Saturday, October 20, 2007

More Subprime Refinance Homeowners Facing Foreclosure

In Philadelphia, Pennsylvania, Philadelphia City Paper reports, among other things, two stories of local residents who are threatened with the loss of their homes as a result of subprime mortgage refinancings of their homes, in which they reportedly ended up signing for mortgages the terms of which were different than what was orally represented to them.

In one case, a 30 year old legally blind woman suffering from kidney failure, diabetes and congestive heart failure, living in a home she inherited from her father was sold on a mortgage in which the payments were considerably more than waht was promised to her. Because of her impaired vision, she depended on others to explain the mortgage. She ultimately defaulted and the home is in foreclosure. Naturally, neither the mortgage brokerage owner nor the attorney present at the closing, have any recollection of the woman's mortgage. The woman apparently is not going down without a fight, however, as her case has been picked up by the non-profit law firm, Community Legal Services of Philadelphia, which hope to prove that she was the victim of predatory lending, the practice of deceiving a borrower into accepting a high-cost loan or a loan they can't afford (legally or illegally), and stave off her foreclosure.

In another case, the apparent victim of deception in a subprime refinancing is a 69 year old grandmother who relied on the representations of her cousin who was the mortgage broker she went to for her loan. At the moment, she is working with ACORN and Legal Aid, hoping to reach an agreement with her mortgage company. She hasn't confronted her cousin yet, and she can't believe that he would have purposefully deceived her.

For more, see Betting the House (How bad is the subprime crisis in Philly?) (if link expired, try here).

Water Shut Off, Unsafe Conditions In Building In Foreclosure Force Tenants Out

In Central Falls, Rhode Island, The Pawtucket Times recently ran a story on a landlord milking the rent from an apartment house without paying for building maintenance, the mortgage payment, or utilities that local code enforcement was required to force the tenants to move, despite that they all had paid receipts for their October rent. There was also enough evidence of four seriously neglected dogs belonging to the landlord that the local animal control agency had to take custody of them, with three being placed in the custody of the Providence Animal Rescue League; one had to be euthanized due to its ill health.

Reportedly, water service to the building has been shut off, the building is going into foreclosure, and the conditions at the building were quite gruesome. Doors were boarded up by authorities, and signs were put up indicating that the building was unsafe. The displaced tenants were told they could stay at a facility run by Crossroads Rhode Island in Providence temporarily.

For more, see Hold your nose, bar the door (if link expired, try here).

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here.

Go here for more on pets and foreclosures. equity skimming unwittingly delta

Illinois City Takes Action To Avoid Utility Bill Stiffing On Foreclosed Homes

In Geneva, Illinois, the Daily Herald reports:
  • As more customers in Geneva lose their homes to foreclosure, the city of Geneva wants to make sure it isn't stuck with unpaid utility bills for those properties. It's starting to ask foreclosing lenders for a $100 deposit to transfer service, and it is also presenting utility bills to them at real-estate closings if it can't get a deposit. [...] Typically, lenders want electrical service to continue to the homes, even if they are empty, so that lights can be turned on for visitors and furnaces run. [...] "It's just a way for us to control our bad debt," said Don Weis, the city's finance director.
For more, see City wants utilities paid on foreclosed homes.

Friday, October 19, 2007

More On Alleged $40 Million Fleecing Of 800 Pennsylvania Residents In Mortgage Investment Program

Lancaster Online (Lancaster County, Pennsylvania) reports:
  • A central hub and help center to assist families facing possible foreclosure due to the collapse of mortgage broker OPFM Inc. will open at Lancaster Farm & Home Center. Also, a rally is planned in Harrisburg next week to prod state officials into doing more to assist those families. State Sen. Michael Brubaker helped arrange a group of attorneys, accountants, banking officials and other professionals who will donate their time to help the 800 families left deeper in debt by the bankruptcy of OPFM, which did business as Personal Financial Management Inc.

For more, see More help for OPFM victims.

Earlier in the week, Lancaster Online reported:

  • About 500 people forced into a financial quagmire by the collapse of OPFM Inc. commiserated Tuesday at Highland Presbyterian Church about the mortgage broker's alleged duplicity. Some were desperate, many were sad, a few cried, others yelled, and most were angry. But everyone showed up looking for direction. Direction on how to deal with monthly mortgages that have ballooned by as much as 50 percent after Wesley A. Snyder, the company founder and president, allegedly left 800 customers with a $40 million tab when he filed Chapter 7 bankruptcy a month ago.

For more, see Mortgage holders vent frustrations.

For other recent media reports on the alleged OPFM / Image Masters scam, see:

NYC Mortgage Fraud / I.D. Theft Investigation Picking Up Steam

In the New York City metropolitan area, the mortgage fraud, identity theft case against Jacob Milton, 41, of Port Washington, New York appears to be expanding, according to a story in Newsday. He currently is charged with scamming another man's identity, buying two homes in his name and leaving him more than $1 million in debt. Suspected victims are reportedly coming out of the woodwork, as they are emerging both in Queens and Nassau counties claiming that their identities were stolen and used to make credit card purchases at chain stores there. An excerpt from the story:

  • The investigation, which started in July, is expected to uncover dozens - maybe hundreds - of victims, police sources said, and is likely to involve millions of dollars in identity theft and mortgage fraud. Detectives still have reams of documents to sort through, but there is already evidence of widespread fraud, sources said, with names and addresses cut out of some documents then pasted onto others.
A woman arrested with Milton on Monday was initially identified as Nira Niru and described as his sister. Authorities now say her name is Shamsun Nira, 38, and that her relationship to Milton is not clear. She is being held on $500,000 bail. Milton is being held without bail on felony charges of grand larceny, identity theft and scheme to defraud, among others. For more, see Mortgage fraud case gathers momentum.

For earlier media reports, see:

Go here for other posts on Jacob Milton.

For an earlier alleged mortgage fraud scam with connections to the New York City Bangladeshi community and another mortgage broker operating out of Jackson Heights, Queens, see:

Ringleader In Atlanta $15M Straw Buyer, Flipping Scam Cops Federal Plea

In Atlanta, Georgia, the Atlanta Business Journal reports:
  • A Georgia man pleaded guilty late Wednesday to running a $15 million mortgage fraud ring in Atlanta's West End. Kevin G. Wiggins, 41, of Ellenwood, Ga., pleaded guilty in federal district court to charges related to a large-scale mortgage fraud scheme that targeted West End neighborhoods in Atlanta in 2001 and 2002. Wiggins contracted to buy more than 80 distressed properties primarily in Atlanta West End neighborhoods at their true value which ranged from $24,000 to $80,000. Then, before he actually bought the property, he deeded the properties to unqualified straw borrowers, some of whom were his relatives. Using false information about the unqualified straw borrowers, he arranged for financing for them and got more than $15 million in mortgage loans. [...] Wiggins pleaded guilty to one count of conspiracy and two counts of wire fraud.

For more, see Ellenwood man guilty in Atlanta mortgage fraud case.

Illinois Regulators Revoke Mortgage Licenses Of 3 For Fraud; Criminal Charges May Be On Horizon

In DuPage County, Illinois, The Herald News reports:
  • Criminal charges could be filed in DuPage County Circuit Court in Wheaton against the operators of a Plainfield-based mortgage company accused of encouraging an area couple to falsify a loan application. State authorities on Tuesday revoked the license of Investor's Choice Mortgage Corp. of Plainfield; its owner, Kelli Wilson; and loan originator Amber Seng, according to a release from Gov. Rod Blagojevich's office. The corporation also was fined $20,000.

  • The state's Mortgage Fraud Task Force and Department of Financial and Professional Regulation probed Investor's Choice with assistance from the DuPage County sheriff's office, the release indicated. State and local agents searched the company's offices Tuesday, gathering evidence that could lead to the filing of criminal charges, the release stated.
For more, see Plainfield mortgage lender may face criminal charges.

For State of Illinois Press release, see Mortgage Fraud Task Force has shut down mortgage company in DuPage fraud ring.

Go here for State of Illinois revocation orders: Investor’s Choice Revocation, Investor's Choice Fine, Kelli Wilson, loan originator revocation, and Amber Seng, loan originator revocation.

700 Unit Planned Condo Construction In Foreclosure; No Word As To Status Of Buyer Deposits

In Bradenton, Florida, the Herald Tribune reports:
  • One of the region's largest condominium projects is the target of a foreclosure suit by one of the nation's biggest banks. If Wells Fargo's suit against the 700-unit Riviera Southshore is successful, Riviera Southshore will be the most prominent Southwest Florida project to date to succumb to the pressures of a sagging real estate market. [... Developer Frank] Maggio defaulted on a $22.3 million loan from the bank, according to the suit filed earlier this month by Wells Fargo.

No word as to the status of any contract deposits put down by the developer's prospective buyers. For more, see Foreclosure suit imperils condo development on Manatee River.

Arizona Foreclosure Sale Voided For Failure To Properly Serve Lawsuit Papers On Homeowner

The Arizona Republic reports:

  • A homeowners association can't foreclose on someone's house for not paying assessments if it can't prove the owner was served with the lawsuit, the state Court of Appeals has ruled. Without dissent, the court threw out a judgment obtained by Olive Green Vistas Homes Association against Santos Cruz. The judges said that without proof of service, the foreclosure, and everything else that happened subsequently, is legally void.

  • The judges also said that the fact that Cruz was aware of what was happening after the initial default judgment was entered against him is irrelevant.
For more, see (no longer available online) HOA loses appeal, foreclosure case is thrown out (Lawsuit wasn't served properly, court determines).

See also, Olive Green Villas vs. Cruz (10-2-07; available online courtesy of the Arizona Court of Appeals).

Editorial Note

This case serves as a reminder to attorneys who are brought in to represent homeowners in a foreclosure action that is either in progress or that has already progressed to a final judgment that (at least in states requiring a judicial foreclosure or other states requiring service of papers by a process server or sheriff's deputy), always first review the "affidavits of service" filed by the process server or deputy before addressing the merits of a case. I can speak from first hand knowledge that process servers and deputies screw up more often than anyone can imagine when serving (or purportedly serving) papers on a defendant in a lawsuit. Why foreclosing lienholders can get away with these errors being made is simple: either a homeowner in foreclosure can't afford an attorney to represent them, or if they have an attorney, the attorney often just doesn't think to review the file to see that the process serving requirements have been properly complied with (often, the attorney is simply unfamiliar with the process serving requirements - state statutes set forth the precise requirements and generally require strict compliance therewith; failure to strictly comply will result in a subsequently obtained judgment in the case being either "voidable" - at a minimum - or completely null and void, as in this case).

Go here and go here for other posts on foreclosures involving faulty notifications to property owners.

Go here for other posts on process server screw ups. ScrewUpProcessServing foreclosure faulty notice

Thursday, October 18, 2007

Utah Mayoral Candidate Still In Race Despite Loss Of Real Estate License In Alleged Cash Back, Straw Buyer Scam

In Eagle Mountain, Utah, the Daily Herald reports:
  • Casting himself as the hero in a vast conspiracy, Eagle Mountain mayoral candidate Richard Culbertson insisted during a candidate debate on Wednesday that despite state investigators charging him with real estate fraud, voters must choose him to protect them from land speculators. Earlier in the day, the Utah Department of Commerce, Division of Real Estate issued a news release saying that Culbertson's real estate license had been revoked by the state's Real Estate Commission on Wednesday "over loan fraud."
  • "Culbertson forged signatures, falsified loan papers and used a straw buyer in equity skimming scheme," said state officials in a media statement. "According to the Division of Real Estate's investigation, Culbertson admitted to using a 'straw buyer' (i.e., using a false identity or the identity of another person) to purchase a home for his personal residence. He also admitted using a straw buyer to purchase other properties at artificially inflated values in order to obtain money in excess of the sales price and acquire cash at closing for his personal benefit."

According to a Division of Real Estate official, Culbertson's actions are part of a larger loan fraud ring in Eagle Mountain and the surrounding area, involving real estate agents, mortgage lenders, appraisers and members of the general public.

Culbertson has not been criminally charged. Reportedly, the Utah Division of Real Estate said they had referred Culbertson's case to federal and state authorities for review. For more, see E.M. candidate charged with fraud (Richard Culbertson says he is the victim in mortgage loan scheme, loses real estate license).

Ex-Banker/Real Estate Broker Charged With Defrauding Mortgage Lender

In Greeley, Colorado, the Greeley Tribune reports:
  • A former Greeley Realtor and banker turned himself in at the Weld County Jail on Tuesday after a grand jury indicted him for investigation of theft involving mortgage fraud. The indictment charged R. Dean Juhl, a partner with JS Real Estate, ... and once an employee of the New Frontier Bank in Greeley, with two counts of theft and one count of forgery.

  • He is accused of ... [giving] a couple almost $13,000 to put down on a house that they were going to buy from JS Real Estate. The indictment charges Juhl used the money to indicate to mortgage lenders that the couple had enough money to afford the house they were buying. [...] "(Juhl) concealed the true source of the funds," according to the indictment. [...] According to the indictment, because the couple paid (with Juhl's money) the down payment and other closing costs, the mortgage company was deceived into believing the couple could make the house payments. After the loan of $165,700 was paid by Master Financial Incorporated ["MFI"], the house payments were never made back to MFI, and the foreclosure was filed 11 months later. The indictment states JS Real Estate received the mortgage money paid by MFI. The indictment lists only MFI mortgage as the victim of the theft.

For more, see Grand jury indicts former Greeley Realtor, banker.

For story update, see Lawyers look at Juhl case in different ways (The Greeley Tribune, 11-15-07).

Traffic Stop Results In Arrest For Mortgage Fraud, Operating Indoor Pot Farm

TC Palm reports:
  • A sophisticated, elaborate marijuana grow house is being dismantled today after a 31-year-old man told officials questioning him about a warrant that he was growing pot in his home. Carlos Andres Bermudez was arrested on an outstanding warrant for mortgage fraud after he was pulled over on a traffic stop, but as Bermudez was being taken into custody, deputies noticed a strong odor of marijuana on his clothing, according to law enforcement officials. Bermudez, who faces charges including cultivation of marijuana and mortgage fraud, told deputies he was growing marijuana in his home ... . When deputies entered the home, they found more than 100 marijuana plants growing in three rooms.

For more, see The nose knows: Strong pot smell on driver leads to grow house bust in St. Lucie. (no longer available online)

Go here to watch St. Lucie County Sheriff's Office video on the indoor pot farm.

See also, Deputies discover luxurious grow house (no longer available online), and Elaborate Marijuana Grow House Discovered In Ft. Pierce.

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops alpha

Florida Town Seeks Code Changes To Deal With Foreclosure Eyesores

In Cape Coral, Florida, WINK News reports:
  • Cape Coral is trying to clean up a city wide problem-foreclosed homes that are now unsightly eyesores. They hope a new ordinance will get these homes up to code in half the time. [...] If [new ordinance is] passed, code enforcement could take action after just ten days. The ordinance would also keep officers out of court and on the streets.

For more, see Cape Coral cleaning up code-violations.

Wednesday, October 17, 2007

89 Year Old Blind Widow Loses 35 Acre Farm For Failure To Pay $38; Files Suit To Get It Back

In Marissa, Illinois, the Belleville News-Democrat reports:
  • An 89-year-old, blind widow could lose her Marissa farm because she never received notice that she owed $38.08 in property taxes from 2003. On Thursday, a lawsuit was filed in St. Clair County Circuit Court on behalf of Virginia A. Juenger after a tax buyer, Prairie State Properties LLC of Belleville, purchased her delinquent tax from 2003. The company purchased the delinquent tax in 2005. On Aug. 27, Prairie State Properties filed an application for a judge to issue a tax deed to Juenger's property for the delinquent 2003 property tax of $38.08. Juenger's property is 35 acres of farmland and worth more than $100,000. The land has been farmed by a tenant farmer for several years, according to the lawsuit.

For more, see Marissa widow may lose family farm over $38 tax bill.

Florida Man Cops Plea In Combo Home Improvement Scam & Mortgage Fraud

An investigation into an alleged mortgage fraud / home improvement scam operation that hit the Tampa / St. Peterburg, Florida area which has implicated six defendants has claimed its first conviction.

The alleged ringleader, Scott Almeida, is the first of the defendants to "get to the courthouse" and successfully agree to a plea bargain with authorities, an agreement which requires him, among other things, to "cooperate with prosecutors" (ie. become a "snitch") in the prosecution of his five now former confederates. The following excerpt comes from the Office of the Florida Attorney General's Office:
  • Attorney General Bill McCollum [last week] announced that a Hillsborough County man pleaded guilty to multiple charges of racketeering, conspiracy to commit racketeering, mortgage fraud, and grand theft. Scott Anthony Almeida will be sentenced to 10 years prison at a later date for a mortgage fraud scam that victimized more than 100 individuals. As part of his plea agreement, Almeida will cooperate with authorities in both the cases pending against his co-defendants and in several active investigations. He is also prohibited from working in the mortgage or title industries.

  • The three-year investigation began when victims filed complaints about incomplete or substandard construction work being performed by construction companies affiliated with Almeida. Almeida and his associates secured mortgages for these homeowners to finance the home repair projects by submitting fraudulent documents to Argent Mortgage Company, one of the nation’s largest wholesale “sub-prime” mortgage companies. Investigators followed the trail of fraudulent applications back to the organized criminal operation which submitted nearly 130 loans to Argent which were funded for approximately $13 million.

The cases against co-defendants Orson Benn, Frank Giffone, Samuel Green, Adrienne White and Bradford Peck are still pending.

For more, see Ringleader of Mortgage Fraud Group Guilty of Racketeering, Grand Theft (Hillsborough County man organized scam involving fraudulent mortgage loans and bad contractors). Go here for the Spanish version of the AG's Press Release.

For media reports on this conviction, see:

Go here for prior posts on this alleged scam and the arrest of the defendants.

Mortgage Company Employees Charged With I.D. Theft, Grand Larceny

In New York City, The New York Times reports that investigators have arrested Jacob Milton, 41, the branch manager of the Jackson Heights, Queens office of Griffin Mortgage Company, and his sister, Nira Niru, 38, a secretary in the same office for identity theft, grand larceny and scheming to defraud.

They are accused of opening bogus charge accounts and taking out mortgage loans using the personal identification information given to them from prospective mortgage customers who applied for loans at their office, the police said. Many were seeking to become first-time homeowners. The investigation began when each of six separate victims reported that their I.D.s had been stolen. According to the story:
  • Investigators said they found a common link: all six had applied for loans at the same local mortgage office. Further investigation found still more victims, and fraud estimated to total more than $1 million, the police said. [...] The number of victims is likely to rise to at least 12 by the time the investigation is finished, the police said.

For more, see Mortgage Office Manager Charged With Identity Theft and Grand Larceny.

Accused "Rent To Own" / Straw Buyer Scam Artist On Trial; Unwitting Straw Buyers Left With Ruined Credit

(revised 10-24-07)
In Pueblo, Colorado, The Pueblo Chieftain reports on a mortgage fraud trial in progress in which the victims of the accused testified against him yesterday. The Chieftain reports:

  • Maybe they gave him too much credit. Accusers of charismatic businessman Maurice Goring testified on Tuesday at his trial that he used their good credit to buy distressed properties that he allowed to lapse into foreclosure, wrecking their financial futures. Goring, 42, is acting as his own lawyer ... . A grand jury indicted Goring on charges of theft, fraud and forgery under the Colorado Organized Crime Act.
Goring is accused of recruiting unwitting straw buyers in order to use their name and good credit to purchases homes that were in foreclosure. Goring is also accused of promising to manage the properties and to make the mortgage payments on the homes from rents collected from tenants, without the need for monetary contributions from the straw buyers. One straw buyer testified that Goring agreed to pay her between $500 and $1,500 for each home purchased in her name. While she knowingly participated in three home purchases, she claimed that her name was forged on documents to list her as the owner of at least 10 more homes. In total, 14 homes in her name ended up in foreclosure.

Goring is also accused of luring tenants on a "lease to own" basis. One tenant testified that the home he and his wife had been renting with the intent of buying changed hands at least twice between Goring's relatives and business associates while they lived there, and the price they were promised was hiked by more than $30,000. Ultimately, they were were evicted.

Most of the homes involved ended in foreclosure and his straw buyer / accusers say they were left with irreparably damaged credit ratings that have severely hampered their financial prospects for the future.

Goring is the last of five defendants left standing in this case. Two who played supporting roles in the scam have already pleaded guilty to lesser charges. Charges against two Goring employees, whose errors in judgment did not rise to the level of criminal conduct according to the prosecutor, have been dismissed. All four have agreed to testify against Goring, the alleged ringleader. For more, see:

For story update (10-24-07), see Goring guilty of racketeering (Former real estate professional faces up to 48 years in prison) (Maurice Goring, 41, was convicted on two counts of racketeering under the Colorado Organized Crime Act. He faces up to 48 years in prison. Prosecutors said Goring stole or fraudulently obtained mortgage loans totaling about $2 million.).

Go here for other posts on this case.

Tuesday, October 16, 2007

Junk Mortgages 101

A Fortune Magazine article (appearing on provides a pretty detailed breakdown of how one particular mortgage pool containing $494 million of junk residential second mortgages has fared. This pool of mortgages was put together by the Wall Street investment banking firm, Goldman Sachs, who then sold interests in this pool to investors (certificate holders). The article begins with the following excerpt:

  • It's getting hard to wrap your brain around subprime mortgages, Wall Street's fancy name for junk home loans. There's so much subprime stuff floating around - more than $1.5 trillion of loans, maybe $200 billion of losses, thousands of families facing foreclosure, umpteen politicians yapping - that it's like the federal budget: It's just too big to be understandable.

  • So let's reduce this macro story to human scale. Meet GSAMP Trust 2006-S3, a $494 million drop in the junk-mortgage bucket, part of the more than half-a-trillion dollars of mortgage-backed securities issued last year. We found this issue by asking mortgage mavens to pick the worst deal they knew of that had been floated by a top-tier firm - and this one's pretty bad.

This story may not be for everyone. But if you're curious to know how, up until recently, it could be that practically every breathing human being capable of signing their name could qualify for a home mortgage, irrespective of bad credit, lack of cash, etc., see Junk mortgages under the microscope (A close-up of one deal shows how subprime mortgages went bad, says Fortune's Allan Sloan) (if link expires, try here).

Connecticut Attorney A Target In Mortgage Fraud Lawsuits

A recent story in The New York Times features Connecticut attorney Maurizio D. Lancia who, along with his Trumbull-based mortgage brokerage firm, Royal Financial Services L.L.C., is currently embroiled in a number of civil lawsuits alleging that he played a part in a mortgage fraud scam that duped unwitting straw buyers into buying homes that they couldn't afford using subprime mortgage financing that ultimately ended up in foreclosure.

In one case, brought by the State of Connecticut, state Attorney General Richard Blumenthal said of them and their co-defendants:
  • The defendants misled consumers and mortgage lenders into property purchases that financially destroyed dozens of homebuyers, while benefiting only the defendants, their associates and family members.”

In this case, the state of Connecticut is seeking civil penalties for violations of the Unfair Trade Practices Act and financial relief for those harmed. The co-defendants in this case include Elisabeth Athan Real Estate, L.L.C., of Shelton, CT and Jose Guzman of Waterford, CT, a former employee of Royal Financial who was recently charged with mail fraud and wire fraud by Federal investigators and prosecutors. For more, see Promises Left Buyers Destitute, Suit Says.

Go here for other posts on this mortgage fraud investigation.

Homeowners Using 401(k) Funds To Avoid Foreclosure?

The Chicago Tribune reports:
  • Despite potential tax and investment problems, more investors have been borrowing from their 401(k) plans or taking hardship withdrawals in recent months, some retirement plan providers say. [...] Indicative of some of the stress, the amount of calls to Principal Financial Group Inc. about hardship withdrawals, while small, has jumped significantly in recent months, company officials said. Not all 401(k) plans permit hardship withdrawals, but the IRS allows them for, among other things, medical or funeral expenses, purchasing a primary residence, or avoiding eviction from or foreclosure on a primary residence.

  • The number of calls asking about withdrawals to prevent a potential foreclosure or eviction doubled in August over July, said Janet Fossell, director of individual investor services for Principal. There were fewer calls in September than August, but still more than in July.

  • [One industry executive] warns people not to use their 401(k) savings if they're going to end up in bankruptcy. That's because in most plans, the 401(k) assets are protected in bankruptcy."The real issue is, what are people facing foreclosure going to do?" he said. "You don't want to tap the plan just to buy time because then you lose your home and your retirement."

For more, see Cash-strapped Americans raiding their 401(k)s.

Homeowner In Foreclosure Charged For Trashing House Days Before Public Auction

In Athens, Georgia, the Athens Banner-Herald reports:

  • The former Athens businessman at the center of a massive mortgage fraud investigation was arrested Wednesday for allegedly trashing his house in west Athens just days before the bank was to auction it off. Brian Christopher Dupree, 36, was arrested in Athens-Clarke Magistrate Court after a warrant hearing and soon was released on a $4,000 bond. Dupree was charged with three misdemeanor counts of endangering a "security interest" for removing appliances, cabinets, lighting fixtures, door knobs and other items with an estimated value of more than $25,000 from a foreclosed house on Meadowview Road. The Bank of Georgia, which foreclosed on Dupree's house, held a security interest in the stolen items, according to the arrest warrant application.
Dupree is currently also facing more serious mortgage fraud charges in an earlier, unrelated arrest in which he and nearly two dozen others were charged in an alleged $7 million mortgage fraud scheme.

For more, see Fraud suspect arrested (Damage to house).

Go here for other posts on foreclosure fixture stripping. foreclosure fixture stripping apple

Monday, October 15, 2007

Metro Dream Homes Official Locked Up For Contempt Of Court

(original post - 10-13-07)
The ongoing saga of the Laurel, Maryland-based company Metropolitan Grapevine continues. The Free Lance-Star reports:
  • The Maryland attorney general's office issued an emergency court order Monday to freeze temporarily the assets of a company that promised investors mortgage-free living. But no one was at Metropolitan Grapevine's locked Maryland offices three days later when an investigator and a receiver arrived to inspect financial records, said Raquel Guillory, the attorney general's spokeswoman. A representative from the Laurel, Md.-based company later explained that the employees didn't show up to let them in because they'd heard the assets had been frozen, she said.
A judge found that the company failed to comply with a court order allowing state officials to inspect company records and, therefore held a company official in contempt of court. The official, whose identity was not available yesterday, was handcuffed and sent to jail, according to the spokeswoman.

For more, see Dream Homes official is jailed (The Maryland Attorney General's office has frozen Metropolitan Grapevine's assets and put one of its officers in jail for contempt of court).

Go here for other posts & links to other stories on Metropolitan Grapevine / POS Metro Dream Homes.

Foreclosure Rescue Scam Leads To Civil Lawsuits, Federal Criminal Investigation; "Pilot-Straw Buyers" Left In Hot Water & Financially Ruined

The Minneapolis Star Tribune reports:
  • Some Northwest Airlines pilots were looking for ways to make up for the steep pay cuts they were facing in 2005 when they learned of a "foreclosure rescue" plan promising them extra cash while helping struggling people hang onto their homes. Two years later, the pilots' credit ratings and their finances are in ruin. Several have been sued by some of the homeowners they tried to help.

  • All told, the six pilots and one flight attendant sank more than $1.5 million into two real estate ventures, some of them taking out second mortgages on their own homes and raiding their savings for the cash. Their attorneys say they are another set of victims in the string of mortgage fraud and equity stripping cases that investigators continue to uncover in Minnesota in the housing bubble's aftermath.

  • The foreclosure venture and related real estate investments are the subject of a federal criminal investigation, and total losses could exceed $2 million.

The foreclosure rescue operators involved were Timothy Beliveau, 39, of Mound, Minnesota and his wife, Shelley Beliveau, 36, a real estate agent. Reportedly, they could not be reached for comment for the Star Tribune story, and have invoked their Fifth Amendment rights against self-incrimination in some recent civil suits, declining to testify on the advice of their attorney.

  • Court records show that the investigation is being led by the U.S. Postal Inspection Service and the Internal Revenue Service's Criminal Investigative Division. The probe spun off from an alleged equity skimming conspiracy involving Michael Fiorito, 39, of Prior Lake. Fiorito, who recently pleaded guilty in federal court, used to work with the Beliveaus, according to a source with knowledge of the case.

For more, see NWA pilots say they were misled in foreclosure venture (A Minnesota couple's investment and real-estate programs are under federal investigation) (if link expired, try here).

For story update (12-23-08), see Elderly Victim Of Equity Stripping Deal Wins Hollow Victory (Court Ruling Comes Too Late To Allow Recovery Of Home; Scammers Claim To Be Broke).

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

California DA Dropping Ball On Mortgage Fraud?

In Bakersfield, California, KGET-TV Channel 17 reports:
  • The fight over real estate fraud spilled onto the editorial pages and airwaves of local talk radio shows Friday. On Thursday, local appraiser Gary Crabtree wrote an opinion piece in the Bakersfield Californian newspaper accusing District Attorney Ed Jagels of dropping the ball on mortgage fraud. Crabtree said he presented a major case of mortgage fraud to Jagels a year ago, but Jagels never followed through. So, in an opinion article published Thursday, Crabtree said he had to turn to the FBI for help. [...] Meantime, bloggers have speculated for weeks about Jagels' motives for declining to take on the case. On Friday, Jagels confirmed he is friends with one of the people the FBI is investigating for mortgage fraud. Agents raided the office of Mark Newton of San Joaquin Appraisals as part of their investigation into local real estate agents David Crisp and Carl Cole.

For more, see DA accused of dropping ball on mortgage fraud; or go here to watch the KGET-TV Channel 17 report.

For a contrary opinion, see Ed Jagels is right: Fraud unit not needed (The Bakersfield Californian - 10-12-07).

For a related post, see California DA Denies Need For Fraud Unit.

For a story update, see County creates trust fund to crack down on real estate fraud (Concerned that the continuing rise of foreclosures in Kern County could be fraud related, Supervisors unanimously adopted a resolution establishing a trust fund to investigate and prosecute real estate fraud).

Go here for other posts on this story.

Builder Dumps 34 New Homes At Auction; Winning Bidders Ecstatic - Existing Homeowners Angry

The San Jose Mercury News reports on a sale last Saturday of 34 brand new homes in Manteca, California owned and built by Anderson Homes that it couldn't unload no matter how many free upgrades it offered. The auction at the Hilton Hotel in Pleasanton was one of the first in Northern California offering a whole section of new subdivision. The homes sold for way below what the builder's current asking prices are, creating many ecstatic new homeowners. That sentiment, however, is not shared by the existing homeowners in the subdivision. One homeowner estimates that the auction devalued his neighbors' homes by roughly $200,000 each compared with what many of them paid a year ago. He commented, "I lost a quarter million dollars in value. I'm screwed." For more, see Big winners, losers at auction of new Manteca homes (Those Who Got Houses Are Ecstatic, Paying Far Less Than Current Owners).

For a related story on ABC News' Good Morning America, see:

Hedge Fund Entrance Into Mortgage Servicing Business Alarms Both Consumers & Investors

(originally posted 10-12-07)
An article by The Associated Press reports:
  • Hedge funds and private equity investors are gaining a foothold in the business of mortgage loan servicing as some of the country's biggest mortgage lenders crash into bankruptcy. Their arrival on the scene has alarmed consumers and investors alike. Over the last few months several failed mortgage lenders -- including ResMae Mortgage Co., Aegis Mortgage Corp., and New Century Financial Corp. -- have sold their loan-servicing businesses to hedge funds or private-equity firms.


  • Their acquisition of loan-servicing rights, as a result, has inflamed the anxieties of many homeowners who have reported loan-servicing disruptions recently. "From a consumer perspective, it's an improvement to have these loans in a mainstream bank," said John Taylor, chief executive of the National Community Reinvestment Coalition, a collection of community groups. "It's not an improvement for them to end up in the hands of Wall Street. There isn't the conversation or the accountability." When it comes to consumer-protection regulations, Taylor said, "Wall Street has a moat around it."

For more, see Hedge Funds Enter Mortgage Arena. questionable mortgage servicing practices tactics yak MortgageServicingIssuesAlpha

Closing Attorney Admits Guilt In Flipping Scam; Cooperates With Georgia Feds reports:
  • A Marietta, Ga., closing attorney, who has admitted he was a member of a mortgage fraud ring that federal prosecutors say included more than a dozen people, is cooperating with the government in a trial that began [last] week in U.S. District Court. On Tuesday, federal prosecutors identified real estate closing attorney James F. Stovall III ... as the lawyer who finalized as many as 50 fraudulent home sales. The sales were part of a scheme that bilked banks out of at least $20 million in 2000 and 2001, prosecutors said.

  • Stovall is the most recent Georgia attorney caught using his law practice to perpetuate mortgage fraud, ... . As a warning to other real estate lawyers, U.S. District Judge Thomas W. Thrash Jr. in 2005 sentenced disbarred DeKalb County attorney Chalana C. McFarland to 30 years in prison for her role in a mortgage fraud scheme that cost lenders more than $11.5 million ...

For more, see Lawyer to Testify in Mortgage Fraud Trial (Stovall admits involvement with ring that bilked banks in loan scheme).

Sunday, October 14, 2007

Foreclosures Hammering Providence Neighborhoods

In Providence, Rhode Island, a recent story in The Providence Journal describes the toll being taken by some of its neighborhoods as a result of the run up in prices caused by the speculators and the subprime mortgage lenders that were lending money to anyone who could breathe, followed by the crash in prices that has resulted in foreclosures, vacant homes, and vandalism. The story begins:

  • The new property owners in some neighborhoods here mark their turf with padlocks, plywood and messages such as the one scrawled on a front door in Olneyville: “Copper Gone.”
  • Vacant houses have always been easy prey for vandals, no less so when the owners are giant banks, companies representing Wall Street investors.
  • Block by city block, foreclosures are scarring the landscape in neighborhoods such as Olneyville, Elmwood and the West End, raising fears that the deteriorating real-estate market could hurt property values and undermine years of urban redevelopment efforts.

The story features the recent history of one area home:


After being sold for $150,000; then resold for $240,000 a year an a half later, the home ended up in foreclosure, abandoned, ransacked by vandals, boarded up, and the public records now list Deutsche Bank as the owner of record (presumably as trustee for certificate holders in a mortgage pool who actually own the home and who, like the neighborhood, are also getting hammered). The home is currently listed for sale at $134,900.

  • "The broker listing now reads: “This property has a lot of potential. Priced to sell AS IS condition. Copper missing. Other work needed … Will need rehab loan, private financing or cash.”"

Reportedly, the home was twice broken into, thieves smashing windows and ripping out the copper pipes. After the second break-in, the real estate agent (no doubt to dissuade any further break-ins) scribbled “Copper gone” on the door. For more, see Foreclosures threaten Providence neighborhoods’ vitality.

In related stories, see:

  • Plywood, padlocks replace homeowners in Providence ("As more padlocks and plywood dot the landscape of neighborhoods ..., local residents and elected officials fear the foreclosure crisis could undo years of urban redevelopment efforts.") (Boston Herald - 10-15-07)

For a prior Providence post, see "Plywood Board" Gains In Popularity As "Window Treatment" In One Rhode Island Neighborhood.

San Jose Squatters Making Themselves At Home In Vacant Foreclosures

In San Jose, California, KPIX-TV Channel 5 reports:
  • [W]e visited a San Jose home that had recently been foreclosed on. After residents moved out, gangs moved in, taking over the vacant property. [...] Graffiti covers one side of the house, and around the corner, bullet holes. [...] And at another foreclosed home we found more evidence of squatters-- two blankets. A window to a bedroom was shattered. Both homes are in east San Jose. That's the area with the most homes in various stages of foreclosure in the city. [...] Real estate agent Mark Detar of Intero thinks the squatter problem is only beginning. "With an increase in foreclosures, you're going to see things like this," Detar said. "With a house being vacant, certain elements come into play."

For more, see Squatters Settle Into Foreclosed SJ Homes, or watch the Channel 5 video report, Foreclosure Squatters.

For another foreclosure squatter story, see Squatter Causes Anxiety For Neighbors (Bank Has Not Evicted The Resident). (KCRA 3, Sacramento, CA), or watch the KCRA 3 video report.

Go here for other posts on foreclosures and squatters.zebra

Watch Out For 'Rent To Own' & 'Lease Option' Scams

In an article appearing in the January, 2006 issue of Realty Times, a number of tactics that scammers use in the context of so-called "rent to own" and "lease option" real estate deals were described.
  • Problems with lease options arise when investors intentionally target consumers who are relatively unsophisticated about real estate or contract law, and who have little real likelihood of ever qualifying to purchase the property. In those cases, the promoters are essentially in the rental business and convince unsuspecting tenants to pay them fees and premium rents, plus pick up most routine property maintenance costs.

  • In Florida, consumers complained to the attorney general that the lease-option promoter included clauses in rental contracts that permitted them to be evicted -- and their option fees forfeited -- for the most minor problems, such as missing a rent payment deadline by one day or failing to keep the house broom clean.

  • Other problems surfaced in Texas, where promoters allegedly offered lease-options to lower income tenants on properties with serious title issues. In some cases, ..., promoters 'acquired' houses from owners facing imminent foreclosure by taking over their payments to lenders [and subsequently offered 'rent to own' deals to unsuspecting tenants without first addressing the legal issues with the existing mortgage lender],

  • The victims "were almost always first-time buyers who had no idea that the contract and lease they signed contained clauses that made it almost impossible for them to actually exercise the option" and acquire legal title to the house [according to one housing law expert].

For more, see "Lease Option" Real Estate Draws Scrutiny.

For more on "Rent To Own" and Lease / Option real estate scams, see "Rent To Own" Scams I. rent to own lease purchase option scams zebra; equity skimming unwittingly delta

Tenant Clipped For $17K In 'Rent To Own' Scam That Ended In Foreclosure

CBS 13 in Sacramento, California recently ran a story on a local woman who paid $17,000 to enter into a "lease to own" arrangement on an area home. Less than three months after moving into the home with her kids and making all her monthly payments, she was stunned to find an eviction notice stuck to her door telling her she had 15 days to get out of the house. Unbeknownst to her, the property owner was stiffing the mortgage lender out of its mortgage payments and allowed the home to go into foreclosure. Ultimately, the home sold at a public auction. She and her kids were forced to move, and she was out her money.

She reportedly told CBS 13 that the FBI is interested in her case and asked her to come in for an interview. In addition, the California Department of Insurance says it's investigating a number of cases involving undisclosed foreclosures across the state, according to the story.

For more, see Call Kurtis: Foreclosed Rental.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra; equity skimming unwittingly delta

Tenant In Foreclosed Home Gets Evicted, Then Gets Reprieve; Lender To Work Out Rental Agreement

In Hazelwood, Pennsylvania, KDKA-TV Channel 2 (Pittsburgh) reports on a woman with four children who found out from the local sheriff's office with only one day advance notice that they were being evicted from their rented home, inspite of being up-to-date on their rent. It turns out that the landlord was pocketing her rent money without paying the house note or the taxes and allowed the home go into foreclosure. After the sheriff's office executed the eviction of the family, the lender reportedly called the sheriff’s office later in the day to say that the family can go back into the house and work out a new rental agreement with them. For more, see Foreclosure Crisis Effects Renters Too; or go here to watch the KDKA Channel 2 report.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here.

Go here for other posts on Police stories involving homes in foreclosures. SheriffDeputiesForeclosureAlpha equity skimming unwittingly delta

Foreclosure Forces Tenant Move; Ex-Landlord Continues Trying To Collect Rent

In San Jose, California, KGO-TV Channel 7 reports:
  • Mary Ellen Murillo has been clearing out her house in recent days. She's also begun to pack her and her five grandchildren's belongings. She's waiting for the knock on her door that will tell her she's now being evicted. [...] Murillo and her five grandchildren have lived in the house for the past six months. Last month, there was a note left on her front door. [...] She was told by a realtor last month that the house had gone through foreclosure and sold at auction. It no longer belonged to the woman who had rented it to her. Even after that foreclosure sale, that woman still came to collect the rent. When Murillo confronted her one-time landlord, she offered an excuse. "She said 'don't worry about it' - keep on giving her the payment. She's taking care of it. She says 'I've got to pay a late charge of $2,000,'" said Murillo. So far, Murillo has refused the woman's demands to pay October's rent. Now her dilemma is finding a new place. She says she is on disability and is worried she'll lose custody of her five grandkids if she doesn't get at least a three bedroom house -- a house she may not be able to afford.

For more, see Subprime Crisis Affecting Those Without Mortgages (Foreclosure Forces Renters To Move).

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. equity skimming unwittingly delta

Beauty Pageant Contestant, Family, Victims Of Subprime Foreclosure Eviction

In Pawtucket, Rhode Island, The Providence Journal reports:
  • Less than a month before she’s to represent Rhode Island in the Miss American Sweetheart beauty pageant in Orlando, Fla., 8-year-old Imani Vazquez and her family are facing eviction from their apartment on Quality Hill. Imani, who won the Miss New England Sweetheart title at a regional pageant in Framingham, Mass., is handling the situation with the aplomb of a beauty queen. [...] Imani and her family are being evicted even though they have a lease and their $900-a-month rent has been paid regularly.
    The lease is up in November, however, and in August, their landlord ... lost [the home] in a foreclosure proceeding brought by Option One Mortgage Corp., the company, owned by H&R Block Inc., that gave him a $292,500 subprime mortgage. [...] She’s ... hoping that her former landlord will return the $900 security deposit she gave him a year ago, ...

For more, see Pawtucket family faces eviction.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. equity skimming unwittingly delta

Condemned Apartment Building In Foreclosure Forcing Tenants Out

In Suffern, New York, The Journal News reports:
  • A state appeals court has rejected a request to delay evictions from the Tall Oaks Apartments. [...] Suffern moved on Aug. 14 to condemn most of the complex ... after its engineers and the county Department of Health found unsafe conditions, including structural and electrical defects. An electrical fire on Aug. 8 led the village to board up entrances and windows to several apartments. [...] Electrical service was terminated to some apartments after the fire, and others were closed when the structural defects were discovered. About 20 of 40 apartments were affected. [...] The complex is to be sold at auction in about two months. The owner of the complex ... was delinquent on its mortgage and sought bankruptcy protection after the state Supreme Court in Rockland ordered foreclosure proceedings.

Representing the tenants in the eviction matter is the Legal Aid Society of Rockland County.

For more, see Suffern tenants lose appeal over evictions.

For story update, see Suffern shuts 25 units, completes closure of Tall Oaks Apartments.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. equity skimming unwittingly delta