Saturday, February 23, 2008

Cops Charge S. Florida Man In 15-Home Indoor Pot Farm Operation; Allegedly Paid Straw Borrowers $10K To Finance Home Purchases

In Palm Beach County, Florida, the South Florida Sun Sentinel reports:

  • El Jefe is in the county jail without bail, authorities said. Marijuana growers used the name — Spanish for "The Boss" — for Miguel Fernandez, who ran a $7 million drug empire from about 15 grow houses, mostly in the Loxahatchee area, according to the Palm Beach County Sheriff's Office. Fernandez, 45, of Hialeah, was booked into the county jail Thursday on a charge of a continuing criminal enterprise involving drugs. [...] "He was the major player in Palm Beach County as far as the cultivating and growing of marijuana," said assistant statewide prosecutor Luis Martinez. "The main guy is done. We have crippled the organization because we have taken him out."


  • Fernandez, who has no criminal record in the state, set up and ran grow houses that contained growing chemicals and crude electrical wiring, investigators say. "It is a complete health hazard," Martinez said. "Right next door you have a regular family living there."

  • Fernandez got so many houses by "purchasing someone's credit," according to the arrest report. He would pay $10,000 to use someone's credit and apply it through his connections with mortgage brokers and title companies, the arrest report said. "Miguel will also pay up to $2,000 per pound to the worker if he or she actually owns the home and lives there to tend the crops," Sheriff's Agent Aron Vento wrote.
For more, see Hialeah man accused of running 15 'grow houses' around Loxahatchee.

See also, Palm Beach Post: Informant helps sheriff's office bust grow houses.

Go here and go here for other posts on Marijuana Grow Houses.

Go here for links to other recent stories on indoor pot farms. pot grow ops alpha

Add The Neighborhood Fire Hydrant To The "Coveted List" For Some Copper, Metal Thieves

In Yucaipa, California, the News Mirror reports:
  • Vandals have stolen more than $10,500 worth of fire hydrants, brass valves and copper wiring from Yucaipa Valley Water District during the past six months, according to district officials. These thefts, when combined with the labor costs involved in replacing the stolen equipment, could cost the district's customers as much as $15,000. [...] “I only know of two fire hydrants being stolen from the district in the past 33 years,” [the district's operations manager Charlie] Bailey said. “But we've had nine fire hydrants stolen in the past six months alone. This is clearly happening because of the significant increase in brass and copper scrap values.”

For more, see Vandals steal $10,500 worth of copper, fire hydrants and more.

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft yak

More Incidents Involving Abandoned Foreclosure Pets

In Gwinnett County, Georgia, the Atlanta Journal Constitution recently ran a story on the increase in foreclosure pets in the area. A couple of excerpts:
  • One abandoned dog Lt. Mary Lou Respess can't get out of her mind is a Chihuahua. He'd been tied up so long, said the Gwinnett County Animal Shelter manager, his collar had gotten embedded in his skin and had to be surgically removed. He's one of hundreds whose owners have left them behind.


  • Joey Brooks, one of two cruelty investigators with Gwinnett County Animal Control, said he's definitely getting more calls about abandoned pets — usually dogs. He responded to one call about two weeks ago, he said. The power was turned off and so was the water. But three labs were tied up in the back yard. Neighbors had been feeding the dogs in this "decent neighborhood in Duluth," he said, but there was already a real estate sign out front. "That's what's weird," Brooks said. "We'll come across ones where [For Sale] signs are already in the front yard, but pets are still tied up out back." [...] Even that's preferable, Brooks said, to finding former pets trapped inside houses, without food or water or any way to get outside to do their business.


  • [Homeowner] Steve Miller who lives outside Norcross in unincorporated Gwinnett, said the problem of abandoned dogs hit too close to home last week. On Friday, a pair he believes were left behind by a neighbor killed one of his cats. He'd been calling animal control all week, Miller said. But it wasn't until he reported the dogs had killed his cat Curly that an officer came out and caught one of the dogs, he said. The other dog hasn't been seen since.

For more, see More pets being abandoned after foreclosures.

For more on foreclosures and abandoned animals, see Foreclosures & Pets I and see Foreclosures & Pets II. petsII and foreclosures

NY Times Story A Reminder That Housing Discrimination Against Attorneys May Be OK In Some Cases In NY

In a recent New York Times article on a husband and wife attorney team who sued their neighbor who lived across the hall from them in a New York City cooperative apartment building because of second hand smoke that was allegedly wafting into their apartment, the article provides a word of caution to attorneys in New York when seeking approval to buy/occupy an apartment in a condo or co-op apartment building who have no qualms about suing their neighbors:

  • Anthony vanEyck Miller, a vice president of Bellmarc Realty, says [co-op and condo] boards don’t mind lawyers, but he warns buyers about using the word “litigator” on applications. “It is almost pejorative in the context,” he said. “It is not quite as bad as terrorist, but it makes people nervous.”

  • Felicia de Chabris, a broker at Halstead Property’s Greenwich Village office, said that lawyers are usually approved, especially if they are helpful and show humility. But she pointed out that a pattern of past lawsuits could pose a problem, especially when suits have been filed against neighbors or co-ops or condo boards. “Sending a quick legal letter is one thing,” she said. “Actually litigating is not a good idea.”

  • [While] a 1977 court decision upheld a landlord’s right to refuse to rent to a lawyer, the city’s human rights law was amended in 1986 to bar discrimination in housing on the basis of a lawful occupation. Co-op and condominium boards may, however, reject lawyers and other applicants based on specific actions — for instance, a pattern of filing lawsuits against neighbors.

For more, see Neighbor vs. Neighbor.

Friday, February 22, 2008

Trouble Unloading Inventory Results In Foreclosure Action For Chicago-Area Condo Converter

In Cook County, Illinois, Crain's Chicago Business reports:
  • NorthSide Community Bank has filed a foreclosure lawsuit to collect $3.5 million on a loan to a Rogers Park condominium converter. The Gurnee-based bank alleges that a venture managed by Greenlight Development LLC failed to pay off a loan [...] when it came due Dec. 29, according to a complaint filed Jan. 31 in Cook County Circuit Court. Mark Greenberg, president of Chicago-based Greenlight, said seven of the 30 units in the building have been sold and another is under contract. He declined further comment. Mr. Greenberg bought the 1930s-era property in June 2006 for $3.4 million, or $113,333 per unit. NorthSide financed the project, which included a renovation of the property, with loan that had an original balance of $4.7 million.
For more, see Foreclosure suit filed on Rogers Park condo conversion.

Go here for details of several other Chicago-area condo developers who appear to be holding the bag on their projects, see Foreclosures on condo projects rise.

Minneapolis City Council Advisory Panel Recommends "Putting The Squeeze" On Foreclosing Lenders, Landlords In Attempt To Address "Empty Home Epidemic"

In Minnesota, the Minneapolis Star Tribune reports:
  • With foreclosures exploding, Minneapolis City Hall is stepping up the pressure on housing violations. A City Council panel Wednesday took three actions aimed at problematic properties as the number of new foreclosures in the city last month hit 344 properties. The committee recommended that the full council:

  1. Revoke a rental license for an unprecedented 45 rental properties associated with Roseville-based TJ Waconia, a firm that the FBI has said it is investigating for mortgage fraud,
  2. Triple the annual fee charged against vacant and boarded housing to $6,000 in an effort to recover some of the city's costs for dealing with them,
  3. Impose a new $1,000 fee on residences that convert to rental units that intended to pay for an immediate inspection to make sure they meet the city's rental licensing standards.

  • Besides running a $1.4 million problem properties unit, the city incurs police, fire, rubbish cleanup and other expenses at vacant houses, Inspection Director Henry Reimer said. Total costs exceed $2 million. [...] The full council plans to act on the recommendations at its Feb. 29 meeting.

For more, see Minneapolis puts squeeze on problem housing (With foreclosures booming, City Hall recommended three actions to combat the empty-house epidemic).

Sleazy Notary Authenticates Phony Lien Causing Home Sale To Fall Thru; Homeowner Awarded $40K In Damages

In Dallas, Texas, CBS11 News reports:
  • A Texas notary authenticates wills, deeds and all sorts of legally binding documents. There are more than 400,000 notaries in our state and almost all of them are law abiding people. But as Michael Kloster found out, one bad apple can make your life a living nightmare. "This cost us three years out of our lives," said Kloster. According to Kloster, it all started when a notary stamped her seal on a mechanics lien and filed it in Collin County. The problem, according to Kloster and a judge, was that the lien was a fraud. "Six bucks and a notary; they filed a lien, and you don't have to approve a thing," said Kloster. What notary would sign off on such lien? Lourdes Medina admits she did just that. According to records, Medina signed for her husband, and then notarized the lien document. Her husband owned a roofing repair company and Kloster said the Medina's were never contracted to repair the roof. The Medinas filed a lien on his house. Medina admits that she "wasn't supposed to sign for someone that I know" and admitted to signing her husband's name on the lien.


  • Court papers show a judge removed the lien on the Kloster's home and Medina voluntarily surrendered her notary license. The court awarded the Klosters more than $40,000 dollars in damages.

No word if a criminal investigation has been opened. For more, including other incidents of bogus notarizations found by CBS 11 News, see How Notaries Can Take Your Land, Money, Home (read story) (watch video).

Dallas-Area Roofer Rips Off Over $500K In Deposits, Failed To Do Any Work, Say Homeowners

In Dallas, Texas, CBS 11 News reports:
  • A CBS 11 investigation exposed a roofing contractor who stirred up a financial storm in the wake of last years hail storm. [...] Roofing contractor Shawn Tatum came calling after that hail storm. He allegedly defrauded customers out of more than half a million dollars. [Homeowner Richard] Stewart and dozens of other customers gave Tatum their insurance settlement checks to buy materials for a new roof. Tatum cashed Stewart's check for more than $6,500, but Stewart got nothing in return.


  • Tatum has since filed for bankruptcy. He claims customers owe him more than a half million dollars, even though he cashed their checks and didn't do the work, according to court testimony. More than two dozen former customers and suppliers faced off against Tatum in Fort Worth at the bankruptcy court last month. Tatum appeared to have a massive memory failure. In response to nearly 100 questions, Tatum replied "I can't recall." Tatum proudly testified that in four years as a roof contractor, he never handled a hammer.


  • Tatum's customers say he is trying to use bankruptcy to get out of paying back their money. The Tarrant County District Attorney has told them that it has opened an inquiry into his roof contracting business while the Colleyville Police Department continues its theft investigation.

For more, see Roofing Contractor Stirs Up Financial Storm (read story) (watch video).

For other posts on builders & contractors accused of stiffing customers, go here and go here. contractors stiff subs customers zeta

Rights Of California Tenants Facing Foreclosure Evictions Depend On What City They Live In

A recent column in the Los Angeles Times on tenants being forced from their rented homes as a result of their landlords being foreclosed on contained this excerpt:
  • State officials said that under California law, existing rental agreements are essentially wiped out when a property is foreclosed upon. All that's required is that a tenant be given at least 30 days' notice that he or she is being evicted.

  • But those officials also said that state law can be trumped by local rent-control statutes, which often provide tenants with more far-reaching protections. These "just cause" provisions of many municipal rent-control laws limit the ability of landlords to evict tenants, even those on month-to-month leases. They also include cases in which ownership of a property changes hands, such as a foreclosure.

  • "Tenants cannot simply be evicted," insisted Adam Radinsky, who heads Santa Monica's consumer protection unit. "There's no question about that."

  • Actually, it depends on where you live. Cities with "just cause" provisions include Los Angeles, San Diego, Santa Monica, Thousand Oaks, West Hollywood and Glendale. However, not all "just cause" provisions are created equal. San Diego's requires that a tenant occupy a property for at least two years before the provision takes effect. Glendale's allows an eviction to proceed if the landlord plans to remove the property from the rental market or have a relative move in. Moreover, not all rental properties may fall under a city's rent-control protections. In such cases, state law would probably apply, which would allow a foreclosure-related eviction to go ahead. "In that case, the tenant may be in a really lousy position," said Al Shelden, chief of consumer law in California Atty. Gen. Jerry Brown's office. "There may not be many rights to begin with."

For more, see Shadow victims of the mortgage crisis: renters (if link expires, try here).

See also, KCBS Channel 2, Los Angeles: Money 101: Tenants Caught In Foreclosure.

Go here for other posts referencing California municipal "just cause" eviction laws.

For posts involving rent / equity skimming landlords who pocket rent and allow homes to go into foreclosure, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , IV , and V. equity skimming unwittingly epsilon

Thursday, February 21, 2008

Bakersfield Broker's Flipping Operation Back In The News

The Bakersfield Californian reports:
  • The mother-in-law of Realtor David Crisp, Leslie Sluga, recently had two homes enter default, property records show. The delinquent loans are a first for Sluga, although scores of defaults and foreclosures have touched other family members of the former Crisp & Cole Real Estate company's staff and business associates over the past year.


  • [A California Department of Real Estate] complaint alleged Sluga and her daughter, Jennifer Crisp, were allowed by Crisp & Cole to report false employment information on loan documents. [...] The women reported nonexistent positions at Crisp & Cole and the accounting business owned by Sluga's husband, state regulators allege.


  • Two days after the state complaint was filed, FBI and federal tax agents raided 13 sites around Bakersfield related to [the now-defunct real estate brokerage] Crisp & Cole. That investigation is ongoing. No charges have been filed. Crisp and his former business partner, broker Carl Cole, have left a string of at least 107 troubled properties carrying more than $66.6 million in loans in the wake of their defunct company's operations, according to an ongoing Californian tally. As of Friday, at least 80 of those have foreclosed, the Californian's research found.

Crisp has not been charged with any crimes, but reportedly is the subject of a Federal investigation. For more, see Crisp relative's homes in default.

See also, KGET-TV Channel 17: Radio host questions embattled realtor outside restaurant:

  • An ambush interview with embattled realtor David Crisp has become the talk of the town online. A local radio personality grabbed a camera and confronted Crisp after spotting him at a local restaurant. KRAB radio host Francis Mayer said when he saw Crisp eating at [a local eatery] Monday, he had to ask him some questions.

Go here for past Bakersfield Californian stories about the Crisp & Cole home flipping operation.

Go here for earlier posts on David Crisp and his alleged flipping operation.

New Texas Law Requires Disclosure Of Meth Lab History In Sale Of Home; May Be Too Late For A Few Dallas-Area Homeowners; Foreclosures Exempted

In North Dallas, Texas, CBS 11 News reports:

  • Imagine buying your dream home, only to learn that the walls are coated in toxic residue. A new Texas law aims to prevent home buyers from making a potentially dangerous mistake. But CBS 11 News learned that there's a loophole that could leave families in the dark. [...] A North Dallas homeowner, who does not want to be identified, learned of her house's hidden history through photographs. She never imagined it once concealed a meth lab. "Do you worry at all about what the health effects could be?" CBS 11 News asked. "Well, I've had two miscarriages in the last two years, so yeah," she answered.


  • [C]BS 11 learned that the buyer only gets that information when the seller is a person, not a bank. That's because the disclosure form does not apply to foreclosure sales, according to Texas Property Code. If you buy a house from the bank, they don't have to tell you anything about the house's history. [...] The exemption means the law would not have helped Laura Budge, a Fort Worth mother of seven. Neighbors divulged the drug habit of a former owner, but Budge had no idea her family could be in danger. [...] Now the Budge family and others live with that fear and few options."It's not like we can just turn around and leave," Budge said.
For more, see Was Your New Home Used As A Meth Lab? (New Law Requires Sellers To Disclose Whether Home Was Used As Meth Lab; Some Experts Question Law's Effectiveness) (read story) (watch video).

Go here for some methamphetamine information resources.

Go here and go here for other posts on home-based methamphetamine labs. meth lab yak

City Anti Foreclosure Blight Ordinance Requires Registration Of Repo'd Homes; Can Assess Fines Up To $100K Per Home; Enforceable As Tax Lien

In Murrieta, California, The Press Enterprise reports:
  • Murrieta on Tuesday became the latest city in California to target financial institutions for blight when a home falls into foreclosure. The City Council unanimously voted for a new blight ordinance that requires lenders to maintain a property that has been abandoned or foreclosed. [...] The law is meant to prevent "the broken window syndrome," where vandals and squatters choose homes to party or live in by finding signs of abandonment.


  • The law requires that when a property is foreclosed upon or is abandoned, the lender must register the property with the city. The registration fee is $70. [...] The fines range from $250 a day for dead lawns or graffiti to $1,000 daily for fire hazards or squatters. The city can assess as much as $100,000 per parcel or structure that will be tacked on as a tax lien and paid to the city when the property is sold. The program is expected to begin in April. The city's proposed blight law is a variation of others used in Chula Vista, Orange County and Riverside.

For more, see Murrieta measure requires lenders to maintain foreclosed homes.

See also, North County Times: Murrieta cracks down on maintenance of foreclosed homes ("[C]ity officials took action Tuesday to curb blighted yards, unsafe neighborhoods and virtual welcome mats for squatters.") squatter foreclosure zebra

"Queen" Of Alleged "Happy Greek" Cash Back Mortgage Fraud Operation Charged By Cops

In Delaware County, Ohio, The Columbus Dispatch reports:
  • A Columbus restaurant owner has been charged with running a multimillion-dollar mortgage-fraud ring that prosecutors say operated with help from dishonest appraisers and unethical, or ill-informed, brokers. Powell police officers arrested Gihan "Gigi" Zalat, 40, of Columbus, on Friday at the Happy Greek restaurant at 1552 N. High St.[...] which she co-owns with her husband. Zalat is charged with engaging in a pattern of corrupt activity and is being held in the Delaware County jail under a $1 million bond. Assistant Prosecutor Bill Owen described Zalat as "the queen" of a mortgage-fraud ring and said investigators have linked her to six illegal transactions in Delaware County.


  • In each case, the homes were grossly overappraised by "less-than-honest appraisers" and financed by lending institutions, Owen said. But because of the over-appraised value of the homes, thousands of dollars were kicked back to the buyers after they purchased the home under the guise of home-improvement money. Many of the properties were bought with no money down, and the homes remained vacant.

For more, see Arrest made in fraud ring (Columbus restaurateur charged in mortgage scam).

For story update, see Pair face 14 counts in mortgage-fraud case (2-22-08).

For an earlier post on this alleged fraud operation, see The "Happy Greek" Restaurant - Home Of The $5.50 Gyro Sandwich (and "Cash Back" Mortgage Fraud Operation?).

N. Myrtle Beach Condo Project In Foreclosure; Deposits, Escrow Funds Missing; Developers Subject Of Federal Investigation

In North Myrtle Beach, South Carolina, the Myrtle Beach Sun News reports:
  • Jeff Shoup and Tommy Hix are counting on a proposed sale of the Bahama Island property here to repay investors, but court documents and financial records show a sale might not generate enough money to replace all of the escrow funds missing from the developers' bank accounts.

  • At least $30 million in bad loans, unpaid bills and missing deposits are owed by Shoup and Hix, who now are the focus of a federal investigation. Among the missing money is at least $7.3 million in deposits from condominium and marina investors.

  • Bank records show most of that money was spent by Shoup, Hix and their nearly 60 corporations, including T&J Development of North Myrtle Beach. The 22-acre Bahama Island property, located west of the Intracoastal Waterway at about 13th Avenue North, is in foreclosure because Shoup and Hix did not make payments on a $7.6 million mortgage given to them by National Bank of South Carolina.

For more, see Sale Unlikely To Reach All Open Hands.

For story update, see Millions in doubt in resort sale (Investors unsure of reimbursement) ("A proposed sale of the Bahama Island resort property in North Myrtle Beach has fallen through, leaving investors who lost millions of dollars in deposits on the failed condominium project with dwindling alternatives to recoup their losses.")

Wednesday, February 20, 2008

Mortgage Servicing Companies Stiffing Maryland Governor On Call For Foreclosure Summit?

In Annapolis, Maryland, WBAL-TV Channel 11 reports:
  • Gov. Martin O'Malley has called for an emergency work session with mortgage [servicing] companies to hammer out solutions to the foreclosure crisis. Letters have been sent to about a dozen loan [servicing] companies requesting they attend a summit on Feb. 28. But so far none of the loan companies have responded.

For more, see No Responses to Governor's Call For Foreclosure Summit (read story) (watch video).

Editor's Note:

In the WBAL-TV 11 video, Governor O'Malley refers to the "huge amount of losses" that the lending industry is facing. Someone in Maryland better explain to the governor that the mortgage servicing companies aren't facing any losses in foreclosure and have no incentive to meet with him. In fact, the servicing companies actually make more money when homes go into foreclosure with late fees and other default-related fees. The actual owners of the home mortgages, at least those of the subprime variety, are generally mortgage securitization trusts, interests in which are owned by private investors (ie. insurance companies, mutual funds, government and private pension funds, etc.) that are disbursed all over the world - and are only now beginning to wake up to the fact that their investments in the subprime mortgage trusts are tanking. While they may have an interest in mitigating their losses, the mortgage servicing companies who represent them (and who profit when there are more homes in foreclosure) don't.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics xero

Nationwide Foreclosure Rescue Operator Charles Head Back In The News

Another story on national foreclosure rescue operator under Federal investigation, Charles Head, has come out; this time coming from Sacramento, California, where The Sacramento Bee reports on his local operations:
  • [Head's] alleged scam includes at least seven Sacramento homeowners and 61 statewide, and the probe is based in the Sacramento FBI office, according to court documents, interviews and an Internal Revenue Service search warrant obtained by The Bee. An additional 100 investors who believed they were helping people on the brink of foreclosure also may have been swept up in the alleged scheme, with many having their credit ruined.
  • [F]ederal authorities say the [investigation] has evolved into money laundering, and Head says the FBI has seized cash and exotic vehicles from him. "We're still reviewing the evidence we got from searches in Los Angeles," Sacramento FBI spokesman Steve Dupre said. "We're still attempting to identify more victims and put the pieces together."
The deals sound like the typical sale leaseback, equity stripping, "straw buyer" arrangements. Head's deals were reportedly described by one New Jersey attorney who has filed a civil lawsuit against Head:
  1. Homeowners were told they could sign their house over to a trust and live there while repairing their credit,
  2. They would pay monthly rent to Head's companies and, after a year or two, could buy back their home at about the same price,
  3. Head recruited "straw buyers" to take title to the homes in the equity stripping transaction without any management responsibilities; they simply would lend their good credit to the deal in return for "straw buyer" fees of between $5,000 to $40,000.
  4. The investors were told they didn't have to make mortgage or tax payments because Head's companies would pay the mortgages,
  5. The investors found out the mortgages had not been paid when they started getting default notices in the mail.

For more, including some of the reported details involving a couple of the Sacramento-area homeowners who were allegedly victimized by Head's deals as well as the Federal asset seizures of property confiscated from Head, see Home scam suspected (Local FBI office heads 'foreclosure rescue' fraud probe).

Go here for other posts on the Head nationwide foreclosure rescue operation.

NY Governor Scorches The Bush Administration On Predatory Lending

In a recent article in The Washington Post, New York Governor Eliot Spitzer scorches the Bush Administration for its actions in impeding the state Attorneys General from all fifty states in their attempts to protect consumers from the actions of predatory lenders throughout the country. An excerpt from the article:
  • Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

  • What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no. Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

For more, see Predatory Lenders' Partner in Crime (How the Bush Administration Stopped the States From Stepping In to Help Consumers).

Common Abusive Mortgage Servicing Practices

A recent article by Mortgage Professor Jack Guttentag appearing in Inman News Globe comments on some of the types of abuses mortgage servicing companies have been accused of engaging in. Among the alleged abuses referred to in the article include:
  1. Pyramiding Late Fees: where the servicer continues to charge late fees until all prior late fees have been paid,
  2. Pyramiding Resulting from Escrow Payment Shortage: When the scheduled payment is received on time but the escrow payment is short, the practice is to place the entire payment in a suspense account, to charge the borrower a late fee, and to send a delinquency notice to the credit bureaus,
  3. Failure To Provide Monthly Statements: If the servicer does not send out monthly statements, the borrower will be in the dark. When a scheduled payment is placed in a suspense account due to an escrow shortage, the next month's regular mortgage payment will also be deposited into the suspense account, and the borrower incurs a second late charge and a second 30-day delinquency report. At this point, the account may go to collections, and the borrower will suddenly find himself dunned for a laundry list of fees, with failure to pay possibly resulting in foreclosure,
  4. Mark-up of Price For Cost Of Services Provided By 3rd Party Vendors: Servicers squeeze extra profitability from their servicing operations by profiting from services provided by 3rd parties,
  5. Failure To Report Good Payment Histories To Credit Bureaus: Some servicers cripple the ability of borrowers to refinance profitably by not reporting good payment records to the credit bureaus,
  6. Unilateral Conversion Of Mortgage To Simple Interest: Some servicers purchase servicing contracts and unilaterally convert the mortgages to simple interest if the note does not explicitly prevent it without borrower approval,
  7. "Abuse Cover-Up" By Selling The Servicing Contract: Some servicers cover up abusive practices by selling the servicing to another firm without forwarding evidence of the abuses -- the prior servicing record.

For the article, see Monthly statements would eliminate loan servicing fraud (if link expires, try here).

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics xero

Volunteer Lawyer Program For Qualified Ohio Homeowners In Foreclosure Slated To Begin In March

In Ohio, the Sandusky Register reports:
  • Ohio Supreme Court Chief Justice Thomas Moyer, a Sandusky native, knows home foreclosures are a big problem back home in Erie County and across Ohio. Moyer is asking the courts and Ohio attorneys to reach out and help as many homeowners as they can. The chief justice has asked judges who handle foreclosure cases to use mediation to resolve as many cases as possible. And he's asked Ohio lawyers to volunteer in foreclosure cases to help families who can't otherwise afford a lawyer.


  • Ken Brown, a spokesman for the Ohio Supreme Court, said the program to provide free volunteer lawyers for homeowners who otherwise can't afford them is supposed to begin in early to mid-March. Moyer issued a call for help several weeks ago and 200 to 250 lawyer answered, he said. A more specific letter from Moyer spelling out what the chief justice has in mind is being mailed out to every attorney in Ohio, Brown said.

For more, see Moyer to lawyers: Fight foreclosure for free.

Go here for posts on attorneys fighting foreclosures on a contingent fee basis (and racking up billable hours in the process - to be paid by the lender and/or mortgage servicer in a successful lawsuit) by invoking Federal and state consumer protection statutes.

For a post referencing a case that shows how it's possible for a law firm to be awarded not insignificant legal fees by a Federal judge in a "pro bono" case based on the number of billable hours invested in the case in connection with a lawsuit invoking a statute that mandates an attorney fee award to a successful plaintiff, see NY Lawyers Land Legal Fee Of $1 Million In Pro Bono Case.

Abandoned Real Estate May Be Costing Eight Ohio Cities $63M+, Says New Report

In Columbus, Ohio, The Associated Press reports:

  • More than 25,000 vacant and abandoned properties cost eight Ohio cities at least $63 million, as ill-equipped local governments have been unable to wrestle with job loss and the foreclosure crisis, a report found. A report released Tuesday by Community Research Partners showed that Cleveland, Columbus, Dayton, Ironton, Lima, Springfield, Toledo and Zanesville have lost millions in services and tax revenues as vacant residences and abandoned lots have mounted. The study was commissioned by ReBuild Ohio, a coalition of local government, non-profit and civic organizations. Researchers said that Dayton and Columbus were able to provide complete data, but many of the smaller cities, as well as Cleveland, weren't able to provide a comprehensive picture. So the total costs of $63 million are likely to be much higher.

For more, see Report: Abandoned properties costing Ohio cities $63M.

See also, The Columbus Dispatch: Empty Housing Costing Millions (Vacant proprties degrade quality of life, study says).

To view the report, see $60 Million and Counting: The cost of vacant and abandoned properties to eight Ohio cities:

Foreclosure Crisis "An Opportunity To Find Low-Cost Housing With Some Privacy" For Many Street People, Says Homeless Advocate

The Associated Press reports:
  • The nation's foreclosure crisis has led to a painful irony for homeless people: On any given night they are outnumbered in some cities by vacant houses, and some street people are taking advantage of the opportunity by becoming squatters.


  • While no one keeps numbers of below-the-radar homeless finding shelter in properties left vacant by foreclosure, homeless advocates agree the locations — even with utilities cut off — would be inviting to some. There are risks for squatters, including fires from using candles and confrontations with drug dealers, prostitutes, copper thieves or police.

  • "Many homeless people see the foreclosure crisis as an opportunity to find low-cost housing (FREE!) with some privacy," Brian Davis, director of the Northeast Ohio Coalition for the Homeless, said in the summary of the latest census of homeless sleeping outside in downtown Cleveland.

For more, see Foreclosed Homes Occupied by Homeless.

Go here for posts on vacant homes, foreclosures and squatters. squatter foreclosure zebra

Tuesday, February 19, 2008

Minnesota Federal Judge Gives MERS The Go-Ahead On Foreclosures Involving Unrecorded Mortgages Assignments

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:
  • A federal judge has refused to temporarily block many Hennepin County foreclosures in a ruling that signals that the borrowers could have a hard time proving their case. Judge Joan Ericksen [last] Wednesday denied a request for a temporary restraining order against foreclosures initiated by a national electronic mortgage registry [Mortgage Electronic Registration Systems, Inc.]. [...] Attorneys for the borrowers argue that the national registry violated Minnesota law because its foreclosure notices don't list assignments, a document recorded when a mortgage is sold to another party, as required by law. [...] Attorney Amber Hawkins, representing the borrowers, said they will proceed with their underlying challenge. She said they'll argue for Ericksen to certify the issue to the Minnesota Supreme Court for review.

For more, see Federal judge refuses to block foreclosures.

For story follow-up (8-14-09), see MERS Scores Big Win As Minnesota High Court Says Sale Of Note Not An “Assignment Of The Mortgage” Which Must Be Recorded Before Initiating Foreclosure.

Go here for earlier posts on this story.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

Another New Hampshire Homeowner Alleges Being Screwed Over By A Mortgage Servicing Company

In New Hampshire, The Union Leader reports:
  • The first sign of trouble was the notice from a company they'd never heard of, informing Greg and Andrea Hunt of Northwood that their monthly mortgage payment had not been received. Just three months later came a foreclosure notice. That was in 2005. The Hunts have been fighting to save their home, and restore their damaged credit, ever since. [...] Over the ensuing months -- now years -- HomEq has assessed late fees, increased escrow payments without notice, and charged the Hunts for an insurance policy they didn't need, according to the couple. Their payment amount seemed to change constantly, and their loan was nearly always in default.


  • "There are just too many people out there who are complaining about the same basic pattern of facts, and that pattern of facts doesn't happen just by accident, that often, and that commonly," said attorney Walter Maroney. Formerly chief of the consumer protection bureau at the state Attorney General's Office, Maroney is now in private practice. He represents a Manchester man who has sued his mortgage servicer and related companies for $13 million; the case is pending in U.S. District Court in Concord.

  • Katherine Porter, an associate professor of law at the University of Iowa, is the author of a recent study, "Misbehavior and Mistake in Bankruptcy Mortgage Claims." She looked at 1,700 Chapter 13 bankruptcy cases, including some from New Hampshire, and found that mortgage servicers often could not produce the documents required to support fees they had charged homeowners. The data, she wrote, "raise the specter of poor record-keeping, failure to comply with consumer-protection laws, and massive, consistent overcharging. All families who are trying to pay off a home loan are put at risk if subject to poor or predatory mortgage servicing," she wrote. "... (T)he frightening prospect is that servicing problems among non-bankruptcy families who are behind on their mortgages may be even worse than the bankruptcy data reveal."

  • Some say one problem is that mortgage servicers make their money from late fees and other penalties charged to borrowers. "There's a built-in incentive for the servicing industry to really rip people off," contends Richard Gaudreau, a Salem attorney who specializes in consumer bankruptcy law. "If they can throw your payment into a suspense account because it's a dollar short, then they can impose a late fee."

For more, see Fighting mortgage disservice.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics xero

Fannie Facing Possible $7B Exposure In Alleged Improper Escrow Grab

Bloomberg News ran a story last week on a Federal lawsuit that has been bouncing around in a Texas Federal court for about four years in which Fannie Mae has been accused of improperly pocketing the interest income from property owners' escrow accounts relating to Federally insured mortgages dating back to the 1970s. According to the story:

  • Fannie Mae, the largest source of U.S. home-loan money, faces a proposed class-action lawsuit over as much as $7 billion it earned on property owners' escrow accounts starting in the 1970s. The company violated government policy and breached its duty to about 4,000 owners of government insured moderate- and low-income housing, lawyer Mark Lanier claims in federal court in Texarkana, Texas. Fannie Mae should return gains of $3 billion to $7 billion, said Lanier, 47, with the Houston-based Lanier Law Firm. The higher figure is $7.20 a share, 24 percent of the company's market value. Fannie Mae says it acted legally.

For more, see Fannie Mae Escrow Grab Exposes Shareholders to 24% Loss in Suit.

WABC-TV Report Shines Light On New Jersey Foreclosure Rescue Operator

In Rutherford, New Jersey, WABC-TV Channel 7's Sarah Wallace recently did another investigative report on an area foreclosure rescue operator. Featured in her report was Scotch Plains, New Jersey-based Elite Services and its owner, Steve French. The deal in which he is accused of screwing over a homeowner facing foreclosure involved:

  1. a sale to a straw buyer (who was paid $10K for allowing his name to be put on the title) with a contemporaneous leaseback which allowed the homeowner to temporarily keep possession of the home,
  2. rent payments on the leaseback that were allegedly "hundreds of dollars more than the mortgage payments they couldn't afford in the first place,"
  3. a new mortgage of about $100,000 higher than the amount owed on the old mortgage,
  4. a home that ended up back in foreclosure.

Excerpts from the story:

  • The FBI is now forming task forces all over the country to investigate the issue. Massachusetts is the first state to ban foreclosure rescue companies outright, and New Jersey may soon take action as well. [...] Foreclosure rescue companies are now under heavy scrutiny. New Jersey Assemblyman Neil Cohen plans to hold public hearings on these firms. "More of these companies are going to pop up," Cohen said. "So we either regulate them or we ban them."

For more, see Investigating foreclosure rescue firms.

Go here to view the pending New Jersey state foreclosure rescue legislation (which is a reintroduction of a bill from the last legislative session), New Jersey Assembly Bill A281 - Foreclosure Rescue Fraud Prevention Act.

For a related story, see Cohen/Schaer/Spencer Bill Granting Subpoena Power To Investigate Foreclosure Consultants Advances.

For background information on foreclosure rescue scams, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams.

DC Homeowner Gets Back Home Lost In "Foreclosure Rescue Swindle"

The Ocala Star Banner reports:
  • Walter Malone got lucky. Days before his house was to be sold at foreclosure, Malone signed papers he thought would help him keep his home. It was a scam. But instead of losing his house, he became a plaintiff in a lawsuit against the men operating the foreclosure rescue swindle. A settlement for an undisclosed sum allowed Malone to win back his home, a rare victory in the battle against such schemes. Malone, who is 72 and lives within two miles of the U.S. Capitol, told his story [last] Wednesday to the Senate Special Committee on Aging, which studies issues of interest to seniors.

  • The panel heard ideas for how best to prevent foreclosure rescue scams, in which unwitting homeowners are turned into renters in their own homes. Such scams disproportionately affect seniors and minorities."The elderly and people of color have a bull's-eye on their back, regrettably," Thomas E. Perez, secretary of the Maryland Department of Labor, Licensing and Regulation, told the Senate panel.

For more, see Victims of foreclosure rescue scams testify (Senate panel ponders swindlers targeting elderly, minorities) (if link expires, try here).

For background information on foreclosure rescue scams, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams.

Boston Neighborhoods Taking A Beating From Vacant Foreclosures

In Boston, Massacusetts, recent columns in the Boston Herald describe the beating being taken by neighborhodds in some parts of the city due to vacant and abandoned homes that have been foreclosed on by mortgage lenders, and in some cases, being taken over by squatters and drug dealers to ply their trade. For more, see:

For related posts on the beating taken by other cities as a result of vacant and abandoned foreclosed homes, see:

  1. Cleveland Repossessions Affect More Than The Foreclosed Homeowner,
  2. Squatters In Abandoned Homes A Concern For Cleveland,
  3. "Bank Day" A Bad Day In Buffalo Housing Court For Foreclosing Banks Stuck With Blighted Homes,
  4. Towns Taking A Beating From Foreclosure Boom,
  5. Vacant Mansion Gradually Being Stripped Away By Thieves; Reflects County-Wide Problem In One California Locality; DA's Office Left Holding The Bag,
  6. CBS News "60 Minutes" On The Subprime "House Of Cards",
  7. Elite Detroit Neighborhoods Being Hammered By Foreclosures,
  8. Michigan Cops Express Crime Concerns Due To Foreclosures & Vacant Homes,
  9. Atlanta, GA; Elk Grove, CA Neighborhoods Among Many Dealing With Crime, Public Safety Concerns That Follow Foreclosures,
  10. San Jose Squatters Making Themselves At Home In Vacant Foreclosures,
  11. Abandoned Homes Raise Public Safety & Health Risks,
  12. Stories On Vacant & Abandoned Homes From Around The Country,
  13. Foreclosures Hammering Providence Neighborhoods,
  14. "Plywood Board" Gains In Popularity As "Window Treatment" In One Rhode Island Neighborhood,
  15. Detroit-Area Columnist: "Mortgage Lending Turned Into A Michigan Carnival Act",
  16. The Destructive Effect Of Forecloures On Neighborhoods,
  17. Urban "Ghost Towns." neighborhood destruction from foreclosures I

Monday, February 18, 2008

South Florida Condo Developer Facing Lawsuits For Unfinished Projects

The South Florida Business Journal reports on the troubles facing one condo Miami, Florida developer, Leviev Boymelgreen, who reportedly has two of his projects on the BankUnited "no mortgage financing" blacklist, and is facing numerous lawsuits from its customers who want their deposits back, and one class action lawsuit from real estate brokers seeking $900,000 in damages reportedly for failure to pay real estate commissions. For more, see Litigation follows developer dreams (Africa Israel's Lev Leviev takes control of Leviev Boymelgreen properties and headaches).

Go here for other posts related to the Miami condo market problem.

191 Condo Projects Make Miami-Based Bank's "No Mortgage" Blacklist

The South Florida Business Journal reported last week that it obtained an internal list maintained by the Miami-based BankUnited, that sets forth 191 condo projects, units in which it won't write mortgage loans for. The list of "non-permissible" projects was updated as of Jan. 14. An excerpt:

  • Most of the forbidden properties were in Miami and were added at the last update. It wasn't clear who at the bank wrote the list, but the author stated a reason for almost every project declared off-limits. Declining market value was the biggest culprit, followed by high investor concentration -- as much as 70 percent in one case. BankUnited also cited numerous foreclosures, delinquent homeowners association dues, structural-based litigation and the bank's existing exposure in the buildings. BankUnited spokeswoman Melissa Gracey said the list is based a similar guidelines used by Fannie Mae and Freddie Mac.
For more, including the list of condo projects BankUnited's loan officers are to avoid like the plague, see:

Go here for other posts related to the Miami condo market problem.

Home Improvement Contractor Accused Of Stiffing Homeowners Loses License; Matter Referred To Criminal Investigators For Possible Prosecution

In Florida, according to media reports:

  • The [Florida] Construction Industry Licensing Board, acting on seven complaints from the Florida Department of Business and Professional Regulation, revoked the license of TransFlorida Corp. president Geoffrey C. Gill. It also ordered him to pay $283,970 —$230,000 in fines, $2,880 for investigative costs and $51,090 in restitution to the families, said Alexis Antonacci, a department spokeswoman. She said the board requested the cases be sent to the state attorney in each county where the families live for possible criminal charges. In addition to [four complaints from] South Florida, the other complaints decided Thursday were from Vero Beach, Deltona and Orlando. TransFlorida is based in Brevard County.


  • Gill, who faces administrative hearings on other complaints, could not be reached for comment. The complaints decided Thursday accused Gill of misconduct or of being incompetent as a contractor and of abandoning projects. Under Florida law, a contractor who receives a deposit of more than 10 percent of the contract must apply for permits to do the work within 30 days and, after the permits are issued, start the work within 90 days. In one Pembroke Pines case decided Thursday, Laszlo Dan said he gave TransFlorida $10,500 for a new roof in July 2006 and no work was done. Later, a subcontractor put a lien against Dan's home because TransFlorida didn't pay for $7,350 worth of materials.


  • More than 100 consumers have filed complaints about Transflorida with the Department of Business and Professional Regulation. Twenty-four other cases are also pending against Gill with the department. Other complaints include accusations of abandoning projects.

For more, see (links no longer available online):

  • South Florida Sun Sentinel: Contractor who didn't do Broward jobs ordered to repay customers,
  • Florida Today: Home remodeler gets license yanked, told to pay up ("[T]he state attorney general has appointed an assistant statewide prosecutor to explore possible criminal charges against Gill and other officers of Transflorida."),
  • Florida Today: Our view: Pay up, pal (Fraudulent Rockledge company that ripped off homeowners deserves tough penalty).
Go here for other posts on Transflorida Corp.

For other posts on builders & contractors accused of stiffing customers, go here and go here. contractors stiff subs customers zeta

Adult Kids Scamming Aging Parents On The Increase?

In Brooklyn Center, Minnesota, The Associated Press reports:

  • As more and more baby boomers head into retirement and beyond, authorities are seeing a rise in crimes against them by their own family members that are making these years anything but golden. Hennepin County’s Adult Protection Services has been inundated with requests to investigate allegations of children swindling their aging and sometimes vulnerable parents. Reports range from spending Social Security checks to duping them into signing over their homes or changing their wills.

For more, see More adult children scam aging parents.

See also, Minneapolis Star Tribune: Growing fear: Elders swindled by family (Hundreds of new allegations pour into Hennepin County every year of seniors losing assets -- most often to loved ones).

  • "First the son took possession of his mother's house. Then he got power of attorney. He took thousands of dollars in insurance proceeds, used her ATM card and took trips to California and Florida at his mother's expense. His 84-year-old mother in Brooklyn Center, who has dementia, apparently didn't approve any of it."

For a recent story on a 46 year old New Jersey woman allegedly unlawfully using her 87-year-old mother's I.D. to finance a Mercedes Benz, obtain credit lines, and pass rubber checks in her mother's name, see Woman Indicted For Stealing Over $500,000.

Go here , here , here , and here for other posts on elder financial abuse. whale

Sunday, February 17, 2008

Patient Claims Botched Surgery Led To Home Foreclosure; Jury Awards $548K In Malpractice Suit

In Springfield, Illinois, the Springfield State Journal Register reports:
  • Toni Pratt said she’s “very pleased” with [last] week’s decision by a Sangamon County Circuit Court jury to award her $548,000 in her medical malpractice lawsuit against a former Springfield surgeon whose mistake in 2002 led to chronic, disabling pain and the loss of her right kidney. Pratt, 59, a Springfield resident and former child-care worker, said Wednesday she didn’t enjoy suing [the] former Springfield Clinic general surgeon [...]. But she said the economic desperation she faced after the botched abdominal surgery at Memorial Medical Center gave her no choice. “I lost my home and my way of supporting myself,” she said. “At least now I can get a house.”


  • Pratt said the chronic pain after the kidney removal prevented her from continuing in her job at a Building Blocks Day Care center. Her husband was unemployed and ill at the time, and Pratt said the loss of her ability to work led to the couple falling behind on mortgage payments. A bank foreclosed on their home, she said. Pratt’s husband died in 2006, and she is living in a rental property owned by a man she divorced before marrying her late husband.

Reportedly, [the doctor] is no longer part of Springfield Clinic, and now practices medicine in Alaska. For more, see City woman wins malpractice case (Jury awards $548,000 in lawsuit against former local doctor).

Cheating Wife Leaves Iraq War Vet-Husband Financially Ruined, Says Suit; Allegations Include Causing Foreclosure

In Hastings, Minnesota, The Hastings Star-Gazette reports:
  • A Hastings resident has filed a lawsuit in Johnson County, Iowa alleging that his wife and another man with whom she was having an extra marital affair, spent nearly all of his military pay, drove him into debt and damaged his credit while he was on active duty in Iraq with the Minnesota National Guard. Andrew Fredrick Scullen, 36, Hastings, married Kimberly Scullen, 26, on March 10, 2006. Andrew was deployed to Iraq five days later on March 15. After about a month, on April 24, Andrew gave Kimberly his power of attorney.

Among the allegations in the suit:

  • Kimberly [...] incurred debt in Andrew’s name by purchasing a vehicle and taking out a mortgage on a piece of real estate in Minnesota, then letting those debts fall into delinquency, which gave rise to penalties, interest and foreclosure, thus damaging Andrew’s credit, the complaint alleges.

For more, see Hastings National Guard member sues estranged wife for spending military pay.

Threats To Landlord For Renting To Minority Family Results In Guilty Pleas For Two NJ Women

The Monmouth County, New Jersey Prosecutor's Office announces:
  • On February 11, 2008, Adriane Lynn Tropiano and Angela Marie DeNigris, both 40 and of Manalapan, N.J., entered guilty pleas [...] to one count each of fourth degree Bias Intimidation. [...] The charges stemmed from an investigation into a series of threats that were made against a Manalapan N.J., couple. The investigation was conducted jointly by the Monmouth County Prosecutor's Office and the Manalapan Township Police Department. The investigation was initiated after the Manalapan couple received a series of threatening and racially derogatory telephone calls in June and July of 2007. The couple owns a second house, also located in Manalapan, which they had rented out to a minority family. The threatening telephone calls were made anonymously. However, a local supermarket's security camera captured both suspects on videotape making two of the calls from a pay telephone. Each of these two phone calls included threats of vandalism and arson against the homeowners in retaliation for their actions in renting their house to a minority family.
For more, see Monmouth County Prosecutor's press release: Two Manalapan Women Plead Guilty To Bias Intimidation.

For Monmouth County Prosecutor's press release announcing the indictment, see Two Manalapan Women Charged With Bias Intimidation And Terroristic Threats.

For story update, see Bias Intimidation Charges Resolved Against Two Manalapan Women (Tropiano was sentenced to 2 years of probation. A condition of her probation is that she perform 100 hours of community service. DeNigris was admitted into the Pre-Trial intervention Program. A condition of her acceptance into that program is that she perform 50 hours of community service).

Landlord Sued For False Imprisonment; Accused Of Locking Tenant, 3 Children In Rental Home

In Jefferson County, Texas, the Southeast Texas Record reports:
  • In a case that sounds more like a criminal matter than a civil one, the mother of three young children has filed suit against a Groves landlord for allegedly locking her and her kids inside a rental home. Grace Dollins claims Johnny Orta shut off the water and power to his rental property while she and her children were trapped inside.

For more, see Suit: Landlord locked house with mom, kids still inside.