Saturday, March 08, 2008

Kids Comandeer Vacant Foreclosed Home To Host Bakersrfield Beer Bash

In California, The Bakesrfield Californian reports:
  • Another unruly party broke out in a vacant Bakersfield home [last] Saturday night, and this time a youth was beaten unconscious and two others were badly hurt, according to neighbors who witnessed the attacks. The party [...] followed one night after a report of teenagers and young adults breaking into a foreclosed Southwest home to stage a large bash. Together, the events could suggest a troubling trend of young people using vacant houses to throw unsupervised parties.


  • Teenagers living near the house said the party was organized by a so-called party crew that scouted out the location the night before and were charging young men $3 a head to enter, and that young women got in free.


  • [One neighbor] said the partygoers did not appear to be gang members. “Gang members wouldn’t have thrown rocks,” he said. “They would have shot you.” [...] The house has sat empty for months, [the neighbor] said. A “for sale” sign, now knocked down, had been posted out front. [...] At a separate party early Saturday [...], about 50 teenagers and young adults broke into a foreclosed home and threw a raging party. Neighbors said police dispersed the partygoers, but not before some made off with the home’s high-end appliances.

For more, see Partiers trash second home (Vacant house selected by ‘party crew,’ three injured).

See also, KGET-TV Channel 17 report: Teens break into foreclosed home, steal appliances.

For an earlier post on kids using vacant foreclosures to host beer bashes, keg parties, etc., see Colorado Cops Bust Boulder Beer Bash.

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I teen parties vacant homes

Teens Using Vacant Homes To Host Weekly Beer Bashes, Pot Parties

In Loxahatchee, Florida, WPEC-TV Channel 12 reports on a group of teens going around town scouting out vacant homes to use for hosting weekly keg & pot parties. Reportedly, they circulate flyers weekly announcing the location of the next beer bash, charging entance fees at the front door. The story featured a vacant investment home owned by a local landlord that was in between tenants and listed for rent. The owner suspects that the real estate agent's lockbox placed on the front door drew the teens' attention, resulting in the home being added to their party list. When the cops crashed the party, about 100 teens took off, leaving toilets clogged with marijuana they attemped to flush away, and a general mess throughout the home.

For more (video only), see Teens Trash Vacant Home.

For a similar story of teens in Bakersfield, California using vacant homes to host parties, see Police break up party raging in foreclosed home.

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I teen parties vacant homes

Vacant Foreclosures Create Headaches For HOAs, Code Enforcement Officers, Real Estate Agents, Neighbors In One Arizona City

In Chandler, Arizona, The Arizona Republic reports:
  • A rapid increase in home foreclosures coupled with a wet winter have created a weed problem that has forced neighbors in Chandler to start cleaning up around vacant homes and real estate agents to work overtime to keep properties maintained. The struggle to keep up empty properties is creating a headache for homeowners associations, city code compliance offices and neighbors who live near the eyesores.


  • [Local Realtor Liz] Morganroth gets about three or four notices a week from HOAs or city code compliance offices, and banks often call her with properties in disrepair. That's prompted her to hire an assistant whose job is primarily property upkeep, she said.

For more, see Foreclosures leave vacant homes blighting neighborhoods.

In a related Arizona Republic story, see Homes left vacant from foreclosure concerns residents.

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Increase In Vacant Homes A Boon For Squatters, Scam Artists, Copper Thieves

In Southern California, the Whittier Daily News reports:

  • With more than 80,000 foreclosures in California during the last quarter of 2007 setting a state record - up 115 percent over the previous year - property owners have struggled to keep squatters and thieves off their vacant properties. [Realtor Steve] Smallson said after several break-ins, his company, White House Properties, now checks more frequently on the more than 50 foreclosure properties on its to-sell list.

  • Thousands of dollars worth of copper plumbing and air-conditioning units were stolen at a three-bedroom Van Nuys house just as a buyer was going through escrow, he said. "I guess these thieves case these places, see the signs, realize that the place is vacant and jump on the opportunity," he said. Last month, at the same three-bedroom house, Smallson found a man inside enjoying three Mickey's Big Mouth malt liquor beers. The 20-something man told Smallson he was "looking at the property." "I don't know how much this happens, but it's just terrible," Smallson said.

  • Another problem that's picked up with the glut of foreclosed properties is real estate scams in which thieves "rent out" homes they don't own, often taking money from several people for the same property, said Detective Erin Camphouse, of the LAPD's Real Estate Fraud Unit. "They can take a whole lot of money really fast without having to get themselves noticed," she said of the thieves who often post on or other Web sites and in community newspapers. Others will break locks at a foreclosed home and install new ones, then rent the properties to unsuspecting tenants. Sometimes those duped pay months of rent before they discover they've been ripped off.

For more, see Squatters, scams plague foreclosures.

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

Go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam zebra squatter foreclosure zebra

Vacant Homes Keeping Cops, Copper Thieves Busy In Brockton

In Brockton, Massachusetts, Wicked Local Brockton reports:
  • A suspected copper thief caught hiding in a vacant house wound up getting bagged by police after the officers found a small cache of the metal in his duffle bag. The suspect was arrested Monday night after officers [...] went to 25 West Ashland St. to investigate a report of someone inside a foreclosed house.


  • This wasn’t the first time police were called to the house, [chief of detectives, Lt. John] Crowley said. The officers went there Feb. 19 after neighbors spotted someone at the house, but the officers didn’t go inside because they were sent to another, more pressing call, Crowley said. The arrest [last] week marked the latest case involving the theft of copper pipes from a vacant house, Crowley said. “It hasn’t slowed down at all,” he said. “There are so many houses that are unattended now, it is easy prey for the thieves.”

For more, see Brockton copper theft suspect bagged by loot in the bag.

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

Copper Thieves Add Oil Burners, Hot Water Heaters To Their "Must Have" List In One Massacusetts Region

In Haverhill, Massachusetts, The Eagle Tribune reports:
  • The region has been hit by a wave of precious metal thefts as criminals attempt to cash in on a sellers market for the material at scrap yards. Recently, thieves have targeted foreclosed homes with valuable copper plumbing and other metals inside.


  • In Lawrence, three men were arrested Jan. 31 as they attempted to flee from a vacant three-decker in a pickup truck laden with two oil burners, three hot water heaters and assorted copper pipes, police said. In a separate incident Jan. 29, copper pipes were reported stolen during a break into a vacant home at [...] in Lawrence, and earlier in January, another 10 copper pipes were stolen from a vacant home [...]. Vacant property break-ins most often occur as thieves scavenge for copper and other valuables that get left behind. In Haverhill, a real estate agent discovered a break and theft of copper pipes at a vacant Hillside Avenue home in foreclosure. The thieves punched holes in the walls on all three floors to get at the pipes.

For more, see Police: Would-be copper thieves arrested in Haverhill.

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

San Diego-Area Homeowner Spearheads Effort To Force Drug Dealers From Vacant Foreclosed Home

In San Diego, California, KGTV Channel 10 reports:

  • Neighbors said unwelcome guests once lived in two local homes in Sherman Heights that are now boarded up. "It was a total nightmare," said Janice Scott Wiley. Wiley lives next door and said the foreclosed homes attracted drugs, prostitution and crime. "They would sometimes sit in the back and package their drugs, and I could stand on my porch and I could look at them with the guns," said Wiley. [...] Several days of worry and anxiety went by before Wiley decided to take matters into her own hands.


  • With the help of San Diego police and Councilman Ben Hueso's office, the entrances to these houses have been blocked off. It is a sigh of relief for neighbors who were too scared to come forward. "She saved our lives because she got the drug addicts out of there. Nobody would do what she does because nobody wants to get involved and we're proud of her," said neighbor Shirley Carpenter. Hueso applauded Wiley's efforts. He said vacant homes are prone to crime. "There's nobody there providing any security. Anyone there providing any oversight, these are sources where a crime happens or a fire breaks out," said Hueso.
For more, see Woman Takes Action To Clean Up Neighborhood.

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Frozen Bursted Water Pipes A Problem In Some Vacant Homes; Melting Ice Inside Home Expected To Create Mold Problems, Says City Inspector

In Omaha, Nebraska, WOWT-TV Channel 6 reports:
  • Home foreclosures that turn into neighborhood eyesores when unpaid utilities lead to broken water pipes are happening more often. Channel 6 News first reported about one such house in Bellevue. The problem has spread to Omaha. [...] "We'll send notice to the bank and give them a short time for them to correct this,” says Omaha Chief Inspector Kevin Denker, who has photos from another abandoned house in northeast Omaha with the heat turned off, but not the water. “When it warms up and this ice melts it's going to lead to more water damage on the inside, mold, mildew and then other issues."


  • There’s ice formed around the shut-off electrical box [in one vacant home]. MUD says the homeowner had the water turned off in January, but someone turned it back on, until neighbors complained of a flood pouring out of the windows. [...] The mortgage company will be notified to start cleanup soon because health problems aren't frozen in time. Mold will grow fast after the spring thaw.

For more, see More Pipes Bursting In Empty Houses (Unless reported by neighbors, mess goes unchecked).

Go here for more on freezing pipes in vacant homes. frozenpipetheta

One South Florida Street Hit Hard By Boarded Up Foreclosures

In South Florida, WFOR-TV Channel 4 reports on the vacant, boarded up homes on Ramona Street in the city of Miramar:
  • Foreclosures have hit this street hard. In the last year, 9 of the 37 homes on Ramona are in or near foreclosure. Homes have been left in disrepair. Windows are boarded up and the whole neighborhood suffers.

For more, see A Miramar Street Lined With Homes In Foreclosure (read story) (watch video).

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Town Ordinance Prohibits Dying Due To Overcrowded Local Cemetery; Violators Threatened With "Severe Punishment"

In Bordeaux, France, Reuters News Service reports:
  • The mayor of a village in southwest France has threatened residents with severe punishment if they die, because there is no room left in the overcrowded cemetery to bury them. In an ordinance posted in the council offices, Mayor Gerard Lalanne told the 260 residents of the village of Sarpourenx that "all persons not having a plot in the cemetery and wishing to be buried in Sarpourenx are forbidden from dying in the parish." It added: "Offenders will be severely punished."

For more, see Cemetery full, mayor tells locals not to die.

Friday, March 07, 2008

Tax Law Change To Help Homeowners In Foreclosure Sale, "Short Sale" Situations

A column in the Lawrence Journal World & News comments:
  • New rules published by the Internal Revenue Service could save huge amounts of money for millions of financially troubled homeowners, especially those who sell for less than their bank is owed. [...] You must fill out IRS Form 982, “Reduction of Tax Attributes Due to Discharge of Indebtedness,” and include it as part of your upcoming return. Despite its formidable title, the form can actually be completed in just a few minutes. The document also must be accompanied by a 1099-C form, which the bank provides to verify the amount of debt that it forgave.

For more, see New IRS rules could help homeowners.

See also IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

Go here for other posts on dodging the income tax on a short sale / foreclosure sale (including handy links to IRS forms and publications related to this subject). short sale income tax

Illinois AG Slaps Subpoenas On Countrywide, Wells Fargo In Probe Into Race Bias In Lending Practices

The Wall Street Journal reports:

  • Illinois's attorney general issued subpoenas yesterday to units of Countrywide Financial Corp. and Wells Fargo & Co., for an investigation into whether lenders have improperly steered minority borrowers into high-cost or inappropriate loans. The subpoena joins a long list of investigations by state and federal officials examining the business practices of the nation's mortgage lenders. Critics say such companies played a major role in the housing and mortgage crisis, which has led to record levels of home foreclosures.


  • In Illinois, Attorney General Lisa Madigan is trying to determine whether Countrywide, the nation's largest mortgage lender, and Wells Fargo, the second-largest lender, put black and Latino borrowers in subprime or other high-cost loans when they could have qualified for a lower-cost loan.

  • If the subpoenas find evidence of discriminatory lending practices, Ms. Madigan may push lenders to more aggressively modify loans to minority borrowers in financial distress so they can stay in their homes, or seek other monetary remedies in addition to changes in how loans are made, said Deborah Hagan, chief of the Illinois Attorney General's Consumer Protection Division. The investigation might be extended to other lenders, she added.

For more, see Illinois Probes Mortgage Firms (State Asks Whether Minority Borrowers Were Bias Victims) (subscription required; if no subscription, try here, then click link for story, then "refresh" browser if needed).

For Illinois AG News Release, see African American and Latino Homeowners May Have Been Steered to High-Cost Loans.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

FDLE Investigating Investment Program Involving 303 Homes; Foreclosure Auctions Started On 65%; Lenders On The Hook For Million$

In Central Florida, The Tampa Tribune reports:
  • Hundreds of peculiar home sales and foreclosures clustered in low-income neighborhoods in south St. Petersburg have attracted the attention of the Florida Department of Law Enforcement. The deals involved unusual mortgages uncovered last summer in a Tampa Tribune investigative report. The sales are tied to a real estate investment program run by a local businessman. Several buyers complained to police that they bought the properties at inflated values.


  • The St. Petersburg case involves 303 property transactions. A group of 65 real estate investors went through a no-money-down investment program to purchase the homes over a five-year period. [...] When the Tribune's story ran in July, 160 of the homes were in foreclosure. Since then, 38 more have joined them, bringing the foreclosure total to 65 percent of the sales. Lenders are left on the hook for millions of dollars in failed loans.


  • The investment program was run by four companies owned by Tampa businessman Joseph F. Daniele.

For more, see State Joins Inquiry Of Unusual Loans.

In a related story, see Appraiser Evaluates Whether 303 Homes Are Overpriced.

Virginia High Court Revives $20M "Flood" Suit By 700 Homeowners Against City Of Newport News

In Newport News, Virginia, WVEC-TV Channel 13 reports:
  • Hundreds of Denbigh area residents will have their day in court to discuss why they think massive flooding in their area triggered by Hurricane Floyd could have been prevented by a better drainage system. While a local Circuit Court denied the case a day in court, the Virginia Supreme Court overturned the ruling. [...] Seven-hundred residents in three neighborhoods [...] are part of a $20 million lawsuit against the City of Newport News.


  • The suit claims the City's poor drainage system was responsible for flooding their homes, apartments, and personal property after Hurricane Floyd in 1999. [...] “Most of [the homeowners] couldn't afford to rebuild,” [one flood victim] said. “Some of them had to go into foreclosure a few people had to file bankruptcy I understand. It really put a big hardship on a lot of people - it ruined lives."

For more, see $20 million lawsuit against Newport News returning to court.

Developer Defaults & Foreclosures Hammering Bakersfield; Leaving Taxes Unpaid, Subs Stiffed

In California, The Bakersfield Californian reports:

  • Through their living room window in a new Wasco subdivision, the Villalobos family can see tumbleweeds almost tall enough to ring a doorbell clog the entryway of an unfinished home across the street. “It’s sad that we got stuck here,” said Carlen Villalobos, 25, of the house she and her husband bought last fall in Hidden Grove, a tract off Palm Avenue north of Highway 46. They live in one of eight homes completed before Sacramento developer Reynen & Bardis Communities Inc. halted construction here late last year, leaving idle partially constructed houses on many of the cul-de-sac’s dirt lots.


  • Reynen & Bardis is among a dozen or so developers who have defaulted on Kern projects carrying loans of $2 million or more, according to an ongoing Californian survey. The largest so far is SunCal Cos.’ default on $74 million borrowed from Lennar Corp. against 515 acres in Shafter; the property foreclosed Wednesday. It’s the first time metropolitan Bakersfield has seen such a spike in developer defaults and foreclosures, real estate professionals say, and it’s unclear what the final impact will be. In the meantime, the resulting pinch goes beyond banks. Some companies aren’t paying contractors, liens indicate, and are letting property taxes slide.
For more, see LEFT HANGING (Sacramento developer's projects sit unfinished as it deals with financial trouble).

Expected Rise In Foreclosure-Related Lawsuits Likely To Spawn More Threats Against Federal Judges, Says U.S Marshal's Service Official

USA Today reports:
  • Threats against federal judges and prosecutors are on pace to rise for the fifth consecutive year, according to statistics from the U.S. Marshals Service. In response, federal officials are expanding their surveillance efforts to include suspects who have threatened state and local authorities and who represent a possible danger to federal court officials.


  • "Historically, there was an expectation that you didn't mess with judges, prosecutors, jurors and police officers," says Michael Prout, the Marshals Service's deputy assistant director for judicial operations. "That tradition has been chipped away." [...] An expected rise in legal disputes related to the home foreclosure crisis likely will spawn more threats against judges and other court officials, he says.

For more, see Threats up against federal judges, lawyers.

Thursday, March 06, 2008

Countrywide, Law Firms Show Disregard For Professional, Ethical Obligations Of Legal Profession, Judicial System, Says Judge; Declines Sanctions

The New York Times reports:
  • The Countrywide Financial Corporation, the largest American mortgage lender, did not show “bad faith” in the handling of a Texas homeowner’s mortgage and will not be sanctioned merely for unprofessional and unethical conduct, a federal judge ruled on Wednesday. Countrywide and two law firms it used showed “a disregard for the professional and ethical obligations of the legal profession and judicial system,” Judge Jeff Bohm of Federal District Court said in ruling on a request by a Justice Department official to consider punishing the company for its conduct. But to impose sanctions, Judge Bohm wrote, he would have had to find “clear and convincing evidence of conduct that is in bad faith, vexatious, wanton or undertaken for oppressive reasons.”


  • In Texas, homesteads are sacrosanct,” the judge said in a ruling that traced how Countrywide’s corporate culture led to mistakes including a failure to properly record some payments made by [a Texas homeowner]. [...] The judge also found fault with the law firms, saying their flat-fee rate had led to a “corrosive ‘assembly line’ culture of practicing law.”

For more, see Judge Lectures Countrywide but Decides Not to Punish It in Texas Mortgage Case.

See also, Reuters: US judge won't punish Countrywide for botched case.

To view the court ruling, in which the presiding bankruptcy judge carefully rips apart Countrywide's attorneys (probably "must reading" for anyone who believes they were screwed over by Countrywide or any other loan servicer), see: In re: William Allen Parsley:

Go here, Go here and Go here for more on recent Countrywide problems with consumers. ForeclosureMillAttorneysAlpha SloppyForeclosuresAlpha

"Assembly Line" Lawyering, Culture Condoning Lying To The Court In Foreclosure Cases Has Bankruptcy Judge Wondering

The Wall Street Journal Law Blog reports:

  • Does flat-fee pricing foster assembly-line lawyering? That’s what U.S. bankruptcy judge Jeff Bohm suggested in a decision, entered yesterday, in a consumer bankruptcy case involving Countrywide and a Texas homeowner. While Judge Bohm declined to enter sanctions against Countrywide and its lawyers from two firms — Barrett Burke and McCalla Raymer — he wrote: “This fixed-fee business model appears to have been an overwhelming financial success. . . . Meanwhile, the profession has suffered from the ever decreasing standards that firms like Barrett Burke and McCalla Raymer have heretofore promoted. This demise must stop.”

  • The judge called problems at the firms’ culture “disconcerting” and described what he called the firms lack of care for accuracy and failure to communicate with clients. [W]hat kind of culture condones its lawyers lying to the court and then retreating to the office hoping that the Court will forget about the whole matter.” While “perfection” he said is “too much to demand, preparedness and candor are not.”

For more, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

For an article examining mortgage companies frequent non-compliance with law in consumer bankruptcy cases, see Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter University of Iowa - College of Law.

Go here, Go here and Go here for more on recent Countrywide problems with consumers. ForeclosureMillAttorneysAlpha SloppyForeclosuresAlpha

Minnesota Lawmakers To Consider Imposing "Deferment" On Subprime Lenders Seeking Foreclosure

In Minnesota, the Minneapolis Star Tribune reports:
  • Minnesota homeowners facing the loss of their houses could stop foreclosures and make reduced payments for up to one year under a bill that will get its first legislative hearing today.


  • [Sen. Ellen] Anderson, chief sponsor of the Minnesota Subprime Foreclosure Deferment Act in the Senate, said, "It's going to offer breathing room." And, she said, "it will offer an alternative to lenders who do not want to be in the real estate business." The measure (HF3612, SF3396) would allow homeowners with subprime loans to pay roughly 65 percent of their monthly mortgage payments, deferring the remainder for one year. Homeowners would have to live on their properties during that year, and even one missed or late payment could restart foreclosures.
For more, see A freeze to keep lenders at bay? (Minnesota homeowners facing the loss of their houses could stop foreclosures and make reduced payments for up to one year under a bill that will get its first legislative hearing today).

Nebraska Lawmakers Pass Foreclosure Rescue Statute; Bill Awaits Governor's Signature

In Lincoln, Nebraska, the LaVista Sun reports:
  • A legislative bill approved Tuesday would give Nebraskans protections against companies offering to rescue them from home foreclosures. Legislative Bill 123, which passed 47-0, would prevent foreclosure consultants and equity purchasers from pressuring distressed homeowners to sign over their ownership interest. [...] The measure addresses foreclosure consultants who charge a fee to advise borrowers or to act as intermediaries with lenders, and equity purchasers, who purchase home equity to help homeowners avoid foreclosure. Violations of the bill could be prosecuted as felonies.

The bill has been delivered to Nebraska Governor Dave Heineman's office for his approval. For more, see Legislators OK foreclosure bill.

Go here to view the newly-passed statute, the Nebraska Foreclosure Protection Act.

Contested Foreclosure Actions By Financially Strapped Homeowners On The Rise

The Financial Times reports:

  • Borrowers whose properties are being foreclosed on are contesting those foreclosures in rising numbers, attorneys representing both mortgage servicers and homeowners told Debtwire. The trend could impact the performance of subprime-backed bonds, as foreclosures will take longer and be more costly, which could put downward pressure on recoveries. [...] As foreclosures in states such as Ohio, Florida and Nevada flood the courts, borrowers and their attorneys have begun finding ways to challenge foreclosures, and judges in several states have been sympathetic, said Alan Wolf, a partner with the Wolf Firm in Irvine, California, in comments made at a panel 27 February during the Mortgage Bankers Association National Mortgage Servicing Conference in New Orleans.


  • Challenges by borrowers are taking a variety of forms, said Edward Hyne, assistant vice president in the legal department for First Horizon Home Loans in Irving, Texas, speaking at the same 27 February panel. Some borrowers are making the case that forbearance agreements are required by law, and others that various notices servicers are required to send were not received, for example. But one defense that seems to be garnering a lot of attention from judges is the issue of standing, or whether plaintiffs may rightfully bring the foreclosure complaints to begin with, Hyne said.

  • In order for trustees acting on behalf of investors in mortgage bonds – the ultimate owners of securitized loans - to have standing to file foreclosure complaints, they must demonstrate that the trust for the securitization has ownership of the loan backed by the property being foreclosed on. But with thousands of loans that have in many cases been sold and re-sold before ultimately landing in their securitizations, the paperwork showing ownership – the assignment of the loans – often has not kept up.


  • Defense attorneys are organizing seminars to teach other attorneys about strategies that can be used in contesting foreclosures.

For more, see Contested foreclosures rise, could increase RMBS losses.

For related posts on contesting foreclosures, see:

Vulture Funds Looking To Buy, Work Out Delinquent Home Loans

Bloomberg news service reports how so-called vulture funds are purchasing distressed residential mortgages for as little as 50 cents on the dollar, servicing the loans themselves, and negotiating loan workout arrangements with financially strapped homeowners in an effort to turn profits from the subprime mess.
  • Once borrowers have re-established themselves, the loans can be resold in the secondary market at a 15-20 percent gain. "If you get the servicing right, you can make money from these mortgages,'' [vulture fund investor Ralph Dellacamera] says during an interview in his 33rd-floor offices in midtown Manhattan. "We win if the homeowner gets to stay in their home.''

For more, see Vulture Fund Deals With Delinquent Homeowners Lost by Subprime.

Phoenix-Area "Rent To Own" Tenants End Up Empty Handed

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • Moving day can be hectic and a lot of work. But it can also be exciting. Owning a home was the American dream for JoAnne McCoy. Joanne signed a lease-to-buy agreement. She says she was told half her monthly rent would go towards buying the house. Leonard Boyer heard the same thing. He says he paid out in total about $33,000 towards purchase, but says the house he was living in was foreclosed on. Joanne paid out in total about $21,000 and says her owner decided not to sell. They signed contracts with Home America Property Management. A company owned by Mark Bosworth.


  • This foreclosure complaint isn’t the only one against Home America. Sam Wercinski is the Commissioner for the Department of Real Estate. “The number of complaints we have received are significant.” His office found 22 open investigations involving Mark Bosworth's real estate businesses, 18 of them are against Home America.

For more, see Valley real estate company investigated after tenant complaints.

For more on problems with "Rent To Own" and Lease / Option real estate deals, go here and go here. rent to own lease purchase option scams yellowstone

Maine Lawmakers Consider Foreclosure Rescue Legislation

In Augusta, Maine, the Kennebec Journal Morning Sentinel reports on the state legislature's current consideration of proposed rules regulating foreclosure rescue operators. An excerpt:
  • It's called equity stripping, and Rep. Charles Priest, D-Brunswick, wants to put regulations in place to better protect consumers. His bill would require foreclosure purchase companies to be licensed by the state. It also calls for a written contract, and requires the company to verify that the consumer can repay the debt. Homeowners who enter a contract would be required to get financial counseling, and those who do lose their homes would be entitled to at least 82 percent of the fair market value of the home. Priest said while there are reputable companies that do this kind of work, he wants to protect Mainers from those that take advantage of people. [...] Rather than ban the practice, Priest said he wants to regulate the companies.
For more, see Lawmakers targeting predatory 'equity stripping'.

Facing Several Lawsuits & Questions On Immigration Status, Chicago Condo Developer Takes A Hike

In Illinois, the Chicago Sun-Times reports:
  • Andrius Augunas used to lead the high life of a Chicago condominium builder. He drove a Bentley, draped expensive clothes over his athletic frame and bought a $4.2 million house in Winnetka. He talked boldly of remaking the Near South Side, with each plan more ambitious than the last. But his former business partners wonder if they'll ever see him again. Augunas, president of Rokas International Inc., owes them money. They say he has essentially abandoned two Near South Side projects, both embroiled in lawsuits and one of which is under construction. Plaintiffs in those cases said Augunas has returned to his native Lithuania. Opinion is divided as to whether he's fleeing his business failures or had a legitimate immigration issue.


  • Augunas [...] planned a 205-unit complex at 2100 S. Indiana, a mix of lofts and a high-rise. But his lender in that deal, First DuPage Bank, has sued to foreclose on the site, accusing Augunas and his companies of owing more than $12.5 million.

For more, see Builder can't be found (Facing lawsuits on Near S. Side, he may have returned to Lithuania).

See also, Crain's Chicago Business: Foreclosure suit filed on Augunas condo project.

Go here for other posts on Andrius Augunas.

Vacant Foreclosures Leaving Some Code Enforcement Officials In A Bind; $5-10K Fines Getting Some Lenders' Attention

In Redding, California, the Redding Record Searchlight reports:

  • The pool at this East Bonnyview Road home has literally popped out of the ground -- almost as if an earthquake hit -- evidence of a growing blight in Redding: foreclosed properties that have been abandoned. "The problem is finding somebody who is legally responsible once the home goes into the foreclosure action," Redding Code Enforcement Supervisor Debra Wright said.


  • Since January, Wright's office has posted about 20 compliance orders on foreclosed homes in Redding. That's the most in Wright's 20 years - four as supervisor - with the city. While the number of vacant and abandoned homes is up in Redding, it's dwarfed by what's happening in the rest of the state. [...] But Doug Leeper, code enforcement manager in the pricey San Diego suburb of Chula Vista, said communities like Redding need to move fast before the problem gets much worse.


  • Fed up with lenders seizing homes and then leaving them to rot, Chula Vista in July adopted a program that forces lenders to maintain homes they've taken back and to register the abandoned houses with the city. Leeper said in the first few months of the program, the city didn't get much cooperation from lenders. When the $5,000 and $10,000 fines started showing up on lenders' desks, however, Leeper's phone was ringing. [...] "Last week I had one gentleman come in and register 38 properties, [said Leeper]."

For more, see Abandoned homes a blight risk (Homes left vacant by foreclosure leave officials and neighborhoods in a bind).

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Wednesday, March 05, 2008

City Of Buffalo Suit Over Vacant Abandoned Foreclosures The First In What May Be A Wave Of Legal Actions Against Lenders

In New York, The Buffalo News reports:
  • The city is suing 28 national lenders and servicers — including two local banks — to recoup between $1 million and $2 million it estimates it will have to spend on securing and demolishing 58 vacant properties. In doing so, it’s trying to address the problem caused when no one takes care of a house. The lawsuit seeks to hold the lenders responsible, and accuses them of allowing the houses to “become so dilapidated, deteriorated, abandoned and/or decayed so as to present a danger to the health, safety and welfare of the public.”

  • The lawsuit says the servicers “have failed to take appropriate action to protect or dispose of these properties,” and it says the conditions of the houses violate both city and state laws. And it asserts that the city now “has a duty to abate these nuisances by demolishing the abandoned and blighted structures.”

  • This is the first lawsuit that I would expect in a series. It’s our first strike in a wave that would obviously focus on more,” said Alisa A. Lukasiewicz, Buffalo’s corporation counsel. “This is our attempt to have banks take responsibility without walking away from properties.” The lawsuit covers a small fraction of the total number of vacant properties citywide, but sought to include a broad swath of the mortgage servicing industry among the defendants. “We considered these to be some of the most severe properties,” Lukasiewicz said. “To the extent that there are more properties, we will definitely be naming those as defendants in further actions.”

For more, see Buffalo sues lenders over abandoned houses in foreclosure (City wants them to pay for demolition when owners are forced out after foreclosure) (if link expires, try here).

To view the lawsuit, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; lawsuit also available here, courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP). If there's a problem with this link, email me at and I'll email it to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Go here for other posts on the City of Buffalo lawsuit against lenders abandoning foreclosed properties.

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Countrywide Postpones 103 Foreclosure Sales In Response To Suit Accusing It Of Foreclosing On Homeowners Current On House Payments

The Wall Street Journal reports:
  • Countrywide Financial Corp. voluntarily postponed 103 foreclosure sales scheduled for yesterday in Texas in connection with a private lawsuit that accuses it of trying to foreclose on homeowners who emerged from bankruptcy and were current on their mortgages. That allegation, which the company denies, is also one of the issues raised by a federal bankruptcy watchdog in suits it filed against the company last week. [...] The U.S. Trustee Program last week sued the company in three states for "bad-faith conduct" and "abuse" of the courts. In Florida, the U.S. trustee alleged that Countrywide tried to foreclose on a home after the borrowers had eliminated the company's mortgage through a bankruptcy proceeding four years earlier.

For more, see Countrywide Delays Foreclosure Sales (subscription may be required; if no subscription, try here, then click link for story, then "refresh" browser if needed).

See also, Countrywide Is Sued Again by U.S. Overseer.

  • [U.S. Trustee Donald] Walton said that after a judge ruled Countrywide did not have a valid lien, it nonetheless pursued claims for nearly four years, including an attempt to foreclose, causing unnecessary delay and expense. Countrywide voluntarily dismissed its foreclosure complaint in October, the trustee said. “Countrywide’s failure to ensure the accuracy of its claims and pleadings has resulted in an abuse of the bankruptcy process and has prejudiced and will continue to prejudice, parties in interest in the bankruptcy cases in which Countrywide participates,” Mr. Walton said.

For the Florida U.S. Trustee's lawsuit against Countrywide, see Walton v. Countrywide Home Loans Inc.

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

Alleged Strong-Arming Massachusetts Mortgage Lender The Target Of Developers' Lawsuits

Stories of overreaching money lenders looking to squeeze property owners for high interest and fees, if not their real estate, are not limited to foreclosure rescue operators scamming unsophisticated homeowners, as a recent Massachusetts story in the Worcester Telegram & Gazette News reports:
  • At least six real estate developers who borrowed money from a Marlboro-based investment firm with ties to prominent Worcester businessman David G. “Duddie” Massad now claim they were later strong-armed by the company under threat of financial ruin to make unusual payments, do costly favors or sign over an ownership interest in property.

  • Their stories of LBM Financial LLC allegedly driving them to the brink of foreclosure or bankruptcy with exorbitant interest rates — and then taking advantage of their financial vulnerability — mirror racketeering complaints filed against LBM, Mr. Massad and others in a series of civil suits recently combined into one action in U.S. District Court.


  • In a general scenario alleged by six developers identified by the Telegram & Gazette, [developer Bernard J.] Laverty said he first borrowed from the Marlboro firm about five years ago based in part on promises that, once he got his projects started, it would help him get a traditional bank loan at a far lower interest rate than the 16 percent charged by LBM. But the promised bank loan never came, he said, and the company stymied his efforts to refinance his debt. Mr. Laverty said he eventually fell behind on his payments to LBM, triggering a default interest rate as well as a series of penalties and fees that drove up his effective interest rate to a budget-busting 32 percent. Then came the demands, he said. “It was, ‘If you don’t do this, we’re going to do that.’ Either I agree to do whatever they say or they foreclose on all my stuff, and I’m out of business,” Mr. Laverty said. “It was a nightmare.”


  • Worcester developers Nicholas J. Fiorillo and Robert Depietri Jr. were the first to lodge racketeering allegations against LBM, Mr. Massad, Mr. [Marcello M.] Mallegni and others in court. A federal judge last month combined their lawsuits into one megasuit seeking $118 million in damages. Mr. Fiorillo previously sued, making similar allegations, in Worcester Superior Court, but eventually lost that case.
For more, see Strong-arm tactics are alleged (LBM Financial target of complaints).

For story update, see Fourth racketeering lawsuit filed (Massad, Mallegni accused by Marshfield man).

Go here for other posts related to this story.

Editor's Note:

In "The law is a ass" department, Massachusetts has an interesting usury statute (M.G.L. Chapter 271: Section 49. Criminal usury) that, while it prohibits charging usurious rates on loans, it apparently also provides that it's okay to do so provided you give the Massachusetts Attorney General advanced notice that you're going to do it (M.G.L Ch. 271, Sec. 49(d)). As it relates to this story, it appears that LBM Financial did just that. Go here to read the LBM Financial letter telling the Massachusetts AG it will be charging usurious rates.

("The law is a ass" - quote courtesy of Mr. Bumble, from CHARLES DICKENS, Oliver Twist, chapter 51, p. 489 (1970). First published serially 1837–1839.)

North Jersey Foreclosure Rescue Operator Back In The News

In Northern New Jersey, The Record reports:
  • Kevin and Jean Petterson of Rutherford fell behind on their mortgage payments in mid-2005 after Kevin, a truck driver, broke his ankle and was unable to work for several months. In 2006, facing foreclosure, the couple got a letter from a Scotch Plains company, Elite Financial Solutions, that offered to help "stop the foreclosure process!" It promised "No gimmicks or tricks." But Kevin Petterson, 41, says the company left his family worse off than before -- in deeper debt and in danger of losing their small Cape Cod. "I'm going to have to go Chapter 7 [bankruptcy],'' Petterson said.


  • In a recent interview, Steve French, president and CEO of Elite Financial Solutions, denied any wrongdoing and said Elite Financial should not be lumped in with unscrupulous companies that strip away clients' home equity. [...] Consumer advocates and bankruptcy lawyers say the number of companies offering questionable services to distressed homeowners is on the rise in New Jersey. Phyllis Salowe-Kaye, head of New Jersey Citizen Action, said the group has been receiving more complaints about them since last fall.

For more, see Betting the house (if link expired, try here).

WABC-TV Channel 7's investigative reporter Sarah Wallace recently did an investigative report on Scotch Plains, New Jersey-based foreclosure rescue operator Elite Services and its owner, Steve French. For more on this report, 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, or go here and enter A281 in "Bill Search" for bill history.

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

"Fractional Interest" Foreclosure Rescue Operator Denied Bail In $50M Bankruptcy Fraud Case

In Topeka, Kansas, The Topeka Capital Journal reports:
  • The defendant in a $50 million bankruptcy fraud case is a flight risk and won’t be allowed out on bond, a federal judge ruled Monday. “When Isaac Yass was arrested last week in Los Angeles, agents found $10,000 in cash on a counter in his apartment and four packed travel bags near the front door,” said U.S. Attorney Eric Melgren. Yass, 41, was charged in an indictment unsealed last week in Topeka with six counts of mail fraud and six counts of aggravated identity theft.

  • The indictment accused him of running a scam in which homeowners who were behind on their mortgage payments paid him to hold off foreclosure by filing fraudulent bankruptcy petitions. The indictment says Yass filed petitions on behalf of fictitious people who claimed to have a fractional interest in the properties in foreclosure. The result was an automatic stay in the foreclosures, halting any further actions by creditors against the properties.

For more, see Bankruptcy fraud defendant ruled a flight risk.

Go here for other posts on foreclosure rescue scams utilizing fractional interests and bogus bankruptcy filings.

Sacramento Real Estate Fraud Unit Funding Declines As Complaints Increase

In California, The Sacramento Bee reports:
  • The funding for real estate fraud investigations and prosecutions has dwindled to the lowest level since 2001 in Sacramento County, even as the two detectives who investigate the crimes say they're fielding a mounting number of complaints. In real estate fraud units, investigators' and prosecutors' salaries are funded with $2 fees paid each time certain deeds are filed in the county recorder's office. [...] The timing could hardly be worse: Eroding equity has laid bare scams that went unreported in the days of big profits and fast money. Meanwhile, new hucksters are preying on those facing hard times, detectives say.

Among some of the scams mentioned in the story:

  1. foreclosure consultants offering homeowners lease-back or buyback deals,
  2. squatters moving into unoccupied bank-owned homes, changing locks and hooking up the power - some just live rent-free hoping to squeeze a few bucks from the banks to leave without a lengthy eviction,
  3. scammers advertising foreclosed homes as "for rent," collecting a deposit from a prospective renter, and then making themselves scarce,
  4. scammers taking title to homes, filing for bankruptcy protection, delaying the foreclosure process for months or years and renting out the houses in the meantime, pocketing the cash while stiffing the mortgage holder out of its monthly payments.

For more, see Sacramento realty fraud unit's funds decline; complaints rise.

California Man Used Forged Lien Satisfactions To Clear Title To Property, Says DA

In California, the Ventura County Star reports:
  • A Simi Valley resident is on trial in Ventura County Superior Court for allegedly filing and recording five false documents, and on two counts of forgery.


  • Prosecutors allege [Aubulghasem] Ahmadpour was facing foreclosure proceedings on his Simi Valley residence, after he had defaulted on one of the loans used to finance the residence. To clear the title so he could refinance the house, [...] Ahmadpour allegedly recorded with the county Recorder's Office a false Reconveyance of Trust Deed [ie. satisfaction of mortgage], which contained the forged signatures of two people.

  • In another incident, a victim was awarded judgment in Los Angeles County against Ahmadpour for $151,220. The award involved a business dispute, prosecutors said. Again, in order to clear the title to the house, Ahmadpour recorded false documents with the Recorder's Office [...], each containing forged signatures, according to prosecutors.

  • In another business dispute, a third victim was awarded $113,900 against Ahmadpour at the conclusion of a civil trial. Another lien was filed against Ahmadpour's residence.
    Prosecutors said Ahmadpour recorded two false Satisfaction of Judgment documents [...]. According to prosecutors, the documents bore the forged signature of the victim, and were created for the purpose of clearing the title on the property.

For the story, see Multiple counts of fraud alleged in Simi man's trial.

Foe story update, see Man convicted of fraud is in custody.

Unsuitable Mortgage Leaves Financially Strapped Staten Island Senior Back In Foreclosure

In New York City, the Staten Island Advance reports:
  • Behind the big lenders headlining the subprime crisis are smaller fraudulent players, who experts say played a role in the foreclosure crisis now gripping Staten Island and the nation. A new state law, which requires all people who originate mortgages in New York to undergo criminal background checks and fingerprinting, could help cut down on criminal behavior. It's a measure Islander Elizabeth Giammarino wishes had been in place when she dealt with two mortgage makers back in 2006.

  • The same two men were recently arrested in Florida on drug charges. And one, Annadale resident Joseph Crapanzano, already had a criminal record for a real estate scam even before he promised to find a loan to help Mrs. Giammarino's mother stop foreclosure on her Great Kills home. But 75-year-old Rose Marie Giammarino only sunk deeper into debt and back into default after Crapanzano and Mark LaMassa got her an "interest only" $350,000 mortgage in 2006. The loan doubled her monthly payments and was due to be paid in full after one year -- an impossible proposition, attorneys at the Homeowner Defense Project at Staten Island Legal Services argue in court papers.


  • Elizabeth Giammarino said she learned only on closing day that the money was coming from a private individual, not a bank. She balked at the high interest rate and monthly payments, but said she was afraid to back out because foreclosure of her mother's home was imminent. "I was at the point where I thought I had no choice," she said.
For more, see Good Faith, Bad Loans, More Misery (Woman, 75, seeking to keep her home falls victim to a system with few restraints).

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

Tuesday, March 04, 2008

NY AG, Fannie, Freddie, Feds Reach Agreement Expected To Deal Major Blow To Appraiser Strong-Arming, Appraisal Fraud In Home Mortgage Lending Industry

An announcement from the New York State Attorney General's Office:
  • Attorney General Andrew M. Cuomo [yesterday] announced that the nation’s two largest purchasers of home loans, Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), have entered into cooperation agreements requiring them to only buy loans from banks that meet new standards designed to ensure independent and reliable appraisals. The agreements, among the New York Attorney General, Fannie Mae, Freddie Mac and their federal regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), also create an independent organization to implement and monitor the new appraisal standards. [U.S.] Senator Charles Schumer, Chair of the Senate Banking Committee’s Housing Subcommittee, praised the agreement and the reforms which he has supported.

  • With this agreement, Fannie Mae and Freddie Mac have become leaders in transforming the mortgage industry,” said Cuomo. “Now national banks have a clear choice: immediately adopt the new code and clean up appraisal fraud in the mortgage industry or stop doing business with Fannie Mae and Freddie Mac – it is that simple.”


  • Today’s agreement with Fannie Mae and Freddie Mac begins to set right what had gone so horribly wrong in the mortgage industry – rampant appraisal fraud,” said Cuomo. “The integrity of our mortgage system depends on independent appraisals. Again and again our industry-wide investigation found that banks were putting pressure on appraisers to drive up the value of loans just to make a quick buck. We believe the new standards, and the new independent monitor agreed to today, can begin to erase this problem from the industry. I want to particularly thank Senator Schumer for all of his help in readying this important agreement today.”

In exchange for Fannie Mae & Freddie Mac entering into these agreements, Attorney General Cuomo has agreed to terminate its investigations into Fannie & Freddie. However, a lawsuit by the NY AG alleging widespread dubious appraisals against First American and its subsidiary eAppraiseIt is still pending, and the NY AG's industry-wide investigation into mortgage fraud continues.

In addition, an impending turf battle between the New York AG's office and OFHEO, a federal government agency, regarding the investigation into Fannie and Freddie has, by reason of these agreements, has apparenly been settled amicably (see earlier post - Feds vs. NY AG: Lending Fraud Probe Turf Battle Emerging?).

For a summary of the agreements, see NY Attorney General's Press Release: New York Attorney General Cuomo Announces Agreement With Fannie Mae, Freddie Mac, And OFHEO (Nation’s Two Largest Purchasers of Home Loans Agree to Only Buy Mortgages From Banks That Meet Requirements of New Home Value Protection Code ~Independent Institute Established with $24 Million from Fannie Mae and Freddie Mac to Implement and Monitor Code ~Senator Schumer Praises Agreement).

Go here for the OFHEO Press Release.

Click below for the Home Value Protection Program and Cooperation Agreements:

Go here for the newly adopted Home Valuation Code of Conduct.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this announcement.

Feds Target Two More Foreclosure Rescue Operators With Civil Suits

The Federal Trade Commission announced last week:
  • As part of the Federal Trade Commission’s intensified efforts to protect consumers from mortgage foreclosure rescue scams, the agency has filed two lawsuits charging six individuals and their businesses with falsely claiming that they will stop foreclosure. The FTC will seek to bar them from further violations and make them forfeit their ill-gotten gains.


  • In the first case, Florida-based Mortgage Foreclosure Solutions, Inc., Debra Behrens, and Michael Siani are charged with falsely representing that they will stop foreclosure in all or virtually all instances, in violation of the FTC Act, which prohibits unfair and deceptive acts or practices. They allegedly claim that they can stop foreclosure regardless of consumers’ hardships or payment histories, stating in one such claim, “We are so confident of our abilities to provide you with a solution in stopping your foreclosure that we guarantee our services in writing to you.” [...] According to the FTC’s complaint, [...] the defendants allegedly charge a $950 advance fee and a $250 processing setup charge, and, after receiving consumers’ money they fail to provide updates about the foreclosure proceedings or return consumers’ telephone calls. [...] Many consumers ultimately lose their homes to foreclosure, and others avoid foreclosure only through their own efforts.

  • In the second case, the defendants, all based in Texas, are National Financial Solutions, LLC, National Hometeam Solutions, LLC, United Financial Solutions, LLC, Nationwide Foreclosure Services, LLC, Evalan Services, LLC, Elant, LLC, Elias H. Taylor aka Eli Taylor, Everard Taylor aka Everardo Taylor, Emanuel Taylor, and Edwin P. Taylor, Sr. aka Ed Taylor. They are charged with violating the FTC Act by falsely representing that they would stop foreclosure in all or virtually all instances, and that they would refund most or all fees if foreclosure could not be stopped. [...] In phone calls with consumers, they also claimed that, for an up-front fee ranging from $500 to $1,200, they could stop foreclosures on specific homes and would provide options other than filing for bankruptcy [according to the FTC complaint].

For more, see FTC Sues Two Mortgage Foreclosure “Rescue” Operations.

To view the two FTC lawsuits, see:

Virginia Beach Real Estate Operator Forged Docs, Embezzled Rent Money, Manipulated Sales Prices In Alleged Flipping Scam, Says Suit

In Norfolk, Virginia, The Virginian-Pilot reports:
  • Two investors claim that a failed real estate company's president repeatedly broke the law in his dealings with them. Cary McEntee of Virginia Beach-based CM Development allegedly forged documents, embezzled rent money, manipulated sales prices and committed other misconduct, according to a complaint filed Thursday in federal court by investors Paul and Scott Dadaian. The company's stated business model was to buy dilapidated houses in low-income neighborhoods, renovate them and either rent them out or sell them. An investigation by The Virginian-Pilot last year found that more than half the homes were vacant and in various stages of disrepair. Many of the occupied homes did not generate enough rental income to support themselves.


  • These allegations are an attempt to prevent a bankruptcy court from dismissing debts from McEntee and the company. [...] At its peak, the company and its investors owned roughly 250 properties throughout Hampton Roads, many of which were sold repeatedly among investors at ever-higher prices as the local real estate market escalated. [...] Since filing for bankruptcy protection, McEntee has testified that he repeatedly falsified loan documents to make it appear buyers used their own money to make down payments when McEntee actually provided the cash himself out of the sales proceeds. The FBI has begun an investigation.

For more, see CM Development exec caused them to lose millions, investors say.

Go here for links to earlier Virginian-Pilot stories on CM Development.

Go here for earlier posts on the CM Development flipping operation.

Cleveland Housing Court Judge Hammering Foreclosing Lenders With Fines, Code Violations

In Cleveland, Ohio, a story in The Associated Press recently reported:
  • Judge Raymond Pianka views his courtroom as the emergency room of the foreclosure crisis. Weary of lenders and wholesalers who don't show up to answer to housing code violations like unsecured doors and windows on foreclosed properties, he began holding trials without them. He's put 12 companies on trial in absentia and has fined most, leaving each unable to sell any properties in the area until it pays up. Rust Belt cities, already beaten down by a miserable economy before foreclosures began spiraling nationally, are moving to cut the number of houses left vacant when the mortgage can't be paid. At stake are valuable tax dollars and the survival of neighborhoods.


  • Vacant houses, some stripped bare of aluminum siding, dot the streets, casting a gloom on their well-maintained neighbors. "It scares people," said Joyce Porozynski, a block watch member who has lived in the neighborhood most of her life.


  • [D]estiny Ventures of Tulsa, Okla., sent Pianka's court a check for $53,036.75 a few weeks ago to cover its fine plus interest and attorney fees. [...] As a housing court judge, Pianka is on the low rung of the judicial system, a bungalow among mansions. He's heard himself referred to as a "rat court judge" at judicial conferences. He embraces the role. "Many times I feel like the mouse that roared," he said, later adding, "Finally, they're paying attention to us."

For more, see Rust Belt cities fight glut of abandoned houses (Courts getting aggressive, cities establish land banks to try to slow blight).

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Recent Homebuyers Left In Lurch In Unfinished Subdivisions As Arizona Homebuilder Takes A Hike; Mechanics' Liens, Worthless Home Warranties A Concern

The Arizona Republic reports:
  • A Scottsdale-based home builder is walking away from its investment in a south Chandler neighborhood, leaving unfinished houses and dozens of empty lots in foreclosure - and making residents who already bought homes concerned for the future of their property. Randall Martin Homes is abandoning its property in four Valley developments, including Portello at Dobson Creek, a subdivision southwest of Queen Creek Road and Arizona Avenue.


  • [T]he builder's lien holders will take over ownership of the vacant lots and unsold homes, which could cause a three- to five-year delay in completing the development. [...] Since they've moved in, [one recent homebuyer couple] hasn't heard from the builder, who was supposed to complete final repairs within 30 days. The only company they have heard from is a subcontractor threatening to put a lien on their house if the builder doesn't pay a $500 bill.


  • Though this is an unusual case of a homebuilder abandoning his property, [a spokeswoman with the Arizona Department of Real Estate] said there have been other signs of troubled developers in the Valley - especially mechanics liens, like the one being threatened against the Diefenbachers, being placed against homes.

For more, see Builder walks away from Chandler development.

In related stories, see:

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

Monday, March 03, 2008

FTC Files Suit Against Central Florida Foreclosure Rescue Operator

The Federal Trade Commission announced last week:
  • In an ongoing effort to crack down on businesses that prey upon homeowners facing foreclosure, the Federal Trade Commission has charged six businesses and three individuals with violating the Home Ownership and Equity Protection Act (HOEPA), the FTC Act, and the Truth in Lending Act (TILA) by enticing homeowners into high-cost, short-term loans secured by an additional mortgage on their homes. The FTC will seek to bar the defendants from further violations, make them forfeit their ill-gotten gains, and stop collection and foreclosure actions or efforts to seize or transfer properties.

  • The defendants are Safe Harbour Foundation of Florida, Inc., Silverstone Lending, LLC, Silverstone Financial, LLC, Southeast Advertising, Inc., Keystone Financial, LLC, MT25 LLC, Peter J. Porcelli II, Bonnie A. Harris, and Christopher Tomasulo.

  • According to the FTC’s complaint, Safe Harbour, Porcelli, Harris, and Tomasulo target homeowners facing foreclosure with claims such as “We have all the funds available to pay your bills and save your home from foreclosure. GUARANTEED!” The Silverstone companies and Keystone then provide high-cost, interest-only, short-term balloon-payment loans secured by second mortgages on homes already subject to foreclosure.

For more, see FTC Charges Mortgage Foreclosure “Rescuers” with Deceiving Homeowners.

In a related story, see the St. Petersburg Times: Scammer in trouble again (A millionaire, already in prison for credit card fraud, is accused of foreclosure deceit).

To view the lawsuit, see FTC v. Safe Harbor Foundation Of Florida, Inc., et al. (U.S. District Court, N.D. Ill.)

This suit now makes at least three civil suits against foreclosure rescue operator Peter Porcelli and his group of associates. To view the two other lawsuits (that I know of), see:

Go here for earlier posts on Peter Porcelli.

Boston Approves Ordinance Requiring Registration Of Foreclosed Buildings; $300/Week Fines For Failure To Comply

In Massachusetts, The Boston Globe reports:
  • The Boston City Council voted unanimously for an ordinance pressuring mortgage companies to maintain foreclosed buildings. The ordinance, sponsored by Councilor Rob Consalvo, has the support of Mayor Thomas M. Menino and will take effect as soon as he signs it. Companies will be required to register foreclosed properties with the city, identify who is responsible for maintenance, and post their contact information at the property. Companies that fail to comply or to properly maintain vacant buildings face weekly fines of $300 per property. The ordinance is an attempt to prevent the deterioration of a growing number of foreclosed, empty buildings that dot the city's neighborhoods.

Source: City Council approves rules for foreclosed properties.

In a related Boston Globe story, see Menino opens "war room" to fight foreclosures.

C. Florida Foreclosure Rescue Operator Faces Another Suit; Racketeering, Conspiracy, Criminal Usury, TILA Violations Alleged

In Central Florida, the St. Petersburg Times reports:
  • Two homeowners filed a lawsuit in federal court [last] week against Peter J. Porcelli, saying they lost their homes because of his foreclosure lending scam. Philip Clark and Tania Harris say Porcelli of Oldsmar and others associated with his Safe Harbour Foundation, Silverstone Lending and Silverstone Financial companies targeted them as part of a scam to save them from foreclosure through fraudulent loans. In October, a federal judge sentenced Porcelli to 13 years in prison for his part in a credit card scam that victimized tens of thousands of credit-poor consumers across the country. He also was ordered to pay restitution of more than $11.8-million. Porcelli was indicted in March on conspiracy, wire fraud, mail fraud and money laundering charges. Prosecutors said he had a telemarketing operation that preyed on 165,141 consumers nationally and took in nearly $12-million in illegal profits.

Source: Homeowners sue over loan fraud (2nd blurb from the top).

Included in the lawsuit are allegations of:

  1. civil RICO violations by a pattern of racketeering activity and through the collection of unlawful debt (18 USC § 1961 et seq.),
  2. Truth In Lending Act violations (15 USC § 1601 et seq.),
  3. unlawful mortgage brokering and mortgage lending (Fla Statute Chapter 494),
  4. criminal usury (Fla. Statute Chapter 687), and
  5. civil conspiracy.

The homeowners also seek to void all liens, mortgages, etc. currenly clouding title to their homes by reason of the alleged acts of Porcelli and his confederates. To view the lawsuit, see Complaint - Clark, et al. v. Porcelli, et al. (U.S. District Court, M.D. Fla.).

To view an earlier lawsuit against Porcelli and associates making similar allegations, see Heise, et al. vs. Porcelli, et al. (U.S. District Court, M.D. Fla.).

Representing the homeowners in both lawsuits is Michael Alex Wasylik, Esq., with the law firm Ricardo & Wasylik PL, Dade City, Florida.

Go here for earlier posts on Peter Porcelli.

Existing Second Mortgages May Be Major "Pothole" On Road To Refinance

Syndicated real estate columnist Kenneth Harney recently wrote:
  • Everybody wants to help keep people in their houses and out of financial stress and foreclosure, right? That's what the Bush administration says, and that's what top executives of major banks, mortgage companies and Wall Street investors all say. But where the proverbial rubber hits the road -- at the point where individual homeowners seek to refinance out of unfavorable loans or modify their mortgage terms -- things may look different.

For more, including how a second mortgage holder's arbitrary refusal to "subordinate" their interest in favor of a refinancing first mortgage might create an insurmountable obstacle for a homeowner seeking to lower his house payments, see Lenders' policies stymie attempts at financial help.

Alleged Dubious Liens Slapped On Homes Results In California Man Facing At Least 327 Felony Fraud, Extorion Counts

In California, ABC30 TV in Fresno recently ran a story on 41-year old Jeff McCoon of Oakhurst, a local man who is going around buying old credit card debt for pennies on the dollar, filing lawsuits against the individuals who purportedly owe the money, and then slapping liens on their homes.

The dubiousness of his business practices is refected by the fact that McCoon is currently facing 327 felony fraud and extortion counts in Southern California because of his business practices. ABC30 Action News is now reporting that prosecutors in Northern California are also on his trail and it has uncovered evidence McCoon has also done the same thing in Fresno. Reportedly, the Sacramento County District Attorney's Office will not talk unless and until they file a case.

For the story and link to the ABC30 video coverage, see Local Businessman Accused of Fraud (A Madera County man is facing criminal charges for what investigators say is an illegal way to collect old credit card debt).

Go here for other posts on zombie debt. zombie debt zeta

Philanthropic "Money Bags" Looking To Jump In & Provide Aid In Foreclosure Crisis

The Wall Street Journal recently reported:
  • Some of the nation's wealthiest philanthropies are turning their attention to the growing foreclosure crisis, which some fear could usher in the type of urban blight that devastated pockets of American cities in the 1970s and 1980s. How to tackle it isn't clear. "Every big funder is out there trying to figure out how to participate in systemic responses," says George McCarthy, a senior program officer with the Ford Foundation. The problem, he says, is that "no one can figure out where the opportunity lies" and how philanthropic dollars can be spent most effectively.


  • The impact of foreclosures on other people who live in the neighborhoods is "the part of the story that gets lost in the whole mortgage discussion," says [chief executive officer Ben] Hecht of Living Cities [a consortium of major foundations and financial institutions working to revive inner cities]. "When I go to some of these communities, it breaks your heart. Not only are the buildings boarded and abandoned, but you have people who have these homes in blue-collar neighborhoods. ... They are hard-working people. They did nothing wrong. We would like to be able to help them."

For more, see Foundations Weigh How to Allay Foreclosures (subscription may be required; if no subscription, try here, then click link for the story - and then click your "refresh" button on your browser; or just go here).

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Sunday, March 02, 2008

NY Feds Charge Upstate "Investment Manager" Of Screwing Seniors Out Of $500K

In Rochester, New York, WHEC-TV Channel 10 reports:
  • A man from Livonia is accused of bilking at least two elderly women out of nearly half a million dollars. So where did their life savings go? His name is Vincent Miller and he claims to be an investment manager but the FBI says he's a crook using elderly women to enrich himself financially. Miller, who lives in Livonia, is charged with wire fraud. Investigators say he told at least two elderly clients he was investing their money but instead took nearly half a million dollars of it and put it into his own bank account.

  • The FBI says the scam came to light when the head of security at Miller's bank noticed suspicious activity in his account. Miller had been depositing large insurance checks payable to elderly widows and appeared to be using the money to cover personal expenses.


  • In speaking with the elderly women involved in this case, both told News 10NBC they didn't want to comment publicly because they're embarrassed they lost their money.

For more, see I-Team 10 investigates: Livonia man accused of bilking elderly women.

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

Caretaker Faces Charges Of Swiping $487K+ From Sightless Central Florida Widow

In Lutz, Florida, the St. Petersburg Times reports:
  • Kay Dahman's money began disappearing in 2001. Authorities say it flowed from her account for nearly seven years, without her knowledge and against her will, into the hands of a thieving caretaker. Dahman is 93 now, widowed, childless and blind. She lost more than $487,000. A sheriff's detective said the caretaker used the money to buy a car and pay her own mortgage. The scam was discovered when Dahman's friend Teresa Bauer, helping her read her mail, found records of suspicious-looking purchases. The caretaker went to jail [last week], charged with felony theft, organized fraud and exploitation of the elderly. She is Barbara Mulert, a 61-year-old Lutz resident.

For more, see Caretaker accused of bilking blind widow (Since 2001, authorities say, the93-year-old victim has lost more than $487,000 to a friend).

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