Saturday, March 15, 2008

New Jersey Handyman Admits Scamming $300K+ From Elderly Homeowner

The Monmouth County, NJ Prosecutor's Office recently announced that Michael J. Madden, 48, of South Plainfield, N.J., copped a guilty plea to second degree Theft by Deception for his role in scamming $322,545.61 from a 77 year old homeowner. He is looking at five years in the NJ state prison and will enter into a civil judgment in favor of the victim for the full amount of the theft. According to a press release:
  • [T]he 77 year old victim hired defendant Madden to make minor repairs in her basement of her [...] residence due to damage caused by a flood. The victim contacted Madden after observing his advertisement which appeared in the "Trenton Times" under the headings "General Repairs" and "Handy Man." [...] The family of the victim became concerned in the Summer of 2006, and subsequently contacted law enforcement authorities, because the repair work had yet to be completed and because their review of the victim's bank statements revealed that she had written a large number of checks made payable to Madden and to his wife.

For more, see Handyman Admits Stealing Over $322,000 From Elderly Victim.

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

Sacramento Grandmother Browbeat By Grandsons Into Guaranteeing $2.8M In Loans Now In Default, Say Suits

In California, The Sacramento Bee reports:
  • The 84-year-old matriarch of a Sacramento-area home building family is suing her grandsons, claiming they browbeat her into guaranteeing nearly $2.8 million in real estate loans that have gone into default. In two lawsuits, Ruth Dunmore of Roseville accuses her grandsons Jeremy A. Dunmore, 32, and Sidney D. Dunmore, 35, of elder abuse. She says they took advantage of her emotional stress as she cared for her husband, George, who had dementia. George Dunmore died in October at age 89, and Umpqua Bank is suing Ruth Dunmore and her grandsons over the unpaid debts.

  • Ruth Dunmore's suits say her and George's signatures were forged on documents originally guaranteeing two bank loans for the grandsons' Sacramento-based land development firm, GSJ Co. LLC. The suit doesn't say who committed the alleged forgeries. When the loans were amended last spring, the grandsons scared her into signing new guarantees, she says.

For more, see Dunmore matriarch sues grandsons, alleges pressure over loans.

For more on the Dunmore real estate development business and the Dunmore family, see The New York Times: In California, a Generational Tale of Real Estate Boom and Bankruptcy.

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

Indianapolis To Consider Plan Addressing Thousands Of Abandoned Homes

In Indiana, The Indianapolis Star reports:
  • Mayor Greg Ballard's administration plans to develop a strategy to address the thousands of abandoned houses in Indianapolis, including hiring someone to spearhead the effort.


  • More than 7,000 abandoned buildings in the city can be traced in part to a massive rate of foreclosure brought on by personal bankruptcies, job losses and illicit real estate schemes. The schemes were enabled when mortgage lenders throughout the nation funneled cash to shady investors under the easy loan standards that were common earlier in the decade, real estate experts say.

For more, see City to develop own plan to revive neighborhoods.

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

Las Vegas Animal Shelters Maxed Out On "Foreclosure Pets"

In Nevada, the Las Vegas Review Journal reports:
  • While local pet owners have long been giving up their animals when they move, the housing crunch has contributed to an alarming increase in what many have dubbed "foreclosure pets." And Las Vegas facilities are overwhelmed with them, animal rescue and shelter representatives say. "It is the No. 1 way we're getting animals right now," says [Doug] Duke, the executive director of the Nevada SPCA. "We've really noticed it in the last three months and it seems to be escalating on a weekly basis."

  • Duke says the SPCA has received a goose, ducks, numerous chickens, rabbits, guinea pigs, a potbellied pig and ferrets recently. Cats and dogs make up the majority of the foreclosure pets, though. It's hard to keep track of the numbers because the shelter receives so many calls, Duke adds, but he estimates 150 animals a month are coming in because their owners give them up or leave them behind when they lose their homes. Las Vegas is among the leaders in the nation in foreclosures.

For more, see Overwhelming Situation: Innocent Victims (Animal shelters full of pets that are abandoned during home foreclosures).

For more on foreclosures and abandoned animals, go here and go here. petsII and foreclosures

Housing Activists Express Displeasure With Countrywide Exec

In Cleveland, Ohio, The Associated Press recently recounted a February, 2006 incident in which a group of over 40 consumer activists went to the home of a regional vice president at Countrywide Financial Corp. to express their displeasure with him and his company's home loans:
  • Folks on Humphrey Hill Drive were still waking up on the icy Saturday morning the shark hunters came to town. They rounded the suburban traffic circle in a pair of rented school buses after a half-hour ride from far more modest neighborhoods, rumbling to a stop at the Garmone family's driveway. Forty-two caffeinated Clevelanders piled out, their leaders carrying bullhorns.

  • Their quarry, Mike Garmone — a regional vice president at Countrywide Financial Corp., the nation's largest mortgage lender — didn't answer his door. So they deployed, ringing bells at the big homes with three-car garages, handing out accusatory fliers and lambasting Garmone and his company's loans. Before departing, they left their calling card — thousands of 2 1/2-inch plastic sharks — flung across Garmone's frozen flower beds, up into the gutters, littering the doorstep.

For more, see Activists Bare Teeth Over Foreclosures.

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

Title Insurance: A Necessary Evil?

Described as "a $16 billion industry that consumer advocates and government regulators say few people understand yet blindly feed whenever they buy, sell or refinance a home or property," title insurance is the subject of a recent article in the Janesville Gazette (Wisconsin). For those looking for a primer on what exactly title insurance is all about, see A necessary evil: Confusion clouds title insurance.

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Friday, March 14, 2008

Key Figure In Erie Mortgage Scam Gets 6+ Years In Federal Pen

In Erie, Pennsylvania, the Erie Times News reports:
  • Erie businessman Robert L. Dodsworth has been sentenced to six years and four months in federal prison for his role in a widespread mortgage-fraud scheme. [...] The government claims that Dodsworth and others bought run-down houses in Erie and sold them at artificially inflated prices.


  • Dodsworth said he simply wanted to help less-fortunate Erie residents become homeowners -- and make money doing it. "I realize it was illegal now to do it," Dodsworth, 60, said at his three-hour sentencing hearing in federal court before U.S. District Judge Sean J. McLaughlin. "My intent was to clean up homes in the city. ... And make money.


  • Most of the buyers were low-income, and many of them knew little about buying homes, the government said in court paperwork. Nearly 200 properties were involved in the probe, and federal officials said victims lost more than $1 million between 2003 and 2006. Five people, including Dodsworth, have been charged in the case.

For more, see:

Go here for other posts related to the Erie, Pa. FBI mortgage fraud probe. Robert Dodsworth

Ohio Judge Again Reduces Willan Bail Bond; Still Unaffordable

In Akron, Ohio, the Akron Beacon Journal reports:
  • Former Evergreen Corp. President David B. Willan remained in the Summit County Jail on Monday after being unable to post a $100,000 cash bond, and he may remain there through trial, his lawyer said. [...] Willan, 37, the focus of a 147-count indictment alleging widespread Akron-area mortgage fraud, has been held at the jail since his Dec. 19 arrest. He is one of 17 defendants in the case. The 66-page indictment alleges that Willan and the others set up a web of predatory borrowing and securities scams that bilked area investors, homeowners and lenders out of some $16 million.


  • Last Friday, a judge modified the terms of Willan's release, from a $1 million cash or surety bond to a $1 million, 10 percent cash bond. But Willan's attempts over the weekend to come up with the necessary $100,000 were unsuccessful, [defense lawyer William] Whitaker said.

The bond was originally set at $3 million. For more, see Evergreen leader fails to raise cash for bond (Lawyer says mortgage-fraud suspect lacks funds, might stay in jail through trial).

For story updates, see:

Go here for other posts on David Willan and the Akron-area 147 count mortgage fraud indictment.

New Jersey Prosecutors Charge Five In Mortgage Scam; Sixth Participant Cops Plea, Agrees To Sing Against Others

In Monmouth County, New Jersey, the Asbury Park Press reports:
  • Five people have been charged Thursday with conspiracy to defraud mortgage lenders of more than $4 million, authorities said. [...] The investigation uncovered a conspiracy to file fraudulent mortgage applications to obtain financing for seven different value-inflated properties — six in Monmouth County and one in Florida, authorities said. Excessive fees also were charged. Funds from the closings were then funneled into various shell corporations. Lenders have already foreclosed on six of the seven properties, the release said.

The arrests came after a sixth "fish" authorities said was also involved, John Deickmann, 27, of Red Bank, "won the race to the prosecutor's office" and avoided "getting fried" by copping a guilty plea on Monday in connection with the alleged scheme. In exchange for an agreement to testify against the other five "fish", Deickmann will reportedly face no jail time and be sentenced only to probation. He currently is free on his own recognizance.

The five who are facing charges are: John Pereless (39, $750K bail), Kevin Deickmann (34, $500K bail), Susan Pereless, also known as Susan Coonan (65, $500K bail), Ramon Iglesia (24, $100K bail), and Erza Lustado (34, $100K bail).

For more, see Five charged in mortgage fraud (Properties in Monmouth County and Florida) (no longer available online).

See also, Monmouth County Prosecutor press release - Five Arrested in Multi-Million Dollar Mortgage Fraud.

Nevada Feds Indict Two In Mortgage Fraud Operation Involving 200+ Properties, 400+ Straw Buyers, $100M+ In Transactions

In Las Vegas, Nevada, The Associated Press reports:
  • A Las Vegas real estate broker and her husband are facing federal charges they made millions of dollars orchestrating a mortgage fraud scheme. U.S. Attorney for Nevada Gregory Brower says Eve Mazzarella, 30, and her husband, Steven Grimm, 45, were indicted Wednesday on bank fraud, money laundering and aiding and abetting charges.

  • The government alleges Mazzarella and Grimm bought more than 200 properties at inflated values using limited liability companies and more than 400 straw buyers to make purchase offers. The couple allegedly controlled transactions worth more than $100 million. They allegedly defaulted on mortgage payments on many of the loans, causing at least 118 properties to be sold in foreclosure.

Source: Las Vegas couple face federal charges in mortgage fraud case.

See also:

Washington State Passes Foreclosure Rescue Legislation; Currently Awaits Governor's Signature

Washington State lawmakers have successfully passed legislation regulating foreclosure rescue transactions as both houses of the legislature voted in favor of the bill earlier this week. The leaders in the state Senate and state House of Representatives both signed off on the bill yesterday. The bill has since been delivered to the governor's office and currently awaits his signature.

In addition to rules regulating the typical sale and leaseback transactions involving the home of a homeowner facing foreclosure, the bill also targets the so-called equity skimmers (aka rent skimmers) - those who acquire homes in exchange for a promise to take over the payments on existing mortgages, only to turn around and lease or "lease to own" the homes to tenants, collecting and pocketing the rent, security and/or lease-option deposits while, at the same time, stiffing the existing mortgage lender out of its monthly payments and allowing the home to go into foreclosure.

For more, see HB 2791 - 2007-08 Concerning distressed property conveyances (bill history) (full text of passed legislation).

A Brooklyn Flavor To Subprime Crimes

In New York City, a column in The Brooklyn Rail comments on the subprime mortgage problem, how "the subprime lender's arsenal" of "exploding ARMs," “option ARMs,” “no doc” loans, and prepayment penalties that trap borrowers in their loans have affected some Brooklyn residents, and contains observations from some NYC-based housing and consumer advocates. For the story, see Subprime Crimes From Wall Street to Brooklyn and Beyond.

South Florida Builders, Lenders "Partners In Misery"; Both Left Holding The Bag On Land They Can't Use, Afford; Worst Yet To Come

In South Florida, the Daily Business Review reports:
  • Now that residential development has hit the wall, builders and lenders are partners in misery. Developers in the field — from small-scale operators to national home-builders — who aggressively acquired land during the go-go years of the early and mid-2000s, are now stuck with hundreds of acres of land they have no use for and cannot afford to hold. Lenders have already taken title to numerous parcels and with a wave of land loans coming due, the worst is yet to come.

For more, see Developers stuck with land they have no use for.

Connecticut Jury Convicts Home Improvement Contractor Despite Not Having Screwed Homeowners Out Of Money

Unlike some other states, it appears that Connecticut and its state Attorney General's office takes its state home improvement laws quite seriously, as evidenced by the AG's direct involvement in the prosecution of an unregistered contractor for misdemeanor offenses:
  • Attorney General Richard Blumenthal [recently] announced the criminal conviction of a home improvement contractor for multiple violations of the [Connecticut] Home Improvement Contractor Act. Richard A. Koslik, 49, of Springfield, Mass., was convicted [...] for twice offering to make and once making home improvements without a state registration. Koslik testified at his trial, denying that he had offered to make or made home improvements, but the jury rejected those claims. He is scheduled for sentencing on March 28 . The maximum penalty on each of the three charges is six months in jail and a fine of up to $1,000.


  • [Blumenthal said] "We will prosecute such criminal wrongdoers whenever they violate our home improvement laws. Our home improvement laws are designed to protect consumers, and this conviction should be a reminder to all homeowners considering home improvements to vigilantly verify their contractors' registration status and complaint history with the state."

For the Connecticut AG press release, see Attorney General Announces Criminal Conviction Of Home Improvement Contractor.

California Homeowner May Be Liable For Injuries Suffered By Unlicensed Contractor

An article on Construction Web Links (a construction industry newsletter),which serves as a reminder that it might not be a good idea to hire unlicensed contractors when contracting for home improvement and repair work, reports the following fact pattern which took place in California and to which California law applies:
  • A homeowner hired his neighbor, an unlicensed roofing contractor, to replace the roof on his house. The parties agreed on a set price, and the roofer immediately began work. After only four hours of work, the roofer fell from the roof and was injured. The roofer filed a personal injury suit against the homeowner for negligence in failing to provide proper safety protection and equipment for the job. The roofer claimed he was an employee of homeowner, and because homeowner did not have worker’s compensation insurance, the roofer was entitled to bring a civil action to recover for damages he sustained from the fall.

Question: Can an unlicensed contractor have a legitimate basis for suing a California homeowner in the above case?

According to the article, the answer is yes:

  • [The court] held that although the roofer was not an employee for purpose of the worker’s compensation law, he was an employee for purposes of tort liability under California law providing that an unlicensed worker performing services for which a license is required is not an independent contractor but an employee.
For more, see California Homeowner Subject to Suit by Unlicensed Contractor for Injuries Suffered on the Job.

For the case itself, see Mendoza v. Brodeur, 142 Cal.App.4th 72 (2006).

For an earlier post in which the California homeowner got the upper hand over the unlicensed contractor hired for home improvements, see Court Hammers Contractor In Dispute With Homeowners; Results In Free Home Improvements & More.

Kern County Cops Crash Another Vacant Foreclosure; Bust Up Another Teen Party

In Bakersfield, California, KBAK-TV Channel 29 / KBFX-TV Channel 58 report:
  • Sixteen people are arrested after sheriff deputies broke up another party at a house going into foreclosure. Deputies went to the home on Chateau Montelena in Northwest Bakersfield, after neighbors called saying a large group of teenagers were heading to the home on Saturday night. This is the third time in two weeks authorities had to respond to parties inside empty homes. Deputies say they arrested 16 adults aged 18-20 for trespassing. They also cited 10 juveniles.

Source: Sheriff Deputies arrest adults and juveniles in another foreclosure party.

See also, The Bakersfield Californian: Police bust another party in foreclosed home.

Go here for other posts on vacant homes and teen beer bashes, keg parties, etc. teen parties vacant homes

Observations On Mortgage Lenders' Failure To Deliver Docs In Foreclosure Actions

In the February, 2008 Bloomberg News article (referenced earlier in this blog) on the problems foreclosing mortgage lenders are facing resulting from their inability to physically produce the actual homeowner promissory notes, as well as other required paperwork, the following choice excerpts may reflect how big the problem may be:

  • Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages.


  • "I think it's going to become pretty hairy,'' said Josh Rosner, managing director at the New York-based investment research firm Graham Fisher & Co. "Regulators appear to have ignored this, given the size and scope of the problem.''
  • Each time the mortgages change hands, the sellers are required to sign over the mortgage notes to the buyers. In the rush to originate more loans during the U.S. mortgage boom, from 2003 to 2006, that assignment of ownership wasn't always properly completed, said Alan White, assistant professor at Valparaiso University School of Law in Valparaiso, Indiana. "Loans were mass produced and short cuts were taken,'' White said. "A lot of the paperwork is done in the name of the original lender and a lot of the original lenders aren't around anymore.'' More than 100 mortgage companies stopped making loans, closed or were sold last year, according to Bloomberg data.


  • "All these loan documents are being sent to the inside of a mountain in the middle of America and not being checked very carefully,'' [real estate lawyer Stuart] Saft said. "The lenders can't find the paper. We're dealing with a lot of paper produced in a mortgage closing.''


  • Judges are becoming increasingly impatient with plaintiffs who produce no more proof of ownership than a lost-note affidavit or a copy of the note, said Michael Doan, an attorney at Doan Law Firm LLP in Carlsbad, California.


  • U.S. District Judge David D. Dowd Jr. in Ohio's northern district chastised Deutsche Bank National Trust Co. and Argent Mortgage Securities Inc. in October for what he called their "cavalier approach'' and "take my word for it'' attitude toward proving ownership of the mortgage note in a foreclosure case.


  • Federal District Judge Christopher Boyko dismissed 14 foreclosure cases in Cleveland in November due to the inability of the trustee and the servicer to prove ownership of the mortgages. Similar cases were dismissed during the past year by judges in California, Massachusetts, Kansas and New York.

  • "Judges are human beings,'' said Kenneth M. Lapine, a partner at the Cleveland law firm Roetzel & Andress LPA. "They no doubt feel the little guy needs all the help he can get against the impersonal, out of town, mega-investment banking company.''

  • U.S. Bankruptcy Judge Samuel L. Bufford in Los Angeles issued a notice last month warning plaintiffs in foreclosure cases to bring the mortgage notes to court and not submit copies. "This requirement will apply because developments in the secondary market for mortgages and other security interests cause the court to lack confidence that presenting a copy of a promissory note is sufficient to show that movant has a right to enforce the note or that it qualifies as a real party in interest,'' the notice said.


  • "I can't believe the handling of notes is worse than it was five years ago,'' said Guy Cecala, publisher of Inside Mortgage Finance. "What we didn't have back then were armies of attorneys out there looking for loopholes. People are challenging foreclosures and courts are paying a lot more attention to foreclosures than they ever did before.''

For the article, see Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

For a related story, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

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

Thursday, March 13, 2008

Defending Foreclosures, Saving Homes Law Conference

In Valparaiso, Indiana, the Valparaiso University School of Law recently announced their Defending Foreclosures, Saving Homes law conference to be held on March 28, 2008.

  • Conference participants will learn about the latest developments in foreclosure and bankruptcy, loss mitigation and mortgage servicer practices. Attorneys interested in representing homeowners will learn the nuts and bolts of the Indiana foreclosure process, explore effective claims and defenses available to homeowners, and learn how to present workout and loan modification proposals to mortgage servicers. Housing counselors will learn more about judicial foreclosure in Indiana and options available to homeowners at each stage of the process. Architects of the Indiana Foreclosure Prevention Network will be on hand to explain the IFPN initiatives—including the recently established hotline and referral network.

Among the topics to be covered, according to the conference brochure, are:

  • Defending Foreclosures in State Court: Defenses and Counterclaims,
  • Defending Foreclosures in Chapter 13, and
  • Attorney Fee Claims and Handling Foreclosure Cases as a Private Attorney, which may be of interest to those civic minded attorneys interested both in representing homeowners facing foreclosure and picking up a few bucks in the process (probably payable by the foreclosing mortgage lender and/or mortgage servicer who either broke the rules or otherwise screwed up).

For more, including a link to the conference brochure and schedule, see Defending Foreclosures, Saving Homes.

Foreclosures, Unpaid Taxes Add Risk For South Florida Tenants

In South Florida, The Miami Herald reports:
  • While South Florida's falling housing prices may favor renting rather than buying right now, the recent real estate bubble is also creating new risks for tenants. Plenty of homes and condos are available for lease because their owners can't sell them, giving renters a variety of options. The problem is that many of the owners may not be on steady financial footing. If they end up in foreclosure, tenants can be kicked out -- despite having a lease. ''That's happening. A lot of people are losing their homes,'' said Samira Ghazal, a Miami consumer lawyer. "They don't know if the landlord is paying the mortgage or not. Then they end up getting evicted.'' Even if they are not formally evicted, many tenants are forced to move prematurely, resulting in unplanned moving expenses and family disruptions.


  • It's hard to say how many tenants are in this situation. But what is clear is that tens of thousands of South Florida properties are in serious financial trouble. In Miami-Dade and Broward counties, more than 70,000 residential property owners failed to pay their 2006 property-tax bills, according to a Miami Herald analysis in November.

For more, see Tenants: Be aware of landlords facing foreclosure (Landlords have always asked potential tenants about their financial situation. But in today's housing market, renters may need to ask if potential landlords are facing foreclosure).

To find out if a South Florida landlord is facing foreclosure, see The Miami Herald: What to do before you rent (if link expires, try here) which, among other things, suggests:

This method isn't foolproof, especially if you're dealing with a sleaze bag who may be running a professional rent skimming / equity skimming operation but may be pretty helpful if you're dealing with an average homeowner or novice real estate investor caught in the real estate bubble and stuck holding a property that he/she can't unload.

For posts involving rent / equity skimming landlords who pocket rent and allow homes to go into foreclosure, go here, go here, go here, go here, and go here.

Go here for other posts related to the Miami condo market problem. equity skimming unwittingly epsilon delinquent tax problem

Oregon Governor Signs Foreclosure Rescue Legislation

The office of Oregon Governor Ted Kulongoski announced yesterday:
  • Governor Ted Kulongoski late [Monday] signed mortgage lending protection legislation (House Bill 3630 and Senate Bill 1064) passed during the February legislative session. The bills will protect consumers from fraudulent mortgage rescue schemes, provide better notice for those facing foreclosure and stronger enforcement for those in the loan industry engaging in dishonest and fraudulent practices. “People who are facing foreclosure should not have to also fall victim to fraudulent rescue schemes and dishonest lending practices,” said Governor Kulongoski. “These protections will help ensure Oregonians are treated fairly and offered the help they need during a very difficult time.”

For more, see Governor Kulongoski Signs Mortgage Protection Legislation.

For the Oregon foreclosure rescue legislation, see House Bill 3630.

Florida Regulators Shut Down Foreclosure Rescue Operator, Mortgage Brokerage

The Florida Office of Financial Regulation announces:
  • The Florida Office of Financial Regulation (OFR) entered an administrative order [Monday] against Safe Harbour Foundation of Florida, Inc., Silverstone Lending, LLC and Peter J. Porcelli, II, of Clearwater, Florida. Safe Harbour Foundation operated as a not-for-profit corporation that aided homeowners facing foreclosure; Silverstone Lending is licensed in Florida as a Mortgage Lender; and Peter Porcelli is President of Safe Harbour Foundation and Principal Representative of Silverstone Lending.

  • The OFR’S investigation disclosed that Safe Harbour, Silverstone Lending and Peter Porcelli were participating in a scheme to make loans that contained unauthorized and excessive fees often exceeding 30% of the face amount of the loan, all in violation of Chapter 494, Florida Statutes. The scheme was initiated when Safe Harbour Foundation sent letters to homeowners who were facing foreclosure, offering to help “save their homes from foreclosure”.

For more, see Office Of Financial Regulation Shuts Down Foreclosure Rescue Scheme.

Go here for earlier posts on Peter Porcelli.

Two Charged In Alleged South Florida Foreclosure Rescue Scam

In what appears to involve an alleged straw buyer, equity stripping, foreclosure rescue scam, the Florida Office of Financial Regulation announces:

  • The Florida Office of Financial Regulation, the Ft. Lauderdale Police Department, and the Office of Statewide Prosecution announce the arrest of two individuals on charges of First Degree-Organized Scheme to Defraud over $1,000,000 from mortgage loan lenders. On Wednesday, March 5, 2008, Curt D. Francis, 37 and Tashina Latouche, 25 were arrested in Ft. Lauderdale, Florida.

  • Curt Francis and Tashina Latouche allegedly participated in a scheme to defraud mortgage lenders by providing false mortgage loan applications that included fraudulent employment verification forms, financial statements, and bank records. The applications also included HUD-1 settlement statements that investigators allege falsely stated that the buyers were using their own money to cover the closings. Multiple properties were involved from Broward and Miami-Dade County.

  • The scheme allegedly used people’s identity and good credit to obtain mortgages on properties facing foreclosure. Once the mortgages were approved, the properties were quit claimed back to the original owners.

For more, see Two South Florida Residents Arrested For Mortgage Fraud.

For other hits for Curt D. Francis for unlicensed mortgage brokerage, see:

Payment Slip Up Leaves Fremont Family Facing Foreclosure

In Fremont, California, KGO-TV Channel 7 reports:
  • A Fremont family faces losing their home just a few months after missing a single mortgage payment. Can foreclosure proceedings really happen that quickly? It doesn't happen often, but it can. This isn't a story about a person with a mortgage they couldn't handle. It's a story of a single simple slip up anyone of us can make.

For more on this family's attempt at resolving the situation with their mortgage company, World Savings / Wachovia, see A missed mortgage payment turns costly.

Use Of Lost Note Affidavits By Attorneys For Foreclosing Lenders In Lieu Of Producing Proper Paperwork Being Called Into Question

In a Bloomberg News article last month featuring Boca Raton, Florida resident Joe Lents, who reportedly hasn't made a payment on his $1.5 million mortgage since 2002 because the lender's inability to produce Mr. Lents' promissory note has precluded a foreclosure of Lents' home, the apparently common (and possibly illegal and/or unethical) practice by foreclosing lenders and their attorneys of submitting "lost note affidavits" in foreclosure actions as a substitute for a promissory note that can't be produced was rasied in these excerpts:
  • When the mortgage servicers and securitizing banks that act as trustees of the securities fail to present proof that they own a mortgage, they sometimes file what's called a lost-note affidavit, said April Charney, a lawyer at Jacksonville Area Legal Aid in Florida. Nobody knows how widespread the use of lost-note affidavits are, Charney said. She's had foreclosure proceedings for 300 clients dismissed or postponed in the past year, with about 80 percent of them involving lost-note affidavits, she said. "They raise the issue of whether the trusts own the loans at all,'' Charney said. "Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.''


  • Judges are becoming increasingly impatient with plaintiffs who produce no more proof of ownership than a lost-note affidavit or a copy of the note, said Michael Doan, an attorney at Doan Law Firm LLP in Carlsbad, California.
  • "If the homeowner doesn't object to the lost-note affidavit, the judge rubber-stamps it,'' Lents said. "Is it oversight, or are they trying to get around the law?''
  • [Mortgage Electronic Registration Systems] rules don't allow [its] members to submit lost-note affidavits in place of mortgage notes, [MERS CEO R.K.] Arnold said. "A lot of companies say the note is lost when it's highly unlikely the note is lost,'' Arnold said. "Saying a note is lost when it's not really lost is wrong.''

  • Lents's attorney, Jane Raskin of Raskin & Raskin in Miami, said she has no idea who owns Lents's mortgage note. "Something is wrong if you start from what I think is the reasonable assumption that these banks are not losing all of these notes,'' Raskin said. "As an officer of the court, I find it troubling that they've been going in and saying we lost the note, and because nobody is challenging it, the foreclosures are pushed through the system.''

For the story, see Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

For a related story, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

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.

Editor's Note:

I have yet to find any published reports on class action lawsuits or administrative disciplinary actions by state bar associations being brought against lenders' attorneys who are filing lost note affidavits in foreclosure actions as a matter of practice and whether the promissory notes have actually been lost or not. If anyone comes across a story about such a class action or state bar association disciplinary action, please forward me the story or a link - missing mortgage foreclosure docs alpha

Philly Feds Indict Woman Offering Alleged Phony Foreclosure Investment Program

In Philadelphia, Pennsylvania, WPVI-TV Channel 6 reports:
  • The operator of a real estate investment program has been arrested and faces federal charges. Lizette Morice operated the program that Action News warned you about called Gaddel Enterprises. Morice is now officially charged with devising a scheme to make money by defrauding consumers. [...] A federal grand jury charges that the founder and head of Gaddel, Morice, took money knowing full well that no real estate transactions were ever completed by her company.

For more, see Foreclosure investment operator indicted.

Wednesday, March 12, 2008

FBI Raid May Have Targeted Bridgeport Foreclosure Rescue Operator

In Bridgeport, Connecticut, The Connecticut Post reports:
  • An eyewitness says he saw FBI agents raid the building that's home to the offices of Invernat LLC and Buyer's Capital at 1944 Boston Ave. Tuesday morning. Dave Foder, a Shell gas station attendant working across the street, said he saw about 10 to 15 agents surround the building around 9 a.m. [...] There are several businesses in the building, including Invernat and Buyer's Capital, which appear to be linked, at least through personnel and their focus on properties in distress.


  • It is unclear if both Invernat and Buyers Capital are foreclosure rescue firms. [...] Attorney General Richard Blumenthal said his office has an active investigation into Invernat. But he was as tight-lipped as the FBI about what exactly was being investigated. He confirmed the company is a foreclosure rescue firm.
For more, see FBI raids Bridgeport office building.

Rogue Notaries In Handcuffs On The Increase; Attestors Often Found At Center Of Home Equity Scams

In California, The Sacramento Bee reports:
  • Detectives and prosecutors sorting through the criminal rubble of the real estate collapse are finding a surprising trend: The notary public is, in some cases, the public enemy. Investigators in Sacramento, the Bay Area and Los Angeles say real estate frauds can hinge on a mastermind's ability to find a complicit notary, a person who is supposed to attest to the identity and presence of a person signing a sensitive document.


  • Investigators statewide say they're seeing an increase in the number of notaries in handcuffs. In Los Angeles County, detective Chris Christopher sees notaries wrapped up in plots fit for Hollywood. He investigated one case in which a "career criminal" convinced a notary to let him use her log book and stamp to swindle property. Eventually, the criminal stole that notary's identity.


  • "A notary seal is the most powerful identity theft and fraud tool you will ever find," Christopher said. "You can bring dead people back to life with it." Investigators note a common theme when they run across a crooked notary: When the heat is on, the log book disappears. "Right behind the dishonest notary, then there's the missing journal," said Jeanne Williams, a Sacramento County district attorney's investigator.

For more, including a number of examples of people having home equity ripped off out from under them through fraudulent deed transfers or by the unauthorized use of property as security for a loan or bail bond involving sleazy notaries, see Outlaw notaries making mark amid real estate crisis.

Go here and go here for other posts on deed theft by forgery, swindle, etc. deed theft yahtzee

Florida Court Enters $6.4M Judgment Against "Scalawag" In Nationwide "Cloud The Title" Real Estate Scam

From the Florida Attorney General's Office:
  • Attorney General Bill McCollum announced [last Thursday] that a U.S. citizen residing in Thailand has been ordered to pay $6.4 million for running an elaborate real estate scam that prevented landowners from selling their property to anyone but him. Todd Teal, 63, was found to have recorded fraudulent affidavits claiming he had an interest in the property, thereby preventing the owner from selling to anyone else. The case was prosecuted by the Attorney General’s Economic Crimes division.


  • The Attorney General’s lawsuit, filed in June 2005, alleged that Teal used a mail drop box in Marco Island as his "local" address and used the internet to identify land held in Florida, mostly by out-of-state owners. Testimony from victims and witnesses revealed that Teal used deceptive contracts to induce landowners to contract with him. Teal then would refuse to make the deposit required by the contract, but would record a fraudulent affidavit in the public record against the landowner’s property. The affidavits recorded by Teal “clouded” the title to the property so that the landowner did not have a clear title and was prevented from selling to any other buyer. [...] McCollum’s investigators discovered that Teal has operated similar scams in Arkansas, Arizona, Colorado, Georgia, Hawaii, North Carolina, South Carolina, Texas and Washington.


For more, see Thailand Resident Ordered to Pay $6.4 Million in Real Estate Scam.

For additional background on this case, see:

Deed Scam Uses Out-Of-Town Mail Solicitations, Offer To Pay Back Taxes

In Michigan, the Kalamazoo Gazette reports:
  • Ted Baker knew he was being scammed when he received a letter in late February from a Texas woman asking him to sign over the deed to his deceased mother's Elder Street home. The letter writer offered to pay the property's delinquent taxes and give Baker a check for $300 in exchange for the house. Instead, Baker contacted city and county tax officials about the delinquent taxes. "My mother hadn't paid her 2007 winter taxes to the city and they were $216,'' Baker said, "but, there's no way the county could have known about this.''

  • Kalamazoo County Treasurer Mary Balkema said she was not surprised when Baker told her about the letter. With foreclosure rates at an all-time high, Balkema said property solicitations, including a copy of a deed to sign, from out-of-town speculators are becoming commonplace and frequently target the elderly, Balkema said.


  • The letter informed Baker that Kalamazoo County records indicated delinquent taxes on the property made the house eligible for sale at Calhoun County's upcoming tax sale. It said all Baker had to do to have the taxes paid off and receive an additional $300 was to sign an enclosed deed transferring title of the property to the woman and her husband.

For more, see Scam offers to pay taxes to get deed.

Southern California Realtors Form Task Force To Combat Foreclosure Fraud

In Riverside County, California, The Press Enterprise reports:
  • Real estate agents who are joining forces across Riverside County to combat pervasive foreclosure fraud are taking their message to several southwestern Riverside County cities. Gene Wunderlich, chairman of the Southwest Riverside County Association of Realtors, spoke at the Lake Elsinore City Council meeting [recently] about the task force and the types of fraud hitting the Inland area. He spoke at the Murrieta City Council a week earlier. Wunderlich's organization has teamed with the Riverside-based Inland Valley Association of Realtors to form the task force, which has a twofold purpose: outreach to fraud victims and lobbying law enforcement to pursue and prosecute fraud suspects. "Real estate fraud is horrendous in the Inland Empire," Wunderlich said. "We're trying to reach out to people in the community to let them know they have someone to turn to."

For more, see Two groups of Realtors try to be agents of change against real estate fraud.

Attorney Says Producing Mandatory Paperwork In Foreclosure Actions "A Gigantic Waste Of Time"

Bloomberg News ran a story last month on the difficulties foreclosing mortgage companies are facing by their inability to produce the mandatory paperwork in court when initiating a foreclosure action. The following excerpt caught my eye:
  • Requiring banks to produce the paperwork at a foreclosure hearing is a nuisance, said Jeffrey Naimon, a partner in the Washington office of Buckley Kolar LLP. "It's a gigantic waste of time,'' Naimon said. "The mortgage may have transferred five, six, eight times. It's possible that you don't have all the pieces of paper, but it was enough to convince the next guy in the chain. There's no true controversy over whether the owner owns the loan.''

What needs to be pointed out to anyone harboring this belief is that when the debtor/homeowner pays the loan off in full, he/she is entitled to physically receive his promissory note back, and is to be marked "cancelled" by the creditor. Simply receiving a satisfaction of mortgage, while enough to clear the lien from the title to the home, is not enough to actually cancel the debt evidenced by the note. By not having the promissory note returned, the debtor/homeowner is legally left in a position where he/she may have to pay off the note a second time if the note (known in the law as a "negotiable instrument") turns up in someone else's hands and is presented to the debtor/homeowner for payment.

I trust that in attorney Naimon's case, above, he was either misquoted or had his words taken out of context. I say this only because any attorney handling foreclosures for lenders who actually asserts the position expressed in the above excerpt and believes the lender can obtain payment on a promissory note without any corresponding obligation to physically possess the note and be in a position to surrender it to the debtor/homeowner upon full payment is either clueless, willfully ignorant, or being intentionally deceptive as to what the requirements of law are in a mortgage foreclosure action.

For the article, see Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

For a related post, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

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

Tuesday, March 11, 2008

South Florida Cops Charge 29 In "Straw Buyer Financed" Indoor Pot Farm Operation

In Palm Beach County, Florida, the South Florida Sun Sentinel reports:
  • Authorities charged 29 people Monday in connection with buying more than 25 homes, recruiting families with children to live in them and growing millions of dollars worth of marijuana in closed-door rooms with powerful lights. [...] Inside, the alleged traffickers kept exposed electrical wires, irrigation lines routed through toilets and sinks and enough chemicals, fertilizer and propane to cause explosions, [investigators said].


  • The group's alleged leader — Miguel Fernandez, 45, of Miami — is accused of masterminding the purchase and conversion of homes, said William Shepherd, the statewide prosecutor with the Florida Attorney General's Office. He did it by using "straw" buyers, mostly recent immigrants from Cuba, to purchase the homes, move into them and then care for the plants, officials said. Once the plants were harvested, Fernandez and his lieutenants packed the marijuana, drove it to Miami-Dade County and sold it in New York.

For more, see 29 charged in marijuana 'grow houses' around South Florida.

See also, Florida Attorney General News Release: 29 Individuals Charged with Operating Marijuana Grow Houses in Palm Beach, Miami-Dade Counties.

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

Mortgage Servicers Balk At Debt Forgiveness Proposal For Home Mortgages

A Debtwire article appearing in Financial Times reports:
  • Mortgage servicers modifying loans under Hope Now are unlikely to allow principal forgiveness readily, especially when the loans have been securitized, servicers and industry analysts told Debtwire. That may lead to temporary forgiveness through the creation of soft second lien loans, said one industry consultant. In a speech before the Independent Community Bankers of America last week, Federal Reserve Chairman Ben Bernanke encouraged servicers to use principal forgiveness for loss mitigation. He argued that principal writedown makes solid economic sense in some cases, notably when stressed borrowers owe more on their mortgages than their houses are worth.

  • But servicers face strong disincentives to paring down non-performing mortgages because of potential legal exposure should RMBS investors decide they are unwilling to write down principal. What’s more, documents governing the securitization may not allow for such modifications. Even if servicers have the will to forgive debt, they may not have the systems or personnel in place to handle this type of modification.
For more, see Mortgage principal forgiveness will meet resistance from servicers.

FTC On Foreclosure Rescue Scams

The Federal Trade Commission has issued a Consumer Fact Sheet that describes the types of foreclsoure rescue scams financially strapped homeowners should be aware of. Among the points covered are: (1) How the Scams Work, (2) Phony Counseling or Phantom Help, (3) Bait-and-Switch, (4) Rent-to-Buy Scheme, (5) Bankruptcy Foreclosure, (6) Red Flags.

For more, see Foreclosure Rescue Scams: Another Potential Stress for Homeowners in Distress.

Foreclosure Action Started Despite Out Of Town Homeowner Not Having A Mortgage With Foreclosing Lender

In Central Florida, WFTV Channel 9 reports:
  • A Kissimmee homeowner was in England when he learned a Florida bank had mistakenly started foreclosure proceedings on his house. As it turns out, Denroy Bell didn't even have a mortgage with the bank, Citi-Residential. The bank admitted that it's dealing with so many foreclosures in Central Florida that it made a mistake. Bell's neighbor called him when she saw the locks being changed and the pool empty. "It was like the army came up and took over the house," Esther Goshop, a neighbor, said. Bell lives primarily in London and rents out his home when he's not in Florida. He said the bank apologized for the inconvenience. Bell wants the company to pay to clean up the pool and change the locks back.

Source: Bank Mistakenly Starts Foreclosure Process On Wrong House In Kissimmee (read story) (watch video).

Go here for other posts on foreclosure services companies who have improperly change locks, remove belongings, etc. ForeclosureLockOuts

Woman Wanted By Cops For Fraudulently Buying Five Properties Turns Out To Be 9 Year Old Child Victimized By I.D. Theft

Buried in a recent story by Reuters news service on how fraud has exacerbated the housing crisis is this excerpt:
  • In a recent case in Chicago, [...] the authorities prepared to file charges against a woman who had fraudulently bought five properties. "When we turned up to serve papers on her, we found she was 9 years old," [...]. "Her uncle had stolen her identity."

Source: Fraud compounds woes of housing crisis.

North Carolina Lawyers Volunteer Assistance To State's Low-Income Homeowners Facing Foreclosure

In North Carolina, a press release issued on Carolina Newswire by a group of North Carolina attorney groups announces:
  • More than 100 attorneys participated in a recent training designed to help them volunteer legal help to low-income families who are dealing with mortgage foreclosures across North Carolina. The training event was sponsored by the NC Academy of Trial Lawyers, which requested that its members reach out to help individual homeowners who are being threatened with foreclosure or are presently in the foreclosure process and cannot afford legal representation.


  • The training, "Responding to the Subprime Mortgage Meltdown: Defending Homeowners Against Foreclosure," included sessions on the foreclosure process, identification of defenses and optional bankruptcy. Participants heard private attorneys and representatives of the legal services organizations who have partnered to provide mortgage foreclosure representation. Participants are expected to provide representation on a pro bono basis for low-income families who are facing mortgage foreclosure.

Among the legal groups involved in the effort were:

For more, see Attorneys volunteer to help low-income families with mortgage foreclosure defense.

Monday, March 10, 2008

Feds Target Countrywide In Criminal Probe, According To Government Leak

The New York Times reports:

  • The federal authorities have opened a criminal inquiry into Countrywide Financial for suspected securities fraud as part of the continuing fallout over the mortgage crisis, government officials with knowledge of the case said on Saturday. The Justice Department and the Federal Bureau of Investigation are looking at whether officials at Countrywide, the nation’s largest mortgage lender, misrepresented its financial condition and the soundness of its loans in security filings, the officials said.

  • The investigation — first reported on Saturday in The Wall Street Journal — is at an early stage, said the officials, who spoke on the condition of anonymity because they were not authorized to discuss ongoing criminal matters. It is unclear whether anyone will ultimately be charged with a crime.

For more, see Countrywide Said to Be Subject of Federal Criminal Inquiry.

Missing Loan Docs Preclude Foreclosure On $1.5M Mortgage; Homeowner Continues "Living Large" 5+ Years After Default

A story in Bloomberg News late last month reported on the increasing problem mortgage companies are facing as a result of the screw-ups in the chain of custody in physically handling essential mortgage loan documents when mortgage loans are sold from investor to investor and, in many cases, end up as part of a mortgage securitization trust. Such screw-ups have resulted in an inability to physically produce the documentation (ie. promissory notes, assignments of mortgage) necessary to commence a foreclosure action when attempting to repossess real estate. The story begins with this short anectdote:
  • Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002. That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork. "If you're going to take my house away from me, you better own the note,'' said Lents, 63, the former chief executive officer of a now-defunct voice recognition software company.
For more, see Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish

For actual court cases that provide real life illustrations of the problems foreclosing lenders have faced in the past when these types of screw-ups occur, see:
  • State St. Bank & Trust Co. v. Lord, 851 So. 2d 790; (Fla. App. Ct. 4th Dist., 2003),
  • In re Shwartz, (Bankr. Ct., Mass. April 19, 2007),
  • Terwin Advisors LLC vs. Balbachan (New York Supreme Court - Queens County; April 16, 2007) (Note: For those unfamiliar with the New York judicial system, the "New York Supreme Court" is simply what the state calls its trial courts - not to be confused with the New York Court of Appeals, which is the state's "highest court."),
  • Lasalle Bank Natl. Assn. v Lamy, 2006 NY Slip Op 51534(U); 12 Misc 3d 1191(A); (New York Supreme Court, Suffolk County; August 7, 2006).

For a related post, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

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

Servicer-Created "Shifting Platform Of Financial Doubt" May Lead To Unnecessary Foreclosures

In Jacksonville, Florida, a recent editorial in The Florida Times Union touches on the problem faced by many financially strapped homeowners concerning their inability to communicate directly with the acual holder of their home mortgages and their inability to rely on the intermediaries - the mortgage servicers - for reliable information:
  • April Charney, a lawyer with Jacksonville Area Legal Aid, is familiar with these scenarios and described some of the key issues: "The net effect to the borrowers is that they stand upon a shifting platform of financial doubt unable to rely upon the servicer for customer service to avoid further debt and expense. This result is driven by the fact that the servicer is conflicted by the layers of padded fees and costs that can be secretly pocketed by the servicer upon the event of the borrower's default.


  • With mortgages sold to a series of servicers, the link between borrower and lender is broken. It seems a basic consumer right to provide consumers with the updated status of their debt.

For more, see Foreclosure: Full disclosure, all the time.

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

NYS Legislation Calling For Moratorium On Home Foreclosures Gaining Steam

In New York City, the Brooklyn Daily Eagle reports:
  • The bipartisan remedy [being proposed by state lawmakers] – holding off home foreclosures for one year will give homeowners and lenders a chance to negotiate new terms – actually hearkens back to the Great Depression. A very similar law, says [Brooklyn Assemblyman Jim] Brennan, was proposed by then-New York Gov. Herbert Lehman in 1933, passed, and then upheld the following year by the U.S. Supreme Court. So far, the bill has picked up 74 sponsors in the state Assembly – just a few short of the “magic number” of 76 or 77 needed to get a bill rolling – and 24 sponsors in the Senate.

For more, see Brooklyn Asssemblyman’s Foreclosure Moratorium Bill Picks Up Steam.

Chicago-Area Recorder Of Deeds Offices Consider Establishing "Deed Theft" Units

In Illinois, the Chicago Tribune reports:
  • [B]eginning in 2007, [Cook County Recorder of Deeds Eugene] Moore's office began mailing postcards to homeowners when quitclaim deeds were filed, transferring interest in their properties. Some criminals had been forging owners' signatures on the deeds, transferring ownership to themselves, and then mortgaging the homes without the real owners being any wiser -- until the foreclosure notices started arriving. [...] Moore said he needs additional resources to keep up with the bad guys. So he is asking for $1 million in additional funding from the county to create a mortgage fraud task force inside his office. The squad would be made up of several sheriff's police officers trained in financial crimes and at least one full-time prosecutor.


  • As for what could be accomplished, Moore points to Detroit, where the register of deeds office in Wayne County, Mich., has the kind of unit he wants. Since September 2005, the Wayne County task force has opened 420 cases of suspected mortgage fraud and sent dozens of people to prison. There is a hot line for consumers and two intake workers to sort through the calls. Four sheriff's deputies investigate cases and two full-time prosecutors bring charges.

For more, see Mortgage fraud units proposed (Officials in Cook, DuPage Counties press for task forces to probe suspected falsified transfers).

Go here and go here for other posts on deed theft by forgery, swindle, etc. deed theft yahtzee

Nebraska AG Warns Homeowners On Foreclosure Rescue Scams

In Nebraska, The Grand Island Independent reports:
  • It's a world of consumer beware. As people struggle to make house payments and keep their homes out of foreclosure, scam artists are popping up to prey on them. "If any company claims it can stop foreclosure if you sign a document appointing its representatives to act on your behalf, beware," Nebraska Attorney General Jon Bruning said. "You could lose your home and your equity." [...] In an effort to help protect homeowners, Bruning supports the Department of Banking and Finance's proposed legislation that would provide protection to homeowners dealing with foreclosure. The bill regulates foreclosure consultants and equity purchasers, plus adds a criminal penalty for violations, according to Bruning's office.

For more, see Attorney general warns vulnerable consumers to beware of scam artists.

Sunday, March 09, 2008

Rise In Foreclosures A Driving Force In Fairfax County Operating Budget Squeeze

In Fairfax County, Virginia, The Washington Post reports:
  • [A]s with most cities and counties in the region, Fairfax County relies primarily on real estate, car and sales taxes to pay for schools, police, fire protection, parks, libraries and other services. And as in most other communities, Fairfax is just beginning to feel the effects of the regional economy's downward drift. The rise in foreclosures, generated by the subprime mortgage crisis, is a driving force in the county's budget crunch. Reduced interest income resulting from lower federal rates is also a factor. So is a softening in the commercial real estate market because of a glut of empty space and flattening job growth.

For more, see Damage From Downturn May Be Worse Than Expected (Officials Say Rising Foreclosures and Drop in Spending May Force Revision of Feb. 25 Budget Proposal).

Frank Makes Case For Housing Rescue

Congressman Barney Frank (D - Mass.), chairman of the House Financial Services Committee, makes his case for a "housing rescue" in a recent Washington Post article in which he describes his basis for supporting a housing rescue, as well as the legislative initiatives his committee is working on. He remids us, in the following excerpt, that it isn't only the homeowners facing foreclosure that are feeling the fallout of this crisis:
  • The negative consequence of this cascade of foreclosures has turned out to be more damaging than predicted. Of course, individuals whose homes are foreclosed suffer the most, and in some cases it is a suffering to which their own irresponsibility contributed. If they were the only ones being hurt, the arguments for simply letting things take their course without intervention would be stronger.

  • But there are concentric circles of victims. First, the people who own homes in those neighborhoods that have a high rate of foreclosures will see their property values decline, and a spread of blight will diminish the quality of their lives. Second, communities where foreclosures cluster are hit with a double whammy -- a need for more public safety and other services to deal with the foreclosed properties as well as a drop in the tax revenue that occupied homes contribute. Third, the economy as a whole weakens as the problems spread even more widely.

Congressman Frank goes on to describe the goals of the initiatives his committee is working on:

  • Taken together, [the] initiatives will help meet three crucial objectives. First, they will allow millions of families to avoid the disaster of losing their homes. Second, they will help hard-pressed local jurisdictions avoid the cascade of deteriorating neighborhoods and abandoned homes that follow in the wake of large-scale foreclosures. Finally, they will help stem the steep and destabilizing decline in house prices that led to and is intensifying the financial crisis.

For the story, see The Case for a Housing Rescue.

Lenders Walking Away From Some Vacant Foreclosures, Sticking Taxpayers With Maintenance Bill

Bloomberg News reports:
  • The public's bill for maintaining foreclosed properties abandoned by lenders and investors may reach as much as $50 billion this year, according to Peter Sepp, vice president of the National Taxpayers Union in Alexandria, Virginia. The U.S. Congress is considering various bills to help cover some of the costs to towns and cities for securing and policing the empty homes, Sepp said. "Housing is now infecting all corners of the economy, including our local governments,'' said Mark Zandi, chief economist of West Chester, Pennsylvania-based Moody's, an economic forecasting agency and unit of Moody's Corp. Banks or mortgage companies typically hire people to care for repossessed properties. As foreclosures increase and the value of property drops, more companies are simply walking away, Zandi said.


  • Cleveland Housing Court Judge Ray Pianka is cracking down on banks and lenders that neglect the homes they seize. He posts a warrant list on his court's Web site of people and companies that have failed to answer a summons or pay a fine for building code violations. [...] "Our property values and our quality of life are being decided by people in Hong Kong and Germany who don't even know where Cleveland is,'' said Pianka, who lives on a street with five foreclosed properties, including a condemned home he says is owned by Deutsche Bank.

For more, see Morgan Stanley, Lone Star Stick Taxpayers With Default Costs.

For more on Housing Court Judge Ray Panka, see Cleveland Housing Court Judge Hammering Foreclosing Lenders With Fines, Code Violations.

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

West Virginia Lawmakers OK Rule Mandating Vacant Property Registration

In Charleston, West Vvirginia, Huntington News reports:
  • A bill [...] authorizing municipalities to create a semiannual vacant property fee, registration of the property and appeal procedures has passed the legislature. It now goes to the governor for his signature. The regulation of vacant properties under state law would grant municipalities and governing bodies with the ability to cause the registration of any residential or commercial property structure that is vacant for at least six months and is “characterized by violations of applicable housing codes established by the municipality.”

For more, see Vacant Property Bill Passes Legislature (Allows for Property Liens for Fees).

Palm Beach County Feeling The Pinch Caused By Vacant Homes

In Palm Beach County, Florida, WPEC-TV Channel 12's I-Team is doing a series of "Clean It Up" investigative reports on the havoc that vacant houses, many in foreclosure or already bank-owned, are creating for neighbors, the neighborhood, code enforcement officers, and local municipalities operating on tight budgets throughout the area. Among the problems are rotting homes creating health and safety hazards, unfinished new homes abandoned by builders, overgrown landscapes attracting rats and snakes, property used as dumping grounds, and homes being broken into and used by local teens to host unauthorized, unsupervised parties.

Municipalities are feeling the squeeze on their budgets, given their limited resources for additional code enforcement, maintenance workers used to clean up and maintain the abandoned homes' exterior, and police in responding to calls involving home break-ins, burglaries, vandalism, and teen beer bashes at the vacant homes.

Go here (video only) for Channel 12's "Clean It Up" series of investigative reports.

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