Saturday, April 26, 2008

Stopping "Stop Foreclosure" Signs On Haverhill City Council Agenda

In Haverhill, Massachusetts, The Eagle Tribune reports:
  • [C]ity Councilor William Macek said he's been asked to do something about a recent wave of advertising signs popping up all over Haverhill, especially in the northern part of the city and on streets such as heavily traveled North Avenue that leads to Plaistow, N.H. "I responded to a constituent who is absolutely correct in the amount and usage of telephone poles to advertise," Macek said. "She was referring to a sign about not losing your house and stopping foreclosure. She also commented on, and I've heard the chief mention, that we need strong ordinances to prevent these groups from using our highway ramps to advertise."

For more, see Haverhill targets 'eye pollution' Wave of signs on poles, sides of streets draws complaints.

Go here for other posts on the battle against the ubiquitous "We Buy Houses", "Stop Foreclosure", etc. road signs.

Real Estate Scams, Tenant Foreclosure Evictions, Concrete Poured Into Home Drain Pipes On The Upswing In Southern Nevada, Says Housing Advocate

In Carson City, Nevada, KOLO-TV Channel 8 reports:
  • Some Nevadans who fall behind on their mortgages and face foreclosure are trashing the homes as they move out, a [state] legislative study panel was told Tuesday. Gail Burks of the Las Vegas-based Nevada Fair Housing Center said there's an increase in southern Nevada borrowers who are giving up when faced with foreclosure and "are taking things out of the property, they're putting cement down the plumbing."

  • Burks also said she's seen an increase in violations of a new state law that's intended to block bogus real estate deals and ensure that borrowers can afford a home loan. She also said there are more cases of renters being forced from homes going through foreclosure.

For more, see Borrowers Trash Homes.

Two Arizona Men Who Say They Paid $500 For Contents Of Home Purportedly In Foreclosure Now Face Burglary Charges

In Chandler, Arizona, the East Valley Times reports:
  • Two East Valley men thought a homeowner’s loss was their gain, police said. For $500, they could have all the possessions in the soon-to-be-foreclosed house in Chandler. But Phillip Figueroa Martinez and Frank Valenzuela paid that sum to burglarize a model house, police said. They were arrested Saturday on suspicion of second-degree burglary. As for the unidentified “homeowner,” he’s $500 richer and nowhere to be found.

  • According to arrest documents, Martinez, 29, of Chandler and Valenzuela, 25, of Mesa said they were drinking in a bar when they met a man who told them his tale of real estate woe. A deal was struck, the two rented a trailer and headed to [the home]. At the house, the men paid cash to the “homeowner,” who then left. The two entered the house through an unknown means, perhaps by kicking in the door, and loaded the trailer with as much as they could. An estimated value of the stolen goods was not immediately available.

  • Around 6:35 p.m., police received a call of a suspicious vehicle and men taking furniture out of a model house. With the trailer full, Martinez and Valenzuela drove away. But police stopped their vehicle [...] about 2 1/2 miles away. That’s when, police said, the two discovered their deal on the furniture was not much of a deal at all.

For the story, see Pair lose $500 in burglary scam, police say.

Four Abandoned Homes Torched In Four Hours In Slavic Village; City Official Blames Foreclosure Crisis

In Cleveland, Ohio, WKYC-TV Channel 3 reports:
  • Four homes caught fire in four hours on Wednesday night. Now neighbors [...] are surrounded by boarded up homes and arson signs. [...] Two abandoned homes near her were set on fire. Flames spread to two other abandoned homes, all on the same block.
  • What's going on in the neighborhood has caught the attention of people at the highest levels. Cleveland Councilman Anthony Brancatelli took contractors who work with the Federal Department of Housing and Urban Development on a tour of the [Slavic Village] neighborhood. He talked about how the fires were a direct result of the foreclosure crisis. "What happened is a number of predatory lenders came in and created a situation where these houses would get stripped and condemned," he said. "There are homes here that are mortgaged for 90-95 thousand dollars that are not worth 10 and 15 thousand dollars."
For more, see Fear grips Slavic Village neighborhood after arson fires (watch video) (read transcript).

Go here and go here for other posts on vacant homes leaving its mark on neighborhoods.

For other stories on fires & foreclosures, go here , go here , go here, and go here. foreclosure arson whale neighborhood destruction from foreclosures zach

"Burning Desire" To Escape Debt: Overall Numbers Still Small, But Some Areas Report Significant Increases

The Los Angeles Times reports:
  • Some folks celebrate their last home mortgage payment by setting fire to their loan agreement. Lately, some people behind on their mortgages are simply setting fire to their homes. In what appears to be the latest symptom of the nation's mortgage meltdown and credit crisis, insurers, law enforcement officials and state agencies nationwide report a jump in home and automobile fires in the last year believed to have been set by owners unable to pay their debts. The numbers are small, but they're leading the insurance industry to scrutinize more closely what seem to be accidental blazes.


  • Few state or federal agencies categorize arson in terms of the financial status of liens on the property, making nationwide figures elusive. Still, pockets of the country are showing a significant increase. [...] Frank Scafidi of the National Insurance Crime Bureau, a membership organization that tracks insurance fraud, says his group has not identified a rise in financially motivated arson. "Everything we've found does not support that," he said. But some observers say state authorities and insurance companies play down the issue -- perhaps out of fear of copycat crimes.

For more, see Debt may be a factor in suspicious house, car fires (Insurers and law enforcement agencies are seeing more cases with possible financial motives. Many involve properties that are near foreclosure).

For other stories on fires & foreclosures, go here, go here, go here, and go here. foreclosure arson whale

Fire Fighting Issues Involving Vacant / Abandoned Homes

An article in Fire Engineering Magazine comments on issues related to fighting fires in vacant/abandoned houses:
  • With foreclosure rates dramatically increasing around the United States, has your department looked at how it will address the associated problems? An increase in foreclosure and bankruptcy means an increase in vacant properties. [...] Has your department discussed how to deal with this? Are you making mental notes? As the number of vacant house fires increases, will the number of firefighter injuries climb along with them? At what point does a company officer decide not to go interior? Remember, firefighter safety is our number-one priority. If it isn't safe and justifiable, don't risk life over wood and stucco.

For the entire commentary, see Fire Commentary: The Foreclosure Issue.

For other stories on fires & foreclosures, go here, go here, go here, and go here. foreclosure arson whale

South Florida Man Shot Dead By Swat Team After Taking Two Condo Association Employees Hostage; Rage Due To Delinquent Maintenance, Assessment Fees

In Pompano Beach, Florida, the South Florida Sun Sentinel reports:
  • Upset over mounting fees levied by the Cypress Bend condo association, a man brandished a gun and took two association employees hostage Thursday before members of the Broward Sheriff's Office SWAT team shot him to death. Patrick Dellisanti, 57, lived in the 2200 block of South Cypress Bend Drive. "He was angry and he had complaints, but he let that anger turn to violence," said sheriff's spokesman Jim Leljedal.


  • Dellisanti lived with his mother, Edith Jemas, 80, who owned the condo. Neighbors said Dellisanti did not appear to have a job and said Jemas was ill and under the constant care of personal nurses. County records show that she was behind on her condo association dues, leading the association on April 11 to put a lien against her home. Jemas missed two quarterly maintenance fees, due Jan. 1 and April 1, totaling $1,707. She also owes a $2,498 special assessment, along with $100 in late fees, the records show. [...] A recent notice from the association about the mounting overdue payments and late fees are what pushed Dellisanti to confront the condo association employees, neighbors said.

For more, see Pompano Beach man killed by police after going on rage about condo fees.

For video coverage by CW News at 10, see Deadly SWAT Standoff at Pompano Condo.

See also, WFOR-TV Channel 4: Family Demands Answers In Fatal SWAT Standoff.

Mandatory Reporting Of "Pro Bono" Hours Irks Some Hawaii Lawyers

In Hawaii, the Star Bulletin reports:
  • This year, for the first time, lawyers in Hawaii each had to report how many hours they donated in pro bono, or free, legal services annually. It was not a popular requirement. The Hawaii State Bar Association had weighed in against it. But the [Hawaii] Supreme Court adopted the rule in October, and it took effect as lawyers re-registered to practice law in 2008.

  • Chief Justice Ronald Moon says he was surprised that the idea was controversial. The new rule does not force lawyers to do volunteer work, just to report their donated hours. "To be perfectly honest, I was totally disappointed and dismayed," Moon said. "It is perplexing to me that mandatory reporting -- not mandatory pro bono services -- could garner any opposition."


  • "Requiring people to report, I suppose there's a little bit of a guilt trip," said Lyn Flanigan, executive director of the Hawaii State Bar Association. "Putting down a zero makes you think, 'What can I do?' And a lot of people did call and say, 'What can I do?'"

For the story, see ‘Little bit of a guilt trip’ spurs lawyers to donate services.

Friday, April 25, 2008

Failure To Deliver Condo Units Results In Suits Against New Hampshire Builder

In Litchfield, New Hampshire, The Nashua Telegraph reports:

  • Stephen Broussard had found the ideal home: a Cape-style duplex condo with a cathedral ceiling, spacious rooms, a porch and a close view of the woods. The 60-year-old computer programmer and his wife, Maryann, adored the unit so much they put down a deposit of more than $50,000 on it and expected to spend their golden years in the 55-plus community. The Broussards signed the purchase and sale agreement in January 2007.

  • Fifteen months later, the condo looks much as it did when construction first started, Broussard said. The interior is nowhere near completion, and the Broussards still live in the home they wanted to leave behind.The developer of the Broussards’ condo and the other 23 units of Blossom Court never put their $52,500 into escrow and can’t account for the money, the couple claims. But the Broussards aren’t alone. Five other owners of Blossom Court condos have sued developer Richard Berube for a slew of alleged misdeeds that they say have spoiled their retirement dreams. “We all worked hard,” said Bruce Heiser, another of the condo owners suing Berube. “This is what we wanted, and we all got screwed.”

For more, see Condo owners’ dreams dashed; lawsuit filed against developer.

For a related stories, see:

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here. contractors stiff subs customers yelbow

The Problems Of Vacant & Abandoned Homes Hitting Throughout South Florida

In South Florida, WTVJ-TV Channel 6's Consumer Investigative Unit recently did a report on the effect that vacant and abandoned houses are having on neighborhoods throughout the greater Miami-Fort Lauderdale area. A cop, code enforcement officer, real estate agent, bank foreclosed home inspectors and angry residents were interviewed for their comments on how these unwanted eyesores are further dragging down property values throughout the area, as well as how the locals are trying to deal with the health, safety, and crime issues that typically arise with the existences of vacant and abandoned homes.

For the story, see Foreclosure Fallout (watch video) (read story transcript).

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

Miami Homeowner Scammed In Foreclosure Rescue Deal

In Miami, Florida, WTVJ-TV Channel 6 reports on a foreclosure rescue scheme that utilized unwitting college students to go door to door and approach homeowners facing foreclosure with a program purportedly designed to save their homes, but was nothing more than a scheme to get them to unknowingly sign away their homes, and ultimately evict the homeowner from the house.

The students were recruited on the Florida Memorial University by the Syntegral Corporation headed by Michael John and Denise Gomes. The financially strapped homeowner ultimately signed away her home to another company, Kelynem Properties, and Dudley Kinlock. Not long after signing the paperwork that she thought was a loan refinance, Kinlock moved to have the homeowner evicted.

For more, see Stealing Home? (watch video) (read transcript).


On April 1, 2009, this blog was contacted by a representative for Syntegral and was advised that there are no active cases or investigations involving the firm.

A Day In The Life Of A Miami Process Server Delivering Foreclosure Notices

In Miami, Florida, WFOR-TV Channel 4 recently road "shotgun" with a local process server as he delivered the bad news of newly commenced foreclosure actions to financially strapped homeowners. For more, see Process Servers Do Dirty Work Of Foreclosures (video only).

On a related story on one type of occupational hazard a process server recently faced when serving a foreclosure notice, see Central Florida News 13: Police: Man, 82, Points Gun At Process Server.

CBS Evening News On Squatters Moving Into Foreclosed Homes

In Sacramento, California, the CBS Evening News ran a story last night showing its correspondent, Ben Tracy, tagging along with a couple of local code enforcement officers making the rounds, inspecting vacant and often vandalized foreclosed homes taken back by the bank, bumping into occasional squatters along the way. Some are simply looking for a place to live. Then, there are the others, as this excerpt describes:
  • Some of these squatters are even more brazen. they'll clean a place up, get the power hooked up, then they'll change the locks on the door and actually rent it out, collecting money on a place they don't even own. Real estate fraud detective Mike Wood says scammers reel in unsuspecting tenants by posting on sites such as Craigslist. "It's not till months later that the bank finally sends someone to check on the house and to discover that someone's actually living in there," Wood said. That makes it hard to know who belongs and who doesn't.

To read more, see The Frontlines Of The Foreclosure Crisis (After Banks Take Over Homes, Squatters Move In, Leaving Enforcement In A Bind).

For the CBS News video on this story, see Squatters On The Rise (A recent survey found that in 33 percent of cities nationwide vacant homes and blight).

Go here for posts on squatters taking up residency in vacant foreclosures.

Go here and go here for other posts on scammers running rent hoaxes, collecting fast cash by renting out homes they don't own. unwitting tenant rent scam yacht squatter foreclosure zebra

Alleged Indianapolis Land Contract Scammers Reportedly At It Again

In Indianapolis, Indiana, WRTV Channel 6 reports on an alleged scam by two local men involving the purchase of homes using a legal arrangement known as a land contract, a deal whereby the purchaser takes immediate possession of a home in exchange for a promise to make monthly payments until a final lump sum payment completes the sale.

  • Two men who buy homes under land contract but skip out on the payments after a few months have been looking for homes again, according to alleged victims who contacted Call 6 For Help. Joseph L. Stanley and business partner Steven Harris, who both own Spectrum Property Corp., would prefer people not know they are house hunting, Call 6's Rafael Sanchez reported. Call 6 has been following Stanley and Harris' activities since late summer 2006 and recently found them on Indianapolis' northwest side, where they were being forced from a home.
  • According to a Call 6 investigation, the owners of 30 properties were left with stacks of legal fees or ruined credit histories after dealing with Stanley and Harris over the last 14 years. As a result of several court battles, there are $326,639.98 in judgments combined against the men and their companies.

  • In some cases, the men move into the homes and live for free while the courts often take months to evict them. In other cases, they have tenants move into the homes. Spectrum keeps the rent and, according to homeowners, the company rarely pays what's owed on the property. That means the original homeowner gets stuck with a financial mess.

  • Call 6 brought the men's activities to the attention of the Marion County prosecutor's office in November 2006. "In and of itself, it's not a crime," deputy prosecutor David Wyser said. "It's just a breach of contract." The prosecutor's office confirmed an ongoing grand jury investigation into a possible pattern of abuse.

For more, see Call 6 Investigation: Land Contract Buyers At It Again (Men Leave Homeowners With Big Legal Fees, Bad Credit) (watch video) (read transcript).

For earlier stories on this alleged scam, see:

Editorial Note:

The prosecutor who commented for the story claims that the activities are not crimes, but rather, are simply civil matters. In other states, these activities may fall under the criminal charges of:

  • grand theft, theft by fraud or deception, obtaining property under false pretenses, securing writings or execution of documents by fraud or deception, engaging in a pattern of corrupt activity, theft of property by false pretenses from victims over the age of 60.

I wonder if the prosecutor quoted in this story is trying hard enough to find the existence of a crime in this case. Maybe it's possible that the state of Indiana doesn't have any of these crimes listed in its statutes.

County Human Rights Board Sides With Fort Lauderdale Woman In Housing Discrimination Complaint In Mezuzah Dispute

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • Broward County's human rights board on Wednesday backed a Jewish woman against the condo association that ordered her to remove a mezuzah from her door last year. A three-member panel of the Broward County Human Rights Board unanimously found reasonable cause to believe the board at the Port Condominium discriminated against lawyer Laurie Richter, 29, when members ordered her to remove the 5-inch mezuzah she had temporarily attached to her doorpost. A mezuzah is a small case containing a religious message that many Jews place on their door frames.


  • The next step in Richter's battle is expected to be mediation between her and the association that operates the 16-story, 129-unit building. If that doesn't work, Richter's attorney, Randall C. Berg Jr., said he will file a lawsuit for an unspecified amount of damages against the association. Damages could include her attorney's fees, emotional distress, pain and suffering.


  • Meanwhile, the state Senate, in a 40-0 vote at 11:13 a.m. Thursday, passed the bill that says a condo association "may not refuse the request of a unit owner" to attach a small "religious object" on the frame of a door. The measure, which now goes to Gov. Crist for approval or rejection, was approved by the House on April 18 in a 110-0 vote.

For more, see Broward panel: Jewish woman had right to hang mezuzah on condo door.

Alleged Conduct By Property Managers Leads To HUD Housing Discrimination Complaint

In Lafayette, Louisiana, The Daily Advertiser reports:
  • Nearly four years ago, when Shreveport real estate agent Angela Tatum took a couple to see a home for sale in Haughton's Camp Joy Marina, she did not find it unusual to see Confederate flags hanging from some of the houses. "It happens in the rural South," said Tatum, who is black. But when she received a phone call from the property manager a week later, she was shocked. Reggie Collier, who managed and owned the lakeside development with his wife, Kim, apparently saw Tatum showing her white clients the townhouse for sale on Sept. 20, 2004, and mistook her for a prospective buyer. Tatum said Reggie Collier called and told her he "did not want those kind of people" moving into the development. "I told him I was going to hang up," Tatum said. "I could not believe in that in this day and age this type of thing was going on."


  • The white couple who viewed the house withdrew their offer because they thought they might have a problem inviting black friends to their new home. That's when the owners of the house for sale, Sherrell and Ronald Tucker, made the discrimination complaint to HUD. They said trouble selling the house forced a foreclosure and accused the Colliers of causing them emotional pain and embarrassment.

According to the story, if the Colliers are found guilty of discriminatory housing practices they could face civil fines, be forced to reimburse the owners of the townhouse for any losses, be forced to compensate Angela Tatum for a lost real estate commission and be required to take "fair housing training."

For the story, see HUD charges North La. couple with discrimination.

For all of the specific allegations of threats and intimidation in this case, see:

Go here for more on filing Housing Discrimination Complaints with HUD.

Thursday, April 24, 2008

Career Criminal Gets 24+ Years In Foreclosure Scam

In Hamilton, Ohio, The Enquirer reports:
  • A foreclosure-relief scam artist was already ordered to spend 23 years and two months in prison for his crimes - but a Butler County judge tacked on an additional year to give Troy Lee Keith more time to comprehend the "economic ruin" he wreaked. Keith, 40, must serve 24 years and two months, Judge Craig Hedric ruled at a resentencing hearing Wednesday.


  • Troubled homeowners were promised that Keith would either assume their mortgages or buy their homes in exchange for monthly rent payments and a processing fee. But victims found themselves evicted because Keith reneged on his promises and just kept their money, authorities said. "You just stole from people that needed help," Hedric said as he lectured Keith. Keith, who represented himself in Wednesday's hearing, said he was acting on the behest of his employer.


  • By Hedric's tally, Keith has been convicted under 37 different case numbers in his adult life - and 35 of those cases were theft-related.

For more, see Operator of scheme gets more time (link no longer available online). foreclosure rescue

Ohio Lender Aggressively Pushing "Deeds In Lieu" Policy To Avoid Costly Foreclosure Proceedings

In Warren, Ohio, the Tribune Chronicle reports:
  • [F]irst Place [Financial Corp.] is trying a ‘‘deeds in lieu of foreclosure’’ policy that can help ease a tough situation for both lender and borrower, [chief executive Steven] Lewis told analysts Wednesday [...]. ‘‘Getting deeds in lieu of foreclosure is a common practice. We’ve been a bit more aggressive in bringing it as an alternative to borrowers,’’ Lewis said.

  • The practice calls for borrowers who are facing foreclosure to turn the deed to their house over to the bank. Borrowers gain by avoiding a potential ‘‘deficiency judgment’’ — the difference between what they owe and what their house is worth — that would stay on their credit forever, Lewis said. [...] Waiving the bank’s right to a deficiency judgment is a ‘‘pretty powerful’’ argument to convince borrowers to turn over their deed, Lewis said, adding the owners may be able to stay in the property a little longer.

  • One downside for the bank is it has to take charges against the amount of deficiency value it doesn’t receive, but Lewis noted in most cases the bank doesn’t get anything from it anyway.

For the story, see First Place meets crisis by accepting deeds, not foreclosing.

See also, Youngstown Vindicator: First Place Bank seeks deeds from nonpaying borrowers.

Hawaii Homeowner Fighting Back To Keep Home Unwittingly Signed Away In Foreclosure Rescue Deal

In Ewa Beach, Hawaii, the Star Bulletin reports on a local homeowner's experience with being allegedly ripped off of over $160,000 in a foreclosure rescue sale leaseback arrangement that she said was described to her as a refinance. According to the story, she and her husband signed the papers presented to her by the operator because they trusted her and she seemed very nice. The story also reports on her experience trying to find a lawyer to help her family:
  • The lawyers [the homeowner] called wanted "a couple of thousand dollars upfront" -- money she did not have. A nonprofit group she approached was overwhelmed with cases and could not help for a month. Her last call was to the Legal Aid Society [of Hawaii], which provides legal services to the needy. "I was so happy when they said they would help me," she said.

  • The society has twice managed to stave off eviction. It is representing [the homeowner] and her relatives in a Circuit Court suit to reclaim title to their home, alleging deception, misrepresentation, fraud, conspiracy, negligence, unauthorized practice as a mortgage broker and violations of notary public law. "When somebody steals your wallet, you can get arrested and charged for theft," [executive director of the Legal Aid Society of Hawaii Chuck] Greenfield said. "When somebody steals your house, it's not a criminal act. In Hawaii you have to locate an attorney and pursue your case in civil court."

For more, see Family needs legal help to save home.

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

Association Slaps $30K Lien For Lawsuit-Related Expenses Against Condo Owner Despite Losing Case

In Mundy Township, Michigan, The Flint Journal reports:
  • When a judge dismissed a condominium association's lawsuit against a condo-owning couple for starting a Web site related to the association, the pair hoped their trouble was over. Instead, the Lake Park Village Condominium Association has slapped a $30,000 lien on James and Helen Cunningham's home -- including the attorney's fees the association paid to sue the couple. The Cunninghams now face possible foreclosure on their condo.

For the full story, see Condominium controversy: Mundy Township couple sue their condo association over $30,000 lien involved in Web site debate.

Realtors: Lenders Making It Tough To Do Short Sales

Reuters reports:
  • Realtors in many U.S. states say lenders are demanding excessively high prices before allowing distressed borrowers to offload their homes in "short sales," making the housing crisis worse. In a short sale, a borrower dumps the home at [sale price] below [the existing balance on the mortgage] and the bank forgives the rest of the debt. The borrower's credit rating is hurt but for less time than in a foreclosure. Such sales have been touted by banks as a way out for homeowners unable to pay their mortgages.

  • But Realtors complain many lenders harm their own interests by refusing to accept bids below internal targets, even though that may eventually force lenders to sell homes in foreclosure, where bids are usually far lower. In addition, many lenders simply do not have the people or processes in place to handle a swelling tide of short sales around the country, Realtors say. As a result, lenders are taking far too long to evaluate offers, leading many would-be buyers to walk away from deals.

For more, see Realtors complain short-sale process is failing.

See also:

Pace Of Inspections During Building Boom May Pose Threats For Recent New-Home Buyers

In Las Vegas, Nevada, the Las Vegas Business Press reports:
  • Southern Nevada's building boom is bust and the foreclosure chickens are home to roost. Some industry experts now wonder if other consequences arising from the valley's long golden age of construction are also coming back to haunt valley consumers. The number of local construction-defect lawsuits has risen alongside the valley's population. And one reason for this may be the heavy regulatory burden assumed by the area's building and safety officials who oversaw all the area development.


  • Construction consultant Neil Opfer is concerned that the torrid pace of inspections in recent years may pose construction quality and safety threats today.

For more, see Ghosts from the boom (Quality and safety concerns arise as officials recount days of high-volume building inspections).

Wednesday, April 23, 2008

Nine Busted In Alleged Central Ohio House Flipping Scam

In Fairfield County, Ohio, The Columbus Dispatch reports:
  • Nine people have been charged in connection with a multimillion-dollar mortgage-flipping and theft-ring scheme that authorities say operated out of Fairfield County but stretched far beyond central Ohio. Huey W. Granderson, 32, of Millersport, called the ringleader by Fairfield County Sheriff Dave Phalen, faces the most serious charges. They include racketeering; 11 counts of money laundering; and charges of theft, securing writings by deception and tax evasion. He and the eight others are accused of systematically falsifying tax records and income statements since early 2006. Authorities say the group submitted the records to central Ohio businesses and mortgage companies to get loans for expensive property, vehicles and construction equipment. The value of the fraud is said to approach $3 million.


  • "This was a well-organized criminal enterprise," Phalen said. Most, if not all, of the homes are in foreclosure, he said. [...] Mary Jo Hudson, director of the Ohio Department of Insurance, said her department took the lead in the case because some insurance companies lost money. That, in turn, affects everyone's rates, she said. "It is all interconnected," Hudson said. "In this case, we began pulling on a thread and unraveled an entire sweater."

For more, see Nine charged in mortgage fraud, theft scheme ($3 million in homes, vehicles).

NY Judge Gives Go-Ahead To Foreclosure Sale, Says "Pro Se" Homeowner Failed To Prove Violations Of State Anti-Predatory Lending Statute

In Nassau County, Long Island, The New York Law Journal reports (reported at
  • Declining to halt a foreclosure sale, a Long Island, N.Y., judge has been left with the "unhappy result" of a loan that should not have been taken for which the homeowner is nevertheless responsible. The case of Alliance v. Dobkin, 10625/06, is illustrative of the nationwide mortgage lending crisis: An increasing number of borrowers who agreed to onerous loan terms to finance homes they could not otherwise afford now are facing foreclosure. [... Nassau County Justice Daniel R. Palmieri] ruled that Dobkin could not rely on the state's prohibition against predatory lending to forestall foreclosure of her home.


  • In her court papers, Dobkin, who represented herself, relied exclusively on LaSalle Bank, N.A. v Shearon, 100255/07, a Staten Island case where a judge found the lender guilty of multiple violations of the state's anti-predatory lending laws. [...] The only difference between that case and hers, argued Dobkin in court documents, was that her situation was "more outrageous."


  • John Cilmi, whose Manhattan firm, Cilmi & Associates, represented the plaintiffs in the Shearon case, said in an interview that the decision was "concise and well-reasoned" under the applicable statutes. However, utilizing only the statutes can paint an incomplete picture, said Cilmi, who was not involved in the Dobkin matter. "When you review the statute, even if a home loan does not fall under it due to the dollar amount involved, that does not mean that there is not potential fraud involved in other aspects of the lending process."

For more, see N.Y. Judge Finds Homeowner Liable for Loan (Homeowner relied on 'LaSalle Bank v. Shearon,' thought to be the first reported decision enforcing provisions of the Banking Law).

Go here other posts referencing the LaSalle Bank v. Shearon case.

Editorial Note:

Not having the benefit of legal counsel, Ms. Dobkin represented herself in this case. undo mortgage loans TILA batallion

Report: Mortgage Servicers Unable To Keep Up With Loan Workout Workload; Fail To Adopt Systematic Approach

The Washington Post reports:
  • Seven out of 10 troubled mortgage borrowers remain without a plan to work out their loans despite increased industry efforts to help them, according to a new report from a coalition of state attorneys general and banking regulators. The coalition collected data from 13 of the largest subprime lenders from October through January and found that they are overwhelmed by their workload and unable to keep pace with the growing number of borrowers who are falling behind on payments.


  • The good news is that more lenders appear to be embracing long-term solutions by rewriting the loan terms instead of simply rescheduling payments, the report said. Five of the 13 lenders are modifying the loans, usually by lowering interest rates and less often by forgiving part of the principal. But while lenders appear more motivated to help, they continue to work on a case-by-case basis instead of adopting a more systematic approach. As result, the process is time-consuming and often fails to help borrowers before they fall into foreclosure.

For the story, see Most Troubled Mortgage Borrowers Without Plan, Report Finds.

See also, Reuters: US states find little change in mortgage servicing. MortgageServicingIssuesAlpha

Team Of Volunteer Lawyers Mobilize To Defend Ohio Homeowners In Foreclosure

U.S. News & World Report recently ran a story on how the State of Ohio is addressing its foreclosure crisis. It reports that "the state has enlisted more than 1,300 lawyers—from state agencies and the private sector—to help struggling homeowners avoid foreclosure by reaching agreements with lenders or, if need be, through litigation." It interviewed Ohio Attorney General Marc Dann, who commented on what the function of these lawyers will be:
  • The lawyers will work with the borrowers to see if there are defenses to the actual foreclosure, whether there was fraud or unsuitability in the creation of the mortgage to begin with, and then to assist in two other ways: either to help litigate the case or to help structure a settlement.

  • With these complex mortgage products—the adjustable rates, the no-document loans that were out there—there are all types of things in the generation of loans that give rise to defenses. And with the fact that these loans then started to become sold seven, eight, nine, 10 times in the process, there are even legitimate legal issues as to whether or not the person filing the foreclosure has the legal right to file a foreclosure because they don't have ownership of the mortgage note. [...] We just convinced a court of appeals—the 10th District Court of Appeals in Franklin County, Ohio—to find that you can't bring a foreclosure action if you don't have paper that proves that you own the house.

When asked about the progress of Ohio's initiative so far, Dann commented:

  • It's been actually kind of rewarding. My uncle is a retired transactional lawyer, and he said, "I've been negotiating with banks my whole life. I am so excited about getting to do this." So he signed up, went to the training. My aunt is happy because it gets him out of the house. Here is a guy that was representing big Fortune 500 companies negotiating with their banks. All of a sudden, that playing field is about to get leveled.

For more, see How Ohio Is Tackling the Foreclosure Crisis.

For Ohio homeowners, see Ohio Foreclosure Assistance Information.

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.

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. undo mortgage loans TILA batallion missing mortgage foreclosure docs beta

Ohio Appellate Court Cases Point To The Need For Foreclosing Lenders To Prove Note Ownership & Otherwise Establish Right To Foreclose

A recent Ohio appeals court ruled last month that a foreclosing mortgage company is not entitled to a foreclosure judgment if they can't prove their ownership of the promissory note and how they came about owning the mortgage. For the ruling, see Everhome Mtge. Co. v. Rowland, 2008-Ohio-1282; (10th Dist. Ct. App.; March 20, 2008).

In making its ruling, the court cited prior Ohio appellate court decisions that also point to the apparent need for a foreclosing mortgage lender to prove that it is the owner of the promissory note and, thererfore, the real party in interest to initiate the legal action. For those cases, see:

Inasmuch as these cases are appellate court cases from the Ohio judiciary, they appear to carry more weight than any Ohio trial court decisions that have ruled to the contrary.

For the long version of this post, see Lender Not Entitled To Foreclosure Judgment Due To Failure To Prove Promissory Note Ownership, Says Ohio Appeals Court.

In a related story, see U.S. News & World Report: How Ohio Is Tackling the Foreclosure Crisis.

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 beta

Plummeting Condo Market Faces More Woes: Mortgage Financing About To Dry Up

Syndicated real estate columnist Kenneth Harney writes in a recent article:
  • If you own or plan to buy a condominium, an ominous new phase of the mortgage credit squeeze could be looming on your horizon. As a result of underwriting changes by giant investors Fannie Mae and Freddie Mac, plus severe new restrictions by private mortgage insurers, getting a loan on a condo unit - or even refinancing one you already own - could prove tougher than you imagined.


  • Under Fannie Mae's changes, most of the due-diligence research on condominium projects' key characteristics - their legal documentation, the adequacy of condo association operating budgets, percentage of unit owners who are late on association-fee payments, percentage of space allocated to commercial use, and percentage of units owned by investors - must now be performed up front by loan officers. Not only is this time consuming and costly, but under the new procedures, Fannie Mae expects the lender to warrant the accuracy of its research. Some condo project legal documents run into the hundreds of pages of text, yet lenders are supposed to take legal and financial responsibility for their accuracy.


  • Bruce Calabrese, president of Equtable Mortgage Corp. in Columbus, Ohio, said "everybody is really backing off condos" because of all the restrictions and changes. He said he personally owns two condo units - one in Florida, another in Myrtle Beach, S.C. - and even though he is in the mortgage industry, "I don't think I could refinance either of them right now if I tried."

For more, see Condo financing getting a lot harder in wake of credit woes (San Francisco Chronicle); or Restrictions on condo loans getting severe (St. Petersburg Times).

More On The Trouble Facing Florida Condo Associations

In South Florida, The Miami Herald reports:
  • At the Fountains of Tamarac, the condo association has no insurance, a couple of unit owners are cutting the community's grass themselves, and 90 percent of the unit owners aren't paying their maintenance fees. Even two banks, both of whom acquired their condos out of foreclosure, haven't paid their dues. [...] The Fountains of Tamarac is an extreme example of a growing problem in South Florida: As the economy slumps and home prices fall, a growing number of home- and condo owners are not paying their community fees. That's creating enormous problems for their neighbors, who must either pick up the slack by paying higher fees or else live with reduced services.


  • How widespread are such problems? According to a recent Internet survey of 487 Florida condo and homeowner associations by the Hollywood-based law firm of Becker & Poliakoff: (1) 51 percent said that mortgage foreclosures were creating a revenue shortfall and a burden on the association's finances, (2) 37 percent said they have raised maintenance fees to cover the shortfall, (3) 43 percent said they have units that have been unoccupied for at least six months because of mortgage foreclosures.

  • And that's a small sampling. There are 7,149 condo associations in Miami-Dade and Broward counties alone, according to the Florida Department of Business and Professional Regulation.

For more, see Unpaid fees trouble condos (From the West Broward suburbs to Miami's trendy Brickell high-rises, condo associations are raising fees or cutting services because some of their members aren't paying their share) (when link expires, try here).

In related articles, see:

Twin Cities' Suburb Hit Hard By Effects Of Housing Boom & Bust

In Minnesota, the Minneapolis Star Tribune recently published a three part report on the real estate problems being faced in Wright County, a Twin Cities suburb.
  • Just two years ago, Wright County epitomized the American dream of home ownership. Young families went there in droves, attracted by the cheap land, good schools and bucolic neighborhoods. But today, that dream is unraveling, as foreclosures rip through Wright County neighborhoods at a rate of 23 a week. What happened?

  • Plummeting home values means some families are trapped, unable to refinance, sell or make ends meet. Speculators helped drive the boom in Wright County — and the bust. Towns welcomed the development with new schools and wider roads. Now they’re paying the price.

For more, see:

  • Part 1: Minnesota's new ghost towns (In Wright County, reckless speculation and the mortgage meltdown have turned subdivisions into virtual ghost towns),

  • Part 2: Housing bets gone bad (Wright County was a haven for speculators -- until they got burned in the downturn),

  • Part 3: Housing downturn has suburbs stuck with the bills (Wright County welcomed growth with new schools and wide roads. But as half-built subdivisions lie fallow, it's paying the price. Officials are scrambling to revitalize neighborhoods that have fallen into decline just years after they were built).

Tuesday, April 22, 2008

Mortgage Servicers, Foreclosures, Legal Standing & Proving Ownership Of Promissory Note

In Iowa, The Des Moines Register reports:
  • Figuring out which company to deal with during a foreclosure can be daunting. Even if the original mortgage was with a company recognized by the borrower, that company may not be the one acting against the borrower in court. For example: Wells Fargo filed more than 3,600 foreclosure lawsuits in Iowa from January 2005 to February 2008, more than any other company identified in Iowa court data. But the company could be taking legal action because it processed payments for another mortgage company or acted as a trustee for investors - not because it's the original lender.

  • Two company names that often appear on Iowa foreclosures - Deutsche Bank and Mortgage Electronic Registration System, or MERS - can be even more puzzling to borrowers.


  • University of Iowa law professor Katherine Porter led a national study of 1,733 foreclosures and found that 40 percent of the creditors filing the lawsuits did not show proof of ownership [of the promissory note]. [...] Companies, she said, have been "putting the burden on the consumer - who is bankrupt - to try to decide whether it's worth it to press the issue."

  • Max Gardner III, a bankruptcy attorney in North Carolina and a national foreclosure expert, said the trend is spreading to other states. "You have to prove in North Carolina that you have the original note," he said. "Judges have not (asked for) that very often, until the last five or six months."

For more, see Firm pursuing foreclosure might not be your lender.

For Katherine Porter's report examining mortgage companies frequent non-compliance with law in consumer bankruptcy cases, see Misbehavior and Mistake in Bankruptcy Mortgage Claims.

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 beta

Twin Cities' Lender Seeks To Buy, Work Out Problem Mortgages

In St. Louis Park, Minnesota, the St. Paul Pioneer Press reports:
  • Mark Saliterman's bank isn't quite 3-years old and hasn't turned a profit, but the 58-year-old entrepreneur still thinks it can help fund troubled Twin Cities homeowners out of foreclosure. VisionBank of St. Louis Park, which Saliterman started in 2005, is rolling out a program to help homeowners who are in or are facing foreclosure keep their homes. Through HumaneMortgage, VisionBank will purchase problem mortgages at a discount from other lenders and lower the monthly payments to a rate the homeowners can afford.

For more, see VisionBank sets sights on problem mortgages (Plan to buy, re-fi loans could curb foreclosures, owner says) (if link expires, try here).

Washington State AG Settles Suit With Florida-Based Upfront Fee Foreclosure Rescue Operator

The Washington State Attorney General’s Office announced yesterday:
  • Approximately 200 Washington consumers who paid for a service that they thought would help save their homes from foreclosure will receive partial refunds under a new settlement announced [yesterday] by the Washington Attorney General’s Office. The homeowners each paid $1,200-$1,500 to Foreclosure Assistance Solutions LLC, of Clearwater, Fla. More than 70 percent of homeowners who signed up with Foreclosure Assistance Solutions ended up losing their homes anyway. The company went out of business in fall 2007. [...] The Attorney General’s Office accused the company of violating the state’s Consumer Protection Act, Credit Services Organization Act and Commercial Telephone Solicitation Act.


  • Foreclosure Assistance Solutions did not admit to any wrongdoing in the settlement but agreed to pay $78,125 in restitution to Washington consumers, as well as $20,000 in attorneys’ fees. The settlement also includes injunctive provisions limiting how the company does business, should it offer services again in the future, as well as an additional $100,000 in civil penalties for failure to comply with the agreement.

The Washington AG stated that some of the solicitations sent to the homeowners by Foreclosure Assistance Solutions mimicked official government notices. In addition to announcing the settlement in this case, AG Rob McKenna also issued a reminder on the recent passage of legislation, HB 2791, designed to regulate foreclosure rescue operators.

  • The Washington Attorney General’s Office introduced legislation this past session to help protect homeowners from foreclosure rescue scams where the “rescuer” agrees to purchase the distressed property then sell or lease it back to the original homeowner. HB 2791 takes effect June 12, 2008. The new law will require that the purchaser prove the homeowner is able to make the payments and provide a written contract with clearly disclosed terms. The new law gives the homeowner the right to cancel the contract within five business days. It also requires that the original homeowner receive at least 82 percent of the difference between the property’s fair market value and the underlying mortgage should the home be sold to a third party.

For more, see Foreclosure rescue company must refund 200 Washington consumers.

To view the cionsent decree and the original lawsuit in this case, see:

Other posts referencing Foreclosure Assistance Solutions.

Go here for a website possibly created by an unsatisfied customer of Foreclosure Assistance Solutions.

Business Booms For Specialty Insurers Issuing Coverage On Empty Detroit Houses, Buildings; Lapse Of Standard Coverage A Risk When Property Left Vacant

In Michigan, Crain's Detroit Business reports:
  • Business is booming for specialty insurers who write policies on the increasing number of vacant houses and buildings in metro Detroit. Vacancy rates for buildings have been increasing in metro Detroit at a faster rate than in Michigan and nationally, caused by bank foreclosures, increasing unemployment and a downturn in the real estate market. “With Michigan's economy in turmoil, you cannot drive anywhere in the state and not see "for sale' signs, "foreclosed' signs or empty storefronts and homes,” said Alan Jay Kaufman, chairman, president and CEO at Burns & Wilcox, a Farmington Hills-based broker.


  • Some owners are not aware of the need for special vacant-property coverage, Kaufman said. While policies vary, standard homeowners or commercial insurance generally does not cover a property 30 days after it is vacant, he said. “Commercial people know they need this insurance. Most homeowners do not know they need special insurance if they are selling their own property and vacate it,” Kaufman said. Business owners and homeowners of vacated properties could incur big out-of-pocket losses with a fire, vandalism, water damage or theft, Kaufman said.

  • [Executive director of the Insurance Institute of Michigan Pete] Kuhnmuench said the high foreclosure rate in Detroit makes it more likely that homeowners and business owners will just walk away from their property. “We hear stories all the time from insurance agents about people who did not have proper coverage and lost everything due to a fire or crime,” Kaufman said. “People left their home and did not tell their insurance agent.”
For more, see Vacancy rates spur growth of policies for empty buildings. foreclosure arson xerox

Housing Fraud Spreads In California's Central Valley

The Fresno Bee reports:
  • Janie Torres thought she was getting help from her friendly neighborhood real estate agent. Instead, she lost her home -- becoming an apparent victim of a form of fraud spreading across California's Central Valley as the mortgage crisis deepens.

  • From phony foreclosure consultants who take thousands of dollars in illegal prepayments and then do nothing, to real estate agents offering complicated rescue schemes that take away people's homes, mortgage scammers are increasingly active, law enforcement and real estate officials say.

  • Schemes range from homeowners being defrauded by phony foreclosure "rescue" services -- Tulare County prosecutors have accused one woman of defrauding more than 200 people across the state -- to nationwide schemes, like one described in a federal indictment unveiled last month in Sacramento. And while some alleged scammers are now facing criminal prosecution, it's likely many more cases have yet to surface, law enforcement officials say.

For more, see Valley housing scams spread (Phony 'rescue' services lure homeowners in crisis).

Maine Passes Legislation Regulating Foreclosure Rescue

Buried in a recent story reported in Foster's Daily Democrat is the following blurb on recent legislation passed in Maine:
  • In consumer issues, homeowners facing foreclosure get new protections from predatory lenders. The law targets practices such as purchasing titles for far less than fair market value, then creating contract provisions that make it impossible to repurchase the property.

For the article, see Dozens of Maine laws enacted.

For the Maine statute, including a summary of the new law, see An Act To Protect Homeowners from Equity Stripping during Foreclosure (or go here for .pdf version).

"Jingle Mail" Reports On the Increase In Arizona

In Arizona, The Arizona Republic reports:
  • Instead of mailing in their monthly mortgage payment, a growing number of homeowners are sending lenders their keys. As housing prices fall and rates on some mortgage loans rise, more homeowners are walking away from their homes, according to housing-market watchers. [...] The growing trend, called "jingle mail," is pushing up foreclosures and alarming market watchers, particularly in metropolitan Phoenix, where home prices have dropped 18 percent in the past year.


  • The mortgage industry is struggling to estimate how many homes are going into foreclosure because of people who don't want to pay, rather than because of people who can't afford to pay. Industry estimates and anecdotes suggest the figure is climbing in the Valley because so many people who bought during the peak are now upside down in their mortgages.


  • "Instead of calling it a foreclosure, these couples are saying, 'We're giving it back to the bank,' and then moving a couple of blocks away and renting a home for half their mortgage payment," [one housing analyst] said. "These people are finding it easier to walk away."

  • Businesses are popping up that guide homeowners on the best way to walk away from their mortgage. [...] Also, the Mortgage Forgiveness Debt Relief Act of 2007 took some of the penalty away from a homeowner filing for foreclosure. Before the act, if a bank sold a foreclosed home for less than the mortgage and forgave the rest of the debt, the borrower had to pay tax on the difference. Now, the Internal Revenue Service is forgiving the [tax on the] difference.

For more, see More homeowners mailing keys to lenders (Owing more than home is worth, recent buyers walk away).

Minnesota Housing Advocates Demonstrate At Governor's Mansion In Response To Veto Threat On Foreclosure Moratorium Proposal

In St. Paul, Minnesota, Workday Minnesota reports:
  • In response to Governor Tim Pawlenty’s threats to veto the Minnesota Subprime Foreclosure Deferment Act, families facing foreclosure brought the crisis to the governor’s mansion on Summit Ave in Saint Paul. On Saturday, members of the housing-focused community organization ACORN and other groups constructed “Subprime City – the fastest-growing city in the nation” – made of tents, cardboard boxes, and sleeping bags. Families facing foreclosure held signs saying, “Governor Pawlenty, I’m losing my home. Can I stay here?

For more, see Homeowners take mortgage crisis to the grounds of the governor's mansion.

Builder In Foreclosure Sues Bank Alleging Conduct That Doomed 4-Unit Development

In Holmes Beach, Florida, the Sarasota Herald Tribune reports:
  • First Priority Bank, the region's most troubled community bank, has been hit with a lawsuit alleging that mismanagement and false statements on the part of its employees doomed a Holmes Beach condominium development. The lawsuit, filed by Ohio developer Benton Benalcazar in response to First Priority's Feb. 28 foreclosure action, states that bank managers not only delayed the construction of four, 2,400-square-foot condominium units, but they actually tried to sell the property to other customers long before Benalcazar defaulted on his company's $1.7 million loan.

For more, see Customer sues First Priority Bank (Developer Benton Benalcazar accuses the bank of delaying work on his project, then trying to sell it).

Monday, April 21, 2008

Bipartisan Federal Foreclosure Rescue Legislation Proposed

From a press release issued today from the office of U.S. Senator Herb Kohl (D-WI):
  • Today, Senators Herb Kohl (D-WI), Susan Collins (R-ME) and Blanche Lincoln (D-AR) unveiled bipartisan legislation to protect financially distressed homeowners -- often elderly -- from unscrupulous financial predators. The Foreclosure Rescue Fraud Act of 2008 would help end the dramatic increase of mortgage schemes that have risen nationally by 800 percent in the last five years, with an estimated 60,000 cases expected this year.

For more, see Kohl Unveils Foreclosure Rescue Scam Bill (Bipartisan Measure Would Protect Financially Distressed Homeowners From Being Targeted).

Increase In Central Florida Real Estate Tax Delinquencies Reported; More Opportunities For Tax Certificate Investors Expected

In Central Florida, The Tampa Tribune reports:

  • A slowing economy and stagnant real estate market has translated into a record year of late property taxes. Tax collectors in Hillsborough, Pinellas and Pasco counties are reporting dramatically higher numbers of people who missed the April 1 deadline to pay their property tax bill. In Hillsborough County, the increase is near 30 percent.


  • When someone misses the deadline for their tax bill, the county prepares to issue and sell a tax certificate, which is essentially an IOU for the delinquent taxes. Hillsborough's tax office advertised 33,106 tax certificates for sale last year to investors. This year that number jumped 29.8 percent, to 42,973. Pasco and Pinellas collectors haven't posted their advertised numbers yet, but based on the delinquent notices they've sent out, both expect huge numbers of certificates to hit the auction block.

For more, see As Housing Market Slumps, More Property Taxes Unpaid. delinquent tax problem

Seven Impediments To Successful Loan Modifications Lead To "Needless Foreclosures"

In a recent article, The Mortgage Professor, Jack Guttentag, lists and describes seven impediments to a successful loan modification of a delinquent mortgage. The list of impediments are:
  1. Borrower denial,
  2. Moral hazard,
  3. Restrictions on servicers,
  4. Scarcity of critically needed staff,
  5. Mortgage insurance,
  6. Second mortgages, and
  7. Lack of public disclosure.
For a description of each of these impediments, and how the author defines a "needless foreclosure," see Why needless foreclosures happen anyway (Borrower denial, restrictions on servicers take toll).

Mortgage Servicing Industry "Maze Of Fees, Firms & Flim-Flams" No Longer Fool Bankruptcy Judges

The New York Times reports:
  • SLOWLY but surely, a handful of public-minded bankruptcy court judges are drawing back the curtain on the mortgage servicing business, exposing, among other questionable practices, the sundry and onerous fees that big banks and financial companies levy on troubled borrowers. It isn’t a pretty sight, if you are a borrower. But shining a light on this dark corner certainly qualifies as progress. The cases come out of bankruptcy courts in Delaware, Louisiana and New York, and each one shows how improper, undisclosed or questionable fees unfairly penalize borrowers already struggling with mortgage debt or bankruptcy.


  • These cases clearly indicate that bankruptcy courts are no longer being fooled by the maze of fees, firms and flim-flams of the mortgage servicing industry,” said O. Max Gardner III, a lawyer who represents borrowers in Shelby, N.C. “The servicers and their lawyers should recognize the clear and present danger of these decisions while they still have time to turn their ships around and do the right thing.”

For more, including the details of the aforementioned Delaware, Louisiana and New York cases, see Piling On: Borrowers Buried by Fees.

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

Editorial Note:

The next question that arises is how long will it take for the state courts, where the vast majority of foreclosure actions are litigated and decided, to stop "rubber-stamping" foreclosure judgments against unrepresented homeowners and catch on to what the Federal bankruptcy judges are now discovering. questionable mortgage servicing practices tactics xero

Probe Into Alleged Colorado Springs "Cash Back" Scam Triggered By Suspicious County Assessor

In Colorado Springs, Colorado, The Gazette reports:
  • The mortgage meltdown on Balsam Street that led to five foreclosures prompted an investigation Tuesday by the state's top real estate cop. Erin Toll, director of the Colorado Division of Real Estate, said it will be a "high priority" for her staff to determine whether any wrongdoing led to the Balsam foreclosures and "subpoenas are being drafted as we speak." Her investigation is a response to a formal complaint filed Tuesday by El Paso County Assessor Mark Lowderman, who became suspicious after being questioned by The Gazette for a story published Tuesday about the mortgage meltdown.


  • Lowderman asked Toll to look into allegations and admissions made by Colorado Springs landscaper Andrew C. Aranda, who bought all five houses within a 48-hour period in November 2006 using $1.9 million obtained from five lenders. Aranda said he was part of a real estate kickback scheme involving a mortgage broker, real estate agent, appraiser and others. [...] Aranda, 27, told The Gazette that he signed documents suggesting he planned to live in each of the houses, though he never intended to move. The deception allowed him to obtain 100 percent mortgages at lower interest rates than if he had described the purchases as investments for resale or rental. All five houses ended up in foreclosure and four have resold, each for about $100,000 less than the price Aranda paid.


  • Already, Lowderman said he suspects another five houses on Balsam and nearby Fossil Butte Drive may have been involved in a similar real estate kickback scheme. [...] "In one case, it looks like a man bought three houses - one on Balsam and two on Fossil Butte - and another man bought one on Balsam and one on Fossil Butte," Lowderman said. He said a quick check of sales records showed the transactions followed a similar pattern to the Aranda deals and involve some of the same players.

For more, see State investigating kickback scheme on Balsam Street (Fraud probe likely, county assessor says).

For a list of the five homes purchased by Aranda that ended up in foreclosure shortly thereafter, see Prices of Balsam homes, then and now.

Builder Problems Leave Recent New-Home Buyers Stranded In Unfinished Developments

The Associated Press reports:
  • [A]s America's housing market has foundered, homeowners who bought into newly rising projects at just the wrong time have found themselves marooned in stalled, abandoned or largely unoccupied developments with little place to turn, placing a strain on them and municipalities forced to pick up the pieces. Experts say it's one of the least examined aspects of the housing downturn, and one that has struck many parts of the country, from areas like Las Vegas, which experienced rampant speculation and overbuilding, to areas where construction was more restrained such as the Jersey Shore and Philadelphia.

For more, see Downturn leaves homeowners without neighbors (no longer available online).

Minnesota's New Ghost Towns

In Minnesota, the Minneapolis Star Tribune reports that, in Wright County, reckless speculation and the mortgage meltdown have turned subdivisions into virtual ghost towns. For more, see:

Sunday, April 20, 2008

Tens Of Thousands Of "Squatters" Swarm Into Vacant Foreclosed SW Florida Homes

In Cape Coral, Florida, The New York Times reports:
  • In a county with one of the nation’s highest foreclosure rates, empty houses have attracted a new type of nonpaying tenant: bees. Tens of thousands of honeybees, building nests in garages, rafters, even furniture left behind. When a swarm came to the foreclosed ranch house at 3738 Santa Barbara Place in Cape Coral, town officials called B. Keith Councell, a fourth generation beekeeper and licensed bee remover.

  • On a recent evening, Mr. Councell stood at the light blue house’s open garage door as hundreds of honeybees buzzed over his head and past his ears, disappearing into a hole behind the water meter. The house has been without a human occupant since December. Then he did what he does at most foreclosed homes: nothing. “If it’s in the yard I just take care of it,” Mr. Councell said. “But if it’s in the structure, usually I can’t get permission to go in. And it’s a problem, because somebody’s going to get stung. It creates a risk for everybody around.” [...] Last year, he said, he answered calls about bees in more than 100 vacant houses, and the volume was higher this year.


  • Mr. Councell said he noticed an increase in calls to vacant houses two years ago, and steadily more since then. “If that continues, then we’ve got a big problem,” he said. [...] When a house is vacant and in foreclosure, Mr. Councell, who rarely uses a computer, finds himself in a tangle of red tape, following trails of loan records to locate the owner, often an out-of-state lender, then a local managing agent. Generally, he said, even when he finds the necessary people, they do not let him on the property, either not wanting to spend the money or not wanting to risk the liability.

For more, see Floridian Is the One to Call When Bees Move In.

In a related story from Cape Coral, Florida, see NBC 2 News: 30,000 bees found in foreclosed home. neighborhood destruction from foreclosures zach

220+ Abandoned Constructuion Sites Identified In One Southwest Florida Town

In Lehigh Acres, Florida, The News-Press reports:
  • More than 220 abandoned construction sites have been identified in Lehigh Acres since June, according to Lee County's code enforcement office. [...] A construction project is considered abandoned if no inspection has been passed in six months, said Joan LaGuardia, spokeswoman for Lee County's Community Development department. [...] The homes are in various stages of construction.


  • County officials are concerned the homes will deteriorate and become safety threats. "We'll have to keep inspecting them," LaGuardia said. But there's a question about how the county can pay for the inspections and any demolition that might be required with budget cuts looming. County Manager Don Stilwell already has told department heads to prepare for a 6 percent decrease in their budgets, LaGuardia said. "We have to cut our budget in code enforcement. We have to cut across the board," LaGuardia said.

For the story, see Town deals with empty nests (More than 220 sites identified since June) (no longer available online).neighborhood destruction from foreclosures zach

Elderly Homeowner Pulls Gun On Process Server Attempting To Serve Foreclosure Notice, Say Cops

In Marion County, Florida, Central Florida News 13 reports:
  • An 82-year-old man was arrested after pointing a gun at a process server. Frank Conard was taken into custody after threatening a man who was trying to serve him a foreclosure notice. Robert McGuiness said Conard answered the door in his pajamas, and then said he wanted to change his clothes. But when he came back, he reportedly pointed a handgun at him and said he'd send McGuiness to the hospital. Conard told deputies the Colt .38 wasn't loaded, but he was charged with aggravated assault.

Source: Police: Man, 82, Points Gun At Process Server.

Home-Based Meth Lab Once Used As A "Zoo"

In Boise, Idaho, KBCI-TV Channel 2 reports on local cops busting a meth lab that was being operated in a home in an area neighborhood. Reportedly, a neighbor said that the current owner purchased the home as a foreclosure back in February, and that the prior foreclosed homeowner had used the home as "somewhat of a zoo," having "a hundred cats inside the house along with [...] probably around 30 rabbits and around 20 iguanas." The neighbor said the house was a mess, but the new occupants rushed to move in anyway. They now face felony drug charges. Good luck to the next guy who ends up with the house. For the story, see New information on meth lab bust in Boise. meth lab yak

Colorado Regulator Subpoenas Real Estate Brokerages In Probe Into Alleged Title Insurance Kickbacks

In Colorado Springs, Colorado, The Gazette reports:
  • A state regulator has subpoenaed three Colorado Springs residential brokerages as part of her investigation of whether kickbacks were paid by title companies to have business steered their way by real estate companies and agents. The investigation stems from allegations that California title company First American Residential Group Inc. agreed to pay $1 million to Denver-based Re/Max International under such an arrangement. Both companies were subpoenaed along with seven other brokerages in Colorado. The Springs brokerages are not suspected of wrongdoing at this time, said Erin Toll, director of the Colorado Real Estate Division.

For more, see 3 real estate firms subpoenaed in kickback probe.

WPB Condo Site Set For Foreclosure; Dozens Who Placed Deposits For Units Also Sue Developer

In West Palm Beach, Florida, the South Florida Business Journal reports:
  • Eastern Financial Florida Credit Union won a $37.3 million judgment in a foreclosure lawsuit against a condominium developer, and will put the vacant West Palm Beach site up for public sale. On April 2, the credit union won the judgment [...] against Merco Group of the Palm Beaches and its principals, Homero Meruelo and Belinda Meruelo, over Palladio Terrace. They never started construction on the site, at 2211 N. Flagler Drive. [...] The property's former owner, The Mark Andrew of the Palm Beaches, won a $6.2 million jury verdict against the Miami Beach-based Merco Group in November. Dozens of people who put deposits on units at Palladio Terrace have also sued Merco.

For the story, see Eastern Financial wins West Palm Beach foreclosure.

West Palm Beach Condo Projects Take A Beating, Stalling Completion Of Downtown Renaissance

In West Palm Beach, Florida, the South Florida Business Journal reports:
  • Business and civic leaders hoped a condo boom would complete the renaissance of downtown West Palm Beach, but the real estate bust has swallowed more than two-thirds of the projects. Of the 32 downtown multifamily residential projects on the city's active list, three are under construction, seven are completed and 22 are either stalled or have expired site plans. Four projects have faced foreclosure lawsuits from lenders. One more is marketing a bulk sale of its remaining units at a 47 percent discount, which is expected to further depress prices.

For more, see Condo projects evaporating in downtown West Palm Beach (if link expires, try here or try here).

Some Have Trouble With Completing Short Sales reports:
  • As more people fall behind on their mortgages, lenders have been slow to take advantage of a longstanding alternative to foreclosure -- a so-called short sale. [...] Deals can fall apart because the mortgage company rejects the price that has been agreed upon by the buyer and seller. Long delays in getting an answer from the mortgage servicer are another obstacle. The process can be so frustrating that some real-estate agents and home buyers have decided that a short sale isn't worth the effort.

  • Shari Adams, a paralegal, bought a foreclosed three-bedroom house in Stuart, Fla., after she tried twice to buy a home being sold in a short sale. One deal fell through when the mortgage servicer turned down her offer after six weeks and didn't make a counteroffer. Another deal collapsed because it wasn't clear that the seller was truly facing a financial hardship. "I basically started to run away from any home listed as a short sale," Ms. Adams says.

For more, see Why Lenders Are Leery Of Short Sales.

See also: Reuters: Realtors complain short-sale process is failing.