Saturday, June 07, 2008

Record Foreclosures Strain Social Services

The Associated Press reports:

  • From pet rescue centers and financial counselors to homeless shelters and food banks, social service providers are feeling the weight of the U.S. foreclosure crisis on a daily basis.

  • In Palatka, Fla., Mike's Dog House pet shelter turns away each week about 10 homeowners who are facing foreclosure around the U.S. because it has no more room. In Cleveland, roughly 200 beds were added in an already-strained homeless shelter system, partly because of fears that foreclosures on landlords will render renters homeless and send them to the streets. And in Orlando, Fla., staff at the Destiny Foundation in Central Florida are being approached by all kinds of people who fear foreclosure and other economic worries.

  • "We've seen people coming in who were losing literally everything ... They're lost, in a daze, trying to figure out what to do," said Scott George, who heads the foundation, which provides counseling, a food bank, a free medical clinic and other social services. "We've been inundated and it's a huge concern for us because it's overwhelming. And it doesn't seem to be going away any time soon."

For more, see Record foreclosures strain social services.

Empty Jail May Begin Taking In Federal, Out-Of-State Prisoners To Avoid Risk Of Foreclosure

In Hardin, Montana, The Associated Press reports:
  • A state judge has ruled that a $27 million jail in Hardin can accept federal or out-of-state prisoners - offering potential relief for a project beset by difficulties since its completion last July. The publicly financed but privately operated jail has sat empty because it has no contracts for inmates to fill its 464 beds. With no money coming in, the city has been forced to dip into a contingency fund to cover payments on its construction bonds. Those bonds went into default last month, and the jail risks foreclosure if it remains empty.

For more, see Judge: Montana jail can take out-of-state inmates.

Green Spray Paint A Quick Fix For Brown Lawns

Buried in a story in The Los Angeles Times is a note on how some locals in Temecula, California, are dealing with the "brown lawn" problem affecting the flood of area foreclosures:
  • [A]t first glance, the house looked like so many others in Temecula: five bedrooms, mushroom-colored stucco walls, a seven iron away from a dapper golf course where two men prepared to tee off. A closer look at the lawn, however, revealed that it was dead and crunchy -- and had been spray-painted green.

  • The paint came courtesy of neighbors, in the hope that it might be less evident to passersby that the house was empty -- foreclosed and left to the elements, with no running water, no electricity and little chance of new occupants any time soon.

For the story, see Housing downturn is a jolt to upscale Temecula.

Five Year Old Drowns In Pool Behind Vacant Home In Foreclosure

In Avon, Indiana, WRTV Channel 6 reports:
  • A 5-year-old girl drowned [last] Saturday afternoon in a swimming pool behind a vacant home that is in foreclosure, police said. [...] Police said the home where the child's body was found is two doors down from the home at which the children were staying.


  • Neighbors told deputies that the home where the child drowned had been vacant for about four months. The swimming pool was covered, but the cover had caved in under about 5 feet of water. Neighbors told police that the pool had been in that condition for a while and that they were concerned about the safety of children in the area because the back yard had only a partial fence.

For more, see Child Drowns In Pool Behind Foreclosed Home (Grandmother Finds 5-Year-Old Girl In Pool).

Editorial Note:

No word whether the foreclosing mortgage lender and/or the mortgage servicing company will be tagged with a wrongful death lawsuit.

More On Tenants Facing Foreclosure Evictions

Some links to recent stories on unwitting tenants getting evicted as a result of their landlords pocketing their rent while not making the mortgage payments, thereby allowing the properties to go into foreclosure:
  • Atlanta, Georgia: WXIA-TV Channel 11 - Housing Crisis Hits Apartment Dwellers (story of a single mother with three kids who, along with 17 other families, will be evicted from an apartment building abandoned by the landlord; she unwittingly paid the landlord six months rent in advance),

  • Palm Beach Gardens, Florida: The Palm Beach Post - Landlords fall into foreclosure, leaving tenants in shock, lurch (a single mother with two young kids who last month signed a lease for a townhouse; only two weeks after she had signed the lease, a man knocked on her door and delivered a mortgage default notice from the landlord's lender. The landlord hadn't made a mortgage payment in eight months.),

  • Venice, Florida: WWSB-TV Channel 7 - Venice couple evicted with no notice (couple who had been renting their house for more than two months, never missing a payment, are padlocked out of the home; everything they own is outside, covered with tarps. Along with their belongings, two cats and a dog are homeless now).

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, go here, and go here. equity skimming unwittingly digamma

More On One Of The "Burning" Issues In The Foreclosure Crisis

The following links are to recent stories on fires in foreclosures:

  • Fort Wayne, Indiana: The Journal Gazette - Arson charged amid foreclosure (homeowner reportedly admits torching home two days before a scheduled April 17 foreclosure sale; reportedly said he didn't know how to tell his wife that he was 20 months behind on the house payments),

  • Traverse City, Michigan: Traverse City Record Eagle - Man allegedly lit house on fire (homeowner charged with arson; reportedly told fire investigator the property was in foreclosure; records show he had inherited the property from his father but couldn't keep up on the mortgage payments; The property was insured, and he allegedly filed a claim after the fire). foreclosure arson whale

Kern County To Charge $1K Per Head "Cover Charge" At Unauthorized Teen Beer Bashes In Vacant / Foreclosed Homes

In Kern County, California, The Bakersfield Californian reports:
  • Kern County supervisors approved a $1,000 fine on individuals caught participating in an illegal party on private property. The nuisance fine was triggered by a rash of teen-powered parties in homes left vacant or abandoned by Kern County’s high foreclosure rates. The penalty “applies to any party held on any property without the permission of the owner,” said County Counsel Bernard Barmann. Each person caught at such a party would be subject to the $1,000 fine, Sheriff Donny Youngblood said.

For the story, see It'll cost you $1,000 each to party at an empty house.

Go here for other posts on teen parties in vacant / foreclosed homes. teen parties vacant homes

Foreclosure Bus Tours Killing Toll Brothers; Developer Wants Practice To Stop

In Palm Beach County, Florida, a Palm Beach Post blog reports:
  • High-end homebuilder Toll Brothers has been an especially creative player in the blame game. Robert Toll never misses a chance to blame the nattering nabobs of negativism in the media, rising oil prices or nasty-NIMBY local politicians for the housing downturn. In today’s quarterly earnings call, he found a new scapegoat: Realtors and investors leading foreclosure bus tours, something that has become common practice in South Florida.


  • To his credit, Toll did eventually get around to pointing the finger of blame at his own company. “We bought our own BS,” he said of the outlandish expectations that accompanied the peak of the housing boom.

For more, see Toll Brothers: Stop those foreclosure bus tours! You’re killing us!

Wisconsin Ex-Prosecutor In Hot Water; Faces Forgery / I.D. Theft Charges; Alllegedly Obtained Mortgage, Other Loans In Daughter's Name

In Eau Claire, Wisconsin, the Leader Telegram reports:
  • Forty years ago, Paul L. Kelly sat in the prosecutor's seat in Eau Claire County Court. On Friday, he sat in the defendant's chair, wearing an orange jail-issue jumpsuit with his wrists and ankles cuffed. Kelly, 68, [...] faces 66 felony charges of identity theft and forgery with more than a third of those counts carrying a maximum punishment of up to 15 years in prison and a $10,000 fine.


  • Kelly claimed to have power of attorney for his daughter [...] while she lived in Colorado. He purchased a 1972 Oldsmobile Cutlass convertible for $7,459, took out a mortgage from First Federal Savings Bank for $128,250 in her name, another loan from the Bank of Augusta for $7,200 to pay for a 1995 Ford conversion van and then filed Chapter 13 bankruptcy on her behalf.

  • Kelly tried to get a $56,000 loan to purchase property [...] by claiming that he had power of attorney for his grandson. At the time, the child was 8 years old, but Kelly used his social security number and said his grandson was a 25-year-old construction worker and forged W-2s and employment records.

For more, see Ex-D.A. in court again.

Friday, June 06, 2008

Philly Sheriff Best Known For The Law He Won't Enforce (To Foreclosing Lenders' Dismay)

In Philadelphia, Pennsylvania, The Wall Street Journal reports:
  • Sheriff John Green has spent 37 years in law enforcement. But these days he's best known around town for the law he won't enforce. With the economy soft and thousands of Philadelphians delinquent on their mortgages, Sheriff Green this spring refused to hold a court-ordered foreclosure auction. His move raised eyebrows on the bench and dropped jaws among lenders and their attorneys, who accuse him of shirking his duty to enforce legal contracts.


  • It also prompted a sweeping, court-endorsed deal, scheduled to go into effect next week, that aims to help homeowners avoid foreclosure. Even as Congress moves forward with a federal plan that could insure up to $300 billion in refinanced mortgages, Mr. Green's unilateral approach has pushed Philadelphia to the leading edge of local responses to the national crisis.

For more, see He's Taking Law Into His Own Hands To Help Broke Homeowners (Trouble Is, He Is the Law; Philly's Sheriff Green Doesn't Do Foreclosures, to Lenders' Dismay).

Go here for other posts on the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program.

Orange County Seeks To Unload Unsold 18%-Yielding Tax Certificates To The Public On First Come, Fisrt Serve Basis

In Orange County, Florida, the Orlando Sentinel reports:

  • Orange County wants to give people a second chance to pay someone else's overdue tax bill. [...] The first sale, last week, was a bit of a bust. In the past, investors pounced on every chance to earn modest interest rates by purchasing tax certificates through online auctions. But buyers balked last week and bid nothing on 3,277 tax certificates in Orange and almost 15,000 throughout Central Florida. Orange County governments could lose $5 million in unpaid taxes.


  • In hopes of stemming the losses, Orange's tax collector's office plans to have an unprecedented second sale -- possibly on Wednesday -- through the same online service that conducted Orange's bidding at the annual auction last week. [...] The sale will differ from the auction because winning certificate buyers will each get an 18 percent return. It will be first-come, first-declared-the-winning-bidder, said Joe Giovanelli, technology manager for the Orange tax collector.
  • Counties across the state this week reported similar losses. Some of the hardest hit counties were inland with Leon and Marion selling only about half of their certificates, according to a report from the Grant Street Group, which helps conduct the sales. Highlands sold even less.
For more, see Tax auction reprise: come buy someone else's debt (After last week's bust, Orange County is planning a 2nd sale -- but with a twist).

City Of Philadelphia To Implement Second Program To Assist Financially Strapped Homeowners With Subprime ARMs

In Philadelphia, Pennsylvania, The New York Times reports:

  • Philadelphia announced a program on Wednesday to reduce the number of people who are forced from their homes because they cannot afford the payments on an adjustable-rate subprime mortgage.


  • Mayor Michael Nutter said the program, in which the city is investing $2 million to pay for legal services and people to counsel homeowners, is intended to solve payment problems before they reach foreclosure. Mr. Nutter urged people to contact the city before they receive a foreclosure letter from their lender.

For more, see Philadelphia Will Try to Reduce Foreclosures.

Editorial Note:

Unlike Philadelphia's Residential Mortgage Foreclosure Diversion Pilot Program, which was recently designed and implemented by the local judiciary in Philadelphia County to help those homeowners who are already in the legal process of foreclosure (and without regard to whether those homeowners have adjustable or fixed rate mortgages), this more recent program announced by Mayor Nutter targets those homeowners who are not yet in foreclosure but who face onerous terms (and onerous changes in the terms) of their subprime adjustable rate home mortgages.

Go here for other posts on the Philadelphia foreclosure diversion program.

Closing Agent Gets 6+ Years For Illegally Pocketing $4.6M In Refinancing Proceeds Earmarked For Mortgage Payoffs From At Least 14 Transactions

In Pennsylvania, the Philadelphia Daily News reports:
  • A Bryn Mawr businessman was sentenced to 6 1/2 years in jail yesterday for his role in a scheme to bilk homeowners, finance companies and title insurers in connection with mortgage refinancings. Jay Berger, 56, of Bryn Mawr, apologized to the government, his family and victims, saying he had "destroyed" his family and his reputation and "betrayed" those with whom he worked.


  • Authorities said Berger bilked homeowners, finance companies and title insurance companies out of approximately $4.6 million between April 2000 and December 2004. Court papers said Berger acted as a mortgage broker, settlement agent and title insurance agent for real-estate refinancings. Berger or his assistants would attend closings related to loan refinancings. Lending institutions would wire money to an account in Berger's name and he was obligated to pay off the original mortgage.

  • Authorities said that in at least 14 instances, Berger did not pay off the first mortgage, as the homeowner, the first mortgage company, the new mortgage company and the title insurance company expected him to do. Instead, he would make some mortgage payments on the first mortgage but keep the bulk of the money for himself.

For more, see Bottom line for Main Line bilker: 6 1/2 years in jail.

Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents gamma

County Recorder's Spelling Error May Cost Family Its Home As Homebuyer Fails To Buy Title Insurance

In Zanesville, Ohio, The Columbus Dispatch reports:
  • A spelling error by a government worker might cost Andy Mateja his house. [...] When Mateja bought his house, he paid for a title search that found no liens on his property. It turns out that wasn't true.

  • JPMorgan Chase had placed a $150,000 lien on the house in 1998, when it was owned by Dr. Subbarayudu Koppera. But the lien was mistakenly entered into the public record under the name Koppepa, so it did not show up when the title company searched for liens by the owner's last name.


  • In buying the house, Mateja did not take out title insurance that would have protected him from claims against a previous owner. Now JPMorgan Chase is going after the Matejas' house. The Matejas have countersued the bank and Koppera. The case is scheduled to go to court June 19.

For more, see Clerk's error jeopardizes family's home (Undetected lien against seller haunts buyer).

For story update, see:

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

Nevada Lawmakers Address Assertions Of Illegal Court Orders Affecting Tenants In Foreclosure Evictions

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • Some justice courts may be evicting tenants in foreclosed rental houses without providing the required three-day notice, a lawyer told a legislative subcommittee Monday. The Legislative Commission subcommittee on mortgage lending and housing heard the testimony Monday in a session at the Sawyer building in Las Vegas. Steve Kilgore, deputy director of the Henderson constable's office, told the panel that justice courts issue orders for him to evict renters immediately from houses that have been foreclosed.

For more, see Courts said to act too hastily (Officials may not be following the law in evicting tenants). equity skimming unwittingly digamma

Neighborhoods Around the Country Struggle With Abandoned Home Blight

The following links are to some recent stories on homewowners and local government officials around the country who find themselves fighting the blight in their neighborhoods caused by vacant, abandoned homes.

12 Of 20 Homes In Foreclosure In Upscale Development Create Mini Ghost Town

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:
  • The perfect example of America's mortgage meltdown can be seen in one Southwest Valley neighborhood. Nearly 75% of the homes inside one gated community [...] are in foreclosure and that is creating a virtual ghost town.


  • Action News talked to Penny Rodgers and her husband who still live in the community. "We expected it to be nice cozy neighborhood," explained Penny. Recently, 12 of the 20 homes in her development went under foreclosure, trading in their new neighbors for foreclosure signs and lock boxes. Most of the people who blew in and blew out of the neighborhood did not pay their home association dues and did not bother to fix what was broken.

For more, see Foreclosure Crisis Leading To A Vegas Ghost Town. neighborhood destruction from foreclosures kappa

Thursday, June 05, 2008

Ratings Agencies Sign Settlement Agreement With NY AG In Subprime Mortgage Probe

Reuters reports:

  • Moody's Investors Service and other rating agencies have signed an agreement with the New York Attorney General Andrew Cuomo addressing rating practices, including fees, Moody's President Ray McDaniel said on Thursday. The New York Attorney General is expected to sign the agreement later on Thursday, said McDaniel, speaking at a Moody's investors conference in New York.

Source: Moody's says has signed agreement with NY AG.

See also:

Texas AG Sues Nine In Alleged Deed Theft From 40+ Dead Homeowners; Accusations Include Illegal Foreclosure Rescue

In Fort Bend County, Texas, reports:

  • Five Fort Bend County residents and four associates have been accused of a scheme to steal homes from families of recently deceased homeowners. A statement from Texas Attorney General Greg Abbott said the nine "orchestrated a complex residential real estate scheme by relying on forged and backdated signatures on fraudulent deeds and trusts," and "fraudulently obtained titles to at least 40 Houston-area properties, which were subsequently sold to other conspirators and unsuspecting buyers." Abbott filed a lawsuit against the nine, and named Edward Charles Gray, of [...] Fresno, and James Lanier King of Houston as ringleaders in the alleged scheme.


  • The lawsuit accuses Gray of operating "an illegal foreclosure rescue scheme" in which he offered to help homeowners prevent foreclosure. In one case, he allegedly convinced an elderly woman to pay him $350 a month and temporarily transfer her home title to him. Then, according to the suit, Gray got the woman to sign a warranty deed transferring the home to another defendant, Erik Lamont Campbell, whose address is listed at the same [...] Fresno home as Gray.

  • A spokesman for Abbott said Wednesday that no criminal charges have been filed in the case, and thus none of the defendants has been arrested.

For more, see AG Sues 5 Fort Bend Residents Over Scheme To Steal Dead People's Homes.

From the Texas Attorney General's Office:

California Homeowner Seeking Home Equity Refinancing Gets Cleaned Out In Equity Stripping Deal

In American Canyon, California, the Los Angeles Times reports:

  • Three years ago, Donna Robbins tried to use her soaring equity to remodel her house in this Napa Valley community.Instead, she says she got cleaned out. Robbins claims that friends from church who ran a finance company agreed to arrange a home equity loan to pay for a new kitchen, bathrooms and landscaping.

  • As with most financial transactions, there were papers to sign. But Robbins says that what she was told were loan documents were in fact papers that transferred the title to her property. These new owners subsequently defaulted on the mortgage, according to public property records and a lawsuit Robbins filed in Napa County Superior Court. Now, the house she had inherited from her parents is in foreclosure and Robbins is facing eviction, along with her boyfriend and their seven children.

For more, see Compounding the pain (Allegations of mortgage fraud are on the upswing).

Summit County Enacts Rule Designed To Eliminate Sloppy Practices By Foreclosing Lenders & Their Attorneys

The Summit County, Ohio judiciary has recently adopted a local rule in mortgage foreclosure actions requiring the foreclosing lender's attorney to file a 14-point certification (known as a Certificate of Readiness) along with the lawsuit initiating the foreclosure action. Among the certifications that the lender's attorney is required to make is the following:
  • The Plaintiff has in its custody and control the original note and mortgage, and said documents are available for inspection upon order of the Court.

In addition, the foreclosing lender's attorney no longer has 60 days to file with the court the required property title report (known as the Preliminary Judicial Report - serves as evidence of the state of the record title of the real property in question). The Preliminary Judicial Report is to be filed contemporaneously with the lawsuit and the attorney's 14-point Certificate of Readiness.

If the foregoing are not filed together when initiating a foreclosure action, the Summit County Clerk of the Courts has been ordered to reject the action for filing.

It will be interesting to see how lenders' counsel deal with the 14-point cerification when promissory notes have been lost, assignments of mortgages have gone unrecorded and that are dated on a date subsequent to the filing of the foreclosure action, and other well reported screw-ups that foreclosing lenders have heretofore been getting away with in foreclosure actions.

For more on the Summit County, Ohio court rule, effective June 1, 2008, together with the standard form Certificate of Readiness containing all 14 points that lenders' attorneys are now required to certify to the court when filing foreclosure actions, see Order - In re: Certificate of Readiness For Foreclosure Actions Filed In The Court of Common Pleas - General Division.

Many thanks to William A. Roper, Jr. for the heads-up on the new rule. missing mortgage foreclosure docs beta SloppyForeclosuresAlpha

Deceptive Real Estate Practices, Exorbitant Interest Rates Alleged In Attempt To "Steal" Property

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:
  • The owner of [a] Boston Hill property joined a growing list of businessmen and developers yesterday who have accused David G. “Duddie” Massad and Commerce Bank and Trust of operating a criminal enterprise that engaged in loan sharking, racketeering, extortion, fraud and conspiracy.

  • Charles T. Sanderson III of Kingston, who owns the 118-acre Boston Hill property that straddles Shrewsbury, Westboro and Northboro, charged in federal court papers that Mr. Massad, of Westboro, his daughter, Pamela Massad of Westboro, Commerce Bank and Trust Co., and Gemstone Investment Company of Worcester operated a criminal organization that used illegally high interest rates and deceptive real estate transactions in an attempt to steal the property from him. Mr. Sanderson also alleged that Mr. Massad’s actions forced him into bankruptcy. He asked a jury to award him $40 million in damages.

For more, see Property owner accuses Massad (Extortion, racketeering alleged).

In related stories, see:

Go here for other posts related to this story.

80 Year Old Dementia Patient Facing Foreclosure Tricked Into Signing Away Eight Parcels Of Land Worth $520K+, Says Suit

In Central Florida, WFTV Channel 9 reports:
  • A couple in Lake Mary is accused of walking into a Seminole County nursing home and tricking a woman diagnosed with dementia into signing away the rights to her property, worth more than half a million dollars. The couple is not related to the victim. The lawsuit says they didn't know her, but they found her property on a list of properties nearing foreclosure.

  • David and Laura Jane Roquemore are accused of sneaking into the secure dementia unit at the Florida Living Nursing Center two years ago and tricking 80-year-old Theolia Marin into signing multiple documents transferring eight parcels of land worth more than $520,000 [...] into their names. "They came in with prepared deeds and prepared contracts, ready to do business," said Marin's attorney Kyle Fletcher.

For more, see Couple Accused Of Tricking Woman With Dementia Into Giving Away Property.

Central Florida Tax Certificate Auction A $20M Bust?

In Central Florida, The Orlando Sentinel reports:

  • Millions of tax dollars that Central Florida governments were counting on may never arrive. And thousands of struggling homeowners may get another shove toward foreclosure. It's all because last week's sale of tax certificates was a giant bust. For the first time, investors didn't snap up tax certificates, which local governments auction off to recoup unpaid taxes.


  • Losses from last week's auctions were still being added up Tuesday but are expected to total more than $20 million for cities, counties and schools, all of which were already reeling from statewide tax cuts and downturns in property values. [...] Throughout the region, tax collectors said they were surprised that bidders changed course this year and rejected nearly 15,000 tax certificates. [...] The certificates sold out in the past. But this year bidders rejected more than a third of late tax bills in Lake County. Osceola and Volusia counties reported similar numbers.


  • Because officials have never dealt with such a mass of unpaid taxes, they are not certain how much will ever be repaid.

For more, see Tax-auction bust could cost $20M.

Wednesday, June 04, 2008

Celebrities In Foreclosure

Among the better known in the general public who are reportedly facing foreclosure problems are:

More On The Mass AG's Suit Against Option One, H & R Block Alleging Discriminatory Predatory Lending Practices

Among the predatory practices alleged in yesterday's Massachsuetts Attorney General 's lawsuit against Option One, H & R Block, and others, The Wall Street Journal reports:
  • Option One "steered even prime borrowers into more costly subprime loans",
  • Loan officers were paid a $750 commission for each completed subprime mortgage loan versus $375 for a prime mortgage; they could also receive a bonus for exceeding certain targets,
  • Option One was accused of "recklessly facilitating the foreclosure of borrowers' homes." In negotiating with distressed borrowers, Option One often proposed terms "that are as unfair and unsustainable as the original loans," and offered forbearance agreements with "oppressive terms" that allow the lender to foreclose if the borrower missed a payment "for even one day."

For more, see State Sues Option One.

See also, The Boston Globe: Minorities hit with higher fees, AG says (Lawsuit accuses former H&R Block mortgage arm of discrimination).

Mass AG Accuses Lender Of Race-Based Discrimination In Predatory Lending Practices In Civil Suit

(originally posted 6-3-08)
In Boston, Massachusetts, Reuters reports:

  • Massachusetts authorities sued H&R Block Inc. on Tuesday, charging that its mortgage unit discriminated against black and Latino borrowers and escalated a crisis over property foreclosures in the state. The lawsuit is the first by a U.S. state to accuse a subprime-mortgage lender of civil rights violations following a wave of foreclosures of homes in poor, often black, neighborhoods nationwide. The complaint, filed in Suffolk Superior Court, accuses H&R's subprime-lending subsidiary, Option One Mortgage Corp, of engaging "in unfair and deceptive conduct on a broad scale."

According to Massachusetts Attorney General Martha Coakley in the lawsuit, Option One and its corporate parent, H & R Block, allegedly marketed loans with layers of risky features, including:

  1. 100% Financing,
  2. 2/28 Loans with “Teaser Rates”,
  3. “Stated Income,” “No-Doc” or “Low-Doc” Loans,
  4. Substantial Prepayment Penalties,
  5. Lucrative Broker Incentives to Sell Expensive Subprime Loans.

For more, see Mass. sues H&R Block over mortgages to minorities.

From the Massachusetts Attorney General's Office:

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

Nevada Lawmaker To Push Making Rent Skimming A Felony In Attempt To Stop Rentals Of Homes In Foreclosure To Unwitting Tenants

In las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • There are thousands of homes in the Las Vegas valley in default and in numerous cases, those homes are being rented out to unsuspecting tenants. Now, the legislature wants to make it a crime for homeowners to rent out their homes if they are in the process of foreclosure.


  • Senator Bob Beers, who wants to go after greedy homeowners, is so upset he said he wanted to "whack" the delinquent homeowners. "It's just wrong, I have no problem dealing with this as a felony," he said.

For more, see Lawmakers Target Delinquent Homeowners (read story) (watch video). equity skimming unwittingly digamma

Loan Servicers Feeling Heat From Scorched Mortgage Investors

Reuters reports:

  • Mortgage investors, watching homeowners default on their loans in record numbers, are fighting back to limit the losses on their assets. Dire forecasts for the slump in the U.S. housing market have spurred investors to turn up scrutiny on the management of the loans they own, which can make the difference between profit and loss. What they are finding is companies overwhelmed by the volume of loans that need special attention due to delinquencies that show little signs of slowing.


  • Disillusioned, investors are looking for help or simply taking their business elsewhere. As a result, a breed of mortgage servicer that was out of the limelight during the housing boom is becoming more prominent. Known as "special servicers," the companies are geared toward taking bad loans and making them current, rather than the basic servicing business of collecting and distributing payments.

  • This year Fannie Mae, the Washington-based mortgage finance giant that owns or guarantees $3 trillion in loans, has pulled loans from some servicers and handed them to others including Litton Loan Servicing LP. Marathon went a step further last year and started its own servicer.

For more, see Burned mortgage investors seek "high-touch" healers. MortgageServicingIssuesAlpha

Stiffed Suppliers Slap Liens On Homeowners As General Contractor Files Bankruptcy

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:

  • Two weeks ago, Ken and Laura Weiskopf were waiting for kitchen cabinets to arrive. The Milwaukee couple would then install flooring, add appliances and soon move into their new home on N. 117th St. near W. Brown Deer Road. But the cabinets never came, and the Weiskopfs soon discovered that the company supposedly shepherding their project hadn't paid suppliers for the cabinets or for other materials used to build the two-story home.

  • The Weiskopfs are among dozens of home buyers nationwide who are realizing that building their dream home is turning into a nightmare. The company, President Homes, filed Friday for Chapter 11 bankruptcy, which provides protection from creditors while a company reorganizes.

  • In the meantime, unpaid suppliers are refusing to deliver more material and are filing liens against homeowners' property. That means in many cases construction is halted, loans are delayed and homeowners are left with major headaches. Some people could even end up paying twice for their building materials.

Among the suggestions in the story for homeowners to protect themselves from financially strapped general contractors:

  • Get a payment or performance bond that acts as an insurance policy. If the contractor doesn't pay subcontractors, the bonding company will.
For more, see 'I just want my house' (Unpaid suppliers stop deliveries, file liens against property owners).

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

Two Cop Plea In Texas Mortgage Scam Involving 200+ Newly Built Homes

In Sherman, Texas, the U.S Attorney - Eastern District of Texas announces:
  • United States Attorney Rebecca A. Gregory announced [yesterday] that [Michael Guy Cary, Sr., 53,] a Florida businessman and [Richard Kirkpatrick, 53,] a Fort Worth real estate appraiser have pleaded guilty in connection with their roles in an extensive mortgage fraud scheme in the Eastern District of Texas.


  • According to information presented in court, between August of 2004 and May of 2006, CARY's scheme involved the purchase and sale of 211 homes in the Eastern District of Texas in a variety of fraudulent transactions. CARY purchased the homes directly from home builders after which he arranged the transfers of the deeds into names deceptively similar to that of the home builders. Once the transfers had been completed, CARY had real estate appraisers artificially inflate the values of the homes and arranged their subsequent sales to out-of-state investors, who believed that they were purchasing the homes directly from the home builders and who qualified for mortgage loans on these inflated amounts based on fraudulent loan applications. KIRKPATRICK provided the inflated appraisals on 89 of the 211 homes.

For more, see U.S. Attorney Press Release - Florida Businessman And Fort Worth Home Appraiser Plead Guilty In Mortgage Fraud (Fraud Involved Over 200 Homes in the Eastern District of Texas).

Brooklyn Judiciary Reaches Out To Local Religious / Community Leaders; Break Bread, Discuss Local Foreclosure Problem

In Brooklyn, New York, the Brooklyn Daily Eagle reports:
  • With the growing concern of foreclosures accelerating nationwide, judges of the Kings County Supreme Court invited religious and community leaders from Brooklyn over for breakfast last week. In conjunction with The Interfaith Center of New York, dozens of community activists, pastors and priests, reverends and rabbis, convened on the top floor of the Brooklyn Supreme Court early in the morning on Thursday. The administrative judge of the courthouse, Hon. Abraham G. Gerges, explained why [...]

For more, see Leaders & Judges Convene To Discuss Fairness & Foreclosure (Community Advocates Discuss Protecting Brooklynites).

Tampa Developer To Stick Bank With Half-Sold Condo Project; Will Sign Over Deed Before Taking A Hike

In Tampa, Florida, The Tampa Tribune reports:
  • Facing foreclosure, the developers of the Ventana condominiums in the Channel District have agreed to hand the keys to the project's lender and walk way, according to documents filed in Hillsborough County Circuit Court. Ventana, completed early last year, has 85 units, but the developer has sold only 41 units, county property records show. None of the six retail condominiums have sold.

For more, see Channel District Condo Developer To Turn Units Over To Bank.

Tuesday, June 03, 2008

Florida Foreclosure Rescue Firm Unravels As Authorities Arrest One; Two Others Flee; Alleged Supporting Cast Face Civil Suits

In Central Florida, the St. Petersburg Times reports the latest story on now-defunct foreclosure rescue operator 4 Solutions and the financial mess a number of its homeowner/clients find themselves in. To date, one individual has been charged with crimes by local Tampa cops, two others have fled, and there are a number of ongoing civil suits targeting the 4 Solutions principals and others allegedly involved in equity stripping, foreclosure rescue transactions. A federal investigation by the Secret Service is also currently ongoing.
  • [T]hings started unraveling when Tampa police got a tip about 4 Solutions last summer. In August, they arrested Carmen Oliveri, the wife of 4 Solutions director Jose Oliveri, after she accepted a check from a 4 Solutions client at his Tampa home. Carmen and Jose Oliveri entered into a scheme to defraud the homeowner by presenting loan terms without disclosing that he was signing over his Tampa home, an arrest report states. Carmen Oliveri is facing grand theft and fraud charges. Her attorney, Frances Perrone, declined to comment.

  • Jose Oliveri and Mario Quiroz, the director of Frontier Capital, have been harder to track down. They stopped replying to lawsuits early last year and summonses served to their Seffner homes came back. They're probably in Peru, attorneys and homeowners say.

Reportedly, closing documents showed that almost $30,000 went to 4 Solutions' Coral Gables law firm, Scaglione & Quesada, in one transaction.

  • Todd Mackey, an attorney for several homeowners who entered into deals with 4 Solutions, said he has seen other closing documents with that same instruction that gives tens of thousands of dollars to the law firm.

Reportedly, some homeowners claim that 4 Solutions slipped sale documents into their paperwork and other times, it has been alleged that employees forged signatures or falsely notarized documents.

For more, see Homeowners find big problem in 'Solutions'.

Go here for earlier posts on 4 Solutions.

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

Central Florida Attorney Charged With Theft Of Client's Foreclosure Sale Surplus Proceeds

In Central Florida, the Ocala Star Banner reports on the experience of a couple who lost their home in a foreclosure sale where, apparently unbeknownst to them, the sale price at auction exceeded the amount due to the foreclosing lender by $36,000 - an amount that rightfully belonged to the couple:
  • After the foreclosed home was sold, the $36,000 in surplus equity was held by the Marion County Clerk of the Court Registry. In January 2007, [foreclosed homeowner Nicolas P. Cabrera Jr.] received a letter from Citivest Group, LLC in Apopka, telling him that they had found his money in a records search and offered to recover the money for him for a fee. Cabrera signed a contract with Citivest in June. Citivest then hired [Orlando attorney Norman Sanders] Moss to recover Cabrera's money.


  • In December 2007, Cabrera received a letter from Moss stating that, after signing an affidavit, Cabrera would receive a check for $31,453.10. That would be the balance owed to Cabrera after Citivest was paid its $4,289.06 fee and Moss was paid his $789.86 fee. Cabrera signed the affidavit and returned it to Moss. But the $31,453.10 check never materialized.


  • In the meantime, Citivest filed a civil suit and, on April 16, received a $320,381.97 final judgment against Moss. Moss allegedly has absconded with more than $107,000 from four Citivest clients, including Cabrera.


  • Moss was arrested and charged with grand theft, a second-degree felony. He will be arraigned June 20 in an Orange County courtroom. Also, at the request of the Florida Bar Association, the Florida Supreme Court granted an emergency suspension of Moss' license. The final hearing on Moss's law license is scheduled for June 6 at the Seminole County Courthouse.

For more, see Couple says lawyer took their money.

Second Lien Holders Feel The Pinch As "HELOC Hell" Begins To Spread

Financial Week reports:
  • As the housing market continues to deteriorate, problems for lenders and insurers are spreading from first-lien mortgages to home-equity lending. Those who engage in this form of lending have a weaker claim on collateral, and so face a greater risk of loss. As a result, this development promises to throw cold water on claims that the credit crisis is abating.

For more, see Now lenders are facing HELOC hell (Second-lien creditors have a greater risk of loss, so credit crisis may not be abating after all).

Financial Pinch Being Felt Amongst The Wealthy As Some Struggle To Maintain Appearances

In New York City, The New York Times reports on the apparently devastating problems being felt by some amongst the wealthy caused by recent financial struggles:
  • One of [Manhattan divorce attorney Nancy Chemtob's] clients recently confessed that his net worth had decreased to $8 million from more than $20 million, and he thinks that his wife will leave him. He has hidden their fall in fortune by taking on debt to pay for her extravagant clothes and vacations.

  • Hairstylists and private jet rental companies say the wealthy are cutting back on luxuries like $350 highlights and $10,000-an-hour jet rentals.

  • Even if they’re not in danger of not paying their mortgage, there’s still a psychological change,” said Chris Del Gatto, chief executive of Circa, which has watched its business jump by 50 percent in the last year as wealthy clients sell their spare diamonds and Rolexes.

  • Some older couples, he said, are selling estate jewelry to help support their children who have lost Wall Street jobs. Bankers are paring down their collections of Patek Philippe watches. Wives from Greenwich and Scarsdale are selling 2-carat to 35-carat single-stone diamond rings. One recent client explained to Mr. Del Gatto that she was selling $2 million in diamonds she rarely wore, because her friends wouldn’t notice that they were gone. “She said, ‘If I sold my Bentley or my important art, they would notice,’ ” he said. “That we hear, in differing examples, every day.”

  • One New York real estate developer cut his budget to less than $250,000 a year from $1.5 million a year. “A year ago, he would have only flown Gulfstreams,” [Justin Sullivan, managing director of Regent Jet, which leases private airplanes] said. “Now it’s moving to the point where he’s flying Beech jets and Learjets.”

For more on the devastating effects of the recent financial downturn being felt by the wealthy, see It’s Not So Easy Being Less Rich.

Monday, June 02, 2008

Non Profit Law Firm Continues Free Legal Clinic Reviewing Loan Document Making Referrals For Predatory Lending Victims

In Watsonville, California, the Register-Pajaronian reports:

  • The Watsonville Law Center will offer a free legal advice clinic today between 4:30 and 6:30 p.m. The clinic is for low-income clients who believe they have been victims of predatory home loans and now face mortgage foreclosure. Clients must call WLC and make an appointment ahead of time to attend the clinic and meet with one of the three volunteer attorneys.

  • The goal is to help homeowners identify any legal claims and remedies, and evaluate any options regarding their homes. After the lawyers review documents, they will refer clients to appropriate resources, including law enforcement, if they have been victims of predatory lending and fraud.

Information: 722-2845,

For the story, see Mortgage foreclosure legal advice clinic meets today.

Go here for more on the WLC Predatory Mortgage and Mortgage Foreclosure Clinic.

Hawaii Feds Indict Five In Alleged Straw Buyer Foreclosure Rescue Scam

In Honolulu, Hawaii, the Honolulu Advertiser reports:

  • Five people have been indicted on federal charges in a scheme in which they allegedly profited from home mortgage loans that were obtained by falsifying applications, court documents show. An indictment handed down May 15 and unsealed the next day alleges that John Gilbert Mendoza, Antonio Alcantara Jr., Ira Altwegg, Albert A. Alimoot Jr. and Evan M. Koizumi illegally obtained more than $400,000 from lenders after securing mortgage loans under false pretenses. They have been charged with conspiracy to commit mail fraud, wire fraud and making false statements on loan applications.


  • The [alleged] schemes began when Mendoza and unidentified co-conspirators found homeowners in financial trouble facing possible foreclosure, the indictment said. According to the indictment, the defendants pitched the distressed homeowners a plan that would allow them to stay in their home while making money in exchange for "the owner's acquiescence in a sham real estate sale." The owners agreed to transfer the deed of the properties to the defendants.

  • Separately, Mendoza allegedly recruited "straw buyers" of the properties, promising them cash if they would agree to fill out fraudulent mortgage applications. The indictment defines straw buyers as "a third party who is willing to purchase a property without any intent to occupy the property." Alimoot and Koizumi agreed to act as straw buyers and lied on loan applications by misrepresenting their income, the indictment said.

For more, see Five indicted in Hawaii mortgage scam (Suspects get $400K in mortgage scheme; FBI gets 5 indictments).

See also:

To view the charges, see Indictment - U.S. v. Mendoza, et. al.

Lying On Loan Application Not A Bar To Mortgage Debt Discharge Where Negligent Bank Fails To Follow Its Own Lending Guidelines, Says Bankruptcy Judge

In Oakland, California, The Wall Street Journal reports:
  • In a ruling that backs borrowers even when they have lied on loan applications, a federal bankruptcy judge held that borrowers who inflated their income to get a loan don't have to pay back a bank because the lender should have noticed a "red flag" about the deceit. The case, which the Oakland, Calif., judge called "a poster child for some of the practices that have led to the current crisis in our housing market," places responsibility on the lender for vetting information in loan applications.

With respect to the falsely inflated income figures contained in the borrowers' loan application:

  • [T]he judge said that the income figures "would alert the reasonably prudent lender of the possibility that the information was inaccurate" and that the bank didn't follow its own guidelines, which required that it "evaluate the reasonableness of the stated income based on job type, tenure, and geographical location among other things."

For more, see Are Borrowers Free to Lie? (Lender Held Responsible for Vetting Data on Home Loan); (If the link doesn't go to the full story, then go here - then click link for the full story; you may also have to click the "Refresh" button on the web page to get to the story).

For the judge's written decision, see National City Bank v. Hill (in re Hill), Case No. 07-41137; A.P. No. 07-4106 AT (May 23, 2008).

Arizona Foreclosure Rescue Operator Ordered To Pay $1.2M In Home Sale, Leaseback Program

In Phoenix, Arizona, KTAR-Radio 92.3FM and 620 AM reports:
  • A Phoenix company and its owner have been ordered to pay $1.2 million in restitution and penalties for violating the Arizona Consumer Fraud Act by claiming they could help homeowners who were behind in mortgage payments avoid losing their homes. Maricopa County Superior Court Judge Edward Burke ruled against Virtual Realty Funding Co. and Kenneth D. Perkins in a consumer protection lawsuit filed in 2005 by the Arizona Attorney General's Office.


  • ''This case represents the worst in our community,'' said [Arizona] Attorney General Terry Goddard. ''This company took advantage of homeowners desperate to save their homes from foreclosure and deceived them into turning over their homes.''


  • According to court documents, although neither VRF nor Perkins were licensed by the Department of Financial Institutions as mortgage brokers or bankers, VRF loaned money to more than 60 homeowners facing foreclosure or in need of money. VRF designed its loans, which it called reverse sales, to evade laws protecting mortgage borrowers by structuring them as an outright sale of the property by the borrower, who then rented back the home with an option to repurchase it. [...] If homeowners were late on a rental payment or unable to repay the loan and funding fee within two years, they could lose their homes and any equity in them.

For more, see Realty firm ordered to pay $1.2 million for mortgage scam.

From the Arizona Attorney General's Office:

Bankruptcy-Based Foreclosure Rescue, Fractional Interest Deed Transfer Scams Finding Their Way Across The Country

In Kansas City, Kansas, The Kansas City Star reports:
  • Federal investigators in Kansas are trying to derail a foreclosure scam that began in California and is sweeping the United States using bogus bankruptcies to dupe homeowners and lenders. The scams take advantage of the fact that a bankruptcy automatically delays home foreclosures, which are at record levels.
  • The Department of Justice is investigating at least nine suspicious bankruptcies filed recently in bankruptcy courts in Kansas City, Kan., Topeka and Wichita, The Kansas City Star has learned. Kansas officials confirmed the federal investigation but declined to discuss it in detail. Bankruptcy officials in Missouri said they were aware of the scam and were reviewing court filings carefully. So far, they have not seen signs of the fraud. But legal experts said the phony filings also are turning up in Maryland, Nevada and Texas. They suspect it is just a matter of time before more are discovered in other states.
  • Generally, the fraud works like this: Scammers approach people facing foreclosure and offer to save their property for an upfront or monthly fee. They persuade the homeowner to assign them a legal interest in the property. Then the scammers — often without the homeowner’s knowledge — transfer fractional shares in the property, often 5 percent or less, to third parties. These third parties are usually fictional, investigators say, although in some cases the scam artists have recruited homeless individuals. They then file bankruptcy petitions in the names of these third parties. Sometimes, as in the Kansas cases, it is in courts thousands of miles from where the property is located.
For more, see Foreclosure rescue scam makes its way to Kansas.

For a 1998 report issued by a California Federal Bankruptcy Court task force that details the types of foreclosure scams involving the abuse of the bankruptcy courts, see Final Report Of The Bankruptcy Foreclosure Scam Task Force.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

Sunday, June 01, 2008

Northern Florida Attorneys Form Group To Assist Homeowners Facing Foreclosure Due To Dishonest Lending Practices

In Nassau County, Florida, the Fernandina Beach News Leader reports on the efforts of local attorneys Dan McCranie and John Taylor in setting up a free program to help homeowners victimized by mortgage fraud.
  • [I]n an effort to educate other attorneys in Nassau County on how to identify victims of mortgage fraud, McCranie contacted Lynn Drysdale, a Jacksonville consumer protection attorney. Along with Taylor, they have been putting together a program that will offer free services to people who are in foreclosure due to dishonest lending practices.


  • McCranie said the free foreclosure program would be "a primer on what attorneys should look for, and what to look at." There are now at least 15 local attorneys on board with the program, McCranie said, a large number of them specializing in real estate. [...] "I think quite frankly they've seen our enthusiasm and want to be part of it," he said. "There's a hell of a lot you can do with foreclosures."

According to the story, McCranie, a personal injury attorney in Fernandina Beach, was unfamiliar with real estate law when he initiated the effort when an 83 year old woman, suffering from glaucoma and cataracts and who was nearly blind, walked into his office and informed him that her home of close to sixty years was scheduled for foreclosure sale in less than a week. A review of her documents indicated to him that the woman had been the unknowing victim of unscrupulous lending practices. McCranie called in Taylor and, together, they stayed the foreclosure sale, sued the mortgage company and the broker who falsified the loan documents, and are now efforting an attempt at settling the case.

For more, see Keep foreclosure at bay from the unscrupulous.

Recent Seminar Guides New York Attorneys On "Truth In Lending" Issues In Home Foreclosure Defense

In Poughkeepsie, New York, a legal seminar in defending home foreclosures was held last week by a senior consumer attorney at the Empire Justice Center in Albany, that covered some of the legal tools provided by the federal Truth in Lending Act. For more, see Seminar for lawyers addresses foreclosure.

Minnesota Governor Vetoes Bill Providing One-Year Moratorium On Home Foreclosures

In Minnesota, My Fox TV Channel 9 reports:
  • As forewarned, Gov. Tim Pawlenty vetoed the Minnesota Subprime Borrower Relief Act Thursday, citing a negative impact on the credit market and a potential clash with the constitution.

For more, see As Warned, Pawlenty Vetoes Mortgage Relief Bill.

Network Of Recruiters With Connection To Organizations Of Trust Used To Target Scam Victims

Last week, law enforcement officials in California arrested a five person ring on charges of conspiracy and grand theft for allegedly running a foreclosure rescue scam.

The North County Times reports that, according to division chief for economic crimes Michael Groch at the county district attorney, scam artists often operate in organizations of trust; and officials are trying to piece together a network of recruiters used to net the troubled homeowners allegedly targeted by this group.
  • Groch, the district attorney division chief, said fraudulent schemes routinely employ a network of recruiters who will use organizations that people feel comfortable with, such as churches, baseball teams or Boy Scout troops, to ensnare victims. "Oftentimes they will utilize their trust, and for a lot of people, that's their faith," Groch said. "There's plenty of good services promoted at church. But just because you hear about something in a church environment, you shouldn't give it any additional credence."
For more, see Churches used to ensnare foreclosure victims, officials say (One recruiter says scheme was legitimate).

States With Laws On Foreclosure Rescue On The Increase reports:
  • States are leading the effort to help homeowners avoid these scams; at least 18 states have laws banning foreclosure-rescue scams by limiting some of practices that lead to them, and six of them — Idaho, Maine, Nebraska, Oregon, Virginia and Washington — enacted laws just this year, according to the National Conference of State Legislatures.

For more, see States act to stem foreclosure scams.