Saturday, July 05, 2008

"Wilbur The Pig" Seeks New Home

In Lake County, Ohio, The News Herald reports:
  • [T]he newest guest at the [Lake Humane Society pet] shelter is proving that the [foreclosure] crisis is affecting more than typical household pets.The shelter recently took in Wilbur, a black pot-bellied pig whose family had to relocate and surrender their special pet. The staff is hoping the friendly porker will find a new family to love. "(Wilbur) is used to more freedom, and shelter life just isn't his puddle of mud," says Gail Keegan, executive director of the Lake Humane Society. "He seems unaffected as he wags his tail and plays with his food ball, but he is a very social pig.

For more, see Pig victim of foreclosure.

$19.5M Long Island Mansion Faces Foreclosure

In Bridgehampton, New York, The Wall Street Journal Blog reports:
  • The foreclosure mess is casting a shadow over New York’s Hamptons this summer. One result: An 18,000-square-foot Bridgehampton home has been reduced from its $27 million asking price to “just” $19.5 million.

For more, including a link to what appears to be an online tour of the home, see $19.5 Million Hamptons Mansion In Foreclosure.

In a related story on foreclosures in The Hamptons, see New York Post: Trouble In LI Paradise (Foreclosures Looming For The Hamptons' Poshest Pads).

Increase In Vacant Home Arsons Concerns Firefighters

Bloomberg News reports:
  • [T]he biggest surge of mortgage defaults in seven decades coincides with an increase in blazes in foreclosed properties led by states with the most repossessed homes, according to fire safety officials in Nevada, Massachusetts and Ohio. "The more empty houses we have, the more fires we are going to see,'' said James Wright, chief of the Nevada State Fire Marshal Division in Carson City, the state's capital. "It's particularly dangerous for firefighters, because they don't know what condition these buildings are in or what they might find in them.''


  • Firefighter Mark Reed knows how dangerous a vacant, foreclosed property can be. He was critically injured battling a June 2007 fire in Buffalo, New York, set by arsonists in a foreclosed home on the city's east side. Bricks from the chimney crushed Reed, who was then 36. His mangled right leg later was amputated.

For more, see Arson Surges Across U.S. for Foreclosed Homes Lost to Subprime.

Renting Homes In Foreclosure, Utility Shut Offs, Trash Accumulatons, Code Violations Among The Accusations Against One Landlord

In Adams, Massachusetts, The Berkshire Eagle has published a couple of articles recently that describe local code enforcers, legal aid attorneys and tenants reportedly having their hands full with the alleged conduct of local property manager and landlord Daniel Borer.
  • "Every time (Borer) is not responsive to the tenants or our orders, tenants are suffering," said Scott F. Koczela, Adams code enforcement officer. "He shows up for rent, the tenants tell him about the problems, and guess what — he never comes back." Officials are tired of spending so much of the town's resources on one property owner, Koczela said. So now they're trying a new tactic in their struggle to protect the public health, and have gone to court to have the four properties put under control of a third party to bring them back up to code and ensure tenants' safety.


  • "The problem is, he keeps getting away with it," said North Adams Mayor John Barrett III. "The arrogant attitude he shows — he walks into court a half-hour late for his hearings. He has no respect for anybody. He has no respect for the local enforcement officers, no respect for the courts, no respect for the people he rents to."

Reportedly, one tenant, a widowed mother of three, is out nearly $6,000 because the apartment she rented from Borer was foreclosed on three weeks after she moved in. Another single mother lost $2,600 when she moved to North Adams thinking she had arranged for an apartment rental from Borer, but she learned there was no apartment at all, according to one of the articles.

Lack of heat & hot water, accumulating garbage, health and safety hazards and forced moves on short notice are among the alleged problems Borer's tenants, their advocates, and local officials are trying to address. For more, see:

Homeowner Confusion Observed In Complaints, Objections Filed In Class Action Settlement

Mike Dillon over at comments on the apparent confusion experienced by some homeowners in their attempts to file complaints, and object to or opt-out of, a class action settlement involving the mortgage servicing firm formerly known as Fairbanks Capital Corp. (now known as Select Portfolio Services) in a case involving alleged loan servicing improprieties. He provides a sampling of the complaints and objections filed by the affected homeowners.

For more, see

Friday, July 04, 2008

Trouble At 179 Ludlow

In New York City, The Village Voice tells the story of 179 Ludlow, a seven-story cinderblock building, just footsteps from Katz's Deli on Houston Street, that was part of the construction boom in the trendy Lower East Side that owner Michelangelo Russo reportedly paid $5.2 million for the property 13 months ago.

According to the story:

Russo reportedly put about a million bucks into the building, installing European-style molding, white-marble bathroom counters, heated terraces, and a private roof deck in the penthouse. Unfortunately for Russo, before he could finish the project, he ran out of cash and is now facing foreclosure. One contractor was reportedly stiffed for $300K, according to the story. Once work stopped, the almost-finished building at 179 Ludlow fell into disrepair. The building was never properly sealed and soon began attracting rats. This excerpt from the story gives a glimpse of the conditions inside the building:
  • In the abandoned building itself, rats have taken over, and a 2,000-square-foot retail space that could have brought in $25,000 a month is now ankle-deep in rat sh[**].

For the story, see Runnin' Scared: The Gentrification Project That Turned into a Rat Castle on Ludlow.

Vacant Homes In Foreclosure Being Used As Hang-Outs, Party Pads

The following recent stories report how some vacant homes in foreclosure are being put to use:
  • Mesa, Arizona: Vandals using vacant homes as party pads (Police in east Mesa noticed a "flare up" earlier this month in vacant houses being broken into and vandalized by teenagers looking for a place to hold parties),

  • Framingham, Massachusetts: Foreclosed Framingham house attracts trouble (Police go the same house for two reported break-ins within 12 hours; the officers reportedly got there just in time to see a group of four people leaving the house, trying to run away - all four were caught and told cops they were "hanging out" in the empty house),

  • Oxnard, California: 15 arrested in activities at 2 homes left vacant (According to police, two handguns were recovered from one of the homes in what they say appeared to be a gang-related gathering. They found gang graffiti and vandalism at both homes, which had several thousand dollars in damage, according to a police statement),

  • Macomb County, Michigan: Teens arrested, released (According to police, a 19-year-old man and a juvenile were arrested after neighbors spotted them coming out of a house that is in foreclosure; the suspects reportedly told deputies they stayed in the house after they got the keys from a girl who used to live there before foreclosure proceedings started).

Go here for other posts on vacant homes being used for parties, hang-outs, etc. teen parties vacant homes

Florida Couple, Adult Children Get Jail In Connection With Scheme To Avoid Home Foreclosure

In Clay County, Florida, My Clay Sun reports:
  • An Orange Park couple and their adult children were sent to Clay County jail following a scheme to avoid foreclosure on their $1 million Orange Park riverfront home. In April 1996, Andrew and Ruth Crawford and their children, James and Kelli Patterson, bought a 5-bedroom, 7-bathroom home [...] but made only a few mortgage payments. To avoid foreclosure, they refinanced the home several times and filed Chapter 13 bankruptcy more than a dozen times.

  • [A]ttorneys for [the mortgage lender] convinced a judge to dismiss the [most recent] bankruptcy and to ban them from filing bankruptcy yet again. Then Kelli Patterson, on three occasions, sent a phony fax from her workplace to the Clay Today newspaper to stop legal advertisements announcing the public sale of the home. Her faxes contained a forged signature of [the lender's] attorney.

For the story, see 4 jailed in foreclosure of Clay home.

Go here for other posts on serial bankruptcy filings. SerialBankruptcyFilings

Florida Lawmakers Put Squeeze On Landlords Filing Eviction Actions

The Tampa Tribune reports:
  • As if dealing with a delinquent tenant wasn't bad enough. Starting [July 1], Florida landlords will have to pay more to file eviction notices - nearly 240 percent more. "Frequently, the landlords have already gone one to two months with no income from the home," said lawyer Robert Altman of New Port Richey. "This is even more of a burden on top of what they've already got to deal with." The fees, recently passed by the Legislature, will bring tenant eviction filings to $270, up from about $80, in Hillsborough, Pasco and Pinellas counties.

For the story, see Eviction Fees For Landlords Up Dramatically.

Thursday, July 03, 2008

California Foreclosure Relief Bill Ready For Governor's Signature; Gives Local Municipalities Right To Fine Unmaintained Vacant Foreclosed Homes

The San Francisco Chronicle reports:
  • A bill designed to help Californian homeowners avoid foreclosure is headed for the desk of Gov. Arnold Schwarzenegger, who said Wednesday that he supports the measure. [...] The bill, which came in response to California's subprime mortgage crisis, requires mortgage holders to contact homeowners by phone or in person at least 30 days before filing a notice of default and calls for discussions about alternative payment options. The bill also doubles the time preceding eviction from foreclosed rental properties from 30 to 60 days, and gives local governments the authority to fine owners of vacant [foreclosed] lots that are not maintained.

For more, see Foreclosure aid bill in hands of governor.

Possible Connection Being Investigated Between Prosecutor & Man Suspected In Alleged Deed Theft Of Dead Woman's Home

In Dallas, Texas, CBS 11 News reports:
  • How did the top prosecutor for Dallas County and his wife end up crossing paths with a career criminal indicted for theft and forgery? CBS 11 Investigator Bennett Cunningham discovered how it happened and why the Texas Attorney General is now investigating the case.

  • Robert Wayne Mitchell, 51, is in jail. According to state records, he's been in and out of prison for theft. But this time, the charges are much more sophisticated. Back in 2005, Dallas County records show a woman named Ella Mae Walker deeded her Dallas home on Bonnie View Road to Mr. Mitchell. The CBS 11 Investigators showed Mitchell the warranty deed with his name and her signature on it. When we asked Mitchell how he had come to own that house, he replied, "I don't want to particularly answer."

  • Mitchell might not want to answer because, unless you can bring back the dead, there is a problem with the deal. The day Mrs. Walker signed the warranty deed she'd been dead for more than six months.


  • Land records show Mr. Mitchell sold Ella Mae Walker's property to the Good Street Missionary Baptist Church, just adjacent to her house. According to a letter from the Dallas District Attorney's Office, District Attorney Craig Watkins not only owns the title company that reviewed the title on the Walker deal, but that the DA did some legal work for the title company while he was serving as the county's top prosecutor. Texas statute prohibits the practice of law by a state prosecutor. Also, the notary on this part of the deal was Tanya Watkins, the DA's wife. Now both are potential witnesses in any case that may be brought against Mr. Mitchell.

For more, see Career Criminal Crosses Paths With Dallas DA, Wife (read story) (watch video).

Go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc. deed theft xenon

Illinois AG Help Line Flooded With Calls Since Filing Countrywide Lawsuit

In Illinois, the Naperville Sun reports:
  • The Illinois attorney general's office is encouraging homeowners with a Countrywide Financial Corp. loan to seek professional help if they're questioning the terms of their loan. Illinois Attorney General Lisa Madigan this week filed a lawsuit in Cook County Circuit Court against the nation's largest mortgage lender and servicer, claiming the company used deceptive practices to lure borrowers into unaffordable loans.


  • A spokesman with Madigan's office said Thursday that consumers with a 30-year fixed mortgage should not be alarmed, but carefully reviewing all documents of the loan is recommended. "Make sure you actually have that fixed mortgage," spokesman Natalie Bauer said.


  • The attorney general's office also has provided a homeowners referral help line, 866-544-7151, which officials say has been inundated with calls.

For more, see Madigan advises home buyers to review Countrywide loans.

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. countrywide consumer problems

Iraq Vet Unwittingly Rents Home In Foreclosure; May Be Out $4K

In Columbus, Georgia, WRBL-TV Channel 3 reports:
  • Imagine signing a lease for a year, then two weeks later being told - you need to move out. Well it happened in Columbus - and its happening around the country. [...] At this point we all know that foreclosures are on the rise - but what you may not know is that if the place you're renting is foreclosed on - there's nothing you can do about it - just ask the Wall family...Master Sgt. John Wall just got back from Iraq - and the place seemed just right.

  • We spent about four thousand just to get in the house - now you gonna tell me I have to pay that (again) and move out.” That's right - just as fast as they moved in - they're moving out - not by choice. Says John’s wife, Shelley, “We find a lease in good faith and 16 days later - we're told we need to find a new place to live?”

For more, see Foreclosing and Renters.

Another Case Of Mistaken Identity As Notice Of Foreclosure Sale Is Posted On Home With Fully Paid Off Mortgage

In Santa Cruz County, California, the Santa Cruz Sentinel reports:
  • Bob Richter was puzzled when a man rushed up to his home in Santa Cruz Gardens one Saturday and posted a foreclosure notice offering him cash to turn in his house keys. The man took a photo of the posted notice, then left. Richter and his wife bought the house in 1977, and the mortgage is paid. It turned out the posting was in error.


  • In this case, the notice announced that a foreclosure sale had taken place, and that a request to begin eviction proceedings had been forwarded to attorneys. The occupant was directed to Coldwell Banker's Corporate REO Division. The notice came from Homecomings Financial, a division of GMAC.


  • "They shouldn't allow people to do that," said Richter, who worries that unsuspecting homeowners might be persuaded to turn over their house keys. "It made me wonder if there is something that we signed that opened the door for this," he added. "I haven't borrowed money in 15 years. The mailman came by and he was shocked."

For the story, see Oops! Foreclosure notice in error.

Wednesday, July 02, 2008

Snyder Gets 12+ Years In $30M Pennsylvania Wraparound Mortgage Ponzi Scheme As Victims Watch Him Handcuffed & Frog-Marched Away To Prison

In Harrisburg, Pennsylvania, Lancaster Online reports:
  • Ignoring [Wesley] Snyder's pleas for leniency, U.S. District Chief Judge Yvette Kane sentenced Snyder to 12 years and two months in prison, a sentence within the federal guidelines. She also ordered him to make full restitution. The judge also summarily turned down Snyder's request to report for sentencing at a later date. He was led from the courtroom in handcuffs, as about 50 of his victims watched.


  • Today's sentencing came nine months after prosecutors discovered that Snyder, from Oley, had taken nearly $30 million from more than 800 borrowers, including 300 from Lancaster County, and 31 investors, including three local ones. Snyder fooled borrowers into thinking they had shorter, smaller mortgages while sticking them with longer, bigger ones and keeping some of their payments. He also made investors think they were funding the mortgages and were destined to get immense returns.

For more, see Mortgage scammer jailed (Ignoring broker's pleas for leniency and heeding local victims' calls for a stiff sentence, federal judge jails Berks man for 12 years, 2 months. He cheated 800 homebuyers out of $30 million).

Go here and go here for other posts and links to earlier media reports on the Pennsylvania wrap around mortgage Ponzi scheme involving companies operated by WesleySnyder.

Federal Appeals Court Affirms 25 Year Prison Sentence For Ohio Developer Who Pocketed Million$ Earmarked For Lien Payoffs; Left Buyers In Foreclosure

In Cincinnati, Ohio, The Cincinnati Enquirer reports:
  • Bill Erpenbeck’s 25-year prison sentence is fair considering the scope and cost of the fraud scheme he used to steal millions of dollars from banks and home buyers, a federal appeals court ruled today. If anything, the judges said, Erpenbeck is lucky he didn’t get an even longer sentence. The ruling by the U.S. 6th Circuit Court of Appeals rejected Erpenbeck’s argument that he was punished too harshly for orchestrating a fraud that left many home buyers with two mortgages and the threat of foreclosure. The home buyers eventually got their money back, but prosecutors estimate the fraud still cost eight banks $7.9 million. Judge Ronald Lee Gilman, who wrote the court’s opinion, said the sentence could have been longer because the total loss from the scheme was reduced when Erpenbeck’s bank agreed to cover some of the cost.

For the story, see Court: Erpenbeck sentence justified.


According to the appeals court ruling, by the time Erpenbeck turned himself in, his companies ("EDC") had illegally diverted a total of $33.9 million from sales to homebuyers in which existing liens from construction loans were not paid off at the title closings. After closing of title, Epenback's customers ended up with homes encumbered both by the exiting construction loan lien that wasn't paid off, in addition to their own mortgage loan used to finance their home purchases. The scheme eventually defrauded 8 federally insured construction lenders, 32 other federally insured financial institutions that provided mortgage loan financing for the individuals who bought EDC properties, and a total of 260 individuals who purchased EDC properties on which the construction liens were not removed.

In addition, after pleading guilty but prior to the sentencing hearing, Erpenback and his father attempted to get Erpenback's sister, Lori (the company's bookkeeper), to testify in a way that would possibly minimize Erpenback's prison sentence for the scam. After the first meeting, Lori ran to the Feds, who got her to wear a wire and go back for additional meetings with her brother and father. The FBI arrested Erpenbeck and his father after one of the subsequent meetings with Lori.

For the specific details of the scam, as reported in the court ruling, see United States v. Erpenback (pages 2 thru 4 of ruling).

Go here, Go here, and Go here for other stories illegal diversions of escrow funds. sneaky slick escrow agents gamma

Unable To Prove Ownership Of Promissory Note In Foreclosure, New Haven Court Tells MERS To Take A Hike

Connecticut & New York attorney Christopher G. Brown recently reported in
  • A Connecticut court recently joined what is becoming a national trend of road-blocking foreclosure of mortgages that have been traded in the secondary market, and the implications for mortgage servicers could be significant. In April, the Connecticut Superior Court in New Haven dismissed a foreclosure action that Mortgage Electronic Registration Systems Inc. (MERS), as nominee for Finance America LLC, had commenced against Anna M. Miller because MERS did not prove that it owned the note.


  • The court was very definite in its ruling that only the true owner of the loan can start a foreclosure, while imposters will be dismissed. MERS learned the lesson the hard way, pursuing the foreclosure for over three years and coming away empty.


  • [I]n today's environment every legal and factual detail in a foreclosure action is under tremendous scrutiny. Courts are declining foreclosure to those who do not play by the rules. Servicers need to understand that these decisions will make it harder for any servicer or mortgage loan owner to collect if and when the loan goes into default. The bottom-line message is that only the institution that can prove by irreproachable evidence that it owns the loan can foreclose. It may be a monumental task, but servicers will have to do their homework to identify the loan's true owner and secure its cooperation in establishing ownership before commencing a foreclosure. If not, the servicer may find that the bridge is out on the road to recovery.

For the details on this and other cases described in the article, see New Rules Toughen Servicers' Foreclosure Procedures.

See also: Connecticut Law Tribune: Shaky Standing (Foreclosure cases identify shoddy record-keeping in mortgage industry) (if link expires, try here).

(Click here for for the research attorney Christopher Brown used in the Anna Miller case.)

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

Pittsburgh-Area Sheriff Moves To Slam Brakes On Foreclosures; Plan Currently Under Legal Review

In Pittsburgh, Pennsylvania, KDKA-TV Channel 2 reports:
  • Allegheny County Sheriff Bill Mullen wants to put the brakes on sheriff sales - the monthly sale of all properties that have fallen into mortgage foreclosure or tax delinquency. Mullen wants to institute an automatic delay of sheriff sales for perhaps as long as two months. That would leave time for a conciliation conference between the lender and the homeowner to craft an alternative - payment plans, new mortgage rates - any possible solution to keep people in their homes.


  • Mullen's plan is currently under review by Joe James, president judge of Allegheny County [Court of Common Pleas], to make sure it passes legal muster. James is expected to approve some version of this plan that would require the lender to meet face to face with the borrowers and try to stem this plague of foreclosures.

For more, see County Sheriff Forms Plan To Curb Sheriff Sales.

Go here for posts on the Residential Mortgage Foreclosure Diversion Pilot Program recently implemented by the city of Philadelphia, Pennsylvania, which requires lenders to meet face to face with owner-occupied homeowners before a foreclosure sale can take place.

Law Students To Litigate Class Action On Behalf Of Inexperienced Investors Saddled With Inflated, Fraudulently Obtained Loans By Admitted Scammer

In Northern New Jersey, The Star Ledger reports:
  • Investors who lost millions in a complex mortgage scam filed suit [Monday] against a real estate operation already the focus of an ongoing federal fraud investigation. The class-action lawsuit by Seton Hall Law School's Center for Social Justice charged that the scheme targeted minorities, the elderly and others with little experience in purchasing and financing real estate.

  • Attorneys for the center said victims of the scheme were saddled with fraudulently obtained loans on investment properties worth far less than the purchase price. Unable to sell the residential properties, many fell into default less than a year after buying the multifamily houses, and subsequently into foreclosure.

  • The suit named Maurice Bethea, 40, of Newark, who pleaded guilty earlier this month in federal court to conspiracy to commit mail fraud. He admitted orchestrating the sales of houses in need of serious repairs and major renovations to so-called "straw buyers," who quickly defaulted on their loans.(1)


  • The lawsuit yesterday was filed on behalf of at least 75 people who bought houses from Bethea over the past six years, said Seton Hall law professor Linda Fisher. "I have talked to dozens of people. I hear the exact same story each time," she said. "They were deceived and induced to buy properties they could not afford and would not have bought had they not been given false information."

  • According to court documents, potential buyers were told that the properties they bought would have existing tenants, or they would have help finding tenants. The suit also charged that the buyers were misled with promises that they would receive rental income that would more than cover their monthly mortgage payments.

  • Loan applications inflated purchasers' incomes, enabling buyers to qualify for mortgages that exceeded their ability to pay. In some cases, mortgage applications were used to obtain a second "piggyback" mortgage as well to finance the purchase of a property. Fisher said many have seen their credit ruined and may never be able to repair it. Others have filed for bankruptcy. Some have lost their live savings.

For more, see Poor investors' lawsuit alleges mortgage con.

(1) Also named in the civil lawsuit were several of Bethea's companies -- Blue Financial Group Inc., Born Asiatic, Greenfield Asset Holdings -- as well as Maplewood attorney Daniel Roy, who was reportedly accused of closing, in a hurried manner, on the vast majority of the real estate transactions.

The End Of The Countrywide/Mozilo Story: "A Total Disaster ... His Ego Sank Him ... He Had To Be First In Everything"

The Los Angeles Times reports:
  • Angelo R. Mozilo struggled last week to bid farewell to No. 1 home lender Countrywide Financial Corp., the company he led for 39 years only to see it toppled by misadventures in high-risk mortgages. The usually silk-smooth Mozilo garbled words and at one point knocked over his microphone at a special shareholder meeting. Looking grim and sounding resigned, he said the era of independent home lenders like Calabasas-based Countrywide was at an end. Still, he added, "Countrywide is a great American story."


  • "He was an admired and feared competitor," said Paul Muolo, an editor at industry newsletter National Mortgage News and co-author of a book on the lending debacle, "Chain of Blame," that is due out this month. "But now his reputation is trashed." [...] The end of the Countrywide story was "a total disaster," Muolo said. "His ego sank him. . . . He had to be first in everything."

For more, see Countrywide's Mozilo exits stage a fallen hero (The mortgage loan empire he created flies a new flag Tuesday as the lender is absorbed by Bank of America).

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. countrywide consumer problems

Recap Of Recent State Actions Against Countrywide Financial

The following "scorecard" recaps the state legal actions taken against mortgage lender Countrywide Financial over the last week or so:

No word whether the timing of these court filings, along with this past Monday's NBC News report on an ex-Countrywide regional vice president blowing the whistle on the alleged shady corporate culture at the firm, were coordinated to coincide with Tuesday's closing of the Bank of America / Countrywide acquisition (possibly meant as "parting gifts" to now former CEO Angelo Mozilo) or whether it was all merely a coincidence.

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. countrywide consumer problems

"Payment Resets" On Subprime ARMs To Peak This Summer

The Washington Post reports:

  • The number of homeowners facing an increase in their subprime adjustable-rate mortgage payments will peak this summer, testing the efforts of lenders and others to keep those people out of foreclosure and stabilize the housing market. The timing reflects the height of subprime lending in the summers of 2005 and 2006, when many borrowers secured loans scheduled to adjust in two or three years. For many, an adjustment means their interest rate will go up two to three percentage points.

  • "The next six months, the industry, all of the folks that are out there trying to solve this problem, they are going to be very busy," said Mark Fleming, chief economist for First American CoreLogic, a California research firm. "There are a lot of people facing their resets right now. A good share of them don't have the refinance option."

For more, see Resets Peaking on Subprime Loans (Jumping Payments Raise Foreclosure Projections).

"Taking A Haircut", Leaving Struggling Developers In Control Among Unpleasant Options For Some Lenders Stuck In S. Florida Condo Quagmire

In South Florida, the Miami Daily Business Review reports:

  • [W]ith a number of South Florida condominium projects in various states of completion or financial distress, however, not every lender is taking so hard a line [on demanding prompt loan payments]. Many are showing more patience with struggling developers than in past downturns — not entirely by choice. “In many cases, they just don’t have the staff to take over a building. They don’t have that expertise,” said Rosendo Caveiro, head of Cushman & Wakefield’s apartment brokerage services group and a director at Miami-based Terrabank.

  • That has left lenders with exposure in the South Florida condominium market — ranging from locally owned Ocean Bank to big out-of-state players like Chicago’s Corus Bank and New York City-based iStar Financial — with some unpleasant options. They include leaving a struggling developer in control of the project or selling the debt at a deep discount and taking a haircut on the loan.

For more, see Special Report: Commercial Lending (may require free registration).

In a related story, see The Wall Street Journal: Small Banks' Reckoning Day Is Coming (Billions in Troubled Construction Loans Promise to Pose Test for Regional Lenders).

Which Banks Will Feel The Pain?

See a sortable list of small and regional banks with sizable exposure to construction and land loans and with notable delinquency rates (available online courtesy of The Wall Street Journal).

California Officials File Suit Accusing Developers Of Selling Same Lots To Multiple Buyers, Pocketing $6M In The Process

In Fresno, California, The Mercury News reports:

  • State officials accuse the developers of the failed Running Horse project in southwest Fresno of defrauding investors of millions of dollars in an effort to raise money. Tom O'Meara and Scott Webb allegedly sold the same lots to multiple buyers, told investors they were buying parcels inside the development when they actually were outside, and misled people into thinking their investments were secured by property in the ambitious project, officials with the [California] Department of Real Estate allege in their accusation. It is the first step in a process that could cause O'Meara's and Webb's brokerage licenses to be revoked. The state accuses the two men of defrauding about $6 million from 10 investors.


  • The state's accusations follow a lawsuit filed by investors from Alameda County in February against two real estate agents and a title company that had represented Running Horse.

For more, see Fresno developers accused of bilking $6 million from investors.

Tuesday, July 01, 2008

Two Indicted In "Metropolitan Money Store" Case Make Court Appearance

In Prince George's County, Maryland, WRC-TV Channel 4 reports:
  • A Prince George's County couple appeared in court on Tuesday in an alleged $35 million mortgage foreclosure rescue scheme to cheat lenders and homeowners facing foreclosure, a case authorities said is likely Maryland's largest mortgage fraud case ever. JoyJackson, 40, and her husband, Kurt Fordham, 38, both of Fort Washington, were arrested in North Carolina last month. [...] Jackson was ordered held without bond Tuesday. Fordham has a detention hearing scheduled for Wednesday.

For more, see 2 Charged In Alleged Foreclosure Scheme Appear In Court.

Wealthy Wife Of Presidential Hopeful Dodges Tax Foreclosure Bullet; Forks Over $8K+ To Settle With San Diego Tax Collector

In San Diego, California, The Associated Press reports:

  • Cindy McCain's debts with the county tax collector appear to be settled. Officials said Monday a trust controlled by the multimillionaire wife of Republican presidential hopeful John McCain had initiated payment on $1,743 owed in property taxes on a condominium in the tony La Jolla Shores area. The payment, due in April, was scheduled to default Tuesday.

  • "You can reasonably assume that it is paid," San Diego County Treasurer-Tax Collector Dan McAllister said Monday. Additional bills totaling $6,744 for the years 2004 through 2007 were paid by the trust on Friday after Newsweek magazine questioned why the trust had fallen into arrears on the two-bedroom, two-bath oceanfront property, McAllister said.


  • Heiress to a large Arizona beer distributorship, Cindy McCain's worth has been estimated at more than $100 million.

For more, see Cindy McCain settles debt with San Diego tax man.

See also, San Diego Union Tribune: McCain's wife avoids default on property taxes

  • [Treasurer-tax collector for San Diego County Dan] McAllister said the McCains just missed the deadline set by the state that allows homes to be sold to pay back taxes. “People have five years to pay taxes in full in order to avoid a tax sale,” McAllister said.

The Hammering Of Countrywide, Mozilo Continues; Florida AG Files Suit Alleging Predatory Lending Practices

In Fort Lauderdale, Florida, Reuters reports:

  • Florida sued mortgage lender Countrywide Financial Corp. on Monday for predatory lending practices, alleging the company at the center of the U.S. mortgage crisis made subprime loans to people who could not repay them.

  • The Florida attorney general filed the lawsuit, which names Countrywide Chief Executive Angelo Mozilo as a defendant, in state court in Broward County, Florida. Last Wednesday, officials in Illinois and the company's home state of California also sued Countrywide. On the same day, shareholders approved the company's takeover by Bank of America Corp.


  • Florida and California are among the leaders in mortgage defaults.

For more, see Florida sues Countrywide over mortgages.

From the Florida AG's office:

Go here and go here for more on Countrywide's problems. countrywide consumer probl.ems

Countrywide Ex-Regional Vice President Comes Forward, Speaks Out On Firm's "Shady" Corporate Culture

The NBC Nightly News with Brian Williams recently ran an investigative report in which a former regional vice president at mortgage lender Countrywide comes forward and describes what he felt were questionable lending practices that were allowed to go on at the firm.

For the story (video only), see Countrywide's 'shady' corporate culture.

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. countrywide consumer problems

Norfolk Alleged Straw Buyer Arrangements Catch The Eye Of The FBI

In Norfolk, Virginia, The Virginian Pilot reports on the stories of two individuals who unwittingly found themselves involved in so-called straw buyer arrangements which were allegedly orchestrated by Aretha Smiley, 37, a loan officer for a now-defunct mortgage company.

In one of the cases, an area woman falling behind on her bills went to Smiley seeking a refinance and reportedly ended up involved in an equity stripping, foreclosure rescue scam in which a straw buyer was allegedly used to pull all of the homeowner's equity out of her home of 23 years. The FBI is looking into both cases, according to the story.

For more, see Mortgage scams hit home amid real estate crunch.

Family Loses Belongings One Week After Moving Into Home Due To Foreclosure Contractor, Lender Screw Up

In Cedar Park, Texas, the Austin American Statesman reports:
  • A Nigerian couple who immigrated to Austin a decade ago thought they had finally made it in America. On May 7, they closed on their first home in the States, buying a $283,000 Cedar Park house that had been headed for foreclosure. [...] But on May 14, they came home from work at their janitorial services company to find that all their furniture, family heirlooms, personal photos, clothes, even their daughter's piggybank, had disappeared.

  • After filing a theft report with the Cedar Park Police Department, the Dicksons were given the news. In a mix-up over whether the home was still facing foreclosure, Field Asset Services was hired to drill open the doors and seize the belongings. [...] Cedar Park police officials said Field Asset Services told them that it carried out orders from a mortgage firm and that the Dicksons' belongings had been donated to area thrift shops. But a search of such shops turned up nothing.

For more, see Seizure of belongings leaves new homeowners baffled, angry.

For story updates, see:

  • Field Asset issues apology in seizure of belongings (Company that seized family's household items says it's sorry),
  • Cedar Park couple sues Austin company in foreclosure mix-up: (Bobo and Joy Dickson are suing Field Asset Services Inc. for failing to return their property. The lawsuit seeks money for the lost property plus compensatory damages, and called the company's conduct "malicious, callous and wanton." EMC Mortgage Corp., the Lewisville company that held the previous owner's loans, has apologized to the Dicksons. On Monday, EMC's parent company, banking giant JPMorgan Chase, also apologized.)

For an earlier post involving a similar type of mishap, reportedly also involving Field Asset Services, see Foreclosure Services Firm Targets Wrong Home; Locks Changed, Valuables Missing, Home In Disarray.

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

DC Announces Release Of Subprime Mortgage Lending Study

The Government of the District of Columbia yesterday announced:
  • Subprime loans in the District of Columbia disproportionately went to single, low- and moderate-income households in wards 4, 5, 7 and 8, according to a recently completed study on subprime mortgage lending and foreclosure, commissioned by the DC Department of Insurance, Securities and Banking (DISB). The study was part of a broader consumer protection initiative on behalf of the Government of the District of Columbia.


  • The Subprime Mortgage Lending Study in the District of Columbia, which was led by the Center for Responsible Lending with the assistance of a coalition of research organizations, is intended to help the District better understand the impact of subprime lending on its residents and to suggest changes that might be needed to help protect residents. The 168-page study contains more than 100 findings and recommendations that provide a road map for possible courses of action by District officials and agencies, lenders and consumers.

For the rest of the DC press release, see Study Shows That Low- and Moderate-Income Residents More Likely to be Offered Subprime Loans in DC.

Go here for the 168-page study, The Subprime Mortgage Lending Study in the District of Columbia (4.85 MB).

Monday, June 30, 2008

Foreclosing Mortgage Lenders Now Facing Foreclosure Themselves?

In Miami, Florida, the Miami Daily Business Review reports:
  • Condo associations that are in a financial bind from mounting foreclosures are now targeting lenders who have taken back units from owners in default but are themselves failing to pay their share of maintenance fees. As more units end up in the hands of lenders, the banks and mortgage servicing companies are responsible for maintenance payments for those units. But administering the growing pool of real estate has proved challenging for lenders.

  • The Residences at the Bath Club Condominium Association in Miami Beach is pressing a foreclosure action against Wells Fargo as trustee for an investment pool that owns the mortgage on a unit that isn’t paying its maintenance fees. The lender owes $32,252 in late maintenance fees on the unit it took back more than a year ago.


  • In a recent statewide community association survey, more than 60 percent of respondents said lenders owning foreclosed units or homes in their communities are not paying dues to the associations.


  • Attorney Paul Breitner, who represents community associations, said lenders are finding a way around having to pay association dues. They initiate foreclosure procedures but don’t seek a final judgment. That way, they avoid taking title to the property. “We increasingly see banks reluctant to take control of a unit,” said Breitner, with The Barthet Firm in Miami. “They would rather keep a unit in limbo and wait until the market comes back.”

For more, see Association turns the tables on bank.

Go here for the Miami court's foreclosure judgment ordering that the exclusive Miami Beach oceanfront condo (which sold for $1.45 million at the height of the market boom) that Wells Fargo acquired through foreclosure be sold at public auction because of its stiffing of the condo association out of $32K in maintenance fees.

Washington State Real Estate Agents Raise Concerns About New Foreclosure Rescue Law

In Everett, Washington, The Herald reports:
  • A new law designed to protect homeowners from foreclosure rescue scams has raised confusion and concerns from real estate agents. Some agents are worried [...] about the new law's provisions, which could hold them liable if anything goes wrong in a transaction involving so-called distressed properties. Those include homes either in foreclosure or close to it, or properties on which owners owe back taxes. Because of the new rules and liability for real estate professionals, some agents are shying away from distressed properties. And that makes it harder for those owners to get help.


  • The confusion is understandable, said Kristin Alexander, spokeswoman for the state Attorney General's Office, which originally proposed a law to save consumers from foreclosure scams. [...] "We're certainly aware there are issues with the law," Alexander said, adding that Attorney General Rob McKenna's staff and real estate industry leaders plan to meet this summer to discuss how to fix provisions of the law. The amendments could then be presented to the Legislature early next year.

For more, see Agents leery of anti-scam law (Until glitches in rules and liability provisions are worked out, real estate agents are steering clear of distressed properties).

Ramapo Couple Face Forgery Charge For Allegedly Tricking Elderly Woman Into Signing Home Sale Agreement, Despite Earlier Civil Suit Upholding Contract

In New City, New York, The Journal News reports:
  • An indictment unsealed last week charged [Michael and Chaya Goldstein] with the felonies of second-degree attempted grand larceny, forgery and criminal possession of a forged instrument.

  • [75 year old homeowner Venera] Held has insisted that Michael Goldstein, 32, tricked her into signing a contract to sell a house [...] during a July 4, 2003, meeting in a Monsey bagel shop.

  • [In an earlier civil suit between Held and the Goldsteins,] State Supreme Court Justice Alfred Weiner upheld the contract after a nonjury trial, and his decision has been supported by an appeals court that felt Weiner was in a better position to determine the veracity of the testimony.

  • [Executive Assistant District Attorney Gary Lee] Heavner said the prosecution was not concerned with the civil litigation, but rather with the seriousness of the felony charges that a grand jury lodged against the Goldsteins.

For more, see Order of protection denied in Ramapo house dispute.

An earlier story on this case reports that the charges could grow against Michael Goldstein as the District Attorney's Office continues to investigate his real estate dealings. According to Executive Assistant DA Heavner, there is an ongoing probe into the facts in this indictment as well as other similar cases involving Goldstein.

For that story, see Ramapo couple face forgery charges in house sale. DeedTheftAlpha ForgeryGenuineSignatureKappa

How Fraud & Foreclosure Hit One New York City Neighborhood

In South Jamaica, Queens, a New York Daily News I-Team investigative report describes the neighborhood deterioration suffered in one three by three block section of town as a result of foreclosures and fraudulent real estate deals. Among the anectdotes:
  • One man who his fighting to keep his home of 52 years after an alleged scam artist secretly recorded a deed to his home and sold it to another in a sale financed by a $365,000 mortgage that has since been allowed to fall into foreclosure;

  • A homeowner who, while not experiencing the difficulties of foreclosure on her own home, was forced to invest in a cat to deal with all the mice that began invading her yard, attracted by other neighborhood homes that were abandoned and left in foreclosure;

  • A woman with three kids who unwittingly rented an apartment that had just fallen into foreclosure from someone who was not the owner; the process server served the foreclosure papers on her 11 year old daughter;

  • A 94 year old woman facing foreclosure because her son secretly put the home in his name, pocketed the proceeds of a $200,000 second mortgage, and has stopped making the payments on the loan;

  • A woman who lost her fully paid off home of 35 years when, needing money to pay for her deceased husband's funeral, ended up with an adjustable rate mortgage with payments that quickly became unmanageable;

  • A homeowner who has fully paid off his home, has never had financial difficulties at all, but nevertheless has his hands full trying to deal with the vandalism and illegal dumping occurring at the vacant foreclosure next door;

  • The postal worker who delivers mail in the area said she keeps an unofficial tally of the foreclosed homes on her route.

For the story, see The tragic toll of housing nightmare (go here for entire story on one web page).

Oregon Halfway House Faces Foreclosure; Owner Signed Over Deed To Contractor Who Now Can't Pay Mortgage

In Medford, Oregon, KOBI-TV Channel 5 reports:
  • [F]or one Medford man, finding himself on the brink of foreclosure has been a surprise. That's after the home he's about to lose has served the community it resides for over twenty years. Gene Haag has worked with Jackson County Corrections in housing and guiding former prisoners since the eighties. The success rate is incredible, but it's all on the brink of being lost to a deal gone wrong and down-trodden economy.


  • [H]aag and his wife face foreclosure on the home they and hundreds of ex-cons have lived in since [1986]. And the reason for the foreclosure came as an unexpected turn of events. In an attempt to pay off their mortgage the Haag's turned over their deed to a contractor who'd purchased part of the land. The contractor promised to return two acres of it and the home once he finished work on the property. But that was two years ago and the recent economic reversal hit the contractor and the deeded property.

  • Now he can't pay off his lender who will auction the home on Tuesday. The lender is taking it all. Haag says he regrets turning over the deed, but says this house is more than just a home. Its millions of dollars we've saved the community.

For more, see "My Families All Gone" Says Former Prisoner.

Sunday, June 29, 2008

City Of Buffalo v. ABN Amro Mortgage Group Inc.

For those of you who have recently been looking for a copy of the lawsuit brought by the City of Buffalo, New York against a host of lenders on account of the blight caused by abandoned houses in foreclosure in that city, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; available online courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP).

I recently discovered an expired link that appeared in several earlier posts referencing this lawsuit that I have since corrected. If any of you have a problem with this link in the future, simply email me at and I'll email the lawsuit to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Sorry for any inconvenience the expired link may have caused.

For other "blight-related" and public nuisance lawsuits brought by municipalities and others, see:

Lenders, Title Company Agree To Fork Over $8.9M To Settle Allegations Of Screwing Over FHA-Insured Loan Program By Submitting False Claims

In two unrelated cases, the U.S. Justice Department has recently settled civil lawsuits brought against two financial institutions and a title company for allegedly screwing over the FHA-insured mortgage loan program.

In one case, the U.S. Attorney for the Eastern District of Michigan announced:
  • The Department of Justice announced [...] that National City Mortgage, Inc. has agreed to pay $4.6 million to settle allegations arising under the False Claims Act concerning fifty-eight federally insured loans for mortgages submitted to the Department of Housing and Urban Development (HUD). [...] The United States alleges that National City improperly submitted fifty-eight late endorsement loans for FHA insurance coverage which were already "in default" prior to their submission, in violation of the FHA regulations.

For more, see U.S. Attorney press release: $4.6 Million Settlement with National City Mortgage, Inc. Involving Federally Insured Mortgages.

In a second case, the U.S. Attorney for the District of Arizona announced:

  • The United States reached a civil settlement with Wells Fargo Bank and Ticor Title Agency of Arizona. In the settlement, Wells Fargo Bank has agreed to pay $4,046,786 and Ticor Title has agreed to pay $265,370.

  • Under certain circumstances, the Federal Housing Administration’s “pre-foreclosure sales” program allows homeowners with federally-insured loans to avoid foreclosures by listing their homes for sale. If a sales price is not enough to pay-off a loan, then the lender submits an insurance claim to the Federal Housing Administration which will pay the lender the balance owing on the loan.

  • The United States contends that Wells Fargo Bank submitted more than 70 false claims to the Federal Housing Administration under the pre-foreclosure sales program and that Ticor Title prepared inaccurate escrow documents which allowed lenders to submit false claims to the Federal Housing Administration. [...] Wells Fargo Bank and Ticor Title deny the United States’ contentions but agreed to pay the amounts listed above.

For more, see U.S. Attorney press release: United States Reaches $4.3 Million Settlement With Wells Fargo Bank And Ticor Title.

Mass AG Bags Five In Alleged Straw Buyer Scam Connected With Widespread Foreclosure Rescue Scam; As Many As 60 Homes Involved; Probe Continues

Massachusetts Attorney General Martha Coakley's Office announced Friday:

  • Two bank employees, a mortgage broker, an assistant of the mortgage broker, and a Worcester man had 106 indictments returned against them late [Thursday] in connection with allegedly creating false or misleading bank documents that were then used to obtain fraudulent mortgage loans in the millions of dollars.(1)


  • Authorities allege that the defendants conspired to produce false bank documents that were pivotal in fraudulently obtaining millions of dollars worth of loans. These bank documents were known as verifications of deposit, or VODs. [...] Authorities believe that the false VODs were used to bolster the loan applications of “straw buyers” in a widespread foreclosure rescue scheme. At this time, the investigation remains ongoing.

For the whole story, see Five People Indicted in Elaborate Mortgage Fraud Scheme (Four of These Individuals Arraigned [Friday] in Superior Court).

See also, Worcester Telegram & Gazette: Five indicted in massive mortage fraud scheme (Prosecutors allege a massive mortgage fraud scheme involving as many as 60 properties in Worcester County over the last two years).

(1) Those indicted are: Erik Tancun, age, 29, of Marshfield, Steven Stapleton, age 36, of Waltham, Kenneth Garabedian, age 51, of Worcester, Martha Sass, age 46, of Marshfield, and Thomas Itemere, age 28, of Worcester.

Sacramento Feds Indict Five In Alleged Straw Buyer Mortgage Scam

In Sacramento, California, KCRA-TV Channel 3 reports:

  • A federal grand jury returned an eight-count indictment Thursday charging five people with conspiracy to commit bank fraud and other related charges in a mortgage fraud scheme, [Eastern District of California] U.S. Attorney McGregor Scott said.


  • [Robert] Martinson and [his wife, Sheryl] Hayden operated a branch of MAC Real Estate Services [...]. Scott said the couple purchased dozens of homes as investment properties, [...] then recruited straw buyers and others to purchase the homes as the housing market began to slow. Scott said loan processors Rick and Melissa Villegas helped Martinson create fraudulent loan applications, and also helped Martinson and Hayden by paying "substantial kickbacks" to at least one straw buyer. [Kathleen] Delapp, a loan processor for MAC Real Estate Services, forged signatures and knowingly forwarded at least one false loan application, Scott said.

  • According to the indictment, after the lenders funded the loans, Martinson and Hayden [...] would receive substantial loan proceeds from the sales of the homes, and Delapp and Rick and Melissa Villegas would receive fees and other compensation as a result of the fraud.

For the story, see 5 Charged In Mortgage Fraud Case (2 Arrested, 2 Previously Released On Bond).

See this press release for a summary of recent mortgage fraud prosecutions by U.S. Attorney's office for the Eastern District of California.

Thanks to Tim McDaniel for the tip on the story.

Albany DA Gets 64 Count Indictment Against Two Charged In Alleged Mortgage Scam Involving 25+ Homes

In Albany, New York, WXXA-TV Channel 23 reports:
  • Former Albany Urban League President Aaron Dare is now facing more charges in connection with his real estate deals. A judge unsealed a more than 59 count indictment [Friday] accusing Dare and his girlfriend of mortgage fraud -- falsifying records and artificially boosting appraisals on buildings now headed into foreclosure.

  • Aaron Dare and Ana Monteiro were arraigned in Albany County Court [Friday] morning on a total of 64 counts ranging from money laundering to grand larceny to falsifying records. The [Albany County] district attorney's office says they stole more than $1.5 million from mortgages they got through bogus down payments and inflated appraisals while deflating the hopes of their investors.

  • There are more than 25 homes throughout Albany’s Arbor Hill and West Hill neighborhoods, and elsewhere in Albany County, that Aaron Dare and Ana Monteiro are accused of helping other people buy while helping themselves to money from the mortgages on them.

For more, see Aaron Dare, girlfriend indicted on mortgage fraud charges.

See also, Albany Times Union: Massive wave of fraud alleged.

Arkansas AG Files Suit Against Developer For Loan Default On Land Parcels Sold To Consumers Using Installment Land Sales Contracts

In Northwest Arkansas, the Arkansas Democrat Gazette reports:
  • [L]ast week, Attorney General Dustin McDaniel sued [developer Wayne] Watkins and some of his business associates, saying they had violated the Arkansas Deceptive Trade Practices Act. Watkins, the suit read, had “engaged in a concerted scheme to knowingly deceive both consumer purchasers and banks to keep his financial house of cards from tumbling.”

According to the story:

  • [Watkins] sold hundreds of parcels of land, often financing the deals himself. Buyers signed installment land-sales contracts and were promised deeds once they made the last payment. Until then, the land remained in Watkins’ name.

  • Many of Watkins’ customers lost their money and the land they thought they were buying when he defaulted on $ 2.6 million in loans he obtained by using the land he was selling as collateral. Because Watkins did not record the contracts at the courthouses in Sharp or Fulton counties, there was nothing showing lenders that buyers had a legal interest in the land.


  • Foreclosure records and other documents show that Watkins’ land sometimes had one or more bank liens that buyers never knew about because they did not conduct title searches on the property. At least one buyer told the Arkansas Democrat-Gazette that Watkins’ salesmen discouraged him from having a title search.

For more, see Land-sales firms see image take hit.

Go here and go here for stories on how easy some found it in getting screwed over in these lease/option, "rent to own" and contract for deed, and installment sale contract real estate deals. rent to own lease purchase option scams yellowstone

Ohio County To Squeeze Extra $400 From Lenders Filing Foreclosures

In Pomeroy, Ohio, The Daily Sentinel reports:
  • Financial institutions filing foreclosure actions in Common Pleas Court will be required to pay an additional $400 above and beyond court costs, beginning July 1, to address an increase in the foreclosures handled by the court. Meeting Thursday, Meigs County Commissioners established a new line item in the general fund for a “Special Projects Fee for Foreclosure Actions,” to be paid by banks and other plaintiffs filing foreclosure lawsuits.

Source: New charge will address increase in foreclosure filings.