Saturday, August 09, 2008

Turf Paint Used To Battle Brown Lawns, Giving Vacant Homes Instant Curb Appeal

In Canyon Lake, California, The Press Enterprise reports:
  • Canyon Lake resident Matthew Larson is trying to help fight the foreclosure crisis. His weapons of choice are gallons of green paint. The battlefields are dead, brown front lawns. Armed with a sprayer that resembles a pearl-colored jet pack, Larson paints lawns with a turf colorant traditionally used at golf courses. "It gives a home instant curb appeal," Larson said as he sprayed the green paint on the lawn of a repossessed home on Longhorn Drive in Canyon Lake.

  • In California, where foreclosures and drought are major issues, lawn painting is getting a fresh look from property owners -- and groups are sprouting up to perform the services.(1)

For more, see Brown lawns go green, thanks to turf paint.

(1) According to the story, lawn painting was once a novelty used at golf courses and athletic stadiums to touch up withered pockets of turf. During the recent real estate boom, some homeowners used turf coloration to give their lawns an evergreen look. Turfgrass science professors nationwide said there are few drawbacks to lawn paint when it is used as a short-term solution. ForeclosuresDestroyNeighborhoodsApple

Minneapolis Initiates Vacant Home Demolition Program To Stabilize Neighborhoods

In Minneapolis, Minnesota, KAAL-TV Channel 6 reports:
  • With the demolition of a condemned, burned-out house in north Minneapolis Monday, the city announced an effort to improve neighborhood livability by demolishing vacant and boarded properties that are unrecoverable and detrimental to neighborhoods. The demolition work is one way Minneapolis and its partners are working collaboratively to stabilize and secure neighborhoods, especially in areas hard-hit by foreclosures. The city of Minneapolis and Hennepin County officials will evaluate vacant and boarded properties and identify those that are the strongest candidates for demolition.

For more, see Mpls. cleans up by demolishing vacant homes.

See also, Minneapolis Star Tribune: Foreclosed homes demolished in Minneapolis.

Go here, Go here, Go here, and Go here for other posts on vacant homes leaving their mark on neighborhoods. ForeclosuresDestroyNeighborhoodsApple

Irvington's Bleakest Block

Columnist Mark DiIonno of The Star-Ledger writes about a section in Irvington, New Jersey that's been particularly hit hard with homes that have been left vacant and abandoned. He describes the neighborhood:
  • But in this part of Irvington, north of Springfield Avenue and east of Grove Street, the vacant houses outnumber the lived-in. At night, the vacant-eyed addicts wandering the streets outnumber the living. Drug dealers and prostitutes sell curbside, as if no laws forbid them. Most of the city's 14 homicides this year come from this area.

  • Guard dogs, left to protect abandoned homes, bark from behind boarded windows and doors. Buildings without dogs get picked clean and become crack houses or gang dens. The new brick-face house had guard dogs. Four in all, from a company called Rottweiler Kingdom Security, roaming the floors at night.

  • But the scavengers, most likely local drug addicts, stripped metal pipes from the basement to sell as scrap. One was the gas pipe. Natural gas filled the house ungoverned. When workers entered in the morning, the house exploded. A worker was killed and four others were injured. The house was leveled, and the blast seriously damaged another half-dozen houses.

This tidbit is about a retired Newark cop who bought a home in the neighborhood but was never able to move in:

  • James Hill, who owns one of [the vacant houses], said scavenging addicts are the curse of the neighborhood. "A homeless guy broke into my house before I bought it and got stuck between a radiator and a pipe and died. That should've told me something."

  • Hill has never lived in his house. The day of the closing, he unlocked the door and saw that anything with scrap value had been unscrewed, unbolted or cut out of the house. Pipes, fixtures, heating elements: all gone. Then came the blast, which broke out all the windows.

For more, see Irvington's bleakest blocks.

Go here, Go here, Go here, and Go here for other posts on vacant homes leaving their mark on neighborhoods. ForeclosuresDestroyNeighborhoodsApple

One Providence Family Left Standing On Street Where Foreclosure Crisis Wiped Out The Rest Of The Block

In Providence, Rhode Island, The Providence Journal reports:
  • Garbage pails outnumber residents on this sorry side street in the city’s West End. On this warm summer afternoon, the sidewalk along Ware Court is broken and empty — like the houses. All but one, that is.

  • The two-story cottage at the end of the block is home to the Lewis family. They bought the house in 2001. Now they are, literally, Ware Court’s sole remaining residents. Their neighbors have all lost their homes to foreclosure. “When we bought it, every house on this street people lived in,” says Terri Lewis. Now, “every house on the street is in foreclosure but mine.”

For more, see Abandoned properties multiplying in Providence.

Go here, Go here, Go here, and Go here for other posts on vacant homes leaving their mark on neighborhoods. ForeclosuresDestroyNeighborhoodsApple

Foot-Dragging Lenders Slow To Foreclose On Abandoned Homes Force City To Consider Converting Upkeep Expenses Into Tax Liens

In Rutland, Vermont, the Rutland Herald reports:
  • [Mayor Christopher Louras] told the aldermen that the city has incurred considerable costs dealing with everything from mold and mosquito-related public health hazards to situations involving tenants left in buildings where water and electrical utilities have been stopped.


  • The problem, according to city Assessor Barry Keefe, a former banker, is that the banks haven't taken the legal foreclosure step on the properties, leaving the city with no one to call if health and safety situations exist on the properties.

  • With no way to ignore the property issues and no one to bill for the expenses, Louras told the aldermen he hopes they will pass an ordinance similar to one in Burlington that converts that municipality's property management expenses into tax liens. [... A] tax lien, which would essentially convert the property expenses into a "tax," would put the city's claim at the front of the line of creditors.

For more, see City proposal may remedy costs of abandoned parcels.

Go here for other posts on code violation problems associated with homes in legal limbo; when a foreclosing lender is reluctant to complete a foreclosure action to avoid getting clipped with housing fines. responsibility code violations foreclosure

Recent Stories On Cities Battling Problems With Vacant, Abandoned Homes

Add the following places to the list of cities having problems dealing with vacant, abandoned, boarded up properties:

  • Ypsilanti, Michigan: Lawn cutting bites into budget (Foreclosures force more mowing by Ypsilanti Township): With more homes falling into foreclosure, mowing grass at vacant properties is costing Ypsilanti Township more money. Township administrators are asking the township Board of Trustees to increase the 2008 nuisance-abatement budget from $50,000 to $125,000. The money pays for cutting grass, boarding up abandoned properties and cleaning up blight, said Police Service Administrator Mike Radzik.

  • Long Island, New York: Foreclosed homes host to wild parties, squatters: Property preservation companies on Long Island and nationwide are so overwhelmed by the high number of foreclosures that an increased number of abandoned homes are falling victim to vandalism, burglaries and raucous spring break parties that cause tens of thousands of dollars in damage. [... A] Babylon-based Realtor said a spring break party – the empty beer bottles were a dead giveaway – damaged a long-vacant West Babylon home. The wreckage, estimated at $20,000, included damaged sheetrock.

  • Jackson, Michigan: Foreclosed Homes A Big Problem for Cities: A burden that should belong to the banks that own the city's 300 foreclosed homes, but City Assessor Jan Markowski says some are opting to let the city do their dirty work and just pay the fine. The problem is Jackson work crews can't keep up with foreclosures popping up like weeds.

  • Lathrop, California: Foreclosures leave Lathrop's west side deserted: Foreclosures have turned one west side Lathrop neighborhood into a ghost town, an occurrence that some say is becoming a common tale across the city. [...] Many of the foreclosed homes stick out due to the dead grass and overgrown weeds filling up the front yards. [Homeowner J.R.] August said he and his neighbors often water and mow the lawns of the empty houses to keep blight from taking over their neighborhood. The Lathrop Code Compliance Division has posted signs on the garages of these empty houses to warn about the overgrowth violations, but upkeep has fallen upon the remaining neighbors.

  • Toledo, Ohio: Toledo taxpayers, neighbors bear woes of vacant sites (Study: City holds up, but crisis is looming): [A] study, titled "Toledo at the Tipping Point," states the city has moderate levels of abandonment and vacancy when compared with other cities, but warns "powerful market forces could bring on a vacant property crisis."

  • Tulare County, California: Neighbors of vacated homes seek solutions: There have been more than 1,000 home foreclosures in the last three months in Tulare County, leaving once-full neighborhoods blotted with abandoned houses. Those sticking around have faced a dilemma: How to determine responsibility for that eyesore on the block.

  • Columbia, South Carolina: City fed up with out-of-town landlords: The city has 54 pending boarded-up housing cases, according to a list that was last updated in May. Twenty-three of the houses are in North Columbia.

  • Worcester, Massachusetts: McGovern calls foreclosures ‘terrible crisis’: For the residents of Preston Street, these [foreclosure] signs have become all too familiar. On this short block alone, six houses have been foreclosed upon. [...] With the recent foreclosures, the neighborhood has seen an increase in vagrants and drug dealers breaking into the vacant houses. “You have the bad people going into these empty houses, looking for a free place to stay or a nice place to sell drugs,” [one resident] said. “They get into these houses and they destroy them, and then after the city gets them out, they close them up and board them up.”

  • Provo, Utah: Riverbottoms mortgage fraud: Residents deal with fallout: For nearly a year, a stately red brick mansion [...] in Vintage On the River, a subdivision in the affluent Riverbottoms area in Provo, has remained vacant, its yellowing front lawn in stark contrast to the manicured, verdant lawns of neighboring luxury homes. This home, one of five properties that federal investigators say were subject to an illegal property flipping scheme in 2006, is among an estimated 20 Riverbottoms properties blighting an area hard-hit by the housing downturn, an ongoing credit crunch and a glut of luxury housing inventory in Utah County.

  • Lake Elsinore, California: In areas of Lake Elsinore, foreclosures force those left to pick up higher tax bill: Lake Elsinore homeowner Jan Vyse need only look at the vacant homes in the Tuscany Hills neighborhood for an explanation of the $200 increase she will see this year on her community facilities district tax bill. As more homeowners fall into foreclosure and tax delinquency, the city is asking homeowners in good standing, like Vyse, to pick up the slack so the city can pay its own debts on time. [...] Homeowners in 11 of the 26 [Lake Elsinore] districts will have higher bills to cover delinquent taxpayers.

  • Phoenix, Arizona: Valley homeowners fight blight caused by foreclosures: [One homeowner] is surrounded by three bank owned homes and another further down the block that is about to enter the foreclosure process. [...] In the worst cases there are box springs on a front patio, a discarded office chair on the front lawn, missing light fixtures, trash in trees, and garbage scattered around the properties;

  • North Hudson, Wisconsin: Home foreclosures create problems in North Hudson: Foreclosed and abandoned houses in the village are causing urban blight and generating complaints to the Board of Trustees. [... V]illage officials’ hands are somewhat tied.
    We can’t just walk in and fix it up,” said Trustee George Klein, “because we would be trespassing.” [Public Welfare Committee and chairman Jim] Thomas said that the law dealing with code violations is weak on enforcement.

Go here, Go here, Go here, and Go here for other posts on vacant homes leaving their mark on neighborhoods. ForeclosuresDestroyNeighborhoodsApple

NW Florida Man Kills Sheriff's Deputy, Self Over Zoning Dispute

In Navarre, Florida, the Northwest Florida Daily News reports:

  • On a vacant lot just south of the East Bay River, an empty camper sits off a red dirt road where Mark Rohlman hoped to build his dream business. Instead, Rohlman killed an Okaloosa County sheriff's deputy and then himself with a shotgun early July 22. In the months before the tragedy, Rohlman filed two lawsuits - one in district court in Santa Rosa County and another in federal court in Pensacola.

  • The first lawsuit was filed in 2007 after the Santa Rosa County Commission denied Rohlman's request to have his property rezoned. The second lawsuit, filed in May of this year, alleges a vast conspiracy involving county officials, federal law enforcement and even the Northwest Florida Daily News to deprive Rohlman of his civil rights.

For more, see Mark Rohlman's breaking point? (Before his death and shooting of a sheriff's deputy, Rohlman believed there was a vast conspiracy against him).

Friday, August 08, 2008

HUD Terminates Section 8 Contract With 77-Unit Complex; Rent Subsidy Stops, Landlord Defaults On Mortgage, Tenants Fear Gentrification, Eviction

In Indianapolis, Indiana, The Indianapolis Star reports:
  • [Cynthia] Moyo and others who live in the complex -- there are about 80 residents in the 77-unit building -- say it is quiet and livable. The U.S. Department of Housing and Urban Development disagrees, saying Senate Manor's two buildings have "serious health, safety and security concerns" that the landlords have failed to adequately address.


  • [T]he buildings' owners argue they haven't been given a fair chance to make repairs and that HUD's inspections have been unfair. HUD, however, has stood firm, terminating its Section 8 housing contract with Senate Manor in April. It stopped sending payments to the landlords in July.

  • One of the owners, Jerry Moss, said the loss of about $40,000 a month in subsidies has caused him and his partners to default on their mortgage. He said they will have to sell the buildings if the government's payments do not resume soon. The landlords and tenants have filed separate lawsuits(1) in federal court in hopes of persuading HUD to reinstate its contract with Senate Manor.

For more, see Senate Manor tenants take on HUD (Termination of Section 8 contract unfair, suits allege).

(1) Unlike most disputes involving landlords & tenants, in this case they find themselves siding together. According to the story, the tenants' lawsuit says Senate Manor is being threatened with foreclosure as construction starts on new "luxury apartments" across the street. "They are simply trying to get buildings like this out of areas that are rehabbed and are considered to be gentrifying areas, basically displacing people to far less desirable neighborhoods," said Stephen Byers, the tenants' Indianapolis lawyer.

California Tenants In Foreclosed Homes Now Get 60 Days Notice Before Facing The Boot

Buried in a story in is this excerpt on tenants rights in California:
  • [Foreclosed h]omeowners who live in their house are only entitled to three days once the bank has repossessed the house before they're evicted. Tenants get at least 60 days to stay there, and they don't have to pay rent.

  • "Even though it's bad, it's really not as bad as it sounds," said local attorney Steven Kellman, who runs the Tenants Legal Center. "It's kind of a soft landing. Some of them actually think of it as a benefit, because they can save up their rent."

  • Gov. Arnold Schwarzenegger signed a bill into law in July to extend the amount of time such tenants are given before they must vacate the house from 30 days to 60 days. That gives tenants an extra month to save the money they would typically spend on rent and look for a new place. It also signaled an acknowledgement that when landlords can't pay their mortgages, they're unlikely to have the money to refund tenants' security deposits, which are usually about one month's rent.

For the story, see Renters Caught When Banks Foreclose on Landlords. TenantRentSkimmingAlpha

New Indiana Law Wipes Out Half Of All State Mortgage Brokers

In Indiana, the Anderson Herald Bulletin reports:
  • [A]s of noon Wednesday, 361 of Indiana’s 950 brokerages had failed to meet a Tuesday deadline for complying with a 2007 industry-backed law that requires each brokerage to name a principal broker with at least three years experience who has passed a state exam and will oversee his company’s business affairs. Another 143 brokerages have voluntarily surrendered their licenses, Indiana Secretary of State Todd Rokita said in a teleconference with reporters. That means only about half of the 950 mortgage brokers licensed by the state on July 1 remain in business five weeks later.

For more, see New state law shutters 40 percent of state mortgage companies.

Recent Home Buyers Snagged In Unfinished Development Facing Massive Foreclosures As Builder Faces Major Financial Problems

In Jennings, Missouri, North County Journal reports:
  • William Coleman looked over the houses on Wilson Bridge Drive and praised his surroundings. "I love this neighborhood," Coleman said. "We've got great neighbors. There's no noise. It's a lovely area."

  • However, there's one difficulty for Coleman and nearby residents - the neighborhood is part of the unfinished Alexandria Place in Jennings. The residential development is in financial trouble. On Aug. 16, two finished homes, four finished townhouses, five unfinished townhouses and 82 vacant lots will be auctioned to the highest bidders to repay money owed to the banks that financed the endeavor.

For more, see Jennings: Alexandria Place residents fear effects of foreclosure proceedings on 93 properties.

Use Of "Trump" Name In Project That Famed Mogul Is Not The Developer A Misleading Marketing Practice, Alleges Lawsuit

In Fort Lauderdale, Florida, the Daily Business Review reports:
  • A Boston restaurateur who banked on the allure of Donald Trump’s name in deciding to buy a Fort Lauderdale condominium-hotel unit alleges in a lawsuit that he is the victim of misleading marketing.


  • The lawsuit claims marketing material indicated the units would be worth 36 percent more with the Trump name. Trump is not the developer and does not have any agreement to indicate the project will operate under the Trump name when it is completed, according to the suit.(1)

Reportedly, neither Donald Trump nor his organization are named in the lawsuit.

For more, including a link to the lawsuit filed in this case, see Condo Meltdown: Condo with Trump name sued over marketing practices.

(1) According to the story: (a) In June, 80 buyers of condos at another South Florida development, the Trump Towers complex in Sunny Isles Beach, also claimed the Trump name was used to attract buyers; (b) In a lawsuit filed in Miami-Dade Circuit Court, the buyer claimed that the Trump name on their condo can only be used temporarily and for promotional purposes; (c) It said the name may change once the units are sold, if the buildings are completed and if developers Related Group and Dezer Development no longer are associated with the project; (d) The buyers sought the return of $20 million in deposits and the cancellation of sales contracts for units collectively priced at more than $100 million.

A similar story involving the alleged licensing of the "Trump" name in connection with the marketing of a condominium development was reported in Tampa, Florida. See Unbuilt Troubled "Trump Tower Tampa" Project Faces Foreclosure; Famed Builder Said To Have Merely Licensed Named To Local Developer.

Bradenton Developer Initiates Aggressive Sales Promotion In Attempt To Unload Unsold Luxury Units, Keep Prices Propped Up

In Bradenton, Florida, buried in an article in the Bradenton Herald is a description of an aggressive sales promotion reportedly being used by a local condo developer with the view to unload the rest of his unsold luxury inventory, and at the same time keep market prices propped up:
  • Instead of lowering the sales price of units at The Promenade that go for $360,000-$700,000, [real estate broker Becky] O'Steen said the developer is offering an alternative cost relief. O'Steen said some new buyers may be eligible for a promotion in which the developer will pay the buyers' mortgage payments, property taxes and association fees for three years. To qualify, O'Steen said buyers must be able to secure a mortgage with 20 percent down and pay any closing costs associated with the mortgage. O'Steen said the promotion has already sparked some interest among buyers and realtors.


  • In the long run, O'Steen said the developer wanted to protect property values. "It helps keep the property value up for three years," O'Steen said. "That's the responsible thing to do. You want to keep the comparables up for sure, you don't want to hurt the property value of the building."(1)

For more, see Promenade condos scarcely populated (Though sales are stalled, residents have faith luxury condos will avoid fall).

(1) I always thought that mortgage lenders and real estate appraisers had to factor in the value of any sales rebates and other buyer incentives when determining the sales price/market value of property involved in a real estate transaction.

Florida Condo Converter Faces Foreclosure Suit On A Third Project; Difficulty Unloading Its Inventory Leaves Ocean Bank Holding The Bag Again

In Coral Springs, Florida, the South Florida Business Journal reports:
  • Financial woes continue for BH Capital Partners, as one more of its condo conversion projects now faces a foreclosure lawsuit from Ocean Bank. The Miami-based bank filed for foreclosure on July 29 against Coral Lake 260, a subsidiary of Coral Gables-based BH Capital that converted the Crescent Cove Condominiums. It is the third such lawsuit against BH Capital. [...] In late December, the bank extended the due date for the mortgage – then owing $9.6 million – to Jan. 28, 2008. In the foreclosure documents, Ocean Bank exempts the 151 units that the developer sold to buyers. Coral Lake 260 owns 109 units at Crescent Cove, according to property records.

  • Ocean Bank also has foreclosure lawsuits pending against BH Capital’s Monticello 856, which owes $29.1 million on 366 unsold units at the Villa Bellini Condos in Miami Lakes, and Hialeah 150, which owes $12.8 million for 116 unsold units in Villas Del Paraiso.

Source: Coral Springs condo faces foreclosure lawsuit.

Thursday, August 07, 2008

Miami Condo Building Ravaged By Unit Foreclosures, Code Violations KO'd As City Officials Order Remaining Occupants To Vacate

In Miami, Florida, WFOR-TV Channel 4 reports:
  • Families living in Cedars Pointe in Miami were left to deal with the reality of their building's foreclosure. While some tenants abandoned their units and others remained with mounting bills, the City of Miami on Thursday asked tenants to leave because of insufficent funds to correct building code violations.

  • Last week, Daisy Cruz told CBS4 Reporter Jorge Estevez, "This is abandoned, destroyed," as she showed him around the Cedars Pointe complex located at 1531 NW 16th Ave. Today, she said, "For me, this is the first time I have ever been evacuated. I have never been in a situation like this."

  • The Cruz family was among the 17 of 51 people who remained to deal with the conditions where garbage was piled up outside and backed up the trash chute. Exposed wires and a broken fire alarm system made the building dangerous. The elevator has been out of order for 6 months. Even worse, squatters lived in the abandoned units at night. Residents told CBS4 most of the other owners abandoned their apartments because they couldn't pay the mortgage.

  • At one point, 51 unit owners paid the maintenance fee of $120 a month. Now, only ten units have paying owners. With fewer families to pick up the expenses of running a building, the bills backed up. [...] The remaining tenants from Cedars Pointe have been temporarily placed in hotels and shelters, at least, until Monday.

Source: Families Leave Neglected And Foreclosed Building (Complex Foreclosure And Lack Of Maintenance Forces Tenants To Leave Because Of Code Violations) (go here for video).

For earlier post on this story, see Condo Foreclosures About To KO Entire Miami Building; Remaining Residents Face The Boot As Trash, Water, Electric Bills Remain Unpaid.

Go here, Go here, Go here, and Go here for other posts on vacant foreclosures leaving their mark on neighborhoods. ForeclosuresDestroyNeighborhoodsApple

Bank Error, Lis Pendens Trigger Foreclosure Rescue Notices To Albany Homeowner Current On Mortgage Payments

In Albany, New York, The Advocate at the Albany Times Union reports:
  • [Tina] Grant, 41, returned home last Friday from camping with her kids at Cape Cod to a summons notice on her front door. Her mortgage company, CitiMortgage, had filed a lawsuit against her to correct an error it made, which inadvertently triggered foreclosure alerts. Grant was stumped and felt shamed. "I am humiliated," she said. "I don't want to step outside my house because all my neighbors know about this." CitiMortgage had filed a lis pendens, otherwise known as a pending notice on a property.(1)


  • Signs that something was wrong starting coming in the mail in late May. Grant was mystified by heaps of letters from attorneys and mortgage companies offering to bail her out -- when she didn't need their help.

  • Grant bought her house in 2007 and took out a mortgage with ABN Amro. When the company merged with CitiMortgage, Grant's mortgage was to be transferred. But CitiMortgage accidentally filed a "Satisfaction of Mortgage" (which means a mortgage has been paid off) with the county clerk instead of a "Transfer of Mortgage" document. Grant didn't think to do anything about it because monthly mortgage payments were still coming out of her account.

For more, see You’re paying your mortgage. Now you’re being sued (go here for Tina Grant's video explaining her embarassment at receiving foreclosure correspondence).

(1) The story subsequently reveals that the recording of the lis pendens was automatically (and incorrectly) interpreted by foreclosure rescue operators and others as a sign that a foreclosure action was filed against Tina Grant's home, triggering the onslaught of offers for bail-out help that she reportedly received from them. In reality, the lender's lawsuit was intended to do nothing more than to void the inadvertent recording of a satisfaction of mortgage, and allow them to properly record an assignment of mortgage. While the recording of a lis pendens is often associated with the commencement of a foreclosure action, it can be filed in any lawsuit that impacts upon the title to property (ie. Actions for/to specific performance, quiet title, void a conveyance or instrument, declaratory judgment for an equitable mortgage, forfeiture, among others).

Court Foreclosure Intervention Pilot Program To Begin In Queens This Summer

In New York City, the Daily News reports:
  • Justice isn't turning a blind eye to the woes of struggling homeowners. New York State courts are set to launch a pilot program in Queens this summer to help curb the alarming number of foreclosures with an early court intervention program. "This program seeks a much more early and active intervention in the foreclosure process to increase the probability that residents can keep their homes," said Judge Ann Pfau, 60, chief administrative judge for state courts.

For more, see Early court intervention plan for foreclosures.

Foreclosure Rescue Operator To Pay $50K In Restitution, Fines In Deal With Ohio AG; Accused Of Pocketing Upfront Fees, Failing To Deliver On Promises

WHIO-TV Channel 7 in Dayton, Ohio reports:
  • One company that offered mortgage help to people facing foreclosure, but didn’t deliver, is being forced to pay restitution by the Ohio Attorney General. The Ohio Attorney General's office said they filed a lawsuit that claimed the American Housing Financial companies promised to help Ohioans facing foreclosure by negotiating loan repayment plans. They routinely misled consumers and didn’t deliver promised services, according to the AG's office. The companies paid more than $50,000 in restitution and fines.(1)

For more, see Mortgage Company Must Pay Restitution.

See also Ohio AG press release: Restitution Available For Victims Of Ohio Mortgage Rescue Scam.

To view the original lawsuit filed by the Ohio AG, see State of Ohio vs. American Housing Authority, American Housing Financial.

(1) To be eligible for restitution, consumers must have paid American Housing Authority Inc. and/or American Housing Financial Inc. for services on or before Aug. 8, 2005. Consumers also must file a complaint with the state attorney general's office before Oct. 3. Complaints can be filed online at or by phone at 1-877-244-6446.

California Woman Charged With Clipping Homeowners For Upfront Fees For Foreclosure Rescue Services & Allegedly Doing Nothing

In Santa Cruz County, California, The Mercury News reports:
  • A Watsonville woman already accused of defrauding an elderly Salinas woman out of thousands of dollars now faces charges she scammed at least seven South County homeowners in a bogus refinancing scheme. Most lost their homes.

  • Melissa Dawn Garcia, 27, allegedly told homeowners nearing foreclosure that she could save their property if they paid her $2,500, according to prosecutor Kelly Walker with the Santa Cruz County District Attorney's Office. He called the alleged scams "keep your house out of foreclosure deals."


  • "Almost all of them have lost their homes," Walker said. As many as 40 Monterey County residents in danger of losing their homes also may have fallen victim to Garcia, Walker said. John Hubanks, a prosecutor in the Monterey County District Attorney's Office, said his office has not filed any charges against Garcia and declined to comment about their investigation.


  • The allegations against Garcia surfaced in May when a 76-year-old Salinas woman told police that Garcia had convinced her to invest $66,000 a year prior. Police there contacted authorities in Santa Cruz and they began probing the alleged phony investment. [...] District Attorney's offices across the region have started a real estate foreclosure task force to look into this type of crime.

For more, see Watsonville woman accused in foreclosure scam.

Stanislaus County DA Charges Three In Alleged Scam Involving Recording Phony Lien Satisfactions

In Stanislaus County, California, The Modesto Bee reports:
  • [I]nvestigators with the Stanislaus County district attorney's office arrested James Lee Lankford, 69, who established Century 21 Apollo more than 26 years ago, and Dr. Dennise Ann Davis, 55, an obstetrician [...] in Modesto. Stelios Papadopoulos, 74, a Century 21 broker who works with Lankford, also was arrested.(1)

  • According to an affidavit filed with the Stanislaus County clerk by the district attorney's office: Lankford helped Davis obtain a $22,400 second mortgage on a $112,000 home she was buying in 1993. The first lender, American Savings Bank, was unaware of the second mortgage and thought Davis was putting her own earnest money down on the loan.

  • The lender on the second mortgage, Jewel Young, died in 1995; the next year, Davis stopped making payments. Davis sold the house in 1999 for $125,000, after Lankford, Davis and Papadopoulos filed fraudulent documents eliminating the second mortgage debt. The documents had the forged signature of Young, four years after her death. The documents were notarized by Papadopoulos, and also signed by Lankford. The incident came to light early this year when Young's nephew found the original loan documents in storage and went to a title company for help.

Source: 3 Modestans are arrested in mortgage scam (Century 21 Apollo founder and doctor among suspects).

For story update, see:

(1) According to the story, the three suspects are charged with forgery, filing a fraudulent document with the county recorder, providing false information to a lender to obtain a mortgage loan and two counts of grand theft; Papadopoulos faces a sixth count of deed-of-trust fraud. Jim Lankford

San Bernardino DA Charges Sisters In ID Theft, Forgery, "Lease To Own" Scam

The San Bernardino, California District Attorney's Office announced:
  • [B]arbara Rader, 37, of Fontana and America Adame, 45, of Lake Elsinore were arrested at the San Bernardino County District Attorney's Real Estate Fraud Unit Offices for real estate fraud related offenses.

  • Rader and Adame are sisters who used their business, Highpoint Professionals in Pomona, to obtain personal information on victims in order to forge real estate documents. Rader, who is a notary public, notarized the documents her sister forged to purchase three homes in San Bernardino and Riverside Counties. The homes were purchased without the victims’ permission or knowledge.

  • The two suspects then leased the homes with an option to buy to additional victims who unwittingly paid the closing costs on the purchases, allowing the suspects to make substantial profits on the sale and purchase of the homes. The total dollar was over $1,000,000.00.

Source: Press Release: Sisters Arrested in Real Estate Fraud Scheme.

Oklahoma Judge Accuses County Sheriff Of Improper Conduct In Conducting Foreclosure Sales

In Pawnee County, Oklahoma, The Oklahoman reports:
  • Even considering the subjective nature of real estate values, this one seemed fishy. At least to one local judge. Appraisers chosen by Pawnee County Sheriff Roger Price placed a $15,500 value(1) on a 2,814-square-foot house as part of a foreclosure action. That appraisal helped the sheriff and his son acquire the property for $97,000 — far less than the value set by the county assessor — in an April sheriff's sale. State law prohibits a sheriff from directly or indirectly buying property at a foreclosure sale.

  • Associate District Judge Matthew Henry was infuriated by the appraisal and sale. In a harshly worded June 25 order, Henry implied that Price committed fraud and should be removed from office. "The malfeasance of Sheriff Price has caused real and substantial injury” to the mortgage company, Henry wrote.(2)

For more, see Judge urging Pawnee sheriff's ouster.

(1) According to the story: (a) the appraisers chosen by Sheriff Price for the Pawnee County sale were E.L. Chronic, Wilma Chronic and Sandra Robinson; (b) all three listed the same mailing address; (c) Judge Henry said the Chronics are husband and wife, and Robinson is their daughter; (d) state law requires three independent appraisals - a family of appraisers doesn't meet that requirement, the judge said.

(2) According to the story, the judge vacated the sale, set aside the $15,500 appraisal and ordered the sheriff to obtain a new appraisal. With a high bid of $105,124.64, the mortgage company acquired the home at a July 14 sheriff's sale.

Florida Federal Judge Breaks Bad News To 29 Condo Buyers Trying To Back Out Of Bad Deals

In Miami, Florida, the Daily Business Review reports:
  • No matter how beautiful a condominium complex looks in the brochure, it might behoove any buyer to look at the fine print in the contract based on a ruling by a federal judge. U.S. District Judge Patricia Seitz in Miami dismissed 29 lawsuits Friday against Opera Tower near downtown Miami, stating the contract was explicit about what buyers were getting, no matter what a slick advertisement promised.(1)


  • [Developer Tibor] Hollo said the lawsuits filed against Opera Tower are from “flippers” upset with the turn in the housing market. [...] “This is a big loss for consumer rights in the Southern District of Florida,” [the plaintiffs' attorney Kent Harrison] Robbins said. “What this ruling says in essence is that developers can say almost anything in [their] advertising and brochures as long as they use certain magic words and certain small-type disclaimers."


  • Obviously, the false advertising statutes are designed to protect the consumer,” [attorney Robert Cooper] said. “The Legislature didn’t intend for the consumer to be duped because they stick something in the fine print.” Cooper said he hopes Seitz’s decision is case-specific and is not adopted by other “lazy” judges.

For more, including a link to Judge Seitz' decision, see Condo Meltdown: Study the fine print before buying.

Go here for other stories on real estate speculators and others looking to back out of purchase contracts.

(1) According to the story, the brochure showed a 56-story elliptical-shaped building on the water with a nearby marina. The illustration omitted surrounding high-rise buildings. The one- and two-bedroom units were priced from $200,000 to $800,000. zebra

Wednesday, August 06, 2008

Connecticut AG The Latest To Jump On "Sue Countrywide" Bandwagon; Alleges Unfair, Deceptive Practices; Seeks To Rescind, Modify Mortgages

The Connecticut Attorney General's Office announced today:

  • Attorney General Richard Blumenthal today announced his office has sued mortgage giant Countrywide Financial Corp. and related companies for allegedly pushing consumers into deceptive, unaffordable loans and workouts, and charging homeowners in default unjustified and excessive legal fees. Blumenthal's lawsuit seeks restitution for consumers as well as fines and forfeitures to the state for alleged violations of Connecticut consumer protection and banking laws. The action also asks the court to rescind, reform or modify all mortgages that broke state laws.(1)


  • Blumenthal said, "Countrywide conned customers into loans that were clearly unaffordable and unsustainable, turning the American Dream of homeownership into a nightmare. When consumers defaulted, the company bullied them into workouts doomed to fail. Countrywide crammed unconscionable legal fees into renegotiated loans, digging consumers deeper into debt. The company broke promises that homeowners could refinance, condemning them to hopelessly unaffordable loans."

For more, see:

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

(1) According to the AG's news release, the lawsuit seeks civil penalties of up to $100,000 per violation of state banking laws and up to $5,000 per violation of state consumer protection laws, disgorgement of all ill-gotten gains and an order compelling the company to cease its illegal practices, in addition to restitution for the consumer and invalidation or modification of the terms of all illegal mortgages. countrywide consumer problems

Murder/Suicide/Arson Cases Involving Arizona, Michigan Homeowners Facing Foreclosure

In Phoenix, Arizona, The Arizona Republic reports:
  • Phoenix police records released Tuesday outline how a man struggling with financial problems "killed the love of his life," set fire to the couple's home and slit his wrists before investigators responded.

  • Daniel Miller, 49, was found dead July 28, his body wedged between a wall and a mattress in his bedroom, after a fire was reported at his house in a quiet cul-de-sac near Loop 101 and 35th Avenue. His wife, Kimberly Miller, 51, was found dead in a separate bedroom at the couple's home in the 3600 block of West Wahalla Lane. Police closed the case, ruling Kimberly Miller was the victim of a domestic-violence homicide. According to investigative documents, Daniel Miller sent a dark e-mail to his sister in Missouri, claiming that a pending foreclosure and family squabble over his late father's estate pushed him to madness.

  • Daniel Miller's wrists were cut with a folding straight razor, which was found near his body in the master bedroom. An accelerant-sniffing arson dog also located evidence on his shoes and on one his hand.

For more, see Man killed wife, died in house fire, police say.


In Bay City, Michigan, a blog on The Bay City Times reports:

  • [A]ccording to Bay City Police, who wrapped up their investigation on Tuesday, David Hetzel committed a series of crimes Saturday morning that left his wife and himself dead and their home [from which they were being evicted] at 406 N. Farragut St. destroyed by fire. [...] The Hetzels had lost their home to foreclosure and also had filed for bankruptcy protection but did not follow through with the Chapter 13 proceedings.

For more, see Police: Bay City couple victims of murder-suicide.

Go here for other posts on foreclosures and suicide. suicide homeowner foreclosure zeta

Kentucky Appeals Court Affirms Lower Court "Kibosh" On Arbitartion Clause In Mortgage; Homeowners Facing Foreclosure To Have TILA Claims Heard

In Richmond, Kentucky, The Richmond Register reports:
  • The Kentucky Court of Appeals has ruled in favor of a Waco couple who were the subject of a foreclosure action by Bank of New York Trust Company and Mortgage Electronic Registration Systems. The litigants, who lost their case against Donald Wayne and Roxane Abner in Madison Circuit Court, had sought to force the Abners into an arbitrated settlement over a $40,000 mortgage.


  • The Abners, represented by Addison Parker of the Appalachian Research and Defense Fund, a legal service group, filed a counterclaim, alleging that the mortgage’s 10.125 percent interest represented a “predatory high-cost loan” that violated the federal Home Ownership Equity Protection Act. The act provides for rescinding mortgages that violate the federal Truth In Lending Act as well as awarding both statutory and enhanced damages.

  • The Abner’s mortgage contract called for waiving any damages as well as for arbitration. On July 25, the appeals court affirmed the trial court’s finding that the arbitration clause was “unconscionable and unenforceable.”


  • The Abners’ allegations of predatory lending practices may be valid the appellate judges said, but the mortgage contract’s arbitration cause was the only issue on appeal.

For more, see Couple wins foreclosure appeal against N.Y. bank.

To view the appellate decision, see Mortgage Electronic Registration Systems v. Abner (Case #2007-CA-000574, Ky. Court of Appeals; July 25, 2008).

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

Connecticut Closing Attorney Cops Guilty Plea To Pocketing Loan Proceeds Earmarked For Existing Mortgage Payoffs In Real Estate Deals

In Bridgeport, Connecticut, the Connecticut Post reports:
  • Joseph Kriz, a Westport real estate attorney, waived his right to a federal grand jury indictment Monday. He then pleaded guilty to conspiring to commit bank fraud, aiding and abetting fraud in loan and credit applications, and mail fraud by obtaining money from a title insurance property. The charges stemmed from Kriz and others keeping proceeds from home sales in Darien and Westport and from homes refinanced in Ansonia and Milford.


  • Kriz, 45, of Wilton, is cooperating with an ongoing federal investigation that is expected to lead to criminal charges against other people including one who posed as a home purchaser, a mortgage broker and a property appraiser. Assistant U.S. Attorney Rahul Kale said at least $8 million was defrauded from homeowners and lenders. This was done by Kriz and others overstating the value of properties; keeping money from home sales and refinancing properties.

For more, see FBI ties state probe to IndyMac woes (if link expires, try here).

BSO Bags Three In Alleged Scam Coupling Deed Theft With Recording Phony Mortgage Satisfactions; Attempted Sale "Stung" As Title Company Blows Whistle

In Fort Lauderdale, Florida, the Broward County Sheriff's Office announced:
  • [L]ast week, Broward Sheriff’s Office Economic Crime Unit detectives were alerted by a Title Insurance Company, whic[h] was in the process of closing on a home, that they suspected fraud was being committed. BSO detectives looked into the matter and set up an undercover operation that ended with the arrest of 28-year-old Brittany Waldon, 34-year-old Alfred Davis(1) and 30-year-old Clarence Glover.

  • Through the investigation, detectives learned that Davis contacted Glover and offered to pay him 10% of the gains from a mortgage fraud scheme (around $30,000), if he could recruit someone willing to participate. Glover recruited Brittany Waldon. She submitted falsified paperwork that transferred the ownership of a home in Deerfield Beach to her.

  • The legitimate owner of the home had two outstanding mortgage loans totaling $950,000. On April 13, 2008, two Mortgage Satisfaction documents were recorded in Broward County showing the loans had been paid. BSO detectives contacted the company listed as the lender on those forms and were able to confirm the documents were forged.

  • When Davis and Waldon showed up to close on the property this past Tuesday, July 29, undercover detectives went through the closing proceedings with them, and once they thought they had gotten away with their plan, they were placed under arrest. Davis stood to make $284,000 in the transaction by defrauding the private lender of the funds.

  • The 2007 Range Rover the suspects drove to the closing was seized, and during an inventory search, detectives found paperwork indicating Davis was in the process of carrying out the same scheme on other properties.

Source: Broward Sheriff's Office news release: Mortgage Fraud Scheme Lands Felon Back In Jail.

(1) According to the news release, Davis had been released from federal prison in June 2006 after serving 33 months for bank fraud and is currently on federal probation.

Baltimore Man's Home Sold In Tax Foreclosure For $500; City Claims Mistake, Will Void Sale

In Baltimore, Maryland, WBAL-TV Channel 11 reports:
  • A Baltimore man who claims a clerical error is the reason his home was sold out from under him for just $500 said it all could have been prevented. In east Baltimore, Jim Urbanski made the investment in 2006 and turned a shell of a house into a liveable home. But he got something he didn't bargain for: After renovating the house and renting it out, Baltimore city sold it, reported WBAL-TV. "I purchased the house for $45,000. It was sold for $497 at a tax sale," Urbanski said.

  • The city called the issue an unusual case and an obvious mistake, claiming the tax sale was being voided. Urbanski is waiting for the paperwork to prove it. "It's been an experience. I wouldn't want to do it again," he said.

For the story, see House Sold Out From Under Owner For $500 (City Sells Man's House For $500, Claims It Was Mistake).

Cash-Strapped Fairfax County Builder Leaves Customers' Deposits At Risk, Forcing Some To Buy Unfinished Homes At Foreclosure Sales

In Fairfax County, Virginia, The Washington Post reports:
  • [S]eville Homes, a small Virginia builder, collected hundreds of thousands in deposits in recent years for homes in Northern Virginia that it never delivered. There are foreclosure filings on 19 Seville properties, according to data collected by ForeclosurePoint, on online listing service, [...]. A $2.2 million five-bedroom home owned by [Seville's owner Stephen] Korfonta personally has also been in the foreclosure process, according to ForeclosurePoint.


  • Seville's struggles have sent would-be homeowners scrambling to protect their investments. The company used the deposits of the homes in foreclosure to fund operations, so it is not able to return the funds, said Brian West, Korfonta's lawyer. "Our hope has always been that the customers would be able to purchase the homes from the bank," West said.


  • Some former Seville clients have bought their homes -- in various stages of completion -- at foreclosure auctions and are now spending thousands more to finish them and to resolve zoning issues. Others are hoping that their deposits, which topped $200,000 in some cases, will eventually be returned. The Fairfax County Police Department is investigating customers' complaints about the loss of their deposits.

For more, see Builder's Troubles Put Buyers in a Bind (Would-Be Owners Scramble to Outbid Banks, Hire New Contractors).

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

Tuesday, August 05, 2008

Two Charged In Alleged Scam To Swipe Personal Customer Information From Countrywide Database; As Many As 2 Million Names Run & Sold, Say Feds

In Los Angeles, California, The Associated Press reports:
  • Two men, including a former Countrywide Home Loans employee, were charged [last week] in a scam to steal and sell the private financial information of customers of the company, authorities said.(1) Prosecutors suspect the data was eventually sold to companies that would then try to make other loans to the Countrywide customers, said Thom Mrozek, a spokesman for the U.S. attorney's office.


  • [Rebollo] is suspected of downloading the information from about 20,000 customers each week for two years and selling the data in batches of 20,000 for $500, authorities said. "As many as 2 million names were run and sold," Mrozek said. "However, we don't know if there was any overlap."

For more, see Two charged in scam to sell Countrywide data.

(1) According to the story, the former employee, Rene L. Rebollo Jr., 36, of Pasadena, was charged with exceeding authorized access to the computer of a financial institution, the FBI said in a statement. Wahid Siddiqi, 25, of Thousand Oaks is accused of fraud and related activity in connection with access devices, the FBI said.

Homebuilder CEO Throws Tantrum Over Nixing Of Seller-Funded Downpayment Assistance Program?

In the "You must be outta your mind" department, MarketWatch reports:
  • The chief executive of one of the nation's largest home builders on Tuesday vented his frustration over new housing legislation and the elimination of some down-payment assistance for buyers, saying the move will further weaken the sagging market. [...] "While the temporary tax credit is certainly a positive for buyers who purchase a home before July 2009, the tax credit does not offset the elimination of the down-payment assistance program which our industry so vitally needs," the CEO said Tuesday.

For more, see Builder CEO blasts ban on down-payment help (As many as one-third of buyers used seller-funded aid).

NFL's Pats, Boston Fed To Host Another Foreclosure Prevention Workshop At Gillette Stadium

In Foxboro, Massachusetts, The Sun Chronicle reports:
  • Homeowners mired in debt and at risk of foreclosure may be able to get help at a special workshop that will include many area lenders next week. The Foreclosure Prevention Workshop is slated to take place Tuesday at Gillette Stadium in Foxboro. It's free and open to the public, but especially people who are drowning in debt and are in danger of losing their homes.

  • The workshop is being sponsored by the New England Patriots Charitable Foundation and the Federal Reserve Bank of Boston. The Hope Now Alliance and Neighborhood Works America are also providing information and assistance at the workshop.

For more, see Help for the struggling homeowner at Gillette Stadium workshop.

Condo Foreclosures About To KO Entire Miami Building; Remaining Residents Face The Boot As Trash, Water, Electric Bills Remain Unpaid

In Miami, Florida, WTVJ-TV Channel 6 reports:

  • Some residents of a Miami condominium building might be displaced due to numerous code violations and unsanitary conditions, including a mountain of trash. Residents of a condominium complex at Northwest 16th Avenue and 15th Street said their trash has not been collected in four or five months. The result is a pile of garbage that is about one story tall.

  • The trash is not the building's only problem. Residents said the management company and the homeowners' association have not paid the electric, water or trash bills, NBC 6's Tom Llamas reported.

For more, see Building With Trash Heap, No Power Could Be Evacuated (Residents: Management Company Didn't Pay Bills).

See also, WPLG-TV Channel 10: Fate Of Residents Of Miami Condo Still Uncertain:

  • The few remaining tenants and owners at a Miami condominium may be paying a high price for the foreclosure crisis sweeping across South Florida. The seven-story building at 1531 NW 16th Ave. has 51 units, but only 17 are occupied. The loss of owners to foreclosures means a loss of maintenance fees being paid for the upkeep of common areas.


  • The few remaining residents said break-ins in the building have been rampant. Thieves have targeted the foreclosed units. Even the metal casings on the laundry machines were taken, likely to be sold for scrap metal. The city provided a fire watch service at the building free of charge overnight because the alarm system is not working.

  • The company that handles the waste removal, Choice Environmental, was called out to remove the garbage. Miami fire-rescue Lt. Ignatius Carroll told Local 10 that under city code, if a company has a Dumpster at a property, the company must continue to pick up the garbage even if the bills are not paid. City building officials are still in the process of deciding if residents will be allowed to stay. The top priorities are getting the fire alarm working and removing the trash.

For story update, see Families Leave Neglected And Foreclosed Building (Complex Foreclosure And Lack Of Maintenance Forces Tenants To Leave Because Of Code Violations).

Go here, Go here, Go here, and Go here for other posts on vacant foreclosures leaving their mark on neighborhoods. ForeclosuresDestroyNeighborhoodsApple

Housing Reforms To Become Law In NY; Will Require Mandatory Settlement Conferences Between Banks, Certain Subprime Borrowers In Foreclosure

In Albany, New York, the Rochester Democrat & Chronicle reports:

  • Gov. David Paterson is set to sign legislation today that housing advocates say will be a major step toward easing the home foreclosure crisis in New York state. The package of reforms is expected to provide better protection for homeowners facing foreclosure and reduce the predatory lending practices that often lead people to buy homes they can't afford.


  • Among the more critical elements of the law is a 90-day waiting period before lenders begin foreclosure proceedings on a home. The wait time allows homeowners and banks to seek remedies other than foreclosure, Paterson has said. That piece of the law will take effect Sept. 1. The law will also require mandatory settlement conferences between banks and homeowners who have certain types of subprime loans. Already New York has the longest waiting period in the country, with the foreclosure process taking about 440 days to complete.

For more, see Paterson to sign housing crisis bill (Law would help those facing foreclosure, protect borrowers).

Story update (8-5-08 - 2:15 pm):

Massachusetts Couple In Foreclosure Sue Loan Servicer, Law Firm; Seeks Class Action Status Against WaMu; Accused Of Failing To Bargain In Good Faith

In Suffolk County, Massachusetts, The Boston Globe reports:

  • A Boston-area couple who are in foreclosure, despite their herculean attempts to prevent it, have filed a lawsuit against Washington Mutual, one of the nation's largest mortgage servicing firms.(1)

  • In the suit, filed in Suffolk Superior Court, Lori and Mark Pestana of Westford allege the loan servicer was unresponsive to their repeated phone calls and to their applications to negotiate an arrangement that would have allowed them keep their house out of foreclosure. The suit is seeking class-action status on behalf of thousands of Washington Mutual borrowers in Massachusetts.


  • The role of servicing firms in the rising tide of US foreclosures is a growing political issue as lawmakers realize the firms - and investors who purchased the mortgages in bundles - are logjams to resolving individual homeowners' situations and clearing up the housing crisis. WaMu is a lender as well as a servicing company.

For more, see Suit blames loan servicer for pending foreclosure.

For those Massachusetts homeowners who feel they might have been screwed over by their mortgage lender, loan servicer, or attorney representing them in foreclosure, the state Attorney General has a consumer hotline for complaints - (617) 727-8400. Go here to file a complaint with the Mass Attorney General.

(1) According to the story, Boston law firm Harmon Law was also named in the lawsuit but was not included in the class-action claims. WaMu and Harmon Law violated state law requiring them to bargain in good faith, homeowners' attorney Gary Klein, of the Boston law firm Roddy Klein & Ryan, alleged. undo mortgage loans TILA batallion

NBC Nightly News On The Increase In Shutoffs Of The HELOC Spigot

The NBC Nightly News recently ran a story on the cutting and freezing of existing home equity line of credit ("HELOC") accounts by major lenders, catching many homeowners by surprise. The sharp decrease in real estate values in many parts of the country is considered the primary reason. Reportedly, 70% of HELOC lenders are tightening standards and 50% are reducing existing credit lines.

For the story, see Lenders cut or freeze home equity credit lines (video only).

Yet Another Attorney Plays Fast & Loose With Foreclosed Client's Surplus Proceeds

The Florida Bar has published the latest issue of its gossip sheet, a periodic news release announcing the latest Florida Supreme Court disciplinary actions, including suspensions and disbarments of a few wayward members of the Florida legal profession.

Among the blurbs listing the 22 attorneys being excoriated by the Florida high court last month was this tidbit:
  • Gail Turgel Scopinich, North Miami Beach, suspended for one year, effective immediately, following a July 3, court order. In 2005, Scopinich represented a client [a defendant] in a foreclosure action. At the conclusion of the proceedings, after the money from the sale of the property was distributed, it was determined that the plaintiff's attorney had been overpaid. The plaintiff's attorney was ordered to return approximately $7,200 to Scopinich's client.

  • In August 2005, Scopinich received the overpayment, but she never cashed the checks, nor did she forward the money to her client. Numerous calls to Scopinich by her client went unanswered, and in November of 2006, the client filed a grievance. As a result of the Bar's efforts, Scopinich's client finally received her money in April 2007 [approximately a year and eight months after Scopinich received the money].
Go here for:

Florida Losing Millions In Uncollected Fees By Allowing Common Practice In Courthouse Foreclosure Sales

In Orlando, Florida, the Orlando Sentinel ran a story on a common practice in Florida courthouse foreclosure sales that could be costing the state millions in uncollected fees. The practice involves the foreclosing lender's representative at the sale either announcing, or holding up a piece of paper with a dollar amount written on it, informing the public how high the lender is prepared to bid for a property being auctioned off.

Such a practice, while understandably is probably intended to speed up the auction process, has the (possibly illegal) effect of discouraging the public from bidding on a property unless they are prepared to open the bidding by at least matching the amount announced by the lender's rep. If there are no interested bidders, the lender takes ownership of the property for a nominal bid (like $100), which costs the state money, as explained in this excerpt from the story:
  • Florida places a 70-cent levy on every $100 per real-estate transaction. That means a $200,000 house sold for $100 shorts the state about $1,400 in what's known as documentary-stamp taxes. Multiply that savings by dozens of homes for a big lender, and the savings add up quickly.

  • Orange County Deputy Comptroller Jim Moye estimates the state could be missing out on as much as $6 million a year in doc stamps just from Orange [County], based on extrapolations he made from four days of bidding he and others observed recently at the courthouse at the request of the Orlando Sentinel.


  • During an auction, representatives from banks and other lenders in Orange County often announce, or hold up a piece of paper to show other prospective buyers, the amount of the mortgage -- in other words, their top bid. That ends virtually all competition, meaning the lender's initial $100 offer wins without any competition in more than 90 percent of the auctions at the Orange County Courthouse.(1)

For more, Houses sold for just $100! But banks' deals short taxes (But those prices often are just a way to lower a lender's tax obligation).

(1) It's always been my understanding that any intentional conduct engaged in by anyone at a public auction conducted by a government official that operates to discourage the public from bidding, or otherwise artificially depresses the amounts being bid, is a criminal violation of some law. Given that the state of Florida is currently in need of more tax revenue to combat recent budget cuts, I suspect that they may take a closer look at the legality of this practice. Unlike public auctions of lender-owned foreclosed homes conducted by private, for-profit auction houses in which a minimum upset price is typically involved, property auctioned off at courthouse foreclosure sales are not owned by the foreclosing lender, and as far as I know, the court clerk conducting the sale has no legal authority to establish a minimum bid, or reject any bid, except as specifically set forth in the foreclosure judgment signed by the judge who ordered the sale.

Dallas Couple Allegedly Used Sham Trust To Hide Home From Possible Tax Foreclosure As Feds Bring Suit To Recover $1M+ In Back Taxes

In Dallas, Texas, The Dallas Morning News reports:
  • The U.S. Justice Department's tax division sued a Dallas couple involved in the real estate business for alleged tax evasion Wednesday. The suit accuses John "Nicky" Sheets of failing to pay $537,433.63 in taxes, interest and penalties, and Eleanor Mowery Sheets of owing $1,111,904.69 in taxes, interest and penalties.


  • The suit accuses the two of setting up a "sham" trust to hide their residence from possible foreclosure related to earlier tax-related actions taken against them, and alleges a fraudulent transfer to the trust, which also owes more than $236,000 in back taxes.

For more, see Prominent Dallas Realtor faces $1.1M tax evasion suit.

Monday, August 04, 2008

Minneapolis To Begin Abandoned Home Demolition Program; Costs Estimated At $17K Each

In Minneapolis, Minnesota, Minnesota Public Radio reports:
  • The city of Minneapolis is launching a new program aimed at clearing abandoned properties. The first of 100 blighted buildings will be demolished Monday in north Minneapolis. There are about 950 abandoned buildings in the city.


  • "These are the 100 worst in the city and the reason it's important to abate these nuisances and to get these properties torn down is that they profoundly affect the livability of our neighborhoods," Reimer said. Reimer said demolition costs an average of $17,000 each. Hennepin County is contributing more than a million dollars to help pay for the program.

For more, see Minneapolis begins effort to demolish abandoned house.

Go here, Go here, Go here, and Go here for other posts on vacant homes leaving their mark on neighborhoods. ForeclosuresDestroyNeighborhoodsApple

Milwaukee Mayor To Intervene In Home Foreclosure Over $50 Parking Ticket

In Milwaukee, Wisconsin, the Public Investigator Blog of the Milwaukee Journal Sentinel reports:

  • Mayor Tom Barrett said today he will work with the city treasurer's office to make sure Peter Tubic doesn't lose his home over a $50 parking violation. "While it is important to recognize the need to comply with rules and regulations, this is a highly unusual situation and I can't sit by and watch a man who is clearly suffering from mental debilitation lose his home because of a $50 ticket," Barrett said in a written statement.


  • Public Investigator wrote a story in Sunday's Journal Sentinel about a disabled Milwaukee man who ignored a parking fine for four years which lead to a foreclosure on his $245,000 house last week.

For more, see:

For story update, see Milwaukee man files petition to pay parking fine, keep house.

Go here for other posts on this story. MilwaukeeParkingTicket

Wave Of Mortgage Defaults On Prime Loans Quickly Building?

The New York Times reports:
  • The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building. Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.


  • In a conference call with analysts last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple in the coming months and described the outlook for them as “terrible.”

For more, see Housing Lenders Fear Bigger Wave of Loan Defaults.

Two Closing Agents Indicted For Allegedly Pocketing $500K In Payoff Proceeds Due To Existing Lien Holders

In Boston, Massachusetts, The Patriot Ledger reports:

  • A Suffolk County grand jury indicted Walpole resident Bruce Namenson and his business associate Gerald Schena of Medford on larceny and embezzlement charges in connection with an alleged scheme to steal mortgage payments from loan companies.(1)

  • State prosecutors said Namenson and Schena acted as closing agents on three homes that were forced into foreclosure after they allegedly absconded with $500,000 that was supposed to pay off the properties’ mortgage debts.

For the story, see Two indicted in alleged scheme to cheat lenders.

See also:

Go here, Go here, and Go here and for other stories of trust account / escrow account theft of funds.

(1) According to the story, (a) they were indicted last November on charges of insurance fraud, perjury and forgery in an unrelated case in Suffolk County; (b) the two were also indicted in Middlesex County in June on unrelated charges of insurance fraud; (c) Namenson, a lawyer who had a law firm in Quincy, was also indicted in late March for an alleged mortgage payment scam. sneaky slick escrow agents gamma

Milwaukee Man May Lose Home Over $50 Parking Ticket; Case Points To The Need For Court-Appointed Lawyers For Defendants In Civil Actions, Says Judge

In Milwaukee, Wisconsin, the Journal Sentinel reports:
  • Peter Tubic ignored a $50 parking fine in 2004, and on Monday, it cost him his $245,000 house. In what city officials believe is the first case of its kind, the city foreclosed on Tubic's house on W. Verona Court after repeated attempts to collect the fine - which over the years had escalated to $2,600 - had failed.(1)


  • Milwaukee County Circuit Judge Richard Sankovitz technically stayed the judgment to give Tubic one last chance to explain why he hasn't paid or even responded, but Sankovitz ruled in favor of the city's foreclosure. [...] Judge Sankovitz called the case a shame and said it demonstrates the need for judges to have authority to appoint attorneys for people involved in civil litigation. "If you were a criminal, we'd take care of the whole problem for you, get you an attorney," he said.

  • "But if you're involved in civil litigation - in jeopardy of losing your house or your family . . . what we do is make you go out and find your own attorney. "If we gave people the help they needed near the beginning of their problem, their problems wouldn't snowball the way they do."

For more, see Milwaukee man faces foreclosure because he didn’t pay parking fine (The ticket went unpaid for four years, eventually amounting to $2,600 in fines).

Go here for story update.

(1) According to the story, Tubic first got the fine for parking his Ford E150 with no license plates in the driveway of the home, which belonged to his parents at the time . The radiator had broken and Tubic couldn't get his plates renewed unless the van passed an emissions test. He didn't have the money to make the repair and had more pressing worries, he said. His father was suffering from dementia. His mother was battling cancer, and he was their live-in caretaker. He needed to shop, cook, clean, maintain the house and tend to his parents' needs. The van repair could wait, he thought. MilwaukeeParkingTicket

Ventura DA Issues Advisory On Fractional Interest Deed Transfers In Foreclosure Rescue Scams

In Ventura County, California, District Attorney Gregory D. Totten has issued an advisory warning county homeowners facing foreclosure to look out for and avoid fractional interest deed transfers(1) promoted by foreclosure rescue scam artists as a way to avoid foreclosure.

Among other things, the advisory warns that, while the County Clerk Recorder's Office may be legally required to accept properly prepared documents for recording, it doesn't necessarily mean that the act of recording a fractional deed is lawful. Among the potential unlawful acts that may be committed in connection with a fraudulent scam involving a fractional interest deed transfer in California (which can be found in the California Penal Code and the California Civil Code), according to the advisory, are:
  1. recording a false or forged document (Penal Code Sec. 115),
  2. foreclosure consultant fraud (Civil Code Sec. 2945.4),
  3. grand theft by false pretenses (Penal Code Sec. 487), and
  4. fraudulent conveyance of land with intent to delay creditors (Penal Code Sec. 531),

For more, including an explanation of the fraudulent deed transfer scam, see "Fractional" Deed Advisory (English version) (Spanish version).

Go here for a brochure on the Ventura County DA's Real Estate Fraud Prosecution Program (English) (Spanish); and go here for the DA's Real Estate Fraud Unit webpage.

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

(1) Anyone wanting some perspective on how the "fractional interest" home title transfer scam works (fractional interest title transfers on the eve of foreclosure, use of backdated deeds for this purpose, abuse of the Federal bankruptcy court system, conveyances to unwitting debtors in bankruptcy in far away places, the frequency of use of this scam, and other interesting points), you can read this detailed narrative from a real live case decided by a Texas bankruptcy court.