Saturday, August 16, 2008

Gas Leak Found In Foreclosed Home; Neighbors On Both Sides Of Street Forced To Evacuate

In Chillecothe, Ohio, the Chillicothe Gazette reports:
  • Neighbors living near 727 E. Main St. had to be evacuated for a time [earlier this week] because of natural gas coming from that address. According to officials at the scene, neighbors called emergency workers when they smelled natural gas coming from the building. Officials said the gas was left on and leaked in the home after the inhabitants moved out due to a foreclosure. Firefighters evacuated homes on both sides of the street on the block between Poplar and Wade Streets as a precaution as they shut off the electric and gas in the home and let it air out. [...] Nobody was injured in the incident.

Source: Natural gas leak causes evacuation. foreclosure arson whale ArsonForeclosureAlpha

Foreclosed Home Goes Up In Flames, Leaving Four Tenants Homeless; Cause Under Investigation

In Marysville, California, the Appeal Democrat reports:
  • At least four renters were left homeless [last week] when a fire swept through a Marysville house. The fire at 527 G Street was reported shortly after 6:30 a.m. All occupants escaped uninjured, said Capt. Matt Furtado of the Marysville Fire Department. The house was in foreclosure and was sold July 22 at an auction in front of the Yuba County Courthouse, according to county Recorder's Office records. [...] Furtado did not comment on a possible cause of the fire. "It's all under investigation," he said. [...] If the house can be salvaged at all, it will have to be gutted, said Furtado.

For more, see Early morning blaze burns house.

For story update, see Hero saves lives in fire (Marysville man awakens tenants, grabs ladder).

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

Gunman Surrenders After Standoff With Deputies During Eviction Of Foreclosed 88-Year Old Mother

In Saddle Brook, New Jersey, The Bergen County Record reports:
  • The son of a 88-year-old Saddle Brook woman whose house had been sold at foreclosure was arrested after pulling a gun on sheriff's officers [Tuesday]. Two Bergen County sheriff's officers eventually talked John Brennan into giving up the weapon, and he was taken into custody. The homeowner, Beatrice Brennan, was walked out of the house and taken away by ambulance.


  • Beatrice Brennan had lived on the Adriana Street cul-de-sac for decades, neighbors said. But the house had been refinanced and the loan couldn't be paid, a real estate agent at the scene said. The home eventually was sold May 16 at a sheriff's sale.

For more, see Gunman surrenders after standoff.

Go here for other posts on Police incidents at foreclosed homes. SheriffDeputiesForeclosureAlpha

Cops Suspect Murder-Suicide In Case Of Homeowners In Foreclosure

In Romeoville, Illinois, The Herald News reports:
  • Police are investigating the possible murder-suicide of a wife and husband found dead in their home Wednesday night. [...] Police were called to the house -- which was in foreclosure and had been sold at auction -- shortly before 6 p.m. Wednesday by the couple's son, who said he had been trying to contact his parents for the past couple of days. [...] A judgment for foreclosure on the [...] home was entered Feb. 11, 2008, according to court records. It has been sold at auction, with a court date of Aug. 20 to confirm the sale, according to the Will County Circuit Clerk's office.

For more, see Police: Deaths may be murder-suicide (A Married Couple Were Found Dead In Their Romeoville Home Wednesday Night, Victims Of Gunshot Wounds).

Go here for other posts on foreclosures and suicide.

Go here for other posts on police incidents at foreclosed homes. suicide homeowner foreclosure zeta SheriffDeputiesForeclosureAlpha

Attempting To Serve Foreclosure Eviction Notice, SW Florida Deputies Stumble Into Dead Body; Victim's Wife Faces Murder Charges

In Lehigh Acres, Florida, WINK-TV News reports:
  • Lee County Sheriff's Deputies have arrested a woman for allegedly killing her husband in their Lehigh Acres home on Monday morning. [... 2]4-year-old Amber Roberts is in the Lee County jail awaiting her first appearance on a second-degree murder charge for the death of 27-year-old John Roberts. John Roberts was found dead inside his home [...] by deputies with the civil division. The home is in foreclosure, and deputies were trying to serve an eviction notice. According to the Lee County Sheriff's Office, when nobody answered the door, a deputy went inside, believing the home was vacant. That's when he discovered John Roberts's body.

For the story, see Arrest made in Lehigh Acres Murder; Divers to Search for Weapon.

For story update, see Deputies say wife confesses to husband's killing in Lehigh Acres.

Go here for other posts on Police incidents involving homes in foreclosure. SheriffDeputiesForeclosureAlpha

Criminal Probe To Be Opened Into Circumstances Surrounding Foreclosure Sale

In Pawnee County, Oklahoma, The Oklahoman reports:
  • A criminal investigation will be opened on a foreclosure sale in which the son of Pawnee County Sheriff Roger Price obtained a house for far less than the mortgage amount. Jessica Brown, spokeswoman for the Oklahoma State Bureau of Investigation, said her agency learned about the matter earlier this week. The investigation involves a 2,814-square-foot house south of Cleveland that Price's son bought for $97,000 at an April auction overseen by Price. [...] The outstanding mortgage was for $188,125. The county assessor listed its market value as $144,412. However, appraisers picked by Price said the property was worth just $15,500.

Source: OSBI plans to investigate Pawnee County house sale.

For earlier post on this story, see Oklahoma Judge Accuses County Sheriff Of Improper Conduct In Conducting Foreclosure Sales.

Friday, August 15, 2008

Judge Nixes Settlement Between Countrywide, Ch. 13 Trustee; Questions Fairness To Nearly 300 Borrowers Allegedly Screwed Over By Lender's Practices

In Pittsburgh, Pennsylvania, Reuters reports:
  • A federal bankruptcy judge has rejected a settlement involving Countrywide Financial Corp, saying he wasn't convinced it was fair to nearly 300 borrowers allegedly hurt by the mortgage lender's abusive practices. The settlement calls for Countrywide, acquired by Bank of America Corp last month, to pay $325,000 to the Chapter 13 bankruptcy trustee in Pittsburgh, Ronda Winnecour,(1) to cover costs and settle litigation in 293 separate cases. [...] The judge ordered both sides to address his concerns, and scheduled an October 2 status conference.

For more, see Judge rejects Countrywide settlement.

Go here for other posts on the Countrywide matter in the Pittsburgh federal bankruptcy court.

(1) According to the story: In her complaint, Winnecour alleged that in dealing with the borrowers, Countrywide made inaccurate claims, filed unnecessary court papers and demanded improper fees and charges. She also accused it of losing or destroying more than $500,000 in checks paid by homeowners in foreclosure.

Minnesota AG Targets Mortgage Broker For Alleged False, Misleading, Deceptive Acts & Practices

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:

  • Noting that lending practices behind the nation's tenacious mortgage crisis still occur, Minnesota Attorney General Lori Swanson singled out Source Lending Corp. in a lawsuit filed Thursday in Hennepin County District Court. The suit alleges that the Plymouth-baed mortgage brokerage misled borrowers into buying risky mortgages, causing some to lose their homes. The state is asking for an injunction, penalties of up to $25,000 per violation, and restitution for any borrowers harmed, Swanson said.


  • Swanson's suit is the second against Source Lending in five months. The Foreclosure Relief Law Project in St. Paul sued in April -- the first suit under a new state anti-predatory lending law -- claiming violation of a new fee limit of 5 percent of a loan's value.


  • The suit's allegations fall under state statutes on deceptive trade practices, false advertising, consumer fraud, and mortgage brokering. The events predate the state's new anti-predatory law. Swanson said her office expects to file more lawsuits involving both mortgage and foreclosure services.
For more, see Swanson sues mortgage firm, alleges deceit (Minnesota's attorney general says Source Lending misled buyers into risky mortgages, causing some to lose their homes).

For the Minnesota AG's press release, see Minnesota AG Files Suit Against Source Lending Corporation Over Abusive Predatory Mortgage Lending Practices.

USDOJ Files Discrimination Suit Against South Florida Property Management Company; Fair Housing Act Violations Alleged

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • A manager at a Davie apartment complex turned away African-American applicants, then tried to use the lack of black tenants to appeal to whites, according to a lawsuit filed Wednesday by the U.S. Justice Department. The suit accuses C.F. Enterprises LLC and on-site apartment manager Don Murroni of discriminating against black people trying to rent at College Square Apartments in violation of the Fair Housing Act. Evidence was gathered through the department's Operation Home Sweet Home initiative, where individuals pose as renters to identify possible discriminatory practices.(1)

For more, see Davie apartment manager kept out black applicants, according to lawsuit.

See also USDOJ press release: Operation Home Sweet Home Results in Florida Lawsuit Alleging Discrimination Against African-Americans.

Go here for more on the U.S Justice Department's "Operation Home Sweet Home."

(1) According to the story: The complaint alleges the defendants discouraged African-Americans from applying and offered to waive the application fee and other costs for white applicants only. The lawsuit, filed in Fort Lauderdale federal court, seeks an injunction against further discrimination, money damages for victims and civil penalties to be paid to the United States.

New Law Protects Hawaii Homeowners From Foreclosure Rescue Scams

In Honolulu, Hawaii, Pacific Business News reports:
  • The Hawaii Bankers Association is reminding consumers that the Hawaii Mortgage Rescue Fraud Prevention Act, signed into law by Gov. Linda Lingle in June, protects them from people who prey on homeowners facing property foreclosures and liens. “Mortgage rescuers,” or distressed-property consultants, charge high fees, often do minimal work and employ deceptive tactics that sometimes force homeowners to deed their properties to the mortgage rescuer, according to the association. The new law requires consultants to provide homeowners with a written contract detailing their services. It also gives homeowners the right to cancel at any time before services are performed.

For more, see Hawaii homeowners are protected from fraudulent mortgage rescuers.

For the perspective of a Hawaii real estate agent, who believes the new law is written in a way that may impede real estate salespeople in the legitimate conduct of arranging short sales for homeowners pursuant to standard listing agreements, see Hawaii Reporter: Mortgage Rescue Fraud Prevention -The Unintended Consequences of Hawaii's New Act 137.

Colorado Appeals Court Gives Homeowner The Boot; Rules Her Affluence Violates Deed Restrictions

In Aspen, Colorado, The Aspen Times reports:

  • A local anesthesiologist who reportedly owns $10 million in real estate property has lost her legal battle with the affordable-housing office and has been ordered to move out of her apartment. The Colorado Court of Appeals this month ruled against Amanda Tucker, who was sued by the Aspen Pitkin County Housing Authority (APCHA) more than two years ago. Judge Jerry N. Jones ruled Tucker, who purchased an apartment at a foreclosure sale in 2005, had illegally lived in it because she didn’t meet the qualifications required by APCHA. Since the unit was in the affordable-housing system with publicly recorded deed restrictions, Tucker was asked to provide proof that she was a qualified buyer, officials said. Tucker never provided the required information, officials said.(1)

For more, see Court: Doc must leave apartment (Court of Appeals rules anesthesiologist must move from affordable unit).

See also, Housing program still ‘under serious attack’:

  • Local housing officials are celebrating a recent court ruling that is seen as validating the Aspen and Pitkin County affordable housing program. But the housing office’s attorney said this week that the Aspen/Pitkin County Housing Authority — which oversees an inventory of rental and for-sale units that numbers in the thousands — is not out of the woods yet. “The housing program’s been under serious attack over the last year and a half,” said attorney Thomas Fenton Smith, who represents the housing office in court. Smith said there currently are six cases working their way through the courts, of which “all, or nearly all, are using the Telluride defense.”

For other reports on this story, see:

For story updates, see:

(1) According to the story: (a) at the time Tucker bought the unit at Ritz-Carlton, at Aspen Highlands Village, she owned seven pieces of real estate in Hawaii with a reported value of $10 million, according to public records; (b) APCHA originally claimed that Tucker didn’t complete an application in order to qualify for ownership of the Category 3 housing unit, which puts a $91,000 cap on yearly earnings for owners with two dependents. Additionally, their net assets cannot exceed $150,000.

Trump To Rescue McMahon Home In Foreclosure; Proposed Deal Involves Sale Leaseback

In Beverly Hills, California, the Los Angeles Times reports:
  • It's "The Donald" to the rescue. Mega-developer and TV personality Donald Trump has agreed to buy Ed McMahon's Beverly Hills house for an undisclosed amount and allow McMahon to continue living in it. Details of the deal are still being ironed out. [...] McMahon, 85, was facing foreclosure within two weeks on his Beverly Hills home of 18 years. The aging television icon, who was Johnny Carson's sidekick for three decades, defaulted on $4.8 million in mortgage loans with Countrywide Financial Corp. He said in interviews that he was unable to work because of a neck injury that occurred about 18 months ago. Trump said he stepped in because helping McMahon "would be an honor." His plan is to buy the home from the lender and lease it back to McMahon.

For more, see Donald Trump to buy Ed McMahon's house (Trump will allow McMahon, who was facing foreclosure, to continue living in the home).

Thursday, August 14, 2008

Loan Servicer Screw-Up Results In Erroneous Charges To Homeowner; Channel 2 "Problem Solvers" Comes To Rescue

In Okmulgee County, Oklahoma, KJRH-TV Channel 2 reports:
  • [A] couple of months after buying her home, Sharon [Whitecloud] applied to have her mortgage company stop collecting money for her tax and insurance escrow account. She wanted to pay those bills herself. [...] Sharon soon received a letter, saying her request was approved.

  • So she started paying her monthly mortgage payment, less the previous escrow amount. [...] But several months later, Sharon started getting letters saying she was delinquent, and owed several thousand dollars. The mortgage company said she hadn't been paying enough into her escrow account, even though she had that letter waiving the escrow requirement. Sharon says she tried unsuccessfully for months to get someone to listen.

  • Why did her problem get so complicated? The company that waived escrow sold Sharon's mortgage, and her new company says it didn't get the correct records, and the situation snowballed out of control. [...] Finally, Sharon called the [Channel 2] Problem Solvers [who] got in touch with both mortgage companies involved in the situation. It took a lot of calls over many weeks, but eventually it all worked out for Sharon, and it worked out better than she ever imagined. [...] Thousands of dollars of incorrectly charged late payments and penalties were erased from Sharon's account.

For the story, see Mortgage mistake almost causes foreclosure. questionable mortgage servicing practices tactics xero

83 Year Old Mother Sues Son For Allegedly Tricking Her Into Signing Mortgage On Her Home

In Beverley, Massachusetts, The Salem News reports:
  • A grand jury has indicted him on firearms, drug and explosives charges. His neighbors have won an injunction barring him from their upscale waterfront condo complex. And now Robert Cohn's own family has filed a lawsuit accusing him of conning his elderly mother into taking out a mortgage on her own home to pay for Cohn's condo. The lawsuit, filed Monday in Salem Superior Court, also alleges that Cohn, 56, has fraudulently transferred ownership of [his] Tuck's Point condo, where he was arrested in March, to his former wife, who plans to sell it to pay for Cohn's legal defense.


  • Four years ago, Cohn, who has been in custody since March, allegedly convinced his now 83-year-old mother to sign a promissory note and other mortgage documents on her Swampscott home, falsely telling her she was co-signing for a mortgage on his own condo, the lawsuit alleges. He also allegedly forged the signature of his sister on the documents. His sister's name is on his mother's home, as well.


  • Cohn still owes his mother $59,000 on the mortgage he tricked her into taking out on her own condo and another $85,000 in credit card bills and cash he withdrew from her account, according to the lawsuit. [...] Cohn has made no payments on the mortgage since he was locked up, putting his mother's home in jeopardy of foreclosure.

For more, see Man accused of swindling mom (Suspect was indicted earlier this year on drugs, explosives charges).

Doc Stamp Confusion Holds Up Short Sale Closings In Florida

In Florida, The Tampa Tribune reports:
  • As Florida's coffers shrink in the face of a dour economy, confusion over a tax statute threatens to choke the flow of home sales at a time when the state is struggling under the burden of millions of unsold properties.


  • In typical transactions, the law is clear about paying taxes [aka documentary, or "doc" stamps] on the price of the property, but as lenders agree to more short sales - allowing troubled owners to sell homes for less than the mortgage and writing off the rest - there's disagreement over how much tax to charge. Some say the tax should be charged on the lower price, a practice that is standard across the state.

  • Others wonder whether the tax should be based on the amount of the mortgage. Although the difference may add up to only about $300 on a typical short-sale transaction, multiply that by hundreds of thousands of properties across the state and the impact is substantial.

For more, see Tax 'Mess' Muddles Short Sales Of Homes.

Legal Services Of Northern Virginia To Launch Foreclosure Legal Assistance Project

In Northern Virginia, The Blog of Legal Times reports:

  • Legal Services of Northern Virginia (LSNV) is launching a new program designed to help low-income homeowners facing foreclosure. The Foreclosure Legal Assistance Project (FLAP) is designed to provide a range of legal assistance. Potential clients call LSNV to make an appointment to meet with an attorney and housing counselor. The three review the homeowners’ financial information and possible legal solutions. The attorney and housing counselor may also offer advice about options lenders may accept to prevent a foreclosure.


  • FLAP is similar to other programs around the country including the Foreclosure Prevention Pro Bono Project in Maryland and the Foreclosure Prevention Collaborative Initiative in Boston.

For more, see Foreclosure Program to Help Low-Income NOVA Homeowners.

Military To Pick Up Moving Tab For Servicemembers Renting From Landlords In Foreclosure

In Washington, D.C., Air Force News reports:
  • A new change to the Joint Federal Travel Regulations authorizes the military to pay to move servicemembers and their families whose landlords default on property the military members are renting. [...] The change is retroactive to July 30, the date President Bush signed the Housing and Economic Recovery Act of 2008. [..] The federal regulation change is designed to help military servicemembers forced to relocate locally when landlords default on their mortgages, [a spokeswoman] said. It does not apply to military members who own their own homes and default on their loans.

For more, see Travel regulation change protects renters whose landlords default.

See also:

Wednesday, August 13, 2008

Minneapolis Loan Officer Rolls First; Cops Plea For Part In Straw Buyer, Mortgage Scam Involving 24 Homes; Will Sing Against His Alleged Confederates

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:
  • A 33-year-old Minneapolis man has admitted in Hennepin County District Court to his part in a mortgage fraud ring carried out by a Brooklyn Park mortgage company.
    Loan officer Andrae Bellfield pleaded guilty Tuesday to four counts of theft by swindle exceeding $35,000. He admitted to submitting false information to lenders in order to obtain mortgage loans. Under the agreement, Bellfield will be sentenced to two years in prison. He also agreed to testify in cases against Universal Mortgage President Donald Walthall and loan officer Marlin Pratt, who are scheduled for trial in early September.(1)


  • All but one of the properties involved are in Minneapolis; the other is in Golden Valley. All but one wound up in foreclosure, he said. The other was given back to the bank.

For the story, see Loan officer admits role in mortgage fraud that shook north Minneapolis.

Go here for other posts on the alleged Universal Mortgage straw buyer, home flipping scams.

(1) According to the story, Bellfield, Walthall and Pratt were among several people charged in December in a $4.9 million mortgage fraud case involving at least 24 homes in Minneapolis and Golden Valley. As the winner of the "race to the prosecutor's office," Bellfield can expect his two year sentence to be significantly less than the sentences Walthall and Pratt could face if, rather than taking a plea bargain, they roll the dice, go to trial and lose.

West Virginia AG Sues Countrywide Over Unfair & Deceptive Lending, Servicing Practices; Seeks Rescission Of Bad Mortgages, Restitution For Borrowers

In Charleston, West Virginia, The Charelston Gazette reports:
  • West Virginia Attorney General Darrell McGraw filed suit [yesterday] against a mortgage lender, alleging it sold loans on terms that were "unaffordable and unconscionable," McGraw said a news conference today. The suit against Countrywide Financial Corp., Countrywide Home Loans Inc., Countrywide Home Loans Servicing LP, Full Spectrum Lending Inc. and Countywide's chief executive officer Angelo R. Mozilo was filed [yesterday] in Putnam County Circuit Court. [...] Countrywide also "engaged in unfair and deceptive acts or practices in servicing loans," according to the suit.


  • The suit seeks an injunction against Countrywide to stop the alleged practices and an order that all contracts and loan agreements using these practices be rescinded. Also, the suit asks that the consumers be awarded lost money and that Countrywide delete any negative reported credit history.

For more, see W.Va. AG files suit against mortgage lender.

From the Office of the West Virginia Attorney General:

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

Florida "Closes The Barn Door" - Passes Emergency Rule To Reduce Convicted Financial Criminals In Mortgage Origination Business

In Tallahassee, Florida, the South Florida Sun Sentinel reports:
  • Gov. Charlie Crist and the state Cabinet on Tuesday barred white-collar convicts jailed for financial crimes from becoming mortgage brokers in Florida, imposing the state's toughest-ever rules in reaction to a scandal over lax licensing standards that allowed criminals to sell home loans. Also, Office of Financial Regulation chief Don Saxon, the state's top mortgage regulator, resigned under pressure from Chief Financial Officer Alex Sink and Crist.

  • Amid Florida's recent real estate boom, more than 10,000 mortgage brokers and loan peddlers were allowed to sell home loans despite having criminal records that included convictions for bank robbery and drug trafficking, according to a recent Miami Herald investigation. The newspaper found some of those brokers bilked consumers for millions of dollars, while state regulators did nothing.


  • Anyone convicted of a violent crime, including murder, rape and armed robbery, will have to wait 15 years from their conviction date to be eligible for such a license. And a five-year wait will now apply to people convicted of misdemeanors involving fraud, dishonest dealing or "moral turpitude."

For more, see Crist, cabinet bar convicts jailed for financial crimes from selling mortgages (Rules bar convicts from selling loans).

Go here for summary & text of the newly-created emergency rules.

Convicted Southern California Con Man Found Guilty In Alleged Deed Theft, Rent Skimming Scams

In Los Angeles, California, Fox News 11 reports:
  • A Mission Hills man was convicted Monday of 14 felony charges involving real estate foreclosure and investment fraud. A San Fernando Superior Court jury deliberated about an hour before finding 51-year-old James Anthony Rojas guilty of grand theft, forgery and attempting to file false or forged grant and trust deeds. He also was convicted of three misdemeanor counts of rent skimming.

For more, see James Anthony Rojas Convicted in Real Estate Fraud Case.

See also, KHTS Radio AM 1220: Rojas Convicted Of Real Estate Fraud.

For earlier stories, see:

Judge Places Hold On Foreclosure Sale; Finds It "Shocking" That Plaintiff Sought Judgment While Leading Defendant To Believe Saving Home Was Possible

In New York City, a Staten Island trial court recently invoked its "inherent equitable power over its judgments and decrees"(1) to set aside a previous judgment foreclosing a mortgage and permitting the sale of the subject property as a result of certain conduct engaged in by the foreclosing lender. The effect of the court's action was not to throw out the foreclosure action altogether, but to give the homeowner a couple of more months to determine if a loan modification on her home loan was possible.

According to the court:
  • [W]hile defendant [homeowner] engaged in good faith negotiations, plaintiff’s [foreclosing lender's] counsel chose to submit an order directing the sale of the subject property to this court for signature. This is a classic case of the left hand does not know what the right hand is doing. [...] On several occasions defendant represented to this court that she is currently paying a second mortgage on the subject premises. Obviously the owner would not normally pay a second mortgage when she was not paying the first mortgage unless she reasonably believed she was resolving the problem with the first mortgage holder.


  • In this case the plaintiff engaged in conduct that led defendant to believe that the sale of her home was not imminent. The defendant argues and the plaintiff does not deny that the defendant engaged the plaintiff to modify her loan agreement on November 28, 2007.


  • It is shocking that plaintiff would submit an application for a Judgement of Foreclosure Sale to this court while at the same time leading the defendant to believe a possibility existed to save her home. Defendant further asserts that she engaged in additional telephone conferences with the plaintiff prior to the foreclosure sale date of February 25, 2008. Defendant states that during these subsequent phone calls plaintiff’s attorney never mentioned the impending foreclosure sale of the subject property. Plaintiff does not deny these allegations.


  • Even had the plaintiff offered [evidence that homeowner's income did not support a loan modification,] it does not absolve plaintiff of applying to this court for a judgment from this court while concurrently leading the defendant to believe that modification was possible, especially when she continued paying the second mortgage.(2)

For the court's Decision and Order, see Deutsche Bank National Trust Co. v. White, et al. 2008 NY Slip Op 31906(U); July 2, 2008.

(1) For authority to invoke the court's equitable powers, Richmond County Supreme Court Justice Joseph J. Maltese quoted from, among other cases, the New York Court of Appeals decision in Fisher v. Hersey, 78 NY 387 (1879):

  • Courts of equity exercise a supervision of sales made under their decrees, which is not in all cases controlled by legal rules, but may be guided by considerations resting in discretion. They may set aside their own judicial sales, upon grounds insufficient to confer upon the objecting party an absolute legal right to a re-sale. They may relieve against mere mistakes, accidents or hardships, or oppressive or unfair conduct of others, though such conduct may not amount to a violation of law; and where fraud is alleged they may order a re-sale upon facts casting such a degree of suspicion upon the fairness of the sale as to render it, in their judgment, expedient, under all the circumstances, to vacate it, though the alleged fraud may not be clearly established.

(2) In setting aside the Judgement of Foreclosure and Sale, the court stated:

  • It is the finding of this court that these actions taken by plaintiff were not maliciously motivated, but were instead careless administrative errors. It is the further finding of this court that this administrative error by the plaintiff’s officers in failing to communicate with their attorneys that the judgment was submitted is a mistake that causes the previous order directing the foreclosure and sale of the subject premises to be patently unfair to the defendant. This court would not have signed that judgment with the knowledge of the foregoing facts. Therefore, this court is setting aside the judgment dated December 21, 2007. A court cannot condone such a practice, even if it is unintentional, by giving it the protection of a judicial order.

Detroit Foreclosed Home Listed For Sale For $1 Takes 19 Days To Sell; Costs Bank $10K To Unload

In Detroit, Michigan, The Detroit News reports:
  • One dollar can get you a large soda at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit. The fact that a home on the city's east side was listed for $1 recently shows how depressed the real estate market has become in one of America's poorest big cities. And it still took 19 days to find a buyer.

  • The sale price of the home may be an anomaly, but illustrates both the depths of the foreclosure crisis in Detroit and the rapid scuttling of vacant homes in some of the city's impoverished neighborhoods.


  • Put on the market in January for $1,100, the house had no lookers other than the squatters who sometimes stayed there at night. Facing $4,000 in back taxes and a large unpaid water bill, the bank that owned the property lowered the price to $1.(1)

  • While it's not unusual for $1 to be exchanged when property is transferred for legal reasons, listing a home in the Multiple Listing Service for $1 was surprising and unsettling to Kent Colpaert, the listing real estate agent for the property. "I've never seen a home listed for $1," Colpaert said. "But it's been hit hard: It's just a shell." On Tuesday, listed one other single-family home, one duplex and one empty lot at $1 in Detroit.

For more, see Foreclosure fallout: Houses go for a $1.

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

(1) According to the story, so desperate was the bank owner to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer's closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000. ForeclosuresDestroyNeighborhoodsApple

Tuesday, August 12, 2008

Countrywide's Loan Servicing Operations The Target Of FTC Investigation

Reuters reports:
  • Countrywide Financial Corp, which was the largest U.S. mortgage lender before being acquired by Bank of America Corp, faces a Federal Trade Commission probe into whether its loan-servicing activities violated federal law. Countrywide in its quarterly report filed on Monday with the U.S. Securities and Exchange Commission said the FTC has issued civil investigative demands requiring it to provide documents. It said the agency is assessing whether activities related to Countrywide's $1.49 trillion servicing portfolio, covering roughly 9 million borrowers, violated laws the agency administers.


  • Separately, Countrywide is under investigation by the FBI, authorities have said. That agency last month said it had 21 corporate targets in its probe of potential corporate fraud in the mortgage industry.

For more, see Countrywide faces FTC probe over loan servicing.

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

Connecticut AG Sues Builder For Allegedly Leaving Homes "Unfinished, Uninhabitable and Unsafe"

From a July 23, 2008 news release from the Connecticut Attorney General's Office:
  • Attorney General Richard Blumenthal [...] announced he is suing Essex modular home builder Bowden Development TLI, LLC and its owner Lloyd L. Bowden of Old Saybrook for construction so shoddy that it endangered consumers and cost them about $500,000 to fix.


  • Blumenthal said of the lawsuit's allegations, "This developer endangered his customers, failing to bolt roofs to walls and install vital column supports, leaving the structures unsafe and unsound. These mistakes could have been fatal, collapsing roofs or walls, injuring or even killing families. The developer left these homes unfinished, uninhabitable and unsafe -- because he was unqualified and unscrupulous. The failings included cracked walls, unsecure foundations, water damage, cut corners, missed deadlines -- and often additional unauthorized charges and abandoned construction, particularly when consumers complained."

For more, see AG, DCP Sue Essex Home Builder For Dangerously Shoddy Work Costing Consumers About $500,000 To Fix.

Alleged Refinancing Scam Leaves Homeowner Out $105K & Facing Foreclosure; Cops Arrest One, Seek Another, Believe There Are More Victims

In Ontario, California, The San Bernardino Sun reports:

  • An Ontario woman is out more than $105,000 and in danger of losing her home after she became the victim of a home mortgage fraud earlier this year, police said. Detectives are investigating Arthur Lee Harris, a 35-year-old Riverside resident, and Nestor Miguel Reyes, a 33-year-old Covina resident, authorities said. The two are suspected of working together in the fraud, which was reported in May.

  • "It is a pretty egregious crime, and we know there's more victims," said police Detective Al Parra. Reyes was arrested Thursday on suspicion of perjury, theft and forgery, Parra said. He was booked at West Valley Detention Center in Rancho Cucamonga. Police were still looking for Harris, who could be living in the 1100 block of West Blaine Street in Riverside. He faces the same charges as Reyes.

  • "Harris would pose as a finance broker, befriend people, gain their trust and assist in refinancing houses," Parra said. "Customers would discover their house had been refinanced, but for thousands of dollars more than they signed for." Parra said virtually every document that was filed was forged. [...] Investigators think there are more victims in San Bernardino and Riverside counties.

Source: Woman loses $105,000; 2 suspected in fraud case.

Sacramento DA Forms Foreclosure Task Force

In Sacramento, California, The Sacramento Bee reports:
  • The Sacramento County District Attorney's Office has formed a foreclosure task force to slow the growth of bank repossessions and help neighborhoods cope with related blight. [...] The force consists of the DA's office, the Sacramento Housing and Redevelopment Agency, the U.S. Department of Housing and Urban Development, law enforcement officers, lawyers and community leaders. U.S. Rep. Doris Matsui, D-Sacramento, joined on Thursday.

Source: Sacramento DA forms foreclosure task force.

Add Corporate Credit Unions To Those Taking Substantial Hits From Holdings In Mortgage-Related Securities

The Wall Street Journal reports:
  • Five of the nation's largest credit unions are reporting big paper losses on mortgage-related securities, a sign that housing-market distress is spreading even to the most risk-averse financial sectors. [...] Credit unions are not-for-profit, member-owned cooperatives that take deposits and lend money like banks. The mortgage problems are focused on so-called corporate credit unions, which are key players in the industry.(1) They don't deal directly with consumers, but provide investment services and financing to regular credit unions, which do.(2)


  • Credit unions in general are among the most conservatively run financial institutions in the U.S. That some are showing strains indicates that almost no financial sector is immune from the mortgage meltdown that has caused widespread carnage among commercial banks and on Wall Street.
For more, see Mortgage-Market Trouble Reaches Big Credit Unions.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this story.

(1) According to the story, the five corporates showing big mortgage-related losses, according to federal regulatory filings, are U.S. Central Federal Credit Union; Western Corporate Federal Credit Union; Members United Corporate Federal Credit Union; Southwest Corporate Federal Credit Union; and Constitution Corporate Federal Credit Union. Together, they reported about $5.7 billion in "unrealized" losses as of the end of May, the filings indicate. Unrealized losses happen when the market value of a security falls, even if it hasn't been sold.
(2) Reportedly, the troubles of the corporate credit unions appear to be having little impact on regular credit unions. Executives at several of the regular firms say they are closely monitoring the financial condition of the corporates, but that they remain confident and haven't reduced their funds on deposit with the corporates, according to the story.

Monday, August 11, 2008

Countrywide's Attempt To Gag Bankruptcy Trustee Challenged By USDOJ

In Pittsburgh, Pennsylvania, The Wall Street Journal reports:
  • The U.S. Justice Department has challenged a deal Countrywide Financial Corp. has cut in a Pittsburgh bankruptcy court, saying the home lender is trying to silence an active critic. A nondisparagement clause in Countrywide's settlement with Ronda Winnecour(1), a court official who monitors consumer bankruptcies, "may impede, impair or otherwise chill witness testimony in the U.S. Trustee's ongoing investigation of Countrywide," Justice Department lawyers wrote in court documents. The provision binds Ms. Winnecour to a promise not to "in any manner, whether directly or indirectly, disparage" Countrywide. Additionally, Ms. Winnecour is to ensure that her employees don't criticize the company.

For more, see Countrywide Deal With Critic Is Disputed (requires subscription).

See also:

Go here for other posts on Countrywide's litigation in the Pittsburgh bankruptcy court.

(1) According to the story: (a) Ms. Winnecour took on Countrywide in nearly 300 Pittsburgh consumer-bankruptcy cases, accusing the company of mishandling payments her office sent to satisfy mortgage debt; (b) she alleged in her motions that Countrywide lost, destroyed or misplaced $515,000 in checks and after losing or destroying checks, Countrywide may have added improper charges to the mortgage debt owed by consumers in hundreds of cases.

Miami Herald: State Regulators Let Mortgage Crooks Keep Working After Catching Scammers Stealing Homes, Loan Proceeds

The Miami Herald yesterday published Part 3 of their three-part series, Borrowers Betrayed, on how the State of Florida reportedly let criminals run wild in the mortgage origination industry. Yesterday's report begins:
  • When state regulators showed up at Samantha Johnson's mortgage company, she had already stolen her first house. She had forged documents to fleece lenders. She had skimmed money off a customer's loan. She had lied to conceal 19 questionable mortgages. Florida regulators caught all of that, but they didn't revoke her license or call for a criminal investigation. Instead, they fined her $4,300 -- less than the commission on a single mortgage -- and made her promise to stop breaking the law. Case closed.

  • Back on the prowl, Johnson went on to steal $2.5 million in loans and nine more homes -- including one from a recently widowed, disabled Vietnam veteran and another from a blind, 79-year old woman with Alzheimer's disease.
  • Time and again, regulators caught mortgage professionals breaking the law -- fraud, forgery, and stealing from clients -- but allowed them to stay in the business with few consequences during the richest housing boom in state history, The Miami Herald found.

For more, see State let crooked brokers keep working (State regulators caught mortgage professionals breaking the law but allowed them to stay in the business with few consequences, The Miami Herald found).

For Part 1 (7-20-08), see Ex-convicts active in mortgage fraud (During Florida's housing boom, state regulators allowed thousands of mortgage professionals with criminal records into the industry -- costing consumers millions).

For Part 2 (7-21-08), see Thousands with criminal records work unlicensed as loan originators.

Mortgage Lender Files 12+ Federal Suits Against Loan Originators For Sticking It With Crappy Loans; Finger-Pointing To Get Ugly, Say Some Experts

In Minnesota, the Minneapolis Star Tribune reports:
  • A division of ResCap, the embattled mortgage-finance arm of GMAC Financial Services, is fighting back in the home-lending credit crisis. The Bloomington-based investor has filed more than a dozen federal lawsuits in Minnesota against mortgage companies, claiming that they failed to do adequate due diligence on borrowers and provided inaccurate information about the financial wherewithal of loan applicants.(1)

  • ResCap, through its Residential Funding Co. unit, is seeking millions of dollars for nonperforming loans that it financed from mortgage brokers around the nation. Securities and real estate experts expect more lawsuits to come as the finger-pointing among lenders, brokers and investors gets ugly.

For more, see ResCap suing brokers who originated bad mortgage loans (The Bloomington-based warehouse lender alleges that defendants misrepresented data on borrowers and should buy back the troubled loans).

(1) According to the story: (a) ResCap alleges in its lawsuits that individual mortgage and finance companies made misrepresentations concerning borrowers' employment, income, occupancy and other "undisclosed liabilities;" and (b) ResCap asserts that the mortgage originators are contractually obligated to buy back those troubled loans because they had been sold to ResCap on the belief that they were of "investment quality, had been prudently originated and had been properly underwritten."

Foreclosure Rescue Scams Being Challenged In Staten Island

In New York City, the Staten Island Advance ran a story on three separate incidents of alleged sale-leaseback, foreclosure rescue scams reportedly involving operators AFG Financial in Garden City, Long Island and broker Patrick Jean Baptiste; and a company called Revolutionary Capital and its CEO, Casman Samuel.

Two of the cases are currently being played out in civil litigation; the third case has been referred to the Staten Island District Attorney's office (Richmond County) for possible criminal prosecution. One of the suits reportedly alleges violations of the homeowner's civil rights, fair-housing and truth-in-lending acts when it convinced her to transfer the deed to her property to the company,

For more, see Duped when they're down, then forced out (Quick-fix rescue scams for those in foreclosure are widespread and often exact a terrible toll).

Clerk's Typo When Recording Mortgage Stymies Lender In Subsequent Foreclosure Action

In Zansesville, Ohio, The Columbus Dispatch reports:

  • A Zanesville resident won the first round in a battle over his house when a judge ruled that JPMorgan Chase could not pursue a foreclosure. The bank went after Andy Mateja's house last year because the home's former owner hadn't paid a $150,000 lien placed on the property in 1998.

  • Mateja purchased the property for $320,000 in 2001 from Dr. Subbarayudu Koppera, but a title search did not detect the lien because an employee in the Muskingum County recorder's office mistakenly entered the lien under the name Koppepa. A Muskingum County judge ruled in favor of Mateja on Monday. The judge didn't say in his ruling why he sided with Mateja. [...] Round 2 of the battle begins Aug. 11 when the sides meet with the judge and Mateja will try to recover $30,000 in court fees.


  • When Mateja purchased the house, he did not take out title insurance that would have protected him from claims against a previous owner, so JPMorgan Chase served him foreclosure papers in August 2007.

For the story, see Bank can't foreclose over typo, judge rules.

For earlier stories, see

DC Laws On Foreclosure Evictions Let Tenants Stay Put Until Lender Resells Home

Buried in a recent article in The Washington Post on tenants finding themselves unwittingly caught up in foreclosure rent scams is this excerpt on the protection afforded tenants renting from a landlord in foreclosure in Washington, D.C.:
  • The District has some of the nation's strongest tenant protection laws. D.C. renters can stay put after a house is foreclosed on, said Julie Becker, a senior staff lawyer at the District's Legal Aid Society. The tenant would then pay rent to the bank until the bank sells the home. If a new owner wants to move in, it's up to him or her to evict the renter, Becker said. If the owner does not move in, the tenant has the right to stay.

  • "But a lot of renters don't know that," Becker said. "They get a notice in the mail, usually addressed to the owner, saying they have to move out within 30 days, and they just pack up and leave." The Office of the Tenant Advocate, an independent city agency, now receives 10 to 12 calls a week from panicked renters, said Lennie Mitchell, the agency's spokesman. Next week, the agency plans to post a form on its Web site that tenants can send to the banks informing them of D.C. laws. It plans to follow up with a marketing blitz that includes public-service TV ads.

For the story, see Foreclosure Crisis Catching Renters Off Guard.

For other posts involving the problems tenants face in rented homes in foreclosure, go here, go here, go here, go here, go here, go here, and go here. TenantRentSkimmingAlpha

Sunday, August 10, 2008

Foreclosure Rescue "Federal Land Grant" Scams Flooding San Diego DA's Office

In San Diego, California, North County Times reports:
  • Two months ago, the district attorney's office busted foreclosure consultants based in Carlsbad who offered a "federal land grant" system that offered to save homeowners from foreclosure, he said. Authorities said the program was useless and bilked struggling homeowners for fees as high as $10,000, plus monthly rent. Similar land grant scams are still active throughout the county, [economic crimes division chief Michael] Groch said, flooding the office with cases.

Source: Fraud cases surpass 2007 numbers, DA says (Land grant scams targeting owners facing foreclosures still active, authorities said).

Minnesota Man Accused Of Abusing POA, Pocketing Refinance Proceeds On Dying Mother's Home

In St. Louis County, Minnesota, the Duluth News Tribune reports:
  • A Twin Cities man made his first appearance in St. Louis County District Court on Thursday accused of stealing about $170,000 from his vulnerable mother. [...] According to the complaint, Vicki Gilbertson [the defendant's mother] was diagnosed in January 2007 with brain cancer. She also suffered from dementia and aphasia. At the time of her diagnosis of cancer she had more than $160,000 in her bank accounts. When she died at age 58 on July 22, 2007, her two bank accounts had negative balances of -$9,880.51 and -$944.00.

According to the story, among the sources of cash allegedly pocketed was the proceeds of a mortgage refinance on his dying mother's home that is reportedly now in foreclosure.(1)

For more, see Police say man stole $170,000 from mom.

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

(1) According to the report, the alleged swindle involved, at least in part, the abuse of authority over the mother's assets under a power of attorney. FinancialAbuseOfElderlyAlpha

Florida Tourist Traps Sing Foreclosure Blues

Two somewhat well known Florida tourist traps made news recently as lenders made moves to reposess them. For more, see:
  • Fort Lauderale: Deal delays auction of Las Olas Riverfront: The foreclosure auction for Las Olas Riverfront was postponed Tuesday after a lender on the complex indicated it will exercise its rights to buy the troubled property. [...] Cerberus [Capital Management, the lender,] has already been talking to developers about the property, a 260,000-square-foot retail and entertainment complex that ultimately struggled to attract customers and keep tenants.

  • Orlando: Church Street Station goes into foreclosure: The rocky road that Church Street Station is traveling as the dining-and-entertainment complex in downtown Orlando tries to make a comeback has hit another pothole, as a lender who helped developer Cameron Kuhn buy the property out of bankruptcy court has filed to foreclose on it.

Stiffed On $760M Construction Loan, Deutsche Bank Seeks Partners For Unfinished Condo-Hotel In Foreclosure

In Las Vegas, Nevada, Reuters reports:

  • Deutsche Bank AG, senior lender to the partially built Cosmopolitan Resort & Casino in Las Vegas, continues to seek partners to operate the 3,000-room resort as it carries out foreclosure proceedings, a spokesman said on Thursday. "We are looking for partners," said bank spokeswoman Ted Meyer.

  • Deutsche Bank began the foreclosure process in January after developer 3700 Associates LLC, led by Chief Executive Ian Bruce Eichner, defaulted on a $760 million construction loan for the condominium-hotel project.

For more, see Deutsche Bank still seeks partners for Vegas resort.

Salem Stuck With Unsold Condo Building; Looming Foreclosure, Difficulty Dumping Units Forces Developer To Consider Conversion To Rentals

In Salem, Massachusetts, The Salem News reports:
  • The first sign of trouble came in December at a lottery to select the owners of some of the new Palmer Cove Condominiums. There were 15 condos for sale, with three-bedrooms going for what appeared a bargain — $189,900. When this project was conceived, an overflow crowd of applicants was expected. Instead, there was just one.


  • A $2.2 million construction loan was due in June, and the Salem Harbor CDC, a nonprofit agency, has asked the city for permission to abandon the condo project and switch to rentals. That's the only way out of this financial mess, according to [executive director of the Salem Harbor Community Development Corp. Michael] Whelan.

For more, see Condos are on edge of foreclosure.

For 8-29-08 story update, see Rentals OK'd for ailing Point housing project.

Private, Gated Residence Not Immune From Foreclosure Fixture Strippers

Recently reported on a police/fire blotter appearing in The Sacramento Bee was this blurb:
  • About $12,800 in appliances and other items were stolen from a private, gated residence that has been unoccupied since November because of foreclosure. The burglary was discovered July 29. Items taken included a stove and hood vent, dishwashers, wine coolers and cupboard doors.

Source: Police/Fire Log (2nd blurb from the top).

SW Florida Cops Score $200K+ In Contraband In Foreclosed Marijuana Grow House

In Collier County, Florida, the Naples Daily News reports:

  • Investigators with the Collier County Sheriff's Office uncovered 68 marijuana plants with an estimated street value of $204,000 from a suspected grow house located at 2420 10th Ave. N.E. in Golden Gate Estates around 2 p.m. Tuesday. Nobody was inside the house when deputies executed the search warrant, according to sheriff’s reports.

  • The house is involved in a bank foreclosure, according to a news release from the sheriff's office. Bank agents notified the Sheriff’s Office after they found suspected marijuana plants growing inside the house during an inspection they were conducting on the property, reports said. Investigators also turned up assorted equipment used for growing marijuana valued at $10,000, reports said.

For more, see Marijuana in Estates growhouse bust worth more than $200,000.

Go here to view interactive map of growhouse busts in SW Florida and around the state.

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