Saturday, September 06, 2008

Four-Legged Squatter Family "Pounces" At Chance To Move In To Vacant Foreclosed Home

In Lake Elsinore, California, KTLA-TV News reports:
  • As more and more southern Californians are moving out of their homes due to foreclosure, others are moving in. You might say the new residents of a Lake Elsinore home "pounced" on the opportunity to take up residence. Last week, neighbors of a well groomed home in Tuscany Hills began noticing that their new neighbors were acting like wild animals. In fact, they are wild animals. They're a family of bobcats.

  • Residents of the foothill community got their first look at the feline squatters late last month. At least two adults and three kittens, were lounging on top of a wall outside the spacious Spanish style home. [...] Four police cruisers showed up and officers ordered everyone to stay inside their homes. But, the officers along with neighbors, started snapping photos.

Based on the video coverage, local authorities will apparently not initiate eviction proceedings against the two adult bobcats (both females - adult males apparently don't stick around) and the three kittens. The neighbors are said to appreciate the way the family controls the local rabbit population. Animal control expects the family to vacate the premises peaceably in a few weeks, when the kittens are old enough to travel. The home has been sitting empty for at least six months, neighbors say.

For more, see Bobcats Move into Foreclosed Home (read story) (watch video).

For story update, see The Californian: Steps taken to shoo off bobcats (Animal spotted again Friday; residents remain calm). squatter foreclosure zebra

Suspect Charged With Torching Foreclosed Home Believed To Be Ex-Firefighter

In Parkesburg, Pennsylvania, the Chester Daily Local reports:
  • For the second time in two weeks authorities arrested someone connected to the Pomeroy Fire Company for arson. At one point, it appeared Samuels was a firefighter with Pomeroy because his name was listed as such on a fire company Web page that has since been revised. But Fire Chief Jeff Sellers adamantly maintains Samuels was always just a social member who helped with fundraisers.


  • Police allege Samuels set a house on fire about 11:30 p.m. Wednesday [...]. The unoccupied house is in foreclosure and owned by Bank of America, police said.

  • The arrest comes two weeks after Pomeroy volunteer firefighter Robert Bruce Tribbett, Jr., 24, of Sadsburyville, was arrested for setting homes and sheds on fire in Sadsbury. [...] Samuels was arraigned Friday morning [...] and then taken to Chester County Prison in lieu of $50,000 bail.

For the story, see 2nd man affiliated with Pomeroy Fire Company arrested.

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

Homes In Foreclosure Among Six Vacant Houses Involved In String Of Suspicious Cincinnati Fires

In Cincinnati, Ohio, The Enquirer reports:
  • A two-alarm fire at a vacant house late Monday in [South Fairmount] is considered suspicious, Cincinnati fire officials said today. The fire is the latest in a string of about six suspicious blazes at vacant homes recently in Price Hill, Westwood and South Fairmount, said District 2 Fire Chief Monty Wolf. “There’s been a rash of fires in vacant homes on the West Side,” he said. Investigators aren't sure if the fires are the work of a single arsonist or if they are a coincidence. At least some of the homes are in foreclosure, he noted.

For more, see String of suspicious fires on West Side. ArsonForeclosureAlpha

Bradenton Foreclosures Account For 50% Of Local Code Violations; Cape Coral Code Enforcers Also Struggle With Vacant Homes

In Central Florida, The Bradenton Herald reports:

  • Foreclosures in Manatee County [...] are putting a heavy workload on local code enforcement departments. Foreclosures run a list of violations from vandalism and overgrown grass to termites and rodents.


  • Volker Reiss, code enforcement director for Bradenton, said about 50 percent of the department's time is allocated to foreclosure violations. "The time-consuming element is trying to do research and finding out who owns it, and getting a hold of them," Reiss said. "It's a problem for everyone." [...] When it comes to getting a bank to tend to violations of foreclosed properties, the city of Bradenton has seen and heard it all. Reiss said he's seen banks respond to violations, he's heard bank representatives say the problem will be fixed then not honor their word, and he's heard nothing at all from the banks that ignore the situation.


  • Among foreclosed homes in Bradenton, code enforcement officer Barbara Hogan has seen overgrown grass, snakes, fruit rats, bee colonies, and tadpoles and frogs in green pools. "The longer they sit empty the further they deteriorate," Hogan said. "I think a lot of neighbors are feeling the effects."

For more, see Foreclosures burdening to code officers.


In Cape Coral, Florida, The News Press reports:

  • Cape Coral Code Enforcement has a backlog of 700 lots that need to be mowed on unkempt homes in foreclosure. “It’s a challenge. We’ve never experienced this before,” said Frank Cassidy, head of the city’s Code Compliance Division.The backlog, said Cassidy, was created by “the huge number of properties in foreclosure.” It will take about two months at a cost total cost of $38,990 — or $55.70 a lot — for the two services under a city contract to mow all 700 lots, Cassidy said. By that time, he said there will still be a backlog as more homes go into foreclosure. “We’ll be mowing an average of 260 to 300 lots a month through the end of the year,” he said.

Source: Cape Coral faces backlog of mowing lots for foreclosed homes.

Foreclosure Pet Rescuer Now Faces Foreclosure Herself

In Southern Indiana, WHAS-TV Channel 11 reports:
  • They’re the innocent victims of America’s foreclosure crisis - pets abandoned by their owners. One southern Indiana woman rescues those dogs and gives them a place to call home. But now she’s apart of the foreclosure crisis.

  • Katherine Fraze has 130 acres of land for her 34 dogs. She knows each one by name and bark. She’s taken them in, tried to give them a wonderful life and now she’s hoping the community will help her continue her mission. [...] Katherine’s facing foreclosure. She says she’s doing what she can to raise money to sustain her sanctuary. But it’s difficult. The good life costs about $800/month. But Katherine says it’s worth it. If you’d like to support the Save that Dog Sanctuary, visit

For the story, see Ironic foreclosure story with scores of pets at risk.

Man Facing Foreclosure Charged In Wife's Death; Allegedly Bought $1M Insurance Policy On Her Life While Behind On House Payments Weeks Before Slaying

In Southern California, The Press Enterprise reports:
  • A Murrieta man charged with murder for financial gain was not making mortgage payments at the time authorities say he purchased $1 million in life insurance on his wife, who died a few weeks later, county records show. Kelle Lee Jarka could face the death penalty or life in prison if convicted of the April slaying of Isabelle Jarka, his 40- year-old wife and the mother of two.

For more, see Murrieta man charged in wife's slaying wasn't making mortgage payments when he reportedly bought $1 million in life insurance on her, records show.

Friday, September 05, 2008

Boston Cops Arrest Four Protestors Chained To Foreclosed Home In Attempt To Block Homeowner Eviction

In Boston, Massachusetts, The Boston Herald reports:
  • Four protesters chained to a deck and yelling “No eviction!” were arrested in Roxbury this morning for trying to block a woman’s eviction from a condo that is under foreclosure. Several Boston police officers made attempts to coax the four protesters, chained to each other, off the wooden deck behind Paula Taylor’s condo, but those efforts were rebuffed. After more than an hour of negotiations and as a group of loud, clapping protesters chanted on the street, police cut the chains and arrested all four - two men and two women who were volunteers with a housing advocacy group.


  • Steve Meacham, director of City Life, the non-profit advocacy group that has organized several eviction blockades amid the spiraling mortgage crisis in the city, vowed that protesters would continue to thwart evictions. “This is the beginning of a struggle that will not weaken,” said Meacham.

  • A representative from the law office of Harmon Law, handling the eviction for the bank, referred comment to Countrywide, which handled Taylor’s loan.

For more, see Four arrested at Roxbury foreclosure protest.

See also, WCVB-TV Channel 5: Four Arrested During Foreclosure Protest (Company Takes Possession Of Roxbury Condo) (read story) (watch Channel 5 video).

Palm Beach County Man To Forfeit $6.5M As Part Of Plea Deal In Alleged "Cash Back" Straw Buyer Scam Involving 44 South Florida Homes

In South Florida, the Palm Beach Post reports:
  • A Palm Beach County real estate investor who was videotaped describing a mortgage scam(1) to an undercover FBI agent has pleaded guilty to one count of conspiracy to commit bank fraud and one count of mail fraud. Berry Louidort agreed to forfeit $6.5 million and a 2008 Mercedes, according to a plea agreement filed Wednesday in federal court. According to the latest indictment from federal prosecutors, Louidort was part of a scheme to land bogus mortgages on 37 properties in Palm Beach County and seven in Naples.(2)


  • Federal prosecutors say the ring overstated the values of properties - including large new homes in Wellington and Boca Raton - then took out loans and pocketed the difference between the amount they paid the sellers and the amount they got from borrowers.

For the story, see Mortgage scam case nets third guilty plea.

(1) According to the story, in one example, Louidort convinced a lender that he had paid $1.03 million for a house west of Delray Beach and walked away from the closing with an "assignment fee" of $250,000, federal prosecutors said in April. The house soon went into foreclosure. The ring also enlisted straw buyers, such as the part-time [supermarket] cashier whose income on loan applications was inflated from $13,000 to $344,000 so she could qualify for $1.3 million in loans on a Boca Raton home.

(2) According to the story, two other players in the scam, former Bank of America employee Ria Sigala and Delray Beach insurance agent Danny Mesidort, pleaded guilty last month. Ralph Michel and Lauren Jasky, accused in the scam, have pleaded not guilty.

Southern California Man Settles With SEC In Alleged Real Estate Scam That Took At Least 95 Investors For $11M+

In Southern California, The Press Enterprise reports:
  • Maurice E. McLeod, one of three Riverside County businessmen whom the Securities and Exchange Commission has accused of operating a massive real estate scam, accepted a court settlement that could require him to return ill-gotten gains. McLeod, James B. Duncan and Hendrix Montecastro are accused of defrauding at least 95 investors in multiple states of more than $11 million and forcing many of them into foreclosure.

  • Pacific Wealth Management, Stonewood Consulting Inc. and Total Return Fund, all companies Duncan, Montecastro and McLeod controlled, also are named as defendants in the SEC lawsuit.

For more, see Real estate scam deal reached (One man in an investment fraud scheme has agreed to repay what he gained and penalties).

For the original complaint filed by the SEC, see Securities and Exchange Commission v. Duncan, et al.

California Real Estate Agent Charged With Ripping Off Senior's I.D., Using It To Finance ($413K) Home Purchase

The San Bernardino County District Attorney's Office recently announced:
  • On Tuesday, September 2, 2008, Investigators with the San Bernardino County District Attorney’s Office Real Estate Fraud Prosecution Unit arrested Delton Alexander Ramirez, 29, of Upland, CA on several felony counts of forgery, offering a forged document to be recorded, and one felony county of identity theft.

  • In November 2007, Ramirez, a licensed real estate agent, introduced himself to the elderly victim at her home in the City of Riverside and told her that he could lower her monthly mortgage payment. The victim agreed to refinance her home in Riverside. During the refinance process, Ramirez submitted an additional loan application in the name of the victim for a home located at 1408 Estrellita Court, in Upland, California.

  • Countrywide Home Loans approved the loan for $413,250.00. The victim received a telephone call from Countrywide Home Loans to inquire about her $3,300.00 a month payment due for the Upland house and discovered that someone had used her confidential identity to fraudulently purchase the home in her name. After a thorough criminal investigation Ramirez was identified as the primary suspect in this fraud for housing scheme. His bail was set at $413,250.00.

For the DA's press release, see Upland Man Arrested for Housing Scheme.

Illinois Man Convicted Of Scamming Seniors Out Of $500K+ In Alleged Bogus Real Estate Investment Scam

From the Illinois Attorney General's Office:
  • Attorney General Lisa Madigan [last month] announced a St. Charles man was convicted on multiple counts for collecting more than $540,000 from five elderly couples for investments he never made. Zia Ahmed, 59, has pled guilty in McHenry County Circuit Court to one count of financial exploitation of the elderly, [...] one count of theft over $10,000, [...], and one count of securities fraud, [...]. He was sentenced to eight years for the financial exploitation charge and five years each on the theft and securities fraud counts.


  • From 2001 to 2006, Ahmed convinced five elderly couples in the western suburbs to supply him with funds to invest in real estate, but he then spent the money for personal interests instead of investing it.

For more, see St. Charles Man Convicted For Scamming Seniors.

Stiffed Subs Get The Squeeze As Foreclosures Leave Them Little Chance Of Getting Paid

In Pleasant View, Utah, the Standard Examiner reports:
  • House foreclosures along the Wasatch Front are claiming more victims than just investors, developers, builders, real estate agents and lending institutions. The slump in Utah's housing market has also put subcontractors -- like Dean Hennefer, of Hennefer Plumbing in Pleasant View -- in a crunch. He has gone unpaid for work already completed on area homes. Cutting his six-member staff in half and using reserves set aside for future expansion has allowed the small-business owner to avoid being pulled under by the crisis.


  • Hennefer estimates he has done $150,000 worth of work in new homes from Sandy to Box Elder County that he will likely not be compensated for because the homes have gone into foreclosure. The cost to pursue legal action -- with only a remote chance of capturing a portion of the loss -- prevents subcontractors like himself from pursuing that remedy, he said.

For more, see Subcontractors going under (More and more aren't being paid because of foreclosed homes throughout Wasatch Front).

Thursday, September 04, 2008

Convicted California Contractor Charged With Grand Theft For Copping Cash For Contracting Work While On Pre-Sentencing Release For Earlier Conviction

The San Bernardino County District Attorney's Office recently announced:
  • The San Bernardino County District Attorney's Office Specialized Prosecution Unit arrested Timothy Shaeffer, 62, in the City of Highland. Shaeffer was found to be in violation of the terms of his Plea Agreement accepted by the Superior Court on July 22, 2008. Shaeffer was granted release from custody to handle personal matters prior to sentencing, which was scheduled for October 6, 2008. The temporary release from custody was granted on the condition that he not act as a contractor or designer.

  • The District Attorney’s Office received information that Shaeffer was operating in the capacity of a contractor and soliciting contracting work in the City of Highland and the City of Redlands. A Felony Warrant was issued on August 27, 2008, for his arrest for additional felony charges of Grand Theft and committing a felony during release from custody on his own recognizance. Shaeffer was arrested on the warrant when he returned to the victim's residence in the hopes of soliciting more money for contracting work. Bail was set at $250,000.

For the press release, see Highland Contractor Arrested for Grand Theft.

Upstate NY Non Profits Pick Up $700K Grant To Fight Foreclosures

In Buffalo, New York, Business First of Buffalo reports:
  • The Western New York Law Center in partnership with HomeFront Inc. has been awarded a $700,000 two-year grant by the New York State Department of Housing and Community Renewal. The funding will be used to address the subprime mortgage crisis in the region.


  • HomeFront and the Western New York Law Center are offering their services free of charge to qualified borrowers. HomeFront will provide counselors who can assist borrowers in developing workout agreements.

  • The Center will represent borrowers in cases that cannot be resolved through counseling and in mandatory court settlement conferences, which [pursuant to a new state] law must be scheduled within 60 days of the date legal action is filed with the county clerk.

For more, see Aid for subprime mortgage holders.

Go here for a partial list (by county) of New York not-for-profit organizations that are providing foreclosure prevention services. New York homeowners at risk of foreclosure are encouraged to contact an organization in their area to seek assistance.

ACORN Conducts Two-Hour Sit-In At Wachovia In Protest Against Loan Servicer's Alleged Unwillingness To Work Out Delinquent Mortgages

In San Francisco, California, Beyond Chron reports:
  • As families face foreclosure due to predatory lending and sub-prime mortgages, San Francisco ACORN went to Wachovia Bank yesterday with a simple goal: have the bank manager fax their list of demands to the company’s C.E.O. As the 4th largest bank in the Bay Area, Wachovia has repeatedly refused to work with families after brokering loans with incorrect incomes and balloon payments—risking the homes of those like Bayview resident Jackie Phillips.


  • Incredibly, the Manager of Wachovia Bank refused to fax Jackie Phillips’ letter to the C.E.O.—and instead called the police. For two hours, ACORN held a boisterous sit-in at the bank—even chanting “fax it and we’ll leave!” so the bank could get back to business.

For more, see ACORN Takes On Wachovia Bank.

See also: KPIX-TV Channel 5: SF Bank Under Siege By People Facing Foreclosure (read story) (watch video of the Wachovia sit-in).

Go here for raw video of the protest at the bank. World Savings

Maryland Attorney Cops Plea In Metropolitan Money Store Alleged Equity Stripping, Foreclosure Rescue Scam

The U.S. Attorney's Office for the District of Maryland announced yesterday:
  • Richard Allison, age 37, of Camp Springs, Maryland, an attorney and employee of the U.S. Census Bureau, pleaded guilty today to conspiracy to commit mail and wire fraud, in connection with a mortgage fraud scheme which falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

  • According to his plea agreement, Allison became employed by the Metropolitan Money Store located in Lanham, Maryland in December 2005. He provided legal services to: the Metropolitan Money Store, which offered foreclosure consultation and credit services to financially distressed homeowners; the Fordham & Fordham Investment Group, Ltd., a foreclosure consulting and credit servicing business based in Lanham and Greenbelt, Maryland; Burroughs & Smythe Financial Services, Inc., another foreclosure consulting and credit servicing business based in Lanham, Maryland; and several individual officers of the companies.

For more, see Lawyer Pleads Guilty In Metropolitan Money Store Mortgage Fraud Scheme (Conspired to Take Title of Homes from Financially Distressed Homeowners and Secretly Use Home Equity for Personal Benefit).

See also: The Washington Post: Lawyer Pleads Guilty in Metropolitan Money Store Scheme.

To read the original Federal indictment of the alleged perpetrators, see U.S. v. JoyJackson, et al. (available online courtesy of the consumer protection attorneys at The Holland Law Firm, P.C. and the Legg Law Firm).

Go here and go here for other posts on the alleged Metropolitan Money Store foreclosure rescue scam. joyjackson

Florida Firm Charged In 14th Civil Suit Brought By Illinois AG Against Foreclosure Rescue Operators

From the Illinois Attorney General's Office:
  • [Illinois Attorney General Lisa] Madigan filed suit [last week] in Cook County against Law & Associates LLC, and its managing member, Thomas E. Law, II, alleging the defendants violated the [Illinois] Mortgage Rescue Fraud Act and the [Illinois] Consumer Fraud and Deceptive Business Practices Act by falsely promising to help consumers save their homes after falling behind on their mortgage payments. According to the complaint, the defendants charged consumers up to $1,900 and promised to provide mortgage foreclosure rescue services that they either failed to perform the services or only performed ineffective services. Attorney General Madigan’s Consumer Fraud Bureau has directly received one complaint relating to the defendant and 68 complaints referred from the Better Business Bureau.(1)

For more, see Illinois AG Sues 14th Company For Mortgage Rescue Fraud (Madigan Alleges Florida Company Takes Advantage of Homeowners on the Verge of Losing their Homes to Foreclosure).

For other recent civil actions by other state attorneys general against Law & Associates, see:

(1) According to the Illinois AG's news release, Madigan’s suit asks the court to prohibit the defendants from engaging in mortgage rescue practices. The suit also seeks a civil penalty of $50,000, additional penalties of $50,000 for every violation found to have been committed with the intent to defraud, and a $10,000 penalty for each violation committed against a person 65 years or older. Further, the suit asks the court to rescind the contracts signed as a result of these deceptive practices and offer full restitution to affected consumers. Finally, Madigan’s suit asks the court to order the defendants to pay all costs associated with the investigation and prosecution of the lawsuit.

Ohio Man Gets Two Years For Duping Man Out Of Home

In Springfield, Ohio, the Springfield News Sun reports on how a local homeowner was duped out of his house by a scammer, with an assist from a phony title closing agent:
  • [T]he young man from Middletown who made an offer on [Patrick] Beckel's house, Dumond Henderson, was just one of many getting in on the action. The 27-year-old's scheme was a case study in mortgage fraud. By the time the Secret Service pieced it together, Henderson had duped Beckel out of his house, taken another man's identity and bilked a wholesale subprime lender out of $131,000.(1)

  • In 2007 Henderson pleaded guilty to a federal wire-fraud charge. Last June — the same month he turned 30 — he was sentenced in United States District Court to a two year prison term. Currently he is serving a 10-month sentence in a state penitentiary on an unrelated forgery charge.

For more, see Local homeowner duped in mortgage scam.

(1) According to the story, what Beckel didn't know was that the title agency handling the closing, Ultimate Resource Group, was fake, court records show. Henderson had set it up himself. The person posing as the title agent was just a friend of his.

Wednesday, September 03, 2008

Freddie Reminds Servicers To Cut Some Slack To Gustav Victims

In McLean, Virginia, Freddie Mac announces:
  • Freddie Mac today reminded its servicers of the disaster relief options available to borrowers with Freddie Mac-owned mortgages who were affected by Hurricane Gustav. [...] Servicers can offer relief under Freddie Mac guidelines to borrowers whose homes were damaged or destroyed, as well as borrowers who may be unable to make their mortgage payments because they were evacuated to avoid the storm. Servicers should assess each case individually to determine if relief is warranted and which option best fits the homeowner's circumstances.

  • In addition, Freddie Mac gives servicers the discretion to reduce or suspend mortgage payments or foreclosure proceedings for up to 12 months for borrowers with Freddie Mac-owned mortgages in federally declared major-disaster areas where individual assistance was provided.

For more, see Freddie Mac Extends Mortgage Relief To Borrowers Affected By Hurricane Gustav.

HUD Declares Foreclosure Moratorium On FHA-Insured Mortgages On Homes In Southern, Central Louisiana

From the U.S. Department of Housing & Urban Development:

  • U.S. Housing and Urban Development Secretary Steve Preston today announced a foreclosure moratorium in 34 parishes throughout Southern and Central Louisiana and offered support to homeowners and low-income renters forced from their homes following Hurricane Gustav. This foreclosure relief will help families living in presidentially declared disaster areas whose damaged homes are insured through the Federal Housing Administration (FHA).


  • In addition, HUD is strongly recommending that loan servicers take such actions as special forbearance, loan modification, refinancing, and waiver of late charges.

For more, see Preston Announces Disaster Assistance For Lousiana (Foreclosure protection offered to displaced families in 34 Parishes).

Fund Seeks $5B To Take Advantage Of Fire Sales Of Junk MBS

Bloomberg News reports:
  • Pacific Investment Management Co., the biggest manager of bond funds, is seeking as much as $5 billion to buy mortgage-backed debt that plunged in value after the subprime market collapsed, according to two investors with knowledge of the matter.


  • "There's a handful of firms out there, Pimco being one of them, that are well-positioned to deal with this credit crisis and the fire sales going on in mortgage-backed securities,'' Geoff Bobroff, a mutual-fund consultant in East Greenwich, Rhode Island, said in an interview.

For more, see Pimco Seeks as Much as $5 Billion for Distressed Debt.

Chicago-Area Sheriff's Office To Safeguard Against Illegal Foreclosure Evictions By Implementing New Procedure

In Cook County, Illinois, the Daily Herald reports:
  • [A]bout 40 to 45 Cook County Sheriff's deputies are learning a new eviction procedure that should at least give innocent tenants a few weeks to make a more orderly transition to new digs, said Kevin G. Connelly, first assistant chief deputy for sheriff Tom Dart.


  • By law, the sheriff can evict only people whose names are on the order.(1) If deputies find a tenant in the building who can show proof of residency - a driver's license, a lease, or even a piece of mail - the sheriff won't evict them if they're not named in the court order. Instead, the sheriff's office tells the mortgage company the name of the tenant and the company must then go back to a judge to try to get the judge to add the tenant to the eviction notice.


  • To provide a little more notice, sheriff's deputies will begin posting eviction notices, starting [this week], at rental property a week in advance. The notice will tell tenants that if they're not listed in the order, they can forestall eviction by getting proof of residency to the sheriff before the eviction date. Given the slow pace of the courts, adding those new names to the eviction notice means tenants will have some time to either get legal representation or arrange for new housing. "You're talking a couple of months," said Connelly, who noted that this still means tenants will eventually be forced out, just not without notice and not without a few weeks to make future arrangements.

For the story, see New rules gives tenants of foreclosed buildings some breathing room.

For a story on the problem of illegal foreclosure evictions in Cook County, Illinois, see The Chicago Reporter: A Renter's Nightmare.

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

(1) In a case involving a family of six, I wonder if all six occupants (including any minor children) need to be named in the order. Or in the case of a 4-unit foreclosed home averaging 3 occupants per unit, do all 12 occupants need to be named in the eviction order? TenantRentSkimmingAlpha

Arizona Foreclosure Glut Good News For "Coyotes" Seeking Drophouses For Human Smuggling Operations

The Arizona Republic reports:
  • [T]he largest concentrations of Valley drophouses(1) are in the same west Phoenix and Mesa neighborhoods that have the largest share of foreclosures, a comparison of drophouse and foreclosure data shows. In addition, of the 41 Valley drophouses investigated for violence in the past year, 12, or nearly 30 percent, were in foreclosure when they were raided. The patterns show that wherever homeowners are in financial distress, "coyotes"(2) are probably lurking.


  • Investigators say they have seen an increasing connection between drophouses and foreclosures in the past year. A year ago, they noticed a small flurry of drophouses in newer subdivisions on the outskirts of the Valley. These were the same areas where buyers were getting overextended and beginning to lose their homes. More recently, foreclosures and drophouses have been showing up in higher concentrations in traditional urban immigrant neighborhoods, such as Maryvale and Mesa.

  • Landlords have repeated the same story to federal agents and Phoenix detectives: They rushed to rent their homes to be able to make mortgage payments and stave off foreclosure. As households slip into deeper financial distress, more properties will be rented as a place to keep illegal immigrants, drophouse investigators say.

For more, see Foreclosed homes are drophouse favorites (Desperate owners duped by easy rent).

In a related story in The Arizona Republic, see Drophouse landlords are rarely prosecuted:

  • Knowingly renting to human smugglers is a federal crime, and guilty landlords can have their houses seized. But in Arizona, U.S. Immigration and Customs Enforcement has not seized a single property or referred any landlord for prosecution.
(1) A house used by those who smuggle illegal aliens into the country to temporarily stash their human cargo until their "smuggling fee" is paid.
(2) A smuggler of illegal aliens.

Pennsylvania Man Claims Homelessness After Allegedly Paying $57K For Undelivered Modular Home

In Wayne County, Pennsylvania, The Scranton Times Tribune reports:
  • When Michael Agolia vowed to continue picketing Wyoming Homes until “I get my money back,” he wasn’t joking. Today is Mr. Agolia’s 100th day protesting outside the Wyoming Homes office on Route 6 in Texas Twp., Wayne County. Wyoming Homes Inc. owner David D. Valenti, 55, [...] , turned himself in earlier this month on charges of forgery, theft by deception and theft by failure to make required disposition of funds. Mr. Agolia claims he was left homeless after allegedly paying Mr. Valenti $57,140 for a modular home he never received.

For the story, see Local man continues picketing for justice (last story on page).

Tuesday, September 02, 2008

Using "Straw Buyers" In Short Sales As A Way To Lower House Payments A New Way To Screw Lenders? Local DA Says The Crime Has Low Priority

In Southern California, this excerpt buried in a recent story in The Press Enterprise reports on what may be a new scam that may be taking hold to screw lenders holding mortgages on "upside down" homes(1):
  • In another scam on lenders, homeowners have been lowering their mortgage payments by arranging fraudulent "short sales" at prices less than what they owe their lenders.(2) The buyer whom the seller chooses, who may be a relative or friend or a "straw buyer" paid for his service, agrees to transfer ownership back to the seller, who winds up with a smaller mortgage on the same house and never has to move. In such a short sale, the seller commits fraud by having a side arrangement with the buyer that he does not disclose to the lender.


  • A borrower who takes part in one of these scams can be sued by the lender or criminally prosecuted. The real estate agent involved can be prosecuted and lose his or her license.(3)


  • However, neither the lending industry nor law enforcement has aggressively punished such offenders. Larry Roberts, who leads the real estate fraud unit of the San Bernardino County district attorney's office, said lying on a mortgage application is a prosecutable crime, but it has low priority. He said the office is more eager to prosecute scammers who profit by deceiving consumers into believing they can help them avoid foreclosure than it is in catching consumers who defraud a lender with the intention of buying or keeping a home.(4)

For more, see Homeowner fraud exacerbates mortgage crisis.

(1) Homes having a current value that is less than the current balance owed on the existing mortgage loans.

(2) According to the story, a local lawyer who specializes in recovering losses from mortgage fraud for lenders, estimated that one-quarter of the "short sales" in this market would fail to meet the criteria of arm's-length transactions.

(3) According to the story, real estate agents and brokers can be held liable, said John Giardinelli, a lawyer who represents nine Southern California real estate associations. Reportedly, Joe Cusamano, broker/owner of Pro-One Investments in Riverside and president-elect of the Inland Valley Association of Realtors, said he knows he has clients who have lied to lenders to "buy and bail" and done short sales between parents and children. He said he tells them what the law requires but still works with them because he believes they are good people caught in a collapsing market who are not getting sufficient help from either lenders or the federal government.

(4) Reportedly, wrongdoers might be further insulated by California law, which, according to the story, greatly restricts a lender's ability to sue borrowers to collect the money they've lost in a foreclosure or short sale (ie. obtaining deficiency judgments).

Final Suspect In Home Improvement/Mortgage Scam Resulting In Ripped Off Home Equity Involving 130 Loans & $13M Convicted By Florida Jury

From the Florida Attorney General's Office:
  • Attorney General Bill McCollum [last week] announced that the final participant in a multi-million dollar mortgage fraud scheme has been convicted by a Polk County jury after only 45 minutes of deliberation. Samuel Green faces up to 60 years in prison for his role in the scheme which spanned more than two years and involved loans in Hillsborough, Lee, Pinellas and Polk counties.


  • The three-year investigation began when victims filed complaints about incomplete or substandard construction work being performed by construction companies affiliated with co-defendant Scott Almeida.(1) Almeida and his associates secured mortgages for homeowners to finance the home repair projects by submitting fraudulent documents to Argent Mortgage Company. Co-defendant Orson Benn,(2) as vice president of Argent, approved or oversaw the approval of the fraudulent loan applications. Green also worked for Argent as an account manager and a regional production manager and assisted with the approval of the loans.

  • Investigators followed the trail of fraudulent applications back to the organized criminal operation which submitted nearly 130 loans to Argent that were funded for approximately $13 million.(3)

For more, see Participant in $13 Million Mortgage Fraud Scheme Convicted by Polk County Jury.

Go here for links to earlier media reports on this story.

(1) Almeida pleaded guilty last October and will serve 10 years in prison for the crimes he committed. He received statewide publicity in the recent Miami Herald investigative report on convicted felons running rampant in the Florida mortgage origination industry.

(2) Benn was convicted by a jury in July; and was sentenced in September to 18 years in prison.

(3) Co-defendants Frank Giffone, Adrienne White and Bradford Peck have all pleaded guilty to similar charges; Giffone and White will be sentenced at a later date and Peck was previously sentenced to eight years in prison. Green will be sentenced in October.

Rhode Island Closing Attorney Disbarred For Pocketing $2.5M+ In Loan Proceeds From Real Estate Transactions; Matter Referred To Law Enforcement

In Providence, Rhode Island, The Providence Journal reports:
  • A Cranston lawyer who handles real-estate closings has admitted to stealing more than $2.5 million from homeowners who were refinancing or buying new homes, the state’s chief disciplinary counsel said yesterday. The Rhode Island Supreme Court disbarred lawyer Pasquale A. Scavitti III on Wednesday, less than half an hour after his lawyer disclosed that Scavitti had stolen money from a total of 12 homeowners — in amounts ranging from $80,341 to $490,290, said David D. Curtin, the Supreme Court’s chief disciplinary counsel.

  • Scavitti, 46, of Cranston, has not been charged with a crime, his lawyers said. But Curtin said he has contacted the state police and the attorney general’s office, providing them with a package of information about Scavitti.


  • The money came from 12 homeowners and involved 13 transactions, Curtin said. Most of those homeowners are Rhode Islanders, and most of the transactions involved mortgage refinancing, he said. Curtin declined to identify the homeowners, saying he had not contacted all of them yet.


For more, see Lawyer admits taking $2.5 million from clients.

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


If a Rhode Island attorney, in the course of representing you, screws you out of money or property through dishonest conduct, go to the Rhode Island Bar Association Lawyer's Fund For Client Reimbursement for more information.

For other states and Canada, see:

Bankruptcy Court Disallows Creditor Claim, Voids Mortgage Lien Due To Lender's Screw Up In Establishing Chain Of Title

On the Bankruptcy Law Network blog, Massachusetts attorney L. Jed Berliner comments on a 2006 case in which a bankruptcy judge disallowed a mortgage lender's secured claim for a loan it held and voided the lien of the mortgage:
  • Foreclosures are being stopped because the purported mortgage holder cannot prove it holds rights to the mortgage. Those cases do not remove the mortgage entirely, but only stop the foreclosure. More can be done.

  • Section 506(d) of the Bankruptcy Code will permanently void a mortgage [lien](1) if the claim is disallowed. This can be easier than you think. With so many mortgages being sold and resold, the electronic transfer of the funds moves much faster than the papers. Sometimes the paperwork is never completed.

  • In In re Long, 353 B.R. 1 (Bankr D MA 2006) (Somma, J.), the bankruptcy court permanently voided a mortgage where the holder could not prove it held rights to the mortgage.(2)

Source: Missing Assignment Voids Mortgage.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here, and Go Here.

(1) In contrast to voiding the actual debt secured by the mortgage lien.

(2) According to the bankruptcy judge hearing the case, the existence of two critical gaps in the mortgage loan's chain of title from the initial mortgage holder to the last mortgage holder was fatal to the secured creditor's bankruptcy claim (See: In re Long, 353 B.R. at 16-17):

  • Portfolio contends that it holds title by virtue of two assignments: the first from Astrum to Union Mortgage Company, and the second from Resolution GGF OY “as successor in interest to Union Mortgage Company” to Portfolio. The first assignment has been well established: the assignment from Astrum to Union Mortgage Company, having been made and signed by Astrum itself, appears to be valid and in order.

  • The second assignment, however, was not executed by Union Mortgage Company, the assignee under the first mortgage. Rather, it was executed by “Foremost Servicing Company, Inc., by Power of Attorney for Resolution GGF OY, Successor in Interest to Union Mortgage Company, Inc.”

  • The assignment is effective only if (1) Resolution GGF OY was in fact the successor in interest to Union Mortgage Company with respect to ownership of the promissory note and mortgage and (2) Foremost Servicing Company, Inc. held a valid power of attorney for Resolution GGF OY.

  • The assignment itself is not evidence that either of these necessary conditions was satisfied when the assignment was executed. (my emphasis added) Proof that these conditions were satisfied requires evidence extraneous to the assignment. Portfolio submitted no such evidence either with the proof of claim or at the evidentiary hearing.22

  • Hence, there are two critical gaps in the Portfolio’s proof that it holds title (my emphasis added). In view of these gaps, I conclude that the Debtor has rebutted the prima facie evidence of the proof of claim, that the burden of proof was thereby shifted to Portfolio to prove that it is the holder by assignment of the promissory note and mortgage, and that Portfolio has failed to carry this burden. Portfolio has failed to establish that it is the holder by assignment of the second mortgage. The Debtor’s objection to the secured claim of Portfolio must therefore be sustained, the claim disallowed, and, in accordance with 11 U.S.C. §506(d),23 the mortgage declared void. missing mortgage foreclosure docs gamma

Monday, September 01, 2008

Foreclosure Defense Law Seminars Coming To Miami, Cleveland

In Miami, Florida, The Florida Bar News reports:
  • April Charney, a Jacksonville Area Legal Aid lawyer and nationally recognized foreclosure defense expert, is the featured speaker at a September 12 seminar in Miami---designed for all attorneys interested in learning how to handle defense of foreclosure cases. [...] Registration for the seminar begins at 8:30 a.m., and the seminar begins at 9 a.m. on Friday, September 12, at the Dade County Courthouse, Courtroom TBA, 73 W. Flagler Street, Miami.

Topics include:

  1. Federal laws that govern mortgage originating and servicing;
  2. Laws and regulations that govern mortgage lending and servicing;
  3. Understanding loan documents, origination, and closing process;
  4. Servicing problems and post origination issues;
  5. Common law/state law causes of action and affirmative defenses;
  6. Drafting discovery/motion practice.

For details and contact information, see Defending Foreclosures in Florida.


In Cleveland, Ohio, the Institute for Foreclosure Legal Assistance has their mortgage foreclosure defense Intensive Training Session scheduled for September 4, 2008 at Cleveland Marriott Downtown at Key Center, 127 Public Square, Cleveland.

This session coincides with the National Association of Consumer Advocates' 2008 Mortgage Lending Litigation Conference on September 5-7, to be held at the same location in Cleveland. Go here for the Beginning Track Agenda, and go here for the Advanced Track Agenda.

Elderly Facing Foreclosure Rely On Housing Non-Profits To Save Homes

Two recent stories report on the efforts of community housing non-profit groups to help the elderly save their homes from foreclosure:

1) In Irvington, New Jersey, The Star Ledger reports on the efforts of one group to help 83-year old Annie Anderson from losing her home of 30 years after it was sold at a foreclosure sale and the local sheriff's office showed up at her front door to evict her:

  • CDC Properties, an affiliate of First Baptist Community Development Corporation, has a housing recovery initiative that helps families facing foreclosure. Under the program, CDC Properties will make an offer to buy Anderson's home, then rent it back to her or sell it to her when she qualifies for a mortgage. The Rev. DeForest "Buster" Soaries Jr., senior pastor of First Baptist Church of Lincoln Gardens, said Anderson's case needs to be investigated to determine if there was fraud. "Somebody got over on Mrs. Anderson," said Soaries, who also is chairman of CDC Properties.

For more, see A pillar of town gets vital support.

2) In Columbus, Ohio, NBC 4 reports:

  • [I]t isn't much of a house to look at on the outside, but inside, it's Oneida Street's home. It has been since 1959 and she's hoping to keep it that way. However, she is in the middle of a foreclosure. [...] For more than 80 years, she's been playing the organ for her Methodist church, saying it keeps her going. At an age when most people would have their home paid off, she's still making payments. There has been a series of bad loans, unemployment and the dead and cancer bills of her late husband, all of which has had her paying a mortgage for nearly half a century. Recently, Street got in touch with the Columbus Housing Partnership, which has helped her reduce her payments.

For more, see Local Resident Depends On Group To Keep Her Home.

Rochester Considers Selling Delinquent Tax Liens In Response To Slow Revenue Collections

In Rochester, New York, the Rochester Democrat & Chronicle reports:
  • More than $20 million in delinquent city property tax liens could be sold to a private firm later this year — not uncommon for governments locally and elsewhere but a first for Rochester. The bulk sale of tax liens is the city's latest attempt to raise cash by selling off assets. Mayor Robert Duffy has said such actions are necessary, though not preferable, given tough budget times.


  • Several council members remain uncertain. Others in the community are skeptical. "The devil is always in the details," said Ruhi Maker, senior attorney with the Empire Justice Center in Rochester. "I would be deeply disturbed. Why such a program, particularly right now with the crest of the foreclosure crisis about to hit us?"
For more, see Rochester split on selling delinquent tax liens.

Property Tax Assessor Takes Heat From City Officials Claiming To Be Blindsided By Lower Than Expected Tax Revenue

In California, Contra Costa (County) Times reports:
  • Contra Costa cities hardest hit by the foreclosure crisis say the county assessor has made their fiscal situations worse with wholesale downgrades of property values. Just doing my job, says Gus Kramer. The outspoken elected official tasked with adjusting homes' assessed values has been confronted by three East County leaders questioning what they see as overly aggressive slashing of property values.


  • Kramer met with Antioch, Brentwood and Oakley city leaders in early July. They said that they were blindsided by lower than anticipated property tax revenue.

For more, see County assessor takes heat for downgrades.

Wisconsin Court Rules Against Home Improvement Company For Violations Of State Consumer Protection Laws

The Wisconsin Attorney General's Office announced last month:

  • The Wisconsin Department of Justice ("DOJ") obtained a judgment on Tuesday holding Middleton company, Asphalt Specialists, L.L.C., and its owner Jace McDonald liable for violating state consumer protection laws. The defendants provide various home improvement services including asphalt and cement paving, deck sealing and gutter cleaning. After an investigation and referral by the Wisconsin Department of Agriculture, Trade and Consumer Protection, DOJ filed suit against the defendants in October, 2007.(1)

For the press release, see Middleton Company Violated State Consumer Protection Laws, Court Rules.

(1) According to the press release, the lawsuit alleged that the company, under the direction of McDonald engaged in misleading and deceptive behavior to solicit home improvement services and then failed to comply with state home improvement laws in conducting services by, among other things:

  • failing to provide home improvement contracts;
  • substituting products or materials used in conducting its services;
  • misrepresenting it was licensed and bonded to conduct work;
  • failing to provide customers with lien waivers following payment; and
  • deceptively advertising its services by promoting gift cards that the company failed to honor.

Sunday, August 31, 2008

Slow Sales Force Massachusetts Condo Developers To Let Customers "Test Drive" Units Thru "Rent/Option To Buy" Arrangements To Unload Excess Inventory

In Massachusetts, The Boston Globe reports:
  • The Carruth, a mix of affordable apartments and market-rate condominiums in Dorchester, opened earlier this year, as the market for condos had turned sharply downward. Sales of the 42 condos in the building languished, with only three sold to date. So, developer Trinity Financial Inc. of Boston decided to offer the units as a variation of rent-to-own - leases with an option to purchase at a potential discount.(1) "We've had great success with it so far," said Abby Goldenfarb, project manager for the developer, noting that nearly all of the 20 new renters have signed up for the purchase option.


  • Economic Development Financing Corp., also known by its initials EDFC, is using rent-to-own(2) in three projects now under development. They are the 82-unit downtown Brockton Renaissance Village on the site of two former shoe factories; a downtown Worcester development with more than 150 units on South Main Street; and the 275-unit Residences at Riverview in Mattapan, next to the Massachusetts Bay Transportation Authority's Mattapan station.

For more, including some of the pros and cons of rent-to-own arrangements, see In slow market, developers offer 'test drive' of condos (Rent-to-own results can be mixed, but backers point to filled units and buyers' rebuilt credit).

(1) The Carruth has reportedly advertised its rent-to-own units as "test drives."

(2) According to the story, the deals offered by both Trinity Financial and EDFC are not pure rent-to-own. Renters are not legally bound to purchase, and portions of the rent are not earmarked for down payments. At the Carruth and the EDFC projects, the arrangements are that renters have the option to purchase their units later at a pre-determined price.

Lenders May Be Choking On Foreclosures As Some Homeowners Admit To Stiffing Lenders For 6-8 Months Without Receiving Default Notice

In Southern California, North County Times reports:
  • Some homeowners in the area have gone months without paying their mortgages and have yet to receive a foreclosure notice ---- a development that suggests banks are overloaded and that also might mean foreclosure reports are understating the region's housing crisis.


  • Several homeowners in the area interviewed last week said that they stopped paying their mortgages six to eight months ago and still have not received a notice of default, which typically comes by the fourth month of nonpayment.

For more, see Banks waiting longer to foreclose (Homeowners report not paying mortgages for eight months with no foreclosure).

Home Sold Out From Under Owner Due To Loan Servicer Screw-Up; Channel 5 ConsumerWatch Comes To Rescue

In Pleasanton, California, KPIX-TV Channel 5 reports:
  • Friday would have been more than the start of a holiday weekend for Martha De Jesus and her three kids. "I was going to be homeless," De Jesus said. "I was going to have to put my kids in different homes." Her home was sold out from under her because of a mortgage mix-up. De Jesus had an automatic mortgage pay, but when Wells Fargo Bank switched mortgage sites in the summer of 2007, De Jesus says she didn't receive a notification. She assumed her mortgages were coming out of her account as they always had. "I discovered while I was Christmas shopping that in my statement my account looked a little bigger. I called Wells Fargo," said De Jesus. But it was too late. "It consisted of months of re-faxing, of calling," said De Jesus.


  • De Jesus called CBS5 ConsumerWatch, which called Wells Fargo. "I saw results in one or two days, in contrast to seven months," said De Jesus.Wells Fargo told ConsumerWatch that they would rescind the sale, and, in a statement, said, "In reviewing the documents she provided us just prior to the foreclosure sale, we have been able to identify a loan payment solution that would allow her to remain in the property."

For more, see Mix-Up Nearly Costs Pleasanton Family Their Home (read story) (watch video).

California Tenants In Foreclosed Homes Now Get To Live Free For 60 Days After Sale While Looking For Another Rental

For tenants in California, a blurb buried at the end of a recent article in the Visalia Times Delta serves as a reminder on a new state law protecting tenants in foreclosed homes:
  • [A] new state law, however, gives renters 60 days after a foreclosure sale to move out. During that time, tenants are not required to pay rent and landlords have no right to ask for it, said Suzanne Swenk, a supervising attorney with the Visalia-based Central California Legal Services, which advises low-income tenants in rental disputes.

California tenants are well advised to research the local ordinances of their cities or towns to determine if those ordinances give even greter protections than the new state law.(1)

For the story, see Renters rocked by foreclosure evictions (Landlords who default on mortgages leave tenants without homes).

(1) For example, reportedly under San Francisco laws, foreclosure is not grounds for a tenant eviction in building covered by the local rent control law. Unless tenants have stopped paying rent or otherwise have misbehaved, generally a tenant in a rent-controlled building can be forced out only when a new owner plans to demolish the property, has secured the necessary approvals to convert into it condominiums or plans to move in family members or him or herself, according to the city's rent ordinance. Even then, the owner typically must provide several months' notice and thousands of dollars in relocation costs. For more, see San Francisco Chronicle: Foreclosure's hidden victims. TenantRentSkimmingAlpha

Anxious Seller Tries "Rent To Own" Approach To Unload Home; Ends Up Getting Stiffed & Now Faces Foreclosure With Trashed House

In Springfield, Massachusetts, WGGB-TV Channel 40 reports:
  • Finding a buyer in this housing market is tough. So Springfield homeowner Rosemarie Rosado decided to try a rent-to-own approach. [...] She took the appropriate steps and drew up a legal agreement. For about six months the buyers paid their monthly fee. That stopped three months ago. Rosemarie had no choice but to evict the family. When she got inside her home again she found it trashed. [...] Rosemarie is now facing foreclosure again.

For more, see Rent To Own To Foreclosure (read story) (watch video).