Saturday, September 20, 2008

White House Press Secretary Dodges "Homelessness" As Unpaid Tax Bill Paid At 11th Hour; Foreclosure Called Off; Loan Servicer Escrow Screw Up Blamed

In Washington, D.C., FOXNews reports:
  • President Bush's press secretary has narrowly escaped homelessness after the District of Columbia declined to put her house on the auction block following her payment of a delinquent tax bill.

  • Dana Perino's house on Capitol Hill was to be "sold at public auction to the highest bidder" next week, The Washington Post reported Thursday. Perino was first alerted by the Post in August that her home was listed as ripe for sale by the city's Office of Tax and Revenue.

  • Perino told the Post that her mortgage company pays the city's property taxes, but "it was a mistake" that they hadn't paid the tab. The $1,921.86 bill was paid on Aug. 25, but as of this week the city still has Perino listed as owing $2,858.89 in back taxes. She told FOX News that the matter has been cleared up. "Both the mortgage company and the DC government have apologized to me for the inconvenience. There is no delinquency in my property taxes," Perino said.

Source: White House Press Secretary Avoids Foreclosure on D.C. Home.

Click here to read The Washington Post article on Perino's close call with foreclosure (Democratic political hotshot - and cable TV political talking head - Hilary Rosen reportedly also appeared on an official District of Columbia's Office of Tax and Revenue list published in The Washington Post on Aug. 21 citing D.C. residents who had failed to pay their property taxes and risked foreclosure).

Suspicious Transactions Under Investigation By Colorado State Regulators

In Colorado Springs, Colorado, The Gazette reports:
  • Belinda Gardner thought it was too good to be true when a mortgage broker offered to pay her $20,000 if she would buy a new house on Fossil Butte Drive in northeast Colorado Springs and promise to live in it, even though she had no intention of moving. But $20,000 was too much money to pass up, so Gardner, who works as a hospital customer service representative, went along while the broker - she says she doesn't remember his name - arranged financing for the $379,900 house.

  • Her younger sister, Katina Scott, also realized it was probably too sweet a deal when the same broker convinced her to buy the new house next door for $396,900.

  • Turns out, both deals were too good to be true. Gardner's house is headed to foreclosure and Scott already has lost her house. Both would simply be statistics in the national mortgage meltdown except for the keen eye of Pete Preston, executive director of Mortgage Solutions of Colorado. His company processed Scott's loan in April and when her paperwork later landed on his desk in a routine audit, Preston recognized something was wrong and started digging.

For more, see State probes Fossil Butte Drive mortgage-fraud allegations.

7-Year Old Says He's "A Homeless Hobo" As Grandmother, 5 Grandkids Victimized By Rent Skimming Landlord Facing Foreclosure

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • While banks are hit hard by home loans that are defaulted, innocent and unknowing renters can also get drawn in to the trouble. One local woman found out the hard way and now she and her family have to find a new place to live. Marlina Pearce rented her home for the last three years. But the bank is taking it over because the homeowner didn't pay the mortgage. The sad part is, this couldn't come at a worst time and she can't do anything about it but pack up and leave.

  • "We're going to be losing everything -- everything is going to be different," said Pearce. She's the latest victim of the growing foreclosure crisis in the valley. [...] Her biggest dilemma is how to care for her five grandchildren she's in the process of adopting, "He's seven and he's telling people he's a homeless hobo now."

For more, see Grandmother, 5 Grandchildren Evicted.

"Innocent Bystander" A Victim Of Abandoned Foreclosures

In Miami, Florida, the Daily Business Review reports:
  • The fresh painted façade of Paula Swink’s new Miami home stands out in a working class neighborhood scarred by abandoned homes. The two-story house next door has no windows and no doors. A mattress blocked the doorway on a recent evening. A yellow house across the street had the windows boarded up; overgrown grass covered the front yard. The shell of what used to be a blue wooden-frame house rises just behind her back yard. Years of neglect had corroded the old house’s windows, doors and roof supports.

  • Swink hopes the emergency funds that Congress approved recently to help stabilize neighborhoods pock-mocked with foreclosures and abandoned homes will help rid her street from those crime-breeding grounds.

For the rest of the story, see Foreclosures: Homeowners waiting for relief.

Exotic Pets No Strangers To Foreclosure, Eviction Woes

In South Florida, the South Florida Sun Sentinel reports:
  • They are among the new homeless of South Florida: Parrots, potbellied pigs, horses, snakes and tarantulas. As the economy sags, animal abandonment cases are on the rise and exotic pets are no exception.


  • Bob Freer, co-founder of the Everglades Outpost wildlife refuge near Florida City, finds all kinds of animals left outside his door. Recent drop-offs include a giant macaw in a cage with no note, a monkey from Madagascar and a domestic shorthair kitten. Last year, Freer got a call from a landlord in Florida City who discovered two snakes and a baby alligator left behind by a tenant.

For more, see Economy's no picnic for exotic pets either; pigs, snakes among homeless (Financial troubles force many to give animals up).

Friday, September 19, 2008

Maryland Feds Bag 2nd Guilty Plea In Alleged "Money Store" Foreclosure Rescue Scam

In Greenbelt, Maryland, The Washington Post reports:
  • A Lanham man pleaded guilty yesterday to participating in a scheme to defraud people who faced losing their homes because they were behind in their mortgage payments. Clifford McCall, 47, was the president of a financial services firm that prosecutors say aided in the fraud orchestrated by Metropolitan Money Store, a Maryland corporation that did business in the District, Maryland and Virginia. McCall, appearing yesterday in federal court in Greenbelt, pleaded guilty to one count of conspiracy to commit mail and wire fraud.


  • McCall is one of nine people charged in the case and the second to plead guilty since the indictments were announced in June. [...] The unsealed portion of the plea documents does not indicate whether McCall is obligated to cooperate with investigators against the remaining defendants, including McCall's wife, Jennifer McCall, and a daughter, Chandra Jones. Both have pleaded not guilty, as have the other five defendants awaiting trial, including JoyJackson and Kurt Fordham, the husband and wife alleged to have masterminded the scheme.

For more, see Man Pleads Guilty To Fraud Charge in Foreclosure Scheme.

See also:

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

Toledo Non-Profit Helps Homeowner In Foreclosure Save Home; Negotiates 80%+ Loan Reduction, Obtains $5K Grant

In Toledo, Ohio, the Toledo Blade reports:
  • Timothy and Michelle Moll had been happily settled into their remodeled house in Toledo's old south end for nearly a decade when misfortune struck. [...] The couple fell behind in mortgage payments, and were facing the loss of their house.

  • But then, the Fair Housing Center of Toledo tossed them a rescue line. Personnel there convinced the Molls' lender to reduce the couple's loan balance to $10,000 from $55,000. That done, the Fair Housing Center helped them find $10,000 in financing, including a $5,000 grant from a Lucas County foreclosure prevention program established with state anti-poverty funds. The couple's monthly mortgage payments have been cut from $1,275 to $245.

For more, see Local housing agency fighting foreclosure wave with loan funds.

Study: 98% Of Loan Mods Reviewed Resulted In No Reduction In Principal Balance; No Monthly Payment Reduction In Nearly 50%

In Washington, D.C., Financial Week reports:
  • Mindful that the foreclosure crisis may be at the root of Wall Street’s meltdown, the House Financial Services Committee today reviewed new evidence that the housing industry’s efforts to modify struggling homeowners’ mortgages aren’t working. An academic study by Valparaiso University law professor Alan M. White, a member of the Federal Reserve Board’s consumer advisory council, found that banks working with distressed homeowners to modify their mortgages had failed to reduce the principal balance in 98% of the 4,300 cases studied. Nearly half the loan modifications did not even reduce the monthly payment amount.

For more, see Mortgage modification programs have failed, lawmakers say.

Professor White's prepared statement to House Committee on Financial Services.

Pastor, Mortgage Broker-Wife Charged In Alleged Treasure Coast Flipping Scam Leaving Straw Buyers Holding The Bag

In Martin County, Florida, TC Palm reports:
  • A locally well-known pastor and radio show host and his mortgage broker wife, who used their positions to lure investors into questionable real estate purchases under the guise of an “investment” scheme, were arrested Tuesday. Rodney and Shalonda McGill of Jensen Beach are being held in the Martin County Jail pending the posting of bail of $1.4 million each.(1)


  • [Department of Financial Services (DFS), Division of Insurance Fraud Detective Ted] Padich said that McGill used his radio show to lure in potential investors. [...] The McGills purchased land in Martin and St. Lucie County, then induced “investors” to purchase the lands at inflated prices, Padich said. “This let them walk away with the equity in the property and left the ‘straw’ investors as we call them, holding land they could not sell.” In all, the investors had $1.115 million dollars in mortgages which they could not pay.

For more, see Martin County pastor and wife charged in real estate investment scam.

See also, WPBF-TV Channel 25: Pastor, Wife Arrested In Mortgage Fraud Scam (State Authorities Say Couple Duped Buyers, Drained Equity On Real Estate).

(1) According to the story, the McGills face charges of racketeering, conspiracy to commit racketeering, first degree grand theft and obtaining a mortgage by false representation by the Statewide Prosecutors Office in West Palm Beach. The investigation was conducted by Detective Ted Padich of the Department of Financial Services(DFS), Division of Insurance Fraud.

Missouri Man Gets 5+ Years In Scam Involving 23 Fraudulent Loans Totaling $5M+

In Kansas City, Missouri, the Kansas City Business Journal reports:
  • A Lee’s Summit man was sentenced [last] Friday in federal court in Kansas City to five years and three months in prison without parole for his role in a $5 million mortgage-fraud conspiracy. District Judge Gary Fenner sentenced Eric Kendall Taylor, 37, and ordered him to pay $1.4 million in restitution, John Wood, U.S. Attorney for the Western District of Missouri, said in a release.

  • Taylor pleaded guilty Aug. 25, 2006, to conspiracy and money laundering. He was in business as an investor in residential properties in Kansas City and Lee’s Summit, using the business name C and K Co. to create false second mortgages on properties and get loan proceeds, Wood’s release said. [...] Between the summer of 1999 and Sept. 23, 2005, mortgage lenders approved 23 fraudulent loans totaling almost $5.16 million.

For more, see Lee’s Summit man gets five years for mortgage fraud.

Atlanta Man Gets 3+ Years In Visa Fraud, House Flipping Scam

In Atlanta, Georgia, the Atlanta Business Chronicle reports:
  • An Atlanta man will go to federal prison for fraudulently applying for work visas for more than 70 people and using the proceeds from the visa fraud scheme to fund a separate mortgage fraud ring. Suren Agadzhanov, 42, of Atlanta, was sentenced late [last] Thursday to three years and 10 months in federal prison followed by five years of supervised release.


  • As the federal agencies began to uncover Agadzhanov’s visa fraud scheme, his sham applications were rejected. Eventually, Agadzhanov got out of the visa fraud business and started investing the proceeds from that fraud in Atlanta residential real estate. Typically, Agadzhanov would find a property in foreclosure, buy it, and then flip the house to one of his visa clients at an inflated price. That buyer would never move in and the house would quickly fall back into foreclosure.

For more, see Visa and mortgage fraud scam lands Atlantan in federal prison.

Thursday, September 18, 2008

Florida AG Files Civil Suit Alleging Straw Buyer Scam Involving At Least 60 Homes, $37M+ In Fraudulently Obtained Mortgages

In Orlando, Florida, the St. Petersburg Times reports:

  • The Florida Attorney General's Office [yesterday] sued 10 companies and 15 individuals for their alleged roles in a major mortgage fraud scheme first reported by the St. Petersburg Times last year. In number of defendants, the case may be the largest mortgage fraud case ever filed in the United States, the office said.

  • According to the lawsuit filed in Orlando, the ring obtained more than $37-million in mortgages for at least 60 home purchases and siphoned off more than $6-million of the proceeds for their own use. Approximately 50 of the houses later went into foreclosure. [...] A criminal investigation of the alleged fraud ring is also underway.

For more, see Florida attorney general sues 25, claiming mortgage fraud.

For the 2007 story in the St. Petersburg Times, see Unsigned letter accuses agent of mortgage fraud (Real estate agent says it may be a rival using smear tactics).

From the Florida AG's Office:

Florida State Investigators: "Bad Brokers Ran Wild"

In Tallahassee, Florida, The Miami Herald reports:
  • In a stinging critique of the state's oversight of the mortgage industry, top Florida investigators found that state regulators failed to alert police agencies to crooked mortgage brokerages, ignored citizen complaints and allowed hundreds of people with criminal histories to peddle loans.


  • The six-week probe was prompted by a Miami Herald series, Borrowers Betrayed, that found sweeping breakdowns in the state enforcement system, including the licensing of thousands of criminals, including money launderers, racketeers and cocaine traffickers.

For more, see Bad mortgage brokers ran wild, Florida admits (A state probe, prompted by a Miami Herald investigation, says the state did not protect people against crooked mortgage brokerages).

Lawsuits: Companies Specializing In Buying Up Troubled Mortgages Shield Original Lenders From Public Embarrassment

In Reno, Nevada, KOLO-TV Channel 8 reports:
  • The sub-prime mortgage mess has become a real-life nightmare for a growing number of Nevada families and some are saying fraudulent lending practices are a big part of the problem. Two lawsuits filed in Reno Federal Court charge companies specializing in buying up troubled mortgages are shielding the original lenders from public embarrassment.


  • Their lawsuit charges GRP is in business to buy up fraudulent loans that other financial institutions wouldn't touch and take on the nasty job of foreclosure protecting the reputation of the original lender. "They are bottom feeders, who buy up these fraudulent and 'scratch and dent' mortgages," says the [plaintiffs'] attorney Bob Hager. "And when it comes to foreclosure, they take the heat."


  • The [plaintiffs] say they hope others in the same situation will join in their suit. In fact, Hager has already filed a similar action for a 71 year old Fernley man and is preparing third. He's seeking to have them made class action suits.

For more, see Lawsuit Charges Fraud, Predatory Ads to Mortgage Crisis.

Fannie, Freddie Woes May Be Good News For Struggling Homeowners Seeking Loan Modifications

The Associated Press reports:
  • The government's takeover of mortgage finance companies Fannie Mae and Freddie Mac should provide an opportunity to modify more home loans for troubled borrowers, government officials said Wednesday.

  • Both companies are "looking at loan modification programs that can be done through mass solicitation programs with streamlined processing,'' James Lockhart, director of the federal agency that took over Fannie and Freddie earlier this month, said by e-mail. Such an effort could have a tremendous impact because Fannie and Freddie own or guarantee more than $5 trillion in loans, about half of the nation's total.

  • "There are still a lot of mortgages out there that need to be restructured and families that can still be helped,'' Sheila Bair, chairman of the Federal Deposit Insurance Corp., told lawmakers that Wednesday. With 1.5 million foreclosures last year and 1.2 million already in the first six months of this year, the foreclosure crisis is accelerating, she said.

  • Under Bair's stewardship, the FDIC has rolled out a plan to help refinance delinquent IndyMac Bank borrowers into 30-year mortgages with interest rates currently capped at 5.9 percent. The FDIC introduced the program about a month ago after it seized the Pasadena, Calif.-based lender, now called IndyMac Federal Bank, in July.

  • Some lawmakers and consumer advocates are urging the government to replicate the program among loans held by Fannie Mae and Freddie Mac, which bought loans from IndyMac, Washington Mutual and many other banks as part of their official role in supporting the housing market.

For the story, see Fannie, Freddie collapse could help borrowers.

See also, Modified IndyMac loans showing results - FDIC's Bair (Bair said among the 60,000 delinquent IndyMac mortgages, about 40,000 are eligible for the FDIC's loan modification program).

Atlanta Prosecutors Charge 12 In Alleged Straw Buyer Scam Using Phony Appraisals

In Atlanta, Georgia, the Atlanta Journal Constitution reports:
  • Local authorities said Monday they charged 12 men with an elaborate mortgage fraud scheme in Atlanta’s West End neighborhood and seized more than $200,000 of assets. In indictments filed last week, Fulton County District Attorney Paul Howard Jr. accused the men of buying and selling nine homes using false appraisals that were more than double the homes’ actual value. Seven of the houses were in the 30310 zip code in the West End, where 26 homes were put up for foreclosure auction in late June.

  • The homes are just a handful of ones in the 30310 zip code [...] that sit vacant and neglected largely as a result of the fraud scheme or fallout from the nation’s credit crisis. Many have been bought and then foreclosed upon more than once, making them prime targets for mortgage fraud, said Detective Robert McFall, an investigator with the Atlanta Police Department’s major fraud unit. McFall said his work is not finished: there are “thousands” of homes in the Atlanta area that are tied to mortgage fraud.

For more, see 12 indicted in Atlanta mortgage fraud scheme.

NY AG Warns Consumers On Entering Natural Gas Exploration Leases

From the New York State Attorney General's Office:

  • Attorney General Cuomo today warned landowners of potential perils and strong-arm tactics when dealing with oil and gas exploration companies. [...] The Attorney General’s Office has become aware of potentially misleading or improper tactics used by certain exploration and development companies to obtain leases from landowners. The office is investigating a significant number of complaints from landowners regarding these tactics and urges anyone who believes they have been defrauded by an unscrupulous representative of a gas exploration company to contact his office at 800-771-7755. A new downloadable tip sheet and brochure can be found online at:


  • If done properly, including implementing the adequate environmental safeguards, increased natural gas production can be mutually beneficial to the landowners, the economy, and all New Yorkers,” said Attorney General Cuomo. “However, in the event New York landowners are approached and asked to sign a lease by a gas exploration company or their agents, they should proceed cautiously, as the process can be rife with potential peril. Consumers must be aware so they do not fall victim to any abusive or misleading tatics. [...]".(1)

For more, see AG Cuomo Cautions Consumers About The Potential Pitfalls Of Oil & Gas Leases (Cuomo urges landowners to know their rights when dealing with gas exploration companies in order to avoid strong-arm tactics and ensure they get the best financial deal).

For anyone interested in the kind of problems homeowners can run into when leasing the mineral rights to their property to an oil & gas exploration company, see:

Go here for other posts on dealing with exploration companies over your mineral rights.

(1) According to the NY AG's press release, landowners who enter into an oil and gas lease are typically approached by a “landman” – a person directly or indirectly representing a gas operator. The landman’s primary goal is to secure leases on as large an area as possible. Landmen may approach landowners at their homes or businesses, or may contact landowners preliminarily by telephone before meeting with them in person. [...] The rights and obligations of the landowner and business are detailed in the lease, as in many other types of leases. In most cases, landowners will be bound to the terms and conditions included for the duration of the lease. This means that the rights and obligations set forth in the lease are connected to the landowner’s land. MineralRightsAlpha

Wednesday, September 17, 2008

90 Day Foreclosure Moratorium Declared On Ike-Affected FHA Borrowers

The U.S. Department of Housing and Urban Development announced Monday:
  • HUD is granting immediate foreclosure relief - In certain storm and flooded ravaged counties, HUD granted a 90-day moratorium on foreclosures of FHA-insured home mortgages and strongly recommended that loan servicers take such actions as special forbearance, loan modification, refinancing, and waiver of late charges.(1)

For more, see HUD Announces Disaster Assistance In The Wake Of Hurricane Ike (Foreclosure protection offered to displaced families in Texas and Louisiana).

(1) Foreclosure relief is available for FHA-insured families living in the following counties:

Angelina, Austin, Brazoria, Chambers, Cherokee, Fort Bend, Galveston, Grimes, Hardin, Harris, Houston, Jasper, Jefferson, Liberty, Madison, Matagorda, Montgomery, Nacogdoches, Newton, Orange, Polk, Sabine, San Augustine, San Jacinto, Trinity, Tyler, Walker, Waller, and Washington Counties.

Acadia, Beauregard, Calcasieu, Cameron, Iberia, Jefferson Davis, Sabine, St. Mary, Vermilion, and Vernon Parishes.

Freddie Reminds Loan Servicers Of Disaster Relief Options For Hurricane Ike-Affected Borrowers

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 Ike.


  • 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 information, see

For Freddie's press release, see Freddie Mac Extends Mortgage Relief T Borrowers Affected By Hurricane Ike.

DOJ Asked To Weigh In On Michigan Foreclosure List Flap

In Michigan, The Michigan Messenger reports:
  • A group of 14 U.S. Senators including Democratic presidential nominee Barack Obama signed a letter to the United States Department of Justice and specifically to Attorney General Michael B. Mukasey to calm fears that people who have undergone or are undergoing a foreclosure will not be allowed to vote. All of the senators who signed the letter are Democrats, and all of the Democrats on the Senate Judiciary Committee signed the letter. The controversy arose after a story on Michigan Messenger last week in which the Macomb County Republican Chair James Carabelli indicated that foreclosure lists will be used to challenge voters. The Republican Party of Michigan has since denied the story.

For more, see Obama, other Senators ask Attorney General to weigh in on foreclosure list controversy.

See also, The Wall Street Journal Blog: Voting-Rights Conflicts Intensify.

Go here for other posts on this story.

Developer Accused Of Stiffing Subs; Mechanics' Lien Lawsuit Threatens Title To Buyers' New Homes

In Dayton, Nevada, Nevada Appeal reports:
  • In a development that is happening again and again in Dayton, homeowners who purchased new homes are facing mechanic’s liens and possibly the loss of their homes through no fault of their own. Five Dayton families are being sued because the developer of the subdivision they live in didn’t pay the contractors who built the homes.

  • Reynen & Bardis, which is facing three complaints lodged with the Nevada Contractors’ Licensing Board, including one for failure to pay bills, has not paid contractors who worked on five homes in the Riverpark subdivision.


  • All the homeowners paid Reynan & Bardis for the homes before construction, all used First American Title Co. and all deals for the homes, priced in the low- to mid-$200,000s, were closed.

For more, see Liens continue to vex Dayton homeowners.

Convicted Wall Street Securities Fraudster, Wife Get Bagged In Florida Straw Buyer, Mortgage Fraud Scam Involving 37 Homes, $27M+ In Loans

In Cape Coral, Florida, the Naples Daily News reports:
  • A decade ago in New York, where Wall Street held the promise of riches, Ronald Luczak started selling securities. He ended up in jail instead. [...] By the summer of 2005, he was on supervised release and settled with his family in Southwest Florida. This time the promised riches were in real estate.

  • With his wife, Lisa Luczak, who opened Cape Coral Equity and Development Group that fall, real estate ended up being his trade. But he continued his previous profession, too.
    Fraud allegations came the following year, and [last] Wednesday, he and his wife both pleaded guilty in federal court to fraud counts related to a mortgage fraud scheme in Cape Coral that involved at least 37 properties and more than $27 million in home loans.(1)

  • In his plea agreement, Ronald Luczak admitted to contracting to buy homes at one price, then having the home appraised for a higher amount — often bumping the price up by about $150,000 — and pocketing much of the difference as an “assignment fee.” In a year and a half, his wife’s company received $5.8 million in those fees.

For more, see Couple may face prison time in Southwest Florida real estate scam.

(1) According to the story, Sandra Mainardi, a New Jersey resident who helped process loan applications with the Luczaks for 100 percent financing of inflated sales prices, pleaded guilty last month to one count of wire fraud; and Alex Nelson Gonzalo, a former Cape Coral police officer and real estate agent, pleaded guilty earlier this year to accessing an FBI database without authorization.

3 Suspects Charged In Alleged Indianapolis Flipping, Rent Skimming Scam Involving As Many As 400 Properties

In Indianapolis, Indiana, WISH-TV Channel 8 reports:
  • Three Carmel residents are facing a number of charges in connection with a possible housing scam.(1) Prosecutors said the three purchased as many as 400 homes in Central Indiana, 200 of which are now in foreclosure.


  • "This company owned almost 400 homes...we're talking about TD Assets, owns 400 homes in Marion and surrounding counties that have a value of about $40 million. And of those 400, 209 of them are in foreclosure," said [Marion County Deputy Prosecutor Barbara] Crawford. The result is neighborhoods that are trying to stay stable end up littered with empty houses.

For more, see 3 arrested in alleged housing scam.

(1) According to the story, the trio appeared in court Friday where they were charged with 13 felony counts related to welfare fraud and theft. If convicted on all of the charges, they could spend up to 10 years in jail.

Home Mortgage Foreclosures & Cancellation Of Debt Income

Syndicated personal finance columnist Michelle Singletary includes this comment in a recent story on an income tax issue that may be causing problems for many homeowners who have lost their homes in foreclosure:
  • [W]hen an individual or business borrows money and the debt is canceled, the borrower generally must include the amount of the canceled debt in gross income. Last year, Congress passed a law giving temporary tax relief to homeowners who had mortgage debt canceled.

  • Here's the problem. The tax relief isn't given automatically. You have to file IRS Form 982 "Reduction of Tax Attributes Due to Discharge of Indebtedness," and the form has to be attached to the federal tax return. Many people entitled to this tax break aren't filing the form. Olson said she wants to work with the IRS to get the word out to more people.

For the story, see To-Do List For IRS.

See also IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments. short sale

Tuesday, September 16, 2008

Obama Campaign, DNC File Suit Over Controversy Involving Alleged Michigan GOP Use Of Foreclosure Lists To Squeeze Out Certain Voters

In Michigan, The Michigan Messenger reports:

  • The Obama campaign and the Democratic National Committee have filed a lawsuit in federal court in Michigan over the Michigan GOP’s plan to use foreclosure lists to challenge voters at the polls, as first reported by the Michigan Messenger. Bob Bauer, general counsel for the Obama campaign, and Mark Brewer, chairman of the Michigan Democratic Party, announced the lawsuit in a conference call with reporters this afternoon. It was filed on behalf of the campaign, the party and three Michigan residents who have had their houses foreclosed upon in recent months. Bauer called the GOP plan to use foreclosure lists “a new and especially repellent version of caging.”

For more, see Obama campaign files suit over “voter-foreclosure” plans.

See also:

Go here for other posts on this story.

Nevada High Court OKs $1M+ Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • Gerald and Katrina Thitchener lost nearly all their material possessions thanks to an arrogant error by Countrywide Home Loans officials. They weren't just stripped of their furniture and clothing when a mistake by Countrywide in 2002 set in motion a foreclosure procedure that resulted in their condominium being "trashed out."


  • The Thitcheners lost a lot back in 2002, including some of their faith in the system; but on Thursday the Nevada Supreme Court determined that their losses, and the actions of the mortgage giant, deserved compensation in the approximate amount of $2 million.(1)

For more, see Sometimes little people come out on top against arrogant big shots.

For the Nevada high court decision, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008).

Go here for other posts on foreclosure screw ups involving improperly changed locks, removal of belongings, etc.

(1) A somewhat conflicting report in the Las Vegas Sun says the total compensation was only $1.29 million, which includes $968,070 in punitive damages. For more, see Court reduces $3 million judgment in wrongful foreclosure case. ForeclosureLockOuts

Foreclosure Fraud Getting Attention Fron San Bernardino DA

In San Bernardino, California, the San Bernardino County Sun contains this blurb on the work of the local district attorney's office in its fight against foreclosure fraud:
  • Foreclosure fraud is the [real estate fraud] unit's latest buzz, [lead deputy district attorney of the unit Larry] Roberts said. Foreclosed homeowners are claiming they paid $2,000, $3,000 or more to companies promising debtor relief, only to find they were stabbed in the back. From July 2007 to July 2008, the 10-person district attorney's unit received almost 460 formal complaints from residents across the county claiming they were burned by mortgage or foreclosure fraud. The suspects are based all over Southern California. That number could grow by leaps and bounds over the next year, but there's a fair chance Roberts' staff size will remain the same.

  • A bill that would provide more funding to county real-estate fraud units statewide made it to Gov. Schwarzenegger's desk, but the state's budget impasse is getting the spotlight right now. Still, Roberts presses onward. "We're here to hurt offenders," he said. "We represent the interests of the people of the state of California."

For the story, see Fraud monsters.

Florida Closing Attorney Cops Plea To Pocketing Almost $3M In Client Escrow Funds; Allegedly Took Money Intended To Satisfy Existing Mortgages

From the U.S. Attorney's Office for the Southern District of Florida:
  • R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, announced [last week] that defendant Joseph J. Weisenfeld, a local real estate attorney, pled guilty to a one-count Information charging him with wire fraud in connection with a scheme to misappropriate almost $3 million in client funds purportedly held in escrow for authorized real estate transactions and related expenses.


  • According to the Information, Weisenfeld, a licensed attorney, represented individuals and/or entities, mostly buyers, in real estate transactions. As the closing agent in many of these transactions, Weisenfeld would collect funds from buyers and lenders, and would represent to the parties engaged in the transaction that these funds were being held in escrow to be disbursed for various specified purposes, including the satisfaction of pre-existing mortgages. In fact, however, Weisenfeld misappropriated the escrowed funds for his use and benefit. Over the course of the scheme, Weisenfeld misappropriated almost $3 million in client funds from his attorney trust account.

For the U.S. Attorney's press release, see Attorney Pleads Guilty To Wire Fraud Charge.

For the original criminal charges filed in this prosecution, see Information - US v Weisenfeld.

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

Financial Industry-Supported Changes In Consumer Bankruptcy Rules Now Hurting Mortgage Lenders

BusinessWeek reports:
  • The latest lesson for lenders from the housing crisis: Be careful what you wish for. Banks and other financial outfits spent eight years and $40 million lobbying for sweeping new bankruptcy rules that would limit their losses from deadbeat debtors. But it turns out those changes, enacted in 2005, are forcing more troubled borrowers to walk away from their homes—even those who didn't take on risky mortgages in the first place. And that's bad news for lenders, which suffer financially every time they have to take a troubled property on their books.

For more, see Tougher Bankruptcy Laws Bite the Lenders (How tough new laws on resolving personal debts are burning lenders—not just cash-strapped Americans).

No Payment Hikes For Up To 3 Years On Certain NJ Mortgage Loans With Interest Rate Resets, Says Governor

In Trenton, New Jersey, reports:
  • Legislation [...] sponsored to extend foreclosure protection to thousands of New Jersey families caught-up in the recent mortgage market upheaval was signed [yesterday] by the governor. The bill (A-2780), the “Save New Jersey Homes Act of 2008,” offers direct aid to homeowners and borrowers affected by the growing mortgage crisis who are facing foreclosure or are in danger of facing foreclosure because of mortgage rates that are about to reset.

  • Under the new law, the homeowner continues making their lower mortgage payments while staying in their home; the lender receives monthly revenue; homes aren’t abandoned; families don’t have to suffer stress from relocation and no taxpayer dollars are appropriated. Homeowners with introductory rate mortgages who are facing an interest rate reset are afforded the opportunity to continue their payments at the much lower pre-reset interest rate for up to three years.

For more, see ‘Save New Jersey Homes Act Of 2008' Signed By Governor (Measure Provides Three-Year Reprieve from Foreclosures; Gives Families More Options to Stay in Their Homes).

Certain Loans Secured By 1-4 Family Homes Now Subject To New Rules In New York

In New York, the New York Law Journal (appearing at reports:
  • [Recent New York mortgage legislation], signed into law on Aug. 5, 2008, is complex legislation, imposing obligations on lenders making certain types of loans to natural persons on the security of one-to-four-family dwellings.

For more, see New N.Y. Mortgage Foreclosure Legislation.

Monday, September 15, 2008

Suspects In Alleged Fractional Interest Deed Transfer, Foreclosure Rescue Scam Cop Plea

In Alameda County, California, The Mercury News reports:
  • Two women who ran a Livermore foreclosure rescue company each face as many as 16 months in state prison after taking a plea deal that forces them to pay full restitution to their victims. Prosecutors say the women preyed on owners of more than 20 different properties in Alameda County. The women, Sonia Alburez, 37, owner of the Community Home Saver Program, and her employee, Verena Silva, 42, of Union City, were found guilty of two felony counts each of foreclosure rescue fraud and grand theft, according to a release from the Alameda County District Attorney's office.(1)


  • Victims, whose names and contact information the defendants obtained from public records in the County Recorder's office, were solicited by direct mailings from Community Home Saver Program. Victims were each told to process grant deeds and to pay monthly fees to the Livermore company of $1,500 to $2,500 so they could stall the foreclosure process as well as help pay down their mortgage and repair their credit.


  • The women would tell clients to transfer a portion of the interest in their properties to various holding companies. They were told those companies would file a petition with the U.S. Bankruptcy Court to forestall foreclosure. Unbeknownst to the homeowners, the holding companies were fake.
For more, see Two found guilty in foreclosure rescue scam.

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

(1) According to the story, the District Attorney's press release said the women were originally charged with the following felonies:
  • filing false grant deeds with the Recorder's Office,
  • receiving money as a foreclosure consultant before fully performing all services,
  • grand theft by false pretenses,
  • fraudulent conveyance of land with intent to delay creditors, a misdemeanor,
  • because Silva went into the home of a victim to solicit the real estate fraud scheme, she was charged with first-degree residential burglary, a felony.

Homeowners Facing Foreclosure Demand Refunds From South Florida Foreclosure Rescue Operator

In Fort Lauderdale, Florida, WFOR-TV Channel 4 reports:
  • Dozens of South Florida homeowners are caught in the middle of a blame game. They say a company that promised to help them fight foreclosure blatantly took their money. The company, however, says they are the victim. People in Ft. Lauderdale have been lining up demanding their money back. This company [Outreach Housing] is blaming their former attorney for the problems. Both sides are filing reams of paperwork in court, accusing the other, and while they argue it's the little guy -- the homeowner who is getting hurt.


  • CBS4 News has learned the Florida Attorney General and the Margate Police Department are investigating Outreach Housing. Meanwhile the lawsuit is still before a judge, and many of these homeowners are desperately trying to save their homes.

For more, see Homeowners Say "Outreach" Housing Didn't Reach Out.

More On Florida's Favorable Business Climate For Mortgage Fraudsters

In Florida, The Miami Herald reports:
  • Florida, now saddled with the nation's highest level of mortgage fraud, once offered a program to reimburse people scammed by rogue mortgage brokers -- the money coming from licensing fees. Today, those fees total $24.7 million -- but victims of mortgage fraud can't get a penny of it.

  • State regulators killed the victim program with no public debate more than a decade ago -- despite warnings that mortgage fraud was on the rise -- leaving borrowers in Florida among the most vulnerable in the country, The Miami Herald found. While 47 states have protections for people who are scammed, including guaranty funds and insurance that covers fraud, Florida has no such provisions.

  • That means thousands of people fleeced by mortgage brokers are left to fend for themselves, despite millions of dollars in the state's regulatory trust fund -- money that goes to cover salaries and benefits for regulators, including trips to conferences at five-star resorts.

For the rest of the story, see No help for mortgage fraud victims (Florida no longer reimburses consumers defrauded by mortgage brokers -- even though $24.7 million raised through licensing fees sits untapped).

For The Miami Herald's three part investigative report (published earlier this summer) on mortgage fraudsters running rampant in Florida, see Borrowers Betrayed.

NY AG Indicts Niagara Falls Man For Allegedly Using Online Ads To Sell Homes He Didn't Own Or Provide Title To

From the New York Attorney General's Office:
  • Attorney General Andrew Cuomo [last week] announced the indictment of a Niagara Falls man who allegedly sold properties to a buyer from England and never provided the titles to the properties. Joseph Furan, 39, of [...] Niagara Falls, was indicted by a Niagara County Grand Jury on the charge of grand larceny in the third degree (class D felony).


  • According to the felony complaint, between January and March of 2007, Furan allegedly sold two Niagara Falls properties over the Internet to a buyer from England. Furan then allegedly failed to provide the titles to the properties and used the money from the sales to pay off various debts.


  • Earlier this year, it was discovered that Furan – in direct violation of [a] previous court order – had again placed ads on the Internet site Craigslist and faked his credentials in an attempt to flip properties he didn’t own to unsuspecting investors. It was during this time that the alleged grand larceny took place. Because of these violations, the Attorney General’s Office sought and obtained criminal contempt of court charges on August 15.

For more, see AG Cuomo Announces Indictment Of WNY House-Flipper For Stealing $39K From Unsuspecting Investor (Niagara Falls man allegedly sold property that he didn’t own over Internet; Sold another without providing title).

Another Mortgage Loan Servicing Horror Story

For those with an interest in mortgage loan servicing horror stories, a recent story in Metro Santa Cruz set in California and involving the loan servicing company Ocwen might be worth a look.

For more, see Borrowed Time. questionable mortgage servicing practices tactics xero

Sunday, September 14, 2008

Milwaukee Court Reverses Home Foreclosure Over $50 Parking Ticket

In Milwaukee, Wisconsin, the Journal Sentinel reports:
  • The City of Milwaukee won’t keep the house of a disabled man who failed to a pay a parking-related fine, after all. The city on Wednesday agreed to have the court reverse its foreclosure on Peter Tubic’s property after a prominent local attorney paid the fine, which had escalated to $2,697.10 over the years.

For more, see Court to reverse foreclosure over parking-related fine (Attorney pays Milwaukee the $2,700 owed by disabled man).

See also: Attorney who paid fine in foreclosure case talks.

Real Estate Agents Eligible For Combat Pay? Squatters In Vacant Foreclosures Increase The Hazards In Showing Homes

In Contra Costa County, California, The Mercury News reports:
  • [S]elling homes in East Contra Costa these days seems tough enough without walking into a squatter's den or break-in party pad. But that's what brokers say they find more often lately with the huge glut in bank-owned and vacant homes — raising safety fears among some agents and possibly crimping home values even further.

  • Agents at one East County real estate office now tote pepper spray on walk-throughs and showings, in case they come across a belligerent dweller. More than a dozen agents have signed up for self-defense training, said Kirsten Amodeo, a Realtor with Coldwell Banker who is organizing the classes. During the Labor Day weekend alone, Amodeo said, she entered four houses to find destruction or signs of squatting.

  • "It's absolutely absurd. Theft and vandalism and squatters. It's all over the place. The holiday weekend was the worst," she said, armed with a canister of pepper spray on a visit to one house. "I'm not trying to be a vigilante. I'm pretty tired of going into these houses and wondering. We don't know what's on the other side of the door."

For more, see Squatters in abandoned homes raise fears among East County Realtors.

Go here for posts on vacant homes, foreclosures and squatters. squatter foreclosure zebra

Outgoing Tenant On Verge Of Eviction Cops Plea To Pretending To Be Landlord While Pocketing Rents & Security Deposits From Unwitting Rental Prospects

In Sacramento, California, The Sacramento Bee Crime Blog reports:
  • A Sacramento man is facing a year in jail and hefty fines after conducting a real estate scam using the popular Craigslist Web site. Michael Eugene Blair, 28, pleaded guilty Wednesday to multiple counts of theft by false pretense, Sacramento police Sgt. Matt Young said. Blair was arrested in May by the department's Real Estate Fraud Unit after they learned he was renting out a property he didn't own.

  • Blair used the Craigslist Web site to advertise that he was renting out a north Natomas condominium. Blair had lived in the condo and was being evicted, Young said. The man pretended to be the property's owner and collected thousands of dollars in security deposits and rent from at least four victims. He was in the midst of defrauding other people when he was arrested.

For more, see Rental scam results in jail time, restitution for Sacramento man.

Go here and go here for posts on tenant victims of rent hoaxes. unwitting tenant rent scam yacht

Court Clerk Warns Against Illegal Upfront Fee Foreclosure Scams In North Carolina

In Davidson County, North Carolina, The Dispatch reports:

  • Local residents have recently been targeted by companies promising to save homes from foreclosure, said the Davidson County Clerk of Superior Court. Clerk Brian Shipwash said that while presiding over foreclosure hearings, he learned that several homeowners were contacted by companies offering help to save their homes for an up-front fee, which is illegal in North Carolina. "These companies would promise these people the world, so they'd walk into a hearing thinking everything was taken care of," Shipwash said.

  • According to North Carolina law, anyone acting as an intermediary in a foreclosure proceeding is prohibited from charging a fee up front. While there is nothing illegal about helping people in debt, Shipwash said the companies were promising far more than what was possible to deliver. Locals contacted by the companies were quoted from $1,400 to $1,800 up front, and asked to sign a waiver. In return, the company claimed it would communicate with the lender on the mortgage-holder's behalf.(1)

For more, see Beware of scam promising foreclosure help.

(1) According to the story, Shipwash said the three companies - Nationwide Modification Agency and HomeAssure in New York and Davis Foreclosure Assistance in New Jersey - contacted residents by mail, offering to negotiate with the lender to stop foreclosure.

Tapping Home Equity Without Borrowing?

Syndicated real estate columnist Kenneth R. Harney writes:
  • Improbable as it sounds at a time when American homeowners have lost billions in equity holdings, a new industry is taking shape to help them tap portions of their equity wealth without incurring traditional mortgage debt or making interest payments.

  • Three companies with sophisticated capital market backers — Rex & Co., Equity Key and Grander Financial — are offering cash to owners who agree to cut them into some of the future appreciation of their properties. The cash typically represents a fraction of the current market value of the home and rises with the percentage of future appreciation the owner is willing to share.

For more, see A New Way to Tap Home Equity.