Saturday, October 04, 2008

Shell Game In Baltimore City?

In Baltimore, Maryland, Baltimore City Paper reports on the story of a small group of people who, according to land records, bought, traded and sold each other houses here before defaulting on their loans.
  • This small group of people is involved with at least 11 foreclosures--some completed, others pending--within a half-mile radius of 223 S. Madeira St. At least three of them are investors who borrowed heavily even after the real estate bubble burst and then stopped paying their mortgages. By selling several houses to [one local property buyer], one man appears to have made about $750,000.

For the story, see Shell Game: Seven Neighbors, 11 Foreclosures, and More Than a Million Dollars' Profit in One Baltimore Neighborhood.

Beware Of Phone Solicitations Offering Mortgage Help That Claim Bogus Affiliation With Local Government

In Trenton, New Jersey, The Times of Trenton reports:
  • The Mercer County Clerk's Office is alerting residents to phone solicitations being conducted by a company claiming to represent the county. Clerk Paula Sollami Covello said Thursday that calls are being made from a company that identifies itself as American Modification Agency (AMA) of Uniondale, N.Y., and claims to be "working with the county clerk's office," offering to help renegotiate the terms of mortgages. "While I have no problem with a legitimate company marketing its services, I object to any reference that they are working with the county clerk's office," Sollami Covello said. "The county does not work with any specific company in this regard and we do not endorse the services of private financial entities, especially those soliciting via telephone."

Source: Mercer County clerk warns of mortgage solicitors.

Scottsdale-Area Real Estate Agents Form Foundation To Rescue Abandoned Pets

In Scottsdale, Arizona, KNXV-TV Channel 15 reports:
  • A Scottsdale organization has been overwhelmed by Valley pets left behind in the foreclosure fallout. Lost Our Home Pet Foundation is made up of real estate agents who help rescue abandoned animals and find them new homes. The latest case happened Monday when eight dogs and 15 puppies were found alone at a Gilbert home. "Basically, the people that used to live there opened a bag of dog food into a drawer in the kitchen and left the gate open for the pool, so they could drink the dirty pool green water, " said Tina Eacret of Lost Our Home Pet Foundation. According to members, the foundation has taken in 60 dogs since launching in June.

Source: Abandoned dogs: Valley real estate agents to the rescue.

Cape Coral "Pool Crew" Mitigates One Public Safety Hazard Of Foreclosures

In Cape Coral, Florida, The News Press reports:
  • City-hired crews are fencing off and boarding up swimming pools at homes throughout Cape Coral that have been abandoned because of foreclosures. The city is paying for the work because the pools - where fences or screened enclosures have fallen down, or have been stolen by thieves who sell the metal to recyclers - are a danger to children, said Frank Cassidy, head of Cape Coral's Code Compliance Division. So far, no children have been hurt in the abandoned pools, Cassidy said. "That's one of our biggest fears. We don't want that to happen. That's why we go to the trouble of securing them. This is a public safety issue," he said.

For more, see Cape Coral crews barricade abandoned pools (Move at city expense is to protect children).

See also, WBBH-TV Channel 2: City paying to protect pools ForeclosuresDestroyNeighborhoodsApple

90 Year Old Widow Shoots Self As Deputies Attempt To Carry Out Foreclosure Eviction; Fannie To Forgive Loan, Give Back Home In Response To Publicity

In Akron, Ohio, the Akron Beacon Journal reports:

  • At the age of 90, [she] found herself in foreclosure this week, about to be forced from the home she's lived in for nearly 40 years. So, with a gun in her hand, the Akron widow apparently shot herself in the chest Wednesday afternoon as deputies were knocking on her door with eviction papers in hand. While a nation reels in financial crisis from years of mortgage abuse, [she] is recovering at Akron General Medical Center, awaiting word on where she will live when she's released. Meanwhile, city leaders say [the widow] has become Akron's ''poster child'' for victims of predatory lenders.

For more, see 90-year-old foreclosure victim apparently shoots self (Woman in hospital with wounds to chest).

See also, Kucinich mentions Akron woman's plight during House bailout debate.


For story update, see CNN: Fannie Mae forgives loan for woman who shot herself:

  • Fannie Mae said it will set aside the loan of a woman who shot herself as sheriff's deputies tried to evict her from her foreclosed home. [...] On Friday, Fannie Mae spokesman Brian Faith said the mortgage association had decided to halt action against [the homeowner] and sign the property "outright" to her. "We're going to forgive whatever outstanding balance she had on the loan and give her the house," Faith said. "Given the circumstances, we think it's appropriate." [Go here for CNN video].

See also, Akron Beacon Journal: Akron woman's foreclosure gets U.S. response (Kucinich takes plight of owner who shot herself to Congress; Fannie Mae forgives mortgage).

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

Friday, October 03, 2008

Federal Judge Orders Credit Bureaus To Clean Up Screw-Ups Affecting Consumers' Credit Reports In California Class Action Suit

The Wall Street Journal reports:

  • [A] recent court order requires the three major credit-reporting bureaus -- Experian Group Ltd., Equifax Inc. and TransUnion LLC -- to clean up the credit files of millions of consumers who have filed for Chapter 7 bankruptcy. The problem: Old debts, which are typically forgiven by the courts in a bankruptcy filing, are still being reported as active on many consumers' credit reports. The judge for the case, David O. Carter of the U.S. District Court for the Central District of California, has given the bureaus until Oct. 1 to revamp their systems.


  • This ruling is expected to clean up the credit files -- and potentially boost the credit scores -- of an estimated six million to 10 million people who have filed for Chapter 7 bankruptcy but still had errors in their files, according to plaintiffs' attorneys. Consumers with so-called zombie debt -- old loans they may have paid off years ago that can resurface when an aggressive debt collector erroneously demands payment -- are also likely to get some relief, if those debts also were discharged under Chapter 7 protection.


  • The court order stems from a class-action lawsuit alleging that each of the credit bureaus violated the Fair Credit Reporting Act by failing to maintain reasonable procedures to assure the accurate reporting of debts that have been discharged in bankruptcy. The lawsuit could now move to a trial to determine liability and damages if Judge Carter decides later next month to give the damages portion of the case a class-action status.

For more, see Dealing With Debt That Refuses to Die (Court Ruling Requires Credit Bureaus To Wipe Away Bills Incurred Before Bankruptcy; Getting a New Report). zeta

Subprime Lender Casualty List

In Southern California, The Orange County Register's Mortgage Insider blog provides a casualty list of the 30 biggest subprime home lenders in 2006 (measured by dollar volume). Reportedly, 22 have gone bankrupt, shut down, been sold or been seized by Uncle Sam. Most of the survivors have scaled back.

For the list, see Subprime’s dearly departed.

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

Florida Legal Services Firm Gets $200K Grant To Open Office To Deal Strictly With Fighting Foreclosures

In Jacksonville, Florida, First Coast News reports:
  • [T]hanks to a new $200,000 grant from the Jacksonville Community Foundation and the city, a new office strictly dealing with foreclosures will be opened soon by Jacksonville Area Legal Aid. "We're expecting people to come see us who are behind on their house payments, who need relief, want to know what their options are," said Michael Figgins with Jacksonville Area Legal Aid, or JALA. "They may have actually been served with foreclosure papers so we're going to focus solely on foreclosures, and saving homes in our community."

For the story, see Jax Legal Aid gets $200,000 to Fight Foreclosures.

Southern California Foreclosure Rescue Operator Faces December Sentencing In Equity Stripping Scam That Screwed Over 100+ Homeowners

In Los Angeles, California, The Downey Patriot reports:
  • Martha Rodriguez, 35, of Downey is scheduled for sentencing Dec. 10 in U.S. District Court in Los Angeles for a $12 million foreclosure scheme that victimized commercial lenders and more than 100 homeowners in Southern California. [...] Included in the indictments were Edward Seung OK, of Torrance; Cynthia Valenzuela, 23, of Downey; Vladimir Stefanovic, 35, of Lancaster; and Maria G. Juarez, 36, of Reseda.


  • The indictment alleges that the homeowners were asked by the defendants to sign documents including loan applications, trusts and grant deeds, while being assured they wouldn’t lose the titles to their homes. Rodriguez and her co-schemers promised the deed would either be held in escrow or that the title would be returned to them once their credit was repaired.

  • Instead of obtaining refinancing, loan applications were submitted in the names of “straw buyers” claiming to buy the property. Some straw buyers were paid up to $5,000 for the use of their personal information. In other cases, the defendants used the personal information of others without their knowledge. The false information on the applications caused lenders to fund mortgages to the straw buyers. The defendants would then pay off the loan in default and pocket the rest of the money.

  • As a result, homeowners lost the titles to their homes and lenders sustained losses when the second loan would go into default because the straw buyers failed to make the loan payments.

  • Rodriguez ran the foreclosure scam while awaiting sentencing after pleading guilty to defrauding the Department of Housing and Urban Development in another loan scheme.

For the story, see Resident awaits sentencing in foreclosure scam.

Go here for earlier posts and any available updates on this foreclosure scam.

Buying Foreclosed Homes In Bulk From Banks Bad Idea For One Company Now Seeking To Unload Holdings

The Wall Street Journal reports:
  • Many investors have been tempted by the idea of buying foreclosed homes in bulk from banks, at a steep discount. But the experiences of a Washington, D.C.-based property investment firm, Redbrick Partners LLC, show it can be difficult to manage a large number of single-family rental homes scattered across a metropolitan area.

  • Though Redbrick was never in the business of buying foreclosed homes, the firm in recent years bought hundreds of properties in working-class areas of East Coast cities including Baltimore, Philadelphia and Trenton, N.J. It hired local managers to handle rentals and maintenance. Now Redbrick, formed in 2003, has concluded that it is too costly to manage those homes and is trying to sell most of them.

For more, see Beware the Foreclosure Allure (Redbrick's Model of Scattered Bets Is Cautionary Tale).

Thursday, October 02, 2008

Federal Judge Nails NYC Foreclosure Rescue Operator With 10 Year Sentence For Role In Equity Stripping Scam

In New York City, Reuters reports:
  • A New York man was sentenced on Wednesday to 10 years in prison and will forfeit $2.5 million for his part in a home foreclosure "rescue" scheme targeting distressed homeowners. The case, which exemplified the easy credit and "no document" loans at the heart of the U.S. mortgage crisis, involved a scam that ran from November 2003 through April 2005 in the New York City boroughs of Brooklyn and The Bronx.

  • Mary Banks, one of the victims of the scheme, told the U.S. District Court in Manhattan on Wednesday that she had put her life's work into her house since 1958 and was "still fighting to stay in my premises." She said defendant Maurice McDowall, who pleaded guilty in June to charges of conspiracy to commit bank and wire fraud, "deserves any misery he has put on us."

  • Other victims told the court how they trusted McDowall to help them avoid foreclosure but fell foul of the scheme. McDowall, 49, said he was sorry for the crime and told the court, "While I was committing the crime we were all in the pot. Whatever we decided to do to save the home we did together."

  • In sentencing McDowall, U.S. Judge Robert Patterson also ordered him to pay $100,000 restitution. The forfeiture of $2.5 million was part of his plea agreement. Another defendant Aleksander Lipkin also pleaded guilty in June. He agreed to forfeit $7 million and faces up to 30 years in prison when he is sentenced on October 10. Six people in all were indicted in December last year with fraudulently obtaining titles to scores of homes and taking out bad bank loans against them worth more than $20 million.

For more, see Judge hands 10-year sentence for foreclosure scam.

For the original indictment, see U.S. vs. McDowall, et al.

Go here for other posts on foreclosure rescue operator Maurice McDowall.

Go here for other criminal prosecutions of foreclosure rescue operators.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Authorities Nail Another Closing Agent For Pocketing Escrow Proceeds Earmarked For Satisfaction Of Existing Mortgages

In Baltimore, Maryland, The Associated Press reports:
  • The U.S. Attorney's office says a Highland woman has pleaded guilty to stealing real estate settlement funds intended to pay off homeowners' previous loans. Thirty-five-year-old Marny Arlen Bailey pleaded guilty Monday to wire fraud. [...] According to court documents, Bailey was head of Executive Settlements, which handled residential real estate closings. Prosecutors say in late 2007 or early 2008, Bailey started taking money intended to pay off lenders a closing and used it herself. Officials say in 2008, she started gambling to make back the money she had stolen.

For the story, see Woman pleads guilty to wire fraud.

For the Maryland U.S. Attorney's press release, see Settlement Officer Pleads Guilty to Diverting Funds Intended to Pay off Mortgage Lenders (Stole Almost $1 Million in Three Months).

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

NY AG Charges Contractor With Squeezing 88-Year Old Widow Out Of $80K+ For Repairs Never Done Or Grossly Substandard

From the Office of New York Attorney General Andrew Cuomo:
  • Attorney General Andrew M. Cuomo [last week] announced the arrest of a Western New York home improvement contractor for repeatedly pressuring an 88 year-old widow into paying more than $80,000 for home improvements that were never done or were done well below industry standards. Bryan Boone, 47, of Kenmore Avenue in Kenmore, was arraigned before Justice Thomas S. Kolbert in Cheektowaga Town Court for Grand Larceny in the 2nd degree (class C felony).


  • According to the complaint, all of the work Boone did was careless and incomplete. [...] Independent experts who reviewed Boone’s work at the request of the Attorney General’s office declared it to be grossly substandard and of little value to the homeowner. They estimated the cost of labor and materials to be no more than $11,000 to $13,000.

  • According to the complaint, besides shoddy and incomplete work, Boone also failed to meet the legal requirements for home repair work, including obtaining the proper permits, providing a written contract to the consumer, and depositing payments into a trust account. Additionally, he has ignored requests from the homeowner to return any of her money, including $3,555 for an awning he never provided, and for an accounting of how he spent all of her payments to him.


  • Attorney General Cuomo strongly encourages all New Yorkers to visit before hiring a contractor for any home improvement or repair.

For more, see Attorney General Cuomo Announces Arrest Of Home Improvement Contractor For Scamming Western New York Senior Out Of More Than $80,000 (88 year-old widow pressured into writing more than 70 checks over seven months ~ Outside experts describe work as ‘grossly substandard’).

According to this press release, since January 1, 2007 the Attorney General’s Office has mediated more than 1550 complaints against contractors resulting in restitution of more than $800,000 to consumers.

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here.

Go here for other posts on other home improvement contractors hammered by the NY AG. Cuomo hammers contractors contractors stiff subs customers yelbow Cuomo hammers contractors

Foreclosure Surge Hitting Homeowners Current On Their Mortgage Payments

In Los Angeles, California, FOX 11 News reports:
  • The surge of foreclosures sweeping across America is hitting condominium owners who are current on their payments because homeowners associations are getting stiffed by persons losing their homes. Many large condo complexes are so rife with vacant, foreclosed units that some have had to levy special $1,000 fees against the remaining owners to pay for emergency termite repairs or other maintenance costs. Some of the abandoned units are turning into nightmares for the volunteer HOAs, with squatters, hundred-pound beehives, and other undesirables taking up residence, [...]. Some condos worth more than $1 million have been abandoned, leaving the neighbors to water and mow the lawns.

For more, see Foreclosure Surge Affecting HOA Residents in Orange County.

See also, The Orange County Register: Foreclosures put county's HOAs in financial bind (Mortgage meltdowns have cut into homeowner association budgets, prompting fee hikes and delays in repairs).

Homeowners Claim Improperly Reported "Zombie Debt" On Credit Report Prevented Mortgage Refinance; Lost Home To Foreclosure After ARM Interest Reset

The Wall Street Journal reports:
  • [E]rica Noe of Burke, Va., says an old debt on her husband's credit file cost them their home -- in part because it prevented them from being able to refinance their interest-only adjustable-rate mortgage last year. Her husband, Kenneth, had filed for Chapter 7 bankruptcy in 2002; in that proceeding, the court discharged his prior debts. Nevertheless, they were unaware that a previous $7,000 credit-union loan remained on his report, pulling down his credit score for several years.

  • "We thought that once we filed for bankruptcy, it would go away," says Ms. Noe. "But it didn't. It affected everything." The 31-year-old nurse says they didn't find out about the error until they tried -- but failed -- to refinance their mortgage. When the rate reset, the Noes' monthly mortgage payments shot up by about $1,000; they lost their home to foreclosure last November. "It was a snowball effect," she says. "Unfortunately, everything just kind of worked against us at the same time."

  • "I tried to fix the error on the report by calling the credit union and telling them to stop reporting," she says. Currently, their lawyer, Robert Weed, is filing a separate lawsuit against Equifax and the credit union. Equifax declined to comment on an ongoing suit.

Source: Dealing With Debt That Refuses to Die (Court Ruling Requires Credit Bureaus To Wipe Away Bills Incurred Before Bankruptcy; Getting a New Report).

Go here for other posts on zombie debt. zeta

Wednesday, October 01, 2008

Illinois AG Hauls Another Foreclosure Rescue Operator Into Court For Alleged Violation Of State Law; Count Now Up To 15 Firms

From the Illinois Attorney General's Office:
  • Illinois Attorney General Lisa Madigan [yesterday] continued her aggressive legal fight against mortgage fraud by filing a lawsuit against a St. Marys, Pa., company, which has been operating a mortgage rescue fraud scheme and preying on vulnerable Illinois homeowners on the verge of foreclosure.

  • Madigan filed suit in Sangamon County Circuit Court against Aeroworks, LLC, doing business as Augustus Rae and Reed, and its president, John F. Reed. The suit alleges that the defendants violated the Mortgage Rescue Fraud Act and the Consumer Fraud and Deceptive Business Practices Act by falsely promising to help consumers save their homes after they have fallen behind on their mortgage payments.

  • According to the complaint, the defendants charge consumers up to $1,185 in upfront fees for homeownership counseling and mortgage rescue services but rarely produce successful results. They also fail to give consumers the right to cancel at any time. The complaint alleges that the defendants accepted money from at least 215 consumers throughout Illinois during 2006 and 2007.

For more, see Madigan Sues Pennsylvania Company For Mortgage Rescue Fraud (Company Preys On Illinois Homeowners Facing Foreclosure).

Arizona AG Indicts Two In Alleged Equity Skimming Operation; Homes Involved Ended Up In Foreclosure, Say Authorities

In Phoenix, Arizona, the East Valley Tribune reports:
  • Jeffery Z. Sayegh, of Cave Creek, and Kimberly R. Werking, of Phoenix, were indicted by the Arizona Attorney General's Office on five counts of forgery, one count of money laundering and one count of fraudulent schemes and artifices. Werking, 42, was also indicted on six counts of residential mortgage fraud, five counts of theft and one count of illegal control of an enterprise.

  • The charges, all felonies, relate to an alleged equity skimming operation in Phoenix and north Scottsdale. These are among the largest indictments issued under the state's residential mortgage fraud statute, enacted in 2007.


  • The indictment further alleges that Werking skimmed more than $1 million in equity from the homes through the refinancing process, and, once no more money could be pulled out of the properties, allowed them to go into foreclosure.

For more, see Pair indicted in mortgage fraud.

From the Arizona Attorney General's Office;

Report: Mortgage Servicing Industry Falling Short In Efforts To Mitigate Foreclosures

Legal Newsline reports:
  • Industry efforts to keep U.S. homeowners from lapsing into foreclosure have decreased, a report by state attorneys general and banking regulators said Monday. [...] The State Foreclosure Prevention Working Group(1) report found that for the period February through May that nearly 80 percent of seriously delinquent homeowners are not on track for any loan work-out or loss mitigation assistance to help them avoid foreclosure. "Too many homeowners face foreclosure without receiving any meaningful assistance by their mortgage servicer," the report said, "a reality that is growing worse rather than better, as the number of delinquent loans, prime and subprime, increases."

  • The report -- Analysis of Subprime Mortgage Servicing Performance -- is based on data collected from subprime mortgage servicers. "While some progress has been made in preventing foreclosures, the empirical evidence is profoundly disappointing," the report said.

For more, see Report: Foreclosure rescue efforts fall short.

(1) Reportedly, The State Foreclosure Working Group has representatives of the attorneys general of 11 states: Arizona, California, Colorado, Iowa, Illinois, Massachusetts, Michigan, New York, North Carolina, Ohio and Texas. The panel also has representatives from banking departments in New York and North Carolina, as well as from the Conference of State Bank Supervisors. MortgageServicingIssuesAlpha

New Homebuyers Find Themselves Stuck Living In Unfinished Development With Plunging Property Values

In Bradenton, Florida, the Bradenton Herald reports:

  • If the Greenbrook homeowners' association didn't know there are unhappy residents in Greenbrook Preserve, Ravine and Banks, they know now. [Last] Tuesday, roughly 60 residents attended the Greenbrook Village Association's board meeting at Town Hall. Most were there to express frustration that their neighborhoods are filled with many vacant lots that builders haven't been able to sell due to the slumping housing market.

  • Some of these lots have tall mounds of dirt, concrete chunks, wood pallets and weeds, residents reported. These conditions are in neighborhoods where residents said they paid between $700,000 to $800,000 for their homes.


  • [Homeowner Allison] Moore said she paid $750,000 for her home in the Preserve in 2006 and a comparable home down the street recently sold in a foreclosure short sale for $380,000. Residents are afraid they will have to live next to vacant lots for years. Residents were told there is no way the association can force the builders to build homes on the lots, finish the handful of unfinished homes, or force them to sod the lots.

Attempts to grow grass by seeding the vacant lots were foiled by hungry birds, according to the story.

For more, see Vacant lots anger Ranch residents.

Banks, Homebuyer, Bankruptcy Trustee Accuse Idaho Homebuilder Of Fraud, Misuse Of Construction Funds, Hiding Assets In Civil Case

In Eagle, Idaho, the Idaho Statesman reports:

  • Meridian homebuilder Justin Walker, who abandoned an unfinished subdivision in Eagle, is accused of fraud, misuse of construction funds and hiding assets in his bankruptcy case. Aaron Hymas, Walker's former partner in the defunct Crestwood Construction Inc., faces several lawsuits alleging fraud too.

  • In April, Justin and Jackie Walker and Aaron and Tiffany Hymas filed for Chapter 7 bankruptcy. That allows all properties and belongings - except those the families are allowed to keep by the court - to be liquidated to pay as many creditors as possible. Both cases list many of the same 800-plus creditors and about $69 million in liabilities.

  • Three banks and a homebuyer asked the Bankruptcy Court in Boise last week to rule that certain debts should not be discharged in the bankruptcies because of "false pretenses, false representation and actual fraud."

  • And Jeremy Gugino, the bankruptcy trustee in Walkers' case, alleges the Walkers transferred $30,000 in cash, about 22 vehicles and other assets to limited liability companies in Nevada and a trust to hide them from creditors.


  • [H]undreds of subcontractors, including painters, house cleaners and suppliers of everything from trash service to building supplies, likely will have to absorb about $11 million in unsecured debt, bankruptcy experts say.

For more, see Meridian builders accused of fraud (Complaints say Justin Walker and his partner misused construction funds and Walker has hidden assets from the Bankruptcy Court).

Unlicensed Contractor Faces Charges Of Allegedly Screwing Elderly Homeowners Of At Least $60K Paid For Work He Failed To Perform

In Lockeford, California, the Stockton Record reports:
  • Police detectives and the Contractors State License Board [last month] arrested Lockeford resident Robert Weaver on nine counts of contractor fraud and working without a license. At his 5-acre property [...], however, they also compiled three counts of animal cruelty on top of accusations that he defrauded elderly homeowners of at least $60,000 worth of landscaping contracts he did not perform.

For the story, see Man faces contractor fraud, animal cruelty charges.

Tuesday, September 30, 2008

Florida Foreclosure Rescue Rules Go Into Effect Tomorrow

Florida Attorney General Bill McCollum's office recently issued a reminder that a few recently passed Florida laws go into effect on October 1, 2008, including:
  • Foreclosure Fraud Protection Act (HB 643): This law protects and educates consumers of their rights when they are signing a contract with a foreclosure rescue entity and includes additional protections for homeowners who face foreclosure. Key provisions of the bill include the creation of a three-day right-of-cancellation period and the requirement that foreclosure rescuers include – in large, bold font – notification to homeowners of this right of cancellation on the contract. The contract must also include a recommendation that the homeowner contact his or her lender or mortgage servicer prior to signing the agreement, and it must inform the homeowner that the consultant is prohibited from accepting any form of payment until all services are completed. Furthermore, the law provides enhanced remedies for consumers under Chapter 501, Florida Statutes.

For the Florida AG's press release, see Attorney General Announces New Laws Taking Effect October 1.

Flipping Operation By Convicted Con Man Illustrates "Anything Goes" Lending Mentality

In Kansas City, Missouri, The Kansas City Star reports:
  • If you wonder how we got to this point — a $700 billion Wall Street bailout for toxic mortgages — the case of Raymond Zwego is a good place to start.

  • While on probation from a previous Kansas City federal bank fraud conviction in 2003, Zwego began constructing his own little housing bubble. He purchased 61 area properties, in many cases using straw buyers and falsified paperwork. He fueled the exercise by illegally obtaining $16.9 million in mortgages, willingly contributed by lenders who never realized they were dealing with a career con man until it was far too late.

  • Almost all of the homes he purchased eventually went into foreclosure, contributing to the tsunami of red ink that has come perilously close to sinking the country’s financial system. At Zwego’s sentencing on federal mortgage fraud charges(1) [last week], his lawyer, Daniel Harrington, acknowledged that the bygone days of anything-goes mortgage lending contributed to his client’s crimes.

For more, see Mortgage fraud sentencing illustrates anything-goes lending environment.

(1) According to the story, Zwego was sentenced to 10 years in federal prison and was slapped with an additional three years for violating probation on his bank fraud conviction. He was also ordered to pay $5.6 million in restitution.

NJ Man Gets Probation For Refinancing Ex-Wife's Home During Divorce Without Her Knowledge, Consent; $300K Proceeds Used To Pay Business Debts

In Somerville, New Jersey, the New Brunswick Home News Tribune reports:
  • A Warren man has been placed on three years probation for his role in a forgery scheme. Salvatore Gramaglia, 55, the chief executive officer of A&G Fine Foods headquartered in Middlesex Borough, pleaded guilty July 22 to forgery before state Superior Court Judge Paul Armstrong, who handed down the sentence. On Sept. 12, Paula Benhayon, 58, of Union, Union County, was also placed on three years probation by Armstrong following her guilty plea in the scheme.

  • An investigation began in November 2005 when an attorney notified the Somerset County Prosecutor's Office that Maria Gramaglia, who had divorced Salvatore Gramaglia, learned her marital home in Warren was refinanced by her former husband without her knowledge or consent while they were involved in divorce proceedings, said Somerset County Prosecutor Wayne Forrest.

For more, see Warren man, Union woman sentenced for roles in forgery scheme.

Mass. Lawyer Gets 5 Years For, Among Other Things, Pocketing $500K+ Meant To Pay Off Existing Liens While Acting As Closing Agent In Real Estate Deals

The Office of Massachusetts Attorney General Martha Coakley announced last week that attorney Bruce Namenson, age 46, of Walpole, pled guilty to over 100 charges involving fraud, larceny, conspiracy, or forgery in which he allegedly screwed over his clients or insurance companies. His victims ranged in age from 15 to 95. Namenson was sentenced to serve 5 years in the House of Correction to be followed by 10 years of probation. As part of his probation, Namenson must repay over $600,000 in restitution. He is also prohibited from practicing law and being employed in any position in the legal profession during this 10 year probationary period.

Included in his bad acts, according to the Massachusetts AG's office:
  • From April through September 2007, Namenson carried out a scheme that defrauded home sellers and buyers and financial lending institutions. During this time Namenson acted as closing agents for three residential real estate closings. At the time of these sales there were outstanding mortgages on the properties totaling over $500,000. The buyers obtained loans to purchase the properties. At the time of the closings, the purchase funds were wired to Namenson’s business account for the purpose of paying off the outstanding mortgages, with the balance of the proceeds (minus closing costs) payable to the sellers. After the closings, Namenson failed to pay off the over $500,000 in mortgage debts remaining on the homes. As a result, the homes were threatened with foreclosure. Namenson attempted to avoid foreclosure and discovery of the thefts by periodically making partial loan payments to the banks.

For the Mass AG's press release, see Quincy Attorney Pleads Guilty, Sentenced on Charges of Insurance Fraud, Larceny, Forgery, Embezzlement and Other Charges.

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

Flagler County Prosecutors Target Local Builders In Criminal Cases For Allegedly Screwing Over Homeowners

In Flagler County, Florida, the Daytona Beach News Journal provides a few blurbs on four area builders/contractors who are being criminally prosecuted for allegedly screwing over homeowners:
  • Timothy John Hassler, owner of Ocean Shore Construction, was found guilty of fraud Sept. 19. Prosecutors said he faces up to five years in prison for $80,000 worth of unfinished work and fraud related to the construction of a home in Flagler County.

  • Hassler filed false paperwork with Flagler County homeowner Joan Foley's bank showing that contractors were paid for work on her home when they were not, prosecutors said. Foley realized there was a problem long before construction on her home was complete, learning there wasn't enough money left on her construction loan to finish her house, let alone pay all of the outstanding liens lodged by subcontractors. Prosecutor Steven Gosney said he also plans to file a second case against Hassler for grand theft over $100,000 in an unrelated case.

  • The case is one of several like it currently moving through the county's court system. Herbert Heron and Noel Richardson, owners of Canterbury Estates Homes Inc. and Oxford Title Company Inc., are facing charges of grand theft, organized fraud and misapplication of construction funds.

  • Gregory Bleyl, owner of Osprey Custom Homes, faces charges of forgery and grand theft.

  • And Joseph Fasino, owner of Sandcastle Homes, faces charges of organized fraud and misapplication of construction funds.

Source: Builder's fraud case one of many in county system.

For other posts on builders/contractors allegedly stiffing their customers, go here, go here, and go here. contractors stiff subs customers yelbow

Monday, September 29, 2008

Ohio AG, Mortgage Broker Settle Civil Charges Of Alleged Conduct Designed To Influence Outcome Of Appraisals In Lending Process

In Hamilton County, Ohio, the Chillicothe Gazette reports:
  • A Cincinnati mortgage broker has paid the State of Ohio $30,000 to settle a lawsuit alleging predatory lending practices. Attorney General Nancy H. Rogers reached a settlement with Ace Mortgage Funding, LLC to end a lawsuit based on Ohio's Consumer Sales Practices Act.


  • The lawsuit alleged Ace Mortgage Funding committed undue influence on appraisers by using pre-printed appraisal request forms and inserting "Estimated Value" and "Loan Amount" in an attempt to influence the outcome of the appraisal with the values they inserted. [... T]he company has agreed not to commit any unfair or deceptive acts or practices including trying to instruct, compensate, or intimidate any person into influencing the judgment of an independent appraiser.

For more, see State, mortgage broker settle suit.

For the original lawsuit filed by the Ohio AG, see State of Ohio v. Ace Mortgage Funding, LLC.

Brooklyn Court Refuses To Dismiss Suit Alleging Fraud In Foreclosure Rescue Transaction

In Brooklyn, New York, a lawsuit in which a homeowner claims that he was scammed out of ownership of his former home, and in which he seeks reconveyance of the premises to him has been allowed to continue. In refusing to dismiss the complaint, Brooklyn Supreme Court Justice Arthur Schack ruled that there were triable issues of fact as to whether their the homeowner was fraudulently induced into conveying the premises to the defendant.

For the court's ruling, and the case law cited therein, see Bryan v Lindsay, 2008 NY Slip Op 51781(U); Decided on August 27, 2008.

More On Brooklyn Supreme Court Justice Arthur Schack

In a recent opinion involving the refusal to allow a foreclosing mortgage lender to continue with a foreclosure until certain requirements are met, Brooklyn Supreme Court Justice Arthur Schack finds himself wrestling with the employment status of one Margery Rotundo, a mortgage company executive whose name appears to regularly show up on documents filed with the court in foreclosure cases involving different plaintiffs. In several recent foreclosure cases he has presided over, Justice Schack has found that Ms. Rotundo has sworn in court documents that she is Senior Vice President for:
  • Residential Loss Mitigation of Ocwen Loan Servicing, LLC,
  • Residential Loss Mitigation of HSBC Bank USA, N.A.,
  • Loss Mitigation for Nomura Credit & Capital, Inc., and
  • an unnamed servicing agent for HSBC.

Justice Schack makes this observation on Ms. Rotundo's apparent knack to freely move from mortgage company employer to mortgage company employer, as the need appears to demand:

  • The late gossip columnist Hedda Hopper and the late United States Representative Bella Abzug were famous for wearing many colorful hats. With all the corporate hats Ms. Rotundo has recently worn, she might become the contemporary millinery rival to both Ms. Hopper and Ms. Abzug. The Court needs to know the employment history of the peripatetic Ms. Rotundo. Did she truly switch employers or did plaintiff have her sign the "affidavit of merit and amount due" as its Senior Vice President solely to satisfy the Court?

For the rest of Justice Schack's opinion in this case, see HSBC Bank USA, N.A. v Charlevagne, 2008 NY Slip Op 51652(U) [20 Misc 3d 1128(A)]; Decided on August 4, 2008.

For another recent case in which Justice Schack finds himself wrestling with the employment status of another ostensibly omnipresent bank executive, a certain Scott Anderson, see HSBC Bank USA v Antrobus, 2008 NY Slip Op 51639(U) [20 Misc 3d 1127(A)]; Decided on July 31, 2008.

Go here for list of links to over thirty of Justice Schack's decisions denying foreclosure to mortgage companies for failure to establish legal standing to bring the legal action. multiple hat-wearing

Foreclosure May Be Preferable Option To Short Sale For Some

A Palm Beach Post real estate blog offers the following points in support of the proposition that, for some home sellers looking to unload a home that's worth less than the outsatnding mortgage balance, allowing the home to go into foreclosure may be better than arranging a short sale:

  • Liars have to come clean. If the seller took out a “liar loan” and indeed lied about his income, the deception will become clear in the voluminous documents required by the bank. Better to go into foreclosure than to face federal charges of bank fraud, [...].

  • The kids’ college savings will have to go. Lenders are scrutinizing sellers’ assets and forcing them to empty out nest eggs and college funds. If the seller loses the home in foreclosure, those assets aren’t at risk.

For more, see Considering a short sale? Foreclosure might be a better choice, Realtor says.

Sunday, September 28, 2008

Two Cop Plea For Bilking Prospective Tenants By Renting Foreclosed Homes They Didn't Own; Used Craigslist To Post Ads

In Vista, California, XETV-TV Channel 6 reports:
  • Two Orange County men who bilked thousands of dollars from people by renting out homes they didn't own pleaded guilty Wednesday to grand theft. Alexander Braslavsky, 34, and Anthony Patrick Marshall, 38, will be sentenced Nov. 10 in Vista. Under the terms of a plea agreement, they must pay $15,000 in compensation to four victims by the sentencing date. They each face up to 90 days in jail.

  • "I'm happy that the victims will get all their money back up front," said Deputy District Attorney Anna Winn. The prosecutor said restitution was her top goal in reaching the plea bargain. Under the plea deal, two other counts of grand theft were dismissed, as well as conspiracy and attempted grand theft charges. Winn said Braslavsky and Marshall -- who has a real estate license -- posted ads on the Craigslist Web site for five foreclosed homes in Carlsbad, Corona and Stanton and rented them out.

For more, see Pair Plead Guilty to Renting Homes They Didn't Own.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

New California Law Creates Registration, Bonding Procedure For Foreclosure Consultants; Addresses Foreclosure Surplus Scams

In Sacramento, California, the Central Valley Business Times reports:
  • Legislation designed to protect homeowners and homebuyers in California and help establish a more accountable lending environment, was signed into law Thursday by Gov. Arnold Schwarzenegger.

Among the bills signed into law by the Governor is:

  • AB 180 by Assembly Speaker Karen Bass, D-Los Angeles. This measure provides a registration and bonding process for foreclosure consultants and prohibits a foreclosure consultant from entering into an agreement to assist an owner in arranging the release of surplus funds after the trustee's sale is conducted.

For the story, see California toughens laws to protect homeowners and homebuyers.

Doc Stamp Calculation On Florida Short Sales To Be Based On Price Paid By Buyer, Not Seller's Higher Mortgage Balance

In Florida, The Tampa Tribune reports:
  • The confusion over state tax law that threatened to bottleneck home sales throughout the state has been resolved. The Florida Department of Revenue said Tuesday that real estate "document stamp" taxes should be paid on the transaction price of short sales, not the higher value of the mortgage. The Florida statute was unclear when it came to short sales - a popular strategy some troubled owners can take to sell their homes for less than the mortgage. Some title companies throughout the state had begun to charge taxes on the higher amount, causing much concern among sellers and real estate agents.

For more, see Taxes Should Be Paid On Transaction Price In State's Short Sales.

For the Florida Department of Revenue advisory, see Technical Assistance Advisement No. 09B4-001 - Documentary Stamp Tax - "Short Sales" of Florida Real Property.

Financial Crisis Crippling Legal Aid For Poor

In Philadelphia, Pennsylvania, the Philadelphia Inquirer reports:
  • The nation's financial crisis is claiming two more victims: Poor people who need legal help, and their attorneys. Programs that provide free legal representation to the indigent are partly funded through interest on accounts for real estate transactions, legal aid groups say. As the housing market collapsed this year and interest rates dropped, funds disappeared.


  • South Jersey Legal Services, which covers seven counties, will lay off five attorneys and close two offices beginning in January. It expects to provide legal help to 9,000 people next year, down from 12,000 this year. "The cruel irony of that is we have a lot of people calling us, losing their homes, being evicted from their homes, and we're not going to have the same staff as before in order to help them, which is painful," said Douglas Gershuny, executive director of South Jersey Legal Services.

  • Pennsylvania is in a slightly better position because of a state Supreme Court move, effective last week, that forces banks to make interest rates for legal aid program money comparable to other similarly sized accounts, said Alfred Azen, executive director of Pennsylvania IOLTA Board.(1) But Philadelphia-area offices are still instituting hiring freezes and not filling open positions for attorneys and other staff.

For more, see Financial crisis crippling legal aid for poor.

(1) According to the story, much of the legal aid money nationwide comes through something known as IOLTA, or Interest On Lawyers Trust Accounts, which is often managed and mandated by state supreme courts. Interest on accounts temporarily created by attorneys for clients' real estate transactions and other matters is pooled to fund these organizations. Due to the collapse in the housing market, the reduction of Federal Reserve interest rates and the overall bleak economic picture, IOLTA funds have plummeted.

NYS Housing Agency Doles Out Grants To Non-Profits To Fight Foreclosures

In upstate New York, The Central New York Business Journal reports:

Source: CNY organizations receive grants to help homeowners avert foreclosure.