Saturday, November 08, 2008

Bronx Tenant Nabbed Stiffing Landlord; Agrees To Cough Up $11M In Back Rent

In New York City, the New York Post reports:
  • The New York Yankees have agreed to fork over $11 million to the city in back rent - money the team probably would have preferred to spend on an ace starting pitcher for next season. The team underpaid the city the equivalent of Mike Mussina's salary between 2003 and 2006, according to an audit by City Comptroller William Thompson.

For more, see $11M Ballpark Figure (Yankees Can't Slide On The Rent).

HUD Issues Clarification On "Nonrecourse" Component In Reverse Mortgages

Syndicated real estate columnist Tom Kelly writes:
  • [T]he U.S. Department of Housing and Urban Development’s Home Equity Conversion Mortgage (HECM) program, the nation’s most popular reverse mortgage with a market share of at least 85 percent to 90 percent, often is marketed with the statement, “the senior can never owe more on her HECM loan than her house is worth at the time the loan is paid back.”

  • FHA recently announced the nonrecourse(1) description in all its reverse mortgages may not be fully accurate in all circumstances.

For more, see ‘Nonrecourse’ loan clarification for reverse mortgages.

(1) According to HUD, nonrecourse means that although a borrower will always owe the entire loan balance, if the borrower (or estate) does not pay the balance when due, the mortgagee’s remedy is limited to foreclosure. The borrower will not be personally liable for any deficiency resulting from the foreclosure. While the home must be sold or foreclosed to satisfy the debt, no assets, other than the home, will be used to repay the debt. reverse mortgage yak

Suspect Charged With Giving Phony Lien Satisfaction To Escrow Company Arrested Again For Using Bogus Credit Docs, Rubber Checks To Buy Vehicle

The San Bernardino County District Attorney annouced earlier this week that, Bayandre Valentine Lewis, 34, who currenly faces a charge related to real estate fraud, was arrested again at the Rancho Cucamonga Courthouse on an unrelated charge of vehicle theft.

  • Lewis, who in 2006 operated a now defunct mortgage brokerage called Baylyfe Mortgage in Upland, Ca., is currently accused of supplying a forged satisfaction of lien document to an escrow company during a refinance transaction in order to circumvent the payment of a civil judgment.

  • Prosecutors allege that in late July 2008, while he was out of custody on a bail bond, Lewis provided false credit documentation and checks with insufficient funds to Crown Toyota in Ontario in order to secure the purchase of a used 2008 F350 pick-up. The amount financed was in excess of $40,000.00. Lewis refused to return the vehicle for several weeks, and it was ultimately located and repossessed from [a] mall parking lot on October 8, 2008. [...] His bail was set at $525,000.

For the DA's press release, see Rancho Cucamonga Man Arrested for Vehicle Theft.

Waiting List Up To 25 As Chicago-Area Animal Rescue Farm Forced To Turn Away Foreclosure Pets

In Tinley Park, Illinois, The Southtown Star reports:
  • [S]everal residents who lost their homes to foreclosure now are renting and couldn't keep their dogs. That's left Dazzle's Painted Pastures animal rescue farm [...] with a slew of new friends, so many there's now a waiting list and a call for donations.


  • The dogs started coming in around May. One by one, owners tearfully dropped off their best friends. Now there's a waiting list of up to 25 dogs. "It breaks my heart to tell people I cannot take their dogs," Hamill said. "They're crying on the phone." Hamill said she gets seven to eight calls a day from people who need to drop off their four-legged pets.

For more, see Homeowners drop off dogs to animal rescue farm (Now farm needs donations, has waiting list).

For a similar story from Boston, Massachusetts, see WCVB-TV Channel 5: Shelters Overwhelmed By Abandoned Pets (Foreclosure Crisis Hits Local Pet Owners).

For other posts on foreclosure pets, go here, go here, and go here. ForeclosurePetsAlpha

Cash Strapped Fort Wayne Man Gets 8 Years For Torching Home In Foreclosure

In Fort Wayne, Indiana, the The Journal Gazette reports:
  • Setting his house on fire in an attempt to prevent foreclosure led Tuesday to an eight-year prison sentence for a 36-year-old Fort Wayne man. Kevin J. Griffin, of the 500 block of Dayton Avenue, pleaded guilty to arson in October, admitting setting fire to his home in April.


  • Days [after the torching], Griffin's wife said that when she called their mortgage company after the fire to check on the insurance, she found out the house was in foreclosure because no mortgage payments had been made for 20 months. Griffin was in charge of paying the bills and never told her about being behind on the payments, according to court documents.

For more, see Foreclosure prompts arson, divorce, sentence.

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

'Operation Growing Pains' Shuts Down 36 South Florida Indoor Pot Farms; Nab 39 Suspects, Seize $9M In Product

In Miami, Florida, WFOR-TV Channel 4 reported last week:
  • Nearly $9 million worth of marijuana won't make it to the streets of South Florida following a drug sweep in Miami-Dade County. Miami-Dade police teamed up with agents from the Drug Enforcement Agency for "Operation Growing Pains" which targeted dozens of suspected hydroponics labs.

  • In total, the two agencies took down 36 so-called 'grow houses' and made 39 arrests. More than 1,500 plants were confiscated that equaled more than two-thousand pounds of pot. The street value of all that marijuana is nearly $9 million. Police also confiscated eight firearms, $23,000 in cash as well as other drugs including ecstasy and cocaine.

Source: 'Operation Growing Pains' Nets $9 Million In Pot (Miami-Dade Police Teamed Up With DEA For County-Wide Drug Sweep, 36 Grow Houses Busted, 39 Arrests).

Go here to watch WFOR-TV video: $9 Million In Pot Seized In Hydroponic Lab Sweep.

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

Friday, November 07, 2008

Six Loan Servicers Agree To 60 Day "Cooling Off" Period On Maryland Foreclosures

In Annapolis, Maryland, The Washington Post reports:

  • Responding to the surge in mortgage delinquencies, Gov. Martin O'Malley will announce an agreement today with six loan service companies to provide help to homeowners before they lose their properties.


  • HSBC, Ocwen, GMAC ResCap, Litton Loan Servicing, AmeriNational Community Services and Citi, which handle nearly a quarter of the mortgage loans in Maryland, have agreed to a "cooling-off period" with homeowners facing foreclosure. During that time, foreclosure actions and the accrual of fees and penalties will be halted for 60 days.

For more, see Md., Lenders Make Deal To Assist Homeowners.

See also:

3rd Defendant In "Money Store" Foreclosure Rescue Scam Pleads Guilty; Seven Remain

In Greenbelt, Maryland, WTOP Radio reports:
  • Federal prosecutors say a Hyattsville woman has pleaded guilty to conspiring to defraud homeowners facing foreclosure. Thirty-one-year-old Carlisha Dixon leaded guilty on Thursday to conspiracy in a scheme that falsely promised to help homeowners keep their homes and repair their credit. Dixon is the third defendant to plead guilty and one of 10 people charged in the scheme.

  • Dixon worked for a company that helped Lanham-based Metropolitan Money Store offer foreclosure consultation and credit services to homeowners with financial problems. Prosecutors say she acted as a straw buyer and fraudulently signed loan documents. Prosecutors attribute $200,000 to $400,000 in losses in the conspiracy to Dixon.

Source: Woman pleads guilty in foreclosure fraud scheme.

See also, U.S. Attorney (Maryland) press release: Third Defendant Pleads Guilty in Metropolitan Money Store Mortgage Fraud Scheme (Ten Defendants Now Charged in Scheme to Take Title of Homes from Financially Distressed Homeowners and Secretly Use Home Equity for Personal Benefit).

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

Go here for criminal prosecutions of foreclosure rescue operators. joyjackson

Cash-Hemorrhaging Bond Insurers Drag Lenders Into Court For Mortgage Underwriting Shenanigans

Forbes reports:
  • The housing crisis is not over for bond insurer MBIA. The company is still losing money on dodgy mortgage-backed securities that it insured at the height of the U.S. housing bubble. [...] The bond insurance industry has been hemorrhaging losses as the credit crunch worsens and the financial products the companies insured have plunged in value.


  • MBIA has taken legal action against two loan sellers and servicers, and filed a claim against a third, regarding certain defaulting bundles of second-lien mortgages. The insurer is alleging that certain past loans do not meet eligibility requirements for its protection and that it should therefore not be liable for losses.

  • [Bond insurer Ambac Financial Group], which was also forced to fortify its reserves against bad residential mortgage loans, said it expects to pull in at least $500.0 million in legal damages related to underwriting shenanigans such as this.

For the story, see Second Mortgages Sting MBIA.

San Antonio Homeowner Alleges Scam As She Pays $10K In Failed Attempt To Save Home From Foreclosure

In San Antonio, Texas, WOIA-TV Channel 4 reports on a local homeowner facing foreclosure who allegedly was scammed out of $10,000 by a woman with a history of approaching cash strapped individuals with offers to save their homes.
  • [Homeowner Janie] Anderson had gotten a letter from Rosie Divins saying she could help them keep their home. The letter said the Anderson family didn't have to go into foreclosure. Divins claimed she had a way to save their home. Janie Anderson and her husband owed the mortgage company $3,600 dollars.

  • But, in the end, they wound up giving Divins $10,000. [...] Eventually, the bank foreclosed and Anderson and her husband had to get out.

  • The News 4 Trouble Shooters found out Janie Anderson is not alone. According to bankruptcy court records at the federal courthouse, at least two other families say Divins did the same thing to them. They claim she charged them thousands of dollars, but they still lost their homes.

  • This, despite the fact, that a judge told her in 2000 to stop offering people help. [...] The judge said Divins was charging an excessive fee and providing legal services without a law license.

For more, see Family Loses Home and Blames Local Businesswoman.

Foreclosed 600 Unit Houston Apartment Complex Leaves Tenants Outraged, In Limbo

In Houston, Texas, FOX 26 reports:

  • A foreclosure on the property of a north Houston apartment complex is leaving its residents in limbo. Residents say they had heard rumors of problems plaguing La Casita Apartments, rumors that appeared to be confirmed when they saw employees at the management office packing up their files and moving out. [...] Officials said the property's lienholder is working to place an interim management team, and Mayor Bill White's office will try to expedite the process so the residents of the 600-unit complex can remain in their homes.

For more, see Complex Residents Left in Limbo After Property Gets Foreclosed.

See also:

1) KPRC-TV Channel 2: Meeting To Be Held About Mass Eviction:

  • The La Casita Apartments, [...] is in foreclosure and the residents are being evicted. When the residents were told their water and lights would be turned off in a day or two, hundreds of outraged residents gathered outside in protest on Wednesday.

2) The Houston Chronicle: City helps halt evictions (Quick action helps 1,000 residents of N. Houston apartment complex from losing homes). BetaTenantRentSkimming

NYC Tenant Evictions Soar As Landlords Lose Homes To Foreclosure

In New York City, the Daily News reports:
  • The staggering rise in foreclosures and home evictions across the outer boroughs has created a new group of innocent victims - renters. A Daily News investigation shows that from Staten Island to South Jamaica, renters have been given just weeks to find new digs, while unscrupulous landlords collect rents for homes they no longer own.

For more, see Evictions soar as banks foreclose on landlords during credit crisis. BetaTenantRentSkimming

HUD Charges NY Co-Ops With Disability Discrimination For Alleged Attempt To Enforce "No-Pets" Rule On Residents Needing Animals For Emotional Support

The U.S. Department of Housing and Urban Development recently brought non-criminal, administrative charges against downstate New York housing cooperatives in two unrelated cases:

Case #1:
  • The U. S. Department of Housing and Urban Development announced [...] that it has charged The Townsend House Corp., a private cooperative in New York City, with housing discrimination for refusing to allow a family to obtain an animal that provides emotional support for their autistic child.


  • After receiving documentation from doctors confirming the child's disabilities and need for an emotional support animal, the co-op agreed to permit the parents to obtain a dog for their son, but subject only to the terms contained in a Pets License Agreement, which was drafted specifically for this family. The parents alleged that the agreement contained unreasonable restrictions.(1)

For more, see HUD Charges New York Co-Op With Discriminating Against Family Of A Disabled Child.

Case #2:

  • The U. S. Department of Housing and Urban Development announced [...] that it has charged the owners and board of directors of an apartment building in Rockville Centre, New York, with housing discrimination for refusing to allow a woman with disabilities to keep a pet for emotional support.


  • Mary Pasko,(2) who suffers from arthritis and depression, lived with her daughter Joan Anzelone at the 20-unit building. Ms. Anzelone wrote a letter to the [co-op association] requesting a waiver of its no-pet policy to allow her mother's dog Coco to reside with them as an emotional support animal for her mother. The request was denied and Anzelone was given three weeks to remove Coco.

  • The board also threatened to pursue legal action and deny parking privileges if the dog was not removed within that time frame. When the family's attorney offered to provide physician statements, the request was again denied and the board of directors later initiated legal action against Ms. Anzelone.

For more, see HUD Charges New York Landlords With Discriminating Against A Disabled Resident.

(1) According to the HUD press release, in addition to requiring the parents to obtain insurance providing liability coverage of $1,000,000.00, the Agreement imposed other discriminatory terms, including a ten-pound weight limit; a limit on how long the service animal could be left alone in the apartment; and a requirement that the dog be muzzled when in the co-op's common areas. HUD's investigation confirmed that the Agreement contained unreasonable restrictions that in effect denied the reasonable accommodation to the child, the press release stated.

(2) According to the charges, Pasko is a 90 year old woman with physical and mental disabilities, including heart disease, hypertension, arthritis, and depression. Her physical impairments coupled with her depression pose substantial limitations on her ability to care for herself, the charges allege.

Thursday, November 06, 2008

Schwarzenegger Proposes 90 Day Foreclosure Moratorium For California

In Sacramento, California, the San Francisco Chronicle reports:

  • Gov. Arnold Schwarzenegger proposed a new plan Wednesday to induce lenders to modify home loans to help struggling borrowers avoid foreclosure. [...] Schwarzenegger suggests imposing a 90-day stay for the foreclosure process for owner-occupied homes that have received notices of default. Lenders could be exempted from the stay by proving they have an "aggressive modification program" to keep borrowers in their homes.

  • The loan modifications would be modeled on the approach used by the Federal Deposit Insurance Corp. to help borrowers of the failed IndyMac Bank.


  • [State officials] said the proposal would increase loan modifications by removing loan servicers' fears that they could be sued by the investors who actually own the mortgages, and by getting the majority of companies involved in working out loans, so no one company need fear it is the only one taking such actions.

For more, see Governor proposes plan to avert foreclosures.

See also, Los Angeles Times: Schwarzenegger proposes 90-day freeze on pending home foreclosures (The plan is part of an economic stimulus package the governor expects to put before lawmakers to spur loan workouts).

Mortgage Servicers Fearing On Oncoming Foreclosure Moratorium?

An article from American Banker makes the following observation on the trouble mortgage servicing companies may face if a 90-day federal moratorium is imposed on foreclosures:
  • With pressure mounting for Congress to enact a 90-day moratorium on home foreclosures, mortgage servicers are warning that the move could have the perverse effect of prolonging the housing downturn.


  • Pooling and servicing agreements typically require that servicers advance all the principal and interest payments, as well as tax, insurance, maintenance, and foreclosure costs, to investors regardless of whether the borrower is paying. Servicers get reimbursed for expenses incurred while a loan is delinquent but only after the property goes into foreclosure, so getting repaid can take nine months to a year.

  • A foreclosure moratorium would indefinitely extend the advances that servicers pay to investors and come as borrowing facilities that servicers rely on to make advance payments are strained by the liquidity crunch.(1)

For more, see Why Foreclosure Relief Worries Many Servicers.

Go here for other related posts on mortgage servicing issues.

(1) According to the story, the chief financial officer of a New York buyer and servicer of distressed loans likened the state of the servicing industry to the "I Love Lucy" episode in which Lucy is furiously grabbing chocolates off a fast-moving conveyor belt. "The borrowers are just piling up, and servicers are inundated and overwhelmed with calls they can't answer, short sales they can't complete, and not enough staff," he said. "They need more manpower." MortgageServicingIssuesAlpha

Another Defendant In Alleged "Bait & Switch" Predatory Loan Scam Takes Plea, 3 Year Prison Sentence

In San Bernardino, California, the San Bernardino Sun reports:

  • Hassine, 25, was originally charged with 47 counts, including conspiracy, grand theft, forgery and filing false documents. As part of the plea bargain, Hassine wrote a four-page letter to the court and admitted that $2.5 million was taken from victims.

  • Hassine is the fourth defendant to plead guilty in the case, leaving as remaining defendants Tarzana-based Lifetime Financial owner Eric Pony, 26, his sister Paulette Pony, 24, and Jacob Shawn Franco.


  • The investigation is ongoing, prosecutors have said, and there could be hundreds of other homeowners who have fallen victim to a bait-and-switch scheme by operators of Lifetime Financial.

For the story, see Defendant in predatory mortgage case takes plea bargain.

The California Attorney General has filed a parallel civil lawsuit against this alleged mortgage fraud operation:

Go here for earlier posts & any updates on this story.

Lender Forced Into Shopping Center Development Business After Foreclosing On Eleven Unfinished Projects Scrambles To Preserve Financial Stake

The Wall Street Journal reports:
  • Mezzanine lender Dominion Capital Management LLC didn't anticipate developing shopping centers when it lent $170 million to developer Premier Properties USA Inc. But that is what Dominion is doing since Premier fell into bankruptcy court last spring.

  • Dominion, a small lender based in Atlanta, foreclosed in April on Premier's 11 shopping centers, which were in varied stages of development. With them, the lender inherited a pile of problems: anxious first-mortgage holders; millions of dollars in contractors' liens; and one new center where allegedly faulty construction forced retailers to vacate.

For more, see Real-Estate Slump Thrusts Lenders Into Unfamiliar Roles (Dominion Capital, 'Not a Developer,' Finds Itself Filling In for a Fallen Builder).

Hazard Reporting Co., Real Estate Firm Settle RESPA Charges; Allegedly Used Sham Entities To Hide Kickbacks, Cheat Consumers; Will Pay Up To $35M

From the Department of Housing and Urban Development ("HUD"):
  • The U.S. Department of Housing and Urban Development [recently] announced that it has settled its federal lawsuit under the Real Estate Settlement Procedures Act (RESPA) against Property I.D. Corporation, a large hazard reporting company in California, Realogy Corporation, Cendant Corporation (now known as Avis Budget Group, Inc.) and Coldwell Banker Residential Brokerage Corporation.(1)


  • HUD alleged that Property I.D. Corporation of Los Angeles made improper payments to large real estate brokers in California based on the referral of consumers to Property I.D. Such referral-based payments are kickbacks and prohibited under Section 8 of RESPA.


  • In return for these referrals, the brokers were paid through quarterly payments, $25 per report, or one-quarter of the total report's cost. The sham affiliated businesses did not provide hazard disclosure reports to non-referred customers and shared in profits based solely on the number of referrals made to Property I.D.

For more, see HUD Settles Lawsuit With California Hazard Reporting Company And Real Estate Brokerage (HUD also wins ruling giving it authority to recover illegal profits).

Go here for other HUD Settlement Agreements With Alleged RESPAViolators.

(1) A settlement in a related federal class action lawsuit requires the companies to pay up to a combined $35 million dollars, much of it to California consumers who purchased hazard disclosure reports as far back as 1996.

Wednesday, November 05, 2008

Lawsuit Alleges Rent-To-Own, Rent Skimming Scam Led To Foreclosure

In Augusta, Georgia, The Augusta Chronicle reports:
  • Regina Preetorius blames the real estate market crash. A class action lawsuit filed in federal bankruptcy court says something else caused people who did business with her company, S.D.A. & Associates, to lose their investments and face eviction papers -- fraud.


  • [Juan Valencia and Decia Bostic-Valencia] got kicked out of a house in south Augusta last year despite putting nearly $16,000 down, paying $4,000 to "loan broker" Fred Climer and making 12 monthly payments of $976, the lawsuit says. They thought that they were working toward home ownership in a rent-to-own, bond-for-title deal, [their attorney Jack] Long said. Unbeknownst to them, the complaint alleges, S.D.A. took their money while letting an outstanding mortgage on the house go unpaid, leading to foreclosure.(1)

For more, see Fraud involved in home deals, lawsuit claims.

Go here for other posts and updates on this story.

For more on problems with "Rent To Own" and Lease / Option real estate deals, go here and go here.

(1) According to the story, the lawsuit names Mrs. Preetorius, her husband, Charles "Greg" Preetorius, and Mr. Climer as defendants and seeks to create a class of plaintiffs who fell into predicaments similar to the Valencias. rent to own lease purchase option scams yellowstone

Nevada AG Charges Three In Alleged Refinance Scam; 69 Year Old Victim Left Facing Possible Foreclosure

From the office of the Nevada Atttorney General:
  • Attorney General Catherine Cortez Masto, announced today the arrests of Roxanne Lynette McCoy and Shanease Renee Bauman, employees of Proserve Mortgage. The arrests were made in connection with an alleged scheme involving the submission of forged loan application documents to a bank for a mortgage loan, after being informed by the victim, Jeri Cooper, age 69, that she could not afford the loan and did not want to complete the loan application process. A third suspect, Laticia Renee Carter, also a Proserve Mortgage employee, remains at large.


  • The State alleges that, as a result, the elderly victim is being held responsible for payment of the loan and now faces possible foreclosure.

According to the Nevada AG's press release, the Defendants are each charged with multiple felonies including:

  1. one count of Forgery,
  2. one count of Obtaining Signature by False Pretenses,
  3. one count of Theft, and
  4. one count of Mortgage Lending Fraud.

For more, see Attorney General Announces Arrests In Mortgage Loan Scam Against Senior Citizen.

Go here, go here, go here, and go here for other posts related to deed or refinancing scams by forgery, swindle, etc. DeedTheftAlpha

Lehman Maintained Squeaky Clean Image In Subprime Mess By Hiding Behind Sleazy Sub?

In New York City, The Village Voice published an investigative report on how Lehman Brothers, the so-called "white shoe" Wall Street investment banking firm maintained its squeaky clean image as it made huge profits in the filth and the sludge of the subprime sewer.
  • [I]t was a sweet proposition while it lasted. But like any racket, the subprime business had its seamier side. And for that, Lehman kept its squeaky-clean image by turning to a less holy subsidiary. Call her Aurora.

  • When the mortgage market collapsed and the huge investment bank failed last month, it dragged other financial markets down with it. Lehman's executives walked away with buckets of cash.

  • But buried beneath the bank, way down at the bottom of the pile, are people like Brooklyn lawyer Philip Grant and Bart Christofferson, an excavator in Utah. They live 2,000 miles apart, but they have one thing in common: They were both worked over by a Lehman Brothers subsidiary called Aurora Loan Services.

For more, see Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary (Lehman Brothers maintained its squeaky-clean image by relying on its seamier subsidiary. Just call her Aurora).

Go here for the entire story on one web page.

Bringing Equity Strippers To Justice May Be Tough Row To Hoe

In Minneapolis, Minnesota, Minnesota Public Radio reports:
  • There's no running count being kept, but observers agree that most of the tens of thousands of Minnesotans scammed by equity strippers, predatory lenders and mortgage fraudsters have not gotten justice. The record for those who try is mixed.

For more, see Thousands of foreclosure scams yield a small number of criminal charges.

Go here for 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.).

Tuesday, November 04, 2008

California AG Files Criminal Charges In Alleged Foreclosure Rescue, Loan Modification Scam That Clipped Homeowners For Up To $5K In Upfront Fees

The California Attorney General's office announced yesterday:

  • California Attorney General Edmund G. Brown Jr. [...] announced the arrests of three members of a fraud ring who preyed on desperate Southern California homeowners by falsely promising to renegotiate their home loans, but instead “ripped them off for thousands of dollars” while their homes fell into foreclosure.


  • California [authorities] arrested Rosa Conrado of San Bernardino, Saul Amador of West Covina, and Jesus Flores of Baldwin Park, believed to be members of the fraud ring. Law enforcement officers have issued arrest warrants for Juan Perez of Grand Terrace, and David Giron of Ontario, who are also suspected to be involved in the scheme. The Attorney General’s Office filed a 39-count complaint that includes multiple grand theft, money laundering and conspiracy charges against these suspects.(1)


  • Loan-modification scams are becoming more and more prevalent across the country, particularly in California,” Attorney General Brown said. “California homeowners should be aware of the warning signs of foreclosure scams, so they don’t fall victim to these cynical schemes.”

For more, see Attorney General Brown Breaks Up Foreclosure Scam Ring.

California AG court documents in this case:

For story update, see Press release: Attorney General Brown Sends Perpetrators of Loan Modification Fraud to Prison.

Go here for criminal prosecutions of foreclosure rescue operators.

(1) The arrests came after an investigation into First Gov, also operating as Foreclosure Prevention Services, uncovered that the company was soliciting hundreds of homeowners with mail flyers offering to help them stop the foreclosure process on their homes. The scammers falsely told homeowners that they would renegotiate their mortgages, reduce monthly payments, and transfer any delinquent loan amounts to the renegotiated principle. The company demanded an up-front fee, ranging from $1,500 to $5,000, to participate in the loan-modification program. The company also told the victims to stop any mortgage payments or communications with their lender, claiming they would interfere with the company’s effort to negotiate the loan modification.

Ohio Man Guilty Of 26 Counts In Foreclosure Rescue, Rent Skimming Scam; Allegedly Conned 14 Homeowners Into Belief He Would Renegotiate Home Loans

In Newark, Ohio, The Newark Advocate reports:
  • As the guilty verdicts piled up -- 26 in all -- Harry Blausey sank further into his chair in Common Pleas Judge Thomas Marcelain's courtroom. [...] Blausey was facing 27 felony counts connected to a scheme he perpetrated on Licking County homeowners facing foreclosure.

  • He was found guilty of deceiving those couples and individuals into signing over deeds to their homes on the premise Blausey would negotiate with their mortgage companies to avoid defaulting on their home debts. Testimony and documentation from the prosecution claimed Blausey had little, if any, communication with the lenders and profited by renting out the homes until they were sold at auction.


  • He was convicted of [...] nine counts of grand theft, 13 counts of securing writings by deception and four counts of theft.(1)

For more, see Blausey guilty on 26 counts (Businessman convicted on all but most serious charge).

See also:

Go here for other posts on foreclosure rescue operator Harry Blausey.

Go here for criminal prosecutions of foreclosure rescue operators.

(1) According to the story, Licking County Assistant Prosecutor Duke Frost said the potential exists to press forward with another indictment. "There are other pending allegations of similar conduct involving this defendant, and they'll be handled in the same manner as in any other case," he said.

In-Fighting Feds Slow Structuring Of Foreclosure Prevention Plan

The Wall Street Journal reports:
  • Disagreements over how to structure a federal foreclosure-prevention program are complicating and potentially delaying what is likely to be the Bush administration's last attempt to forestall sliding home prices.

  • The White House and the Federal Deposit Insurance Corp. are at odds over basic questions about the effort's size and breadth, several government officials said. The expectation that a new president could immediately redraw the design and scope of any plan has further delayed matters.

For more, see Homeowners Wait as Relief Plan Drags (may require subscription; if no subscription, try here, then click link for story).

Massachusetts Man Pleas Guilty To Pocketing Closing Proceeds Intended To Pay Off Existing Mortgages, Leaving Homes Facing Foreclosure

The Office of the Massachusetts Attorney General recently announced:
  • [G]erald Schena, age 57, pled guilty in Suffolk Superior Court to [over 200 charges involving a wide variety of fraudulent conduct].(1)

Among the illegal acts, Schena and co-defendant attorney Bruce Namenson(2) carried out a scheme that defrauded home sellers and buyers and financial lending institutions.

  • [B]oth men 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. After the closings, banks wired funds 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.

  • Namenson, with Schena’s help, failed to pay off the over $500,000 in mortgage debts remaining on the homes from before the sales. As a result, the homes were threatened with foreclosure. With Schena’s aid, Namenson attempted to avoid foreclosure and discovery of the thefts by periodically making partial loan payments to the banks.

For the Massachusetts AG's press release, see Medford Man Sentenced to Five Years in Jail After Pleading Guilty to Stealing Identities, Credit Card Fraud, and Other Charges.

(1) Suffolk Superior Court Judge Judith Fabricant sentenced Schena to serve five years in the House of Correction, to be followed by 10 years of probation. As part of his probation, Schena must repay over $500,000 in restitution.

(2) Namenson received five years for his part in the scam. sneaky slick escrow agents gamma

Washington Man Found Guilty Of Swindling Nearly $1M From Elderly Widow, Leaving Her Facing Foreclosure

In Vancouver, Washington, The Columbian reported last Friday:
  • A Vancouver man was convicted Friday of scamming an elderly widow out of nearly $1 million over five years by wildly overcharging for home-improvement projects and convincing her she was investing in other properties. In what’s believed to be the largest theft case prosecuted in Clark County, a jury [...] deliberated 2 hours before finding Richard M. Amaro guilty of 12 counts of first-degree theft, three counts of contracting without a license and two counts of second-degree theft.


  • During three days of testimony, jurors heard how Amaro befriended Pamela Leibel in 2002 after knocking on her door in the Fairway Village retirement community in east Vancouver and offering to clean her gutters. Over the next five years he did projects at her home at incredibly inflated costs, for example charging $130,000 to rebuild her deck twice. A licensed contractor testified that he would have bid $6,700 for the project.

In an earlier story, The Columbian reported:

  • In November 2007, by the time Detective Jane Easter from the Vancouver Police Department found out about the case, “[The widow] was down to eating a packet of oatmeal, split three ways, for her meals,” [Senior Deputy Prosecuting Attorney Jim] David said. And her home, which she had owned outright, was in foreclosure because she’d taken out a $285,000 mortgage in order to keep paying Amaro. [...] An attorney did help [the widow] save her home.

For more, see:

For story update (11-13-08), see Seattle Times: Man sentenced for scamming Vancouver woman (A man who scammed $981,000 from an elderly woman was sentenced in Vancouver to nine years in prison).

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

Failed Miami Condo Conversion Project Leaves Lender Holding The Bag On 333 Unsold Units Securing $28M+

In Miami, Florida, the South Florida Business Journal reports:
  • AmTrust Bank is looking to foreclose on a mortgage it holds on 333 units in the Miami condo-conversion project Residences at the Falls in southwest Miami. A notice of lis pendens was filed on Oct. 16 in Miami-Dade County against the developer, Lucky Chase II, which is controlled by Pittsburgh-based Deaktor Development.


  • According to the complaint, the developer didn’t pay off the loan when it came due on Aug. 9. Lucky Chase II owes nearly $28.9 million on the balance, accrued interest and other charges, the complaint says. It’s racking up a little more than $10,000 per day in interest.


  • The developer sold 313 units, according to county records.(1) AmTrust’s lis pendens named 333 unsold units in the foreclosure.

For the story, see Residences at the Falls has 333 units facing foreclosure.

(1) I wonder how many of the 313 privately owned units are also in foreclosure, and also wonder how badly the unwitting private unit owners who find themselves stuck with their apartments in this complex are getting creamed on their monthly/quarterly maintenance fees.

Mass AG Brings "Sewer Service" Charges Against Process Server In Civil Suit For Allegedly Failing To Deliver Legal Papers To Parties Named In Lawsuits

From the Massachusetts Attorney General's office:
  • Attorney General Martha Coakley’s Office has filed a lawsuit and obtained a temporary restraining order against Boston-based process server Stokes & Levin, Inc. and its sole officer and director, Darren Stokes, in connection with allegations that Stokes & Levin engaged in a pattern of falsifying service of legal papers and filing those documents with state and federal courts.


  • According to the complaint, [...] Stokes & Levin filed documents on multiple occasions with courts, indicating that it had served documents on the intended recipients, when in fact, Stokes & Levin had not served the documents at all. These alleged actions left individuals exposed to potential liability in cases that they may not have been aware of.

  • Stokes & Levin also allegedly misrepresented in court filings and at court hearings that service of legal documents had occurred, thereby signaling that cases could proceed, when in fact, the intended recipients had not received the documents and were not on notice of the legal proceedings and hearings in which they were expected to participate and attend.

For more, see AG Coakley Obtains Temporary Restraining Order Against Process Server for Making False Representations to Courts.

For earlier media reports on this process server firm, see

Go here for other posts on "sewer service" which, according to at least one source, is so named on the theory that the process server simply tosses the legal papers into the sewer instead of attempting to deliver them to the proper party named in the lawsuit. The server then files a sworn statement with the court attesting that the papers were properly served on the named parties.

Go here for other posts on process server screw ups. ScrewUpProcessServing SewerServiceAlpha

Arizona Man Gets 16 Months In Alleged Straw Buyer Scam That Left Lenders Holding The Bag On $13M In Mortgage Loans On 23 Homes

In Tuscon, Arizona, the Tuscon Citizen reports:
  • [Carlos Bent] was sentenced Monday to 16 months in federal prison for his role in a $13 million mortgage scam. [...] Bent and Tucsonan Frank L. Padilla were indicted on 59 charges including conspiracy, wire fraud and engaging in illegal monetary transactions in amounts greater than $10,000. Both men pleaded guilty to conspiracy to commit wire fraud.(1)


  • An investigation by the IRS's Criminal Investigation Division and the FBI found that Padilla and Bent targeted area homeowners whose properties sat unsold on the market for months.

  • The men told the homeowners that the properties were worth more than the listed price and they would sell them for more and pocket the difference, the indictment said. The men paid outsiders to pose as buyers and got 23 mortgage loans by providing false information, the indictment said. Minimal or no payments on the mortgages were made and the properties became at risk of foreclosure.

Source: Tucsonan gets 16 months in federal prison for $13 million mortgage scam.

(1) According to the story, Bent was also sentenced to an additional three years of supervised release; Padilla was sentenced in June to two years in prison and three years' probation.

Monday, November 03, 2008

Lender Self-Imposes 90 Day Foreclosure Moratorium; Will Launch Massive Loan Modification Program

The Wall Street Journal reports:
  • J.P. Morgan Chase & Co. launched an ambitious plan Friday to modify the terms of $70 billion in mortgages for borrowers who are behind on their payments or soon could be. The move by the New York bank will cover as many as 400,000 borrowers. They'll be moved into loans carrying lower interest rates, smaller principal amounts or other more-affordable terms.


  • Under the plan, option ARMs that are accumulating interest will be replaced with fixed-rate loans that are more stable for borrowers and seen as far less likely to default. J.P. Morgan said it wouldn't begin the foreclosure process on borrowers during the next 90 days, as it opens loan-counseling centers and takes other steps to launch the program.

For more, see Massive Effort to Save Mortgages.

50%+ Of Delinquent IndyMac Borrowers Fail To Respond To Lender's Loan Modification Offer

The Los Angeles Times reports:
  • The Federal Deposit Insurance Corp.'s program to lower loan payments for struggling borrowers with mortgages from IndyMac Bank has been lauded by consumer advocates and government leaders as a model of foreclosure prevention.

  • But when the FDIC, which is running IndyMac, mailed out 35,000 letters offering homeowners a chance to rework the terms of their mortgages, more than half the borrowers were apparently so discouraged, scared or stressed out that they didn't bother to respond.

For more, see Struggling IndyMac borrowers may be in the dark about offer to lower their mortgage payments (The FDIC, which is running the bank, says more than half of those who were sent letters giving them the chance to rework the terms of their loans haven't responded).

Generous Homeowner Foreclosure Bailout Programs A "Free Lunch" Spurring Intentional Defaults?

The New York Times reports:
  • [W]ashington and Wall Street are frantically seeking to stabilize markets by curtailing the onslaught of foreclosures. There are now at least four major plans to aid homeowners. But experts say it is difficult to design these programs in ways that reduce the indebtedness of the distressed without giving everyone else a reason to mail the keys back to their lenders. “If the lunch truly is free, the demand for free lunches will be large,” said Paul McCulley, a managing director with the investment firm Pimco.

For more, see Mortgage Plan May Irk Those It Doesn’t Help.

Judge Voids Tax Lien Foreclosure Sale; Finds Faulty Notice To Owner = No Due Process; Subsequent Purchaser Ordered To Give Back Property

In Bridgeport, Connecticut, The Connecticut Post reports:
  • A Wood Avenue lot seized by the city through foreclosure and sold to a developer must be given back to the original owner, a Superior Court judge ruled last week. Judge John Blawie ruled that because the city did not send notice of the foreclosure to the correct address, its attempt to take property for tax delinquency is null and void.

  • Waikele Properties Corp., the Garden City, N.Y.-based developer that bought the Wood Avenue property from the city after the foreclosure, had begun clearing the property, digging a large hole in the center to build a house.

  • "In this case, the best address for the [defendant] was available right in City Hall. Because city officials did not comply with the notice procedures found in the governing statute," Blawie states in his ruling. "This court finds that due process was not afforded the [defendant] before tax liens on the property were foreclosed."


  • "Because notice of the petition was never mailed to the correct address, the defendants had no opportunity to present their case in court and be heard in its support before the property was taken by the plaintiff for unpaid taxes," the judge said. "At the very least, the defendants were deprived of the opportunity to make payment of any delinquent city property taxes before the court ordered the forfeiture of their property to the plaintiff."

For more, see Foreclosure notice to dead man (Judge orders seized, then sold, land returned to owner).

For the court decision, see City of Bridgeport v. List of 41 Parcels, CV065004804S, 2008 Conn. Super. LEXIS 2701 (Super. Ct., Dist. of Fairfield at Bridgeport, October 24, 2008) (case access may require free registration at LexisOne Free Case Law).

Go here and go here for other posts on foreclosures involving faulty notifications to property owners. foreclosure faulty notice

Sunday, November 02, 2008

The "Bonnie & Clyde" Of Mortgage Fraud?

Bloomberg News reports on the story of Eve Mazzarella, a former up and coming Las Vegas real estate agent until, along with her morgage broker husband Steven Grimm, were slammed with a bank fraud and conspiracy indictment by the local Feds.
  • Prosecutors say the pair recruited fake -- or ``straw'' -- buyers to apply for loans to purchase 227 properties worth $107 million. They told the straw buyers they would pay the mortgages. Then they skimmed thousands of dollars from each of more than 432 transactions, the indictment says, stashing the cash in 80 bank accounts.


  • If prosecutors are right, Mazzarella and Grimm were the Bonnie and Clyde of mortgage fraud -- among the greediest of a band of swindlers who took advantage of lax lending standards at profit-hungry banks, which stopped verifying income and assets for even questionable borrowers.

For more, see Maid-Turned-Realtor Ran Vegas Mortgage Scam, Prosecutors Say.

San Diego DA's Office Using Mail To Issue Scam Warnings To Homeowners Facing Foreclosure

In San Diego, California, NBC-TV Channels 7/39 report:
  • Those falling behind on their house payments are increasingly being targeted by scam artists. Authorities say it's a problem that is likely to get bigger as more homeowners face foreclosure. The deputy district attorney's office has moved to protect homeowners, by sending out pamphlets to people who are late paying their mortgage or have received what's called a notice-of-default.

  • "We've seen a lot more activity in people taking advantage of distressed homeowners and we want to make sure they know how they're protected," said Michael Groch, Head of the Economic Crimes Division at the Deputy District Attorney's Office. He said those offering services to help those facing foreclosure: (1) Cannot accept money up-front, (2) Cannot take an ownership interest in the home, (3) Must provide a written contract detailing services offered, including how the contract can be terminated.

  • Groch says not following these guidelines could be a misdemeanor or a felony. They can carry a maximum sentence of up to three years in prison.

For more, see Scam Artists Target Foreclosure Victims (Authorities move to protect distressed homeowners).

100+ Spokane Seniors May Face Eviction As Local Retirement Home Faces Foreclosure

In Spokane, Washington, KXLY-TV Channel 4 reports:
  • More than 100 Spokane seniors are wondering if they'll have to find a new place to live while their retirement complex faces foreclosure. The developer of Clare House on the South Hill is millions of dollars in debt and the property is heading for the auction block.

  • The seniors living there are pretty worried because not only will their retirement complex be changing hands but many of the residents living here can't afford to move some where else.

For more, see Retirement complex to be auctioned (read story) (watch KXLY-TV video).

See also, Spokane Journal of Business: Retirement complex faces foreclosure (Clare House Apartments placed in receivership pending trustee sale). BetaTenantRentSkimming

Foreclosed Landlord's Failure To Pay Utility Bill Results In Gas Shut-Off, Leaving Tenants In 10-Unit Building Facing Eviction

In Battle Creek, Michigan, the Battle Creek Enquirer reports:
  • Residents of a 10-unit apartment house on Capital Avenue, Northeast, are facing forcible eviction [...] because the property owner is not providing heat for the building.

  • Henry Turner, owner of the house [...] said Tuesday he had gotten a personal loan through his credit union to help cover the months-old, unpaid $4,800 natural gas bill that led to the service being cut off. [...] But the house has other code violations that may keep it condemned even after the gas is back on, said Marcie Gillette, neighborhood services director for the city of Battle Creek.


  • A city housing inspector went to the house on Oct. 20 and 22 and found that it did not meet safety standards because it lacked central heat. "He found tenants heating their homes with their oven doors open," Gillette said, "which is a huge fire and safety concern." [...] Turner said he owns four rental properties and has been struggling with finances at all of them.


  • City tax records show that the home, owned by Turner and his wife, Rhonda, was foreclosed upon this year. It was purchased Oct. 9 by its previous owners, Carl and Barbara Dennis, in a sheriff's foreclosure sale, the records show. The Turners remain responsible for the property during the six months they have to try to pay off what's owed on the house and retain ownership.(1)

For more, see Gas cut, tenants may be evicted.

See also: Court hearing set on unheated apartment building.

(1) Michigan law gives foreclosed property owners a six month redemption period after a foreclosure sale to come up with the amount needed to pay off the amount owed and keep their property. BetaTenantRentSkimming

Ontario Cops Catch Up With Forgery Suspect; Charge Man With Pocketing $105K+ In Alleged Refinance Scam

In Ontario, California, the Contra Costa Times reports:
  • A Riverside man has been arrested on suspicion of grand theft and forgery in the conning of an Ontario woman in May out of more than $105,000 in a home-mortgage fraud. Arthur Lee Harris, 35, was arrested Oct. 15 after evading Ontario police for more than five months. [...] Nestor Miguel Reyes, 33, of Covina - who is accused of aiding Harris in the scam - was arrested in August on suspicion of perjury, theft and forgery.


  • Earlier this year, Harris posed as a finance broker. He would befriend people, gain their trust and assist in refinancing houses, Ontario police Detective Al Parra said in August. Customers would later discover their house had been refinanced, but for thousands of dollars more than they originally signed.

  • Reyes would pose as an escrow officer who processed the loans and recorded forged loan documents, authorities said. Virtually every document that was filed was forged, Parra said.

Source: Man accused of bilking Ontario woman out of home.

For an earlier report on this story, see The San Bernardino Sun: Woman loses $105,000; 2 suspected in fraud case.

Go here, go here, go here, and go here for other posts related to deed theft or refinancing scams by forgery, swindle, etc. DeedTheftAlpha