Saturday, January 03, 2009

One Dead, One Jailed At Illegal "Pay At Door" Bash At Hillside Mansion In Foreclosure; Catered Events In Defaulted Upscale Homes More Common, Say Cops

In Los Angeles, California, the Los Angeles Times reports:
  • Los Angeles police have arrested a man in the shooting death of a onetime local basketball star at a heavily promoted New Year's Eve party at a rented Coldwater Canyon mansion.


  • The shooting [...] is the latest incident involving so-called party houses, sprawling hillside mansions that host illegal, professionally catered and paid events. [...] Police described [the alleged shooter] as a friend of a female party promoter who organized the New Year's bash at the hillside estate on a winding street of three- and four-story houses with canyon and ridge-top views. The property, police said, is in foreclosure.


  • Police described the event as a "pay-at-the-door, illegal party," a type that has become increasingly popular during the real estate foreclosure crisis. "Unfortunately, we're seeing these in foreclosed homes," Hamilton said of the parties. "You get what you get in that type of situation."

  • Fliers for the party invited guests to a "Winter Wonderland," according to several area residents, who declined to be identified. The fliers also requested that partygoers "dress to impress" and advertised appetizers and an open bar.

For more, see Man held in slaying at Coldwater Canyon party in Los Angeles (Police say a dispute over food at an illegal event in a foreclosed mansion escalated into violence. The victim, Felix L. Lang Jr., was a former star basketball player at Valley College).

See also, The Associated Press: Man held for shooting death at New Year's party.

Go here for other posts on vacant or foreclosed homes being used for unauthorized parties. teen parties vacant homes

Connecticut Warns Consumers Against Unsolicited Mortgage, Credit Card Debt Assistance; False Offers Of Help Are A "Scavenger Hunt" Says State AG

From the Office of the Connecticut Attorney General:
  • Attorney General Richard Blumenthal issued an urgent consumer warning [last week] about unsolicited calls to consumers offering reduced rates on mortgages or credit card debt.


  • "Our advice to consumers: hang up on unsolicited offers," Blumenthal said. "This scam victimizes our most vulnerable citizens -- homeowners desperate to save their families and escape financial ruin. This reprehensible ruse -- false promises of reduced rates on mortgage and debt -- is actually a scavenger hunt for private, personal information on consumers that may be illegally exploited. Consumers who divulge details hopeful for better lives will find only deeper financial ruin."

For the Connecticut AG press release, see Attorney General Issues Consumer Alert On Mortgage And Debt Rescue Scam. loan modification

Missouri AG Brings Civil Suit Against Homebuilder For Allegedly Pocketing Customer Cash & Either Failing To Perform Work Or Doing So In Shoddy Manner

From the Office of the Missouri Attorney General:
  • The Franklin County Circuit Court has entered an order against homebuilder Jason Woods that prevents him from doing any home repair or construction in Missouri while a lawsuit brought by the Attorney General's Office is pending.

  • The lawsuit,(1) filed in October, alleges that Woods, who does business as Timber Ridge Construction, took money for home repair or construction projects from consumers but then either failed to do the work or did the work in a shoddy manner.

For the Missouri AG press release, see Preliminary injunction prevents homebuilder accused of fraud from doing business while AG lawsuit is pending.

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

(1) According to the Missouri AG press release, the lawsuit alleges that Woods entered into a contract with one consumer in which Woods was paid a total of $138,951 to construct a new home on property owned by the consumer. However, Woods allegedly failed to complete the construction of the house per the specifications listed in the agreement; and the work completed was also alleged to have been done using poor workmanship. The lawsuit also alleges the defendant entered into a contract with another homeowner couple to construct a storage building on the couple's property. The couple paid Woods a total of $30,000 to construct the structure, but he failed to do so, according to the AG's press release. StiffingContractorsTheta

Massachusetts AG Continues Effort Against Housing Discrimination

Massachusetts Attorney General Martha Coakley's Office has recently issued news releases in connection with its efforts targeting housing discrimination:
  • AG Coakley Obtains Consent Judgment Against Cambridge Realty Company in Housing Discrimination Case: Resolved claims that company discriminated against a disabled Cambridge resident by refusing to rent her an apartment because it did not want to accept the lease requirements of the state-assisted housing program. The consent judgment permanently prohibits Oxford Street Realty, Inc. and its President, Jeffrey Indeck, from discriminating against tenants who have federal or state housing subsidies and requires defendants to pay the tenant $35,000 in damages.

  • AG Coakley Obtains Consent Judgment Against Pittsfield Property Owner in Housing Discrimination Case: Resolves claims that Wahconah Grove Realty Trust and its property manager, Douglas Malins, violated state antidiscrimination laws by discriminating against a tenant on the basis of race. The defendants have agreed to pay $10,000 to the tenant as part of the settlement of the case. The complaint alleged that Malins prohibited a tenant’s grandson, who is biracial, from visiting her apartment and that he interfered with the tenant’s right to have African-American guests at her apartment.

Feds Put Squeeze On Vegas Landlords Accused Of Discriminating Against Families With Children; Tenant Gets $30K Settlement To Resolve Claims

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • The federal government recently settled a complaint against the owners of Las Vegas apartments who allegedly discriminated against families, the third such case in the valley in two years.

  • The repeated cases involving hundreds of apartments mean “there definitely is discrimination against families with children” in the Las Vegas Valley, said Chuck Hauptman, a representative of the Housing and Urban Development Department’s San Francisco office of fair housing and equal opportunity.

  • He said the agency wants valley landlords to be on notice that this is illegal, a message that’s especially crucial when families with children are among the many seeking rental housing in the wake of the valley’s foreclosure crisis.

  • In the most recent case, which was settled in October, HUD, rather than the victim, had filed the complaint, indicating the alleged discrimination was flagrant and easy to prove.(1)

For the rest of the story, see U.S. strikes at landlord bias against children (HUD gets payments to families, message to apartment owners).

(1) According to the story, the allegations were resolved when the landlord agreed to pay the tenant $30,000 and to set aside money for any other victims, as well as to stop the policy of not renting to children. In another case, HUD allegations were reportedly resolved when the landlord agreed to pay $75,000 total to four families the apartment management evicted or attempted to evict. Some of the settlement money was set aside to compensate any victims who come forth in the future.

Failure To Report Living Companion Leads To Hot Water For Alleged Housing Assistance Cheats

Recent Ventura County, California District Attorney prosecutions of housing assistance fraud:
  • Nina Marie McMahan was sentenced to one year in the county jail as a result of her guilty plea to a charge of grand theft. McMahan was also placed on felony probation for 36 months and ordered to pay restitution of $49,660 to two public assistance agencies. Under penalty of perjury, McMahan failed to report that her husband was living at the residence and failed to report his earned income as part of the total household income. Go here and go here for the press releases.

  • AnnaMarie Tamayo was arrested for felony grand theft for housing assistance fraud. Tamayo is alleged to have received $3,051 in public assistance funds over a three-month period for which she was not legally entitled. Tamayo allegedly failed to report that her boyfriend, who was on felony probation, was also living at the residence. Tamayo was required to report any changes in her household composition to the local Housing Authority within 10 days. Housing authority rules and regulations preclude individuals with a felony conviction from residing in public assistance housing. Go here for press release.

  • Juana Nunez was arrested pursuant to a felony warrant for welfare fraud and housing assistance fraud. Nunez is alleged to have received $152,576 in public assistance funds from the two separate government programs for which she was not legally entitled over a period spanning ten years. Nunez allegedly received $19,556 in food stamps for which she was not entitled and also allegedly received $133,120 in housing benefits from the Ventura Housing Authority for which she was not legally entitled. Under penalty of perjury, Nunez failed to report that her boyfriend was living at the residence and failed to report his earned income as part of the total household income. Go here for press release.

Friday, January 02, 2009

Federal Prison Sentences Expected To Get Stiffer As Tanking Real Estate Market Drives Up Lenders' Losses From Mortgage Fraud

Buried in a recent story in the South Florida Sun Sentinel is an observation that prison sentences in federal mortgage fraud prosecutions will begin becoming stiffer than they have been:
  • [U]ntil now, the punishments meted out to mortgage fraud offenders have been relatively mild — usually less than five years' imprisonment and sometimes nothing more than probation.

  • That's because under federal sentencing guidelines, penalities in such cases are tied to the amount of documented financial loss. When home prices were climbing, fraudsters generally paid off their loans and lenders had no direct losses.

  • Now the foreclosure crisis is driving up losses, resulting in stiffer punishment. In [one recent] case, prosecutors and defense lawyers agreed [a mortgage scam defendant's] crimes cost lenders at least $1 million because many of the properties he purchased were subsequently foreclosed on at a loss [he received eight years in prison].

Source: Mortgage fraud cases in South Florida might bring stiffer sentences (Judge imposes 8-year term, saying he wants to deter others).

Colorado Man Cops Plea To One Count Of Forgery In Alleged Mortgage Scam; Gets Free Pass From Prosecution In Cases Involving 15 Other Properties

In Weld County, Colorado, the Greeley Tribune reports:
  • A Greeley man who holds himself out as a real estate broker and builder and is a defendant in a civil fraud case(1) pleaded guilty to forgery [...] in exchange for immunity on other mortgage crimes. Ernest Salazar Jr., 49, pleaded to the felony [...] and faces from one to three years behind bars.


  • Weld District Attorney Ken Buck said he will ask for jail time but would not discuss specifics. He said he had been talking with Salazar’s attorney prior to the grand jury indictment against Salazar, and agreed to pursue only one felony charge. “I think that our resources are best spent pursuing the other targets we have identified,” Buck said. “I’d say stay tuned.” Buck said he couldn’t elaborate about who else may have been involved.

  • Salazar said he would plead guilty to forgery if the Weld District Attorney’s Office agreed not to pursue charges in cases involving 15 properties(2) he worked with through his businesses, Sunset Construction, Sunrise Mortgage, A-1 Action Construction and All-Pro Mortgage.

For more, see Greeley man pleads in forgery case in deal with Weld DA.

(1) According to the story, the civil case against Salazar was filed in February, and alleges that he defrauded a man and other property owners in a series of real estate flipping schemes throughout Greeley and Windsor, designed to either steal equity, use others’ credit to obtain loans and skim off the top, and flat out steal money. Reportedly, the civil suit claims that the damage done to individual investors exceeds $800,000.

(2) Salazar's ostensibly sweet plea bargain may have possibly been obtained as a result of his "winning the race to the prosecutor's office" - which has been described as a natural phenomenon that arises whenever the government has multiple targets in its crosshairs. In this case, Salazar, the first "fish" to get to the prosecutor, negotiates a great plea deal for himself in exchange for an agreement to "sing" against the other "fish" (ie. his confederates in the alleged scam). The more "fish" Salazar can help the prosecutor "reel in" (through convictions), the less time he'll have to spend in the "frying pan" (ie. prison) when the "fish fry" takes place (ie. sentencing day).

Sacramento Man Cops Guilty Pleas In Alleged "Cash Back" Fraud Scam Involving $11M+ In Fraudulent Loan Activity, Approximately 20 Homes

In Sacramento, California, United States Attorney McGregor W. Scott (Eastern District of California) announced that Derek Davis, aka Terry McCullough, 62, of Sacramento, entered guilty pleas in an alleged "cash back" mortgage swindle involving in excess of $1 million in stolen funds and more than $11.3 million in fraudulently obtained loans on approximately 20 homes in the Sacramento region. The losses caused by Davis's conduct exceed $2,500,000, according to prosecutors. From the press release:
  • According to [prosecutors], Davis admitted that [...] he participated in a mortgage fraud scheme in which several individuals purchased approximately 20 residential real properties using a form of 100 percent financing called "80/20." In the transactions, Davis caused material misstatements to be made about the purchasers’ monthly income and intent to occupy the property.

  • He further admitted that in the transactions an amount approximately equal to the difference between the purchase price and the true market price of the properties was credited as "cash back" at the close of each escrow to the bank account of a Nevada Corporation he controlled [...]. Davis caused these credits to be concealed from lenders. [...] In total, approximately $1,400,000 was transferred to [the Nevada corporation] from escrow companies in connection with the approximately 20 real property transactions.

For the U.S Attorney press release, see Sacramento Area Fraudster Enters Guilty Pleas In 'Cash Back' Mortgage fraud Scheme.

For earlier reports on this case, see:

Thanks to Tim McDaniel for the heads up on the story.

Virginia Developer Faces Forgery Charges Involving Bogus Certificates Of Occupancy Used To Push Thru Home Sale Closings

In Gloucester County, Virginia, the Daily Mail reports:
  • Four Gloucester county supervisors and the sheriff have seen indictments handed up by a special grand jury in July dismissed or not prosecuted, but developer George Woodhouse is still facing 10 felony counts.

  • Woodhouse — who developed the unfinished Dunston Hall subdivision, as well as the Bray Woods subdivision — is scheduled to go to trial in February on charges involving forged county certificates of occupancy for five homes in March and June 2007.

  • The forged certificates of occupancy allowed the closing of sales on the homes and the release of money from Woodhouse's lender, EVB Mortgage, earlier than when the county would have issued genuine documents. All homes involved ultimately passed required inspections.

For more, see Forgery trial for Gloucester developer scheduled for Feb. (George Woodhouse will face 10 felony counts related to forged county certificates of occupancy for five homes).

ACORN Protestors Picket Mortgage Company On Behalf Of Homeowner Facing Foreclosure; Claims Lender Screwed Up In Accounting For Loan Payments

In Fort Worth, Texas, the Fort Worth Star Telegram reports:
  • Eight people chanted, sang protest songs and marched with placards Wednesday outside the Fort Worth office of Saxon Home Mortgage in support of a man facing foreclosure despite his assertions that he was not in arrears and that Saxon had mislaid his property-tax payments.


  • The 36-year-old homeowner said he had gotten no clear answers from Saxon’s customer service until he asked ACORN to intervene. "Without them, I know I wouldn’t have gotten anywhere," he told the Star-Telegram. "I’d still be getting the runaround."

For the story, see ACORN protests at Fort Worth mortgage company over planned foreclosure.

HELOC Freeze Puts Squeeze On Family's College Tuition Plans

In Algonquin, Illinois, the Chicago Sun Times reports:
  • Jim and Cindy Ranallo are determined to give their two sons one thing they don't have: a four-year college degree. But the home equity line of credit they were relying on to get both boys through school was unexpectedly frozen by JPMorgan Chase weeks before their elder son's recent tuition payment was due.


  • The Ranallos' situation is a familiar one for hundreds of thousands of Americans who have found their home equity credit lines frozen or reduced this year. Their struggle to send their children to college also is familiar to parents patching funds together for higher education, constantly worried they will come up short.


  • Hysterical after opening the bank's letter, Cindy Ranallo feared her son would be kicked out of school because they couldn't afford it. A [college] official reassured the Ranallos that they would find a way for their son to stay, offering additional student loans, which the family accepted.

For more, see Frozen home equity loan hurts family (ECONOMY'S VICTIMS: Freezing of home equity loan threatens to kill Algonquin family's dream of sending sons to college).

The U.S. Office of Thrift Supervision recently issued a six-page letter of guidance which generally explains what obligations lenders have in connection with the freezing of home-equity lines of credit [HELOCs].

Go here for other posts on Frozen HELOCs.

Thursday, January 01, 2009

Buying/Selling Vacant Foreclosed Homes In Cold Weather Regions Not A "Winter Wonderland"

In the St. Paul / Minneapolis area of Minnesota, the Pioneer Press reports:
  • [W]hether it's water heaters that have exploded like frozen pop cans, snow-covered walks and roofs, or indoor temperatures that make you want to warm up outside, unique promises await those who try to sell foreclosed homes during winter in Minnesota.


  • Once inside, the potential buyer of a foreclosure will learn quickly whether the home has been properly "winterized." That means shutting off the water, draining pipes and emptying the water heater to prevent freezing, [...].

  • Plumbers who do the work also will dump antifreeze down the kitchen sink and the toilet, [...] and drain water from radiators and the boiler where needed. Failure to winterize can result in burst pipes and radiators and even cracked toilet tanks.

  • Potential buyers must have foreclosed properties "de-winterized" to perform good inspections, said John Piché, an agent with Century 21 Jay Blank in Roseville who specializes in foreclosed homes. That can mean anywhere from $100 to $300 to get water back into the house so a buyer can see whether the plumbing is in good condition. [...] Piché recalled one case where de-winterizing a foreclosed home revealed a broken release valve on the water heater. The valve had blown off, so the only way for the buyer to test the system was to pay $100 for a plumber to bypass the tank, Piché said. In the end, he said, the buyer opted against the purchase, because the de-winterization revealed cracks in the radiators.

For more, see Winter takes toll on efforts to sell homes in foreclosure (Burst pipes, snow-covered roofs, higher inspection costs add to buyer's burden).

Go here for more on freezing pipes in vacant homes. frozenpipetheta

More Stories Related To Foreclosure & The Tightening Economy

More stories related to foreclosure and the tightening economy from around the country:

  • Foreclosures Don’t Spare the House of God: The era of easy credit has begun taking its toll on even the most sacred of borrowers, religious institutions. Hundreds of churches across the country have received foreclosure notices in recent months, and even more are behind on mortgage payments. Historically, churches were wary of debt, and many old-line congregations have owned their buildings free and clear for decades. But borrowing by churches became more common in the 1990s.

  • Kansas Shelters See Surge in Abandoned Horses: Dogs and cats aren't the only animals suffering as the economy takes a toll on pet owners. Rescue groups in Kansas say they're seeing a surge in the number of horses being abandoned, especially older horses. Ande Miller, president and founder of the Hope in the Valley Equine Rescue and Sanctuary near Valley Center, Kansas said the 3-year-old shelter normally cares for 10 to 15 abandoned horses at any given time. But in recent months that number has jumped to between 25 and 30 animals.

  • Animal rescue site opens kids eyes: Former major league baseball player Shea Hillenbrand, and his wife Jessica Hillenbrand own and operate Marley Farms, a Gilbert, Arizona animal rescue and petting zoo. The family bought the 25-acre farm last year, and established their nonprofit organization, Against All Odds, with two missions in mind - rescue animals and help disadvantaged children or kids in crisis, Hillenbrand said.

  • New Law Means Realtors Responsible For Pets Left At Foreclosed Homes: In Contra Costa County, California, thousands of people have lost their homes to foreclosure, and some of them leave behind the family pet. In response to this continuing trend, state Assemblyman Mark Desaulnier, D-Concord, introduced Assembly Bill 2949 this year calling for real estate agents, landlords and property managers to take responsibility for those abandoned pets.

  • Skaters Jump In as Foreclosures Drain the Pool: Pools in abandoned foreclosed homes are being converted into skateboard parks. Skaters are coming to places like Fresno from as far as Germany and Australia. Reportedly, older, kidney-shaped pools are preferred. One skateboarder said his floor and couch were covered by sleeping bags of visiting skateboarders each weekend. Some skateboarders use realty tracking sites like and to find foreclosed houses with pools, while others trawl through satellite images from Google Earth. On the Web site, where skaters trade tips about how to find and drain abandoned pools, one poster wrote about the current economic malaise. “God bless Greenspan,” the post read, “patron saint of pool skatin’.”

  • St. Paul looks for squatters in foreclosed homes: One night a week, crews from St. Paul, Minnesota's city inspector's office make surprise visits to foreclosed buildings with a mission: to look for people who might be living there illegally. Inspectors try to avoid evicting people on the spot unless they are chronic offenders. In cases that involve repeat squatters, inspectors may issue a criminal citation, kick out the residents and board up the building.

  • Contractors Discover Marijuana Grow House: Lake Mary, Florida police want to find the people who abandoned a suspected drug house. They found pot plants and growing equipment inside a home but no people. Police were led to the house by contractors who were there to do some work. When they went inside, they found bags of pot and growing equipment. Neighbors told Eyewitness News the house was in foreclosure and the last tenants moved out a year ago.

Fire Responders Feel Added Risks, Burdens From Vacant Homes, Foreclosures, Evictions

The following stories reflect the added burdens firefighters face as a result of the troubled economy:
  • Dover-Foxcroft, Maine: As the economy worsens, state fire marshals are seeing more buildings and vehicles going up in smoke. State Fire Marshal John Dean said last week he has noticed more mention in his investigators’ reports of vacant buildings or buildings under foreclosure and vehicles that have burned for no reason other than to collect on insurance. Economy may be cause of more fires (‘Trapped’ people commit arson for insurance money).

  • Middleburg, Florida: Fire destroyed a mobile home in Clay County last week. Although no one was hurt, an increased number of "suspicious fires" across the state is sparking concerns. No one lived in the home for months. It was a foreclosure. "It was vacant at the time," said Detective Jerry Baker, Bureau of Fire Marshall Investigations. The investigation is ongoing but insurance experts and law enforcement officials said they're noticing a correlation between the increasing number of foreclosed homes and suspicious fires. Suspicious Fire in a Foreclosed Home.

  • St.Augustine/Jacksonville, Florida: A St. Augustine woman was charged with arson Dec. 19 after vacating a house she was evicted from that was later found burning. The arrest of Billy Bouchard marks two cases within days where people being evicted have been accused of setting fire to former residences. In the other arson, Jacksonville resident Patrice Plummer, 31, was arrested and placed in the Clay County jail after being accused of setting fire Dec. 21 to the Orange Park apartment from which she had been evicted, The Times-Union previously reported. The damage estimate is $500,000 and one firefighter was slightly injured by heat and steam. Plummer was charged with burglary, arson and arson with bodily harm. 2nd evicted woman charged with arson of former home; this one in St. Augustine.

  • Marlborough, Massachusetts: A water pipe inside a vacant house on Millham Street broke last week and caused the building to flood, a recurring issue in the city, a fire official said. The Fire Department yesterday marked the building for "limited interior operations" in the event of a fire, Deputy Chief Ron Ayotte said. The city has been identifying vacant houses that would present an emergency hazard for firefighters. Several properties, including two other recent cases, have placards on the outside that warn responders to enter with extreme caution or to simply not enter. See Pipes burst, flood vacant Marlborough house.

  • Toledo, Ohio: In today's troubled housing market, the story is all too familiar. A tenant is evicted. The now-vacant dwelling catches fire. The once stately property goes unrepaired and gradually deteriorates to the point that a date with a bulldozer is inevitable. The only difference in this case is that the house isn't in Toledo's aged inner core but in Sylvania Township, an upscale suburb. The case was complicated by a finding that the blaze was intentionally set and by an insurance company's refusal to pay for repairs. The situation helps to illustrate the plague of vacant properties spreading across not only U.S. urban areas but suburbs as well. It also highlights the circumstances that take some vacant houses to the point of no return. Upscale Sylvania Township area copes with blight more typical of inner city.

  • Gainesville, Georgia: Officials believe a vacant house fire, which melted vinyl siding on an occupied home next door, was caused by a human act. The two prevailing theories are that a homeless person or neighborhood kids started the fire, either intentionally or unintentionally. "This could be a sign of the times to come," Deputy Fire Chief Jerome Yarbrough said. He fears that with a deepening recession, more homes left vacant from foreclosures and evictions will be burned by vagrants or vandals. And when firefighters show up, they don’t always know if there are occupants who need rescuing. "I have concerns because this type of property fire here is the kind that gets firefighters hurt," Yarbrough said. "I expect to see more of these if the economy gets worse." Vacant home fires a ‘sign of the times’ (Home foreclosures could be behind increase in suspected arsons). ArsonForeclosureAlpha

Failure To Winterize Can Lead To Vacant Home Havoc

The following stories provide emphasis to the importance of winterizing vacant homes, foreclosed or not, located in cold weather areas to avoid the havoc caused by frozen, broken, bursted water pipes:

  • Foreclosures leading to more unattended burst pipes: Winter weather is causing a soggy new headache for towns and cities working to keep foreclosed homes from becoming safety hazards: water pipes that freeze and burst in empty houses. Municipal officials say when these problems spring up, they usually happen in homes partway through the foreclosure process, or taken over by far-away or financially troubled mortgage companies. The residents have left, and power and heat are shut off. But the water is still on, and pipes and water heaters have not been drained. They freeze when temperatures drop, sometimes bursting the pipes as the ice expands, and the water flows out freely when they thaw. Once a home floods after the burst water pipes thaw, unless you get the wet drywall and rugs out, mold will start growing.

  • Pipes burst, flood vacant Marlborough house: A water pipe inside a vacant house on Millham Street in Malborough, Massachusetts broke last week and caused the building to flood, a recurring issue in the city, a fire official said. Water was running from the second floor to the first floor and into the basement after the pipe apparently froze and then blew, said Deputy Chief Ron Ayotte. "We've had a rash of them lately," Ayotte said. "That's what happens when you don't winterize a house." Many similar calls concern foreclosed houses, said Ayotte, who believes the Millham Street house had been in foreclosure. A lot of vacant properties, including the Millham Street house, are not winterized, Ayotte said.

  • Princeton renters suddenly without homes due to foreclosure: A vacant unit in a foreclosed apartment building in Princeton, Minnesota was apparently not winterized properly so a water pipe froze and then burst sending water down into the apartment directly below Christmas Eve. As a result, the water utility shut off the water for the complex and residents say they were told they need to move out by New Years Eve. Residents say because they're not getting their damage deposits back, they have no money for new damage deposits and moving expenses for new apartments.

  • New Minnesota State Law Prevents Frozen Pipes in Foreclosed Homes (Mold, bursting pipes among destruction in metro foreclosures): According to the new law, city inspectors are allowed to find out where utility companies have disconnected gas and electric services, so they can shut off water at the curb and keep pipes from bursting inside, which would help avoid the additional damage done by flooding when the pipes thaw. Sometimes the damage from foreclosed homes is so severe, the homes are dubbed “ice houses.” The water damage often leads to mold, destroying walls and entire homes.

  • Irwin Man Tries To Thaw Pipe, Starts Fire: An Irwin, Pennsylvania man trying to thaw a frozen pipe in his home apparently started a house fire. Several fire departments responded to the fire on Chestnut Street after it broke out. Officials say the homeowner was trying to thaw out the pipe with a kerosene torch.

  • Protect pipes during winter’s deep freeze: In River Falls, Wisconsin, Liberty Plumbing owner Bob Kolashinski sees it every winter as Mother Nature delivers frigid temperatures and wicked wind chills: Any pipe carrying water can freeze. Liberty has seen a rise in calls on problems in foreclosed homes, where the heat is usually off. Since furnaces can fail, Kolashinski said the only foolproof way to prevent freezing is to shut off water at the main valve, drain all the fixtures and pour RV antifreeze into the pipes’ p-traps. Kolashinski said people living in townhomes or condos shouldn’t be lulled into thinking heat from other units will keep their pipes from freezing. That ambient heat is seldom enough.

  • More Pipes Bursting In Empty Houses (Unless reported by neighbors, mess goes unchecked): Home foreclosures that turn into neighborhood eyesores when unpaid utilities lead to broken water pipes are happening more often. The mortgage company will be notified to start cleanup soon because health problems aren't frozen in time. Mold will grow fast after the spring thaw.

Go here for more on freezing pipes in vacant homes. frozenpipetheta BetaVacantForeclosure

Wednesday, December 31, 2008

More On Anticipated Home Mortgage "Cram Downs" In Bankruptcy

The Wall Street Journal reports:
  • Mortgage lenders who wake up Thursday with a New Year's hangover are likely to face another headache soon: The effort to give bankruptcy judges the power to rewrite mortgages is gaining steam.

  • The banking industry hoped the mortgage "cram-down"(1) measure died when Congress removed it from the $700 billion bailout bill that passed in October. But it has been gathering momentum in Democrat-controlled Washington, as evidence emerges that current voluntary foreclosure-prevention programs are falling short.


  • "It is absolutely clear that voluntary modification is just not working," says Rep. Brad Miller, a North Carolina Democrat. "Every plan that Congress has passed, we do it and nothing happens."

For more, see Mortgage 'Cram-Downs' Loom as Foreclosures Mount (may require subscription; if no subscription, go here - then click link for the story).

(1) In a cram-down, a judge modifies a loan, often reducing principal so a borrower can afford it. Lenders hate it because they have to absorb the loss. Bankruptcy judges currently have the ability to modify certain personal loans and even mortgages on vacation homes, but they can not cram-down mortgages on primary residences.

Judge Tacks On 3 Years To Prison Sentence Sought By Feds In S. Florida Mortgage Scam

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • [A] Fort Lauderdale federal judge on Tuesday sentenced a Coral Springs man to eight years in prison for orchestrating a $12 million mortgage fraud in Broward County. In sentencing Anthony Dehaney, U.S. District Judge William Dimitrouleas went beyond the five-year prison term recommended by prosecutors, saying he wanted to deter other people from trying to make "quick easy money" through real estate fraud.


  • Dehaney, 57, who pleaded guilty in October to conspiracy and fraud charges, lied on mortgage loan applications for at least 25 Broward County properties between January 2003 and August 2006, including a $1.4 million home in Coral Springs.

  • When the real estate market hit the rocks, Dehaney filed forged bankruptcy petitions in Broward federal court on behalf of three straw buyers to stall foreclosure proceedings.

For more, see Mortgage fraud cases in South Florida might bring stiffer sentences (Judge imposes 8-year term, saying he wants to deter others).

Lenders Accused In Housing Court Of Dumping Blighted Foreclosures Onto Real Estate Market Shop For Friendlier Forum; Move Cases To Federal Court

In Cleveland, Ohio, The Washington Independent reports:
  • The fight that neighborhoods in Cleveland are launching against banks that dump vacant and vandalized foreclosed homes back onto the real estate market received a bit of a setback, [...]. A private, non-profit housing advocacy group had filed suit in local housing court to force the banks to clean up their properties before selling them, or to demolish them entirely. But the banks - Deutsche Bank and Wells Fargo - convinced a judge to move the suit to federal court.


  • The move to federal court is more than just an arcane legal development. The neighborhood group wants the case heard in housing court because it validates what has become increasingly clear in the foreclosure crisis: Banks are property owners, with all the responsibilities that come with it. As they foreclose on houses and their inventories of bank-owned properties swell, banks try to dodge this reality by blaming servicers and paying lawyers to get them out of housing court.

  • The same thing happened in Cincinnati recently, where the local legal aid agency filed suit in housing court, but the case was moved to a federal court instead.

For more, see Banks with Deep Pockets Dodge Foreclosure Damages.

See also, Lawsuit Targets Banks With Novel Tactic (Advocacy Group Takes Grievances to Housing Court):

  • [C]leveland and other cities are “looking at old bodies of law to address new problems,” [University of Connecticut law professor] Patricia McCoy said, because they are trying to fight foreclosures with any tools they can. Cleveland has taken legal action previously over foreclosures. The city in January sued 21 investment banks, including Wells Fargo and Deutsche Bank, and accused them of creating and enabling the subprime crisis. The suit was filed in Cuyahoga County Common Pleas court. The latest suit differs in that it was filed in housing court. BetaVacantForeclosure

More On Philly Deed Theft Problem

In Philadelphia, Pennsylvania, The Intelligencer reports:
  • [P]hiladelphia has become a hot spot for deed theft in the past couple of years, said [Montgomery County Recorder of Deeds Nancy J.] Becker. She recalled an incident where homeowners left for their winter home in Florida only to return to the city in the spring to find all of their furniture and possessions gone and a family living in their home who thought they had rightfully bought the property.

  • In Philadelphia, it's so bad that the president judge designated two judges, and all they hear is land-fraud charges.”

For more, see New law helps limit deed fraud.

For an old NBC10 (Philadelphia) television story in which investigative reporter Lu Ann Cahn "steals" the homes of Pennsylvania Governor Ed Rendell, as well as the homes of the Philadelphia mayor and the Pennsylvania Speaker of the House of Representatives to highlight the deed theft problem in Philadelphia, see Stolen Homes.

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

Loan Modification Services Prohibited In Vermont Unless Licensed, Say State Officials

In Montpelier, Vermont, The Burlington Free Press reports:

  • (BISHCA) has received inquiries and complaints about so-called foreclosure “rescue” services. While it is not inherently illegal to offer these services, the person doing it must be licensed with BISHCA as a lender, mortgage broker, or debt adjuster, said BISHCA officials.

For the story, see State: Be wary of foreclosure rescue services.

Shelby County Commisioners Give Go-Ahead For Filing Race-Based, Predatory Mortgage Suit Against Major Lenders

In Memphis, Tennessee, Memphis Commercial Appeal reports:
  • Shelby County commissioners approved a resolution [last week] authorizing the county to file suit against the national lenders who, officials say, gave out risky, high-interest rate loans and enabled a foreclosure crisis in Shelby County.

  • The resolution alleges that these major national lenders engaged in "deceptive" and "discriminatory" lending practices targeted at the black community. And the resulting foreclosure epidemic has destabilized neighborhoods, eroded property values and damaged the tax base -- costing county and Memphis city government millions in tax revenues.


  • Webb Brewer, the director of advocacy for Memphis Area Legal Services, who will help the city and county prosecute, said the 10 or so national banks that gave out the most predatory loans will most likely be named.

For more, see Shelby commissioners authorize lawsuits against mortgage lenders (Resolution says loans targeted minorities, forced foreclosures).

See also, Memphis Daily News: Details Coming Soon for Lender Lawsuit.

Go here, Go here, and Go here for other posts on alleged discrimination in real estate transactions. DiscriminationPredatoryLendingAlpha

Tuesday, December 30, 2008

Attorneys, Law Students From Seton Hall Pro Bono Program Intervene On Behalf Of Elderly Couple In Equity Stripping, Foreclosure Rescue Scam

In Newark, New Jersey, lawyers and law students from the Center for Social Justice (CSJ) at Seton Hall University School of Law have successfully vacated a foreclosure judgment against an elderly couple who were allegdly victims of a foreclosure rescue, equity stripping scam that resulted in a loss of approximately $400,000.00 in equity in their home, which ended up in foreclosure. CSJ believes the scam has been perpetrated on numerous other distressed homeowners in the area. The homeowners will now, along with CSJ, defend against the foreclosure.(1)

For the CSJ press release, see CSJ Stays Foreclosure, Charges Mortgage Scam.

(1) According to the press release, the Counterclaim filed on behalf of the elderly homeowners by CSJ against Third-Party defendants (a disbarred lawyer, a subprime lender, and others) includes, in part, a petition for relief for multiple violations of:

Reportedly also included in the countersuit are a number of common law claims. The pleading also charges that the foreclosing entity, assignee U.S. Bank:

  • Lacks standing to enforce the Note securing the Property because U.S. Bank is not a proper assignee and holder of the Note pursuant to N.J.S.A. § 12A:3-201 and Article 3 of the Uniform Commercial Code ( “UCC” );
  • Is not a “holder in due course” and therefore is vicariously liable for the elderly couple's claims and defenses against the originators of the mortgage, Credit Suisse Financial Corporation and its agent, ANM Funding, LLC;
  • Lacks standing to seek foreclosure because the mortgage was not assigned to it until after about four months after the foreclosure action was filed. N.J.S.A. § 46:9-9 requires mortgage assignments to be in writing.

Failure To File Proper Paperwork A Stumbling Block For Plaintiffs In Credit Card Suits As Well As Mortgage Foreclosures

In Erie, Pennsylvania, the Erie Times News recently ran a story on how some individual consumers are fighting back against large finance companies in debt lawsuits:
  • [A] recent ruling in Erie County Court, as well as rulings in U.S. Bankruptcy Court in Erie and in Pittsburgh, show how judges are forcing credit-card companies, banks and mortgage companies to play by the rules, even as those corporations are desperate to collect on debts in these desperate times.

  • The fine print -- all those regulations enumerated in tiny words in credit-card contracts and mortgages -- apply not only to you, the consumer. The banks and credit-card companies must follow them too. And, with the help of vigilant judges, "they are starting to," said Erie lawyer Lori R. Miller.


  • Erie County Judge Shad Connelly, citing Pennsylvania law, agreed with Miller and threw out a suit over a claimed debt of $21,305, including more than $3,000 in interest, on a Bank One credit card. Connelly said the plaintiff, a debt-collection company called Unifund CCR Partners, failed to file the proper paperwork(1) and filed an amended version of its suit too late.(2)

For more, including how two bankruptcy judges in Erie and Pittsburgh are holding lenders feet to the fire in home foreclosure actions, see In some area debt cases, small print has yielded big help.

(1) Among the documents lacking, Connelly said, were a complete list of the dates and merchants for the disputed charges; the contract or credit agreement that Anderson would have received with the disputed credit card; and the appropriate documentation showing how Unifund purchased Anderson's claimed debt from another company, First USA Platinum.

(2) Reportedly, Judge Connelly gave Unifund a chance to file a corrected suit, though attorney Anderson could argue that any new civil action violates the four-year statute of limitations in her case.

Boston Legal Aid Firm Wins $54K Jury Verdict For Tenant Illegally Booted In Foreclosure Eviction; Now Seeks Triple Damages, Attorney Fee From Servicer

In Boston, Massachusetts, The Boston Globe reports on William Allen, a local man who, with the help of local law students at Harvard Legal Aid Bureau, fought back against a mortgage loan servicing company in a case involving an illegal foreclosure eviction.
  • [I]n January, after the Bank of New York, which owns the property, sent an eviction notice, Allen fought back. He filed a counterclaim, arguing that by changing the locks the bank tried to paint him as a squatter and that it intentionally did not turn on the water and heat, because it wanted him to leave.(1) Last month, after a three-day trial in Boston Housing Court, a jury awarded Allen $54,000 for his ordeal.(2)


  • Lawyers at the Harvard Legal Aid Bureau, which represented Allen, say that it's a rare victory for a tenant in a post-foreclosure case and that the verdict has caught the interest of legal services groups nationwide.

  • "The impact of this case is that the banks now know that if they engage in extrajudicial practices to gain possession of a foreclosed property it can cost them dearly," said Verner Moore, a lawyer and clinical instructor at the Harvard Legal Aid Bureau.

For more, see Vindication after eviction ordeal (Jury backs tenant in foreclosure dispute).

Go here for more on the law students at the Harvard Legal Aid Bureau urging tenants in foreclosed homes to fight back against careless/reckless mortgage companies seeking illegal evictions.

(1) The story states that, after experiencing a loss of heat and water to the premises, Allen turned to WilmerHale Legal Services Center in Jamaica Plain - one of two legal services programs run by Harvard. A law student reportedly fired off a letter to the Bank of New York, saying that Allen lived there and urging the bank to get the heat and water turned back on. Allen alleges that the bank instead changed the locks and sent police after him.

(2) Reportedly, the case is not over. A hearing is a set for Jan. 30, when Allen's lawyers will ask a judge to double or triple the award because, they contend, the bank willfully and knowingly failed to act responsibly as a landlord. They will also seek attorneys' fees. ThetaTenantRentSkimming ForeclosureLockOuts

Unlicensed Practice Of Law Becomes An Issue With Some Loan Modification Firms

A recent story in The Washington Post raises an issue that could begin taking hold in targeting certain loan modification firms for engaging in illegal conduct when seeking out financially distressed homeowners:
  • [T]he pitch companies make varies. But one approach includes paying a company to challenge the legality of a loan -- a process housing experts say can be long and complicated.

  • Vienna-based Mortgage Analysis and Consulting, for example, charges $150 for a consultation and $250 to $500 for a preliminary audit. If the audit finds problems with the loan document, Mortgage Analysis will refer the borrower to a lawyer, who may charge an additional $2,000 retainer. If the lawyer requests a more in-depth audit, Mortgage Analysis charges up to $1,750, which clients can pay in installments.


  • Virginia's State Bar is investigating a complaint that [the firm's founder Jose] Semidey has illegally practiced law.(1) Semidey said he makes clear he is not a lawyer and refers clients to a list of lawyers he has compiled.

  • One of Semidey's former clients, Edwin Monge, said he became concerned that he would no longer be able to afford the payments on his Woodbridge townhouse after the adjustable interest rate rose and the payments increased. The home's value had tumbled, making it impossible for him to refinance. Monge said he met Semidey through a friend and eventually paid him $7,000, some of which was to be used to pay a lawyer.

For more see Firms Charge Thousands To Modify Mortgages (Nonprofits Offer Service For Free, Advocates Say).

Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

(1) Unlicensed or unauthorized practice of law has been raised as an issue in at least two recent civil lawsuits against loan modification firms, one by the Tennessee Attorney General (press release; for copy of lawsuit, see State of Tennessee v. Patrick and Patrick, LLC, et al.), and the other by the Florida Attorney General.

In addressing what constitutes the unlicensed practice of law, the Florida Supreme Court, in The Florida Bar v. We The People Forms And Service Center Of Sarasota, Inc., 883 So. 2d 1280; (Fla. 2004), relied on the following survey of its prior decisions in holding that certain activities of a non-lawyer constituted the unlicensed practice of law:

  • Florida Bar v. Catarcio, 709 So. 2d 96 (Fla. 1998) (holding that a nonlawyer who has direct contact with individuals in the nature of consultation, explanation, recommendations, advice, and assistance in the provision, selection, and completion of legal forms engages in the unlicensed practice of law);

  • Florida Bar v. Becerra, 661 So. 2d 299 (Fla. 1995) (enjoining a nonlawyer from advertising in any fashion that may lead a reasonable lay person to believe that the nonlawyer may offer to the public legal services, legal advice, or personal legal assistance);

  • Florida Bar v. Consol. Bus. & Legal Forms, Inc., 386 So. 2d 797 (Fla. 1980) (holding that a corporation engaged in the unlicensed practice of law where its officers and stockholders were nonlawyers with no legal training who supervised and maintained a degree of control over the legal services it furnished through its lawyer employees and noting the inherent conflict of interest between the legal needs of the client and the monetary policy of the corporation and how such a business structure permits unlicensed and unregulated persons to profit from the providing of services which by law they are prohibited from providing).

Where loan modification firms offer and conduct, for homeowners, reviews of mortgage loan and other legal documents for the purpose of determining whether said documents are in compliance with the applicable lending, consumer, and other laws (Truth in Lending, HOEPA, RESPA, etc.), such services seem to fall squarely within the scope of the above survey of Florida laws and, consequently, could constitute the unlicensed / unauthorized practice of law in Florida. Assuming other states have similar case law in this regard, it may only be a matter of time before these types of non-attorney loan modification firms offering "legal reviews" or "legal analyses" of loan documents find the legality of their services being challenged throughout the country as unlicensed practice of law. UnauthPractOfLawKappa

100+ Borrowers Ripped Off By Ex-Bank Exec, Mortgage Broker For Inflated Loan Fees Entitled To Restitution, Says Federal Court

In Sarasota, Florida, the Sarasota Herald Tribune reports:
  • Federal appeals court judges ruled [earlier this month] that Coast Bank borrowers were indeed victims in the scheme that involved a former bank executive skimming money from their loans.


  • In his argument, [Sarasota attorney Alan] Tannenbaum invoked the Crime Victims' Rights Act on behalf of 104 Coast borrowers who he says deserve to share in any restitution [in a related criminal case]. Those customers were overcharged in their loans, and [Coast's former executive vice president Philip] Coon and [Tampa mortgage broker John Robert] Miller pocketed the money, the attorney says. That excess charge was spelled out in their loan agreements.(1)

For more, see Court rules Coast loan holders were victims.

(1) In a related criminal case, Coon pleaded guilty last month to conspiracy to commit wire fraud and money laundering. Miller pleaded guilty in August. In their plea deals, each man will be ordered to pay more than $1.5 million in restitution.

Monday, December 29, 2008

Sloppy Lender/Servicer Leaves Judge Fuming, Homeowners Frustrated

A recent story in The New York Times describes how Wells Fargo left one federal bankruptcy judge fuming regarding a dispute the lender had with a homeowner couple over whether they had missed some of their required payments on their home loan. Wells Fargo claimed that the couple missed some payments but that, if they could present “valid, accurate and true copies” of the front and back of the checks they sent in, they would receive the proper credit.

What ultimately had the judge fuming was that, several months later, evidence came out that strongly suggested that the borrowers' purportedly missing payments to Wells Fargo were, in fact, received and processed electronically. That meant that the lender never returned the checks to the borrowers' bank, thereby making it impossible for the couple to provide the proof of payment that Wells Fargo had demanded in the first place. An excerpt from the story:
  • [S]idney B. Brooks, the judge overseeing the case, was clearly dismayed by the bank’s performance. In his opinion, he fumed that Wells Fargo had asked the borrowers for canceled checks as proof of payment, even though such checks were often not available.

  • Wells Fargo’s request for canceled checks was especially troubling, the judge said, given that the bank was a proponent of the 2003 law that allowed banks to stop returning canceled checks to customers.

  • The only institution that could have the original checks is Wells Fargo, he concluded. “The payments have, evidently, been lost in a black hole of the creditor’s organization or through accounting mismanagement,” the judge wrote. “This is a major lender/mortgage loan servicer where the left hand does not know what the right hand is doing — the collection department does not know what the check processing and accounting departments are doing.”

  • Because this is not the first time the judge has encountered problems in Wells Fargo’s operations, he is considering sanctions on the bank. “This dispute might portend a widespread abuse of collection practices or creditor overreaching,” he wrote, “demanding of debtors what it, the creditor itself, is unable to provide: accurate and reliable record keeping and billing practices.”(1)

Not surprisingly, Wells Fargo reportedly disgreed with the judge's conclusions.

For the story, see A Mortgage Paper Trail Often Leads to Nowhere.

For the judge's written decision, see Wells Fargo v. Burrier.

(1) According to the story, the attorney for the homeowners says that this kind of dispute is becoming more common in her practice and that borrowers wind up losing too often. “A lot of times clients don’t keep canceled checks or maybe their bank account was closed and they can’t go and get the proof,” she said. “The bank gets that extra money for as long as the debtor can keep it up and when they can’t they are pushed out of their homes.” SloppyForeclosuresAlpha

Foreclosing Lender Can't Prove Ownership Of The Note? So What's The Big Deal???

The following excerpt out of a recent article on addresses the importance of establishing the ownership of a promissory note in foreclosure (or, for that matter, not in foreclosure):
  • [M]aking an issue out of the actual ownership of the securitized title might strike some as a shameless stalling tactic aimed at abetting a debtor who, after all, owes the money. But [Florida attorney April] Charney said that if such basic legalities aren’t adhered to, a homeowner could pay his or her way out of a foreclosure jam only to wind up in another when a new plaintiff emerges claiming to own the debt. She described cases in which homeowners have been sued for foreclosure by two different trusts, each claiming they owned their house, and cases where trusts have been sent documents on the same case by two different servicers.(1)


  • Bert Ely, a longtime analyst of the financial services industry and a scholar at the conservative Cato Institute who was among the first to predict the S&L scandal of the 1980s, said lenders may detest tactics like the ones Charney employs, but “this is well-established in bankruptcy practice, that you have to properly perfect the security interest, and if you haven’t, you’re screwed. … Debtors’ lawyers immediately start looking for flaws in how the debt is protected. Creditor attorneys always worry about this.”

  • It kind of boggles my mind that this is even an issue” in the nation’s current mortgage mess, he said. “I don’t understand how lawyers let this happen in the first place.” Mortgage-lending and servicing is “a matter of dotting the I’s and crossing the T’s. … That’s what puts the discipline in the process.”

For the story, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers). (for the entire story on one web page, try here).

(1) For an account describing this (apparently growing) phenomenon, see The Wall Street Journal Law Blog: Foreclosure Mess: Two Different Plaintiffs Claim to Own Same Mortgage.

According to the MSNBC story, Charney points out that, because of the way mortgages have been securitized, it’s often unclear who actually owns the debt, and further, found that in many cases, the originating lenders only pledged these loans and didn’t actually transfer ownership of them to the trusts that are supposed to hold them and issue the securities. KappaMtgDocsMissing

Colorado, California Collaborate To Shut Down Loan Modification Scams

Buried in a recent story in the Rocky Mountain News on a homeowner claiming to have been screwed out of about $3,000 by a loan modification firm is this excerpt:
  • [I]n addition to the [16 subpoenas sent to loan modification companies in Colorado, California and Arizona, Colorado director of the division of real estate Erin] Toll also recently entered into what she calls an "unprecedented collaboration," with Jeff Davi, the division of real estate director in California.

  • "(Davi) has agreed to work closely with us to shut down illegal loan modification companies that prey on consumers when they are most vulnerable," Toll said. "Mr. Davi is well aware of the problem and will do everything possible to ensure Colorado consumers are not harmed by unlicensed California companies."


  • Davi, in a phone interview Tuesday, said he is "very pleased with our relationship with Colorado and Erin," and hopes to build similar relationships with state real estate divisions across the country, because the practices have become so widespread.

  • "These companies are based everywhere," Davi said. "I heard of one yesterday where a 75-year-old California woman gave her last $2,000 to a company out of Massachusetts. It is the saddest thing I ever heard."

For more, see Loan modification firms causing more problems for homeowners.

Loan Modification Firms Beginning To Find Themselves In The Crosshairs Of Various Groups

The Washington Post reports:
  • A growing industry has emerged to take advantage of the unprecedented wave of foreclosures, charging distressed homeowners for help negotiating better loan terms -- a service provided for free or for a nominal fee by many nonprofits.

  • Such companies charge $500 to $2,500 or more and are drawing the ire of consumer advocates, regulators and lenders, who say many are just the latest version of foreclosure rescue scams and can make it more difficult for homeowners to get help.

For more see Firms Charge Thousands To Modify Mortgages (Nonprofits Offer Service For Free, Advocates Say).

Sunday, December 28, 2008

Judges, Homeowner Attorneys Begin To Wonder How To Do A Loan Modification When Lender Can't Prove Ownership Of Promissory Note?

The New York Times reports:
  • WITH home prices in free fall and mortgage delinquencies mounting, pressure to modify troubled loans is ratcheting up. But lawyers who represent candidates for modifications say the programs are hobbled by the complexity of securitization pools that hold the loans, as well as uncertainty about who actually owns the notes underlying the mortgages.(1)


  • How can a loan be modified, these lawyers ask, if the lender cannot prove that it actually owns the note? More and more judges are asking the same thing about lenders trying to foreclose on borrowers.

For more, see A Mortgage Paper Trail Often Leads to Nowhere.

For posts that reference the failure of mortgage lenders and their attorneys to prove ownership of the promissory note when starting foreclosure actions, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) As the article points out, problems often emerge because these notes — which are written promises to repay the full amount of a mortgage — weren’t physically handled, legally transferred, or accounted for properly when they were bundled by Wall Street into pools or were subsequently transferred to other holders. Many of the notes are now missing. KappaMtgDocsMissing SloppyForeclosuresAlpha

Focus Of NYC Commercial Real Estate Market Shifting From "Bricks & Mortar" To Buying/Selling Secured Paper? More Lenders Look To Dump Mortgage Loans

In New York City, The New York Times recently ran a story on a reported "shift in the commercial real estate market, away from brick-and-mortar properties and toward the buying and selling of debt."
  • [M]any lenders are looking to offload [their problem mortgage] loans because they need to cash out quickly, or because they are not in the business of selling real estate and lack the necessary resources and expertise. This means that commercial brokers, who regularly negotiated the acquisition and sale of properties, are now marketing mortgages and other loans.

  • I am being inundated with calls from banks who want to sell their loans,” said David Schechtman, a senior director at the commercial brokerage firm Eastern Consolidated. “In just the last few weeks, I have also collected a list of about 30 clients — primarily high-net-worth individuals, long-established real estate families and small opportunity funds — who want to buy up these loans.”

For more, see Loans on Distressed Properties Become a Burden and an Opportunity.

In related stories, see

New Pennsylvania Law To Make It Tougher For Deed Theft Scammers To Heist Homes

In Philadelphia, Pennsylvania and its suburbs, The Intelligencer reports:

  • To the relief of real estate title companies and county workers, Pennsylvania Act 110, which regulates how a homeowner's deed is registered and recorded, took effect this month.

  • Montgomery County Recorder of Deeds Nancy J. Becker says the new law not only streamlines the process among municipalities and counties, but also protects the new homeowner. “We're really delighted because, if for any reason, if there is a delay in recording a deed, the possibility of fraud being committed against that property increases,” said Becker, in her fifth year in office. “If people aren't paying attention and deeds aren't being recorded in a timely fashion, than things can happen.”

  • In the gap between when a homeowner purchases a home and when the deed is recorded, a thief can obtain a copy of that deed and have it transferred fraudulently.

The story cites the recent example earlier this month of The New York Daily News, when they "stole" the $2 billion Empire State Building in 90 minutes in an effort to show how easy it is for crooks to make bogus documents, transfer deeds and take out mortgages.

For more, see New law helps limit deed fraud.

For an old NBC10 (Philadelphia) television story in which investigative reporter Lu Ann Cahn "steals" the homes of Pennsylvania Governor Ed Rendell, as well as the homes of the Philadelphia mayor and the Pennsylvania Speaker of the House of Representatives to highlight the deed theft problem in Philadelphia, see Stolen Homes.

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

1031 Exchange Intermediary Suspected Of Feloniously Pocketing $550K+ In Clients' Sale Proceeds Found Dead By Suicide

In Boulder Colorado, the Boulder Daily Camera reports:
  • [K.C.] Schneider, who owns a commercial real estate firm in Boulder, said Wednesday he is [...] out $425,000 in real estate proceeds he gave National 1031 Exchange Service to hold while he closed on a new property.


  • Schneider filed a complaint in October against the now-defunct holding company's owner, Debra Edwards, and earlier this month Boulder police issued a warrant for her arrest on suspicion of three felony counts of theft of more than $20,000.

  • But the day before Edwards was to surrender to authorities, the 53-year-old certified public accountant and former board member of the Longmont Area Chamber of Commerce was found dead in her Longmont office. The Boulder County Coroner's Office said Wednesday that her Dec. 15 death was a suicide -- asphyxiation due to inhalation of helium.

  • Edwards' death led Boulder police to close its criminal case against her. Schneider said that leaves him and two other National 1031 Exchange Service clients -- who also claim to have been bilked of tens of thousands of dollars -- out in the cold.

For more, see Suicide complicates money-recovery effort (Client says Debra Edwards' Boulder financial firm stole $425,000 from him).

Go here for other posts on problems with 1031 exchange intermediaries.

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

"Baby Mama" Accuses Ex-NBAer Of Forging Signature On Releases Of Lien For Child Support, Then Draining Equity From The Unencumbered Properties w/ Refi

In Mobile, Alabama, the Press Register reports on a civil lawsuit involving a former pro athlete and one of, what has been alleged to be a slew of, his babies mamas:
  • Former pro basketball player Jason Caffey has been hit with a lawsuit accusing him of using forged signatures on legal documents to transfer property.(1) [...] Caffey put up the properties as part of a negotiated settlement in a child-support case.

  • The plaintiff, Nicole Carter, is one of at least eight women with whom Caffey has had children, according to court records.


  • Carter's lawsuit accuses Caffey of forging her signature on documents filed in Mobile County Probate Court on Feb. 28, 2007, and May 31, 2007, canceling liens on the properties. "Jason admitted in a newspaper interview that he signed it but that my client authorized it. She did not," said Carter's lawyer, Steven L. Terry.

  • After canceling the liens, according to the lawsuit, Caffey transferred the properties to Marita Hansberry, who then refinanced them and sucked out the equity.

For more, see Caffey, former NBA player, accused of forgery (for the entire story on one page, try here).

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

(1) Reportedly, the lawsuit also names the woman to whom rental properties were transferred, as well as the notary public who witnessed the transaction and the title company that handled the refinancing of the properties. KappaDeedTheft

Refinance Scam Leaves SW Florida Sisters Facing Foreclosure

In Lee County, Florida, WINK News reports:
  • Two Lee County sisters say they've been duped out of tens of thousands of dollars, all from a home finance scheme that now threatens to put their home in foreclosure. "We are good people, we are trusting people, and that's what they work on," said Kesrie Persaud, who thought she could trust a man who claimed to be looking out for her financial interests.


  • Drained of their savings, the sisters now have another challenge: their mortgage, already higher after the scam, was sold to J.P. Morgan Chase, who's threatening to foreclose.

For the story, see Sisters lose thousands in home finance scam.

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