Saturday, February 07, 2009

Beware Of Finacially Shaky Auto Dealers Failing To Pay Off Car Loans On Trade-Ins

The Associated Press reports:

  • The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve.

  • When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title.


  • "It's becoming a serious problem because the consumer, through no fault of their own, may be facing financial ruin just because they purchased a car," [California state Senator Ellen] Corbett said.

For more, see Folding dealers shock car buyers with unpaid liens.

Real Estate Agent Discovers "Bomb-Like" Device In Foreclosed Home

In Macon County, North Carolina, WLOS -TV Channel 13 reports:
  • A real estate agent makes a startling discovery inside a foreclosed Macon County home. Dave Rowland with Prudential Realty found a bomb-like device and a box labeled "High Explosives" in the home on Silver Spruce Lane. A bomb squad was called in to take a look but didn't find anything illegal. However, authorities still have questions like what the owner planned to do with the device.

For more, see Bomb-Like Device Discovered in Foreclosed Home.

Miami Community Activist Continues "Vacant Home-Finding" Service For Homeless

In Miami, Florida, WTVJ-TV Channel 6 reports:
  • With the number of foreclosures continuing to rise in South Florida, squatting has become a growing trend among the area's homeless. "I had to squat because nobody gave a squat," said 'Mary.' We're calling her 'Mary' and concealing her identity because she's a squatter. She lost her job and took up residence in this vacant foreclosed house.


  • Community activist Max Rameau placed Mary in the home through his organization, Take Back the Land. "Our role is to identify these places and make them available for people who need places to stay, and that's what we do," said Rameau. He's placed seven such families in foreclosed homes.

For more, see With Growing Number Of Foreclosures, Homeless Turning to Squatting (read text) (watch video). squatter foreclosure zebra

Ohio Town Stuck Holding $11K Demolition Bill After Tearing Down Arson-Damaged Home Currently In Foreclosure

In Sylvania Township, Ohio, The Toledo Blade reports:
  • More than two years after it partially burned in a suspicious fire, a derelict and decaying house [...] was torn down last week — to neighbors’ delight. [Township trustees] reiterated that the path to demolition was a tortuous one, complicated by the arson investigation, an insurance company’s resulting refusal to pay for repairs, and a federal lien placed on the property that wasn’t released until last spring.


  • Yet another complication involved the mortgage on the property. The institution that held it failed and Deutsche Bank National Trust Co., which assumed the mortgage, filed a foreclosure complaint three months ago in Lucas County Common Pleas Court.


  • The township is paying the demolition’s $11,000 bill, which will include removing the foundation, filling in the basement, and seeding the vacated space in the spring, Ms. Liedel said.

For the story, see Decrepit house demolished (Sylvania Township responds to neighbors’ concerns). BetaVacantForeclosure

Vacant Home Unexpectedly Torn Down Without Demolition Permit Four Days Before Foreclosure Sale; Owner Faces $5K Fine

In Monsey, New York, The Journal News reports:
  • A heap of wooden shards and the scarred trunks of cedar trees were all that remained of a house at 1 Carlton Road. Two residents of the neighborhood called The Journal News on Monday, concerned that the house had been knocked down at dusk on Sunday without a permit and before natural gas service was terminated.


  • While no utilities were still being delivered to the house,(1) it was indeed torn down without a demolition permit, the town of Ramapo confirmed after a reporter's call about the incident and the residents' concerns. The demolition occurred four days before the property was to be auctioned after a mortgage default.

For more, see Ramapo house demolished before Thursday auction.

For story updates, see:

(1) According to the story, it appeared that the house had not been occupied for some time. Water service was terminated in 2007, followed by gas and electrical terminations in April 2008, according to the utility companies. Court documents indicated that $588,955.97 was owed on the property.

Hotel In Foreclosure Shuts Down, Putting Possible Kibosh On Couple's Wedding Plans, $5,500 Deposit; 130 Now On Unemployment Line

In Hood River, Oregon, The Oregonian reports:
  • Michelle Oleson got engaged in Venice, Italy, found the Columbia Gorge Hotel on the Internet and fell for the romantic getaway when she visited with her fiance. The 28-year-old accountant, a Beaverton native who works in Beverly Hills, Calif., paid a $5,500 deposit for an Aug. 2 wedding at the Hood River hotel. She got her dress. She got her shoes. The happy couple invited more than 150 guests. Then on Sunday, Oleson's mother called with startling news. The financially troubled hotel had closed.


  • The abrupt demise of the 88-year-old landmark, [...] has snarled nuptials and Valentine's Day plans, infuriated creditors and claimed 130 jobs. The hotel wedding coordinator insists the 18 scheduled ceremonies will he held. But as a judge prepares to name a receiver, legal wrangles loom -- absent a white knight who could buy and reopen the property. Holders of gift certificates and prepaid reservations have a burning question: How can we get our money back?

For more, see Gorge hotel's closure puts lovebirds, creditors in limbo.

Emergency Water Shutoffs By Public Works Officials On Upswing As Bursting Frozen Pipes In Vacant, Abandoned Homes Create Havoc

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:
  • Annoyed public works officials say the winter freeze has them conducting more emergency water shut-offs because of burst pipes at vacant or abandoned homes, many of them in the foreclosure process. The foreclosure piece compounds the problem, officials in Worcester, Southbridge and Fitchburg said this week.


  • Right now, folks are abandoning the house and the last thing they care about is the heat in the house,” Konstantin Eliadi, Worcester director of water and sewer operations, said Tuesday. In some instances, the water practically races out of basement windows. “It’s an issue that we never had before,” Mr. Eliadi said. The only thing the department can do is shut the valves off in the street, he said.


  • On Monday, water from a burst pipe in a vacant home reached a West Street sidewalk, where a small child slipped on the ice. The child suffered a facial injury and was taken by ambulance to Harrington Memorial Hospital, according to police and DPW officials. “It’s one of those crazy things that you wouldn’t think of,” said Southbridge Police Chief Daniel R. Charette, adding that vacant properties are also susceptible to break-ins and rodents.

For more, see Pipes bursting in vacant homes (Foreclosures leave sites unattended).

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

Connection Between Fires & Frozen Pipes

Stories illustrating the connection between fires and water pipes freezing up from the extreme cold weather are coming in from around the country. Here are a few:

  • Wheeling, West Virginia: Wheeling firefighters said a man trying to fix frozen pipes ended up setting his home on fire Monday morning in Elm Grove. Fire Chief Larry Helms said the homeowner accidentally caught the wall on fire, which then spread the upper floor of the home. No one was hurt and the homeowner did make it out OK. Frozen Pipe Fix To Blame For Wheeling Fire.

  • Winona, Minnesota: A West End home was damaged by fire Thursday evening after plumbers used a torch to thaw pipes earlier in the day. Officials suspect the torch started the fire. No one was injured. Fire crews tore into the exterior wall with chainsaws and axes, searching for flames as smoke seeped from the siding. Frozen pipes lead to fire.

  • New Brunswick, New Jersey: A small afternoon fire between the basement and first floor of a city home was quickly extinguished by responding officials a couple of weeks ago. Reportedly, the fire was started when the homeowner attempted to defrost a frozen water pipe on an exterior wall with a heat gun. When the copper piping got hot, some of the wood framing around it caught on fire. Official: New Brunswick homeowner caused fire attempting to fix frozen pipe.

  • Kingsley, Pennsylvania: A recent fire that destroyed a house on Main Avenue was caused by attempts to thaw frozen water pipes, according to Red Cross officials at the scene. Frozen-pipe repair leads to house fire.

  • Oakwood, Illinois: The family of a local member of the military suffered a blow Saturday when its house burned to the ground. The house is considered a total loss. Fire Chief Tony Frye said the fire was caused by a forced air heater placed in the crawl space underneath the house to warm frozen pipes. He said it’s unknown what was ignited by the heater, although there was some straw in the crawlspace of the home. He said a door left open combined with a hole in the floor of the house from repairs helped the flames spread quickly through the building. “I can’t believe it’s all gone” (Soldier's house a total loss).

  • Columbia, Missouri: A malfunctioning heat tape meant to keep pipes from freezing likely caused a trailer fire, according to a news release from the Columbia Fire Department. Investigators said either the heat tape placed on a pipe near the home’s water heater or its extension cord ignited the fire that caused an estimated $50,000 in damages. Batallion Chief Steven Sapp said heating tape is like an electrical blanket for pipes. It is supposed to shut itself off after reaching a certain temperature, but if not installed properly, it can get too hot. Trailer fire caused by electrical malfunction, fire officials say.

  • Livonia, Michigan: Livonia fire officials are warning the public about cold weather-related fires after battling six structural fires this week, most of which were caused by people trying to stay warm. One fire started when a resident used a blow torch to heat a frozen pipe. Livonia firefighters battle 6 blazes in 5 days.

  • Richmond, Indiana: Preparation is the best way to keep water pipes from freezing when temperatures plunge. But, when they do, open flames are certain no-nos in thawing them: "It sure isn't a blow torch," said Bobby Farris, deputy chief of fire prevention for the Richmond Fire Department. Flames of any kind carry a risk of engulfing a home in minutes -- or even hours later. "You're taking that chance," Farris said. "You might think you have it out, but it could be sitting there smoldering." That's apparently what happened recently at a home being renovated. A fire there was extinguished within minutes after firefighters arrived. It caused about $7,500 in damages. No one was injured. A worker had been trying to thaw pipes with a torch earlier in the day and the radiant heat caught material inside the wall on fire, said Battalion Chief Jerry Purcell. Thaw pipes with care.

  • Farmington, Connecticut: A heating element installed to keep pipes from freezing may have been the cause of a morning fire on East Shore Boulevard. Reportedly, fire officials believe the fire resulted from efforts to keep water pipes from freezing, but the Fire Marshal’s Office is investigating the cause. Fire possibly caused by pipe-heating apparatus.

  • Kittitas County, Washington: According to Kittitas Valley Fire and Rescue Deputy Fire Chief Rich Elliott, there have been about six structure fires since winter started. There has been one reported fire caused by improper thawing of a pipe. Fire safety tips for local residents in winter weather.

  • Murfreesboro, Tennessee: Don’t use open flame butane torches to thaw frozen water pipes. That’s the message from Assistant Fire Marshal Carl Peas of Murfreesboro Fire Department. When Friday’s temperatures dipped to single digits, maintenance workers using butane torches to thaw frozen water pipes at Chelsea Place apartments, the fire department reported. The flames caused a fire resulting in $50,000 damage to four apartments on Bradyville Pike. Also, a resident used a butane torch to thaw pipes at his home. The flame burned insulation and dryer lint under his home. “Never use open flames” to thaw frozen water pipes, Peas said. An open flame used on copper pipes could catch a structure on fire. “Once it gets into the wall, you can’t see it. The fire can run up the wall to the attic.” Butane torch blamed in Chelsea Place fire.

  • Madison, Wisconsin: On Jan. 15, a maintenance worker using a torch to thaw frozen pipes ignited insulation in a wall near the pipes, with the subsequent fire causing $50,000 in damages. Torches blamed in 2 structure fires.

  • Johnstown, Pennsylvania: A fire marshal determined that the cause of a recent home fire was a space heater. “The heater was used to thaw frozen pipes,” Johnstown fire Chief Tony Kovacic said. “Either the space heater lit materials it was too close to or the space heater had some sort of failure.“Obviously, we’re going to have a lot of pipe issues in the cold weather,” Kovacic said. “Be cautious when you try to thaw (frozen pipes).” City firefighters battle Prospect blaze.

  • Petrolia, Ontario: A tenant thawing frozen water pipes with a gas heater in a crawl space was the source of a house fire that caused $130,000 damage to a Petrolia home, the deputy fire chief says. Don Harding, of the Petrolia and North Enniskillen Fire Department, said when he arrived at the home, flames were "shooting out the crawl space" from exposed floor joists that has caught fire. The fire went up the east wall and reached the roof before it was contained. Harding said there was no evidence of pipe wrapping or heater/tracer wire to keep pipes unfrozen at the house. Gas heater caused blaze (DAMAGES ESTIMATED AT MORE THAN $130,000).

Go here for links to other recent stories on frozen pipe problems.

For lenders, mortgage loan servicers and other property owners and managers looking for tips on dealing with frozen pipes, see:

Friday, February 06, 2009

Detroit-Area Sheriff To Seek Declaratory Judgment & Stay Of Future Foreclosure Sales; Says Action Is Supported By Federal Law

In a letter to the editor of the Detroit Free Press, Wayne County Sheriff Warren C. Evans responds to an editorial attacking him for calling an immediate halt to all foreclosure sales in Detroit and the rest of Wayne County, Michigan. Among other things, Sheriff Evans states:
  • [M]y office will be seeking a declaratory judgment and a stay of future foreclosure sales in the courts based on my conclusion that the Emergency Economic Stabilization Act of 2008, specifically the TARP, preempts state foreclosure laws. We will put this very question to the court, and I will abide by that ruling. In the meantime, I will do my best to protect the rights of my constituents and uphold the law.

  • I will continue to hold back on foreclosure sales unless lenders can assure me that the homes they wish to see sold are either exempt from the protections provided under TARP or that qualifying home owners have been provided the opportunity to modify their mortgages until such time as a court rules on my position.

For more, see Wayne County can stop foreclosure sales.

See also, The Detroit News: Evans to seek foreclosure sale ruling.

Bust Made In Fort Myers-Area Alleged Mortgage Fraud/Rent To Own Scam; Homes Let Go To Foreclosure; Tenants Get Boot, Straw Buyers Left Holding The Bag

In Miami, Florida, The News Press reports that, according to Miami-Dade police, the Florida Department of Law Enforcement have arrested Paul Bosnyak, who is suspected of being involved in an alleged real estate fraud conspiracy with a number of others, and with the company Alternative Home Financing, Inc., of Fort Myers.(1)
  • [A]ccording to the documents, Alternative would find people and pay them to allow the company to apply for mortgages in their names to buy houses. The state attorney’s office alleges that the company would falsify application information so the person could qualify for the mortgage.


  • Alternative would manage the property, finding tenants who would make monthly payments in a lease-to-own option. After a specified amount of time, the company would stop making mortgage payments, causing the house to foreclose. The tenant would be kicked out of the house and the person whose name was used for the loan would be associated with the foreclosure.

For the story, see Mortgage fraud scheme involved dozens of Lee homes.

See also, NBC2 News: Man facing RICO charge in alleged scam:

  • The State Attorney's Office says AHFI would place a tenant with insufficient credit into the person's home under a proposed lease/option to buy contract. The tenant would pay a $5,000 deposit and make a monthly payment. In the end- the warrant says that AHFI paid very few of the bills and allowed the mortgages to go into foreclosure.

(1) According to court documents filed Jan. 23, Bosnyak, Jeremy Hatlee, James Dalonzo, Brian Chili and Trinity Hansen worked with a group of three others as part of a conspiracy dating back to 2002. Kim Jack, Erich Heckler and Erilng Hall ran Alternative Home Financing, Inc. Charges were filed by the state attorney’s office in 2006 against Jack, Heckler, Hall and seven others. Hatlee, of Fort Myers, Chili, of Lehigh Acres, and Hansen, of Fort Myers were all arrested Jan. 23, 2009. Jack, a foreign national, is still on the lam and, according to his attorney, his visa expired and he took off to his native England, the story reports. rent to own lease purchase option scams yellowstone

Philly Scores $275K For Foreclosure Diversion Program

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:
  • Hailing it as a model for the rest of the country, Mayor Nutter said [this week] that the city had raised $275,000 in private funds to aid the city's mortgage-foreclosure- prevention program. The program provides homeowners in danger of foreclosure with free legal counseling and the opportunity to sit down with their lender in court to modify their loan. Since its kick-off in June, 600 homes have been saved from foreclosure and about 1,400 are in the process of rescue. "Other cities and states across America are asking about this program," Nutter said.

For more, see City gets 275G to help homeowners.

Stiffed Sub Sues Contractor For Unpaid Work At New Development; Slaps Liens, Seeks Foreclosure On Residents' Homes

In Pingree Grove, Illinois, The Courier News reports:
  • A subcontractor is suing not only developer DRH Cambridge Homes for improvements made at its Carillon subdivision, but also home­owners, according to a lawsuit filed with the Kane County Circuit Clerk's Office. VCNA Prairie Inc. seeks $164,856 against D.R. Horton, Neptune Construction Co. and Cambridge Homes for subcontracting work it performed dating back to February 2007, the lawsuit states.


  • "What this is about is Cambridge and its customers are caught in a dispute between sewage contractors and their suppliers," said Steve Goodman, a Cambridge vice president and general counsel. [...] The lawsuit lists names of people -- including homeowners and the Cambridge Lakes Homeowners Association -- who have some right, title or interest in the premises sought to be foreclosed.(1)

For more, see Subcontractor sues construction company, subdivision.

(1) Stories like these are a reminder of the importance of obtaining a title insurance policy when buying a home, especially with new construction, where there is the added risk of liens being placed on the home after the closing of title if all of the appropriate lien releases have not been obtained from contractors, and their subs and suppliers. (The homebuyer may also be well advised to steer clear from purchasing the insurance from the developer's "in-house" title agent, who may be controlled by, or otherwise "in bed with," the developer). In this situation, it's the insurance company's job to step in on the homebuyer's behalf and both defend the title to the home, and foot the bill for the legal costs incident thereto. StiffingContractorsTheta

Miami Lender Getting Clobbered Financing Failed Condo Conversions; Foreclosures Will Leave It Holding 500+ Unsold Units

In Fort Lauderdale, Florida, the South Florida Business Journal reports:
  • A foreclosure auction has been scheduled for the 109 unsold units in the Crescent Cove condominium community in Coral Springs. Miami-based Ocean Bank won an $11.8 million foreclosure judgment against condo converter Coral Lake 260, an affiliate of Coral Gables-based BH Capital, [...]. The auction is set for Feb. 24 at 11 a.m. in the county courthouse in Fort Lauderdale. The 260-unit complex is at 8300 Coral Lakes Lane.


  • Ocean Bank also has foreclosure lawsuits pending against BH Capital’s Monticello 856, which owes $29.1 million on 366 unsold units at the Villa Bellini Condos in Miami Lakes, and Hialeah 150, which owes $12.8 million for 116 unsold units in Villas Del Paraiso.

For the story, see Foreclosure auction set for 109 units in Coral Springs.

In a related story, see Ocean Bank to lay off 127:

  • It was a double whammy for Ocean Bank as the Miami-based bank announced [last] Friday an $86.7 million fourth quarter loss, along with the layoff of 127 employees. [...] Ocean Bank has filed foreclosure lawsuits against dozens of development projects in South Florida.

Failed Condo Conversion Leaves 35 Buyers Stranded As Remaining Unsold Apartments In 162-Unit Building Fall To Foreclosure

In Kenosha, Wisconsin, the Kenosha News reports:
  • When Angela and Adam Haut moved from California to Kenosha two years ago, they were thrilled to find the world of Midwestern property values. “We were excited that we could finally buy our own home,” Angela said.

  • Now the couple, along with more than 30 neighbors, are worried that their investment is slipping away after the condominium complex where they bought their home was caught up in the foreclosure crisis. “We feel like we’re stuck,” she said. [...] Of the 162 individual units in the Regal Pointe development, just 35 had been sold to private owners.

After the condo converter fell into default on a $12.9 million mortgage secured by the remaining unsold units, the lender unloaded its mortgage loan to a real estate investor, who then foreclosed and took title to the unsold apartments, acquiring the controlling interest in the entire complex in the process.

For more, see Condos vs. Apartments (Housing slump hits home as Regal Pointe changes hands, focus).

Sacramento Cops Probe Possible Rent Scam Involving Foreclosed Home In Gated Community

In Sacramento, California, The Sacramento Bee reports:

  • Sacramento police are investigating a possible scam involving the rental of foreclosed homes to unsuspecting victims. [...] The home on Clubside Lane had been abandoned and bank owned for about two years, neighbors said,(1) but a couple moved in over the weekend.

  • On the front window two signs were posted warning people, especially state and federal employees, against trespassing on the property and that the occupants have "the unalienable right to self-preservation right to repel force by force -- self defense -- justifiable homicide."

For more, see:

For story update (2-10-09), see Natomas Rental Fraud Brings Arrest Warrants.

(1) Reportedly, the 3,361-square-foot home sold in 2006 for $865,000, assessor's records show. Neighbors say the home has been on the market seven times since then and that the last owner moved out more than a year ago, has been vacant ever since, the report states. PhonyLandlordScamZeta

Thursday, February 05, 2009

Queens Shopping Mall Owner To Hand Over Complex To Foreclosing Lenders; Area Competition, Bad Economy Dooms Retail Project

In Glendale, Queens, The New York Times reports:
  • [L]enders are foreclosing on a Queens shopping mall developed and owned by [Metropolitan Transit Authority chairman H. Dale Hemmerdinger's] company, Atco Properties and Management, Mr. Hemmerdinger said on Tuesday. [...] He declined to say how much his company had invested in the property, the Shops at Atlas Park, which has a $128 million mortgage with two French banks, Calyon and Société Générale. He said the two banks were in the process of taking over the property, which is in the Glendale neighborhood.


  • David A. Rosenberg, an executive vice president of Robert K. Futterman, a retail leasing firm, said the mall was hurt by competition from an expanded Queens Center Mall and from the established shopping corridor on Austin Street in Forest Hills.

For more, see M.T.A. Head’s Firm Loses Its Queens Shopping Mall.

Judge Allows Foreclosure To Proceed On Now-Deceased Man's Property Despite His Forgery Of Wife's Signature On Loan Documents

In Polk County, Iowa, the Des Moines Register reports:
  • A Polk County judge has delivered a legal setback to the widow of Ed Boesen. Judge Douglas Staskal ruled last week to allow Freedom Financial Bank to foreclose on property [...] in Ankeny to collect on a $232,000 loan obtained by Ed Boesen. The ruling rejected Maureen Boesen's claim that she was entitled to inherit the property, which was used as collateral for the loan.


  • [H]er lawyers claim the loans were invalid because of the forgery. Her lawyers also claim that she should be permitted to inherit property used as collateral. In his ruling, Staskal said state law generally upholds a spouse's right to inherit property when the spouse has not approved a loan connected to that property, or the sale of the property, by the dead spouse.

  • But the judge said the law makes an exception when the loan is considered a "purchase money mortgage."(1) [...] "Under most circumstances, Mrs. Boesen's arguments would certainly prevail," Staskal wrote in his decision. But "the priority of a purchase money mortgage over the dower interest of a surviving spouse established by statute is consistent with Iowa common law."

For more, see Foreclosure on Boesen property to proceed.

Go here for earlier reports on this story.

(1) A purchase money mortgage can be taken by a lender who provides money to enable the purchaser to acquire the real estate. It takes precedent over other liens and claims on a property. DeedGammaTheft

Ohio High Court Voids Mortgage Obtained By Man On Property Swindled From Mom; Unwitting Lender Burned By Lack Of Diligence

In Columbus, Ohio, the Youngstown Vindicator reports:
  • The Ohio Supreme Court sided with the estate of a Trumbull County woman whose son had defaulted on a mortgage he obtained on property that was not rightly his. According to court documents, Dale Ellis fraudulently obtained quit-claim deeds about a decade ago on six lots from his mother, who had agreed to give him only one.


  • Ellis subsequently secured mortgages on all six lots, starting in 1999, a few weeks after the fraudulent deeds were recorded, according to documents. His mother eventually discovered the fraud and filed a lawsuit in Trumbull County Common Pleas Court seeking the return of five of the six lots.

  • Shortly before he was served with the complaint, but after the mortgage provider had received its copies, Ellis obtained another loan from a different provider on the lots, using the proceeds to pay off the other mortgages, according to documents. [...] Ellis defaulted on the final mortgage he took out, and the provider filed foreclosure actions against him and his mother’s estate, according to documents.

While there were no facts established to indicate that the final lender had any actual knowledge of the fraud perpetrated by Ellis against his mother at the time of giving the mortgage loan to him, the court ruled that, given the specific facts of the case, the final lender was considered to be "charged with notice" of the swindle, thereby making its mortgage subject to being voided.(1)

For the story, see High court sides with estate of mother defrauded by son (The high court said a records check should have been made before a mortgage was provided).

For the Ohio Supreme Court decision, see Beneficial Ohio, Inc. v. Ellis, Slip Opinion No. 2009-Ohio-311 (February 3, 2009).

(1) In the event the lender obtained a title insurance policy when issuing the loan, the insurance company may wind up coughing up the cash to indemnify the lender for the loss due to the title screw-up.

Lack Of Proper Notice A Problem In Foreclosure Sales Of Property Over Delinquent Real Estate Taxes?

A 2007 article appearing in The Florida Bar Journal addresses the problem of lack of proper notice to a homeowner in the context of a foreclosure for failure to pay real estate taxes. The author makes this observation:
  • [T]wo recent decisions(1) applying due process protection to tax deed sales have imposed more stringent notice requirements than have prevailed in prior years, tilting the playing field to the advantage of property owners challenging tax deed sales due to a lack of notice.

For more, see Florida Tax Deed Sales Are Getting Risky.

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

(1) The decisions cited are the U.S. Supreme Court decision in Jones v. Flowers, 547 U.S. 220 (2006), and the Florida Supreme Court decision in Vosilla v. Rosado, 944 So. 2d 289 (Fla. 2006). foreclosure faulty notice

Lenders Lax In Maintaining Foreclosed Properties As Tenants Struggle In Rotting Homes

In Boston, Massachusetts, The Boston Globe reports:
  • Despite a year-old city ordinance designed to keep foreclosed properties from falling into disrepair, many lenders who have taken over properties are absentee landlords. That leaves [...] tenants [...] to cope with decaying living conditions in apartments that, in many cases, were already substandard. Some struggle to receive basic services, such as heat and hot water, and they often don't know whom to contact in an emergency.


  • [P]ublic documents show about 27 percent of the 1,566 properties that entered the foreclosure process since the ordinance took effect last year are not registered. Without that information, it is difficult for the city to monitor property upkeep.


  • State lawmakers are considering legislation for a statewide registration program similar to Boston's. But housing activists say that even if lenders register, they seldom offer a way for tenants to get in touch with them, even though they are supposed to post 24-hour contact information on foreclosed buildings.


  • Some renters, [...] are caught in a kind of ownership limbo - the landlord is gone, but the bank has not completed foreclosure proceedings.(1)

For more, see Forgotten in foreclosures, renters forced to live in decaying homes.

(1) The apparent rough treatment some foreclosing lenders and servicers have been giving Boston-area tenants has been the subject of two earlier posts where, with the help of local pro bono counsel, the tenants have been able to return the rough treatment. See:

  • 2-4-09: Legal Aid Obtains Settlement For Boston-Area Tenants Facing Foreclosure Eviction; Lender Coughs Up $40K, Gives Renters Option To Buy Building,
  • 12-30-08: Boston Legal Aid Firm Wins $54K Jury Verdict For Tenant Illegally Booted In Foreclosure Eviction; Now Seek Triple Damages, Attorney Fee From Servicer.

Tenants In Financially Trobuled Apartment Building Ordered To Leave Immediately As Bursting Frozen Pipes Create Safety Hazard

In Pekin, Illinois, the Pekin Daily Times reports on tenants in a local 16-unit building getting a surprise 24-hour notice to vacate their apartments:
  • [T]he latest issue arose when a frozen pipe burst, flooding the basement with water that eventually reached electrical panels, according to city code enforcement officer Ron Sieh. The rising water forced AmerenCILCO to kill electricity to the building for safety reasons. At the time of the landlord’s notice, the building was without water service and the electricity had already been cut by Ameren.

Reportedly, the 16-unit apartment complex is for sale, and the bank will not issue any more loans to fix the building. Beyond financing problems with the bank, owners of the property are also delinquent on more than $6,880 in 2007 taxes, according to the Tazewell County clerk’s office, the story states.

For the story, see Tenants evicted with 24-hour notice.

Suspect Bagged In Alleged Real Estate Scam Leaving 75-Year Old South Carolina Woman Out $15K, Facing Foreclosure; More Victims Possible

In Moncks Corner, South Carolina, WCIV-TV Channel 4 reports:
  • A man is arrested for scamming a 75-year-old out of more than $15,000, according to the Berkeley County Sheriff’s Office. Rufus Rivers of Ladson was arrested Tuesday, after deputies say he convinced the elderly woman the money would be used to pay her mortgage. Authorities say Rivers kept the money for himself and the woman’s property is now in foreclosure and ready to be auctioned off.

  • He was apprehended when he went to the woman’s Moncks Corner home to collect another supposed payment from the victim. [...] A receipt book seized as evidence indicates Rivers may have additional victims.

Rivers is reportedly charged with felony offenses of:

  • Obtaining a signature or property under false pretenses, and
  • Exploitation of a vulnerable adult.

Source: Elderly Woman Scammed Out of $15,000.

See also: Scammed Elderly Woman May Lose Home. KappaDeedTheft

Wednesday, February 04, 2009

Squatters In Vacant Foreclosed Homes Now On The Radar For Prince William Cops

In Woodbridge, Virginia, Newschannel 8 reports:
  • In the hidden side to the foreclosure crisis, local homes abandoned by their owners are finding new tenants as 'squatters' move in. The properties have been foreclosed on and abandoned for months, making them vulnerable to squatting [...]. The issue has led to Prince William County police having to check on houses that are no longer homes.


  • [W]ith the large number of vacant properties, there are more and more that are becoming temporary shelters. "Sometimes it's teenagers, sometimes it's homeless adults," said Manassas Police Officer Scott Stallard. In fact, just this week, a realtor spotted a man running from a home that is for sale. Inside, it appeared someone had just taken a shower.

For more, see 'Squatters' Move In On Foreclosed Properties.

Phony Eviction Attempt On DFW-Area Tenant Renting Home In Foreclosure Fails

In Rockwall, Texas, WFAA-TV Channel 8 reports:

  • [O]ne renter who recently got a foreclosure notice may have been the victim of a hoax. Carolyn Williams has been renting a home in the Turtle Cove neighborhood in Rockwall for the last three months. Two weeks ago, she got a knock on the door. "They came by to tell us the house was being foreclosed on and that we had to leave," she said. "They identified themselves as 'the constable.'" It turns out, the constable for this area, John Cullins, never went to her door. "I have no eviction and I am the only one in this precinct who would have served it," he said.


  • The house went into foreclosure because the owner failed to pay his home owners association dues. But the HOA's attorney told News 8, it has not filed an eviction notice.

For more, see Fake constable issues foreclosure notice in Rockwall.

Economy, Needed Repairs Leave Connecticut Nursing Home's Fate In The Hands Of The State As 76 Residents Face The Boot, 133 Workers Face The Ax

In Griswold, Connecticut, WTNH-TV Channel 8 reports:
  • The ball is now in the state's court. Despite opposition from those who work and live there, the state will now decide whether a Griswold nursing home will remain open. The facility claims that due to the tough, economic times they are forced to close its doors. [... T]he fate of 76 residents and 133 workers now lies in the hands of the state.

For more, see Court to decide nursing home's fate.

Rent Skimming Landlords Hard To Avoid For One Las Vegas-Area Tenant

In Las Vegas, Nevada, KTNV-TV Channel 13 reports on an area tenant who has just found out, for the fourth time, that the home she is renting is going into foreclosure.

For the story, see Contact 13: Foreclosed rental property scam (read story) (watch video). SkimmingKappaRent

21 Missouri Homebuyers File Suit Against Springfield Firm In Failed Contract For Deed Home-Buying Program

In Springfield, Missouri, the Springfield News-Leader reports:
  • Twenty-one homebuyers and tenants in a subdivision in Peculiar south of Kansas City have brought a group lawsuit against Greenleaf Companies, many of its business partners and 61 home investors in the U.S. District Court for the Western District of Missouri in Springfield.

  • The lawsuit, filed on Jan. 23, is the first collective effort by Greenleaf victims against the Springfield company. Many homes in Greenleaf’s investment program have been lost to foreclosure, after the company failed to remit enough money to its investors to make mortgage payments.


  • In this latest suit, homebuyers and tenants in Tuscany, a Greenleaf-managed investment subdivision in Peculiar, are accusing the Springfield company of racketeering, a Ponzi scheme and unlawful merchandising acts. The plaintiffs also named participating investors in the suit.

For the story, see Group of residents of Peculiar bring lawsuit against Greenleaf Companies.

Go here for other "contract for deed" problems involving Greenleaf Companies. Arkansas rent to own lease purchase option scams yellowstone

Washington AG Targets Couple In Suit Alleging Deception In Acquiring Homes From Strapped Homeowners; Pocketed Rents While Stiffing Bank

From the Washington Attorney General's Office:
  • The Washington Attorney General’s Office is suing a convicted equity skimmer a second time, claiming the Colfax man and his wife ran a real estate investment business that misled distressed homeowners and property investors.

  • Attorney General Rob McKenna and Assistant Attorney General Jack Zurlini filed new documents [...] in Spokane County Superior Court that accuse Anthony and Alicia Napier of skimming equity from distressed homeowners in Eastern Washington and misleading investors. It’s alleged their dirty deals left a trail of victims – families who lost their homes, renters who never recouped security deposits and investors who never saw profits.

For more, see Attorney General sues Colfax couple for equity skimming (Eastern Washington families lost their homes to felon and his wife).

For the lawsuit, see State of Washington v. Napier.

Feds Left Holding The Bag On Home Seized From Alleged Equity Stripping Foreclosure Rescue Operator

The Huntington Homes blog at The Orange County Register reports:
  • It sounds odd. The home in foreclosure for $3,589,000 at 3281 Bounty Circle in Huntington Harbour is owned by …. Uncle Sam? It’s true. Here’s how it happened:

  • When Edward Seung Ok pleaded guilty to his part in a $12 million mortgage fraud ring, the feds took his fancy house, [...] as part of the deal. There was some equity when the case began, but eventually, between the drop in the real estate market and Ok’s failure to make his mortgage payments on the house, the equity disappeared, says Steve Welk, assistant U.S. attorney and asset forfeiture chief.

  • When we go after real property, people usually stop paying their mortgage,” Welk says. “What we do in those situations is we allow the lender to foreclose and we come back in only if there’s money left over.”

For more, see Guess who got left with a $3.59 million foreclosure?

In a related story, see From a harbor-view home to a jail cell.

Go here for earlier posts and any available updates on the alleged $12 million equity stripping scam.

Legal Aid Obtains Settlement For Boston-Area Tenants Facing Foreclosure Eviction; Lender Coughs Up $40K, Gives Renters Option To Buy Building

In a letter from the President Of The Boston Bar Association (appearing on the website of The Metropolian Corporate Counsel) describing the funding crisis faced by legal aid in Masachusetts, Kathy B. Weinman describes the successful work of pro bono counsel in one particular case involving tenants facing foreclosure eviction:
  • When the bank foreclosed on their building, the Vietnamese-American tenants were fully paid up on their rent. During the foreclosure, however, conditions at their residence had deteriorated; the building had developed extensive leaks and the heating system had broken down. The tenants - including the elderly and disabled - nevertheless perservered.

  • When the bank sought to evict them, they called the Greater Boston Legal Services for help. A staff attorney, Zoe Cronin, led their successful defense. After exploring all avenues of redress, Cronin negotiated an agreement with the bank entitling the tenants to a one-year lease at reduced rent, an option to purchase the building, and compensation exceeding $40,000 for the conditions they had endured.

  • These tenants were fortunate. They had a lawyer. In normal times, legal services programs in Massachusetts turn away over one-half of qualified callers in need of help as a result of inadequate resources.

For the rest of the letter, see "Send Lawyers, Guns And Money" (or go here for published version).

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, go here, go here, and go here. Copyright 2009 The Home Equity Theft Reporter http:// SkimmingKappaRent

Condo Residents Throughout South Florida Face The Boot As Delinquent Water Bills Force Cities To Consider Service Shutoffs

The South Florida Sun Sentinel reports:
  • Diela Narrabe may be forced to leave her Deerfield Beach condo next month, even though she's done everything right. Narrabe is one of 28 unit owners — out of 168 — in the Deerfield Palms condo association who still pay their monthly maintenance fees, which are used to pay the community's water bill.(1)

  • Residents owe the city $90,000. If they don't pay $12,929 by the first week of March, the city is threatening to turn off the water. Because the community has master meters rather than individual unit gauges, the city can't separate owners who are current on their bills from delinquent customers. If the water goes away, so will Narrabe, a golf club employee and mother of two who says she could not afford both her mortgage and rent on another place.


  • Associations with unpaid utility bills also are an issue in Coral Springs, Lauderhill, Boca Raton and Tamarac, and the problem is likely to spread as joblessness and foreclosures keep climbing.

For more, see Deerfield Beach may shut off water at condo that owes $90,000 (At Deerfield Palms, only 28 units out of 168 pay maintenance fees).

See also:

(1) According to the story, Armando Fana, director of the Miami office of the U.S. Department of Housing and Urban Development, estimated more than 80 units in Deerfield Palms are in some form of foreclosure. The community cannot afford a lawyer to chase maintenance fees, said condo board president David Brenelus; nor could the association purchase foreclosed units and pay those monthly fees. homeowner association

Tuesday, February 03, 2009

The Phones Keep Ringing Off The Hook At Legal Aid As "Key To The Courthouse" For The Poor Left Imperiled By Budget Shortfall

In southeastern Pennsylvania, The Intelligencer reports:
  • More people are turning to Legal Aid to stop foreclosures and file bankruptcy, but budget cuts mean there's less money to help. As the economy plummets and jobs disappear, the phones at Legal Aid are ringing off the hook. An increasing number of those calls are from people seeking help to avoid foreclosure or file bankruptcy.

  • But the organization, which provides free or reduced-price legal services to the poor, is having its own financial crisis, and many calls are going unanswered. "It has gotten to the point where people cannot get through," said Elizabeth Fritsch, co-executive director of Legal Aid of Southeastern Pennsylvania.


  • Fritsch said the shortfall is hurting the most vulnerable members of society. "This is about equal justice, about everyone having a key to the courthouse," she said. "Everyone, no matter how much money they have, is entitled to have their say."

For more, see Economic woes putting legal pinch on poor.

San Diego DA Indicts 10 On 150+ Felony Charges In Alleged Foreclosure Scams Involving Sale Leasebacks, Land Grants

In San Diego, California, the San Diego Union Tribune reports:
  • The county grand jury indicted 10 people(1) yesterday for allegedly stealing hundreds of thousands of dollars in a foreclosure scam that victimized hundreds of homeowners in San Diego and Riverside counties. The District Attorney's Office received indictments on more than 150 felony counts. Authorities said the crimes were uncovered last year following complaints by homeowners, most of whom are Latino.

  • The alleged victims said they were tricked into paying fees to foreclosure consultants who did nothing to prevent their homes from being taken back by lenders. Many had only a basic command of the English language, said Deputy District Attorney Stephen Robinson.


  • The alleged scammers had two ways to trick the owners of some 400 homes into paying them fees for bogus consulting services, the district attorney charged. One required them to pay a one-time fee of up to $10,000 to place their property into a land grant. The second method was a lease-back, in which they deeded over their properties and paid rent.

For more, see 10 indicted in alleged foreclosure conspiracy (Authorities: Homeowners tricked into paying fees).

(1) Five suspects in the case were arrested in May. Yesterday in Superior Court, 10 defendants were arraigned on charges of conspiracy, grand theft, rent skimming and deceitful practices. They were William Hutchings, 62, and his wife, Xiaoke Li, 43, both of San Diego; Edgar Martinez, 30; Diego Gil, 38, Shawna Landis, 29; Octavio Escatel, 29; Joel E. Garcia, 26; Stephen P. Mauer, 54; Rose M. Napoli, 34; and Alex Olmos, 39.

Crippled Finances Force Homeowners In Foreclosure To Bypass Lawyers & Represent Themselves In Court

In Miami, Florida, reports:
  • [T]he reasons that foreclosure defendants end up representing themselves are usually financial. “A lot of lawyers out there have been extremely reluctant to take homeowners’ cases,” said [Arizona attorney Neil F.] Garfield. “They figure if the person can’t pay their mortgage, they can’t pay their lawyer.”(1)

  • Even when homeowners in foreclosure can show errors by their lenders and mortgage servicers, many lawyers still aren't interested in representing them, according to [director of the Center for Responsible Lending Eric] Halperin. “A lot of the time, what you’re getting is loan forgiveness,” he said. “There’s no cash for you to take a piece of. It’s challenging. ... I don’t think there’s an adequate number of attorneys who both are trained and will take foreclosure cases.”

For the story, see The home you save could be your own (In foreclosure crisis, more Americans representing themselves in court).

(1) A reminder to attorneys in Florida: In the case of any mortgage that allows a foreclosing lender to add attorney's fees to the amount of a judgment in a successful action, Florida law allows a defendant (ie. homeowner) in a successful defense against the mortgage company to recoup prevailing party attorney fees from the non-prevailing lender under the reciprocity provisions of section 57.105(7), Florida Statutes. See also, Attorney Fee Awards For Successful Foreclosure Defense In Florida.

Woman Gets 5 To 15 Years In Brooklyn Deed Theft Binge; Still Has Charges Pending With Manhattan DA

In Brooklyn, New York, WABC-TV Channel 7 reports:
  • A woman was convicted of scamming dozens of people out of their homes by forging deeds has been sentenced. Maria Leyna Albertina stayed silent, declining to divulge any of her scam secrets as State Supreme Court Justice Michael Gary blasted her and then sentenced her to 5 to 15 years in prison.

  • She is charged with running a longtime forged deed scam to literally steal dozens of Brooklyn properties owned by absentee landlords, including a Brownsville home owned for 20 years by artist Garfield Gillings


  • In May of 2006, Albertina pleaded guilty to first degree grand larceny, promising to pay $2 million in restitution to her victims for a lesser sentence. She got sprung a second time. And what happened? Albertina didn't pay back the money, only a small fraction. She did allegedly come up with a new scam. Actually not new at all. She just started targeting properties to steal in Manhattan instead of Brooklyn, according to a new criminal complaint charging her with forgery and scheme to defraud.

For more, see Woman sentenced in forged deeds case.

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

Homeowner Victimized In Equity Stripping Deal Successfully Challenges Bona Fide Purchaser Status Of Subsequent Buyer In Attempt To Void Deed

A 2005 court decision of the Colorado Supreme Court gives a good example of how a financially strapped homeowner who was screwed over in an equity stripping, foreclosure rescue deal can approach (probably with help of experienced, competent counsel) undoing the transaction in court of law.

The case involved a foreclosure rescue operator who acquired title to a home through fraudulent means from a financially strapped husband and wife, and who then flipped the home to a subsequent third party purchaser shortly thereafter.

In bringing suit to void the deed, the homeowner successfully attacked the subsequent purchaser's asserted status as a bona fide purchaser, despite the fact that the subsequent purchaser neither participated in the foreclosure rescue operator's alleged fraud, nor had any knowledge thereof. The court ruled(1) that, because the the subsequent purchaser bought the home with the homeowners in occupancy and possession thereof, the subsequent purchaser was charged with a duty to inquire of the homeowners as to the nature of their possession. Such an inquiry would have uncovered the fraud by the foreclosure rescue operator. The purchaser's failure to make such an inquiry legally placed him on notice of the fraud, thereby disqualifying him from the protection of the recording statutes as a bona fide purchaser. Consequently, the subsequent purchaser's title to the homeowner's property is subject to being voided on account of the fraud perpetrated by the foreclosure rescue operator.

For an expanded version of this post, and the links to the court decision, see Lack Of Knowledge Or Partcipation In Fraud Not Enough To Sustain Bona Fide Purchaser Status In Equity Stripping, Foreclosure Rescue Deal.

For case law addressing the effect of possession and a real estate purchaser's duty to investigate when seeking the protection of the recording statutes as a bona fide purchaser, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

(1) In ruling favorably for the homeowner, the Colorado Supreme Court reversed a ruling of the state Court of Appeals, which in turn, affirmed a trial court, ruling (incorrectly, in retrospect) that the subsequent purchaser was entitled to the protection of bona fide purchaser status, and consequently, the homeowner would be precluded from voiding/cancelling the deed (which goes to show that, if you're a homeowner in this position, not only do you have to be lucky enough to find an attorney to represent you who really knows what he/she is doing in this area of law, but the attorney may have to be willing to ignore, what in retrospect were, the incorrect rulings of the lower courts and appeal those decisions up the ladder until the justice system ultimately - and hopefully - gets it right. I can't imagine how many homeowners there must be who found themselves in a similar foreclosure rescue scam, but were either unable to retain affordable, competent counsel or, if represented, unable to finance an appeal of an incorrect trial court decision. I suspect that the attorney in this case probably provided his/her services to the financially strapped homeowners either (a) on a contingent fee basis, or (b) "on the arm."

NYC Attorney Accused Of Looting Escrow Account Of $396K; Keeps Client From Buying House

In New York City, the New York Post reports:
  • A Manhattan real-estate lawyer stole $396,000 from a client who had hoped to use the money to buy a house in Brazil, authorities said yesterday. When the client went to close on the house last October, Robert Barsch 'fessed up - admitting that he had looted the escrow account to take care of "a personal emergency," prosecutors said.

  • Bausch, 48, of Levittown, LI, returned $175,000 but cost the client the chance to get the home, prosecutors said. Barsch is charged with grand larceny and was being held last night on $20,000 bail.

Source: 'Thief' Lawyer A House Louse: DA.

Architect Of Alleged $50B Scam Using Florida Homestead Laws To Protect Property From Creditors' Seizure?

CBS News reports:
  • [C]BS News has learned that [Bernard] Madoff and his brother, along with their wives, took steps two years ago -- around the time that federal regulators started probing Madoff’s business activities -- that could help prevent their Florida homes from being taken away from them, something possible under Florida state law.

For more, see Double Trouble for Madoffs? (CBS News Investigates: Brother Of Bernard Made Florida Real Estate Moves That Raise Questions About How Much Family Knew).

Monday, February 02, 2009

Foreclosure Diversion Program Proposed In Providence; Similar To Philly Plan

In Providence, Rhode Island, WPRI-TV Channel 12 reports:
  • In an effort to protect families from foreclosure, Providence Mayor David Cicilline unveiled two ordinances Monday morning during a news conference in the city's Olneyville neighborhood.


  • The first proposal, Tenants Protection Against Foreclosures Ordinance, is meant to protect renters from eviction when their apartments are subject to foreclosure proceedings.


  • The second proposal, Foreclosure Mediation Ordinance, would require financial institutions and property owners to engage in mediation with a HUD-approved counselor before moving ahead with a foreclosure. Cicilline said a similar mediation program in Philadelphia has prevented or delayed foreclosures in nearly 80 percent of the 552 cases that went into mediation. [...] Both ordinances have been sent to City Council for approval.

For more, see Foreclosure plan aims to shield renters (Providence's mayor unveils 2 new ordinances).

Housing Non-Profit Files Trademark Complaints Targeting Loan Modification, Foreclosure Rescue Firms

In Washington, D.C., NeighborWorks America(1) announced today:
  • Today NeighborWorks® America announced that it filed two trademark complaints with online search engines in an attempt to protect consumers from falling prey to foreclosure rescue scams. The trademark complaints filed by NeighborWorks sought to remove online ads paid for by so-called mortgage rescue companies that used the NeighborWorks name and logo and offered foreclosure help for a fee. The companies have no affiliation with NeighborWorks.

  • The trademark complaints were the latest of NeighborWorks’ efforts to help ensure that homeowners in danger of foreclosure receive the help they need to avoid foreclosure.

For the rest of the press release, see NeighborWorks America Works to Thwart Foreclosure “Rescue” Scams (Offers Consumers Tips to Avoid Being Scammed).

Go here for more from NeighborWorks on avoiding loan modification, foreclosure rescue scams.

(1) NeighborWorks America is a national nonprofit organization created by Congress to provide financial support, technical assistance, and training for community-based revitalization efforts.

Moratorium Declared On All Detroit-Area Foreclosure Sales

In Detroit, Michigan, the Detroit Free Press reports:
  • Wayne County Sheriff Warren Evans announced today that his office is refusing to enforce sales of foreclosed homes as the real estate crisis continues to drain the region. Evans made the announcement this morning at a press conference, several days after he urged Gov. Jennifer Granholm to impose a moratorium on home foreclosures.

  • "Today I will be stopping all mortgage foreclosure sales in Wayne County beginning with the sale that was scheduled for this Wednesday," Evans said. "I am doing so because it's my opinion that recently enacted federal laws provide protections for homeowners facing foreclosure."(1)

For more, see Evans says county will not enforce foreclosure sales.

(1) Reportedly, Evans said the Troubled Asset Relief Program, or TARP, approved by Congress last fall requires the Secretary of the Treasury to implement a plan to mitigate foreclosures and to encourage services of mortgagers to modify loans to enable homeowners to stay in their homes. He said federal law pre-empts state law. Coincidentally, Evans is also running for mayor of Detroit.

Use Of "Cash Back, No Money Down" R/E Acquisition Technique The Focus Of Suit As Elderly Couple Allege Buyer Screwed Them Out Of Their Home Equity

In Tampa, Florida, the St. Petersburg Times reports on the story of an elderly couple who claim they had their home equity ripped out from under them by a buyer using a real estate financing technique (or, more specifically, an over-financing technique that some may consider a form of equity stripping) that's been made famous over the last 3+ decades by a batallion of peddlers of "No Money Down" real estate investment books, tapes & seminars:
  • A retired couple who sold their longtime homestead to Buddy Johnson sued the former Hillsborough elections supervisor Friday, alleging that he committed fraud by secretly altering the terms of the sales contract.

  • Cecil and Nita Bass, who sold their 20-acre family land to Johnson two years ago for $800,000, say Johnson defrauded them in a conspiracy involving a title company and the Plant City bank whose president, at the time, was the treasurer for Johnson's re-election campaign.

  • Johnson changed the sales contract, the lawsuit says, to obtain financing in excess of the amount allowed under the contract's terms, enabling him to walk away from the closing with $158,177 in cash "for his own personal benefit."

  • The Basses say Johnson signed documents representing that he would finance $760,000 of the $800,000 purchase price: $240,000 from Sunshine State Savings(1) in Plant City and $520,000 in a second mortgage from the Basses.

  • Instead, the suit says, Johnson negotiated a $400,000 loan from the federally-insured thrift and kept the Basses in the dark about it. In all, he got $920,000 in loans on the $800,000 purchase, allowing him to take a six-figure sum away at closing.

For more, see Lawsuit accuses Buddy Johnson of fraud in land financing.

For story updates, see:

(1) Any attempt by the screwed over homeowners to void the mortgage by Johnson to Sunshine State will turn on whether Sunshine's status as a bona fide purchaser / encumbrancer can be successfully attacked and overcome. Even if Sunshine didn't participate in the alleged fraud and had no knowledge thereof, it may nevertheless find itself as being "on notice" of the alleged fraud and, consequently, lose the protection of the recording statutes, leaving its mortgage interest in the real estate subject to being voided. See Flanigan's Enters. v. Shoppes at 18th & Commer., Inc., 954 So. 2d 758; 2007 Fla. App. LEXIS 7065; 32 Fla. L. Weekly D 1241 (4th DCA 2007) (The court, in addressing the bona fide purchaser issue, stated: "If a person has information that would lead a reasonable man to make further inquiry for his own protection, but fails to further investigate and learn what the inquiry would reasonably have uncovered, the person must suffer the consequence of his neglect." [citations and internal quotations omitted]).

Florida Judge Throws Loan Modification Firm Into Receivership; Company Left Many Homeowners Worse Off, Says State AG

In Fort Lauderdale, Florida, The Miami Herald reports:
  • A Broward Circuit judge has placed Margate-based foreclosure rescue company Outreach Housing into receivership and banned its principal, Blair Wright, from certain business activities. The action follows a suit by the Office of Financial Regulation alleging the company was wrongly taking money from homeowners in foreclosure.

  • According to the state agency's complaint, Outreach persuaded numerous homeowners facing foreclosure to pay it up to 65 percent of their regular mortgage payment each month in exchange for help staying in their homes.

  • The agency alleges that the company in many cases never helped the homeowners, leaving them worse off than before, and held itself out as a mortgage servicer. Outreach filed a motion Friday to dissolve the injunction, Wright said.

  • Borrowers who have contracted with Outreach Housing are encouraged to call the Office of Financial Regulation at 954-958-5508.

Source: Judge wrests control from mortgage helpers.

For the Florida Attorney General's 10-16-08 press release announcing the filing of the lawsuit, see Broward Foreclosure Debt Mitigation Company Sued for Deceptive Practices.

Go here for other posts on this case.

Surge In Self-Represented Homeowners In Foreclosure Actions Forcing Courts To Examine Non-Default Related Legal Issues

In Miami, Florida, reports:
  • [Luis M]olina, a former car salesman and deli owner whose formal education ended with a diploma from Teaneck High School in New Jersey, is among a growing number of American homeowners representing themselves as what are called "pro se" — a Latin phrase meaning “for oneself” — litigants in foreclosure proceedings.

  • There’s no way to know how many pro se foreclosure cases are currently moving through U.S. courts, but anecdotal accounts from lawyers and others indicate the number is growing along with the nation’s mortgage crisis, which has reached unprecedented proportions.

  • Along with trained and licensed attorneys, pro se litigants are forcing courts to look at myriad foreclosure issues that go far beyond whether or not a loan is being properly repaid, including allegations of predatory lending practices and the fundamental question of who actually has the right to foreclose.

For the story, see The home you save could be your own (In foreclosure crisis, more Americans representing themselves in court). KappaMtgDocsMissing

Lenders' Begin Feeling The Heat As Demands For Loan Documentation In Foreclosure Actions Are Evidenced Across Florida

Buried at the end of a recent story in The St. Augustine Record is this excerpt on the difficulty lenders and loan servicers are having in proving they have standing to foreclose on a delinquent homeowner, and how evidence is showing up across Florida of homeowners going to court demanding the lender/servicer to produce the proper loan documentation in a foreclosure action:
  • The [mortgage loan] ownership link was easy to follow when the transactions passed from one hand to another without repackaging for multiple sales. Things got confusing when individual loans became drops in large pools. And without that proof of ownership, service companies don't have "standing" to foreclose.

  • Even if the companies are later able to provide the necessary proof, the delay may be all the homeowner needs to straighten out his financial problems. "They have to prove they have the right to bring a suit," said [Jacksonville attorney James] Kowalski.


  • "I've had lawyers with banks ... tell me they are seeing the motions filed around the state. Bankruptcy judges have picked up on this and have dismissed some cases."

For more, see Pooling complicates mortgages. KappaMtgDocsMissing

Ohio Congresswoman Urges Homeowners In Foreclosure To Stay Put, Become Squatters, & Make Lenders "Produce The Note"

CNN's Lou Dobbs Tonight ran a story last week on Toledo, Ohio Congresswoman Marcy Kaptur's crusade urging homeowners facing foreclosure who haven't had the benefit of legal counsel from a competent attorney to stay put, become squatters in their own homes, and fight back. In light of the fact that lenders are having a rough time finding the original paperwork for each loan, Kaptur is advocating a "Produce The Note" strategy. She expresses the belief that 99.9% of all homeowners losing their homes have not had a good lawyer to put the heat on sloppy lenders.(1)

For the story (video only, 3:19), see Fight Foreclosures: Be a Squatter!

For a related story in the Toledo Blade, see Kaptur advises owners facing eviction to stay.

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) At this point, it should be obvious that the vast majority of these promissory notes that these sloppy lenders can't find haven't actually been lost through some innocent inadvertence; they've been misplaced as a result of their own recklessness, and should, arguably, be made to weigh heavily against them in any attempt on their part to re-establish their "lost" notes in a court action. KappaMtgDocsMissing

Sunday, February 01, 2009

Poor Mortgage Servicing Leading To New Breed Of Predator?

On the Credit Slips blog, attorney Tara Twomey makes some observations on how poor mortgage servicing is paving the path for a new breed of predators and how little is being done to address the situation.
  • [W]hen property values were appreciating rapidly, foreclosure rescue scams primarily focused on obtaining title to the home and robbing homeowners of their equity. Today with property prices depreciating and many homes already “underwater,” equity is no longer the game. Instead, rescuers have become high-volume, “loan modification specialists.”


  • The gist of the business model is that for a fee, which can reach several thousand dollars, these specialists will attempt to obtain a loan modification for the borrower.

  • But why are homeowners giving their precious dollars to loan modification specialists when they should be able to obtain the same results for no charge?

For the answer to this question, and other observations, see Poor Servicing Paves the Path for Predators.

Loan Modification Scams "Getting Worse & Worse Every Day," Says California DRE Chief

In San Francisco, California, cbs5 did an investigative report on loan modification firms and featured two firms which which reportedly took at least $3,000 each in upfront fees(1) from two different homeowners seeking help dealing with their house payments:
  • [T]he State of California has now taken action against both companies. The Department of Real Estate accuses Saving California and People's First Financial of taking money upfront without the agreements necessary to protect consumers, and in desist and refrain orders, has ordered them to stop those practices. But the state says those two cases represent just the tip of the iceberg. "It's getting worse and worse every day," said California Department of Real Estate Commissioner Jeff Davi.

For the story, see Loan Modification Firms May Not Always Be Helpful. (read story) (watch cbs5 video).

(1) Taking upfront fees from California homeowners for loan modifications requires prior approval from the California Department of Real Estate, and is outright illegal if a notice of default has already been recorded against the homeowner's property. See Upfront Fees For Loan Modifications In California Prohibited Once Notice Of Default Is Recorded On Home In Foreclosure.

Pro Se Homowner In Foreclosure Getting Harrassment From The Florida Bar?

Buried in a recent article on homeowners in foreclosure going into court and representing themselves against the mortgage lender was this excerpt about one Florida homeowner responding to why he was representing himself:

  • [M]ario Kenny, [a] Miami resident who is fighting foreclosure pro se and writing about his experience online,(1) said the cost of professional help is too high. “A lawyer wants too much money — ... $5,000, $10,000, $15,000,” he said.

  • Besides, Kenny said, the legal profession is doing more to aid foreclosures than avert them. “They are stopping us and getting in our way,” he charged, referring to what he described as a warning by someone with the Florida Bar Association [sic] that advice on his Web site bordered on practicing law without a license. “I don’t practice law, I don’t have any clients, I don’t charge anybody,” said Kenny, a 52-year-old fashion designer.(2)

  • The bar association, which regulates the state’s 85,000 lawyers, had no record of Kenny being contacted or investigated, but said it could not rule that out. Lori Holcomb, the bar’s counsel for unlicensed practice of law, said the bar is much more likely to investigate “companies that have gone into business to do this, not individuals who say, ‘Hey, I’ve done my foreclosure, let me help you with yours.’”

Source: The home you save could be your own (In foreclosure crisis, more Americans representing themselves in court).

(1) A review of some of the material on Mr. Kenny's blog reveals that he may be a fan of this blog. The fact that he lifted some of my material and used it on his blog, although done without attribution, is really quite flattering.

(2) Could it be possible that there is someone over at The Florida Bar who is that stupid that he/she believes that hassling a homeowner writing about his foreclosure experiences on the Internet poses more of a threat to the general public than, say, non-attorney loan modification firms charging big upfront fees for reviewing legal documents in search of violations of applicable lending law (and, arguably, are engaging in the unlicensed / unaythorized practice of law)??? Or, just as bad or worse, attorneys with little training or experience in this area of law charging big upfront fees and

  • doing little or nothing in terms of substantive litigation in representing homeowners other than delaying a foreclosure for a couple of months; and/or
  • allowing themselves to be used as a fig leaf for loan modification firms seeking "protective cover " with the view that said cover could be enough to keep The Florida Bar from bringing charges of unlicensed / unauthorized practice of law against them?

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

Buying A Vacant Foreclosed Home? Don't Forget That Mold Inspection

Northern Virginia Daily reports:
  • [M]old litigation has become one of the fastest growing fields of litigation, according to the National Institute of Environmental Health Sciences of the National Institutes of Health. Empty houses in foreclosure are becoming mold breeding grounds. It's not a new problem -- mentions of household mold date back to biblical times -- but is one that is receiving more attention due to huge jury verdicts, allegedly due to its toxicity.

For more, see Silent stalker: Household mold can cause damage to health and wallet. meth lab yak

Ex-Real Estate Agent Cops Plea To Pocketing $1,500 For Renting Vacant Foreclosed Home That Didn't Belong To Him

In Greeley, Colorado, the Greeley Tribune reports:
  • A former Greeley real estate agent pleaded guilty Thursday to one count of felony theft in a deal that dropped a second count of theft and a forgery case. Gunnar Weber took the deal, which calls for an open sentencing option of two to six years in prison. Prosecutors said Weber took money from a couple for a home he claimed he owned. The district attorney’s office said Weber accepted and cashed two checks in the amount of $1,527.77 that the couple had given him for rent. Later the couple learned the home was actually in foreclosure and did not belong to Weber.

Source: Man pleads guilty in real estate theft.

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

Shootout At Foreclosed Home; Two Cops Injured While Serving Eviction Notice

In Otero County, New Mexico, FoxNews reports:
  • Two police officers were injured during a shootout as they tried to serve an eviction notice at a New Mexico home facing foreclosure, according to the Alamogordo Daily News. The wounded deputies were hit by flying glass in the Friday night gunbattle after their windshield was shattered by bullets, said Otero County Sheriff's Deputy John Dalton. Someone inside the house was firing a weapon, he said.

  • The deputies' injuries were minor, according to the Albuquerque Journal. SWAT teams swarmed the southern New Mexico house after officers serving the eviction papers about 11:15 a.m. Friday were met at the gate by gunfire. "They were shooting at officers with rifles," Otero County Sheriff's Deputy John Dalton told the Daily News.

  • The standoff continued late Friday night and into the early morning hours Saturday. Officers negotiated with at least one man who refused to leave the home. They have not identified him or the other occupants of the house.

Source: 2 Officers Injured in Shootout at New Mexico Home Facing Foreclosure.

See also: Alamogordo Daily News: Canyon standoff: (Two Otero County Sheriff's deputies injured in shootout).

For story update, see KOAT-TV Channel 7: Neighbors Reveal More Details In Otero County Standoff.

Go here and go here for other posts on police incidents during home evictions. DeputyEvictionTheta