Saturday, April 25, 2009

Delinquent Homeowner's Bank Account Wiped Out By Mortgage Lender Before Foreclosure; No Court Judgment Needed, Says Bank

In Phoenix, Arizona, KTVK-TV Channel 3 reports:
  • [U]nable to keep up with his mortgage payments, [Joel] Contreras is giving his condo back to the bank. He says that's depressing enough, but he certainly wasn't prepared for what happened next. "When I looked at my bank account and saw that it was all wiped out, it took me a good day to rebound from that," he said. "I was panicking. I was freaking out."

  • Why? Well, Contreras discovered someone raided his bank account and withdrew nearly $2,100, leaving him penniless. Just who would do such a thing? Wells Fargo, that's who. Contreras has a second mortgage with Wells Fargo and says even though they knew he was giving his condo back, he says they took what they could from his account.

  • "If your lender is the same bank that your checking account is with then they don't need a judgment," Contreras said. "They can just wipe out your whole account." He's right. In an e-mail to 3 On Your Side, Wells Fargo says, "... State and federal law gives financial institutions the right to claim unpaid and past due amounts owed to them ..." They go on to say, "This is a common industry practice."

For the story, see Mortgage lender can raid your bank account during foreclosure.

State Banking Lobbyists Seek To Sneak Law Exempting Banks From Maintaining Abandoned Homes In Foreclosure Past Florida Legislature

The Mike Thomas Blog in the Orlando Sentinel opines:

  • First came tarp. Then camp the compensation packages. And just when you thought banks had maxed out on the gag meter, we learned [Thursday] about their latest screw-you to taxpayers. The banks want to let their growing plague of foreclosed homes become overgrown, rotting eyesores that attract crime and drag down communities. Bankers are asking [Florida] state legislators to exempt them from having to maintain homes that have been abandoned because the banks recklessly sold them to speculators and others who could not afford them.

For more, see Sleazy banker ploy would devastate neighborhoods.

See also, The Miami Herald: Florida banks balk at taking care of vacant homes:

  • [B]anking lobbyists have quietly crafted a measure in the Florida Legislature that would prevent cities and counties from forcing the banks that hold mortgages on properties in foreclosure to maintain those properties until they have actually acquired the title to the land. [...] Banking industry lobbyists hope to tack their language onto other legislation in the waning days of this year's legislative session, which is scheduled to end May 1.

Premature Foreclosure Eviction Leaves Family's Belongings Missing, Out On Street Before Lender Obtained Title To Home

In Waldron Acres, Illinois, The Daily Journal reports:
  • Richard Ball is among hundreds of thousands of Americans who have been caught in the current foreclosure crisis. However, his situation has drawn individual attention, and he called The Daily Journal to tell his side of the story.


  • Ball said the family, which also includes the couple's 14-month-old son and his mother, moved out on Jan. 13, anticipating the foreclosure. The family had fallen six months behind on house payments after the interest rate rose.


  • On Jan. 29, Ball said he tried to retrieve the remainder of his belongings from the garage -- a baby swing, bassinet, stereo and several cans of paint and primer. But Countrywide had padlocks placed on the garage's overhead door and on a door that leads into the house, he said.

  • All this took place, Ball said, before he received documents showing that the foreclosure of his home was official. He said those papers weren't stamped by a circuit clerk until March 13 and shortly after that, he was served a notice stating that they had to be out of the home by April 13.

For more, see Foreclosure — Family tried to claim belongings.

Go here for other posts on lender screw ups. ForeclosureLockOuts

More On Loan Modifications Gone Bad

The following links are to stories on financially strapped homeowners reporting problems with loan modification companies they hired to help resolve their mortgage problems:
  • Chicago, Illinois: Scams about foreclosures, jobs, IRS feed on desperation. Last September, Esmeralda Carmona only had enough money to pay a fraction of her mortgage. Her husband, laid off nearly a year earlier, had not worked in nine months. Debt was mounting, and the mother of four was prepared to give up. But while driving to her job as a health care clinic coordinator in Chicago, Carmona heard a radio advertisement promising protection from foreclosure. She breathed a sigh of relief. She scraped together $1,500 to pay Centurion Loss Mitigation upfront for its help but found out four months later her house had been foreclosed upon. She says she considers herself a victim, like hundreds of thousands of others, whose tough times have been made worse by too-good-to-be-true quick fixes. The Illinois Attorney General's office filed a complaint against Centurion in early April. A temporary restraining order restricts the company from accepting any upfront fees, and a court date is set for next month. Centurion officials declined to comment for this story.

  • Weslaco, Texas: Woman Facing Foreclosure Takes Desperate Measures. She was in trouble. Months behind on her house payments, she says she took desperate measures to try to save her house from foreclosure. In the process, she lost $1,500. The woman asked us to protect her identity because relatives don't know about her financial situation. She showed us copies of checks she sent to Houston-based company called Excel Loss Mitigation: a cashier's check from November 26th, 2008 for $749 and a personal check for $749 sent December 26, 2008. The homeowner says she tried negotiating with her bank, but when that didn't work, she turned to the company. Now, she says Excel Loss Mitigation won't answer her calls.

  • Boise, Idaho: State: Mortgage company running business without license. The Idaho Department of Finance has issued a warning to Idaho consumers facing foreclosure: Don't do business with National Foreclosure Relief. IDOF says National Foreclosure has been running its business in Idaho without a license. The state department says the company has never been licensed in Idaho to engage in the offer or sale of mortgage loan modification services as required by state law. The state says it became aware of the company when an Idaho couple complained that it withdrew three payments of $1,200 from their bank account. The money never went toward their mortgage payments, the state says. Instead it went straight to the company. The couple lost their home to foreclosure. See also: Mortgage scam snags couple (A Nevada company took the Mounts' money, and the bank took their home).

More On Foreclosure Arson

The following links are to stories on property in foreclosure that have mysteriously gone up in flames:
  • West Asheville, North Carolina: The Asheville-Buncombe Arson Task Force has identified enough physical evidence at the historic Richmond Hill Inn in West Asheville to determine the cause of the fire to be intentionally set. The fire reduced much of the inn’s 120-year-old mansion to rubble. The months leading up to a devastating fire today at the Richmond Hill Inn were fraught with conflict as current and former owners battled over a $6.8 million debt. The historic inn building and surrounding complex were set to be sold April 16 on the courthouse steps because of an unpaid mortgage. See Fire-ravaged Richmond Hill Inn was in foreclosure.

  • Stockton, Missouri: The owner of three businesses and the strip mall that housed them is charged for the fire that destroyed them. Investigators think that owner Dan Thornton, 38, wanted the building burned so he could collect insurance proceeds. According to an ATF investigator: "Investigators have also determined through their investigation that Dan Thornton has several current, adverse financial situations that he was dealing with. For example, Liberty Bank, in which Thornton had his building/business mortgage, had recently initiated foreclosure proceedings against Thornton. Thornton, through his own admissions to investigators, was heavily in debt and had been trying to sell the building and businesses for the past year and a half." Investigators have determined that Thornton maintained approximately $900,000 in insurance coverage. See Owner of burned strip mall in Stockton is charged with arson. Go here for Criminal Complaint & Probable Cause Affidavit.

  • Hudson, Ohio: The son of a homeowner was arrested in connection with a fire that broke out at a foreclosed Hudson home. Twenty-nine Hudson firefighters battled a house fire. The main part of the house was destroyed by the fire. Damage is estimated at $400,000 to the structure and its contents. The home was involved in a foreclosure action at the time. See Son Arrested In Connection With Blaze At Foreclosed Home, Officials Say ($400,000 In Damage Done).

  • Toledo, Ohio: Already this year, Toledo firefighters have battled more than twice as many arsons as they did during the same time last year - a trend Deputy Chief Phil Cervantes fears could worsen. Chief Cervantes said the spike in arsons locally is likely related to the economic downturn and the increase in the number of foreclosed houses. An increasing number of people are setting houses or vehicles on fire to get out from under loans or mortgage payments. See Arson rate doubles in city in last year; motivation for setting blazes varies.

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

Friday, April 24, 2009

California Duo Sentenced For Tricking 94-Year Old Homeowner Into Signing Over Title To House; Court Orders Ownership To Be Restored In Victim's Name

The San Bernardino, California District Attorney's Office announced:
  • A Victorville couple was sentenced to county jail on felony charges connected to real estate fraud and financial elder abuse. Joe Warf, 51, and Tracy Warf, 41, appeared in Victorville Superior Court on Friday, April 10, 2009. The pair was sentenced to 250 days and 365 days county jail, respectively, for financial elder abuse. Both will be placed on formal supervised probation for five years at the conclusion of their sentences.

  • In June 2008, Joe and Tracy Warf deceived the 94-year-old victim into signing over his San Bernardino home to them. The San Bernardino County District Attorney's Real Estate Fraud Unit conducted an investigation and arrested Joe and Tracy Warf on November 24, 2009. The court has already ordered that title to the San Bernardino house be transferred back into the victim's name.

For the DA's press release, see Victorville Couple Sentenced in Real Estate Fraud/Elder Abuse Case.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Pennsylvania AG Warns State Homeowners Of Defunct Escrow Company, Possible Unpaid Property Tax & Insurance Bills

From the Office of the Pennsylvania Attorney General:
  • Attorney General Tom Corbett [...] announced that the Attorney General's Bureau of Consumer Protection has launched an investigation into the business practices of American Escrow LLC, an Illinois-based escrow company that suddenly halted operations in March 2009.

  • Corbett said that homeowners across Pennsylvania, along with consumers from several other states, used American Escrow to handle the payment of their property taxes and/or homeowners insurance. "Based on our preliminary investigation, it is possible that property tax and insurance bills for more than 100 Pennsylvania consumers were not paid by American Escrow," Corbett said. "It is essential that consumers who used American Escrow contact their local taxing authorities and homeowner's insurance companies as soon as possible to notify them of the problem, verify what payments have been made and make arrangements to directly pay any balances that are due." [...] American Escrow customers in Pennsylvania who do not receive a letter [from the pennsylvania Attorney General], or those who misplace the complaint form, can download a copy of the form.

For the entire press release, see Attorney General Corbett cautions homeowners about closed escrow company; encourages check of tax & insurance records. EscrowRipOffAlpha

Oregon Feds Expand Effort To Prosecute Mortgage Fraud, Foreclosure & Short Sale Scams

In Portland, Oregon, The Bend Bulletin reports:
  • The Portland office of the Federal Bureau of Investigation and the U.S. Attorney’s Office have expanded their efforts to identify and prosecute mortgage fraud throughout the state, including Central Oregon, according to an announcement this week from the state’s Department of Justice. Those law enforcement offices have created a Web site and telephone tip line to handle reports of suspected mortgage fraud, including foreclosure rescue schemes and fraudulent behavior surrounding some short-sale agreements.

For more, see Feds step up mortgage fraud crackdown.

Tough Economy Triggers Sleazy Collection Practices As Threatening, Humiliating MySpace Messages, Profanity Alleged In Civil Suits

In Chicago, Illinois, WLS-TV Channel 7 reports:
  • A Chicago man is suing a collection agency and JP Morgan Chase Bank for posting threatening messages on his daughter's MySpace account. James Ricobene claims Universal Tracing Services threatened his daughter with felony charges and possible imprisonment if he didn't pay back his car loan.

  • When he contacted Chase, Ricobene claims, he was told the bank employs Universal because the company uses social networking sites and that it's an "effective collection practice." The suit accuses Universal and Chase of libel, invasion of privacy and violation of the Consumer Fraud Act, and asks for more than $150,000 in damages.

Source: Man sues bank over threatening MySpace messages.

For the lawsuit, see Ricobene v. JP Morgan Chase Bank, Universal Tracing Services.


In Martinsburg, West Virginia, The West Virginia Record reports:

  • A Berkeley County couple is suing a Pennsylvania law firm, two of its employees and a Florida company over alleged illegal phone calls the law firm made to the couple's house in an attempt to collect a debt from them. Linc and Eileen Beers filed suit March 10 in federal court against the Law Office of Thomas Landis, Thomas Lanis, Paul Kenwood and Oliphant Financial.

  • The Beers say Kenwood, who works for the Law Office of Thomas Landis, called them repeatedly throughout May and June on behalf of Oliphant in an attempt to collect debt the Beers owed to Oliphant.During the phone calls, Kenwood accused Eileen Beers of being a "foreigner" and "stealing company money," the suit states. In some of his calls, Kenwood would use profane language, calling the Beers "[*]ucking liars" and "thieves," according to the complaint.


  • In the five-count suit, the Beers are seeking $4,392.96 in statutory damages, $10,000 in actual damages for each incident, unspecified punitive damages, a correction of their credit report, a cancellation of their debt, attorney's fees and other relief the court deems just.

For the story, see Couple sues law firm, others over collection calls.

For the lawsuit, see Beers v. The Law Offices of Thomas Landis, et al.

Go here for Ripoff Report on Thomas Landis.

Atlanta Homeowner Gets Legal Aid Help In Fighting Off Wachovia Predatory Loan Foreclosure

In Atlanta, Georgia, WGCL-TV Channel 46 reports:
  • [A]vonia Carson will never forget the day she and her husband made their last payment on the house they bought in 1971. [...] But a few years ago, after adding on a new den and accumulating some other debt after the death of her husband, Carson answered an advertisement from Wachovia bank to try to get her debt payments down. She borrowed against her home and even though she brings in just $1,200 a month through social security, Wachovia gave her a loan with a payment of $900 a month, which amounts to 75 percent of her income. She's now on the verge of losing her home.


  • Carson feels guilty for not knowing what she was signing. "We people need to be educated a little bit more about the practices of banks,” said Carson. Bill Brennan's group at the Atlanta Legal Aid Society has now taken on Carson's case free of charge. "Ms. Carson has nothing to feel guilty about," said Brennan. "That loan should have never been made by Wachovia. Wachovia knew exactly what it was doing." Carson's lawyers are in negotiations with Wachovia, but so far, no settlement has been made on the loan.

For the story, see Demonstrators Protest Predatory Lending (Protestors Say Banks Knowingly Made Loans They Knew Couldn't be Paid).

New Name, Same Operation For San Diego-Area Loan Modification Firm

In San Diego, California, ABC News reports:
  • People's First Financial, an aggressive loan modification company that was the subject of a "20/20" story last month, has begun doing business under a different name. A related loan modification company, Sunrise Financial, has just started doing business out of the same San Diego office. Their Web site features testimonials from happy customers identical to the ones on the People's First Web site. When "20/20" called Sunrise Financial's new phone number, we reached an employee of People's First. Insiders confirmed that Sunrise Financial is just a new name being used by People's First.

For more, see Foreclosure Rescue Gone Wrong: New Name, Same Company (Company Featured on '20/20' Is Operating Under a New Name Out of the Same Office).

Thursday, April 23, 2009

Miami-Area Court System To Implement Mandatory Foreclosure Mediation Program For Owner-Occupied Homes

In Miami, Florida, the Daily Business Review reports:
  • Overwhelmed by foreclosures, the Miami-Dade Circuit Court plans to announce today a mandatory mediation program for cases involving owner-occupied homes. The program is set to begin May 1. Chief Circuit Judge Joseph Farina signed an administrative order April 9 creating the program, which mandates lenders to pay an additional $750 fee for the mediation services of the Collins Center for Public Policy, a nonprofit Tallahassee think tank specializing in dispute resolution.

For more, see Foreclosures: Court to force lenders, borrowers to mediate.

See also, WFOR-TV Channel 4: Foreclosure Mediation May Keep You Out Of Court.

Go here for the Circuit Homestead Access To Mediation Program ("CHAMP").

Seattle Feds Get Guilty Pleas In Mortgage Fraud/Marijuana Grow House Operation

From the Office of the U.S. Attorney (Western District of Washington):
  • JET CITY MORTGAGE, LLC and one of its owners and operators, HA-DUYEN THI LE, a/k/a Holly Le, pleaded guilty [last week] in U.S. District Court in Seattle to Conspiracy to Commit Wire Fraud and Money Laundering in connection with a mortgage fraud scheme. The company was first identified by law enforcement as part of “Operation Green Reaper,” an investigation into large scale marijuana growing conspiracies in south King County. Financial investigation by Internal Revenue Service Criminal Investigation revealed the company had fraudulently obtained mortgage loans on many of the homes where marijuana grows were established. [...] Many of the homes purchased through this scheme have now been foreclosed by the victim lenders.

For the entire press release, see Mortgage Company And Owner Plead Guilty To Conspiracy To Commit Wire Fraud And Money Laundering (Defendants Falsified Loan Applications on Houses used for Marijuana Production).

In another recent bust of an indoor pot farm operation by the Seattle Feds, see Renton Man Sentenced To 5 Years In Prison For Leading Marijuana Grow Conspuiracy (Installed Marijuana Grows in Six Houses Across Puget Sound Region).

Pennsylvania Regulators Order Four Loan Modification Firms To Cease Unlicensed Activity Within State

In Harrisburg, Pennsylvania, the Pennsylvania Department of Banking reports:
  • The Department of Banking recently ordered four out-of-state mortgage modification companies to stop engaging in unlicensed activity in Pennsylvania. The department issued cease and desist orders against Consumer Loan Modification of Arizona and U.S. Settlement Services of Florida on April 10 and Federal Loan Modification Law Center LLC of California on April 14. All three companies advertise on their Web sites to refinance mortgage loans in Pennsylvania when they are not licensed to do so. The companies must comply with the orders or file appeals by the end of April.

  • The department also entered into a consent agreement and order with Nationwide Foreclosure Prevention Center, LLC of New Jersey and its owner, Robert P. Valentin, to stop doing business in Pennsylvania. The company was fined $2,000. Valentin is prohibited from engaging in the mortgage business in Pennsylvania for five years and must refund fees that he collected from Pennsylvania consumers within 90 days. The department also cited Valentin for unlicensed activity in 2008 under the name Justice Mortgage.

For the entire press release, see Banking Department Takes Action Against Mortgage Modification Companies (Companies ordered to stop unlicensed activity in Pennsylvania).

For the above referenced Consent Agreement and Order, see Commonwealth of Pennsylvania v. Valentin, Nationwide Foreclosure Prevention Center, LLC.

Go here for the Cease & Desist Orders Against:

Staten Island DA Now Acknowledges Real Estate Fraud Problem In His County

The announcement by U.S. Senator Charles Schumer of New York in a recent news conference that he will seek $100 million in federal money to fund real estate fraud units in local prosecutors' offices across the country to combat deed, mortgage and foreclosure fraud has apparently caused the Richmond County District Attorney's office to abandon its recently-articulated position that there is no real estate fraud problem on Staten Island, according to a story in The New York Times:
  • Two weeks ago, the Staten Island district attorney, through a spokesman and a top assistant, told The New York Times that mortgage fraud was uncommon in his county. But the district attorney, Daniel M. Donovan Jr., took a different view at the news conference. "In some cases, families have fallen victim to con artists promising easy homeownership,” Mr. Donovan said. “Or even worse, some families already facing foreclosure desperately turned to scammers offering financial relief, only to wind up in a worse-off situation.”

I suspect the DA's office was going to find it tough trying to glom onto some of that anticipated federal cash without first recanting its position that they had no real estate fraud problems in the county, characterizing the reported incidents of fraud as "civil cases."

For the most recent story in The New York Times, see: Schumer Seeks Grants to Battle Mortgage Fraud.

Virginia Man Charged With Using Stolen IDs To Steal Title To, Fraudulently Borrow Against, Two Homes

In San Bernardino, California, the Office of the San Bernardino District Attorney announced:
  • [S]an Bernardino County District Attorney Investigators assigned to the Real Estate Fraud Unit traveled to suburban Washington D.C. and escorted wanted suspect, Duk Sung Jin, 30, of McLean Virginia, back to San Bernardino County to face felony fraud charges.


  • Jin is facing felony charges of conspiracy and grand theft with an estimated total loss of over 1.2 million dollars. The victim’s identity was used to steal (2) two homes and (2) two vehicles. The homes went into foreclosure after the equity was drawn out of the homes in the form of 2nd mortgages in the victims' names.

For more, see Additional Suspect Arrested on Mortgage Fraud Charges.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Virginia Feds Bust Five In Alleged Scam Using Stolen IDs In "Cash Back" Mortgage Fraud Racket

From the Office of the U.S. Attorney (Eastern District of Virginia):
  • Five individuals(1) are accused of a mortgage scam fraudulently purchasing homes in Northern Virginia and profiting by using the mortgage proceeds to pay “home improvement” expenses and other payments totaling nearly $337,000.


  • According to the indictment and other court documents, [Nelson C.] Cardoza provided names of two different people to purchase five different properties in the Northern Virginia region. These buyers did not know of or authorize the purchases but the conspirators used their names and Social Security numbers to apply for and obtain the mortgage financing.


  • The conspirators profited by using part of the mortgage proceeds to pay “home improvement” expenses to themselves, entities they controlled and their associates. These home improvement expenses were approximately $33,000 to $55,000 per house. Some of the conspirators also earned thousands of dollars in commissions on the sales. According to the indictment, the conspiracy resulted in a total of at least $336,957 in fraudulent proceeds. The properties involved in the scheme have been foreclosed upon, causing substantial losses to the lenders.

For the entire press release, see Five Indicted and Arrested in Mortgage Fraud Scam.

(1) On April 15, 2009, a federal grand jury indicted Nelson C. Cardoza, age 37 of Ranson, W.V.; Victor A. Valdez, age 27 of Fairfax, Va.; Monica J. Lambert, age 30 of Gainesville, Va.; Liguia Abaunza Miranda, age 54 of Chantilly, Va.; and Erick G. Chavarria, age 35 of Manassas, Va., on conspiracy and wire fraud charges.

Miami Man Convicted Of Using Stolen IDs To Rip Off Unwitting Homeowners' HELOC Accounts

From the U.S. Attorney's Office (Eastern District of Virginia):
  • A jury convicted Henry “Uche” Obilo, age 29, of Miami, Fl., today of conspiracy to commit bank fraud involving a home equity line of credit fraud scheme that has been linked to $8 million in actual losses.(1)


  • According to court documents and evidence adduced at trial, the defendant and other co-conspirators used fee-based web databases to search for potential victim account holders with large balances in home equity line of credit (HELOC) accounts. This information included name, address, date of birth, and social security number. Once the conspirators identified a victim, they used other online databases to obtain information commonly used in security questions, such as the victim’s mother’s maiden name. The conspirators then obtained credit reports on the victims in order to verify personal information and account balances.

  • Armed with a victim’s personal information, the conspirators called the victim’s financial institution, impersonated the victim, and transferred the majority of the available money from the HELOC account into an account from which a wire transfer could be sent.

For more, see Jury Finds Miami Man Guilty in $8 Million Bank-Fraud Conspiracy.

(1) Obilo is the seventh individual convicted in this case, and the first to be convicted following a jury trial. The other six, who all pled guilty, include: Abel Nnabue, age 33, of Dallas, who was sentenced to 54 months on Jan. 30, 2009; Precious Matthews, age 27, of Miami, who was sentenced 51 months on Feb. 13, 2009; Ezenwa Onyedebelu, age 20, of Dallas, who was sentenced to 37 months on Feb. 27, 2009; Daniel Orjinta, age 42, of Nigeria, who was sentenced to 42 months on March 6, 2009; Brandy Anderson, age 30, of Dallas, who was sentenced to 2 years of supervised probation and 40 days of community confinement on Feb. 20, 2009; and Paula Gipson, age 33, of Dallas, who pled guilty on Feb. 26, 2009 and is scheduled to be sentenced on May 22, 2009. DeedZetaTheft

Utility Temporarily Pulls Plug On S. Florida Condo Association Ravaged By Foreclosure & Unable To Pay Light Bills; Residents Dodge Getting Booted

In Hialeah, Florida, WFOR-TV Channel 4 reports:
  • After FPL and a property management company struck a deal, families living in a Northwest Miami-Dade condo complex are getting the lights turned back on in areas such as parking lots, hallways and other common areas. Tuesday night CBS4 News learned that the homeowner's assocation and FPL reached an agreement that allows the lights to be turned back on, but it hasn't been easy for residents living in the complex in recent months.


  • The power [had been] out in all the common areas, stairwells, hallways, and parking lots at the Coral Gate Apartments. Florida Power & Light pulled the plug after the condo association failed to pay the bill.


  • The problem is nearly half of the 424 units are in foreclosure or pre-foreclosure and the units owned by the bank are not paying any assessments. The county said it's unsafe to live in conditions like the ones at Coral Gate Apartments and ha[d] given the complex five days to come up with the nearly $200,000 in back assessments due, or move everyone out.


  • Florida Property Management group deflected the blame saying they just manage the site. They said it is up to the owners to pay the assessments. The same company has a similar problem at one of its other buildings, Mirassou Condos.(1) Residents at Mirassou had to go without tap water because the bills weren't being paid.

For the story, see Lights Are Coming Back On At NW Dade Condo Complex.

(1) See Hundreds Of Residents In 310-Unit S. Florida Condo Face Water Shutoff As Delinquent Maintenance Fees Result In Unpaid Bills; 100+ Units In Foreclosure.

Wednesday, April 22, 2009

Wisconsin Man Charged With Stealing From Dementia-Stricken Homeowner; Victim's House Ultimately Lost In Foreclosure

In Chippewa Falls, Wisconsin, WQOW-TV Channel 18 reports:
  • A Chippewa Falls man is charged with stealing thousands of dollars from a woman who was in the early stages of Dementia. Todd Evenson is charged with theft. Investigators say he made a deal with a woman in 2004 that he would do chores in exchange for a room. Over three years, investigators say Evenson used the woman's debt consolidation loan to buy power tools, a motorcycle, and even pay some of his child support payments. Nearly $17,000 was taken and the woman's home was eventually foreclosed on. The criminal complaint says Evenson has a history of forgery, credit card fraud and identity theft. He'll be in court in July.

Source: Man Charged With Stealing From Woman With Dementia. FinancialAbuseOfElderlyAlpha

Cape Cod Time Share Developer Pocketed $1.5M Of Customers' Cash, Then Failed To Deliver Units, Says Mass AG

In Boston, Massachusetts, Cape Cod Times reports:
  • The former owner of the Navigator Beach Club in Dennisport collected more than $1.5 million from consumers, but never delivered the timeshare units promised in exchange, Attorney General Martha Coakley alleges in a lawsuit filed [last week] in Boston. Hingham resident Robert Reposa and LSC Associates, his development and management company, are accused of taking money from more than 100 buyers and later abandoning the project without providing any compensation to consumers. The resort property was sold in a foreclosure auction in October. [...] The complaint also accuses Reposa of using deceptive marketing practices and failing to properly file deeds for many of the timeshare units that were sold.

  • In additional to the attorney general's complaint, another lawsuit will soon be filed on behalf of 25 plaintiffs who paid Reposa close to $600,000 for units that were never completed, Falmouth attorney Richard Reilly said. "They bought it, then it was foreclosed on before they knew what was going on," Reilly said. "None of them ever got to use them."

For more, see Attorney general sues Cape timeshare developer.

For the Massachusetts Attorney General press release, see AG Coakley Obtains Temporary Restraining Order Against Former Owner of Cape Cod Time-Share Who Allegedly Scammed Consumer Out of Millions.

"Who Owns The Note" Among Points To Be Covered By North Florida Foreclosure Self-Defense Seminar For Financially Strapped Homeowners

The Pensacola News Journal reports:
  • A seminar on foreclosures is set for 6 p.m. Monday. Legal Services of North Florida will present “Avoiding and Defending Foreclosure - Your Legal Options” at St. Sylvester Church, 6464 Gulf Breeze Pkwy., Gulf Breeze.

  • The presentation will include a discussion of what to do if you start to fall behind, settlement issues, what to do once a foreclosure lawsuit has been filed and who owns the note. For more information, call 432-8222.

Source: Seminar on foreclosures Monday in Gulf Breeze.

New Jersey Woman Gets 10 Years In Foreclosure Investment Program Ponzi Scheme

The Philadelphia Inquirer reports:
  • A woman who recruited nearly 2,800 small investors to supposedly "buy" foreclosed properties was sentenced Wednesday to 10 years in federal prison. The scheme was bogus, and only the early investors got rich. A few made $50,000 to $250,000 on their $1,000 investments , and quickly spread the word to others about Lizette Morice and her suburban Philadelphia company, Gaddel Enterprises. In just 15 months, Morice took in $7.8 million.

For more, see: NJ woman gets 10 years for $7.8M foreclosure scam.

Philadelphia Homeowner Loses Home To Title Fraud; Cost To Hire Lawyer To Unwind Scam Unaffordable For Victim

A recent story by The Associated Press on the apparent need for strengthening notary laws to protect unwitting homeowners from having their homes stolen out from underneath them by deed/title fraud scammers contained these excerpts on one victim who lost her home and, because retaining an attorney to file a civil lawsuit to undo the theft was unaffordable, was never able to get it back:
  • The small row house had been unoccupied for months, but it was still a home. And if she had really wanted to sell it, Virginia Coontz says, she certainly would have spelled her name right on the title transfer. Even with her name wrongly spelled "Coonzt," the sale went through and she ultimately lost the house. Prosecutors said she was a victim of a title fraud ring that collected about $400,000 by selling off more than 80 properties — unbeknownst to the true owners — through the help of corrupt notaries.


  • In 2004, Coontz and her teenage daughter left their home temporarily unoccupied when they moved in with her son. Then, in October 2005, relatives saw people coming and going from the property; Coontz arrived to find her valuables gone and bags full of her other belongings on the sidewalk. A confrontation and several phone calls led to a police report and discovery of the forged deed.

  • Behind on her taxes and unable to afford a lawyer, Coontz gave up.(1) The house was sold at a sheriff's auction in 2007 for $15,600. Coontz, 49, now says she is unable to work due to depression. She and her teenage daughter continue to live with her son. She sleeps in the basement, and her daughter, on a living room couch.

Source: Tougher notary laws sought to curb house thefts.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

(1) Unlike auto theft (or any other theft of personal property) where the police will return the stolen property to its rightful owner (if they're lucky enough to physically recover it), no similar parallel exists when property owners have their homes stolen from them, even though the house itself has not been physically ripped out of the ground and absconded with. It is up to the victimized homeowner to retain a lawyer to file a civil lawsuit to legally unwind the mess created by the scammers by:

  • voiding the forged deed, and
  • where the scammers duped a mortgage lender into giving them a loan secured by the house, voiding the mortgage.

During this time, victimized homeowners must be sure to keep current on the real estate taxes, lest they risk losing the home in a county tax foreclosure. DeedZetaTheft

Hawaii Feds Ring Up 2 More Guilty Pleas In Sale Leaseback Foreclosure Rescue Scam; Civil Case Continues As One Victim Seeks To Recover Property Title

The Honolulu Star Bulletin reports:
  • The owners of a Honolulu mortgage brokerage firm pleaded guilty to fraud and money laundering yesterday in a scheme that used phony buyers to obtain loans to buy homes that were in foreclosure proceedings. Federal Magistrate Judge Barry Kurren set a Sept. 17 sentencing date for John Michael Dimitrion, 33, who pleaded guilty to three felony counts, and a Sept. 24 court appearance for his wife, Julie Ann Baldueza Dimitrion, 37, who pleaded guilty to two counts. Two employees of their company, Mortgage Alliance LLD, pleaded guilty previously. Assistant U.S. Attorney Clare Connors told Kurren that the fraud involving three homes occurred in July 2005. The defendants arranged for "straw buyers" who lied on applications that they intended to live in the houses.


  • Debbie Aurelio and her family, who signed over title of their home thinking they were refinancing, were in the courtroom to watch the Dimitrions plead guilty. "I feel better now that it came to a point where they know they cheated us," said Aurelio. "We want our house back." The family of seven continues to live in their Ewa Beach home of 10 years.

  • The Aurelios filed a lawsuit against the Dimitrions, and "their suit thwarted their eviction," said Legal Aid Society [of Hawaii] attorney Russ Awakuni. "This family was smart enough to seek legal help," but the other two families had to leave their homes.

  • But the title to the Aurelio home is still held by the straw buyer, and "there's not much the federal government can do about that. They will continue with the civil case because the title needs to be restored," Awakuni said.

For the story, see Husband and wife plead guilty to mortgage fraud.

For the indictment in this case, see U.S. v. Dimitrion.

See also: Beware Local Mortgage, Foreclosure Scams (Family Faced Eviction After Company Took Ownership Of Home).

NYC Man Charged With Swiping Co-Owner's 75% Interest In Bronx Building; Also Accused Of Duping Notary Into Signing Off On Mortgage Satisfactions

In The Bronx, New York, the New York Daily News reports:
  • A Manhattan businessman struck out in his fraudulent bid to sell a building across from Yankee Stadium, Manhattan federal prosecutors said Monday. Mark Benun, 35, hid several mortgages on the commercial property at 67-79 E. 161st St. by faking notarized documents, prosecutors said. Benun and an unidentified party had bought the building for $9.5 million in 2006 with borrowed money.

  • Benun sold the property to an unidentified buyer in February for $6 million by claiming to be its sole owner. That deal called for Benun to get $4 million in cash and a note for $1.96 million, Manhattan federal prosecutors said.

  • To dupe the buyer, prosecutors said, Benun created three bogus satisfactions of mortgages that were notarized. He conned a notary into signing off on the documents by claiming the individuals whose signatures were on them got stuck in traffic, prosecutors said. The feds traced money from the sale to a company controlled by Benun and to out-of-state accounts. Benun faces up to 10 years in prison.

Source: Businessman strikes out in fraudulent bid to sell building across from Yankee Stadium.

For the U.S. Attorney Attorney's press release, see Manhattan Property Owner Charged In Fraudulent Sale Of Jointly-Owned Building.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

NYC Attorney: Deed, Home Equity Scammers "Continue To Have Better Chance Of Being Kidnapped By Somali Pirates Than Of Being Prosecuted By Brooklyn DA"

In Brooklyn, New York, one local legal services attorney expressed his views on the apparent slow-footedness of Brooklyn District Attorney Charles Hynes' office in prosecuting scammers perpetrating mortgage, deed, and home equity ripoffs in a recent New York Times story :
  • Most of the con artists perpetrating frauds at this moment continue to have a better chance of being kidnapped by Somali pirates than of being prosecuted by Charles Hynes’s office,” said Rick Wagner, director of litigation at Legal Services Corporation A in East New York, referring to the Brooklyn district attorney’s office. “When they arrest someone, then I’ll get excited.”

Source: Schumer Seeks Grants to Battle Mortgage Fraud.

St. Louis-Based Legal Services Lawyers To Launch Foreclosure Defense Project

In St. Louis, Missouri, the St. Louis Post Dispatch reports:
  • Legal Services of Eastern Missouri is launching a “Foreclosure Defense Project” to help clients who are at risk of losing their homes through foreclosure, the St. Louis-based nonprofit said recently. Legal Services recently received a three-year $250,000 grant from the Institute for Foreclosure Legal Assistance for the project, which will pay for additional staff to handle bankruptcy proceedings and provide other aid to people facing foreclosure. They’ll also step up community outreach programs.

Source: Legal Services launches foreclosure defense project.

Government Funding For Legal Services Lawyers Gets Strong Public Support, Says Poll; Sen. Harkin Looks To Double Budget For Services To Poor, Indigent

The Associated Press reports:
  • Americans strongly support government-paid legal services for the poor, says a poll commissioned by the Legal Services Corp. Two-thirds of those polled for the American Bar Association by Harris Interactive said theyfavor federal funding for people who need legal assistance. Legislation introduced in March by Sen. Tom Harkin, D-Iowa, would nearly double the budget for Legal Services,(1) which Congress created 35 years ago, and lift restrictions on the kinds of cases legal aid lawyers can file. The ABA, the nation's largest lawyers group, backs the bill.

For more, see Americans back legal aid to poor, new poll says.

(1) According to the story, Harkin said his proposal to raise Legal Services' budget to $750 million from the $390 million it is getting in the current government spending year would give legal aid programs roughly the same amount of money, adjusted for inflation, that they received in 1981.

Tuesday, April 21, 2009

Schumer Seeks To Authorize $100M To Unleash Real Estate, Mortgage Scam Cops Throughout Country

From the Office Of U.S. Senator Charles E. Schumer:
  • United States Senator Charles E. Schumer, joined by [the five New York City District Attorneys], announced he is introducing new legislation to better protect homeowners from the recent wave of housing scams that are plaguing New Yorkers and homeowners across the country. The Fighting Real Estate Fraud Act of 2009 establishes a competitive grant program in the Department of Justice for local District Attorney’s offices to battle real estate fraud. The bill authorizes $100 million in grants for hiring specialized staff, such as investigators, forensic accountants, and attorneys, to offices demonstrating need for increased resources to combat mortgage scams.


  • Across the country, district attorneys, homeowner advocacy groups, state agencies and homeowners have had trouble investigating and prosecuting mortgage fraud cases due lack of staff and funding. The creation of Real Estate Fraud Units will resolve these issues by employing staffers who will be able to focus exclusively on real estate crimes that plague homeowners and prosecute scammers for their crimes.

For the entire press release, see Schumer, All Five NYC District Attorneys Unveil new Legislation To Crackdown On Flood Of New Mortgage Scams By Creating Elite mortgage Fraud Units In DA's Offices Across the Country (DA's Don't Have the Resources or Manpower to Fight New Wave of Mortgage Scams Amid Foreclosure Crisis).

Strengthen Notary Laws To Curb Deed/Title Fraud, Say Prosecutors; Requiring Seller Thumbprints On Deed Transfers May Offer Partial Solution

The Associated Press reports:
  • [W]ith a notary seal, criminals can steal the title to a house, take out a mortgage, drain the equity in the property and even give themselves power of attorney to access a victim's bank accounts. "Notaries really are the gatekeepers for fraud in real estate transactions, yet we don't put in the type of mechanism that would help law enforcement track down the crooks," said Dave Fleck, a former Los Angeles County prosecutor specializing in real estate cases.

  • States have widely varying rules for becoming a notary public, many not requiring a background check. About 20 states don't mandate that notaries keep journals of their transactions, and even fewer require a thumbprint from home sellers when notarizing property transfers — a regulation recently enacted to help combat title fraud in the Chicago area.

  • Philadelphia District Attorney Lynne Abraham said stricter regulations in Pennsylvania may have prevented [...] and the heartache of dozens of [...] victims [of a recent deed theft scheme], including owners who lost title to their homes and unwitting buyers who spent thousands of dollars on properties they never really owned.(1) Abraham said a thumbprint requirement might have deterred criminals posing as home sellers because they likely would not have wanted to leave behind evidence of their identities.(2)


  • A thumbprint requirement has been the law in California since 1996, providing an invaluable tool for tracking down forgers and also helping protect notaries from being victimized, Fleck said.

For more, see Tougher notary laws sought to curb house thefts.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

(1) In the scheme, ring members scouted for abandoned homes — the owners were dead or living elsewhere — looked up the property records and began the forgery process with the help of four notaries, prosecutors said. They then sold the homes, usually for a few thousand dollars, to unsuspecting families, many of them immigrants with little understanding of real estate procedures.

(2) Reportedly, the district attorney tried to add that mandate to legislation in Pennsylvania in 2000, along with a requirement to photocopy the ID cards of those seeking notary services. Her effort failed, partly because the Pennsylvania Association of Notaries said the proposals would be too onerous. Association president Marc Aronson said he believes such provisions would get more backing today. DeedZetaTheft

Arizona Man Cops Guilty Plea In Loan Modification Scam

The Arizona Daily Star reports:
  • A Glendale man has pleaded guilty to fraud charges in connection with a mortgage loan scam that bilked 47 homeowners, the Attorney General's Office said. Bobby John Herrera, 33, will be sentenced May 13 and he faces five years in prison as well as $73,000 in restitution payments to victims.(1)

  • According to investigators, Herrera told struggling homeowners he could modify mortgage terms or provide other assistance to help them prevent foreclosure, often charging an upfront fee of $1,245. Investigators said he didn't provide any loan modification or foreclosure relief assistance and instead used the money himself. Herrera was arrested in December by Surprise and Peoria police.

Source: AZ man guilty in mortgage-help scam.

For the Arizona Attorney General press release, see Mortgage Fraud Artist who Victimized 47 Valley Homeowners Pleads Guilty.

For the indictment in this case, see State of Arizona v. Herrera.

(1) According to the indictment, Herrera faced charges of:

  • one count of fraudulent schemes and artifices (ie. knowingly obtaining any benefit by means of false or fraudulent pretenses, representations, promises or material omissions, pursuant to a scheme or artifice to defraud, in violation of § 13-2310, of the Arizona Revised Statutes),
  • one count of money laundering (A.R.S. § 13-2317),
  • one count of illegal control of an enterprise (A.R.S. § 13-2312(A)), and
  • six counts of theft (A.R.S. § 13-1802(A)(1)).

Missouri AG Tags Two Firms With Civil Suits Alleging Bogus Refinancing Offers

In St. Louis, Missouri, the St. Louis Buisness Journal reports:
  • Missouri Attorney General Chris Koster sued two mortgage brokerages Monday for allegedly misleading consumers with letters that appeared like they were from banks or the government. “These are outrageous misrepresentations that are illegal in Missouri,” Koster said at a news conference Monday in St. Louis. Koster sued Gold Star Home Mortgage, which is based in Columbia, Mo., and Oxford Lending Group, which is based in Columbus, Ohio.


  • Gold Star sent direct-mail letters to consumers with the consumers’ own bank name at the top of the letter, making it appear that consumers’ bank was encouraging them to refinance, according to the lawsuit. And in at least one case, the business offered a loan that likely would have left a homeowner with a mortgage that was higher than the home was worth, Koster’s office said.

  • Oxford Lending Group mailed letters to consumers making it appear it was about the economic stimulus package and from the federal government, according to the lawsuit. Koster said his office learned of the allegedly misleading solicitations after hearing complaints from consumers and local community banks.

  • Earlier this month, Koster sued U.S. Foreclosure Relief, an Anaheim, Calif., company that allegedly defrauded Missourians looking for help avoiding mortgage foreclosure. He urged consumers to send any suspicious solicitations to his office in Jefferson City. He also asked consumers to call the state consumer hotline at 800-392-8222 or visit the attorney general’s Web site.

Source: Koster sues 2 mortgage brokerages.

For the Missouri AG's press release, see Attorney General Koster declares ‘Zero tolerance’ on mortgage scams: Files suit today to stop two more businesses:

  • [Attorney General Koster] also said he wants consumers to send him the offers they are receiving in the mail. "Pack them up and send them to our office in Jefferson City," Koster said. "We will look at what you send us, investigate each new deceptive tactic and prosecute to the fullest extent of the law," he said. "That's what 'Zero Tolerance' for mortgage scams means in Missouri."

Monday, April 20, 2009

Tampa Feds Have Mortgage, Loan Modification Fraud In Its Crosshairs; 200+ Indictments For 2009 Possible

In Tampa, Florida, TIME Magazine reports:
  • [T]he U.S. Attorney's office in the Middle District of Florida tells TIME, federal agents and prosecutors have embarked on a "surge" of mortgage and loan-modification fraud investigations that could result in more than 200 indictments this year in the Tampa region alone. "The idea is to do as many cases as we can at once," says Tampa U.S. Attorney Brian Albritton, "to clearly send a message that this is not going to be tolerated."


  • Of the FBI's 56 field offices, more than 40 now have mortgage-fraud task forces. In Florida's Tampa-based Middle District, as many as 50 agents have been incorporated into new task forces that include more than 10 other federal agencies, such as the Secret Service, the U.S. Postal Service, the Department of Housing & Urban Development, the Internal Revenue Service and the Federal Deposit Insurance Corporation.


  • Albritton, who says the task force is also working with industry insiders who can walk agents and prosecutors through the arcane intricacies of mortgage fraud, hopes to clear the decks by making as many plea deals as possible with suspects as early as this spring. Indictments will come later in the year, and will probably be announced all at once, "to make the largest public impact and have the largest deterrent value."

For more, see Mortgage Fraud Crackdown Gathering Steam in Florida.

Loan Modification Firms Begin Using Perceived "Attorney Defense" Loophole To Pocket Upfront Fees From Homeowners Facing Foreclosure

In Central Florida, The Tampa Tribune reports:
  • [I]t's against the law in Florida to charge up-front fees for foreclosure help. [...] Federal and state authorities are investigating, prosecuting and shutting down companies that violate the law. But some have found what they think is a loophole in the law: Florida attorneys are exempt from the ban on charging up-front fees.

  • When [homeowner Sandi] Stewart questioned the fees, she said she was told it was legal because she was hiring an attorney. However, she had no correspondence with the attorney and spoke only to the "loan modification department." Plus, the attorney, Christian M. Dillon, is not licensed in Florida. Repeated phone calls to representatives for the company, uFirst Direct, and for Dillon himself, were not returned.

  • The attorney defense for charging up-front fees is not an isolated case. Another reader called recently about a Chicago company, American Homeowners Alliance. It asked for $1,500 up front. When reached by phone, the company president, Jim Hamilton, told me he was well aware of Florida's law but that it doesn't apply to him because his company is based in Illinois. Furthermore, he said, his company is exempt from Illinois' law against up-front fees because he has an attorney on staff.


  • The attorney general has not received complaints about Hamilton's company. However, the attorney defense for charging up-front fees just doesn't hold up, according to regulators. Offices for the Attorney General in both Florida and Illinois say companies operating in Florida must obey local laws, no matter where their home office is.

  • "Merely having an attorney on staff, even assuming he is licensed to practice in Florida, is not enough to qualify for the exemption, said Sandi Copes, communications director for the attorney general. "There must be an attorney-client relationship established before the exemption applies."(1)

For the story, see Home sweet home: Beware of foreclosure rescue scams, fees.

(1) Florida homeowners who think they've been victimized by foreclosure rescue fraud, call the Florida Attorney General's hot line at 1-866-966-7226 or go to the office's new Web site,, which provides complaint forms, information on current investigations and tips to identify and avoid foreclosure rescue fraud.

It might not hurt to file a complaint with the State Bar alleging the unauthorized practice of law against the loan modification company if they purport to review legal documents to find errors in the paperwork or who claim to perform other services associated with the work of an attorney. An out-of-state attorney who is not licensed to practice law in the state where the homeowner is located might also make for a good target for an unlicensed practice of law complaint. Florida homeowners looking to file such a complaint can go here for Filing an Unlicensed Practice of Law Complaint with The Florida Bar. UnauthPractOfLawTheta

Judge Halts Foreclosure Action As Lender Lacks Promissory Note, Ditches Court Hearing

In Levy County, Florida, the Chiefland Citizen reports:
  • It’s a story right off the national news: Homeowners fighting to prevent foreclosure on their property ask a lender to produce the original promissory note in legal proceedings. But in Levy County, it is the estate of Kathryn F. Causey, an accountant who died in January 2008, that is trying to stave off foreclosure by having the lender produce the promissory note.


  • The attorneys for Wells Fargo were a no-show for a hearing on their suit to enforce a missing promissory note so the judge dismissed it. For the estate of Kathryn F. Causey, a Cedar Key accountant who died in January 2008, it’s a victory in staving off a foreclosure attempt by the lender who cannot produce the original promissory note.


  • In June 2008, Wells Fargo filed suit asking 8th Judicial Circuit Judge David O. Glant to grant it “an action to enforce a lost, destroyed or stolen promissory note and mortgage.” [...] Glant scheduled a 10-minute telephone hearing in his chambers [last] Monday, but because Wells Fargo’s lawyers did not call in he granted a motion by Hamill’s attorney to dismiss the case.

For more, see:

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here. ThetaMissingDocsMtg

Data Management Firm, Assembly Line Law Firm Scorched By Scathing Court Ruling That Shines Light On Filing Screw-Ups In Consumer Foreclosure Cases

In Philadelphia, Pennsylvania, Bloomberg News reports:

  • Lender Processing Services Inc.(1) fell 29 percent after Dow Jones News Service reported that the company was the subject of an inquiry by the U.S. Trustees Office, an arm of the Justice Department that monitors bankruptcy courts.

  • A ruling by Judge Diane Weiss Sigmund in U.S. Bankruptcy Court in Philadelphia questioned inaccurate court filings made by HSBC Mortgage Corp. in a personal bankruptcy case. HSBC relied on electronic information from an LPS system that manages foreclosure data. “At issue in these cases are the homes of poor and unfortunate debtors, more and more of whom are threatened with foreclosure due to the historic job loss and housing crisis,” Sigmund wrote in a 58-page opinion released [Wednesday].(2)

  • Lender Processing, based in Jacksonville, Florida, runs an automated system to track mortgage payments and defaults and as recently as 2007 was used by 39 of the country’s 50 largest banks, according Sigmund’s ruling.

For more, see Lender Processing Falls 29% on Report of Inquiry.

See also, The Wall Street Journal: DOJ Probing Mortgage Data Processing Firms:

  • In pursuit of homeowners Niles and Angela Taylor, HSBC filed the wrong mortgage, gave incorrect payment amounts and claimed the Taylors had missed monthly payments. This "was simply not true," Sigmund wrote in a 58-page decision. Pressed to produce a loan history for the Taylors, HSBC's lawyer confessed the system simply wouldn't give it to him.


  • The processes the company uses to crank out court documents for fast, cheap foreclosures were the culprit, the judge found. By forcing lawyers to talk to computers rather than to their clients - the lenders - LPS makes it hard for lawyers to do right by the court and discharge their ethical obligations, Sigmund said. Lawyers at one level spot-check a fraction of the documents that are on their way to foreclosure actions, Sigmund found. But the business is built for profitability rather than reliability, and counts on "lower-cost labor," according to the judge. [...] She faulted HSBC and some of the lawyers involved in the case for having "sacrificed accuracy and fairness to efficiency and cost-savings," by relying on LPS's systems.

For Judge Sigmund's opinion, see In re Niles C. & Angela J. Taylor (Case No. 07-15385DWS, Bankr. E.D. Pa., April 15, 2009).

Go here, go here, go here, and go here for posts on questionable mortgage servicing practices.

Go here for other posts on sloppy foreclosures and assembly line lawyering.

(1) Formerly known as Fidelity National Information Services, Inc., according to the court ruling.

(2) Judge Sigmund diplomatically expresses her "disappointment" over the errors generated by the company's foreclosure data processing system, and the assembly line attorneys (ie. Udren Law Office and Moss Codilis LLP) who are roped in by their clients into allowing themselves to be manipulated by said system yielding sloppy, careless results in the interest of profits, by concluding her ruling with the following statement:

  • My research has disclosed no other published opinion that explains the NewTrak process that is utilized by so many consumer mortgage lenders seeking relief in bankruptcy cases. I have attempted to share my education in this Opinion. Finally, it is my hope that by bringing the NewTrak process to the light of day in a published opinion, systemic changes will be made by the attorneys and lenders who employ the system or at least help courts formulate the right questions when they have not. While NewTrak has many features that make a volume business process more efficient, the users may not abandon their responsibility for fairness and accuracy to the seduction of electronic communication. The escalation procedures in place at HSBC and the Udren Firm existed on paper only. When an attorney appears in a matter, it is assumed he or she brings not only substantive knowledge of the law but judgment. The competition for business cannot be an impediment to the use of these capabilities. The attorney, as opposed to a processor, knows when a contest does not fit the cookie cutter forms employed by paralegals. At that juncture, the use of technology and automated queries must yield to hand-carried justice. The client must be advised, questioned and consulted. Young lawyers must be trained to make those judgments as opposed to merely following the form manual. Until they are capable of doing so, they should be supported and not left to sink or swim alone in an effort for the firm to be more profitable by leveraging the cheapest labor.

  • At issue in these cases are the homes of poor and unfortunate debtors, more and more of whom are threatened with foreclosure due to the historic job loss and housing crisis in this country. Congress, in its wisdom, has fashioned a bankruptcy law which balances the rights and duties of debtors and creditors. Chapter 13 is a rehabilitative process with a goal of saving the family home. The thoughtless mechanical employment of computer·driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of our American bankruptcy system. It is for those involved in the process to step back and assess how they can fulfill their professional obligations and responsibly reap the benefits of technology. Nothing less should be tolerated. QuestionableServicingTacticsSigma SloppyForeclosuresAlpha

Sunday, April 19, 2009

Hawaii Feds Pick Up Guilty Pleas In Equity Stripping Foreclosure Rescue Scam

In Honolulu, Hawaii, the Hawaiian Advertiser reports:
  • [Rick Kealoha Pa Jr.] faces five years in prison, a $250,000 fine and payment of restitution to an evicted homeowner after pleading guilty yesterday to aiding a Honolulu mortgage company accused of orchestrating a foreclosure bailout scheme and stealing hundreds of thousands of dollars from banks and distressed homeowners.


  • Pa was paid $10,000 to submit falsified mortgage loan applications, according to court documents. When the scam fell apart, a Makakilo family was evicted from their home.
    Pa was one of several loan officers employed by John M. Dimitrion,(1) founder and chief executive of Mortgage Alliance LLC, and his wife, Julie A.B. Dimitrion, the firm's chief financial officer.(2)

For more, see Man pleads guilty to fraud (Loan officer helped firm in mortgage scam that led to family's eviction).

For the indictment, see U.S. v. Dimitrion.

(1) Dimitrion and his associates are accused of finding homeowners on the cusp of foreclosure and offering help if the homeowners agreed to a temporary sale of the house to a third-party "investor," according to court documents. They allegedly told the homeowners they could remain in their homes and that their title would be returned to them after a set period of time. But Mortgage Alliance allegedly stole the proceeds by funneling the money into fake escrow accounts, and the new loan would go into default, according to court documents.

(2) Reportedly, one of Dimitrion's former employees, Vance Yukio Inouye, 31, has already pleaded guilty and has promised to cooperate with the government; Dimitrion and his wife, Julie Ann Baldueza Dimitrion, are scheduled to plead guilty later this month; and the final defendant, Benjamin Yoshito Thompson, is scheduled to stand trial in September. See Star-Bulletin: Mortgage fraud case draws new guilty plea.

Dementia-Suffering Foreclosure Rescue Scam Victim Now Lives Penniless; Brooklyn DA's Office Slow To Pursue Prosecution

A recent article in The New York Times on foreclosure rescue scams contained this excerpt describing one victim who was swindled out of her home:
  • [T]here is Dr. Janet Mitchell, 58, the daughter of a butler and a maid who became chief of perinatology at Harlem Hospital Center and a national advocate for black pregnant women with H.I.V.

  • In 1992, she purchased a handsome and affordable brownstone in Fort Greene, Brooklyn. Then early-onset dementia struck. Dr. Mitchell stopped paying her bills in 2005, leading lenders to foreclose. Soon afterward, she walked into a mortgage company, according to a lawsuit filed by her niece.

  • A mortgage specialist persuaded her to sign a handwritten transfer with no lawyer present and paid off her $210,000 in loans. Then he refinanced her house, taking $1.7 million in cash. The doctor now lives, penniless, with her sister in Colorado.

  • South Brooklyn Legal Services gave the files to the Brooklyn district attorney’s office. The prosecutors have not yet brought a case.(1)We are constantly trying to get them to pursue this case,” [co-director of the foreclosure prevention project Jessica] Attie said. “These are the most defenseless of all.”

Source: Prosecutions Lag as N.Y. Foreclosure Frauds Surge.

(1) Sol Wachtler, the former Chief Judge of the New York Court of Appeals, once jokingly observed that a prosecutor could persuade a grand jury to "indict a ham sandwich." If this is the case, obtaining an indictment in an egregious case like this should be easier than indicting the defenseless ham sandwich. Possible charges include, but are not limited to:

  • Forgery (“[F]orgery is committed when a defendant, by fraud or trickery, causes another to execute a . . . document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature.” People v. Martinez, (2008) 161 Cal. App. 4th 754; 74 Cal. Rptr. 3d 409, quoting People v. Parker (1967) 255 Cal.App. 2d 664, 672); see also Marden v. Dorthy, 160 N. Y. 39, 54 N.E. 726; (NY 1899),
  • Exploitation of a vulnerable adult,
  • Grand theft,
  • Fraud by deception,
  • Securing writings by deception,
  • Theft by false pretenses.

Florida Bankruptcy Judge Questions Judgment Of Lenders Opposing Proposed Loan Modification Legislation

In Miami, Florida, the Miami Daily Business Review reports:
  • U.S. Bankruptcy Judge A. Jay Cristol said the banking and mortgage lending industry is either greedy, stupid or both when it comes to opposing legislation that would allow mortgage modifications for homeowners who declare Chapter 13 bankruptcy. “Everyone’s best interest would be served by stabilizing the situation and keeping people in their homes,” said Cristol, chief judge emeritus of U.S. Bankruptcy Court in Miami.


  • Unfortunately, because of lack of wisdom or greed, the banks are not acting in their own best interest. It’s in the whole country’s best interest to modify these mortgages,” Cristol said.


  • The new legislation also could take the teeth out of criminal loan-modification businesses preying on homeowners desperate to stay in their homes. Florida Attorney General Bill McCollum issued a consumer advisory last month saying foreclosure rescue services were the most frequent subject of complaints in 2008, defrauding hundreds of homeowners out of millions of dollars.

  • Cristol said it’s unknown what impact the modification measure would have on what he called “the creatures out at the edge of the herd, looking for the wounded and disabled.”

For more, see Loan modifications for homeowners in bankruptcy opposed by lenders.

Low Income L.A. Tenants Score $1M & Strengthened Rights In Discrimination Settlement Against Hotel, City

In Los Angeles, California, Daily Journal reports:
  • A group of current and former low-income tenants of the Alexandria Hotel who claimed they were victims of discrimination, deplorable housing conditions and illegal evictions will receive nearly $1 million under a settlement reached with the building's owners and the city of Los Angeles. The settlement also will require sweeping changes to policies at both the Alexandria and the city's redevelopment agency governing how tenants should be treated when the buildings they live in undergo publicly funded renovations.


  • The lawsuit, filed in December 2007 after local housing advocates noticed an influx of Alexandria tenants at Skid Row housing clinics, alleged widespread disability and race discrimination, illegal evictions and the systematic violation of multiple redevelopment laws at the residential hotel in downtown Los Angeles.(1)

For more, see Low-Income Tenants Win Rights, Money In Housing Case (Lawsuit Alleged Discrimination, Illegal Evictions and Violations Of Redevelopment Laws).

(1) Attorneys at McDermott Will & Emery who handled the case pro bono, and several agencies - the Legal Aid Foundation of Los Angeles, the Disability Rights Legal Center, the Western Center on Law and Poverty and the Los Angeles Community Action Network - filed the suit against the Alexandria Housing Partners, Logan Property Management Inc., the City of Los Angeles and the Community Redevelopment Agency. Woods, et al. v. Alexandria Housing Partners L.P., CV07-08262 (C.D. Cal, filed Dec. 20, 2007).