Saturday, May 30, 2009

Elk Grove Cop Charged With Lying On Mortgage Applications; Brother, Sister-In-Law Accused Of Pocketing $200K In Separate Refinancing Scheme

In Elk Grove, California, KXTV Channel 10 reports:
  • An Elk Grove police officer has been charged by federal authorities for allegedly lying on mortgage loan applications to buy two homes that later went into foreclosure. Hidayatullah Ali Khalil, 29, was arrested Thursday by the FBI on a three-count complaint and made an initial appearance in Sacramento federal court before being released on a $75,000 unsecured bond.


  • According to the complaint, Khalil pulled more than $100,000 in cash out of the Elk Grove house in two separate transactions. Property records show both homes were sold at auction last year. [...] The FBI said its investigation into Khalil was continuing, with possibly more searches and arrests to come.

  • Khalil's brother and sister-in-law also made an intial federal court appearance Thursday for their role in an alleged equity-stripping scheme involving a house in El Dorado Hills that later went into foreclosure. They, too, were released on bond. IRS criminal investigator Christopher Fitzpatrick said Amanullah and Muzdha Khalil lied on a refinancing application to pull nearly $200,000 in cash out of the house [...].

For the story, see Elk Grove Cop Charged with Mortgage Fraud.

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

Some Realtors Begin Warning Homeowners In Foreclosure Against Home Stripping

In Phoenix, Arizona, KPHO-TV Channel 5 reports:
  • Several Valley real estate agents are doing their part to prevent a new kind of crime. They are asking homeowners selling their foreclosed homes to sign disclosure forms saying they’ve been told stripping their homes is a felony. "Now I can sleep at night know I've given my clients all the information," Cari Gililland said. "What they choose to do from that point is their decision.”


  • Gilliland said owners of foreclosed homes started stripping their homes about one year ago, at the height of the foreclosure crisis. "People will take the light fixtures. They’ll take the sinks. They'll take the kitchen cabinets. They'll take the carpet. All kinds of stuff. They'll take anything. Anything they can get their hands on,” she said.

For more, see Valley Realtors Help Prevent New Crime.

See also, The Arizona Republic: Foreclosure home strippers can face arrest.

Go here for other posts on pre-foreclosure homeowner fixture stripping. foreclosure fixture stripping apple

More Problems With Loan Modification Firms

The following links are to stories on financially strapped homeowners reporting problems with loan modification companies they hired to help resolve their mortgage problems:
  • Oceanside, California: Couple brings loan modification fees into question. Warnings cautioning homeowners about paying upfront consultant fees in last-ditch efforts to avoid foreclosure may have been too little, too late for homeowners Ryan Walker and Kelly Hart. “She told us we were perfect candidates,” Hart said. “We met all the qualifications for a modification. They said it would be 30 to 45 days.” That guarantee was never made in writing, however. “Their attorney supposedly had a 99 percent success rate when working with candidates like us,” Walker said. “She sold us a good story.” In October 2008, they paid the $3,495 service fee with a cashier’s check hoping to have some financial relief by the end of the year. In the nearly seven months since, Walker and [Hart] have received about 30 e-mails from Mary Moi, the Better Life modification specialist assigned to their case after they paid the fee, but there has been no change in the status of either of their mortgages.

  • Indianapolis, Indiana: Hoosiers falling victim to foreclosure scams. Laura Bailey and her husband lost their jobs and missed mortgage payments. The bank foreclosed and a sheriff's sale notice arrived. Desperate, they called a mortgage foreclosure consultant. "When someone tells you 'for this amount of money we can stop all this,' you think 'great,'" said Bailey. New Hope Modifications took $1,250 of the couple's money, then shut down. The Federal Trade Commission charged the New Jersey company with false advertising. It claimed it was part of the non-profit, government-endorsed mortgage assistance network. New Hope is one of many suspected fraudulent businesses authorities are trying to close. "They are like vultures. They go after people who are down on their luck," said Bailey.

  • Phoenix, Arizona: Loan modification scam leaves Phoenix woman facing foreclosure. Not one but two Valley families fell for the same promise, come up with some cash and we'll save your home from foreclosure. Weeks and then months went by and the families still found themselves facing foreclosure. Their mortgages were not modified. That’s when law enforcement got involved and so did 3 On Your Side. In one particular neighborhood alone, two houses back to back both signed up with Jose Chavez. In total, Chavez reportedly collected $8,000 in cashier’s checks. Phoenix police and the FBI got involved and they are now looking in to theft allegations against Jose Chavez.

  • Middletown, Pennsylvania: Couple lose home despite ability to pay (One payment was returned, and mortgage service firm refused to negotiate after they got behind). After inadvertently failing to mail a mortgage payment, Richard & Patricia Meredith's mortgage company, Wells Fargo, threatened foreclosure. About the same time, the Merediths got a postcard from a foreclosure rescue company called American Housing Authority in California offering to help. It seemed to be just what they were looking for, Patricia said. American Housing Authority told them to send $4,500 to Wells Fargo, but the money was returned for reasons the Merediths can't explain. American Housing Authority started demanding payments to continue negotiating on behalf of the couple, the Merediths said. They sent the company $1,200 in 2007 but balked when it asked for more, because they hadn't seen results. In February 2008, the Merediths' home was foreclosed on by Litton Loan Servicing in Houston, which services Wells Fargo loans. As for the money and time the couple spent with American Housing Authority, it's not clear what, if anything, the company did for the Merediths. Though the Pennsylvania attorney general's office has had no dealings with American Housing Authority, the company has been sued by the attorneys general in several other states, including Illinois, Ohio and Minnesota. A contact number for American Housing Authority could not be found.

Rescuing Starving, Abandonded Animals Left In Foreclosed Homes No Longer Illegal In Gilbert

In Gilbert, Arizona, The Arizona Republic reports:
  • Gilbert police and town employees can now rescue abandoned or distressed animals from foreclosed homes. That will be welcome news for the increasing number of cats, dogs and other pets who have been abandoned when their owners let their homes go into foreclosure.

  • Until Town Council last week amended its animal control ordinance, town personnel could do nothing about the abandoned pets, even if the animals were in obvious discomfort or pain. "Up until this ordinance, pets that were abandoned or mistreated, we didn't have the authority to treat these animals unless we could locate the owner and have them voluntarily give them up," said Sgt. Mark Marino, a police spokesman.


  • The number of incidents of abandoned pets has skyrocketed over the past year as police responded to more calls about pets barking or meowing in empty homes.

For more, see Workers now allowed to help deserted pets.

Friday, May 29, 2009

Minnesota Feds Convict Mortgage Broker In Equity Stripping, Foreclosure Rescue Scam; Victims Duped Into Believing Deals Were Mere Refinancings

From the Office of the U.S. Attorney (Minnesota):
  • A federal [trial] jury [...] convicted a 41-year-old Prior Lake man on seven criminal counts in connection with an equity-skimming scheme that targeted vulnerable homeowners. After more than six hours of deliberation, on May 20 in St. Paul, a jury found Michael Fiorito guilty on all counts against him, including one count of conspiracy to commit mail fraud and six counts of mail fraud.

  • According to the indictment and evidence presented during the nearly three-week trial, Fiorito was a mortgage broker at three different Minnesota mortgage companies from 2003 through January 2007. Working with his assistant, Kristin Louise Jerde, he devised a scheme to defraud homeowners who were in foreclosure or behind on their mortgage payments.

  • Specifically, Fiorito and Jerde caused homeowners to refinance their homes. They then stole some or all of the equity checks produced through the refinancing process. They also induced homeowners to sell their homes to Fiorito and then stole the checks paid to the victims out of the closing of the sale. Many of the victims who sold their homes to Fiorito did not know they were actually selling their homes because Fiorito misled them into believing that they were only refinancing their homes.


  • Fiorito sought out and contacted homeowners and encouraged them to hire him to arrange a refinancing or sale. In some cases, Fiorito promised homeowners that they would receive checks in the amount of the equity in their homes, but he then either intercepted the checks or else used physical intimidation to force homeowners to endorse the checks over to him. In most cases, Fiorito caused the homeowners to execute powers-of-attorney appointing him as attorney-in-fact for the homeowners, which facilitated Fiorito’s theft of checks issued to homeowners when the transactions closed. The homeowners testified at trial that they did not know they had signed documents granting Fiorito permission to take their money. [...] Between January 2005 and March 2007, Fiorito fraudulently converted to his own use more than $400,000 in equity from at least 17 victims, [...].

For the U.S. Attorney press release, see Jury convicts former mortgage broker of defrauding vulnerable homeowners in equity-skimming scheme.

NY Judge Gives Go-Ahead To Tax Foreclosure Sale Despite Property Owner's Failure To Receive Notice Of Action While In County Jail On Unrelated Matter

In Canandaigua, New York, the Daily Messenger reports:
  • A property that was slated to be sold at Ontario County’s foreclosure auction May 6 escaped the initial sale. But now it will be sold, following a judge’s decision. The owner of 4530 Blossom Road in Gorham sued the county “over notice issues,” county Assistant Attorney Gary Curtiss said after a meeting Wednesday, [...]. Representing the property owner was attorney David Whitcomb.(1) [...] The outcome of the recent case is “unfortunate,” said Whitcomb, [...].

  • In the case of the Gorham property, the owner maintained she never received the notices from Ontario County warning her about the back taxes owed, said Whitcomb. The woman was in Ontario County Jail, serving time for driving while intoxicated, he said. The county’s certified letters sent to her address came back unclaimed and letters sent by regular mail never came back, he said. The woman was in a county facility and the county should have known she didn’t get the notices, said Whitcomb. Within days of hearing arguments in the case earlier this month, state Supreme Court Judge Craig Doran ruled the county could auction off the property. The lot with ranch home at the corner of Blossom Road and Summit Parkway, assessed at $61,500, will go for its highest bid of $32,000.

For more, see Property to be sold by county after lawsuit.

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

(1) Whitcomb also represented a property owner last year who sued the county over a foreclosure. But in that case, the owner won and was able to keep his parcel. A panel of judges with the state Appellate Division’s Fourth Department overturned a previous ruling that would have allowed the county to auction the parcel over $24 in interest owed by the property owner. foreclosure faulty notice

Watch Out For Mail Solicitations Simulating Official Forms & Letters From Government Agencies Offering Mortgage Help

The New York Times reports:
  • The letter may look like a government form. The logo may seem official. The Web site address may sound like an agency that can help. But there's a good chance it may all be a scam.


  • ''With people losing homes, you're at your most vulnerable,'' said Roscoe Howard, a Treasury Department spokesman. ''It's a lot like being a poor swimmer and being thrown into a lake, you're going to reach for whatever you can.'' Even for wary consumers, it may be hard to tell if the line being thrown by a company will sink you.

  • A letter sent out earlier this month by Bridgewater, N.J.-based Financial Solutions Today LLC is a good example of the difficulty assessing a company. The letter is designed to resemble a W-2 or other form from the Internal Revenue Service, with boxes across the top and a similar typeface. It suggests the recipient ''may be eligible for a special modification program according to guidelines created in conjunction with the Government Stimulus Program HR 1106: Helping Families Save Their Home Act.'' The bill that bore that number in the House of Representatives actually used the plural ''Homes'' in its title, a subtle misspelling that consumer advocates say is the type of thing that should be a red flag for recipients.

For more, see Mortgage Relief Scams Mushroom as Crisis Winds On. loan modification

Missouri AG Files Suit Against Two Mortgage Refinancing Firms Accused Of Calling Consumers Having Phone Numbers On State's "Do Not Call" Registry

In Jefferson City, Missouri, the St. Louis Post Dispatch reports:
  • Missouri Attorney General Chris Koster announced today suits against two area mortgage-refinancing companies that allegedly called consumers who have placed their telephone numbers on the state’s Do-Not-Call registry. Koster’s office says in a press release that the suit is part of a “zero-tolerance stance against illegal mortgage operations.”

For more, see Koster: Mortgage-refinance firms called consumers on no-call list.

For the Missouri AG press release, see Attorney General Koster sues to stop mortgage-refinancing telemarketer from calling Missourians on the no-call list.

Thursday, May 28, 2009

NYC Tenants Look To Fannie To Maintain Complexes On Which They Hold Mortgages As Overfinanced Buildings Throughout City Begin Falling Apart

In New York City, Crain's New York Business reports:
  • In 2005, Cammeby’s International bought a portfolio of five rent-regulated housing complexes in the city for $295 million. Just two years later, it flipped the grouping of former Mitchell-Lama buildings to Urban American Management for $918 million. Deutsche Bank underwrote the $700 million loan that funded the purchase, which resulted in a tripling of the properties’ debt service.

  • Since the sale, tenants in the buildings, located in Manhattan and on Roosevelt Island, have reported a steady decline in services and maintenance. They protested against Urban American, but say they got few results. Now, they’re trying a different approach. They’re arguing that Fannie Mae, the government-sponsored enterprise that bought the debt from Deutsche Bank, has a duty to make sure buildings it owns loans on don’t fall into states of disrepair.

  • And they’ll rally in Harlem Thursday afternoon to call on the mortgage giant to put a stop to leaks, lack of hot water and other maintenance problems they say have plagued the buildings. Leaders representing 7,000 tenants in buildings across the city where Fannie Mae owns the debt will participate in the rally.

  • With the rents they’re taking in, there’s no way Urban American can pay that almost $1 billion mortgage and continue to maintain the buildings,” said Jackie Peters, secretary of the Metro North Riverview Tenant Coalition, one of the buildings in the portfolio. Ms. Peters added that up until a few days ago, soot from a February fire in one of Urban American’s buildings had not been cleaned. “We believe that these poor conditions indicate that the owner does not have the available capital to operate the housing in a safe and livable manner,” wrote a collection of 10 city, state and federal elected officials in a February letter to Fannie Mae.

For more, see Tenants target Fannie Mae for upkeep dollars (Advocates say the mortgage guarantor should help pay for repairs on rent-regulated properties). RentSigmaSkimming

Court Says Foreclosure Sales Were Invalid As Banks Didn't Acquire Interest In Delinquent Loans Until After Legal Action Was Completed

In a recent ruling by the Massachusetts Land Court, two foreclosure sales were held to be invalid because, at the time of the publication of the notices of foreclosure sale, neither foreclosing lender owned an interest in the mortgage (either recorded or unrecorded) each was attempting to foreclose.

The facts of the cases in a nutshell are as follows:
  • Wells Fargo and U.S. Bank each foreclosed on mortgages it purportedly held and acquired title to the homes securing said loans at foreclosure sales.

  • When each lender attempted to unload the homes onto a subsequent purchaser, they were unable to obtain title insurance policies on the homes until a couple of legal issues affecting the property were resolved in the lenders' favor.(1) One of the issues was whether the lenders were the holders of their respective mortgages at the time the notices of foreclosure sale were published.

  • The lenders then each commenced legal actions to "remove a cloud from the title" to the homes.

  • The court found that the applicable law for this case is found in G.L. c. 244, § 14, Bottomly v. Kabachnick, 13 Mass. App. Ct. 480, 484 (1982), and the cases cited therein which, among other things, appear to require that notice of a foreclosure sale identify "the holder of the mortgage," (See Bottomly, at 483) and that failure to do so renders the "sale void as a matter of law." (Id. at 484.)

  • According to the court, the evidence showed that, while Wells Fargo and U.S. Bank were each identified in the published notice of foreclosure sale as "the holder of the mortgage," each acquired its interest in their respective mortgages after the foreclosure sale (in Wells Fargo's case, it acquired its mortgage by assignment ten months after the sale, with the assignment declaring an effective date prior to foreclosure; in U.S. Bank's case, it acquired its interest in the mortgage by assignment nearly fourteen months after the auction took place). Additionally, the court's ruling pointed out that there also was nothing to indicate that each was acting (or purporting to act) as someone else's agent, much less the agent of the principal.

  • Because they were incorrectly identified as the mortgage holders in the notice of foreclosure sale when, in fact, each did not acquire its interest until after the foreclosure sale, the court found a lack of compliance with G.L. c. 244, § 14, and therefore, ruled that the foreclosure sales were invalid.(2)(3)

Go here for the consolidated court ruling (U.S. Bank v. Ibanez; LaSalle Bank v. Rosario; and Wells Fargo v. Larace).

In a related story, see Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership.

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.

Thanks to Glenn F. Russell, Jr. of the Law Office of Glenn F. Russell, Jr., Fall River, Massachusetts for the heads up on this case, and for providing a copy of the court ruling.

(1) For the kinds of title problems one can encounter in buying real estate in a transaction, see:
(2) In a third case, the court found in favor of a foreclosing lender, ruling that possession of an unrecorded assignment of mortgage at the time of the publication of the notice of sale was sufficient to establish its status as a holder of the mortgage. Failure to record the assignment of mortgage was not fatal to its position as holder in this case.

(3) In the following excerpt from the court ruling, the trial judge makes an observation that may be of some interest to those in the title insurance industry who are asked to insure the potentially crappy titles to foreclosed homes that may contain title defects as a result of errors made by assembly-line, foreclosure mill lawyers bringing lawsuits on behalf of lenders who lack standing to foreclose. Real estate purchasers buying foreclosed homes, either at a foreclosure auction, or from the bank directly after it acquires title to the foreclosed home, may also have some interest in the following (footnotes omitted):
  • As even a cursory glance at the current caseload of this court reveals, titles arising from mortgage foreclosures can have many problems. These include the most fundamental: Did the party conducting the foreclosure have the authority to do so and, if challenged, can it prove that it had such authority? In short, will a purchaser at the foreclosure sale get good title and will get it in prompt fashion? These are increasingly important questions in the current deteriorating real estate market and are not small concerns. It is increasingly rare for a mortgage to remain with its originating lender. Often, as here, mortgages are assigned to other entities, and then assigned yet again into large securitized pools. Often, as here, the paperwork lags far behind. Sometimes mistakes are made. Mistakes can only be corrected, if at all, through confirmatory documents (which the borrower may not so easily agree to) or litigation. With so many foreclosed properties available for purchase, why bid on a property with even the possibility for such trouble? Why bid on a property when the foreclosing party cannot produce all the documents (including proper mortgage assignments in recordable form) that would give good title? Why take the risk that the foreclosing party will be able to produce the documents promptly after the auction takes place, that those documents will be complete and in proper form, or even (in this era of failed and failing institutions) that the foreclosing party will still be in existence, with intact files and knowledgeable employees able to find those files so that the proper paperwork can be completed? Since these concerns affect the ability to obtain clear, marketable title, why bid a reasonable market value instead of a discount price to account for that risk?

  • None of this is the fault of the mortgagor [Editor's note: "mortgagor" = the foreclosed homeowner], yet the mortgagor suffers due to fewer (or no) bids in competition with the foreclosing institution. Only the foreclosing party is advantaged by the clouded title at the time of auction. It can bid a lower price, hold the property in inventory, and put together the proper documents at any time it chooses. And who can say that problems won't be encountered during this process? It is interesting that it took the plaintiff (the foreclosing party and successful bidder) almost fourteen months after the auction to obtain its assignment in Ibanez and ten months after the auction in Larace. Would any reasonable third-party bidder have been willing to wait that long, trusting that no other issues would arise? Only in Rosario was the assignment (showing that the foreclosing party held the mortgage and could convey title as a result of the sale) in hand and ready for recording at the time of the auction sale. EpsilonMissingDocsMtg title insurance legal issues

FTC Files Civil Suit Against Loan Modification Firm Accused Of Deceptive Practices While Clipping Homeowners For $3.3M+ In Upfont Fees

From the Federal Trade Commision:
  • The Federal Trade Commission has charged a mortgage foreclosure “rescue” operation with falsely promising Spanish-speaking consumers who are behind on their mortgage payments that it would stop foreclosure.(1) Many people who paid the defendants ultimately lost their homes, and others avoided foreclosure only through their own efforts. At the FTC’s request, a federal court temporarily halted the defendants’ practices and froze their assets. The FTC seeks to stop the deceptive claims and obtain consumer redress from the defendants, whom consumers have paid at least $3.3 million.

For the entire press release, see FTC Sues Mortgage Foreclosure 'Rescue' Operation That Targeted Spanish-Speaking Consumers.

For copies of the lawsuit and the temporary restraining order, see FTC v. Dinamica Financiera LLC.

(1) The Commission charged the defendants with violating the FTC Act by falsely representing that they would obtain mortgage loan modifications or stop foreclosure in all or virtually all instances. The defendants are Dinamica Financiera LLC, Soluciones Dinamicas Inc., Jose Mario Esquer, and Valentin Benitez. The complaint was filed in the U.S. District Court for the Central District of California on May 19, 2009. The court entered a temporary restraining order on May 20, 2009, halting the defendants’ practices and freezing their assets pending a hearing on whether a preliminary injunction should be entered against the defendants.

New FHA Program Allowing Use Of Reverse Mortgages To Purchase Home Prohibited In Texas; OK Everywhere Else

The San Antonio Express News reports:
  • Imagine being able to buy a new home with a 40 percent down payment and not ever having to make a mortgage payment for the rest of your life. The Federal Housing Administration early this year approved such a deal as a form of reverse mortgage for home buyers who are 62 or older. But in Texas, the only thing anyone can do is imagine. The home-equity-for-purchase deal is available in 49 states, but not Texas.


  • [The available] options would be popular with many Texans as they reach retirement age. They won’t be able to do so, however, until the Texas Constitution is amended. Texas lagged [behind] the rest of the nation in offering home-equity and reverse mortgage loans by more than a decade because of the state constitution’s homestead protections.

  • Home-equity lending finally was approved in 1997 by a constitutional amendment, followed by reverse mortgages in 1999. One of the Texas consumer safeguards requires owning equity in a house before anyone could apply for a reverse mortgage, which is a form of home-equity lending. No one could foresee the new home-equity-for-purchase option. Take that restriction away, and the home-equity-for-purchase deal becomes available in Texas, allowing lenders to apply reverse mortgage loans to the purchase price of the house.

For more, see Law blocks new reverse mortgage.

Wednesday, May 27, 2009

Missouri AG Tags Loan Modification Firm With Allegations Of Clipping Homeowners For Illegal Upfront Fees; Seeks Restitution & Civil Penalties

The St. Louis Business Journal reports:
  • Missouri Attorney General Chris Koster on Tuesday sued a St. Louis company that allegedly failed to offer the foreclosure relief and mortgage modifications it promised to Missourians. Koster said the company, Gateway Mortgage Modification, charged “large sums of money and promised it would negotiate a new, workable solution on the client’s existing mortgage, including a change in the terms of a loan in order to help the borrower stay in the home and avoid foreclosure.” But a state investigation found that the company took customers’ money and didn’t provide the services, Koster said.


  • Koster said Gateway has about 200 current clients and continues to solicit more business. [...] The company also requires upfront payments before services, which is illegal in Missouri. The lawsuit seeks restitution for customers and civil penalties.

Source: Koster sues Gateway Mortgage Modification.

For the Missouri AG's press release, see Attorney General Koster continues 'zero tolerance' stance on mortgage scams (Koster files suit to stop company from cheating people seeking foreclosure assistance and mortgage modification).

Colorado Mortgage Broker Charged With Forging Documents, Fudging Numbers To Obtain Unaffordable Loans For Homeowners

In Wheat Ridge, Colorado, KUSA-TV Channel 9 reports:
  • Investigators say a mortgage broker forged documents and doctored numbers to get people into homes and loans they couldn't afford, leading to a string of foreclosures. Zach Magalei will appear in Jefferson County Court next week. He surrendered to police last week after they obtained arrest warrants for felony theft and forgery.

  • Magalei, and his brother Shane, ran Superior Lending and Mavy Incorporated in Wheat Ridge. Last July, Wheat Ridge police officers served search warrants on the Magalei brothers' homes and offices. After a televised plea to find the brokerage offices' customers, the investigation spread to Denver, Aurora, Lakewood, Arapahoe County, Golden and Colorado Springs. Detectives estimate 100 homes are involved so far.

For more, see Arrest made in widening mortgage fraud case.

SC High Court Lifts Stay On Foreclosure Sales; Creates Procedures To Ensure Uniform Handling Of Cases Where Eligible Homeowners Seek Out Federal Help

In Columbia, South Carolina, The Associated Press reports:
  • South Carolina's highest court has lifted a temporary stop on thousands of pending foreclosure sales in the state. Supreme Court Chief Justice Jean Toal on Friday replaced an injunction with procedures to ensure foreclosures are handled uniformly while eligible homeowners seek out federal assistance. Earlier this month, Toal ordered South Carolina judges to stop finalizing foreclosure sales on thousands of properties to give homeowners more time to take advantage of a new federal program to help them refinance mortgages. Mortgage experts said Toal's ruling was the nation's first court-ordered stop for an entire state.

Source: Top SC court lifts stop on home foreclosure sales.

Parents Testify Against Son Accused & Subsequently Convicted Of Using Forged Documents To Refinance Family Home, Pocketing £55,000

In Gloucestershire, UK, the Daily Mail reports:
  • A couple were horrified to discover that their son had remortgaged their home to raise £55,000 which he spent on luxury living, a court was told. Darrell Keen, 26, forged his father's signature to remortgage the family home in the Cotswolds - then blew the surplus cash in four months on restaurants and clothes. Keen did not turn up for his trial at Gloucester Crown Court, but his parents Graham and Rachel Keen were both there to give evidence against him and he was convicted in his absence. Judge Martin Picton issued a warrant for the callous fraudster's arrest and said he would pass sentence on him on June 1st whether he has been found by then or not.

  • The jury of seven men and five women had taken just 25 minutes to convict Keen of forging the morgtage application and using a false instrument with intent. Prosecutor Lisa Hennessy said Keen was living with his parents and a lodger in Field Lane, Willersey, Gloucestershire. Darrell switched his father's mortgage from the Kensington Mortgage company to GE Money, raising an extra £55,000 in the process. In June last year, Mr Keen started to realise what had happened when he got a letter from the new mortgage company stating that the repayments were not being made. The next day he was shocked to receive a notice of summons to attend court about the arrears.

For more, see Son secretly remortgaged parents' house to splurge £55,000 on a flat, car, clothes and restaurants.

Tuesday, May 26, 2009

Loan Modification Outfit Sued By Idaho AG Abruptly Shuts Down; Homeowners, Employees Left High & Dry As Feds, State Slap $700K+ In Tax Liens On Firm

In Coeur d'Alene, Idaho, The Spokesman Review reports:
  • Apply 2 Save Inc. in Coeur d’Alene has closed its doors, shutting out hundreds of frustrated customers who did not receive the mortgage help they paid for and employees who are owed wages. The Internal Revenue Service on Monday filed four tax liens totaling more than $663,000 for unpaid 2008 federal unemployment and income taxes. The state of Idaho has filed a nearly $52,000 lien for unpaid withholding tax.

For more, see Tax liens filed against Apply 2 Save (Coeur d’Alene company closes doors).

See also Apply 2 Save leaves clients and workers bewildered:

  • The Coeur d’Alene company was sued last month by the state of Idaho for promising mortgage relief it did not deliver. That was April 20. On April 21, employees were issued paychecks that bounced around North Idaho banks like ping-pong balls. Then dozens were laid off or, as the company calls it, “furloughed.”

Virginia Feds Get 3 Guilty Pleas In Scam That Ripped Off $600K+ From Unwitting Homeowners' HELOC Accounts; One Suspect Remains A Fugitive

From the Office of the U.S. Attorney (Eastern District - Virginia):
  • Chad Antoine Vieux, age 27, of Central Islip, New York, pled guilty today to Conspiracy to Commit Bank Fraud, [...] and one count of Bank Fraud, [...]. On April 2, 2009, Happie Harris, age 27 of Chester, Virginia, and on May 4, 2009, Sandra Caiby-Ramkissoon, age 37, of Glen Allen, Virginia also pled guilty to the same charges.


  • According to court documents, beginning in 2007, Caiby, Vieux, and Harris conspired with individuals who targeted victims with large amounts of available credit on their Home Equity Line of Credit (HELOC) and credit card accounts. These other individuals obtained personal and financial information for various victims. They then obtained accounts with companies that provide what is commonly called a “caller-ID spoofing” service. This allowed the individuals to make a call appear as though they were coming from the victims’ homes. Armed with the victims’ financial and personal information, these individuals then called the victims’ financial institution, answered security questions, changed account passwords, obtained account balances, and transferred funds from the victims’ accounts. The funds were ultimately transferred into bank accounts under the control of the defendants.

  • Once the defendants received the money, they provided the funds to the individuals who had collected the financial information of the victims and called their financial institutions, keeping a percentage of the funds as payment for allowing their bank accounts to be used to facilitate the fraud. The total fraud and intended fraud perpetrated by the defendants exceeds $600,000.

  • Shannon Lamont Greene, a/k/a/ Devonte Carr, Devonte Green, and Shannon Israel, age 32, of New York, was also charged. He remains a fugitive.

For the press release, see Three Defendants Plead Guilty to Conspiracy and $600,000 Bank Fraud Scheme. TheftOfDeedMeta

Pennsylvania Regulator Issues Cease & Desist Orders Against Six Loan Modification Firms

From the Pennsylvania Department of Banking:
  • The Department of Banking has ordered six out-of-state mortgage modification companies to end their unlicensed business activities in Pennsylvania. The companies advertise on their Web sites to refinance mortgages in Pennsylvania as part of the loan modification process when they are not licensed to do so. The companies must comply with the orders or file appeals.

The following cease & desist orders have been issued:



The Department has also suspended the mortgage brokerage license of, and issued a cease and desist order against, U.S. Mortgage Group, Inc. of Philadelphia, for refusing to answer questions and provide documentation about its activities as well as the activities of its affiliate, U.S. Mortgage Mod, LLC, according to a press release. The department had been unaware of the existence of U.S. Mortgage Mod, LLC, which engages in loan modification and debt settlement activities. Both companies are owned by Marc Dambrosio and located at 1617 John F. Kennedy Boulevard.

For more, see:

New Housing Law Protects Tenants Nationwide Against Being Blindsided By Surprise Foreclosure Evictions

The Associated Press reports:
  • Buried in a housing law signed [last] week by President Barack Obama are protections that will help thousands of renters stay in their homes — at least for awhile — after their landlord has been foreclosed on.

  • The law allows tenants to remain in their foreclosed rentals through the end of their lease and then 90 days after that before being forced to vacate by the lender. Renters without leases will have 90 days, a significant improvement over what most received before: almost no notice at all. "Until this law was enacted, there had been no national protections for any of these households," said Linda Couch, deputy director at the National Low Income Housing Coalition. "This gives renters time to adjust their lives."

For more, see Law protects renters from foreclosure evictions.

Monday, May 25, 2009

NY Title Agent Charged With Misappropriating Escrow Funds From Real Estate Deals; Uses "Ponzi" Approach In Attempt To Conceal Earlier Thefts, Say Feds

From the Office of the U.S. Attorney (Southern District - New York):
  • LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, [and other officials] announced that BRIAN H. MADDEN, who controlled and operated three title insurance agencies in New York and Suffolk counties, was arrested today for misappropriating millions of dollars of escrow and other client funds and embezzling a portion of those funds for his own benefit.

The Feds allege that:

  • Commencing around early 2008, MADDEN misappropriated escrow and other client funds from Liberty Title, Skyline Title, and GNY Liberty Abstract in order to sustain operations at Liberty Title, and to support the significant cash draws he was taking from the company. In particular, between January 2008 and April 2009, MADDEN took approximately $2.2 million in cash draws from Liberty Title. Those cash draws, which at times amounted to $300,000 or more in a single month, far exceeded MADDEN's draws in prior years, and were taken despite the deterioration in the real estate market throughout 2008. To sustain Liberty Title's operations in the face of such draws, and to pay current client debts, MADDEN misappropriated escrow and client funds of other clients, essentially using new funds from clients to pay off older debts on behalf of other clients.


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

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

Cleveland Housing Court Judge Slams Brakes On All Wells Fargo Foreclosure Sales Within City; Lender Accused Of Dumping Blighted Homes

In Cleveland, Ohio, The Plain Dealer reports:
  • Cleveland Housing Court Judge Raymond Pianka on Thursday ordered Wells Fargo Bank to temporarily stop selling any foreclosed homes it owns in the city. A housing-advocacy group sought the temporary restraining order, saying that Wells Fargo has expanded its practice of dumping vacant and deteriorated homes for paltry sums without first doing repairs. Wells Fargo and Cleveland Housing Renewal Project Inc., a subsidiary of Neighborhood Progress Inc., are to be in Pianka's court [this] week for a hearing to consider whether Wells Fargo properties should be declared public nuisances and be repaired or demolished before they can be sold. The group estimates the order could cover as many as 183 properties.

For more, see Wells Fargo Bank blocked from selling foreclosed homes in Cleveland by Housing Court Judge Raymond Pianka (if link expires, try here).

Closing Agent Gets 24 Months After Copping Plea To Pocketing Proceeds Of Real Estate Transactions; Insurance Underwriter Forced To Cough Up $1.2M+

From the Office of the U.S. Attorney (Rhode Island):
  • A federal judge [last week] sentenced Angela Raposa, age 33, a resident of Riverside, Rhode Island, to 24 months in federal prison for Wire Fraud. Raposa pleaded guilty to that offense, admitting that between February 2006 and February 2007 she operated a title insurance company, Title America Closing Services, and used mortgage proceeds that were supposed to be paid to mortgage companies for her own personal benefit.


  • Raposa directed that funds which were deposited into the company escrow account not be used to pay off the corresponding existing mortgage. Instead, these funds were used to pay for various personal expenses of the defendant. Escrow funds were also used to pay off existing mortgages that were already delinquent, since they were originally not paid off in a timely fashion.


  • In February, 2007, Stewart Title uncovered the fraudulent scheme, at which time it terminated Title America as its representative. As a result of the fraudulent scheme, mortgages were not paid off by Title America with respect to five (5) real estate transactions. As a result, Stewart Title was required to pay off these amounts, which totaled approximately $1,254,324.85.

For the entire press release, see Defendant sentenced to 24 months imprisonment for Mortgage Fraud.

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

Cincinnati Man Charged With Stealing Bar Claims He's The True Owner; Accuses Alleged Victim Of Forging His Name On Papers To Illegally Transfer Title

In Cincinnati, Ohio, The Cincinnati Enquirer reports:
  • A 40-year-old man was charged Tuesday with deceiving the owner of the East End Café to sign the deed over to him, Cincinnati police said. John Yeager of Sycamore Township was booked into the Hamilton County jail on charges of theft, breaking and entering, and securing writings by deception, court records show. The property, located in the 4000 block of Eastern Avenue, is worth $310,000, court records state.


  • Yeager says none of the allegations are true. He says that he bought the café in 2002 and was working out a deal to rent it to the alleged victim. Instead, that man created a false deed with Yeager’s forged signature and stole the property, he said. “I’m still the owner,” he said. “I’m not a con artist; the property was taken from me. I have all this paperwork showing that the numbers don’t add up.”


  • On Wednesday, Yeager was released early in lieu of $7,000 bond. He is now working with attorneys to bring the matter to rest, he said. “They have two options: they can pay me what they owe me or they can give me the bar back,” he said.

For the story, see Man charged: 'I am not a con artist.' TheftOfDeedMeta

Tennessee Feds Charge Mortgage Broker With Ripping Off Refinancing Proceeds From Customers

From the Office of the U.S. Attorney (Eastern District, Tennessee):
  • Thomas Duane Roderick, age 42, of Wesley Chapel, Florida, has been indicted by a federal grand jury in Greeneville, Tennessee, charged with one (1) count of wire fraud, three (3) counts of bank fraud, and three (3) counts of money laundering.


  • The indictment states that Roderick worked with Premier Mortgage [...] in Greeneville, Tennessee, and used various real estate closing agencies in Greene County. At the closings, Roderick would provide legal documents for the signature of the clients seeking loans, and the closing agency would disburse funds as required by the lending institution. Roderick allegedly set up a sham investment company entitled MSI and set up a checking account used to capture money from clients.

  • The indictment charges that Roderick caused one client to wire $20,000 to MSI, falsely telling this client that she would owe taxes on the $20,000 equity she received from the refinancing of her home mortgage. Roderick convinced her that if she turned the funds over to him, he would invest the money to avoid taxes. The indictment states that Roderick never invested the funds and immediately withdrew them within two days of the wire transfer.

  • Additionally, the indictment charges that Roderick persuaded another client to authorize $119,000 to be wired into his bank account by representing to her that he would use the funds to pay off her mortgage, pay her and her daughter’s outstanding bills, and to assist her granddaughter in obtaining a mobile home. Instead, the indictment states, Roderick spent the $119,000 within three weeks for his personal living expenses.


Sunday, May 24, 2009

California Fugitive Suspected Of Stealing, Then Selling, Home With Forged Deed Nabbed By Texas Cops

From the Office of the San Bernardino County, California District Attorney:
  • In 2006, the San Bernardino County District Attorney’s Office filed felony charges against Daniel Schrey, 28, formerly of Yucca Valley, involving several counts of Real Estate Fraud. In 2005 and 2006, Schrey and codefendant Abel Gotti, forged the victim's signature on a Grant Deed for property located in San Bernardino County. Subsequently, Schrey and Gotti sold the property to another victim for $185,000.

  • On May 9, 2009, the Pecos County Sheriff’s Department arrested Schrey in Fort Stockton, Texas. Schrey was arrested on the outstanding felony warrant that included charges of forgery and grand theft. Gotti pleaded to the felony charges in May 2006.

For the press release, see Former Yucca Valley Man Arrested in Texas for Real Estate Fraud.

Go here, 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. TheftOfDeedMeta

North Carolina Man Charged With Forging Ex-Wife's Signature To Steal Her Interest In Home

In Cary, North Carolina, the May 20th Police Blotter reported in The Cary News contains this entry:
  • On May 12, police charged Robert Harry Vogt, 40, of 1202 Castalia Drive, with one count each of obtaining property by false pretenses and forgery. Vogt allegedly forged his ex-wife’s signature in order to have her removed from the deed to their house.

Source: The Cary News, May 20th Police Blotter. TheftOfDeedMeta

Harvard Law's "No One Leaves" Group Makes House Calls To Help Tenants Fight Off Foreclosure Evictions

In Cambridge, Massachusetts, The Harvard University Gazette reports:
  • On a bright May afternoon, two third-year Harvard Law School students set out on one of their regular visits to Dorchester and Mattapan. They are a slightly odd couple: Nick Hartigan, an intense, fast-talking 225-pound former running back, and David Haller, a laid-back native of Arkansas, with a slow Southern drawl. But they have been drawn together on a mission of hope. For the past nine months, the students have been driving through Boston neighborhoods in a car bought on Craigslist, offering to use their legal skills to help families stay in their homes and fight foreclosure.


  • The pair are part of the Harvard Legal Aid Bureau,(1) a student-operated organization created in 1913 to provide legal services and representation to those unable to afford it. One of the bureau’s four areas of specialization is housing law. As part of Hartigan and Haller’s weekly work with the bureau, they attend housing court, and each has several clients that they represent in a variety of housing court claims. And not long ago, the two came up with an effective, hands-on way to help more tenants in jeopardy —the students knock on one door at a time and explain to tenants their legal rights.


  • They named their program “No One Leaves.” The process is simple: Each week, banks are required to list the properties being foreclosed upon in the Boston-based business paper Banker & Tradesman. The pair, with help from their technology expert and graduating Law School student Tony Borich, take the listings from the paper, create a spreadsheet, enter it into Google maps, divide up the properties among their volunteer corps, and start making house calls.

For more, see Law School students lend a legal hand (Door-to-door canvassers protect vulnerable tenants).

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

(1) According to their website, The Bureau is a student-run organization composed of approximately 40 second and third-year student-attorneys, and 7 staff attorneys. Practicing under the Massachusetts Supreme Judicial Court Rule 3:03, they provide free legal services in civil (non-criminal) matters to low-income people in order to ensure equal access to justice and to remove legal barriers to economic opportunity (see also Student Practitioners).

Tennessee Couple Loses Home In Phony Foreclosure Rescue Scam; Operators Turn Out To Be Convicted Felons

In Hardemon County, Tennessee, WREG-TV Channel 3 reports on a local couple facing foreclosure who was offered and accepted assistance from Freedom Property Investment, a foreclosure rescue company that turned out to be a scam.
  • WREG News Channel 3 Investigators spent weeks trying to track down the company's president, William Boxley. It turns out, Boxley was was cited for driving with a revoked license in Memphis back in March. Records show Boxley never showed up for court. The address he gave police is really a Hickory Hill office complex. Workers there tell us Boxley, and Thomas Frank Montgomery, wanted to open up shop there.

  • Court records show Montgomery was just released from federal prison in December. He was serving time after getting caught with nearly 73 pounds of marijuana. A check of arrest records shows Boxley is an ex-con too. He was convicted, and sentenced to 8 years in prison on cocaine charges. In addition, the man who promises to "stop the stranglehold on your financial well-being", in his letter to [the homeowners], has filed bankruptcy.

  • So how can someone with Boxley's history run a company promising foreclosure relief? State Senator Roy Herron explains it this way. "It's like the wild wild west," Herron said of the foreclosure rescue industry. "There's no regulation. There's not good statutory protection for people." Herron sponsored a bill that would ban foreclosure rescue companies from charging anything upfront.

For the story, see Homeowners Warned Of Foreclosure Relief Rip-Offs.

Go here to read recent FTC Warning Letter to loan modification firms, and here for the FTC Foreclosure Warning List.

NY Feds Indict Four In Alleged Short Sale, Flipping Fraud Targeting Homeowners In Foreclosure; Unwitting Straw Buyers Left Holding The Bag

From the Office of the U.S. Attorney (Southern District - New York):
  • LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, [and other officials] announced the filing yesterday of a six-count Indictment against LAVETTE M. BILLS, KIRK LACEY, OMAR HENRY, and PETER CHEVERE, charging them with perpetrating a mortgage fraud scheme involving loans totaling over $3 million on at least six different residences.(1)

  • BILLS targeted homeowners who had fallen behind on their mortgage payments and whose homes were facing foreclosure by running radio advertisements and appearing on radio programs representing that she was a foreclosure specialist and had the ability to keep a home from going into foreclosure. BILLS and LACEY were then able to convince some of these homeowners to sell or transfer their homes to BILLS or to a company BILLS controlled, NNI, LLC. This was usually done via a "short sale," in which the lender agreed to sell the property for less than the balance owed on the loan and to discharge the remainder of the loan.


  • However, without the knowledge of either the lenders who approved the short sales, or of the selling homeowners, BILLS and LACEY or their co-conspirators "flipped" the properties to third-party straw buyers at a higher price, usually on the same day or within a short period of time. The sales price in the second transactions–the "flips" -- was often significantly higher–typically by $150,000 or more -- than the short sale price, yet the homeowners typically received little or no money from the sale of their homes. To accomplish this, BILLS and LACEY deceived both the straw buyers and the lenders who were providing the mortgages to finance the purchases.


  • As a result of their fraud, the defendants profited from their "flips" of the properties; the homeowners lost title to their homes; the straw buyers became liable on hundreds of thousands of dollars they were unable to repay; and the lenders suffered losses from those loans, which eventually went into default.


For the Indictment, see U.S. v. Bills, et al.

(1) BILLS, 36, of Briarcliff Manor, New York, and LACEY, 36, of Pembroke Pines, Florida, were previously charged in a criminal Complaint filed in Manhattan federal court on March 17, 2009.

(2) In at least one case, involving a residence on Tinton Avenue in the Bronx, BILLS convinced the homeowner to place BILLS' name on the deed to the house and to "gift" the equity in the house to BILLS, in return for BILLS' fraudulent promise to transfer the house back to a relative of the homeowner.

20-Unit Condo The Target Of Suspected Straw Buyer Mortgage Scam Leaves One Unit Owner Facing Loss Of Home Despite Having Made All His House Payments

In Escondido, California, the North County Times reports:
  • [A] North County Times investigation that began in July has traced the demise of Brookhaven, a community emblematic of the nation's housing bust: Born of a 2005 project to convert apartments to condos, the complex has since been plagued by subprime loans, foreclosures, failed loan modifications, inflated values, strange rent agreements on vacant homes and three real estate professionals charged with mortgage fraud in unrelated cases. An astounding 15 out of 20 of the units are in some stage of foreclosure. Two others sit vacant. There is only one owner who lives in the complex, Cruz Alberto Rangel.

  • He bought a home in the complex in 2006. He has made all his mortgage payments and homeowners association fees. Now, he faces eviction because all the foreclosures and vacancies have forced the homeowners association out of business. It can't pay the water bill, and the city of Escondido threatened to shut off the line and evict all residents.


  • The association also can't pay its taxes and is not allowed to operate as a business, according to state officials. Brookhaven has one water bill, which is supposed to be paid by the association, so it doesn't matter that Rangel has paid his portion and his mortgage. He said he has never missed any payment. "This is our place," said Elvia Rangel, Cruz's wife. "This is our house. We're paying for it, and it's not fair that we're going to lose it."

For more, see Foreclosures overwhelm condo complex (Broke homeowners association late on water bill, residents face eviction).