Saturday, June 06, 2009

NYC Pro Bono Recruiting Effort Continues

In The Bronx, New York, the New York Law Journal reports:
  • NYC Legal Outreach will hold its second meeting [Monday, June 8] to recruit attorneys to provide pro bono representation for the growing number of unrepresented consumers with financial and immigration problems. The campaign is a joint effort by the judicial and executive branches to expand pro bono legal assistance. In a May 12 letter to bar groups, law schools and the 100 largest law firms, Mayor Michael R. Bloomberg and Chief Judge Jonathan Lippman said NYC Legal Outreach will target four key areas: foreclosure, eviction, immigration and consumer credit. In particular, the project seeks lawyers who will "direct their energies outside of Manhattan to residents of neighborhoods where the problems are the most pressing, and the needs the greatest," said Corporation Counsel Michael A. Cardozo.

  • At a press conference in April, Judge Fern A. Fisher, deputy chief administrative judge for courts in New York City, said there were some 600,000 filings last year in consumer credit and housing cases. Up to 90 percent to 95 percent of litigants in housing cases are unrepresented, and as many as 99 percent of litigants in consumer credit cases appear pro se. [Monday night's] meeting begins at 6 p.m. at the Bronx Supreme Court, 851 Grand Concourse, Courtroom 711. Additional meetings will be held on June 17 on Staten Island, June 22 in Manhattan and June 25 in Queens. For more information, e-mail or call 212-442-9031.

Source: Attorney Volunteer Effort Meets in Bronx.

Suit Charges City Of St. Pete With Targeting, Harassing Homeless

In Central Florida, The Tampa Tribune reports:
  • St. Petersburg officials and police are using local ordinances to target and harass the homeless, depriving them of their constitutional rights, according to a federal lawsuit. A Gainesville public advocacy law firm and the National Law Center on Homelessness & Poverty in Washington filed the 63-page complaint [...] on behalf of six named defendants. The lawsuit is seeking class-action status.

For more, see Lawsuit: St. Pete police, officials targeting homeless (About 30 percent of new residents are ''economic homeless,'' people who recently have lost jobs and homes and have nowhere else to go).

For the lawsuit, see Catron v. City Of St. Petersburg.

Late Mob Godfather's Daughter Cuts Deal With NY Feds To Save Long Island Mansion From Foreclosure

In Old Westbury, Long Island, the New York Post reports:
  • Mob princess Victoria Gotti is staying in her castle -- she's cut a tentative deal with Feds that will allow her to save her Long Island estate from foreclosure. Gotti had maintained she needed money owed to her by her ex-husband, Carmine Agnello from their divorce to make payments on the Old Westbury mansion. But Agnello needs cash to pay off a $10 million penalty he was hit with after pleading guilty in 2001 to racketeering. He'd hoped to use money from the sale of up to a dozen properties to make good on the debt.

  • [This week], Gotti cut a deal to get a portion of the properties. Last month an appeals court allowed lender JPMorgan Chase to foreclose on the Old Westbury home. Gotti claimed that Agnello secretly took out the mortgage on the mansion by falsely claiming she had given him power of attorney.


See also, New York Daily News: Victoria Gotti cuts deal, saves Long Island mansion from foreclosure.

Harvard Law Class Of 2009 Sets School Pro Bono Record

In Cambridge, Massachusetts, Harvard Law School News reports:
  • Demonstrating a strong commitment to public service, the class of 2009 put in a record total of 308,605 pro bono hours, more than any previous class. This year’s graduates achieved an average of 542 hours of pro bono work per student, 502 hours more than the 40 required for graduation. Ninety-six students provided more than 1,000 hours of free legal services during their years at HLS.

For more, see Class of 2009 Racks up Record 308,605 Hours of Pro Bono Service.

Friday, June 05, 2009

Feds Hammer Countrywide's Mozilo, Two Top Deputies In Securities Fraud Civil Suit; Allegedly Hid Firm's Crumbling Finances During Subprime Meltdown

In Los Angeles, California, Bloomberg News reports:
  • Former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo and two of his top deputies were sued by regulators for allegedly hiding the home lender’s deteriorating finances as the subprime mortgage crisis unfolded.

  • While publicly reassuring investors about the quality of his loans, Mozilo issued “dire” internal warnings and engaged in insider trading accelerating stock sales to reap about $140 million, the agency said in the suit at Los Angeles federal court.

  • In one e-mail, he described a “particularly profitable subprime product as ‘toxic.’” He also wrote that Countrywide was “flying blind” and had “no way” to determine the risks of some adjustable-rate mortgages, the SEC said.

  • Each of the defendants was aware, but failed to disclose, that Countrywide’s current business model was unsustainable,” the agency wrote in the suit, which also named former Chief Operating Officer David Sambol, 49, and former Chief Financial Officer Eric Sieracki, 52. All three defendants denied the agency’s claims.

For more, see Countrywide’s Mozilo Saw Loans as ‘Toxic,’ SEC Claims.

For more from the U.S. Securities & Exchange Commission on this story:

Ex-Mortgage Broker Gets 9+ Years In Subprime, Straw Buyer Mortgage & Foreclosure Rescue Scams Involving $200M+ In Fraudulently Obtained Loans

In New York City, The Wall Street Journal reports:
  • A one-time mortgage broker was sentenced to more than nine years in prison Thursday after pleading guilty last year in a home-foreclosure rescue scheme and in a separate scheme to defraud subprime lenders. Aleksander Lipkin was sentenced to 110 months in prison, to be followed by five years supervised release at a hearing [...] in Manhattan. He also was ordered to forfeit $7 million and to pay $11.6 million in restitution.


  • Prosecutors had alleged that Lipkin, from 2004 to 2007, was a leader of a scheme to defraud subprime and other lenders by using so-called "straw buyers" and submitting false information to lenders on loan applications. The scheme involved at least $200 million in loans, prosecutors said. Twenty-six people have pleaded guilty or been convicted of criminal charges in the subprime scheme.

  • The government also had alleged Lipkin participated in a separate home foreclosure rescue scheme involving more than $20 million in loans. The scam allegedly targeted homeowners facing foreclosure - primarily in Brooklyn and the Bronx - between November 2003 and April 2005, prosecutors said.

For more, see Ex-Mortgage Broker Sentenced To 110 Mos In Subprime Scam (may require subscription; if no subscription, try here, then click link for the story).


In a related, February 9, 2009 New York Law Journal story on one of the attorneys that was embroiled in this scam, see N.Y. Attorney Convicted of Mortgage Fraud (Alexander M. Kaplan, 34, of Lerner & Kaplan, sat stoically at the defense table while a jury of 10 women and two men pronounced him guilty on all 18 counts in an indictment charging him with conspiracy and bank, mail and wire fraud).

Orange County DA Busts Alleged Straw Buyer, Mortgage Scam Ring; Involved $17.5M In Fraudulently Obtained Loans On 35 Properties

From the Office of the Orange County, California District Attorney:
  • A real estate broker, her boyfriend, and his brother have been charged with conspiring to commit $17.5 million in real estate fraud for purchasing 35 properties in the names of “straw buyers” and intentionally defaulting on loans in order to steal the loan money. Kathy Chen, 48, Westminster, Richard Salgado Gonzalez, 59, and Daniel Gonzalez, 56, are charged with 154 felony counts including one count of conspiracy, 47 counts of grand theft, one count of attempted grand theft, 40 counts of forgery, 30 counts of recording false documents, 30 counts of identity theft, one count of elder financial exploitation, and four counts of forging an official seal. If convicted, the defendants face a sentence ranging from two years up to 109 years in state prison.

For the entire press release, see Broker, Boyfriend, And Brother Charged With Conspiracy To Commit $17.5 Million In Real Estate Fraud By Purchasing Homes Under "Straw Buyer" Names And Intentionally Defaulting On Loans (One defendant has been arrested and a warrant has been issued for the arrest of two others).

Florida Woman Charged In Alleged Foreclosure Surplus Scam; Accused Of Using Forged Documents To Swipe Excess Proceeds From Tax Deed Sales

In Pasco County, Florida, the Charlotte Sun reports:
  • A Zephyrhills, Fla., woman is accused of conning local officials out of $93,104 in excess taxes from foreclosure sales, a reported scheme state investigators say spans three counties. Michelle Boyett, 33, was arrested [last week] and charged with first-degree grand theft of more than $100,000.

  • According to the Florida Department of Law Enforcement, Boyett forged documents to collect money left over from the sale of foreclosed properties in Charlotte, Bay and Volusia counties. In all, the claims exceeded $113,000.

  • Investigators say Boyett would submit paperwork to each of the county clerk offices identifying herself and her company, Central Florida Asset Recovery, as the representative of the original property owners. Normally, once taxes become delinquent on a particular property, county officials will sell the parcels at a public auction. In most cases, these sales generate more money than actually is owed to the county in taxes. As a result, the excess funds are returned to the previous property owner, an FDLE report said.

  • Boyett attempted to act as an intermediary to the collection process, authorities say, as she would file documents claiming to work on behalf of the property owners. The documents also would include the forged signatures of the owners, giving Boyett consent to distribute the money, according to the report.

For more, see Report, Woman stole thousands in tax deed sales.

Unwitting Home Seller Conned By Alleged Mortgage Scammers Into Holding Subordinate Carry Back Note Now Faces Having Equity Wiped Out

In Seattle, Washington, The Seattle Times reports:
  • Tom Backman says the deal to sell his house in Pacific two years ago seemed fishy from the get-go. The real-estate agent was hard to reach and demanded a specific escrow closer. The actual buyer was never around. Still Backman, who had already moved to rural Idaho, wanted to get the deal closed. He even agreed personally to loan the buyer $53,500 to seal the sale. But the loan payments quit coming. The house fell into foreclosure. Then one day, federal agents told him he might have been the victim of an elaborate mortgage-fraud scheme.(1) Now Backman worries that if he doesn't get his money back, he'll lose his current home.


  • [I]n this case, the defendants in some instances got unwitting home sellers to extend their own private loans — called "carry-back notes" — to the phony buyers, the prosecutors say. The sellers lost it all when no one paid on the primary bank loans and the homes were foreclosed.

  • Backman said that's exactly what happened to him. He had been counting on it to fulfill a short-term loan he took for the down payment on his current home. Now he has to come up with $50,000, or he's in real trouble.

For more, see Five nabbed in alleged mortgage-fraud scheme in Pierce, King counties.

For the U.S. Attorney (Washington State - Western District) press release, see FIVE ACCUSED IN MORTGAGE FRAUD SCHEME THAT CHEATED BANKS AND PROPERTY SELLERS (Real Estate Agents, Mortgage Loan Originators, and Escrow Company Employee Conspire in $18 Million Fraud):

  • [I]n this scheme, the conspirators did not just damage banks and financial institutions. Innocent sellers were harmed when they agreed to loan the buyer a portion of the purchase price, to be paid back over time. The sellers did not know that the conspirators had already obtained 100 percent financing from commercial lenders. When payments were not made and properties fell into foreclosure, and then were sold for less than the total of all loans secured by the property, the sellers holding private notes were left with nothing.

(1) The prosecution documents allege the conspiracy involved dozens of falsified real-estate sales used to scam banks and innocent sellers all over King and Pierce counties out of at least $18 million in at least 80 loans. Indicted were real-estate agent Humberto A. Reyes-Rodriguez, 42, of Federal Way — known to Backman and others as Tony Reyes; real-estate agent Alexis Ikilikyan, 29, of Auburn; Ikilikyan's ex-husband, William S. Poff, 37, of Michigan; Micki S. Thompson, 54, an escrow agent from Tacoma; and Mario A. Marroquin, 38, of Kent.

Ex-Cop Charged With Recording Bogus Deeds Putting Homes In Foreclosure Into His Name, Then Renting Them Out To Unsupecting Tenants

In West Palm Beach, Florida, WPBF-TV Channel 25 reports:
  • The Palm Beach County Sheriff's Office announced the arrest of a former West Palm Beach police officer Thursday. Carl Heflin is accused of stealing more than two dozen properties that were about to go into foreclosure.

  • Detectives said Heflin forged names on the property deeds and would then rent those properties to people, take their deposit money and refuse to let them move in. "All of these properties are in some sort of foreclosure," said Palm Beach County sheriff's detective Michael Antinoro. "People are either trying to work it out or they are just walking away from the property," he said.

  • Heflin allegedly made money off the scheme by duping renters. "He'll take money from tenants," explained Antinoro. "Sometimes he'll kick the tenants out; sometimes he'll take the money from the tenants and have no thought about moving them in to begin with."

  • Heflin was arrested on charges of scheme to defraud. Antinoro said he'll also be facing charges of burglary and grand theft.

Source: Ex-Cop Charged In Home Foreclosure Scheme (Former W. Palm Beach Officer Accused Of Stealing Properties Near Foreclosure, Duping Renters).

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.

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

Thursday, June 04, 2009

Almost Half Of All Mortgages Are Serviced Using One Firm's Data Processing System

The following is an excerpt from a recent press release from Lender Processing Services, Inc.:
  • Lender Processing Services, Inc. (LPS)(1) is a leading provider of integrated technology and services to the mortgage industry. [...] Approximately 50 percent of all U.S. mortgages are serviced using LPS's Mortgage Servicing Package (MSP). In fact, many of the nation's top servicers rely on MSP, including eight of the top 10 and 14 of the top 20. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries.

Go here for the Lender Processing Services press release.

For more on Lender Processing Services, Inc., see:

  • Bloomberg News: Lender Processing Falls 29% on Report of Inquiry (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),

  • The Wall Street Journal: DOJ Probing Mortgage Data Processing Firms (The Department of Justice is conducting a nationwide probe of the company whose automated systems handle half the mortgages in the U.S., looking for evidence Lender Processing Services Inc. (LPS) has "improperly directed" the actions of lawyers in bankruptcy court) (may require subscription; if no subscription, try here, then click link for the story).


The use of these types of data processing systems in the context of filing foreclosure actions was the target of a scathing ruling (at page 58) in a recent Federal bankruptcy case in which the judge made this observation (among others):

  • 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(2) 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.

For the court ruling, see In re Niles C. & Angela J. Taylor (Case No. 07-15385-DWS, Bankr. E.D. Pa., April 15, 2009).


The use of company employees to act as "multiple corporate hat-wearing dummy vice presidents" for the various lenders and loan servicing companies using these data processing systems when initiating foreclosure actions has also been the focus of some controversy. Go here for more on multiple corporate hat wearing dummy vice presidents.

(1) On July 2, 2008, LPS was spun-off from Fidelity National Information Services, Inc. through a tax free distribution of all of its shares to Fidelity shareholders. Form 10-Q for Lender Processing Services, Inc. http:/

(2) This footnote is not from the court ruling. Reference here is being made to the assembly line, foreclosure mill law firms and their employees who, in my view, willfully blind themselves to the practices of the foreclosing lenders that they represent, and otherwise allow themselves to be roped in and used by their clients as mere lackeys in the foreclosure process. SloppyForeclosuresAlpha

Federal Jury Awards Forklift Operator $500K In Suit Against Out-Of-Control Bill Collector

In San Jose, California, the San Jose Mercury News reports:
  • With a straight back, short haircut and stern face, Manuel Faustos looks more like an Army sergeant than a farmworker, and he certainly doesn't sound like a happy man who stands to collect a lot of money from a bill-collection agency that hounded his family without mercy.

  • "I don't care about the money,'' Faustos said in the kitchen of a modest tract home in Gonzales, a farming town an hour's drive south of Silicon Valley. A naturalized U.S. citizen, he and his wife, Luz, speak mostly Spanish. "It was never about the money. It was about protecting my family, providing for my wife and children. These people threatened to take it all away from me.''

  • Sorry, he said, but he won't be laughing on his way to the bank to deposit a $500,000 check. That's how much money a federal jury recently granted the couple after a short trial in San Jose.


  • According to court records, [Georgia-based Credigy Services Corp.'s] callers threatened to take their home and savings, garnish Manuel's wages as a forklift operator and ruin their credit. Desperate for help again, the couple turned to the Watsonville Law Center, a nonprofit agency that represents the rural poor. The law center hooked them up with attorney Balam Letona, a Santa Clara law school graduate who seemed to be heaven sent. [...] After nine days in court, the jurors [...] awarded the couple $100,000 in damages and $400,000 in punitive damages.(1)

For the rest of the story, see Farmworker couple wins $500,000 verdict against bill collector.

(1) As collection activities rise, more people will seek relief under the Fair Debt Collection Practices Act, the Federal law that regulates the conduct of debt collectors.

New York AG Obtains Court Order Shutting Down Two Debt Collection Agencies For Illegal Business Practices

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced that his office has launched a statewide inquiry into debt collection companies. As part of the inquiry, the Attorney General’s Office obtained a court order against Lamont Cooper and his two debt collection companies, Emanee Development, Inc. and Dial Tech LLC,(1) under which the companies will shut down and Cooper will be forced to pay restitution to consumers statewide.

  • According to Cuomo’s Office, Cooper’s companies unlawfully lied to consumers, threatened to arrest them, and intimidated them into paying debts that they sometimes did not even owe. They would often call third parties like neighbors or employers to further embarrass and harass consumers. The Attorney General also announced that his Office has subpoenaed nearly 20 other debt collectors across the state in his ongoing investigation into various facets of the debt industry.

For more, see Attorney General Cuomo Launches Inquiry Into Debt Collectors Across New York State (Cuomo Shuts Down NY Collection Agencies That Threatened and Intimidated Consumers Into Paying Debts They Didn’t Owe; Sends Subpoenas to Nearly 20 Debt Collectors Statewide).

(1) According to the Attorney General's Office, Cooper operated Emanee and Dial Tech, which did business under the names of various shell companies and fictitious law firms across the state, including: Claims Process Services, Claims America, CMC Recovery Services, Lomax & Barnes and Murray, Bradshaw & Associates.

Wednesday, June 03, 2009

"Produce The Note" Approach Now Required Of Lenders In Nevada Foreclosures Where Homeowner Requests Mandatory Mediation

The Las Vegas Sun reports:
  • Homeowners facing foreclosure may have a new friend on their side, if they’re willing to pay for it — a judge. A new state law, signed by Gov. Jim Gibbons and which takes effect in July, allows homeowner-occupants facing foreclosure to demand a sit-down mediation with lenders, overseen by a retired judge or an attorney. It’ll cost homeowners up to $200, but it might help them save their homes.


  • [A]t best for homeowners, the process might stave off foreclosure altogether because of a major technicality. One of the more dramatic components of the foreclosure mediation law compels lenders to produce promissory notes, showing that money is owed, and deeds of trust, showing the banks’ security on the loans. If they can’t, then mediators could reduce the loans significantly, allowing struggling homeowners to stay put. “It’s a basic consumer protection that most states are looking at,” says Assembly Speaker Barbara Buckley, who wrote the bill. “We don’t want people paying mortgages to people who don’t own the mortgage.”(1)


  • Previous to the passage of the Nevada law, lenders here had to file three documents in the foreclosure process: a 90-day notice-of-default and election to sell, a 21-day notice-of-sale and a three-day eviction notice, [...]. Upon receiving the 90-day default notice under the new law, homeowners have 30 days to seek mediation.

For more, see Foreclosure help could hinge on who holds the note.

For a graphic illustration of how promissory notes get "chopped up" in the securitization process, see Why Your Lender May Not Have Your Mortgage Papers.

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.

(1) This new law comes on the heels of a recent Nevada bankruptcy court ruling encompassing 27 cases in which Mortgage Electronic Registration Systems, Inc. was prohibited from representing lenders seeking to foreclose on delinquent homeowners already in bankruptcy unless it could produce the actual loan note.

After Paying Firm $5,600 For Failed Loan Modification Of Unaffordable Mortgage, Brooklyn Homeowner Gets Needed Changes To Terms On Her Own

In Brooklyn, New York, Newsday reports:
  • After months of trying to get mortgage relief using American Modification Agency, Brooklyn resident Rolett Brown is now working with South Brooklyn Legal Services to try to get back the $5,600 she paid AMA, based in Hauppauge and founded by executive Salvatore Pane. He also owns Amerimod, a separate Uniondale company that's Long Island's largest modification firm.

  • Brown, who needed help after the monthly payment for her adjustable rate mortgage rose to $3,700 last July, said she paid AMA last summer, using two credit cards and a loan from her retirement fund. Her loan modification application was denied - twice. AMA wanted to try a third time. Brown said no. Then, she said, she connected with city officials and her bank's representatives and was able to get the changes she needed on her own. AMA hasn't refunded her money, she said. "I feel betrayed," Brown added.

For the story, see Foreclosure rescue firms under scrutiny (Federal and NY regulators moving to weed out scam operations with tighter rules).

Cost For Homeowners To Countersue Lenders When Contesting Florida Foreclosure Actions In State Court Skyrockets

The South Florida Sun Sentinel reports:
  • Starting [June 1], the cost to file a notice of foreclosure in Florida jumps dramatically. State lawmakers approved the hike from $301 to between $401 and $1,906, depending on the value of the property. Few people will shed any tears for the lenders and homeowners associations that have to fork over the extra cash.

  • But get this: homeowners and lien holders who want to contest a foreclosure in some way will have to pay plenty more as well. Those filing a foreclosure cross-claim, counterclaim, counterpetition or third-party complaint used to pay $295. Now the fee is $395 to $1,900, depending on the property value.


  • For the old foreclosure fees, click here. For the new foreclosure fees, click here.

Source: Filing a foreclosure notice in Florida? Prepare to pony up.

New York AG Files Suit Against Two Out-Of-State Debt Settlement Businesses; Accused Of Pocketing Fees, Failing To Fulfill Promises

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced a new development in his nationwide investigation into the debt settlement industry, filing suit against two debt settlement companies for fraudulent business practices and false advertising. Cuomo filed suit against CSA-Credit Solutions of America, Inc. (“CSA”),(1) based in Richardson, Texas, which is one of the largest debt settlement companies in the country. He has also filed suit against Nationwide Asset Services, Inc. (“NAS”),(2) based in Phoenix, Arizona, along with its affiliates - ServiceStar LLP and Universal Debt Reduction, LLC - and its marketer, FGL Clearwater, Inc. d/b/a American Debt Arbitration, based in Florida.

For more, see Attorney General Cuomo Sues Debt Settlement Companies For Deceiving And Harming Consumers (Cuomo Files Suit against Credit Solutions of America, One of the Nation’s Largest Debt Settlement Companies, and Nationwide Asset Services for Fraud and Deceptive Advertising; Launches Website - - that Explains Consumer Rights and Outlines the Attorney General’s Investigation).

(1) According to the NY AG, approximately 18,000 New Yorkers signed up as customers of Credit Solutions of America between its inception in January 2003 and September 2008. CSA promised a sixty percent reduction in its consumers’ outstanding debt, but an average of one percent of consumers received that savings. Many consumers have faced continued harassment and lawsuits by their creditors, despite CSA’s promise to intervene on their behalf. CSA has collected approximately $17 million in fees from New York-based consumers, AG Cuomo said.

(2) According to the NY AG, approximately 2,000 New Yorkers became customers of Nationwide Asset Services, Inc. between January 2005 and May 2008. NAS promised a twenty-five to forty percent reduction in its consumers’ outstanding debt, but only one-third of one percent of consumers received that savings. Customers suffered continued harassment and lawsuits by creditors and had their credit ratings destroyed, AG Cuomo said.

Tuesday, June 02, 2009

Wells Whistleblowers Call Lending Practices "Riding The Stagecoach To Hell" In Testimony Claiming Blacks Were Targeted In Baltimore City Subprime Suit

In Baltimore, Maryland, The Daily Record reports:
  • The city of Baltimore has beefed up its groundbreaking racial discrimination lawsuit against Wells Fargo with sometimes shocking testimony from a pair of the megabank’s former subprime-loan officers. The two whistleblowers claim their co-workers targeted black ZIP codes and churches, used software to “translate” marketing materials into African-American vernacular, and referred to subprime loans in minority communities as “ghetto loans” and to borrowers as “mud people.”

  • Their declarations were attached to an amended complaint filed Monday in U.S. District Court in Baltimore. The loan officers, who worked for Wells Fargo in the Baltimore-Washington area from the late 1990s until 2007, also alleged bank employees deceptively steered prime borrowers into subprime loans for their own financial benefit and joked that they were “riding the stagecoach to Hell.”

  • The city also filed declarations from four city residents who live near Wells Fargo’s foreclosed properties. They complained of squatters, rats and burst pipes, all of which have required attention from some city department. It cites 10 studies, including one specific to Baltimore, which studied reverse-redlining in black neighborhoods; and updated the foreclosure data to include the first part of 2009.

For more, see Ex-workers allege race-based loan approach at Wells Fargo (if link expires, try here for the full story, courtesy of

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

California Foreclosure Consultants Now Required To Register With State AG, Post $100K Bond

From the Office of the California Attorney General:
  • Continuing his fight against scam artists who "prey on" vulnerable Californians, Attorney General Edmund G. Brown Jr. [Monday] issued a directive forcing foreclosure consultants to register with his office and post a $100,000 bond by July 1, 2009.(1) Those who fail to do so will be in violation of state law, subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. "California is awash with con artists who prey on vulnerable families facing foreclosure," Brown said. "By forcing foreclosure consultants to submit detailed information to my office and post a $100,000 bond, this registry will help bring long-overdue transparency to this shadowy world."


  • If the company violates the law, a court may order restitution to victims out of proceeds from the $100,000 bond. In order to obtain a Certificate of Registration by July 1, 2009, foreclosure consultants should send in their registration application and materials as soon as possible so they can be reviewed prior to July 1.

Go here for a copy of the registration forms.

For the entire press release, see Brown Directs Foreclosure Consultants to Register with his Office and Post $100,000.

(1) All foreclosure consultants operating in California must post a $100,000 bond and register with Brown's office by July 1, 2009 and submit the following information:

  • Name, address, and telephone number;
  • All names, addresses, telephone numbers, websites, and e-mail addresses used or proposed to be used in connection with their business;
  • Copies of all advertising;
  • Copies of each different contract the consultant will use with consumers; and
  • A copy of its $100,000 bond. loan modification

Alabama Family Settles With Feds Over Mold Infestation Caused By Roof Leak In Adjoining Foreclosed Townhome Owned By HUD

In Trussville, Alabama, WVTM-TV Channel 13 reports:
  • A Trussville family ousted from their home because of a mold problem has resolved their case with the Federal Government. Leslieanne Johannsen, her husband and two young children had to move out of their townhome on New Year’s Day when they discovered a roof leak in the adjoining unit had caused mold to spread like wildfire into their walls, floors as well as the heating and cooling vents.

  • That adjoining unit had become the property of the Federal Department of Housing and Urban Development after the home went into foreclosure in the fall of 2008. Local contractors had been handling the situation for HUD. But the Johannsens were not able to get a satisfactory response. Once NBC13HD became involved, officials from the Birmingham HUD office took made their first visit to the home to get a first-hand look at the damage. The Johannsens have now settled with the government.

For more, see Trussville family settles with HUD over mold infestation.

Fleeing Buffalo-Area Homebuilder Nabbed In Louisiana; Gets Shipped Back To NY For Prison Time After Ripping Off Customers

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced that a corrupt Buffalo-area homebuilder has been sentenced to prison for ripping off his customers for tens of thousands of dollars. Steven Wisniewski, former owner of Elite Custom Homes, was sentenced for grand larceny in Erie County today to 5 to 15 years in prison [...] In separate related charges brought by the Erie County District Attorney, Wisniewski was also sentenced to 2 1/3 to 7 years and 1 1/3 to 4 years to be served consecutively for a total sentence of 8 2/3 to 26 years, the maximum sentence. Wisniewski pleaded guilty to second-degree grand larceny last September. Wisniewski was originally scheduled for a court appearance on January 8, 2009, but he failed to appear. He was subsequently caught in Louisiana in March and brought back to western New York.

  • Wisniewski ripped off hard-working New Yorkers and then tried fleeing from the law,” said Attorney General Cuomo. “This so-called home contractor left one family with little more than a hole in the ground. He also tarnished the hard-earned reputations of all honest workers in the building trades.”

  • According to the felony complaint, [...] Wisniewski and [one couple] agreed on a contract for construction of a new 2,300 square-foot home and 600 square-foot garage [...] for $207,500. The family made several substantial payments to Wisniewski for labor and materials, but he never delivered, other than installing a construction driveway in October 2006 and installing concrete walls and footers for the basement in January 2007. Despite repeated requests, Wisniewski never refunded any of the money. The Office of the Attorney General hired a licensed contractor from Buffalo to assess the value of the work performed, which estimated to be $33,572. Of the down payments made to Wisniewski, the family lost $120,000.

For more, see Attorney General Cuomo Announces Buffalo Area Homebuilder Sentenced To Prison For Grand Larceny (Steven Wisniewski, former owner of Elite Custom Homes, caught in Louisiana after fleeing justice in western New York, gets maximum sentence).

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

Go here for other posts on other home improvement contractors hammered by the NY AG. Cuomo hammers contractors StiffingContractorsTheta

Michigan AG Takes Heat For Lack Of Action On 15 Alleged Criminal Mortgage Fraud Cases Referred By State Finance Regulator

In Lansing, Michigan, The Michigan Messenger reports:
  • State Democrats are calling for greater accountability from Attorney General Mike Cox, whom they accuse of not acting on 15 cases of alleged criminal mortgage fraud forwarded from the state’s Office of Financial and Insurance Services since Jan. 1, 2008.

  • It’s horrifying,” said state Sen. Gretchen Whitmer, an East Lansing Democrat who is likely going to run for attorney general in 2010. Last week, Cox officially declared his intention to run for governor. “One of the things I am going to do is call on the Judiciary Committee to call a hearing. I will formally request that of Chairman [Sen. Wayne] Kuipers,” Whitmer said, referring to the Holland Republican who chairs the panel.

  • Matt Frendewey, a Cox spokesman, has repeatedly refused to return calls for comment about what his boss, who is facing a crowded Republican gubernatorial race, has done to address the referrals from the Office of Financial and Insurance Services.

For more, see Whitmer says AG Cox needs to answer questions about inaction on alleged mortgage fraud cases.

Monday, June 01, 2009

Manhattan Feds Bust Alleged Equity Stripping, Mortgage Fraud Scam; 13 Suspects Charged

In Islip, New York, the New York Daily News reports:
  • The feds busted up a $10 million mortgage scam that had left city and Long Island homeowners facing eviction. The scheme, run out of Bridgewater Funding in Islip, L.I., targeted dozens of residential properties in the $200,000 to $500,000 range, Manhattan prosecutors said [Thursday].(1)

  • The mortgage brokerage firm would approach homeowners who were facing foreclosure and convince them to sell their homes to straw buyers they had recruited, prosecutors said. The fraudsters then told the homeowners they could stay in their houses and that they would make the mortgage payments until they could resell the home at a profit. Using the names of the straw buyers, the ring then took out mortgages that were for more than what they had paid for the houses.

  • After pocketing the difference, Bridgewater never made any mortgage payments, leaving the straw buyers on the hook - and the homeowners facing eviction.

For more, see Feds bust ring in $10M mortgage scam.


(1) Those charged are loan officers Micah Meyers, Jakob Gearwar and a man known as Eddie Garcia; office manager Brian Urraro; loan processor Michael Didio; attorneys Stephen Caputo and Dawn Hughes; alleged straw buyers Jennifer Moschitta, Victor Avendano, Adrian Avendano, Janet McGuinness and Liam Leavey; and Daniel Hampton, charged with falsely verifying their employment information to lenders.

It's Standing Room Only At Sarasota Foreclosure Court's "Rocket Docket"

In Sarasota, Florida, the Tampa Tribune reports:
  • Lawyers and frantic homeowners cram together, creating a standing-room-only crowd before Judge Harry Rapkin's foreclosure court. [...] Rapkin, now retired, comes in on a part-time basis to oversee what's become known as the "Rocket Docket." And he gave everyone the same advice: "You need a lawyer." [...] The court, aimed at moving foreclosures through the judicial system at a quicker pace, stems from an effort to unclog dockets and still give the little guy a voice.

For more, see It's fast, furious at Sarasota's 'Rocket Docket' court.

Time To Batten Down The Hatches For Lenders Stuck Holding Vacant Foreclosed Homes As Hurricane Season Starts Today

In Lehigh Acres, Florida, The Associated Press reports:
  • Mike Manikchand points toward his neighbors in Lehigh Acres -- a half-dozen empty, foreclosed-upon homes, sitting on weed-strewn yards -- and he wonders: What will happen if a hurricane slams into southwest Florida this year? His simple answer: "A lot of these places will get destroyed.''

  • Unoccupied, these homes would be defenseless in a storm; there will be no one to put up shutters, batten down garage doors and otherwise secure homes. But that's not all. Nearby homes and their residents would also be at risk from wind-propelled debris.

  • Lehigh Acres and other communities at the epicenter of the nation's housing crisis are coming to realize that this year's hurricane season, beginning June 1, represents yet another pitfall. Hurricanes could make hazards of thousands of foreclosed-upon houses, and their diminished value could decrease even more.

For more, see Foreclosures add to hurricane hazards.

Sunday, May 31, 2009

Las Vegas Family Loses Home to Foreclosure Over $39 Fee, Despite Being Otherwise Current On Loan Modification Agreement With Lender

In Las Vegas, Nevada, KVBC-TV Channel 3 reports:
  • "Your house has been sold based on the fact you failed to send a $39 contribution. We figured by you not sending that, you didn't want to stay in the house."

  • That's what American Servicing Company, a division of Wells Fargo, told David Zepeda earlier this month. That conversation came after a notice of new ownership was taped to his door telling him, his wife, and his two children that their home had been sold May 8.

In April, the Zepedas reportedly signed a loan modification agreement that called for:

  • The bank lowered the interest rate on the loan, which totaled $280,000,
  • It gave them a fixed rate of five percent for 30 years,
  • To get the modification, they had to make five payments of $1,500, which was done,
  • The new, lower mortgage payment - according to the signed agreement - wasn't due until June 1.

However, the house was sold May 8. According to the homeowner, Wells Fargo reportedly told him its trying to rescind the foreclosure sale of his home to Deutsche Bank.

For more, see Did family lose house over $39?

South Carolina Homeowner Loses Home In Sale Leaseback Foreclosure Rescue Deal

In Myrtle Beach, South Carolina, WMBF-TV reports:
  • The home is the centerpiece of the American dream. A dream that for Larry Revels has turned into an unimaginable nightmare. "They said that they would stop the foreclosure and keep me in my house," he said. As his home was nearing foreclosure two years ago, he got a flier in the mail offering him a way out. He would sell his house then pay rent to continue living in it. The company paid $80,000 for it. But now they want him to pay $127,000 to get it back, he said. Plus, he's now paying $1,000 in rent instead of making his old $700 mortgage payment.(1)

For more, see Homeowners lose houses to scams.

(1) This deal appears to have some of the earmarks of an equitable mortgage (and, perhaps, a usurious equitable mortgage).

Colleges "Prowling" For Cheap Student Dorm Space Seek Out Desperate Developers Looking To Unload Unsold Condo Complexes

In Providence, Rhode Island, The Associated Press reports:
  • River views, granite countertops, stainless-steel appliances, 9-foot ceilings. This is student housing? When classes start this fall — if all goes as planned — more than 300 students at Johnson & Wales University will be living in Capitol Cove, an upscale condominium project that had been languishing on the market for more than six months.


  • Some universities around the country have found a silver lining to the real estate recession that has left condominium developers in the lurch. For less time and money than it would take to build a residence hall, universities in places like New York City and Ohio are buying or leasing entire condo projects.(1) And they are also eyeing vacant lots once targeted for high-end condos for use as retail and parking. "This is a bonanza of an opportunity ... for universities to acquire the space they desperately need," said Dan Fasulo, managing director of Real Capital Analytics.

For more, see Empty condos give universities new dorm space.

(1) In New York, Columbia University last year paid $67.6 million for a residence hall for graduate students and staff in the Riverdale neighborhood of the Bronx after a planned condo development called the Arbor couldn't sell out. In Ohio, Capital University bought a 30-unit building for $4 million in suburban Columbus that had been marketed as 55-and-older housing but is now reserved for about 60 upperclassmen in good academic standing.

Treasury Department Issues Alert On Scammers Using Fraudulent Promissory Notes & Bonds In Attempt To Buy Real Estate, Vehicles

The U.S. Treasury Department has informed the National Association of Realtors ("NAR") by letter of a new fraud that is making the rounds:
  • The Department of Treasury, Office of Inspector General (OIG) is investigating incidences whereby individuals are using fraudulent promissory notes and bonds to attempt to purchase vehicles and real estate. The OIG has been notified of numerous occurrences throughout the United States where fraudulent documents were used to attempt to purchase vehicles. Treasury OIG has also been made aware of incidents in Arizona and Colorado where similar fraudulent documents were used to attempt to purchase homes and an office building.

According to a related Treasury department press release:

  • Fraudulent seminars are being held throughout the United States, which teach attendees how to create the aforementioned fictitious documents and how to use federal routing numbers.

Go here for the entire NAR letter, here for the related Treasury department press release, and here for: