Saturday, June 20, 2009

Unwitting Tenant Rents Foreclosed Home, Then Gets Evicted Days After Moving In; Full Rent Refund Obtained After Local Media Reporter Intervenes

In West Palm Beach, Florida, WPBF-TV Channel 25 reports:
  • It's not what Marie Jean-Pierre envisioned for the week she took off work. She planned to be moving in, not moving out, too. Jean-Pierre rented a four-bedroom home in the gated Terracina community from a woman named Micki O'Callaghan. Jean-Pierre knew it was in the beginning stage of foreclosure. But she said O'Callaghan promised it would all be OK and that maybe the Jean-Pierre family could even buy the home. [...] She said the notice went up on the front door the day after she moved in.


  • [WPBF-TV Channel 25 reporter Cathleen] O'Toole tried to ask O'Callaghan about Jean-Pierre's $800 in rent Thursday. Instead, O'Callaghan shut the door on her. [...] The pre-school teacher did get her rent back and a lesson she never wanted. "Don't just go anywhere, saying you got the place, here take it, like that, because I learned a big lesson from this. Believe me," said Jean-Pierre.

For the story, see Renter Forced Out Same Week She Moved In (Eviction Notice Plastered On Door Day After Woman Moved In).

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, and go here. RentSigmaSkimming

Stiffed Condo Associations Now Target Deadbeat Lenders With "Unpaid Maintenance Fee" Lien Foreclosures On Units Already Seized By Banks

In Sunny South Florida, The Wall Street Journal reports:
  • As more condominium owners default on home loans, the amount of unpaid dues owed to condo associations is piling up. To collect the arrears, some condo boards have begun foreclosures on units already seized by banks. While it is common for banks to foreclose on properties, any entity with a lien on a property can do the same. That includes condo associations, which have used the tactic to collect from owners who don't pay dues -- or to oust them.

For more, see Condo Boards Take On Lenders (Chasing Unpaid Dues, Associations Are Foreclosing on Units Seized by Banks) (requires subscription; if no subscription, try here, then click link for the story).

In related posts on the legal battles being waged by condominium associations in buildings loaded with foreclosures and non-maintenance-fee-paying unit owners, see:

Florida Man Accused Of Using Bogus Deeds, Adverse Possession Claims In Alleged Massive Foreclosed Home Hijacking Scam Faces New Charges

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Carl Heflin, 51, of suburban West Palm Beach was arrested June 4 and charged with organized scheme to defraud and committing a criminal process under color of law. [Wednesday] morning he was marched back into a courtroom at the Palm Beach County Jail to face burglary and grand theft charges related to his "elaborate scheme," which authorities said affected dozens of foreclosed homes in the Westgate neighborhood and surrounding areas.

  • Heflin, who worked a short stint as a West Palm Beach police officer in the 1980s, used bogus warrant deeds and a junk legal justification he called "adverse possession" to seize and plunder as many as 30 houses, which he then would rent out to unsuspecting tenants, said Detective Michael Antinoro of the Palm Beach County Sheriff's Office. The scheme netted about $6,000 a month in rent, Antinoro said.

Reportedly, there are at least 25 victims in this alleged massive house-stealing scam west of West Palm Beach.

For more, see West Palm Beach ex-cop charged with hijacking foreclosed homes, now charged with burglary, too.

Go here, 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 DeedContraTheft

Federal Regulator Urges Caution When Considering Reverse Mortgages

The Washington Post reports:
  • If you watch TV during insomniac hours, you've probably caught some of the commercials for reverse mortgages. [...] But there's much more to know about these highly complicated and often very expensive forms of credit. And [last week], one of the government's banking regulators, Comptroller of the Currency, John C. Dugan, warned that tougher oversight may be necessary. "While reverse mortgages can provide real benefits, they also have some of the same characteristics as the riskiest types of subprime mortgages -- and that should set off alarm bells," Dugan said in a speech to a banking group.


  • Under the right circumstances, a reverse mortgage can be a fine way for the elderly to remain in the homes and neighborhoods they love, while using their equity to make needed repairs, keep up with rising property taxes or to supplement their monthly cash flow. [...] But consider these elements of risk: Elderly homeowners, (a group that frequently has been targeted by financial scammers), large pots of home equity, confusing financial/legal documents, big up-front fees, and the potential for profit. There is plenty of opportunity for things to go wrong.

For more, see Regulator Warns Public About Reverse Mortgages. reverse mortgage yak

Colorado Couple Arrested For Using Stolen IDs To Rent Expensive Homes From Property Owners For Use As Indoor Pot Farms

From the Front Range of Colorado, The Denver Post reports:
  • Expensive homes in three Front Range counties have allegedly been rented by a couple who have used them to grow marijuana, according to the Arapahoe County Sheriff's Department. The suspects were identified as Brian Wayne Coplen, 24, and Melissa Violet Haraldson, 21. The couple are accused of renting high-end homes in Arapahoe, Douglas and El Paso counties, often using stolen identities to shield themselves and to obtain the necessary utilities to carry out their marijuana-growing operations. Authorities know of at least five properties where the couple grew marijuana, according to Sgt. Larry Etheridge, spokesman for the South Metro Drug Task Force.

For more, see Arapahoe sheriff: Pair rented houses to grow pot.

Go here and Go here for other posts on marijuana grow houses. pot grow ops beta

Bomb Squad Called In To Clear Out Volatile Chemicals Stumbled Into By Bank Reps In Vacant Home Recently Foreclosed On

In Montgomery County, Ohio, the Dayton Daily News reports:
  • The Dayton Bomb Squad has removed two chemicals from a vacant home on Evansville Avenue [Wednesday] afternoon and is trucking them out to be destroyed. At 4:40 p.m., two canisters containing potassium chlorate and aluminum powder were loaded onto a Harrison Twp. dump truck full of sand, which will be driven to a range on Gettysburg Avenue the squad uses to dispose of hazardous chemicals and ordnance. The chemicals were discovered about 1:18 p.m. in a back room of the home [...] by bank representatives who were at the property following a bank foreclosure, Montgomery County sheriff’s Maj. Scott Landis said Wednesday, June 17.

For more, see Bomb Squad removes volatile chemicals from Harrison Twp. house. DeputyEvictionTheta

Friday, June 19, 2009

New Jersey Man Accused Of Fraudulently Pocketing $75K+ In Mortgage Loan Proceeds Secured By Unwitting Father-In-Law's Vacation Home

In Bergen County, New Jersey, reports:
  • A 68-year-old car salesman ripped off his father-in-law to the tune of $150,000 by impersonating him, authorities said [...]. Besides obtaining more than $75,000 through various accounts and leases, Jerome A. Singer of Ridgewood also took out a $75,000 mortgage on his father-in-law's Long Beach Island vacation home by posing as him, Bergen County Prosecutor John L. Molinelli said. Singer of Ridgewood was arrested [...] after the victim notified detectives of what was going on, the prosecutor said. The thievery began sometime in 2003 and ended last year, he said. Singer, who worked at Ramsey Mazda, is charged with theft by deception and criminal impersonation.

Source: Posing as father-in-law, he rips off $150,000.

Go here, 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. DeedContraTheft

New Orleans Feds Convict Local Woman Accused Of Using Forged Deed To Apply For & Obtain SBA Disaster Loan, HUD Grant

A recent press release by the Office of the U.S Attorney in New Orleans, Louisiana announced the conviction of Barbara Simmons Dowl on a five-count indictment by a Federal jury for theft of government funds, false statements and wire fraud.

Dowl was accused of filing a bogus quit claim deed, naming her as owner to property she once owned but lost to the City of New Orleans for failure to pay real estate taxes, and then applying for and obtaining a Small Business Administration disaster loan of $75,000, and a $132,000 federal grant under the Road Home Program from the United States Department of Housing and Urban Development.

For the press release, see New Orleans Woman Convicted For defrauding Louisiana Road Home And Small Business Administration. TheftOfDeedMeta

Builder Convicted Of Pocketing Customer Cash For Homes Never Constructed

In Prince George's County, Maryland, The Washington Post reports:
  • A District Heights builder who was accused of collecting more than $1 million from banks and home buyers for homes that were never constructed has been convicted of 16 counts of theft and other violations. Leon T. Coleman, 40, promised to build homes in Kings Grant, a new subdivision in Upper Marlboro. Instead, prosecutors said, he pocketed $206,000 and used some of the rest to buy land and pay closing costs. Now many buyers face foreclosure on the land. Coleman, who ran Opportunity Investment Group, was convicted late Monday in Prince George's County Circuit Court and faces as much as 30 years in prison. His attorney, Sloane R. Franklin, said he expects the verdict to be appealed.

Source: Builder Convicted in House Scam. StiffingContractorsTheta

Central Oregon Squatters In Vacant Foreclosures A Problem Getting Out Of Hand, Say Local Cops, Real Estate Agents

In Bend, Oregon, KTVZ-TV Channel 21 reports:
  • As more houses in Central Oregon and nationwide fall into foreclosure and sit empty, a new problem is creeping up: Squatters are breaking in and doing drugs, lighting fires, leaving a mess - and police are having a hard time finding them all. Squatters in Bend are either transients looking for shelter or kids looking for a place to party, officers said Monday. Police and local Realtors agree the problem is getting out of hand, now that the housing bubble has burst.

For more, see Bend foreclosures on the rise; squatters take advantage (Homes often trashed, need extensive cleaning, repairs).

Go here for posts on squatters moving into vacant homes, foreclosures. squatter foreclosure zebra

Thursday, June 18, 2009

Mandatory Mediation For Indiana Homeowners, Foreclosing Lenders Begins July 1

In Marion County, Indiana, The Indianapolis Star reports:
  • Indiana homeowners facing foreclosure are starting to see benefits of new legal protections and counseling along with millions of dollars in new federal grants. On July 1, a new state law takes effect requiring mediation between homeowners and lenders in foreclosure cases. It's the first such requirement in the state, although Marion County passed a rule in March requiring settlement conferences between lenders and homeowners before a foreclosure will be approved.

For more, see New rules, programs aid Hoosier foreclosure candidates.

Federal Jury Convicts San Antonio Woman Of Bilking Homeowners In Foreclosure Of Upfront Fees In Exchange For Bogus Promises Of Help

In San Antonio, Texas, the San Antonio Express News reports:
  • A San Antonio woman accused of bilking $100,000 from several people who thought she could help stop foreclosure on their homes was convicted Wednesday of all 14 charges she faced. Rosario Castro Divins [aka Rosie Divins], 54, showed little emotion after hearing the guilty verdicts to seven counts of criminal contempt and seven counts of mail fraud. Jurors took an hour and a half to find her guilty.


  • After the verdict, U.S. District Judge Fred Biery ordered Divins jailed, citing her criminal past and her new conviction as reasons for keeping her off the streets pending sentencing in September.

  • Representatives of seven families testified during her trial that, after falling behind on their mortgages, they paid her money after receiving a direct-mailed ad that purported to stop foreclosure. Four of the victims said they ended up losing their home, while three said they wound up saving their houses through other means — such as working with the Veterans Administration, filing for bankruptcy or negotiating with the lender.

  • All said they did not know she had been ordered repeatedly by bankruptcy judges to stop claiming she could stop foreclosures. Had they known that, they said, they would never had paid her money and chosen another course.

For more, see Businesswoman convicted for defrauding homeowners.

For the U.S. Attorney (Western District - Texas) press release, see Federal Jury Convicts San Antonio Woman Of Criminal Contempt And Mail Fraud In Foreclosure Prevention Scheme.

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

Go here for earlier posts on this alleged foreclosure rescue scam. loan modification

75-Year Old Chicago Woman Fights To Get Back Home Ripped Off In Straw Buyer, Equity Stripping Foreclosure Rescue Scam

In Chicago, Illinois, WLS-TV Channel 7 reports:
  • A Chicago woman is battling to keep the home she has owned for 40 years. Lessie Towns is a victim of mortgage fraud, and she could lose her home, despite the fact she has never missed a mortgage payment. Towns, who is 75 years old, raised five children as a single mother in her South Side home. Four years ago, she was astonished to discover that her home was in foreclosure. She says she was current with her payments, although her lender had changed hands. Then came a cold-call visit from a lender who knew about the pending foreclosure.


  • She signed what she thought was a refinancing agreement with Oak Brook based Trust One Mortgage. She was regularly making payments until she found the company's south suburban office empty and padlocked. Then, Lessie Towns discovered she no longer owned her home. It had been sold, investigators say, at least twice to straw buyers who made a profit.


  • Last month, [the Illinois Dept. of Financial and Professional Regulation] revoked the licenses of Trust One Mortgage and its owner, Paul Shelton, saying the alleged fraud scheme involved Lessie Towns and at least 13 other homeowners. Towns was back in court Friday in the fight to keep her home. [...] Her attorney is optimistic Towns will win the fight to keep her home, but it's been a very emotional fight for the homeowner who technically does not own her home. [...] Lessie Towns' effort to stay in her home is set for a court ruling July 14.(1)

For the story, see Chicago owner loses home in mortgage scam.

(1) Any attempt by the financially strapped homeowner to successfully void her unwitting title transfer, as well as the subsequent title transfers (and any mortgage liens created incident thereto) to subsequent purchasers and encumbrancers could turn on whether the subsequent purchasers and encumbrancers can be charged with inquiry notice of the alleged fraud and/or any other unrecorded rights (ie. equitable mortgage) the scammed homeowners can establish that they had at the time of the relevant conveyances.

Under Illinois law, the continued open and visible possession of the home by the scammed homeowners after being duped by the foreclosure rescue operator may be sufficient to charge those subsequently acquiring title and security interests in the home with notice of the fraud, and thereby disqualifying them from bona fide purchaser status. An Illinois appeals court ruling in Life Savings & Loan Association v. Bryant, 125 Ill. App. 3d 1012, 81 Ill. Dec. 577, 467 N.E.2d 277 (1st Dist. 1984) addresses this point:

  • Illinois courts have uniformly held that the actual occupation of land is equivalent to the recording of the instrument under which the occupant claims interest in the property. (Bullard v. Turner (1934), 357 Ill. 279, 192 N.E. 223; Beals v. Cryer (1981), 99 Ill. App. 3d 842, 426 N.E.2d 253). The open and visible possession of land by the equitable owner is sufficient to charge a mortgagee with notice of the rights of such owner, and the mortgagee will take subject to the rights of the person in possession. Williams v. Spitzer (1903), 203 Ill. 505, 68 N.E. 49.

Likewise, citing heavily to the Illinois state case law, a Federal bankruptcy court in In re Cutty's-Gurnee, Inc., 133 B.R. 934 (Bankr. N.D. Ill. 1991) made this observation on the effect of continued possession on subsequent purchasers and encumbrancers:

  • It is clear that where a physical inspection of the property would reveal an adverse interest or where there is a party in possession other than the record title owner, the subsequent lien claimant has a duty to inquire of the possessor as to his interest and is charged with knowledge of the facts discoverable from such an inquiry or inspection. Miller [v. Bullington], 381 Ill. [238] at 244, 44 N.E.2d [850] at 853; Burnex Oil Co. v. Floyd, 106 Ill. App. 2d 16, 23, 245 N.E.2d 539, 544 (1st Dist. 1969); In re Ehrlich, 59 Bankr. 646, 650 (Bankr. N.D. Ill. 1986).

Go here for more on the effect of continued possesion on bona fide purchaser/encumbrancer in Illinois.

For cases that support the proposition that possession of real estate by one other than the seller is enough to trigger this imposition of the duty to inquire as to possible unrecorded rights of the possessor, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Brooklyn Family Scammed Out Of Home In Foreclosure Rescue Scam

In Brooklyn, New York, WNYC Radio 93.9 reports on the story of Robert Pascall, a local homeowner who accuses three men of milking his two-family Brownsville home out of its equity and tricking him out of the deed in a foreclosure rescue, equity stripping sale leaseback scam. The home had been in the family for decades. In all, 13 family members were evicted and the home currently is vacant. They are all bow packed into a one room basement apartment in the Bronx.

The non-profit legal services firms are overwhelmed and can’t take on too many deed scams because the cases are complicated and time consuming. Robert Pascall said he was turned way from the few agencies he approached for help. He says the Brooklyn District Attorney also rejected his case.

For the story, see Housing Scam Artists Defraud Brownsville Residents.

Title Insurance Heavyweight Forks Over $300K, Drops NJ Malpractice Suit Against Buyer's Lawyer For Allegedly Failing To Unearth $2.7M Federal Tax Lien

The New Jersey Law Journal reports:
  • A venerable title insurance company has done something unusual in New Jersey, and lawyers aren't likely to applaud. Chicago Title Insurance Co. filed a malpractice claim against a homebuyer's attorney, saying he acted without diligence and owes a piece of the $300,000 the company paid to save a policyholder's home. The Bergen County suit charged Albert Birchwale, of Basile, Birchwale & Pellino in Ridgefield, N.J., failed to investigate a previous sale in the chain of ownership to make sure there was no potential federal estate tax lien.


  • On Friday, Chicago Title said through its lawyer that the company had decided to voluntarily dismiss the case, Chicago Title Insurance Company v. Birchwale, Ber-L-483-09, but didn't backtrack from the position that the claim has merit.

  • The case reminds lawyers that rubber-stamping title commitments can be dangerous, particularly in northern New Jersey, where buyers' attorneys often act as title companies' proxies. It also raises the question of whether title insurers should be added to the list of potential malpractice plaintiffs to be feared by attorneys and their legal malpractice carriers.

The problem started when the executor of a deceased prior owner of the property in question falsely certified that no estate taxes were due when it sold to a subsequent purchaser ("Danton"). The issue reared its head when the IRS filed suit seeking $2.7 million in back taxes against the estate and sought to enforce its lien against the subject property. At the time, it was valuing the property at more than $500,000, and the current owner ("Jhang") (who acquired his ownership from Danton) had only $310,000 of title insurance (presumably equal to the purchase price that Jhang paid Danton for the property). There was concern that the $310,000 title insurance policy wouldn't cover the lien. Ultimately, however, the IRS reportedly settled the lien for $300,000.

For the rest of the story, including what the title insurer and the buyer's attorney say what they should and shouldn't have done to avoid this near-miss of a horror story for the unwitting real estate purchaser, see Insurer Blames N.J. Lawyer for Blot on Title (Suit shows that rubber-stamping title commitments can be dangerous).

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Free Legal Help For Washington State Low & Middle Income Homeowners In Danger Of Foreclosure Available Thru State Bar Association

In Seattle, Washington, The Seattle Times reports:
  • The Washington State Bar Association has launched a program to provide free legal help to low- and middle-income people in danger of losing their homes to foreclosure. Homeowners who call a toll-free number will be referred to volunteer attorneys in their communities who are trained to deal with foreclosure-related issues.

  • The bar association started recruiting and training lawyers for the program May 1, said Judy Berrett, director of member and community relations. So far, more than 270 have signed up. The statewide program began accepting clients this week.


  • Free foreclosure legal aid already is available to homeowners whose annual incomes fall below 200 percent of the federal poverty level through the nonprofit, government-funded Northwest Justice Project, a partner in the bar association's initiative. The new program will serve homeowners with incomes as high as 400 percent of the poverty level, or about $88,000 for a family of four.

  • But Lily Sotelo, of the Northwest Justice Project said the program will indirectly help homeowners of all income levels, by boosting the number of lawyers with expertise in such areas as predatory lending and foreclosure-rescue scams.

For the story, see Free legal aid available for low-, middle-income homeowners facing foreclosure (Many homeowners facing foreclosure can get free legal help from a program launched this week by the Washington State Bar Association).

Information for Lawyers:

Brooklyn Man Accused Of Dressing In Drag To Impersonate Dead Mom To Collect Her Benefits Checks & Steal Back Brownstone Previously Lost To Foreclosure

In Brooklyn, New York, the New York Daily News reports:
  • He may be the ultimate mama's boy. A Brooklyn man is accused of donning a wig, nail polish and dresses to impersonate his dead mom and collect $115,000 in Social Security and rent subsidies. For six years, Thomas Prusik-Parkin hoodwinked a stunning array of government agencies with his elaborate charade - using a cane, heavy makeup, fake ID and a phony "nephew," law enforcement sources said. The 49-year-old was busted late Monday and will be arraigned [Wednesday] on grand larceny, forgery and conspiracy charges linked to a deed and mortgage fraud scheme.


  • In 1996, Irene Prusik deeded the [family] home at 492 Sixth Ave. to her son, according to city records. He took out a $200,000 mortgage to bankroll a real estate investment business that failed. He stopped making mortgage payments, the house went into foreclosure and it was bought by Samir Chopra in 2003.

  • To hold onto the brownstone and avoid eviction, Prusik-Parkin posed as his mother to file a suit alleging that he had forged the 1996 deed transfer, investigators allege. He even filed an affidavit from a nonexistent son. In essence, investigators say, he sued himself to prove that he didn't have the title to the home and that Chopra - who also thought Irene Prusik was still alive - couldn't have legally bought it.

  • Prusik-Parkin deeded the house back to his mother last year. Then he took out a mortgage for almost a million dollars in her name in April, collecting some $300,000 of the loan. That same month, Chopra convinced a Brooklyn judge the home really did belong to him, and the Prusik "family" was evicted in May.

For the story, see Cops: Brooklyn man impersonates dead mother to collect $115,000 in Social Security, rent subsidies.

See also:

Wednesday, June 17, 2009

South Philly Mortgage Broker Gets 12+ Years In Mortgage Fraud Scam Involving Borrowed, Stolen IDs, 180 Properties In Or Near Foreclosure

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:
  • A South Philadelphia mortgage broker charged with a murder-for-hire plot was sentenced yesterday to more than 12 years in federal prison for a separate mortgage-fraud scheme. Mahn Huu "Bruce" Doan, 40, was sentenced [...] to 151 months in prison and was ordered to pay more than $5 million in restitution.

  • Doan oversaw 195 fraudulent real estate transactions involving about 180 properties, financed with government-insured loans he obtained by using borrowed or fictitious identities, prosecutors wrote in a sentencing memorandum. "On almost every single property, the mortgage loan is in or about to be in foreclosure," prosecutors wrote. "Net losses - to the government on government-insured loans, and to various banks, on the conventional loans - could total more than $6 million."

For more, see Mahn Huu Doan sentenced to 151 months for fraud.

L.A. Feds Charge Man With Filing Fraudulent Bankruptcy Petitions As Part Of Foreclosure Rescue Scam Targeting Financially Strapped Homeowners

From the Office of the U.S. Attorney (Los Angeles):
  • A Los Angeles man was taken into federal custody last [week] on charges that he has been defrauding homeowners by falsely promising them that he could prevent foreclosures and evictions from their property. Gilfert Welton Jackson, 64, [...] was indicted on June 4, and charged with six counts of making false representations and filing documents in bankruptcy proceedings in furtherance of a scheme to defraud. According to the indictment, which was unsealed after his arrest, Jackson’s scheme was designed to bilk distressed homeowners, as well as banks and other creditors by fraudulently obstructing lawful foreclosure and eviction actions.
The indictment alleges that Jackson falsely passed himself off as an attorney, collecting money from property owners and tenants in exchange for promises that he could prevent foreclosure and eviction actions. Jackson is also alleged to have filed bankruptcy petitions, identfying himself as the attorney for the debtors, in order to obtain “automatic stays” to stall foreclosures and evictions. He is also alleged to have collected rent from those living in the the homes during the period of time that the legal actions were stalled, based on the false representation that he was the rightful landlord of the properties.

For the entire press release, see Los Angeles Man Arrested On Charges Of Abusing Bankruptcy System To Defraud Those In Foreclosure.

For a report issued by a California Federal Bankruptcy Court task force detailing the types of foreclosure scams involving the abuse of the bankruptcy court system, see Final Report Of The Bankruptcy Foreclosure Scam Task Force.

DeKalb District Attorney's White Collar Unit Takes Aggressive Approach When Prosecuting Elder Exploitation Cases

In DeKalb County, Georgia, the Atlanta Journal Constitution reports on how the county district attorney's white collar crime unit head Jeanne Canavan deals with the problem of the inability of elder exploitation victims(1) to testify (ie. due to death or infirmity) at the criminal trial of the alleged perpetrator:
  • Once a defendant is indicted, Canavan moves quickly to secure the elderly victims’ testimony out of concern they may be unable to testify by the time the case goes to trial. She takes a novel approach, filing court motions that cite a 2004 U.S. Supreme Court precedent(2) that requires pre-trial testimony to be admitted only if the witness had previously been subject to cross-examination.

  • Canavan obtains a judge’s approval for a hastily called hearing, where the victim testifies before a prosecutor, the defendant and the defense attorney, who is allowed to cross examine the witness. The testimony, if needed, can be used later at trial.

  • Canavan said she will not forget her first elderly exploitation case in 2004 involving 89-year-old widower Leonard Stewart. Stewart was dining alone at a DeKalb restaurant when he was approached by Nicholas Marks. Marks befriended the elderly man, falsely identifying himself as a lawyer. Over time, Marks got Stewart to sign over possession of his car and his home. He also charged more than $22,000 on Stewart’s credit cards.

  • By the time of trial, Leonard was dead. But because he testified at a pre-trial bond hearing —- during which he was subject to cross-examination — Leonard’s testimony was admitted into evidence. Marks was convicted and sentenced to five years in prison.

For the story, see Elderly victims find help to fight fraud (Many targeted by very people claiming to care. DeKalb creates task force to combat rise in crime against seniors).

Go here, here, here, here, here, and here for other posts on elder financial abuse.

(1) Canavan commented: “We are seeing elderly victims with their life savings wiped out, their homes taken away. They take everything they have. We’ve seen this happen over and over and over.”

(2) See Crawford v. Washington, 541 U.S. 36; 124 S. Ct. 1354; 158 L. Ed. 2d 177 (2004). In addressing a criminal defendant's federal constitutional right to be confronted with the witnesses against him, the court stated:

  • According to our description of that right in Ohio v. Roberts, 448 U.S. 56, 65 L. Ed. 2d 597, 100 S. Ct. 2531 (1980), it does not bar admission of an unavailable witness's statement against a criminal defendant if the statement bears "adequate 'indicia of reliability.'" Id., at 66, 65 L. Ed. 2d 597, 100 S. Ct. 2531. To meet that test, evidence must either fall within a "firmly rooted hearsay exception" or bear "particularized guarantees of trustworthiness." Ibid. FinancialAbuseOfElderlyAlpha

Minnesota Woman Charged With Pocketing $1.1M+ In Real Estate Sale Proceeds Belonging To Her 89-Year Old Dementia-Suffering Mom, Leaving Her Destitute

From the Office of the Minnesota Attorney General:
  • The Office of Minnesota Attorney General Lori Swanson [...] filed a criminal complaint in Rice County District Court charging a Dakota County woman, Connie Ruth Rott, with nine felony counts of theft by swindle and five felony counts of financial exploitation of a vulnerable adult for diverting over $1.1 million held in trust for the benefit of Rott’s elderly mother, D.S. Because of Rott’s depletion of D.S.’s assets, the State’s taxpayer-funded Medical Assistance program is now paying for the 89-year-old D.S.’s nursing home and medical bills, at a monthly cost of $4,200.

  • The sad thing about this case is that, unlike many senior citizens, the 89-year-old victim started out with plenty of money to pay for her nursing home and medical care. Because of the daughter’s exploitive self-dealing, the mother’s assets have been substantially depleted, and the taxpayer-financed Medical Assistance program is now paying for her care,” said Attorney General Lori Swanson.

  • In 2000, D.S. placed real estate she owned in Northfield, Minnesota that she originally farmed with her late husband into a revocable trust to be used for her care, comfort, support, and maintenance, naming her daughter Rott as Trustee. D.S. also signed a durable power of attorney that year naming Rott as her attorney-in-fact, and in 2003, Rott was named D.S.’s legal guardian. In 2004, D.S. was admitted to the dementia unit of the Three Links Care Center, a Northfield nursing home. D.S. requires total assistance with activities of daily living. Rott agreed to make timely payments to Three Links using D.S.’s income and assets.

  • The complaint alleges that, between 2004 and 2007, Rott sold three pieces of the real estate D.S. placed into trust, for a net amount of over $1.3 million, and then diverted over $1.1 million in proceeds from the sale of the real estate to her own benefit or for the benefit of persons other than D.S.

For the entire press release, see Attorney General Charges Woman With Felony Theft and Financial Exploitation for Depleting $1.1 Million In Assets Held In Trust For Elderly Mother (Taxpayer-Funded Medical Assistance Is Now Paying for 89 Year Old’s Nursing Home Care).

Go here, here, here, here, here, and here for other posts on elder financial abuse. FinancialAbuseOfElderlyAlpha

Utah AG Prosecution Of Foreclosure Rescue Operator Accused In Dubious Equity Stripping, Sale Leaseback Deals Hits Another Delay

In Farmington, Utah, the Standard Examiner reports:
  • One of the oldest foreclosure-rescue fraud cases in the state against a Morgan businessman has hit another road block. The Attorney General’s Office charged Jeffery Q. Wangsgard, 57, with three counts of communications fraud and two counts of exploitation. The charges were filed in February of 2008 and stem from dealings Wangsgard’s Layton company, Residential Resolve, had with three Top of Utah families who wanted to save their homes from foreclosure. Wangsgard was ruled indigent and Dee Smith was appointed as his defense attorney. However, Smith recently was appointed as a Deputy Weber County Attorney. The case is now under defense attorney Rich Gallegos. [...] Gallegos said the earliest he could proceed with a trial will be in six months.

For more, see Fraud case hits another roadblock.

See also, How A Utah Couple Was Kicked Out Of Their Home By Mortgage "Helper."

Go here for earlier posts on this story.

Two Miami Men Face Charges Of "Hijacking" Vacant, Foreclosed Homes & Renting Them Out; Used Craigslist To Reel In Unsupecting Tenants, Say Cops

In Miami, Florida, WFOR-TV Channel 4 reports:
  • Miami-Dade Police have arrested two men who they say scoured neighborhoods for vacant and foreclosed homes, broke in to them, removed and changed the locks and then used a popular website to rent them to unsuspecting tenants. [...] Police said 34-year-old Benjamin Sandora not only confessed to the crimes, but he also added, "Times are rough and I took advantage." Sandora, who's from Fort Lauderdale, and 38-year-old Melchised Martinez, face felony charges including organized scheme to defraud, burglary of an unoccupied dwelling, grand theft and uttering a forged instrument or lease. [...] Detectives say the men broke into three homes and then advertised them on Craigslist and provided tenants with fraudulent leases.

For more, see Police Arrest 2 Men In Foreclosed Home Scam.

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

Tuesday, June 16, 2009

Federal Trial Of Texas Woman Charged in Alleged Upfront Fee Foreclosure Rescue Scam Begins

In San Antonio, Texas, the San Antonio Express News reports:
  • Jacquelyn Guerrero and her husband handed over their $3,000 tax refund to try to stop the impending foreclosure. Guadalupe Dominguez handed over her monthly $1,400 Social Security income and more money she borrowed. They testified Monday that they still lost their homes because of the misrepresentations of Rosario Castro Divins [aka Rosie Divins], who sent dozens of direct-mailed advertisements claiming she could stop foreclosures.

  • Divins, 54, went on trial Monday before U.S. District Judge Fred Biery on seven counts of criminal contempt for allegedly disobeying four bankruptcy court orders since 2000 that barred her from claiming she could stop foreclosures. She's also charged with seven counts of mail fraud, which stem from the mailers that advertised her business, R.D. Investments, and guaranteed results. Seven families claim that rather than help save them, Divins took almost $50,000 from them, and put them deeper in the hole. All are expected to testify at the three-day trial.

For more, see Anti-foreclosure help called a scam.

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

Go here for earlier posts on this alleged foreclosure rescue scam. Loan Modification

Indictments Handed Down, Arrest Warrants Gone Out In San Diego "Land Patent" Foreclosure Rescue Scam; Add'l 12 Suspects Charged

In San Diego, California, XETV-TV Channel 6 reports:
  • An indictment was unsealed Monday charging 18 people in a scam in which homeowners were falsely told that "land patents" would protect their properties from foreclosure.

    Six of the defendants -- Larry Smith, Maria Candida Capa, Margarita Gaviola, Jessica Refuerzo, Julita Whittingham and Edgardo Orcino -- were already charged in a criminal complaint with conspiracy to commit grand theft, grand theft and conspiracy to do a deceitful practice while acting as a mortgage foreclosure consultant.

    The defendants are also charged with allegation that the amount of money lost in the mortgage foreclosure scam exceeded $200,000. Smith, Capa, Gaviola, Refuerzo, Whittingham and Orcino pleaded not guilty today at their Superior Court arraignment. They will be back in court July 20 for a status conference.

    Arrest warrants have gone out for the remaining 12 defendants named in the indictment, said Deputy District Attorney Marlene Coyne. They face similar charges to the original six defendants, Coyne said.

    More than 20 alleged victims have come forward saying they lost tens of thousands of dollars in the real estate scam in 2007 and 2008. Prosecutors allege the defendants sold the bogus "land patents" to homeowners, claiming the victims could pay only 10 percent of their mortgage payment each month and could force lenders to "re-contract" the loan amounts.

Source: 18 People Charged with Scamming Foreclosure Victims.

Go here for earlier posts on this story.

Detroit Man Accused Of Using Forged Title Documents In Attempt To Steal Church

In Detroit, Michigan, the Detroit Free Press reports:
  • Forget going to jail for deed fraud, what Tracy Carmichael is accused of doing could lead to an unpleasant afterlife. Carmichael, 46, of Detroit was charged Friday with trying to sell a Detroit church building that he never owned.

  • Wayne County Prosecutor Kym Worthy said Carmichael used a scheme to obtain a $120,000 mortgage on the Temple of God Deliverance building in the 11000 block of Mt. Elliott. He tried to sell the property to a woman as an investment property, falsifying documents to obtain a mortgage, Worthy said. The building has been razed. Carmichael did not have authority to sell the property and forged signatures of the owner on fake title documents, Worthy said. [...] The case was investigated by the Wayne County Deed Fraud Task Force, which includes the Sheriff's Department and register of deeds.

Source: Man accused of trying to illegally sell church.

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Homeowners Current On Their Mortgage Payments Now The Target Of Some Loan Modification Peddlers

The competition among the peddlers of loan modification services has apparently become so fierce that some outfits aren't even waiting for the legal notices indicating mortgage loan default to be filed in the public records to identify and contact potential targets - they are simply contacting anybody with a mortgage, as reflected in this Florida story in TC Palm:
  • [S]eacoast National Bank executives became concerned when some of their mortgage customers received a letter from an Ohio attorney a few weeks ago claiming they were more than 90 days behind in their payments. The letter went on to say, “If you do not act immediately Seacoast National Bank may file a lawsuit to take your home.” The borrowers who contacted Seacoast after receiving the letter knew they were not delinquent in their payments.(1)

  • A Seacoast spokeswoman said the attorney and the company that sent the letter offering to help those who got it probably obtained a list of the bank’s borrowers from public records and sent out a mass mailing. They were hoping to ensnare some of the bank’s delinquent borrowers before other competitors, who normally wait for foreclosures to be publicly filed, could reach them.


  • W.D. “Chic” Acosta, executive vice president of Seacoast’s Mortgage Lending Division, said he was concerned by the use of scare tactics to make borrowers believe they may be in jeopardy of losing their home.

The story also reports that one homeowner current on her house payments actually received a phone call with a recorded message from someone saying they had been informed she was more than 90 days behind in her mortgage payments.

For more, see Treasure Coast homeowners warned against home rescue fraud.

(1) Reportedly, the letter goes on to exclaim in bold letters: “Beware of mortgage rescue scams! Only licensed attorneys can represent you!” The Ohio attorney is not licensed to practice in Florida, according to the story, and a Florida Bar spokeswoman reportedly confirmed an investigation of the attorney is ongoing. The Seacoast spokeswoman said the attorney and the company were reported to local, state and federal law enforcement authorities.

Private Mortgage Insurance A Source Of Help For Financially Strapped Homeowners?

The Wall Street Journal reports:
  • Homeowners in trouble may find help from an unlikely source: their private mortgage insurance company. [...] Homeowners who've tried unsuccessfully to get help, may have one more opportunity to get back on their feet by turning to their private mortgage insurer. Private mortgage insurance (not to be confused with homeowners insurance) is required of anyone who buys a home with less than a 20% down payment. These policies protect the lender in the event of a default, covering anywhere between 12% and 35% of their losses on the property, says Keith Gumbinger, vice president at mortgage information firm HSH Associates.

For more, see Mortgage Insurers to the Rescue?

Florida Supreme Court Mortgage Foreclosure Task Force Seeks Public Input

In Tallahassee, Florida, The Miami Herald reports:
  • A Florida Supreme Court task force wants to know what borrowers, mortgage holders and lawyers have to say about their experiences in the foreclosure process. They can comment on the State Courts System Web site, court officials said Friday. Chief Justice Peggy Quince created the Task Force on Residential Mortgage Foreclosure to recommend changes and improve the legal process in response to Florida's foreclosure crisis. It has swamped the courts with such cases. The panel's final report is due by Aug. 15.

Source: Fla. Supreme Court seeking foreclosure comments.

Please click on the appropriate link below to take a survey regarding your experience.

Go here for a Summary of Current Administrative Court Orders regarding residential mortgage foreclosure mediation in the various Florida trial courts throughout the state.

Monday, June 15, 2009

Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program Celebrates One-Year Anniversary

In Philadelphia, Pennsylvania, the Philadelphia Business Journal reports:
  • State Rep. Michael McGeehan watched in amazement last Thursday as a group of lawyers, housing counselors, homeowners and court personnel whirred around City Hall Courtroom 676 as part of the city’s foreclosure conciliation conference program. “It’s like organized chaos,” said McGeehan, a Philadelphia Democrat who is sponsoring legislation to make foreclosure prevention programs like the one he was witnessing mandatory in all 67 Pennsylvania counties. “It’s amazing how this room virtually cleared out after the big crowd they started with this morning,” he said.

  • Philadelphia Common Pleas Judge Annette M. Rizzo would like to think the foreclosure prevention program she runs has become more organized and produced less chaos as it celebrates its one-year anniversary today. According to the city’s Office of Housing and Community Development, roughly 1,200 homes have been saved from sheriff sale through the program out of 3,380 homeowners who have accessed it. The pilot program serves as a model for other jurisdictions around the country. Rizzo just led a delegation to New York, where they met with Mayor Michael Bloomberg to brief him on the program’s particulars.

For more, see Tally: 1 year old, 1,200 homes saved.

California 90-Day Foreclosure "Moratorium" Begins Today

The Sacramento Bee reports:
  • Lots of questions this morning on the real meaning of California's new 90-day foreclosure moratorium beginning today - which got plenty of attention on national TV yesterday. Here is a link to the California Department of Corporations site and on the official regulations that spell out the program in detail. A Bee story Saturday explaining the moratorium is here. What's most important to remember: this does NOT stop foreclosures effective today. It begins a process in which lenders must apply to the state for an exemption from the 90-day moratorium. Lenders must show the state they have an aggressive loan modification program in place to receive the exemption.

For more, see Today's start to California's 90-day foreclosure moratorium.

Nevada AG Announces Indictment Of Two Charged With Theft In Connection With Alleged Loan Modification Scam

From the Office of the Nevada Attorney General:
  • Nevada Attorney General Catherine Cortez Masto announced [Friday] the indictments of William Vargas and Michael Sinclair, on one (1) felony count of Theft of a Person 60 Years or Older and four (4) felony counts of Theft by Material Misrepresentation, for allegedly operating a foreclosure rescue scam in Las Vegas under the business name of Federal Housing Aid.


  • The indictment alleges that Vargas and Sinclair operated Federal Housing Aid since February 2007 offering loan modification services to assist victims in avoiding foreclosure on their homes. The Defendants allegedly charged the victims between $899 to $1500 in upfront fees and offered a 100% money back guaranty, claiming their company would refund the money if the foreclosure could not be stopped. [...] After paying for services, it is alleged that the Defendants failed to provide the services paid for and failed to provide refunds as promised in their advertisements.


  • Collection of fees upfront for services promised for loan modification is in violation of Nevada Revised Statute 645D.400, which makes it unlawful for a mortgage consultant to collect or receive any compensation until after the consultant has fully performed the consulting services that was contracted to perform or represented that would be performed.

For thr entire press release, see Attorney General Announces Indictments In Foreclosure Rescue Scam Case.

Massachusetts AG Obtains Temporary Restraining Orders Against Two Firms For Allegedly Soliciting Illegal Upfront Fees For Loan Modification Services

In Boston, Massachusetts, Legal Newsline reports:
  • Attorney General Martha Coakley has obtained temporary restraining orders against a Wyoming and Florida company, and a Florida man for soliciting unlawful fees from homeowners facing foreclosure.The defendants, H.O.P.E. Alliance, Inc., (H.O.P.E. Alliance) Law & Associates, LLC and Thomas E. Law, II, allegedly solicited unlawful advance fees for foreclosure-related services, and unnecessarily delayed negotiations regarding loan modifications.

  • The complaint also alleges that H.O.P.E. Alliance, with the help of the co-defendants sent letters that directed them to a toll-free number and to the Web site, which fraudulently claimed that the company was a non-profit and H.O.P.E. Alliance deceptively used a similar name to the government-sponsored non-profit organization, HOPE NOW Alliance.(1)

For more, see Coakley gets temporary restraining orders over fraudulent foreclosure-related services.

For the Massachusetts Attorney General's press release, see AG Obtains Temporary Restraining Order Against WY and FL Companies and FL Man for Soliciting Unlawful Fees From Homeowners Facing Foreclosure.

For a follow-up press release from the Massachusetts AG, see AG Obtains Preliminary Injunction Against Wyoming and Florida Companies and Florida man for Soliciting Unlawful Fees From Homeowners Facing Foreclosure.

(1) According to the Massachusetts Attorney General, the website also states that H.O.P.E. Alliance is a 501(c)(3) non-profit organization. H.O.P.E. Alliance is not registered with the IRS or the Attorney General’s Office as a non-profit.

Minnesota Couple Sentenced In Mortgage Scam Involving Recording Phony Lien Satisfaction Before Selling Home, Pocketing Entire Sale Proceeds

From the Office of the U.S. Attorney (Minnesota):
  • An Oak Grove couple was sentenced yesterday in federal court in connection with a scheme to defraud several mortgage lending companies and to obtain money from them by means of false and fraudulent pretenses. [...] According to their respective plea agreements, both [Robert G.] Bock [10 months of confinement in a half-way house and three years of supervised release] and [Michelle M.] Niska [36 months in prison and three years of supervised release] admitted that they devised a scheme to defraud certain mortgage lenders.

The allegations are as follows:

  1. On Sept. 21, 2005, the couple borrowed $593,740 from Bravo Credit Corp., and granted Bravo a mortgage on their jointly-owned Oak Grove home.
  2. On April 7, 2006, Niska filed a document with the Anoka County Recorder’s Office purporting to be a satisfaction of the mortgage the defendants had granted to Bravo, even though the defendants had not paid off the loan and even though most of the principal balance was still due.
  3. On May 5, 2006, the couple sold the home to a third party for $675,000, $540,000 of which was financed by Equifirst Corp.
  4. Bock and Niska each admitted that they knew the title company that closed the home’s sale should have used the third-party buyer’s loan proceeds to pay off the Bravo loan, but instead allowed the title company to believe that the Bravo loan had been repaid, as reflected by the false mortgage satisfaction document.

The press release continues:

  • As a result of the scheme, the defendants pocketed proceeds from the sale in the amount of $510,000, all of which should have been paid to Bravo. Bock and Niska each admitted that the scheme was executed, in part, by sending certain items by commercial carrier, specifically a $35,000 lulling payment sent to Bravo on May 8, 2006, for the specific purpose of forestalling foreclosure efforts by Bravo and for the general purpose of executing the scheme to defraud.

For the press release, see Oak Grove couple sentenced for mail fraud. TheftOfDeedMeta

ATIF Refuses To Issue Title Insurance On Controversial Short Sale Deals Involving Simultaneous Investor "Flips"

In Tampa, Florida, The Tampa Tribune reports:
  • It may now be a bit tougher for investors to flip short sales for big profits. Attorneys' Title Insurance Fund(1) notified its 6,000 member attorneys [last] week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales.


  • In a letter to attorneys, the fund said it has become aware of short sale programs advertised on the Internet that promise to make investors lots of money with little or no work. The programs, the letter says, involve investors entering into option contracts with homeowners for "the exclusive right to purchase their property for a period of time."

  • The investor negotiates a short sale with the lender by convincing the lender that the price it is offering is the market value of the property. The investor then finds a buyer for a much higher price. The sales happen simultaneously, and the investor pockets the difference.

  • The problem is that "the original lender is not told that the buyer is flipping the property on the same day for thousands more than the lender has been told is the market value of the property," the letter states. [...] Critics say lenders are misled and don't realize they could be selling the home for more money. [...] Some attorneys have raised concerns that sellers could have to pay the difference later.(2)

For more, see Title insurance group's move could stymie short sale flips (Attorneys' Title Insurance Fund notified its 6,000 member attorneys this week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales).

(1) The Orlando-based fund is a major underwriter for attorneys who write title insurance in Florida.

(2) If the simultaneous transactions are consummated as part of one closing (as opposed to two separate closings occurring back-to-back, using different closing agents - usually carried out in two separate conference rooms at the same location), the closing agent, as a fiduciary for the lender agreeing to the short sale (as well as to all other parties to the transaction), could also find itself having to pay the difference if the lender can establish that:

  • it was defrauded in this type of transaction and,
  • the closing agent either knew or should have known what was going on. title insurance legal issues

Sunday, June 14, 2009

South Carolina Motel Not Immune From Foreclosure Stripping As $95K In Equipment Found Missing

In Sumpter, South Carolina, WIS-TV Channel 10 reports:
  • A foreclosed motel in Sumter County was stripped of $95,000 worth of big-ticket items. The investigation is now going to attorneys. Over a month's time, authorities say someone stole 50 air conditioner units, 94 televisions, a commercial washing machine and a satellite system from the America's Inn in the 7400 block of Myrtle Beach Highway. Sumter County deputies say it's a civil matter because the inn is in foreclosure.

Source: $95k in furniture stolen from Sumter inn.

Go here for other posts on foreclosure stripping. foreclosure fixture stripping apple

Brooklyn Daily Eagle On Local Trial Judge

In Brooklyn, New York, the Brooklyn Daily Eagle recently ran a profile on trial judge Arthur M. Schack of the Kings County Supreme Court, who has been noted for his stiff stance on lenders and their lawyers using sloppy paperwork when attempting to make their cases in foreclosure actions. For the story, see Fighting in the Courthouse Trenches, Justice Schack Presides With Humor and Poise.

Go here for other posts referencing Justice Arthur M. Schack.

Massachusetts Closing Attorney To Pay $115K In Restitution, Penalties For Participating In Alleged Equity Stripping & Mortgage Fraud Schemes

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office has entered into a judgment with Brockton attorney Valerie Hanserd resolving allegations over her role as a closing attorney in two companion lawsuits that both allege unfair practices with respect to mortgage brokering services. [...] Under the terms of the Consent Judgment, [...] Hanserd must refrain from acting as a real estate closing attorney or title agent for seven years retroactive to April 27, 2007. In addition, Hanserd must pay $80,000 in restitution to victims of foreclosure rescue schemes or to address the negative impact of mortgage foreclosures in the Commonwealth, as well as $35,000 in fees and penalties to the Commonwealth.


  • [One lawsuit] alleges that Hanserd and 18 other defendants participated in a foreclosure rescue scheme targeted at distressed homeowners facing foreclosure. Each of the defendants allegedly conspired through their respective roles as mortgage brokers, real estate brokers, closing attorneys and straw buyers to deceive homeowners into selling their homes under the false promise of avoiding foreclosure and maintaining their homes and their homes’ equity.

  • The defendants not only obtained title to the homeowners’ residences but also stripped most of the homes’ equity by distributing sale proceeds to pay for unearned brokers’ fees and other fictitious services, and drafted and submitted to lenders HUD Settlement Statements that did not accurately reflect the disbursements made in the transactions. In certain cases, the defendants resold the homes in multiple transactions amongst themselves, thereby stripping the homes of all their equity.

For the entire press release, see Attorney General Martha Coakley Obtains Judgment Against Brockton Attorney for Her Alleged Role in Mortgage Fraud and a Foreclosure Rescue Scheme.

San Bernardino DA Convicts Two Accused Of Using Stolen IDs To Fraudulently Pocket Loan Proceeds Secured By Unwitting Victims' Real Estate

In San Bernardino, California, the Office of the San Bernardino County District Attorney recently announced that John Foster and Howard Edwards were found guilty after a jury trial of 56 counts ranging from forgery, grand theft, filing of false instruments, identity theft, conspiracy, and money laundering in a scam where they allegedly swiped personal information from unwitting victims and used to obtain loans on luxury cars and real estate in Fontana. The two defendants pocketed the loan proceeds while leaving the victims liable for these loans.

As part of the scam operation, the defendants falsified several real estate deeds and forged the signatures and stamps of several notary publics, and subsequently recorded in the county records office. In one case, the defendants sold a house out from under the rightful owners, pocketing $560,000. The rightful owners had been living at the residence since 1971, free and clear of any liens, and only found out about the scam when a lending institution attempted to foreclose on the property.

For the San Bernardino Conty DA's press release, see Guilty Verdicts in Real Estate Fraud Case.

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Five Big City Mayors Urge States To Pass Philadelphia-Based Mediation Model To Stem Foreclosures

Reuters reports:
  • Mayors from five U.S. cities called on Thursday for states to pass laws that would require mortgage lenders to negotiate with borrowers who are threatened with foreclosure. The mayors of New York City, Los Angeles, Miami, St. Louis and Oakland, California, said mandatory mediation offers the best hope of stemming a national foreclosure crisis that led to an 18 percent surge in foreclosure filings in May compared with a year earlier.

  • The mayors aim to follow up on a year-old program in Philadelphia that brings lenders and borrowers together under court supervision, and has allowed more than 70 percent of participating homeowners to remain in their homes.

For more, see US mayors urge states to require mortgage mediation.

In a related story, WNYC 93.9 FM reports that New York City Mayor Mike Bloomberg offered this gem as a way to accelerate the number of successful loan modifications between lenders and homeowners facing foreclosure:

  • "Maybe you lock them in a room with a big pot of coffee and no bathroom and that will get them to pretty quickly come to an agreement. That's the only way you're going to get people to agree."

Source: Mayor Backs Foreclosure Mediation Bill.

Ohio Loan Review Specialist Uncovers Florida Straw Buyer Mortgage Fraud; Nine Charged

In Alachua County, Florida, The Gainseville Sun reports:
  • A loan review specialist in Ohio uncovered a $2.4 million Florida mortgage fraud conspiracy allegedly led by a Marion County man with ties to Alachua County and four other Florida counties.(1) Nine people have been charged and each faces up to 60 years in prison if convicted. The Florida Department of Law Enforcement ["FDLE"] and Office of Statewide Prosecution announced the arrests on Tuesday afternoon.

  • Investigators said 17 homes in Marion County are still standing empty as a result of a complex scheme controlled by alleged ringleader William H. King, 52, of Silver Springs, and his ex-wife, Beverly Ann King, 52, of Jacksonville. The Kings and seven others were each charged with criminal racketeering and conspiracy to commit racketeering, also known as RICO.(2)

For more, see Nine charged with being part of $2.4 million mortgage fraud ring (The group was charged in connection with 17 mortgage loans).

(1) According to the story, the situation was uncovered in February 2007 when the loan review specialist in Ohio recognized red flags in paperwork that crossed his desk. For example, the man noted that one couple obtained five mortgages from five different lenders in four days. The man alerted FDLE and an investigation was launched into the Kings' transactions between 2004 and 2006.

(2) According to an FDLE assistant special agent, like any organization, a mortgage fraud ring requires "a lot of people to get the job done - mortgage brokers, notary publics, people working in a title company, people who are appraisers. It takes all of these people to get a loan through. And what these people did was work together to deceive the mortgage lenders."