Saturday, June 27, 2009

State AG Shuts Down Western NY Debt Collection Operation; Arrest Owner/Convicted Felon For Unrelated Gun Possession

In Buffalo, New York, the New York Post reports:
  • New York authorities say they've shut down a debt collection company that was falsely telling people they'd be thrown in jail if they didn't pay immediately. State Attorney General Andrew Cuomo says the Buffalo firm routinely broke the law by having its collectors impersonate law enforcement officials. In reality, the company was run by ex-convicts.

  • Owner Tobias Boyland was arrested Tuesday after investigators serving a search warrant discovered a loaded pistol. A judge issued a temporary order closing the company's doors. Boyland's firm did nationwide business under several names. It was the subject of an expose on Dateline NBC in March. Messages left with the company and Boyland's lawyer weren't immediately returned.

Source: Authorities Shut Down False Debt Collectors.

For the New York AG's press release, see Attorney General Cuomo Shuts Down New York Debt Collection Operation That Used Illegal Scare Tactics To Threaten Consumers Across The Country (Employees Posed as Law Enforcement Officials and Threatened to Throw Consumers in Jail if They Didn't Immediately Pay Debts; Latest Action in Cuomo's Ongoing Probe into Unlawful Debt Collection Practices ).

For the Dateline NBC expose on the debt epidemic and the sleazy tactics used by some bill collection agencies and "debt scavengers" in hounding consumers into making payments on delinquent credit accounts, see Inside The Financial Fiasco: Debt Trap.

(1) According to the NY AG press release, the operation consisted of at least nine debt collection companies across Western New York. They operated under several names, including: Central Resource Management, Final Claims Asset Locators, Final Control Asset Locators, Interchange Payment Solutions, Next Step Services, Portfolio Asset Assurance, Silverbay Services, and Teleport.

Law Students Spending Their Summer Vacation Helping Renters Beat Back Foreclosure Evictions

In Fall River, Massachusetts, The Herald News reports:
  • A small group of area law students is circulating throughout this city and elsewhere in the SouthCoast to help tenants learn their rights and avoid evicted under harsh terms because landlords didn’t pay the bills and the banks came knocking at their doors. “Only the court can evict you after a foreclosure,” said Kelly Rafferty, one of six Roger Williams University School of Law students involved in a new summer program organized through South Coastal Counties Legal Services, headquartered on Bedford Street.(1)


  • The law students have been combing legal ads and housing court records to determine where foreclosures are happening in Fall River, Taunton, Brockton and New Bedford to notify residents. [...] With the dreaded foreclosure increasingly swallowing up landlords, tenants and entire neighborhoods alike throughout the country, South Coastal lawyers, student interns and volunteers are using tools and skills to battle back.


  • In additional to canvassing neighborhoods hard hit by foreclosures in the target cities each Monday, they hold free clinics in the city legal service offices each Thursday and Friday from 10 a.m. to noon. Their advice includes turning down the “keys for cash” program that banks use to offer token money and empty their foreclosed buildings. “We always ask the tenant what they want,” Rafferty said. For some, it’s more time, for others it’s funds to pay the next rent and deposit.

For more, see KNOW YOUR RIGHTS: Law students help tenants protect themselves.

(1) See the "No One Leaves" campaign conducted by another group of Massachusetts law students helping renters beat back foreclosure evictions.

Swat Team Takes Distraught Man Into Custody After Seven Hour Standoff; Job Loss, Fear Of Foreclosure Results In Suicide Threat

In Yucaipa, California, the News Mirror reports:
  • Yucaipa Police Department personnel along with the San Bernardino County SWAT team responded to a suicidal man who barricaded himself in his home with an assault rifle Tuesday evening in a Chapman Heights neighborhood resulting in an all-night stand-off.


  • Law enforcement immediately converged on the 33917 Lake Breeze address near Pinehurst and secured the area with mandatory evacuation of the Yucaipa Valley Golf Course and blocked off an extensive perimeter around the residence. This extra precaution came after learning the disturbed suspect had a scope on his high-powered rifle and an intent to commit suicide at the hands of officers. Law enforcement learned he was distraught about losing his job recently and facing a possible foreclosure on his home.


  • After nearly seven hours the suspect, identified as Jason Keene, 32, refused to exit and the SWAT team introduced teargas into the residence. Keene emerged from the front door about 10 minutes after the chemical agent was initiated. [...] Keene was taken into custody for a 72-hour psychological evaluation and additional charges may be filed at a later date. No one was injured.

For the story, see Seven hour stand-off ends with no injuries. DeputyEvictionTheta

150 Guests Who Unwittingly Booked Rooms In High-End Motown Hotel In Foreclosure Bolt As Malfunctioning A/C, Ice Machines Make Visitors Feel The Heat

In Detroit, Michigan, WXYZ-TV Channel 7 reports:
  • Hundreds of guests are steaming mad about the service they've been receiving while guests at the Detroit Riverside Hotel. Now Action News has learned the hotel is just days away from foreclosure and knew about it before booking hundreds of rooms. Guests say they haven't had air conditioning, lights, working TVs or even towels. Ice machines weren't even working.


  • Management tells Action News that the hotel is having financial problems, and hasn't been able to pay their employees in weeks. Without a paycheck, many of the employees have now refused to work. So far, 150 guests have left the hotel. The hotel has moved 250 guests to the part of the hotel that still has air conditioning. The restaurant at the hotel is also closed.

Source: Guests Feeling the Heat at Downtown Hotel. RentSigmaSkimming

Big Apple Scores Another "Ruthian" Coup Over Boston; NYPD To Pick Up Five Of Beantown's Finest From Recently Disbanded Horse Unit

In New York City, the New York Post reports:
  • First, it was Babe Ruth. Now, it's Mr. Ed. Boston's taking a beating again at the hands of the Big Apple, which is set to trot off with the cream of beleaguered Beantown's recently disbanded police-horse unit, cops said [last week]. "Boston's loss is New York's gain," said one NYPD source.

  • The NYPD is one of a handful of departments around the country that was under consideration as new home for the recently unemployed equines, according to published reports. "These horses are already trained and street-ready," said the New York police source.


  • Boston officials said nay to the division last month to save about $600,000 a year. [...] In 2004, the NYPD took on a handful of horses from Philadelphia after that city shuttered its mounted unit.

For the story, see 'STIRRUP' THE RIVALRY (HOME-RUN TROT: Some of the horses from Boston's scrapped mounted-police division will join the NYPD -- and could work Yankee games).

Friday, June 26, 2009

House OKs Bill Allowing LSC-Affiliated Non-Profit Law Firms To Pocket Prevailing Party Legal Fees From Losing Litigant; Senate To Address Measure

The Washington Post reports:
  • [Last week] the House [of Representatives] approved a budget of $440 million for the LSC [Legal Services Corporation](1) -- up $50 million from 2009 funding and $5 million more than the amount requested by the Obama administration. Lawmakers also lifted a restriction that kept legal aid lawyers who prevail in cases from recovering attorney's fees from the losing party -- a benefit available to winning lawyers in many civil rights or consumer protection cases. This move was important because those fees could be used to further supplement the LSC's budget. The Senate, which is scheduled to take up the funding measure [...], should go even further in freeing legal aid lawyers from federal restrictions.

For more, see Helping Lawyers Help the Poor (Congress should free legal aid lawyers from burdensome restrictions).

(1) Created by Congress in 1974, the LSC provides grants to civil legal aid organizations that in turn help represent the poor in civil cases.

California DRE Posts List Of Alleged Loan Modification Scofflaws

The California Department of Real Estate has posted a list of persons and entities that have been served with a Desist and Refrain Order and/or Accusation by the Department resulting from a loan modification and/or foreclosure rescue transaction. In some instances, the person or entity has been ordered to stop providing loan modification and/or foreclosure rescue services because the person or entity is not licensed by the Department of Real Estate. In other instances, the person or entity has been ordered to stop collecting advance fees.

For the list of alleged loan modification rules violators, and links to the orders issued by the Department, see Desist and Refrain Orders and/or Accusations for Loan Modification Activities.

Go here for a non-inclusive list of State Foreclosure Rescue Enforcement Actions, compiled by the Federal Trade Commission.

NYC Woman Faces Charges Of Allegedly Pocketing $11K+ By Renting Out Apartment She Didn't Own; Used Craigslist To Reel In Seven Victims, Says DA

In Richmond Hill, Queens, the New York Post reports:
  • Elizabeth Mosh was so excited when she rented a Queens apartment for $650 a month last September, that she even ordered a bed and a flat-screen TV online so they would be there when she moved in. But the 23-year-old preschool teacher was never able to make the move into the two-bedroom apartment in Richmond Hill because the woman who rented it to her via Craigslist doesn't own it, authorities said [...].

  • Mosh and six others were victims of Tonja Fenton, 35, who allegedly rented the same apartment to seven people and pocketed $11,735 in deposit fees, a spokeswoman for the Queens District Attorney's Office said. The apartment is in the basement of a two-family home where Fenton lives.

  • Fenton has been charged with grand larceny and scheming to defraud. Mosh said she gave Fenton $1,300 in cash for the first month's rent and the security deposit after finding the apartment listing on Craigslist. But at 6 a.m. on the day she was supposed to move in, Fenton allegedly called and said she couldn't do so because a pipe had burst and there was a flood in the apartment.


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

Lender "Hijacks" House In Foreclosure Despite Court Order To The Contrary; Judge Orders BofA To Turn Over Keys To Homeowner & Pay Her Legal Fees

In Kissimmee, Florida, WFTV Channel 9 reports:
  • Eyewitness News found an Osceola County homeowner won her battle in court to save her home from foreclosure, but the bank wouldn't listen. Ana Chavez used to live on Killamanjaro Drive until the Bank of America changed her door locks in violation of a court ruling.

  • A judge told the bank that if Chavez does not get her keys by noon Thursday, he's is dismissing the foreclosure lawsuit and the bank will face more penalties. In the meantime, the bank couldn't explain why it took over a house it did not own.

  • Homeowner Ana Chavez is fighting to save her home from going into foreclosure. She is hoping to modify her loan and Chavez thought she was one step closer when a judge ruled in her favor last month. Bank of America asked the judge to set a foreclosure sale date on her Kissimmee home, but the judge denied the request. Despite the judge's ruling, the bank decided to take over Chavez's home. [...] Ana Chavez had been away from her home for a couple of days. When she came home she tried to get into her house, but all the locks had been changed. The bank hired a locksmith, changed the locks and refused to give Chavez access to her home. The bank's attorney even called the bank and said there was a mistake, but those calls were ignored too.


  • Attorney Adam Sudbury says he hopes the punishment sends a message to the banks. "These banks and these attorneys they steam roll over people like there is no tomorrow and unfortunately for them sometimes they run into a road block," said Sudbury. Judge James Stroker wasn't happy with the bank's actions and has now ordered Bank of America to turn over the keys to her within 24 hours, pay for Chavez's attorney's fees and the bank may also have to pay for her living expenses.

Source: Bank Locks Woman Out Of Her Own Home.

For story update, see Bank Gives Woman Keys Back To Home (Bank of America has complied with an Osceola County judge's orders and has given a homeowner her keys back).

Go here for other posts on foreclosure & eviction screw ups.

(1) Last year, the Nevada Supreme Court approved a jury award of over $1 million, including punitive damages of $968,000, against a foreclosing lender for improperly booting a couple from their home and trashing its contents. See Nevada High Court OKs Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure.

For the Nevada high court decision, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008), or go here for a summary of the Thitchener ruling from the Nevada Law Journal. ForeclosureLockOuts

Oregon Lawmakers Close To Eliminating Loophole Allowing Lenders To Sue Homeowners With Two-Note Mortgages After Home Is Lost To Foreclosure

In Salem, Oregon, The Oregonian reports:
  • The Oregon Senate unanimously voted on Wednesday to close the loophole in Oregon law that allows people with two-note mortgages to be sued for money even after they lose their home to foreclosure. House Bill 3004 prevents lenders from suing borrowers who had a 80/20 mortgage or another combined mortgage. These riskier kinds of mortgages are usually offered to people with poor credit ratings or little money to put down.

  • The bill will return to the House for a concurring vote. The Senate amended some of the bill's language, but retained its substance, according to co-sponsor Rep. Brian Clem, D-Salem. "I am looking forward to the day this bill is signed into law so families can get relief from these predators," he said. A spokeswoman from Gov. Ted Kulongoski's office said he will sign the bill into law.

Source: Mortgage holder protection bill clears Senate (if link expires, try here).

Thursday, June 25, 2009

Miami Judge Discovers 15,000+ Unserved Foreclosure Cases; Could Lead To Title Disputes Down The Road If Courthouse Sales Are Allowed To Go Forward

In Miami, Florida, the Daily Business Review reports:
  • A Miami-Dade Circuit Court judge discovered more than 15,000 foreclosure cases filed this year haven’t been served. It’s the latest shoe to drop in a foreclosure crisis garnering nationwide attention, and an unwelcome discovery in the face of state budget cuts that produced layoffs for courts and clerks. The backlog is critical because cases where homeowners haven’t been served [with foreclosure papers] within four months are subject to dismissal.

  • Civil Division Administrative Judge Jennifer D. Bailey made the discovery last month as she was taking stock of the circuit’s foreclosure load. She noticed 15,219 cases with no letters of correspondence, no answers and no motions to dismiss. “In other words, no service,” she said.

  • The circuit is scrambling to find the root of the problem, which could jeopardize most of this year’s 17,000 foreclosure filings. Most of the cases still fall within the four-month window, but no program is in place to speed things up. If a foreclosure proceeds to a default judgment with no service on the defendants, it could lead to a title dispute down the road. Bailey said there is no sign that has happened so far but recognizes the potential for problems.


  • Bailey said she still is trying to interpret the data to determine the source of the problem and chart a new course. But whoever is at fault, Bailey quickly notes the problem threatens to overwhelm a court system that already is strapped. “The question I now face is what do I do with this?” she asked. The cases “would potentially be subject to dismissal,” but she noted many cases are recent enough that service within the four-month window is still possible. “Let’s assume a third of these are subject to dismissal. In my spare time, I’ve got to figure out ways to generate orders in 5,000 cases and pay for 5,000 stamps and serve everyone,” Bailey said. “Are we going to do that? Yes. Am I trying to figure it out? Yes.”


  • "It all starts with service [of foreclosure papers to initiate the lawsuit]. If people don’t get served, all we’re doing is buying ourselves a bunch of title cases in six years,” the judge said.(1)

For the rest of the story, see Judge grapples with her discovery of 15,000 unserved foreclosure cases.

(1) To the extent courts are allowing mortgage companies to bring foreclosure actions where the foreclosing entities either fail to produce the promissory notes and other required paperwork, or otherwise lack standing to bring these lawsuits, the courts may already be buying themselves a bunch of title cases. SloppyForeclosuresAlpha SewerServiceAlpha

Mortgage Broker Gets 3 Years For Illegally Pocketing $16K By Filing Phony Mechanics Lien On Home Shortly Before Title Closing

In Jacksonville, Florida, The Florida Times Union reports:
  • A Jacksonville mortgage broker faces three years in prison for pocketing thousands of dollars at a real estate closing by pretending she did home repairs. Katina Mickens, 30, was sentenced [...] for grand theft, filing a false construction lien claim and acting as an unlicensed real estate agent at a 2005 home sale where she arranged the mortgage.


  • The day before the house went to closing, Mickens filed a document called a claim of lien. Under a fictitious name, J&J Properties, Mickens reported she had done work on the house and was owed $16,000. That represented about 18 percent of the $85,000 mortgage on the home, putting an unnecessary added burden on the buyer, [Assistant State Attorney Stephen] Siegel said.(1)

Source: Mortgage broker faces 3 years on theft charges (4th story from the top).

Go here for other posts on suspected mechanics lien scams.

(1) Reportedly, J&J Properties filed lien claims at six Jacksonville homes in 2004 and 2005, claiming to be owed a total of $117,835. Former owners of five of those properties said they never hired Mickens or J&J to do any repairs, and none was done, according to the story. A hearing is scheduled in July about other charges involving some of those homes, Siegel said. MechanicLienScamTheta

Loan Modification, Foreclosure Rescue Firm Changes Name After Being Hit With Complaints, Tagged With Lawsuits

In Charlotte, North Carolina, WCNC-TV Channel 36 reports:
  • The Better Business Bureau wants to warn you about a Charlotte mortgage consultant.
    A formal complaint has been filed against Michael Grieco, previous owner of Home Assure, a mortgage foreclosure rescue business. In the past 13 months the BBB has received 19 complaints from 14 states about Greico's Home Assure business.(1)

  • He's now operating under a new name -- Assurance Consulting Group. The BBB says there are ways for homeowners to identify companies that can really offer them some assistance. "The big difference in what Mr Grieco was offering and what legitimate companies offer is how they collect their fees," said Tom Bartholomy with the BBB. "Mr Grieco was requiring monies up front anywhere between $1,500 and $2,500 up front before he does any work at all. And then what the complaints are saying is they paid him that money and then nothing happens. They still lose that house."

Source: BBB: 19 complaints against Charlotte mortgage consultant.

(1) Home Assure has also been hit with lawsuits from the Federal Trade Commission ( see FTC v. Home Assure, LLC, et al. - the other defendants in this case are B Home Associates, LLC, doing business as Expert Foreclosure, Michael Grieco, Michael Trimarco, Nicholas Molina, and Brian Blanchard), and the North Carolina Attorney General (see AG Cooper goes after Charlotte foreclosure rescue scams).

Attorney Hired By Homeowner To Fight Back Against Foreclosure Rescue Scammers Found Guilty Of Taking Fees, Doing Nothing

From the Office Of The State's Attorney For Prince George's County, Maryland:
  • Prince George's County State’s Attorney Glenn F. Ivey [...] announced that a Prince George’s County grand jury found David Alexander, 37, of North Bethesda, MD guilty of Theft over $500 and Unauthorized Practice of Law in representing Renata Brevard, 45, of Prince Georges County, MD, who hired him to help her recover her home from a mortgage scam.


  • Doubly victimized, Ms. Brevard fell prey to foreclosure fraud when she was first mistreated by foreclosure scammers who took her home and then by the attorney that she hired to fight back against the scammers.

  • On November 11, 2007, Ms. Brevard hired Defendant, David Alexander, an attorney to help get back her home and to sue the scammers. Alexander charged her $13,000 to file suit against the scammers, get back her home and stop the subsequent foreclosure on her home. [... H]e assured her that he was performing his duties. However, Ms. Brevard learned that Alexander failed to keep his promises when she came home in April 2009, and all of her family’s belongings had been evicted and thrown on the street. On the day of the eviction, she contacted Alexander who assured her that he was handling her legal matters and that the eviction was an error. She had made her last payment to Alexander in January 2009.

  • After the eviction day, he never called her back. She later learned that he had been disbarred from the practice of law in August 2008. As a result of his disbarment, he was not allowed to practice law in the State of Maryland. Not only did he fail to notify the victim of his disbarment, but he continued to hold himself out as her lawyer and continued to take her money. In April 2009, the victim learned that the defendant never filed suit against the scammers and did nothing to stop the foreclosure sale on her home. She lost 905 of her and her families belongings including her two-year old granddaughter’s leg braces.(1)

Source: Prince George's County Woman Victimized by Scammers And by Attorney Hired to Fight Scammers.

(1) If a Maryland attorney, in the course of representing clients, screws them out of money or property through dishonest conduct, go to the Client Protection Fund of the Bar of Maryland for more information. For other states and Canada, see:

Aggression, Violence Against Process Servers Delivering Foreclosure Notices On The Upswing?

In Prescott, Arizona, KNXV-TV Channel 15 reports:
  • Sheriff's deputies questioned a Prescott couple after a woman allegedly pointed a shotgun at a process server Thursday. According to Yavapai County Sheriff's spokesman Dwight D'Evelyn, the official went to the home [...] to serve foreclosure papers to the homeowner. [...] As the server dropped the paperwork near the gate a woman came out of the home and pointed a shotgun at him, D'Evelyn said. [...] The server left and called deputies who arrived at the home to investigate an assault complaint.


  • The County Attorney will review the criminal allegation involving the process server and YCSO will also be conducting a force review of this incident, D'Evelyn said. He said YCSO has noted an increase in aggression and violence involving process servers delivering home foreclosure notices. Officials want to remind residents who might find themselves involved with a process server, and have questions about the legal authority of such a person on their property, to contact law enforcement and thus avoid this type of incident from occurring.

For the story, see Prescott pair held after woman points gun at process server.

For a similar story in Central Florida, see Police: Man, 82, Points Gun At Process Server.

Wednesday, June 24, 2009

Chicago Feds Announce Mortgage Fraud Busts In Five Separate Cases; 37 Individuals, Four Businesses Face Felony Charges

From the Office of the U.S. Attorney (Chicago, Illinois):
  • Forty-one defendants are facing federal charges relating to various mortgage fraud schemes in five separate cases(1) made public today by federal law enforcement officials. In some of the schemes, the defendants were charged with falsely inflating the values of dilapidated homes in urban areas. Other schemes feature a twist where defendants were charged with deals involving million-dollar condominiums in a Chicago high-rise and sprawling homes in affluent suburbs. A total of 37 individuals and four businesses, including a title company that closed on allegedly fraudulent loans, are facing new federal charges relating to mortgage fraud in five separate cases in Chicago, federal law enforcement officials announced today. The defendants include a vice president of the title company, mortgage brokers, loan officers, real estate investors, appraisers and an attorney. Together the cases involve more than $48 million in fraudulently-obtained mortgages issued by various lenders and secured by scores of residential properties in the Chicago area, including two in the suburbs of Wheaton and Glenview. As a result, the various lending companies suffered millions of dollars in losses after the loans went into default and the properties were foreclosed upon.

For the entire U.S. Attorney press release, see: Forty-One Defendants Charged in Five New Area Mortgage Fraud Cases; Two Schemes Involve Expensive Condos and Suburban Homes.

(1) For the charges in the five cases, see:

Florida Attorney Group Formed To Spread Accurate Foreclosure Information On Legal Rights For Homeowners, Effective Litigation Defenses For Advocates

The Florida Bar News reports:
  • A group of Florida bankruptcy and foreclosure attorneys have founded The Florida Foreclosure Defense Bar Association to help families facing foreclosure find accurate information about their legal rights and to provide lawyers engaged in helping Floridians fight for their homes with access to up-to-date information about the most effective legal defenses being used statewide.

  • The number of Florida residents — and other people who own property in Florida — facing foreclosure is staggering,” said Michael Wasylik, a partner with Ricardo, Wasylik & Kaniuk and the president of the fledgling FFDBA. “We created the FFDBA to provide homeowners and others facing foreclosure with the information they need to fight back and protect their homes, and to help the attorneys who represent them provide the best possible legal counsel.”

  • Wasylik said the FFDBA will organize seminars and town hall meetings about how to cope with the threat of foreclosure, such as the one hosted by U.S. Rep. Robert Wexler, D-FL, in April. The FFDBA also plans to provide property owners and the legal community with advice online and in print. [...] For more information about the FFDBA, visit

Source: Foreclosure Defense Bar launched.

(1) Along with Wasylik, other founding members of the FFDBA include Jason Ricardo and Ron Kaniuk of Ricardo, Wasylik & Kaniuk; Jeffrey H. Tromberg of Florida Debt Relief Center; Lori Patton of Law Office of Lori Patton, P.A.; Todd Budgen of Budgen Law Group; Dawn Rapoport of Rapoport Law Group; Shannon Stankiewicz of Hutchison Mamele & Coover; and Kevin Hoyes of Kevin M. Hoyes, P.A. President Wasylik also holds the office of treasurer, while Tromberg serves as vice president and Budgen as secretary.

Phones Start Ringing At Brooklyn DA's Deed Scam, Mortgage Fraud Unit

In Brooklyn, New York, WNYC Radio 93.9 FM reports:
  • [Brooklyn District Attorney] Charles Hynes says his new mortgage and real estate fraud unit has opened more than 80 investigations since March, leading to the indictment of eight people. [...] Hynes says the new unit was created with $875,000 of federal funding, and is investigating cases of mortgage fraud, refinancing fraud, predatory lending, deed theft and foreclosure rescue scams. The unit has received hundreds of calls since establishing a hot-line earlier this year.

Source: New Unit in Brooklyn DA's Office Cracks Down on Real Estate Fraud.

See also, Brooklyn Daily Eagle: The Senator and the Prosecutor: Fighting Mortgage Fraud in Brooklyn.

The Rush Is On By Lenders, Servicers Looking To Dodge California's New 90-Day Foreclosure Moratorium

In Southern California, the Orange County Register reports:
  • Bank of America, Citigroup and EMC Mortgage Corp. are among seven companies that have received permanent exemptions to California’s 90-day foreclosure moratorium, which began last week. More than 20 other lenders and loan servicers, including Wells Fargo and JPMorgan Chase, have received a temporary exemption while they wait to learn if it will become permanent.

For more, see 7 lenders escape state foreclosure moratorium.

Tuesday, June 23, 2009

Arizona Firms Selling Allegedly Bogus Loan Modification Services & "Loss Mitigation Consultant" Business Opportunities Faces Federal Civil Charges

The Federal Trade Commission recently announced:
  • At the request of the Federal Trade Commission, a federal court has halted a bogus mortgage foreclosure prevention operation that misrepresented both the “loss mitigation” services it offered and the earnings potential of the business opportunity it sold. The FTC seeks to end this deceptive scheme and make the defendants give up their ill-gotten gains.

  • According to the FTC’s complaint, the defendants(1) sold “loss mitigation” services to homeowners at risk of foreclosure, falsely claiming they could prevent foreclosure in 97 percent of cases and misrepresenting that they would make a full refund if they failed. Before performing any loss mitigation services, the defendants required homeowners to pay the equivalent of one month’s mortgage payment. Their contracts instructed homeowners not to contact lenders or their contract and its money-back guarantee would be voided. In some cases the defendants’ consultants told homeowners to stop making their mortgage payments while the defendants were working on their cases.

  • The FTC alleged that, contrary to the defendants’ claims, they completed loan modification in only about 6 percent of cases and routinely failed to return consumers’ repeated telephone calls. In numerous instances, the defendants had not contacted the consumers’ lenders or had made only non-substantive contacts with them, resulting in late fees, penalties, and other costs for the homeowners. After failing to secure loan modifications, the defendants also failed to honor their refund policies.

  • The FTC’s complaint also alleges that the defendants sold a “loss mitigation consultant” business opportunity for up to $1,500, falsely claiming that purchasers (“consultants”) could earn various amounts, including up to $6,000 per week, by referring homeowners to them and by recruiting new consultants. In fact, throughout the defendants’ entire operation, no consultant has earned that much money.

For the entire press release, see FTC Stops Foreclosure Prevention Marketers Who Misrepresented Their Services and Misled Business Opportunity Buyers.

For the relevant court documents in this case, see:

(1) According to the civil lawsuit, the defendants are:

  • Freedom Foreclosure Prevention Services, LLC, 1234 S. Power Road, Mesa, Arizona 85206. Freedom Foreclosure also used a maildrop located at 70 S. Val Vista Drive, Suite 3, #420, Gilbert, Arizona 85296,
  • Loss Mitigation Training Center of America, LLC, - uses a maildrop located at 70 S. Val Vista Drive, Suite 3, #420, Gilbert, Arizona 85296 as its registered office address. In addition, it directs correspondence to the physical address of 1234 S. Power Road, Mesa, Arizona 85206. It also does business as Mastermind Consulting Group.
  • Jeffrey C. Segal, and
  • Michael R. Workman.

State AG Probe Focuses On Central Florida Man With Involvement In Dubious Sale Leaseback, Foreclosure Rescue Deals

In Central Florida, the St. Petersburg Times reports:
  • For scores of desperate Tampa Bay homeowners, it seemed like a lifeline — Gideon Rechnitz would help bring their mortgage payments up to date and save their homes from foreclosure. But now the Florida Attorney General's Office is investigating whether Rechnitz misrepresented himself and his St. Petersburg-based companies in a foreclosure rescue scheme that enabled him to acquire dozens of houses at below-market value.(1)(2)


  • As the St. Petersburg Times reported last year, Rechnitz, 62, told homeowners that investors would buy their houses, make the payments and stop the foreclosure proceedings. The sellers could then rent back their homes with an option to repurchase them in two years. In an interview for that story, Rechnitz said that he explained all facets of the "program" and even videotaped closings to make sure the sellers understood. But many homeowners were confused by the documents he asked them to sign and could not meet the stringent rental and buyback conditions.


  • Rechnitz said in the fall that his foreclosure rescue business had slowed considerably in 2008 because it was harder to find people [...] with substantial [home] equity. But as home­owners who got 100 percent financing now struggle to renegotiate their mortgage terms, state records show he recently started a new company — Loan Modification Enterprises.

For more, see Attorney general investigating fraud in foreclosure 'rescue' operation.

(1) According to the story, the current investigation is not the first involving Rechnitz. The Florida Bar conducted a probe involving conduct that could constitute the unauthorized practice of law in connection with an alleged "rescue" of a Bradenton home. Rechnitz admitted no wrongdoing, but later signed a cease-and-desist affidavit. In the 1980s, the Federal Trade Commission sued Rechnitz for deceptive trade practices in connection with timeshare marketing program. He admitted no wrongdoing, but agreed to refund $1.25 million to customers. He reportedly also lost his Florida real estate license. He also reportedly faces two lawsuits in Sarasota County, including one by 71-year-old Yolanda Rodriguez, who claims that in 2006 Rechnitz improperly evicted her and her deaf brother from their home, which he acknowledged in a deposition was worth far more than the $150,000 Rodriguez owed on her mortgage, according to the report.

(2) In May, a Washington State jury hammered a foreclosure rescue operator similarly suspected of ripping off the home equity of financially strapped homeowners in a civil lawsuit brought by the Washington Attorney General's office (see Pay time for notorious foreclosure rescue scammer - Attorney General announces major victory in state’s case with Washington man who promised help but took homes). The jury found that the business practices engaged in by the operator violated the state Consumer Protection Act. See Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M.

Two Lawmakers Ask Fannie, Freddie To Ease The Squeeze On Available Financing For New Condo Units

The Wall Street Journal reports:
  • Two Democratic lawmakers are calling on Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery.

  • In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. Fannie Mae also won't purchase mortgages in buildings where 15% of owners are delinquent on condo association dues or where one owner has more than 10% of units, which the firm sees as signals that a building could run into financial trouble. Freddie Mac will implement similar policies next month.

  • In a letter to the chief executives of Fannie and Freddie, Reps. Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, and Anthony Weiner (D., N.Y.) warned that the 70% sales threshold "may be too onerous" and could lead condo buyers to shun new developments. The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos. [...] Tighter lending standards are also creating hurdles for condo owners who want to sell their units.

For the rest of the story, see Changes Urged to Rules on Condo Loans.

Virginia Accountant Charged In Alleged Mortgage Scam; Accused Of Creating Letters Containing Bogus Info To Assist Straw Buyers Obtain Home Loans

In Northern Virginia, The Washington Examiner reports:
  • Federal authorities have accused a Virginia accountant of writing false letters verifying the incomes of homebuyers who were caught in a mortgage fraud scheme that caused banks to lose about $3 million when their homes went into foreclosure. Maria E. Conrad would receive up to $400 each from loan officers at E-Star Lending for the letters she wrote supporting its clients’ loan applications, court documents said. In December, the owner of E-Star Lending, Gohar Mirza, was sentenced to 5 years and 3 three months in prison and ordered to pay back the $3 million he caused lenders to lose when the houses purchased by his straw buyer scheme went into foreclosure.


  • The conspirators required help from accountants to support the false information in the loan applications, charging documents said. [...] The postal inspector wrote that he interviewed a sales representative from one of the swindled lenders. The representative said letters from accountants could “make or break” loans from self-employed customers.

For more, see Accountant accused of role in mortgage fraud.

Arizona Minister's Real Estate Deals Attract Interest From State, Federal Investigators; 23 Of 26 Purchases Went Into Foreclosure

In Phoenix, Arizona, The Arizona Republic reports:
  • A Valley preacher with a worldwide ministry and his wife bought multiple upscale homes with deceptive loan applications, according to a state case accusing a mortgage firm of illegal practices. Clint Rogers, head of Mesa-based Clint Rogers Ministries, and Angela Faith Rogers are not accused of any wrongdoing in the complaint filed by the Arizona Department of Financial Institutions, which seeks to shut down Scottsdale-based Global Mortgage. The mortgage company handled many of the couple's purchases and is accused by the state of using illegal and improper procedures. But the couple's purchases of more than two dozen homes in Arizona over two years are documented in records turned over by the state to federal investigators charged with looking at mortgage improprieties.


  • Property records show that they bought homes that the sellers had purchased hours, days or weeks earlier for thousands of dollars less than what Clint and Angela Rogers had paid for them. That generated hundreds of thousands of dollars in profits for the sellers. Of 26 homes bought by the minister and his wife, at least 23 went into foreclosure. All were sold for less than what banks lent to the couple, mostly through trustee sales.

For more, see Minister's home purchases questioned in state mortgage case.

Monday, June 22, 2009

Hawaii Feds Accuse Three Of Arranging For Fraudulent Financing In Foreclosure Rescue Schemes

In Honolulu, Hawaii, the Honolulu Advertiser reports:
  • Another mortgage fraud criminal case has been filed in federal court, this one accusing more people affiliated with Accel Mortgage LLC with conspiracy to commit mail, wire and loan fraud. Charged in the case are Carla Dutro, identified by the U.S. attorney's office as the regional manager of Accel, Maria "Gerlie" Guillermo, Maui branch manager of the company, and Alfred Ulat, a tax return preparer. Accel owner Welton Kalani and Audra Palomares, a loan processor with the company, were charged in an earlier fraud case filed here in April. The government alleges in the new case that Dutro, working with Kalani and others, "facilitated fraudulent real estate transactions involving homes facing foreclosure."

Source: Another mortgage fraud case in court (More people linked to Accel Mortgage face federal charges).

(1) According to the story, Dutro processed loan applications and "submitted materially false supporting documentation to lending institutions," the government charged. Dutro allegedly submitted bank statements on behalf of borrowers "that she had materially altered" to inflate the net worth of the borrowers, the government alleged. Guillermo and Kalani allegedly "structured fraudulent loan transactions" and helped prepare false documents from accountants and tax return preparers, according to the U.S. attorney's office. Ulat allegedly was paid $100 to $150 for submitting "false statements concerning the employment and tax returns of loan applicants."

City Judge Orders Wells Fargo To Clean Up Its Mess Of Foreclosed Homes Throughout Cleveland; Bans Sales Of Homes Under $40K That Violate Local Codes

In Cleveland, Ohio, The Washington Independent reports:
  • For neighborhoods fighting the blight and deteriorating property values caused by foreclosed properties that banks abandon or unload on speculators, this is big news: A housing court judge in Cleveland has ordered Wells Fargo to clean up the foreclosed houses it owns in Cleveland. In the preliminary injunction he issued Thursday, Judge Raymond Pianka also required Wells Fargo to prove its foreclosed properties are up to city building and housing codes before the bank can sell any of them for less than $40,000, reports. Pianka will decide at some point whether to make the injunction permanent.

For more, see Cleveland Neighborhoods Win a Round in Fight Against Banks Over Foreclosures.

See also, The Cleveland Plain Dealer: Judge Raymond Pianka orders Wells Fargo Bank to bring foreclosed properties up to code in Cleveland. BetaVacantForeclosure

Cook County Sits On $18M In Foreclosure Sale Surplus Funds Owing To Approx. 1,900 Ex-Homeowners; $460K In Unclaimed Cash Awaits One Former Owner

In Chicago, Illinois, the Chicago Sun Times reports:
  • Call it a green lining on the cloud of the mortgage foreclosure crisis. Homeowners who handed the keys over to the bank may actually have some money coming their way, and in Cook County, a new online system may help nearly 2,000 property owners get their due. The Cook County Clerk of the Circuit Court is holding approximately $18 million in mortgage foreclosure surplus funds -- profits generated when the bank sells a property for more than what the original owner owed the lending institution.

  • The county has identified about 1,900 onetime owners who are owed money as a result of foreclosure sales in the last decade, and Circuit Court Clerk Dorothy Brown has launched a campaign to get the word out. In one case, a property owner could collect $460,000, she said. So many people turn the keys over to the bank and don't look back -- and that's why the money has accumulated, Brown said.


  • Go to and head to the mortgage surplus search engine, which will allow you to put in your name. If there's a match, begin the process of petitioning the court for your money. Cook County residents can also visit the clerk's accounting office for more information.

For more, see Homeowners who gave up might get foreclosure refund.

Condo Living Begins To Get Ugly In Some Complexes Where Non-Delinquent Unit Owners Are Left On The Financial Hook By Their Deadbeat Neighbors

In Miami, Florida, The Miami Herald reports:
  • Well into the second year of South Florida's foreclosure crisis, deadbeat condo owners are taking a heavy toll on associations [...]. Owners in or facing foreclosure often stop paying their condo fees that are needed to pay for essential utilities and services. That leaves other residents on the hook to pay the difference. Some can't cover the shortfall. As a result, the water has been shut off. And the lights. Trash is piling up and lawns are ragged. Many are going without property insurance in the depths of hurricane season.

  • In condos, those who pay their bills and those who don't live cheek to jowl, fraying nerves throughout the building. Some condo owners are acting out. It's getting ugly. The frustration is fed by a legal system that affords considerable protections to delinquent owners -- too many protections, in the eyes of some of those who are current with their payments. And so, some associations are meting out their own punishment. Public humiliation is in vogue. At least two condominiums -- The Collins in Miami Beach and Island Place in North Bay Village -- and probably far more, post lists bearing the names of owners who are behind on fees. "I don't see it as a bad practice, myself,'' said Jenny Huertas, a resident of The Collins who hopes it will keep her assessments from going up. "I guess it's a way to embarrass them and get their attention that they need to take action.''(1) After appealing to nonpayers' sense of fairness failed, Eduard Sotolongo, a board member at Island Shores condo, said he started aggressively calling the towing service to haul away their cars when parked in guest spots or other unauthorized spaces.

For more, see Condos squeeze deadbeat residents (It's a mad, mad world in condo land, where those who pay their maintenance fees and those who don't live cheek to jowl, harboring bitter resentment).

See also, WFOR-TV Channel 4: Condo Associations Fight Back Against Deadbeats.

(1) While it may seem like a good idea to some to post "deadbeat lists" to embarrass unit owners into paying their delinquent maintenance fees, such a practice, when targeting owner-occupants (either full-time or part-time residents) appears to be a violation of the Florida Consumer Collection Practices Act (Sections 559.55-559.785, Florida Statutes, which provides, in pertinent part:

  • Prohibited practices generally.--In collecting consumer debts, no person shall [... p]ublish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts [...]. F.S. 559.72(14).

It is arguable whether this statute prohibits posting a deadbeat list of unit owners who rent out their units as investments in that this statute only applies to the collection of "consumer debts" (as opposed to debts incurred in connection with "business" or "investment" transactions), which the Florida Statute defines as follows:

  • "Debt" or "consumer debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. F.S. 559.55(1).

Sunday, June 21, 2009

Fires In Vacant Homes On The Upswing?

The Associated Press reports:
  • Fires in vacant homes rose 11 percent to 21,000 in 2006 — the latest year for which figures are available — while all home fires rose just 4 percent, the National Fire Protection Association reported in April. More than four of every 10 vacant building fires were intentionally set, the group reported. Some of that is arson for financial reasons. But in neighborhoods of sagging homes worth little, fires are often set by vandals, the homeless or people seeking revenge.

  • The threat grows as empty homes multiply, said John Hall, the NFPA's division director for fire analysis and research. Vacant homes nationwide topped 19 million earlier this year, up from 15.7 million in 2005, according to the Census Bureau. "The best way to prevent vacant building fires is to prevent vacant buildings," the NFPA concluded.

For more, see Fire moves into houses abandoned by foreclosures (Fire Moves Into Houses Nation's Foreclosure Crisis Left Abandoned - But Not Always Empty).

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

Over A Dozen Tenants Put Out Onto Street Without Notice As Landlord Is Accused Of Housing Violations & Suspected Of Stealing Electric & Water Service

In Pinellas County, Florida, the St. Petersburg Times reports:
  • At least 15 residents of a west Oldsmar apartment building were evicted Friday morning with no prior notice after Pinellas County sheriff's deputies said their landlord violated housing codes. The residents, who said they first learned of the eviction about 9:30 a.m., had to pack their things in the morning heat without lights or air conditioning after a TECO employee cut off what deputies said was stolen electricity. Many said they knew nothing about the allegations of power and water theft leveled against landlord Lawrence Ayers, who charged them $125 weekly to cover rent and utilities.

  • Electrical connections at 3616 Meriden Ave. were jerry-rigged to bypass meters, causing "imminent danger to the residents," said Safety Harbor Fire Marshal Richard Brock. Though the eviction notices allowed residents 30 days to vacate, officials would not let people stay or delay the disconnection of power lines due to "personal safety concerns" like the potential for a fire, Brock said.


  • Ayers has not been arrested and utility-theft charges have been referred to the State Attorney's Office. [...] Ayers was arrested three times in the past five years for failing to appear in court on housing violation charges dealing with electricity and accumulation of trash, according to Pinellas jail records. He has entered into 11 mortgage foreclosure cases with seven different companies, court records show.

For the story, see Residents evicted from Oldsmar apartment building; landlord accused of code violations. RentSigmaSkimming

Mass. Family With Young Children Pockets $10K Settlement From Real Estate Agents Accused Of Violating State Anti-Discrimination, Lead-Based Paint Laws

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office obtained a consent judgment against Geoffrey Wells, doing business as (d/b/a) Harvard Real Estate of Brookline, and one of his employees, David Ravalli, accused of violating state antidiscrimination and lead paint laws by refusing to show a property to a family because they had young children. The judgment, [...] requires the brokers to pay the family $10,000 and prohibits them from discriminating against any person who seeks or applies for housing because they have children or otherwise discriminating against any person in violation of state and federal fair housing laws.


  • The consent judgment resolves a complaint filed in October 2007 in Norfolk Superior Court, alleging that Geoffrey Wells, d/b/a Harvard Real Estate of Brookline, through its agent David Ravalli, refused to show an advertised unit to a mother of two young children and tried to steer her to other properties. The complaint alleges that the discriminatory treatment was confirmed by two testers from the Fair Housing Center of Greater Boston.(1)

For the entire press release, see AG Reaches $10,000 Settlement with Brookline Real Estate Brokers for Discrimination.

(1) Information for Massachusetts residents who believe they've been discriminated against in any way in violation of federal and state anti-discrimination laws in connection with housing sales or rentals or in housing lending and insurance is made available online by the Fair Housing Center of Greater Boston in the following languages:

Cleveland Housing Court Judge Begins Belting Lenders With Contempt Citations For Failing To Answer For Code Violations On Dilapidated Foreclosures

In Cleveland, Ohio, The Plain Dealer reports:
  • One day last month, Cleveland Housing Court Judge Raymond Pianka waited for absentee owners facing charges that they neglected their property to come and explain why they shouldn't be held in contempt. The mostly out-of-town companies had been no-shows at previous hearings, and now it looked as if they would be missing again, despite Pianka's summons.

  • Court staff checked the hallway and called the companies' names. But nobody answered. Pianka found them in contempt of court and fined them $1,000 a day until they appeared before him, ratcheting up the financial stakes for far-flung owners in a city scarred by vacant and dilapidated housing. For Cleveland's lone housing judge, this contempt hearing was an unprecedented legal move during an unprecedented housing crisis that is further eroding neighborhoods across the city.

For more, see Cleveland Housing Court judge gets tough, holds absentee landlords in contempt who fail to appear.

Go here for other posts on Judge Pianka's hammering of deadbeat lenders in Cleveland Housing Court. BetaVacantForeclosure

WV Non-Profit Law Firm Expands Assistance For State Predatory Mortgage Victims In Foreclosure By Launching New Office

In Charles Town, West Virginia, The Journal reports:
  • Mountain State Justice Inc., a Charleston-based agency, has opened a new office in Clarksburg in an attempt to better serve clients in the state's eastern and northern counties. The nonprofit group opened its first office in 1996, to help provide legal assistance to low-income individuals facing problems related to consumer issues, health care and other matters, said attorney Nathan Fetty. Recently though, the focus has changed, as calls flooded in from people hoping to keep their home out of foreclosure.

  • "The foreclosure work has really picked up since all the economic troubles have broken loose," Fetty said. "The vast bulk of our work right now is foreclosure work. It's 95 percent of what we do right now."

  • Potential clients, especially those who believe they have fallen prey to predatory lending practices, phone in to Mountain Justice. If the agency representatives think they might be able to provide assistance, Fetty said the individuals are asked to come in for an in-person meeting. Until now, he said that meant a five- to six-hour drive to Charleston for clients living in the eastern and northern portions of the state.


For more, see Nonprofit law firm expands state’s service (Mountain State Justice says bulk of caseload foreclosure assistance).