Saturday, August 29, 2009

Condo Association Trend Seeking "Blanket Receiverships" In Attempt To Avert Financial Disaster Begins To Take Hold In Central Florida

In Central Florida, the Orlando Sentinel reports:
  • Condominiums in Central Florida are cutting back on things like tennis-court lights and are seeking help from the courts because so many condo owners are abandoning their fast-depreciating units and refusing to pay required maintenance fees. "It's a major crisis right now," said Bill Raphan, a supervisor with the state Division of Condominiums.

  • Desperate condo associations are starting to seek court-appointed receivers — a trend that started in South Florida but has spread to this part of the state. It's a sign of how dire the situation is, said Donna Berger, executive director of the Community Advocacy Network, a nonprofit group representing more than 1,500 condo and homeowner associations. "The current economic downturn and foreclosure crisis have placed many associations on the brink of disaster," she said.


  • Last week, state Circuit Judge Alan A. Dickey appointed Seth R. Heller and Co. to collect fees at the Villas. More than 60 percent of the 294 unit owners are delinquent, with individual tabs of as much as $11,000 for some owners of multiple units. Total unpaid fees: $720,000. If those condo owners or their tenants don't pay up soon, they will be held in contempt of court and at some point could face arrest. "Without this order, the association was really facing financial collapse," said Fort Lauderdale lawyer Stuart Zoberg, who represented the Villas board. "And all along you have these landlords laughing, because they are collecting rents, and they still siphon off as much money as they can from their renters without paying association fees."

For more, see Condos sic judges on owners for back fees.

In a related post, see Florida Appeals Court OKs "Blanket Receivership" In Condo Association Battle Against Rent Skimming Unit Owners, Deadbeat Investors.

Dozens Of Brooklyn Condo Projects Face Financial Trouble

In Brooklyn, New York, Crain's New York Business reports:
  • Sixty-five residential buildings in central Brooklyn are either financially troubled or on the verge of distress, according to a recent survey conducted by Democratic Assemblyman Hakeem Jeffries. These properties are market-rate residential buildings at least four stories high located in the neighborhoods of Fort Greene, Clinton Hill, Prospect Heights, Crown Heights and Bedford–Stuyvesant. Many are luxury developments in different stages of completion. Some projects are completed and unoccupied, while others are stalled. Some of the projects’ developers are also defaulting on their construction loans, said Mr. Jeffries.

For more, see 65 central Brooklyn condos in or near financial distress (The list of properties, compiled from a survey conducted by Democratic Assemblyman Hakeem Jeffries, includes a number of high-profile new developments).

In a related story, see Goldman Sachs' Brooklyn condo bet sours (The company, along with partner The Clarett Group, is negotiating with German lender Eurohypo Bank to turn over the 30-story Forté tower after sales went nowhere).

Oregon Man Cops Plea To Foreclosure Stripping His Own Home

In Damascus, Oregon, The Oregonian reports:
  • After stripping his foreclosed home of everything from the air conditioning system to the kitchen sink, Grigoriy Bogoslavets was convicted of a crime that is often witnessed but rarely reported. The 33-year-old electrician pleaded no contest last month to aggravated theft after stealing more than $50,000 of property attached to his former Damascus home, one of the few such cases in Oregon or across the country to result in prosecution. He will be sentenced Sept. 22.


  • Departing homeowners' taking off with fixtures that are legally part of the house -- generally anything attached or installed -- is nothing new to real estate brokers. What's changing, especially in the nation's worst housing markets, is the recognition that such acts can be criminal.


  • Neighbors tipped off police when they saw Bogoslavets return to his former home with a van after vacating the premises. Investigators discovered Bogoslavets had taken nearly everything he could remove, including the kitchen island, fireplace, bathtubs, the doorbell and electrical outlets.

For more, see Damascus man even took the kitchen sink from foreclosed home (if link expires, try here).foreclosure fixture stripping apple

Struggles Continue For Homeowners Seeking Loan Modifications

A recent story in The Tampa Tribune contained anecdotes of three Central Florida homeowners and their troubles trying to get their mortgage loans modified. For example:
  • It's been more than a year since David Austin asked his mortgage company to modify his loan. He says he was told to stop making payments while he waits. He doesn't receive phone calls or letters, and the lender hasn't filed for foreclosure. "It's like they forgot about me," Austin said. "Every month, I get more behind and my house value drops further."

For more, see Homeowners' worlds, mortgages upside down.

Involvement In Failed Real Estate Scheme Results In Big Drop In Credit Score For Navy Officer, Leaving His Security Clearance, Service Status In Limbo

In Fresno, California, KGO-TV Channel 7 reports:
  • The ABC7 I-Team has been investigating a statewide, multi-million dollar real estate scheme that ruined credit scores for dozens of Bay Area investors, but one man's story stands out. He's a Navy officer who just volunteered for a tour of duty in Afghanistan. The condos he bought for more than $1 million are now virtually worthless. But even worse, he says, he can't be deployed overseas because of the huge drop in his credit score.


  • Late last year, he got a default letter from a bank. Then a call from the Naval Criminal Investigative Service saying his security clearance was under review. That's because his credit score had dropped from more than 800 to around 500. [... His] deployment was [placed] on hold.

For more, see Scheme ruins war veteran's credit score.

Friday, August 28, 2009

California Real Estate Agent Gets 90 Days After Admitting To Forging Unwitting Victim's Name On $900K+ In Loan Documents To Purchase Home

In San Bernardino, California, the Contra Costa Times reports:
  • A Chino Hills real estate agent was sentenced to 90 days in jail [last week] after pleading guilty to forging more than $900,000 in loan documents. Anita Mendoza, 44, was accused of forging another person's signature to obtain the loans, which she used to purchase a home in Chino Hills in 2006. In addition to the jail time - which Mendoza can serve on weekends - the Realtor was placed on three years' probation Friday in San Bernardino Superior Court and ordered to attend a counseling program. [...] She will be required to pay back $180,000 lost by a mortgage company victimized in her scheme, Deputy District Attorney Vance Welch said last month. When Mendoza was interviewed by investigators last month, she confessed to forging loan documents to purchase her home.

For the story, see Chino Hills Realtor sentenced to 90 days for loan forgery.

Role Of Licensed Loan Modification Consultants In Nevada Mandatory Foreclosure Mediations An Unanswered Question

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • Permanent regulations that require licenses for home mortgage modification and foreclosure consultants are expected to become effective [this week], but one important question remains unanswered. Can these licensed consultants represent clients in mediation sessions with mortgage lenders?

For more, see License rules leave questions (Whether consultants can represent clients in mortgage mediation unclear).

In a related story, see Las Vegas Sun: Agency gets authority to set fines for bilked homeowners (Nevada commissioner of mortgage lending adopted rules Tuesday giving his agency authority to license loan modification & foreclosure consultants and to take disciplinary action, including fines up to $10,000 for violations):

  • These companies or agents must place the up-front money collected from the homeowner in a trust account and can draw down only when they deliver a service. Education requirements are in place that those in the business must get anywhere from 15 hours to 25 hours of instruction. Bonds must be posted with the lowest amount at $75,000.

Role Of Attorneys Representing Homeowners In Mandatory Foreclosure Mediations Questioned

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • The Nevada legal community is getting behind a new mediation program designed to reduce the state’s ongoing foreclosure problem, but some attorneys are facing criticism for trying to profit from it. [...] One legal advocate for the poor has criticized the program, sayings attorneys are preying on homeowners for a service they don’t need. Many attorneys, however, said it never hurts to have legal representation in the complicated process to keep a home.

  • Michael Joe, an attorney and foreclosure specialist for the Legal Aid Center of Southern Nevada, said he has seen attorneys advertise their services for $1,500 to $3,500 to help homeowners in mediation. It’s piggybacking on attorneys’ ads to help homeowners modify loans, he said. Joe called it no different from an attorney waiting outside of a hospital for injured patients who are brought in by ambulance.


  • Robert Noggle, a real estate and business attorney with Black & LoBello, said attorneys have helped people stay in their homes by working with lenders and helping negotiate short sales. In mediation, attorneys may need to advise the homeowner on what is offered by lenders. Although attorneys aren’t necessary, not every homeowner who goes into mediation has the time or inclination to understand the rules, Noggle said.

For more, see Lawyers’ role in foreclosure mediations sparks debate (At issue: Are homeowners buying what they don’t need?).

In a related story, see License rules leave questions (Whether consultants can represent clients in mortgage mediation unclear).

Tennessee Real Estate Operator Screwed Us In Bogus Real Estate Deals, Say Clients

In Dickson, Tennessee, WSMV-TV Channel 4 reports:
  • Some families who Jimmy Greene has done business with seem to end up losing their homes. Karen and Doug Young said Greene caused them to lose their house in Dickson to foreclosure. [...] The Youngs wanted to sell their house, and so they signed a contract with Greene and Greene Custom Homes. The deal was that if it didn't sell, Greene would make the payments. But he didn't. "They did not pay for May, June, July or August of 2008, and that was why it was in foreclosure," said Doug Young. They never saw it coming, they said, because Greene intercepted the correspondence from their mortgage company. "All of the contact numbers were changed, down to the e-mail address, so that everything would go to him and we wouldn't know," Karen Young said. The two ended up losing the house.(1) And they aren't the only ones who have said their real estate deals with Greene ended badly.


  • [Marsha Hargrove] and her husband were buying a home they ended up losing. They had signed a rent-to-own contract with Greene, then found out after two and half years that Greene didn't own the house and all the improvements they made were down the drain.


  • Deborah Branham's family was renting to own from Greene but found out he wasn't paying the mortgage on the family's house, either. It, too, was in foreclosure, and they lost their $5,000 down payment.

For the story, see Clients Say Company Ruined Homeownership (Greene And Greene Custom Homes Faces String Of Lawsuits).

(1) Reportedly, the Youngs went to court and won, but they have yet to collect on their $25,000 judgment.

Oregon AG Settles Suits With Two Firms, Begins Probe Into At Least Six Others In Effort To Find & Prosecute Crooked Loan Modification Rackets

From the Oregon Department of Justice:
  • Attorney General John Kroger [Wednesday] announced a new enforcement effort to protect Oregon homeowners by targeting loan modification companies that engage in deceptive and misleading business practices. [...] The attorney general announced that his Financial Fraud and Consumer Protection Unit has opened more than half a dozen investigations related to loan modification companies and mortgage fraud. Kroger also announced the results of two cases.

  • [Wednesday's] settlements are with National Homeowners Assistance Services, Inc. [$4,000 in legal costs reimbursement], based in Lake Forest, Calif., and American Mitigation Group [$4,000 in restitution], based in Newport Beach, Calif. The companies offered loan modification assistance and related services to homeowners facing foreclosure. The companies purposefully used tactics that could confuse homeowners, including implying they were affiliated with government agencies or programs.


  • [Wednesday's] settlements are one part of an overall Oregon Department of Justice strategy to protect Oregon homeowners. The Department of Justice will vigorously pursue crooked loan modification companies.

For the Oregon AG press release, see Attorney General John Kroger Cracks Down On Loan Modification Scammers (Two California loan modification companies must stop misleading Oregon consumers).

Thursday, August 27, 2009

Mortgage Servicer's Insurance Payment Screw Up Left Texas Couple "Naked" During Hurricane Ike & Stuck w/ Force-Placed Policy, Says Suit

In Galveston, Texas, The Southeast Texas Record reports:
  • A Galveston County couple is suing a subsidiary of Citigroup for failing to pay their insurance premium payment on time. Garry and Karrie Higgs' breach of contract suit alleges St. Louis-based CitiMortgage mishandled a payment that was essential to the renewal of their policy with the Texas Windstorm Insurance Association ["TWIA"].


  • According to the complaint, CitiMortgage was responsible for initiating premium payments from an escrow account. The suit states that CitiMortgage was informed by Nationwide in late July 2008 that the Higgs' coverage was set to expire in two months. Nationwide then established a three-week window for payment. The plaintiffs claim CitiMortgage did not properly heed Nationwide's request, but CitiMortgage claims it made the payment but accidentally mailed it to a wrong location.

  • Both Nationwide and the Higgs claim they repeatedly tried to contact CitiMortgage regarding the payment, only to be told by the defendant it was already issued. The payment finally surfaced on Sept. 10, 2008, a week after the deadline and three days before Hurricane Ike. Ike, a Category 2 storm, came ashore and inflicted a significant amount of damage to the plaintiffs' residence. The Higgs say their new TWIA policy did not include the events during Ike and was cancelled. "As a result, CitiMortgage purchased its own force-placed insurance policy and charged the plaintiffs a higher and more expensive premium," the suit says.

For the story, see Galveston couple blames Citigroup for failing to pay TWIA premiums.

Ohio AG, Cuyahoga County Task Force Bust 41 People In Alleged Straw Buyer Mortgage Scam Involving 453 Houses, $44M In Fraudulently Obtained Loans

In Cleveland, Ohio, Crain's Cleveland Business reports:
  • Four companies and 41 people(1) have been indicted in an alleged mortgage fraud scheme spearheaded in Beachwood. The scam allegedly included 453 homes and $44 million of fraudulent loans. The Cuyahoga County Mortgage Fraud Task Force(2) and the Ohio Organized Crime Investigations Commission allege that Beachwood resident Uri Gofman convinced friends and relatives to invest in his real estate company, Real Asset Fund. He began the business with seed money from Latvia, the officials said in a press release, but used “straw buyers” to purchase homes. The company then falsely claimed that improvements were made to the homes so they could be refinanced, the attorney general's office alleged. The houses were then sold to unqualified buyers.

For more, see Indictments handed up in alleged mortgage fraud scheme.

See also:

Go here to see a complete list of the defendants and charges.

(1) The 45 individuals and outfits busted were: Uri Gofman, 36, of Beachwood, Tony Viola, 43, of Cleveland, Igor Gofman, 47, of Beachwood, Samyel Goldshtein, 51, of Highland Hts., Alex Kurlienko, 27, of South Euclid, Kevin Landrum, 30, of Solon, The Real Asset Fund, 2120 Green Rd. South Euclid, Yan Satanovskiy, 61, of Lyndhurst, Irina Satanovskiy, 61, of Lyndhurst, Ester Simkhovich, 35, of Lakewood, New Jersey, Leonid Simkhovich, 31, of Wickliffe, Gennadiy Simkhovich, 52, of Highland Hts., Marina Simkhovich, 47, of Highland Hts., Alexander Vinokur, 39, of Solon, Eric Gesis, 45, of Highland Hts., Tigran Babloyan, 44, of Reminderville, Karka Inc., 2120 Green Rd. South Euclid, James Alexander, 42, of Warrensville Hts., Tiffany Alexander, 39, of Beachwood, Farah Dailey, 30, of Euclid, George F. Gardner III, 38, of Euclid, Donnie Eatmon, 44, of Macedonia, Rochelle Huffman, 35, of Cleveland Hts., Brian P. Jordan, 48, of Cleveland, Crystal McCoy, 53, of Cleveland, Maura McKissic, 32, of Cleveland Hts., Steve Greenwald, 43, of Solon, Zakkiyya Mumin, 32, of Warrensville Hts., Sulieman Mumin, 30, of Warrensville Hts., Troy E. Spencer, 47, Cleveland Hts., Shirley Board (Vannerson), 59, of Cleveland Hts., Nathan Prusak, 35, of Bay Village, Dale M. Adams, 34, of Solon, Miroslav Simkhovich, 35, of Willoughby, Ronald Medley, 45, of Cleveland, Darrin Harsley, 39, of University Hts., Dave Pirichy, 38, of Burton, Linas Puskorius, 51, of Cleveland, Howard Sieferd, 58, of Euclid, James M. Leoni, 35, Lyndhurst, Realty Corporation of America, 815 Superior Ave. Cleveland, Tiffeney Dennis, 35, of Cleveland Hts., Alicia McKnight, 25, of Bedford Hts., Gregory L. Krainess, 44, of Beachwood, JN & DH Investments, 3213 Portman Ave. Cleveland.

(2) Task Force members include:

  • Ohio Organized Crime Investigations Commission
  • Cuyahoga County Prosecutor's Office
  • Ohio Bureau of Criminal Identification and Investigation
  • Cuyahoga County Sheriff's Office
  • Cleveland Heights Police Department
  • Solon Police Department
  • Beachwood Police Department
  • Pepper Pike Police Department
  • HUD Inspector General's Office
  • Cuyahoga County Recorder
  • Cuyahoga County Auditor
  • Cuyahoga County Treasurer
  • Ohio Department of Commerce-Division of Financial Institutions
  • F.B.I.
  • U.S. Attorney's Office
  • U.S. Postal Inspector

South Florida-Based Loan Servicer Scores No Points In New Report

The South Florida Business Journal reports:
  • West Palm Beach-based Ocwen Financial Corp. and other subprime lenders are the subject of a critical report released Wednesday by The Center for Public Integrity. Public records show 21 of the top 25 participants in a $21 billion federal program to bail out home borrowers were involved in the subprime loan industry, the center said. The report gives more ammunition to critics who say some of the nation's largest financial institutions are profiting from bailout funds after helping to cause the economic mess in the first place.


  • The new report by the Center for Public Integrity says Ocwen has received $553.4 million in funds from federal Home Affordable Modification Program (HAMP). The report cites SEC filings that say Ocwen is the subject of about 64 lawsuits accusing it of abusive collection practices.

For more, see Ocwen target of critical report.

For the report by The Center For Public Integrity, see Who's Behind The Financial Meltdown (The Top 25 Subprime Lenders And Their Wall Street Backers).

Conn. AG Files Civil Suit Against "Renegade Real Estate Ring" Putting Customers Into Unaffordable Mortgages; Referral To Criminal Prosecutors Possible

In Hartford, Connecticut, The Connecticut Post reports:
  • Latinos throughout Southwestern Connecticut were victims of a wide-ranging predatory-lending scheme that used a Stamford real estate office to guide them into unaffordable mortgages, Attorney General Richard Blumenthal charged on Tuesday.(1) Many of the 120 or so victims are unable to speak English and about 33 homes have already been lost through foreclosure, said Blumenthal during an interview in which he said the case will be referred to state and federal prosecutors for possible criminal investigation.

  • He detailed a "renegade real estate ring" in which customers dealing with Roman Realty, a Century 21 affiliate on Bedford Street, would be taken to an adjacent mortgage company and later have their incomes falsified by a third company for use on loan applications.

For more, see Blumenthal says Latinos were victims of predatory lending scheme.

(1) According to the story, Blumenthal, representing the state Department of Banking and the Department of Consumer Protection, has sued VRM Mortgage Company, Inc. and Roman Realty, Inc. and the companies' owner, Victor Roman, as well as VRM's office manager, Tony Mojica. He's also filed a lawsuit against Jose Flores, the owner of Harvard Financial Services, located on Virgil Street in Stamford.

California Real Estate Agent Cops Plea To Investment Scam That Pulled In $1.25M+; Victims Include Senior Who Invested Bulk Of Life Savings

From the Office of the Ventura County, California District Attorney:
  • District Attorney Gregory D. Totten announced [...] that Veronica Sanchez Gallegos, a licensed real estate agent residing in Ventura, pled guilty on August 6, 2009, to one felony count of theft from an elder, five felony counts of grand theft, and admitted a special allegation of taking more than $500,000. In an investigation conducted by the District Attorney's Office Bureau of Investigation, it was determined that Gallegos conducted a fraudulent investment scheme where six victims entrusted her with a total $1,289,000. Victims invested money with Gallegos after relying on false assurances made by Gallegos that their investments were being pooled into short term construction, real estate, and similar “secured” loans [...] and were protected by an escrow fund in the event of default.


  • One 65 year-old victim invested the bulk of his life savings for a total of $284,000 and suffered a net loss of $244,000. Other investors invested amounts ranging from $40,000 to $622,000.

Go here for the Ventura County DA press release.

Wednesday, August 26, 2009

Westchester DA Indicts Eight In Alleged Equity Stripping Foreclosure Rescue Scam After Joint Probe w/ NYS Banking Dept.; Four Families Victimized

In White Plains, New York, The Journal News reports:
  • Eight people(1) were indicted for a countywide mortgage scheme that defrauded four families and two mortgage lenders of $1.4 million, Westchester authorities announced [Tuesday]. The perpetrators "induced desperate property owners fearing the threat of foreclosure to deed their homes to 'investors' with the promise that they could re-purchase their property in 12 to 24 months," District Attorney Janet DiFiore stated in a news release. "In fact, the defendants colluded to strip the property of its equity by obtaining inflated mortgages based on fictitious purchase prices using 'show' checks to deceive the banks as to the actual purchase price." The arrests followed a nine-month probe by DiFiore's office and the state Banking Department. The targeted families were from Croton-on-Hudson, Yorktown, Cortlandt and Mount Vernon.

Reportedly, Westchester DA Fiore said that four members of the alleged racket were attorneys,(2) and that the four victims who had their home equity ripped off in the sale-buyback deals would have to bring civil lawsuits against the alleged perpetrators to try to get their homes back.(3)

Source: Eight indicted in Westchester mortgage scheme.

For the Westchester DA press release, see Indictment Unsealed In Countywide Mortgage Fraud Scheme (Eight Individuals Defrauded 4 Families For 1.4 Million Dollars).

(1) Arrested were Doreen Swenson, 60, and Herbert "Phil" Hall, 60, of Tarrytown; Mildred Didio, 44, of Manhattan; David Reback, 67, of Rye Brook; Amerigo DiPietro, 59, of Brewster; Eileen Potash, 52, of Queen; Wilma Shkreli, also known as Wilma Gecay, of Westwood, N.J.; and Frank Corgiliano, 44, of Newtown, Conn.

(2) The lawyers were identified as Didio, Reback, Potash, Corigliano. The four lawyers, along with the four others, were indicted Tuesday, each on charges of grand larceny, fraud and conspiracy. They pleaded not guilty. See 4 lawyers indicted in $1.4M NY scam.

(3) See DA: Lawyers taking desperate owners' NY homes.

Ten State AGs, Feds Form Posse To Target Equity Skimming, Bogus Foreclosure Rescue, Straw Purchases, Unethical Lending Practices

The New York Times reports:

  • The group is headed by McKenna and Iowa Attorney General Tom Miller. Other members include the attorneys general of Arizona, Colorado, Illinois, Nevada, North Carolina, Massachusetts, Missouri and Ohio, as well as representatives from the Department of Justice, Federal Treasury, Department of Housing and Urban Development and Federal Trade Commission. McKenna says the task force is the result of meetings on July 15 in Washington, DC, between federal regulators and a number of state attorneys general.

Source: Attorneys General Form Mortgage Fraud Task Force.

(1)Scammers and opportunists need to know that they’re in the crosshairs of a tough, well-armed posse with a presence in every state,” McKenna said. McKenna said that by combining their enforcement powers and expertise, state and federal authorities are in a stronger position than ever before to take on equity skimmers, foreclosure rescuer schemers, straw purchasers and unethical lenders who deceive or discriminate.

Mississippi Couple Cops Pleas In Bankruptcy Fraud-Related, Deed Transfer Foreclosure Rescue Scam; Wife Goes Down For Failing To Turn In Hubby

In Jackson, Mississippi, The Clarion Ledger reports:
  • A Jackson couple will be sentenced Nov. 5 in federal court after pleading guilty to fraud related charges. Robert E. Power Jr. pleaded guilty Friday to conspiracy to commit bank and wire fraud, and bankruptcy fraud. His wife, Deaundrea Power, pleaded guilty to misprision of a felony for failure to report bankruptcy fraud committed by her husband.

  • The couple had operated a business, Yorkshire Financial Services on Ridgewood Road in Jackson, which targeted homeowners at risk of foreclosure. The couple had represented to the homeowners that in exchange for transfer of their property to Yorkshire and a monthly rental payment, the company would negotiate mortgages or refinance mortgages to allow homeowners to remain in their homes, according to the United States Attorney’s Office. But the Powers would then place the property in bankruptcy unbeknownst to the homeowners and either the home would eventually be forclosed upon, or sold through straw buyers, via fraudulent loans, where the Powers would obtain cash money from the sale. As a result of the Powers’ actions, the homeowners lost their homes while the Powers gained a profit from the fraudulent activity, according to the federal investigation.

Source: Jackson couple pleads to fraud charges.

For the U.S. Attorney press release, see Couple Pleads Guilty To Mail Fraud, Bankruptcy Fraud And Falsifying Documents In Bankruptcy Cases. loan modification

Mississippi Feds Hit Title Agents With 38-Count Indictment For Role In Alleged Scam To Fraudulently Obtain $9M+ In Mortgage Loans

From the Office of the U.S. Attorney (Jackson, Mississippi):
  • Acting United States Attorney Stan Harris announced [...] that a federal grand jury has returned a 38 count indictment charging J. Larry Kennedy and Keith M. Kennedy with conspiracy to commit mail and wire fraud, conspiracy to launder money, multiple counts of wire fraud, and multiple counts of money laundering in relation to their roles in a mortgage fraud conspiracy and scheme with Mark J. Calhoun, April Calhoun and Willie Jones to obtain fraudulent loans totaling in excess of $9 million.

For the U.S. Attorney press release, see Former Real Estate Loan Closing Agents Are Charged With $9 Million Mortgage Loan Fraud.

(1) The indictment alleges that between September 2004, and at least through September 2006, while operating in the Jackson-metro area as Loan Closing & Title Services, Inc., the Kennedys were the closing agents involved with the fraudulent mortgage loans charged in the indictment. The indictment alleges that during the conspiracy and scheme, the Kennedys and their co-conspirators provided fraudulent loan documents to various lenders; thereafter, the Kennedys disbursed proceeds from the fraudulent loans to Mark J. Calhoun, April Calhoun, Willie Jones, and their respective companies as fictitious creditors. According to the indictment, as part of the conspiracy and scheme, on some of the fraudulent loans the Kennedys falsely notarized loan documents during the loan closing process that were relied upon by the lenders to demonstrate that the specific borrower personally appeared at the loan closing and signed the closing documents in the presence of the loan closing agent in order to retrieve the mortgage loan proceeds.

Cook County Court Clerk Sits On $18M+ Belonging To Foreclosed Homeowners Who Failed To Claim Surplus Money From Courthouse Sales

In Chicago, Illinois, WLS-TV Channel 7 reports:
  • Cook County Circuit Court Clerk Dorothy Brown says her office has found more than $18 million in mortgage surplus money that belongs to people who lost their homes to foreclosure in the last two decades. The surpluses occur when the bank sells foreclosed homes for more than the homeowners owe. The clerk's database found about 1,900 people are due surplus money. The surpluses mostly involve foreclosures from the 1990s and not the recent subprime mortgage collapse.

Source: Clerk: $18M due to foreclosed homeowners.

Tuesday, August 25, 2009

Upfront Fee Florida Foreclosure Rescue Operator Gets Apparent Hand Slap In Federal Civil Suit; FTC To Suspend $4.1M Judgment After Payment Of $21K

The Federal Trade Commission recently announced:
  • The Federal Trade Commission has put a stop to a deceptive foreclosure "rescue" operation that charged homeowners $1,200 based on the false promise that it could save them from losing their homes. The operators of the business(1) are barred from any further deceptive practices under a settlement with the FTC. The agency charged them with violating the FTC Act by falsely claiming that they would prevent homes from being foreclosed in virtually all instances or refund most of the $1,200 fee. In most cases the defendants neither stopped foreclosure nor provided promised refunds.


  • The order imposes a $4.1 million judgment, which will be suspended upon transfer of $21,694 in bank account funds that were frozen by the court. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

For the entire FTC press release, see FTC Action Stops Foreclosure 'Rescue' Operation.

For linkks to the relevant court documents in this matter, see Federal Trade Commission v. United Home Savers, LLP, et al.

(1) The defendants are Stephanie Dietschy, Darin Dietschy, and United Home Savers, LLC, all based in Florida. loan modification

Queens Woman Accused Of Swiping Deed To Brooklyn Retiree's Home & Emptying His Savings Account; House & Cash Recovered In Civil Suit

In Brooklyn, New York, the New York Daily News reports:
  • A Queens mom in a child support battle offered to help an elderly man with his own Family Court problem - and then stole the deed to his home and cleared out his bank account, officials said. Chandra Myers is facing larceny and forgery charges and a possible 15 years in prison if convicted of scamming Brooklyn retiree Levi Latham. She's accused of using the documents he gave her to forge his signature on a property transfer and using a fake power of attorney to grab his $25,000 savings.


  • With the help of Legal Aid lawyer Roger Hawke, Latham sued Myers and Citibank and got his house and money back when she didn't bother to show up to court. Myers, 42, isn't in the clear, though. She's been hit with criminal charges by the Brooklyn district attorney and pleaded not guilty during a July 16 hearing. [...] Hawke said his client, a former military man, has still not recovered from the scam. "It's so easy to take the property away but so difficult to correct it," he said.

For the story, see Fake advocate's offer of help turns into horror story as woman swindles elderly gent in $25G scam.

Mississippi Man Gets 20+ Years In Mortgage Fraud, Investment Scam; Used Recruits To Buy Property Using Bogus Financial Info, Title Work, Appraisals

From the Office of the U.S. Attorney (Jackson, Mississippi):
  • James Wynn Threatt of Brandon, MS, was sentenced in U.S. District Court to serve 250 months (20 years and 10 months) in federal prison in relation to a $ 3.5 million mortgage fraud conspiracy [...]. James Wynn Threatt owned numerous properties in the Jackson-metro area, and engaged in the business of selling properties. [...] Threatt would recruit persons to purchase residential properties as investments with the understanding that those properties would thereafter be rented to various tenants which he would select.

  • In order to get the purchase money from the lenders, defendant Threatt caused numerous false representations to be made regarding the financial situations of these “investors” and the value and condition of the properties. Threatt helped these “investors” complete their loan applications and supporting documents – such as financial statements and tax returns – needed to get the money to fund these purchases. Threatt caused false information to be submitted to lenders on HUD-1 Settlement statements, and when necessary Threatt fraudulently enhanced financial statements for the investors and also fraudulently modified tax returns to make the borrower appear creditworthy and acquire the funding and in an effort induce the lender to fund the loans.

  • Further, Threatt fraudulently altered appraisals to misrepresent the value or condition of the property that would collateralize the loan, and he fabricated title opinions and title work and created fictitious title certificates which falsely represented no existing encumbrances to properties that in fact were already pledged as collateral to other banks on other loans. Threatt also sold the same piece of property to multiple individuals, fraudulently representing to each that he was conveying clear title to the property.

For the entire press release, see James Wynn Threatt Sentenced To Over 20 Years Imprisonment In Fraud Cases.

"Helpful" Neighbor Gets 57 Months For Ripping Off Cancer Patient; Stopping Automatic Bank Debit For House Payments Leads To Near Foreclosure

In Fort Worth, Texas, the Star Telegram reports:
  • Debilitated by breast cancer, Jody Short of Mansfield was grateful two years ago when a neighbor offered to help care for her after she came home from the hospital. Sixteen months later, Short learned that the neighbor, Janice Gast, whom she considered a friend, had begun using her identity, her credit cards and her bank accounts shortly after she took over Short’s care.

  • Gast, 42, was sentenced to prison [last week] after pleading guilty to forging Short’s name on documents and stealing more than $67,000 from her over about a year. State District Judge Sharen Wilson sentenced Gast to concurrent four-year prison terms on charges of felony theft and fraudulent use of identification, and to nine months in state jail on a forgery charge.


  • [Prosecutor Tiffany] Burks said the worst thing Gast did was stopping the automatic bank debit for Short’s monthly mortgage payments. "Her lender was in the process of filing a foreclosure, so she almost lost her home," Burks said.

For the story, see Neighbor who stole from cancer patient gets 4 years, 9 months in prison. FinancialAbuseOfElderlyAlpha

Four Face Federal Charges In Alleged Straw Buyer Mortgage Fraud Scheme Designed To Assist Struggling Oklahoma Homebuilder Unload Unsold Inventory

In Muskogee, Oklahoma, Tulsa World reports:
  • Four people, one of them a Tulsa firefighter, were arraigned [last] week in federal court in connection with an alleged mortgage conspiracy that defrauded lenders and homeowners. Home builders Gerald Wayne Snow Sr., 68, of Broken Arrow and his son, Gerald Wayne Snow Jr., 40, are charged with wire fraud and criminal forfeiture. The younger Snow, a captain in the Tulsa Fire Department, has been placed on administrative duty until the matter is resolved, a Fire Department official said. Mortgage agents Ayo Dineji Olaniyan, 33, of Joplin, Mo., and Gaile Diana Cates, 37, of Tulsa face the same charges. Olaniyan worked for Key Mortgage Corp. and Cates for Olympia Funding and Gateway Mortgage. All of the defendants pleaded not guilty.

  • The defendants allegedly approached potential home buyers to buy homes built by Storybook Homes(1) and C&J Homes, both operated by the Snows. The deal was sweetened when the defendants offered to cover the down payment, closing costs and even to pay off debts or give cash back, the indictment alleges. The scheme involved inflating the buyers’ bank account balances so that lenders would approve loans. The home prices also were inflated on loan documents to secure loans beyond the actual purchase price, records show.

For more, see Tulsa firefighter, three others arraigned in alleged mortgage conspiracy.

(1) According to the story, records show that Storybook Homes is the defendant in numerous foreclosure cases in Wagoner County.

Monday, August 24, 2009

Maryland Federal Judge Grants "Money Store" Equity Stripping Foreclosure Rescue Scam Lawsuit Class Action Status

In Greenbelt, Maryland, the Maryland Daily Record reports:
  • The criminal prosecution of the massive Metropolitan Money Store mortgage fraud, which has yielded 10 guilty pleas since the first indictment(1) was handed up last summer, has grabbed headlines as a particularly egregious example of the foreclosure rescue schemes that prey on people already hard-hit by the recession. But as the criminal case winds down — ringleader Kurt Fordham(2) received a 10-year sentence last month and his co-conspirators’ punishments will be meted out this fall — a civil lawsuit on behalf of the hoodwinked homeowners that predates the U.S. Attorney’s intervention is picking up steam.

  • In a July decision published this week, a U.S. District Court judge in Greenbelt turned back arguments from the only two defendants who have not defaulted in the civil case and certified it as a class action. The class, consisting of perhaps more than 200 Maryland, Washington, D.C., and Virginia residents who signed up with MMS or one of its affiliates, lost more than $60 million in the equity-stripping scheme, according to the homeowners’ lawyers.


  • But, [attorney Philip Robinson admitted in an interview Wednesday, the case is complicated by its many “moving pieces,” such as the ongoing criminal prosecutions, other litigation and the collapse of the corporate defendants. [...] In the end, Robinson says, there might not be a whole lot to give back to the cheated class members.

For more, see Federal judge certifies class action against Metropolitan Money Store.

For the class action lawsuits, see:

Go here for updates on the Metropolitan Money Store federal class action lawsuit.

(1) See U.S. v. Joy Jackson, et al.

(2) Fordham, his wife and MMS President Joy Jackson and their accomplices convinced homeowners to transfer to title of their houses to straw buyers for a year, during which time they set to swiping their existing equity through fraudulent loan applications and bogus settlement costs, the plaintiffs allege.

Maryland Lawmaker To Cough Up $109K For Violating State Law Regulating Sale Leaseback Foreclosure Rescue Scams

In Anne Arundel County, Maryland, The Capital Gazette reports:
  • A state lawmaker from Severna Park who lost a lawsuit earlier this year must pay $109,000 in damages and attorney fees, a county judge has ruled. That is 10 times more than what a jury ordered Del. Tony McConkey to pay in April after determining that the Republican knowingly violated a state law designed to protect homeowners in foreclosure. After hearing numerous motions July 27, Circuit Court Judge D. William Simpson decided that McConkey owes his victim $34,000 - rather than the $10,800 ordered by the jury - and owes her attorneys $75,000 in legal fees.(1)

  • Despite the drastic increase in the judgment, McConkey yesterday continued to praise the jury's verdict, noting that it did not believe he was perpetrating a foreclosure rescue scam or otherwise trying to defraud Teresa Milligan of her money. "I still feel vindicated," said McConkey, pointing to how the jury found that he did not breach his fiduciary duty to Milligan.(2)

For more, see Lawmaker must pay $109K judgment (Judge increases damages, tacks on attorney fees for McConkey).

(1) Attorney Michael Morin and Milligan's other attorney, Peter A. Holland, argued in court on July 27 that McConkey owed them $126,061 in legal fees for more than 450 hours of work. Judge Simpson said their rates - $275 an hour for Morin and $300 for Holland - were reasonable, but that some of the work they performed was on counts on which the jury found in favor of McConkey. He cut the legal fees to $75,000.

(2) "You have to be remarkably self-centered - virtually delusional - to see a $109,000 judgment as a vindication," attorney Michael Morin said. "Ms. Milligan will be paid," he added.

Federal Suit Says Wells Fargo Illegally Cut Illinois Homeowner's HELOC; Class Action Status Sought

In Chicago, Illinois, Reuters reports:
  • An Illinois homeowner accused Wells Fargo & Co, the largest U.S. mortgage lender, in a lawsuit of summarily cutting home equity lines of credit by undervaluing customers' houses. In a federal lawsuit filed in Chicago on Wednesday that seeks class-action status, homeowner Michael Hickman accused the bank of using "dubious" computer models that systematically undervalue homes, depriving customers of credit.


  • In his complaint, Hickman said that because the new limit was just above what he had borrowed, his "credit utilization rate" increased, damaging his credit rating and boosting his borrowing costs. The lawsuit says that San Francisco-based Wells Fargo violated the U.S. Truth-in-Lending Act and Illinois consumer fraud laws. It seeks punitive damages and several other remedies.

For more, see Homeowner sues Wells Fargo over equity credit lines.

Go here for a six-page letter of guidance issued by the U.S. Office of Thrift Supervision which generally explains what obligations lenders have in connection with the freezing of home-equity lines of credit.

In a related story, see Sarasota Herald Tribune: Some home-equity lines of credit can't be rescinded. Frozen HELOC

Arizona Bankruptcy Judge Orders Wells Fargo Exec Into Court To Explain Mortgage Servicer's Loan Modification Policy

In Phoenix, Arizona, KPHO-TV Channel 5 reports:
  • A federal bankruptcy judge has ordered a top Wells Fargo executive to testify in court about the bank's loan modification policies. The order came in response to a Phoenix woman's complaint that Wells Fargo had ignored her modification request. "I sent them everything they asked for, and then when I called to follow up they said, 'What paperwork? What modification? We don't know what you're talking about,'" said Bobbi Giguere.

  • Giguere said she applied for a modification after she lost her job in December. Instead, she said she received a notice of foreclosure while she thought she was still trying to work out a deal with Wells Fargo. Now Judge Randolph Haines wants a senior officer at Wells Fargo to defend the charges.

For the story, see Judge To Bank: Explain Mortgage Policies (Judge Orders Wells Fargo Executive To Testify About Loan Modification Policies).

Florida AG Brings Civil Suit Against Another Central Florida Loan Modification Foreclosure Rescue Outfit

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [Friday] sued a Kissimmee-based company over allegations it targeted Hispanics in a foreclosure rescue fraud scheme. JPB Consulting Inc. and its president, Juan P. Bordali, allegedly charged up front fees of more than $1,000 per customer to homeowners about to lose their homes, but never performed any services. Charging fees up front before completing foreclosure rescue services is a direct violation of Florida’s Foreclosure Rescue Fraud Prevention Act. [...] An investigation conducted by members of the Attorney General’s Economic Crimes Division, working as part of the Attorney General’s Mortgage Fraud Task Force, determined that JPB Consulting and Bordali marketed the company’s services primarily to those in the Hispanic community(1) using posters and signs in neighborhood stores and flyers handed out on sidewalks and street corners. The company also used radio and TV ads to solicit clients.

  • According to the lawsuit, unsuspecting consumers were charged up front fees ranging from over $1,000 to $3,500 and were promised foreclosure relief. No foreclosure rescue services or loan modifications were performed by defendants. The Attorney General’s investigation further revealed the company was advised by a law firm in February that it was acting in violation of the law, but the company continued to collect the illegal up-front fees. The Attorney General’s Office knows of over 30 victims, but believes the company may have hundreds of clients.(1) JPB Consulting, Inc. is also known as JB Consulting, which sometimes does business under the name “Mortgage Modification Solutions.”

For more, see Kissimmee Foreclosure Rescue Company Sued for Fraud (Company purportedly targeted the Hispanic community with foreclosure rescue scam).

For the lawsuit, see State of Florida v. JPB Consulting, Inc., et al.

(1) Among the Florida AG's allegations is that the foreclosure rescue operator violated Section 2-2.002, Florida Administrative Code (2008), Advertising in Languages other than English (see Lawsuit, paragraph 49):

  • [B]y advertising to homeowners in Spanish but providing contracts drafted only in English, defendants have violated Section 2-2.002, Florida Administrative Code (2008) and have thus committed acts or practices in trade or commerce which offend established public policy and are unethical, unscrupulous or injurious to homeowners in violation of Sec. 501.204(1), Florida Statutes (2008).

(2) Homeowners who feel they may have been screwed over by this outfit are urged to file complaints against them with the Florida Attorney General's Office. Complaint forms are available online:

Sunday, August 23, 2009

Minnesota Title Agent Cops Plea To Swiping $400K+ In Clients' Escrow Funds From Real Estate Transactions

In St. Paul, Minnesota, the Star Tribune reports:
  • A Brooklyn Center man pleaded guilty [last week] in U.S. District Court to using as much as $1 million from clients of his mortgage title company for his own benefit. Terry Louis Lemke, 40, owns All Metro Title. He pleaded guilty to one count of wire fraud and one count of money laundering. As part of a plea agreement, Lemke says he knowingly and intentionally defrauded clients from June 2006 through 2007, a statement from the U.S. attorney's office said. The All Metro Title clients thought the money was being deposited into an escrow account as part of real estate transactions.

  • In the plea agreement, Lemke admits to defrauding more than $400,000 and possibly as much as $1 million, the statement said. Specifically, the statement says, on June 23, 2006, Lemke electronically transferred $193,226.76 from Lehman Brothers Bank in Colorado to an All Metro Title account. On the same day, he paid $20,746.18 from the All Metro account to a personal credit card bill, the U.S. attorney's office said.

Source: Brooklyn Center title firm owner admits to fraud (As part of a plea agreement, Terry L. Lemke said he diverted money from clients to himself). EscrowRipOffKappa

Backpeddling Begins For City Officials Whose Foreclosure Program Referred Strapped Homeowners To Forensic Loan Audit Outfit With History Of Complaints

In Carson, California, The Daily Breeze reports:
  • Carson's elected officials are distancing themselves from a city foreclosure program that has steered strapped homeowners to a private firm with a history of complaints. The company, ABS Business Solutions, charges thousands of dollars in up-front fees to perform mortgage "audits." It is illegal to charge up-front fees for foreclosure counseling, and numerous nonprofit groups will do it for free.(1)

  • Councilman Elito Santarina, who serves on the city's foreclosure protection subcommittee, said he wanted a full explanation of what went wrong from the program's coordinator, Sai Momoli.(2) "I'm so furious. This is ridiculous," Santarina said. "All I wanted was to do something good for the people. I wish I knew every detail and I wish I knew I had been a part of this. No, I do not know anything about this. I am out of it."

For the story, see Carson officials distancing themselves from foreclosure program.

(1) The Breeze recently reported that the Carson Foreclosure Crisis Response Team was referring Carson residents to ABS, which the Attorney General's Office has targeted for failing to register as a foreclosure consultant. The Breeze also reported that several former ABS customers have posted complaints about the company online, claiming that it had taken fees of more than $3,000 and then had done nothing to prevent their foreclosures. See Carson mortgage program is under fire.

(2) According to an earlier story, the city's Foreclosure Crisis Response Team was launched last October, when local resident Sai Momoli urged the City Council to invest $300,000 in his foreclosure prevention program. Momoli touted his connections to Marie McDonnell, a Massachusetts-based mortgage consultant. See Carson mortgage program is under fire.

Consumer Lawsuits Against Companies Alleging Violations Of Federal Debt Collection, Credit Reporting Laws Surge In 2009's John Ulzheimer writes:

  • The issue at hand seems to be two-fold. First, more consumers view litigation as an investment in their own credit future. These are the folks who are fed up with the typical credit dispute protocol, which might work fine for 98 percent of disputes, but isn’t 100 percent effective. The percentage who can’t seem to have legitimate errors removed from their credit reports using the bureau’s required methods are starting to find it necessary to escalate their efforts into the courts in order to regain their good credit names.

  • The second bunch seems to be coming from the shake down artists.

For more, see Debt Collectors and Creditors Beware: FCRA and FDCPA Lawsuits Skyrocket.

Unconventional Purchase From Homebuilder Leaves Unwitting Washington Couple Facing Foreclosure, Despite Making All House Payments

In Richland, Washington, The News Tribune reports:
  • For 21 months, Tonya and Timothy Stapleton paid the mortgage, insurance and taxes on their new $220,000 Horn Rapids house on time. But today [last Friday] Tonya plans to go to the Benton County Justice Center to make sure her home isn't auctioned in a foreclosure sale.(1)

  • The Stapletons found out their house was in jeopardy about seven months ago, when the bank notified them the man they had been sending their payments to had stopped paying the bank. She was on her way home from the grocery store when her husband called and told her the news. "Needless to say, my heart sunk and I went into panic mode," she said.

  • The Stapletons bought their house from Steve Schlam, formerly of Redmond, Ore., who built at least 20 houses in the Horn Rapids area of Richland. Schlam had a loan for the house through IndyMac Federal Bank, and the Stapletons wrote their checks out to him so he could make the bank payments. But in January they found out Schlam hadn't made a payment since October, although the Stapletons had continued paying him, not knowing anything was wrong. When they confronted him, he refunded their January payment but no more.

For more, see Dream home turns to nightmare for Richland couple.

(1) For story update, see Couple resume fight for Richland house after auction:

  • Tim and Tonya Stapleton attended the foreclosure sale at the Benton County Justice Center on Friday, where their Horn Rapids home was to go up on the auction block. [... T]he home went "back to beneficiary," meaning OneWest Bank, which holds the loan on the house, bought it for the low bid of $189,000. Tonya said she was relieved with that outcome, because a third party didn't end up with her home.

Dispute Between Concrete Firm & Supplier Leads To Foreclosure Threat For Unwitting Homeowner; Gets Hit w/ Mechanics Lien Over Contractor's Unpaid Bill

In Lansing, Michigan, the Lansing State Journal reports:
  • In May, Maurice Jones hired a local company to replace about 340 square feet of driveway at his home on Norburn Way in Lansing. The cement got poured. Jones paid in full. Done deal, right? Not quite. Three weeks ago Jones got a certified letter from Shafer Redi-Mix of Albion. Here's what it said:

  • "We supplied concrete to McClain Concrete, for improvements to your property. To date we have not been paid by McClain Concrete and, in accordance with the Michigan Lien Act we're forced to file a mechanic's lien against your property. If this situation cannot be rectified promptly, we will be forced to commence with foreclosure ..."

For more, see Homeowner stuck in middle of cement squabble. StiffingContractorsTheta