Saturday, September 26, 2009

Lender's Rep Stumbles Into Indoor Pot Farm While Changing Locks At Home In Foreclosure; Cops "Bag" 60 Marijuana Plants, One Suspect

In Vero Beach, Florida, TC Palm reports:
  • Authorities on Thursday discovered a home going into foreclosure was being used as a marijuana grow house. Eric Sotero Martinez, 26, [...] was charged with cultivation and possession of marijuana with intent to distribute. He was also charged with possession of illegal mushrooms. [...] The operation [...] was owned by Martinez’s fiancee, according to his arrest affidavit.

  • A representative of a holding company went to the home to have the locks changed as part of foreclosure proceedings, the affidavit said. He told the Indian River County Sheriff’s Office he discovered the marijuana plants inside the home when he went to change the locks. Investigators found 60 marijuana plants in a bedroom of the Stockbridge home along with industrial lights, a carbon dioxide machine and several fans, the affidavit said. Martinez’s fiancee said the plants were the second crop he had grown, the affidavit said. Detectives also found more than a pound of packaged marijuana and four bags of mushrooms in the home. The case is still under investigation, but Martinez’s fiancee will not be charged, sheriff’s spokesman Deputy Jeff Luther said.

Source: Man changing locks on Vero Beach house finds leafy surprise inside. pot grow ops beta

Accused Squatter Family Claims To Be Legal Tenant; Refuses To Show Lease, Won't Pay Rent Or Leave Foreclosed $1.5M Home

In Manhattan Beach, California, the Daily Breeze reports:
  • The buyer of a foreclosed Manhattan Beach house last owned by a former Los Angeles Clipper is suing the occupants, alleging they are refusing to leave the once $2.7 million residence or pay rent. The lawsuit by Soda Partners, a company that purchased the house Sept. 2 for $1.5 million, charges that [a family] and their children are squatters because they have failed to provide documents showing they have a lease to be in the house [...].

  • [One occupant] declined to answer questions Friday when contacted by the Daily Breeze. "The lawsuit is in litigation. We don't want to comment on that," [he] said. "Tenants do have rights and I would point that out." The lawsuit filed Thursday in Los Angeles Superior Court alleges the [occupants] have failed to pay the new owners any money since the sale was completed.


  • Attorney Ronald Richards, who represents Soda Partners, said no one knows if [they] ever paid rent because they refuse to answer his calls. [...] In [a] brief phone call with the Breeze, [one of the occupants ...] refused to comment on whether he had rented the home from Zeljko Rebraca, who played for three NBA teams, including the Clippers, from 2004-06. [...] If [they] are paying rent or have a lease, they could protect themselves under the tenants' rights laws.

For more, see Manhattan Beach house buyer sues tenants. hijack

Cops Let Would-Be Foreclosure Stripper Off Hook; Pleads Ignorance Of The Law, Agrees To Stop, Refunds Money On Sale Of Cabinets, Yanks Craigslist Ad

In Medford, Oregon, the Mail Tribune reports:
  • Mike Vaughan was surprised when an elderly couple was willing to pay $60 for some old kitchen cabinets from an east Medford home that is heading into foreclosure. The couple had seen an ad the 30-year-old Vaughan posted on Craigslist Wednesday that offered to sell almost every fixture in the house on Cedar Links Circle — including the kitchen sink. Vaughan, who said he didn't think anybody would really want the old cabinets, was even more surprised when two Medford police fraud investigators approached the couple as they were leaving Thursday. They informed the couple it was against the law to sell anything attached to the house.


  • The two Medford fraud investigators, alerted to the ad by some observant citizens, decided not to press charges against Vaughan, who previously lived in the house, which was owned by his father-in-law. "We were able to catch it in time so that no crime was committed," said Medford Detective Sgt. Mike Budreau. [...] After questioning Vaughan, the detectives determined he didn't realize he was doing anything illegal and he agreed to stop. He had been paid $60, but the couple planned to come back later after he removed the cabinets from the wall. After a discussion with the detectives, Vaughan gave the money back and removed the Craigslist ad, which offered to sell sinks, a mirror, bedroom doors, a laundry door, cabinets, light fixtures, ceiling fans, stair rails, attic stairs and an old water heater. [...] He said he had done a lot of work on the house, which his father-in-law bought with the provision that Vaughan would make the monthly payments. He said the house wasn't in foreclosure yet, though he said it would be at the end of the month.


  • Budreau said banks and other lenders have been sending letters to police agencies advising that it is illegal to take items that are attached to a house during a foreclosure action. He said the key issue for law enforcement is whether there is an intent to defraud someone, but he said the issue could get into a gray area depending on the status of the loan. "It does get tricky," he said, noting that many police agencies have relatively little experience dealing with foreclosures. [...] At this point, Medford police would prefer to educate people about the law rather than put anyone in jail, [Detective Brenda] Garich said.

For the story, see Police on alert for attempts to sell pieces of forceclosure. foreclosure fixture stripping apple foreclosure stripping

S. Florida Squatters Expand Housing Search Into High-End Neighborhoods; Family Hijacks Foreclosed Waterfront Home; Lender's Agent Caught Flat-Footed

In Coral Gables, Florida, WTVJ-TV Channel 6 reports:
  • Miami's squatter problem has garnered national media attention over the past year and a half, as the foreclosure crisis threatened to transform the Magic City into something resembling a lawless, "Mad Max"-esque landscape. The squatters mostly kept a low profile, moving in [...] to neighborhoods where they could take over unnoticed.

  • But now come reports that squatters are seeking out more ritzy neighborhoods, including the pricey, tree-lined streets of Coral Gables. "They seem to be squatters, I don't think that they pay rent. I don't think that they own the house, the house is in total disrepair," said Gables by the Sea resident Bruce Hornik, who said he couldn't believe his eyes when he saw a family set up shop in the waterfront neighborhood. [...] The bank which owns the property hired a realtor to sell it last month, and the realtor said they have no idea who could be staying in the home.

For more, see Ritzy Gables Pad Plays Host to Squatters (Residents say free-home seekers took over waterfront home).

Water Shutoff Threats Face Tenants In Financially Troubled Apartment Buildings; Notices Sent To Central Jersey Renters In 70 Units

In Plainfield, New Jersey, reports:
  • Notices informing tenants that their water service could be shut off in less than three weeks appeared Monday at two downtown apartment buildings managed by Connolly Properties Inc., but a company spokesman said that residents there shouldn't be concerned. The notices appeared at Pingry Arms(1) and Viola's Place,(2) buildings that include a combined 70 apartment units and sit directly across East Seventh Street from each other on Crescent Avenue.


  • Banks since June have filed for foreclosure against at least nine companies owning 17 different apartment entities managed by Connolly Properties, and at least six of those companies then filed for Chapter 11 bankruptcy protection. Debts listed in those proceedings combine to approach $60 million. Connolly Properties manages a total of 3,000 apartment units in more than 60 different apartment entities in New Jersey and Pennsylvania.

For more, see Utility threatens service suspension to two Connolly-managed buildings in Plainfield.

(1) Reportedly, Pingry Arms, the larger of the two Crescent Avenue buildings at 50 units, is not tied to any known pending foreclosure or bankruptcy case.

(2) Viola's Place is reportedly owned by Plainfield Apartments LLC, the company that in August filed for bankruptcy protection after a North Jersey bank filed for foreclosure against its nine city properties. RentSigmaSkimming

Landlord's Unpaid $100K Electric Bill Leaves Building's Tenants In The Dark, Without Refrigerators, Elevators

In Highland Park, Michigan, WJBK-TV Channel 2 reports:
  • Residents of the Highland Towers apartments say they've paid their rent, but they're being left in the dark. It's been more than a week since power to the building was shut off. DTE Energy admits it is a horrible situation, but they say the owners of the building owe $100,000 in unpaid bills.

  • A small but spirited demonstration outside DTE headquarters was meant to shed light on a serious problem. Residents of the Highland Towers apartments have been living without power for more than a week. Latanya Lloyd is one of them. "It's not fair. I don't have money to just up and move somewhere again right now," she said. You can hear the emotion from tenants who have nowhere to turn.

  • DTE says it had no choice but to kill the lights because the building's owner hasn't paid the utility bill in a year and owes $100,000. "The building is not shut down because the people that lived there were delinquent in paying their (bills)," Lloyd said. Residents have the receipts to prove it, but they're the ones stuck in the dark without lights, refrigerators and even elevators. Without the elevators, residents have no choice but to walk up and down a dark stairwell.

  • In the midst of this mess, the building's owner and manager are nowhere to be found. DTE sent the United Way to try and help people who are still at the building. "So far, we've identified about 30 people who are still in the building, including women and children, and we're working with all the resources we have to try and get them placed," said Nick Monterosso with the United Way.

Source: Apartment Tenants Living Without Lights.

For story update, see Struggle restores power to apartment residents. RentSigmaSkimming

Another Tenant In Building In Foreclosure Faces Immediate Boot Due To Landlord's Unpaid Water Bill

In Visalia, California, the Visalia Times Delta reports:
  • By April, [Tracy Wood] and a friend were able to save enough money for the security deposit on a two-bedroom apartment. The deposit was steep more than $2,000 but the $675-a-month rent was just the right price. "I finally thought I was getting back on my feet," she said. Now she's about to become homeless again.

  • The notices of foreclosure started to arrive a few months after she moved in. She called the apartment complex's owner but got no answers. "He was avoiding us and kept telling us not to worry, that he was restructuring his debt," she said. But the notices kept coming, and Wood's roommate moved out.

  • "I've been looking for other places, and everyone wants a completely clean credit history," she said. "I went through a divorce, lost my house in a tornado and was homeless you don't go through that and keep a spotless credit history."

  • Stuck, she waited for the other shoe to drop. And last week it did. She came home from work and found a notice on the door saying the water bill was past due for a total of $800. Like many apartment dwellers, Wood is not directly responsible for paying the monthly water bill, which is paid by the owner.

  • If the water is turned off, city sanitation rules will prevent Wood from staying in the apartment. [...] "Tenants can set up their own account and they won't be responsible for the unpaid balance," [superintendent with Visalia's water provider Mike Markarian] said. But there's a catch. Woods lives in a triplex and would be responsible for the entire property and other tenants' bills if she were to set up such an account. "It would be about $200 a month," she said. "I don't have that kind of money." The Times-Delta attempted to contact Wood's landlord, Habes Alrawashdeh, but phone calls were not returned [...].(1)

For the story, see Foreclosure fallout: Visalia tenant unaware of landlord's financial status (Visalia woman, 4-year-old son may lose use of water).

(1) I suspect that the recently enacted Federal law, known as the Protecting Tenants At Foreclosure Act of 2009 and which gives tenants some protection against being immediately booted from their rented homes in foreclosure eviction situations, may not apply when the tenant displacement is a result of a local municipality applying its ordinances relating to the health and sanitation issues that arise when water service to a home/apartment building is shut off, even though the premises is in foreclosure. RentSigmaSkimming

Foreclosure Stripping Alive & Well In Chicago Suburbs

In suburban Chicago, Illinois, SouthtownStar reports:
  • Now appearing in the Southland: the amazing disappearing kitchen! It's not magic, though. It's homeowners leaving their foreclosed houses bare, stripping and selling everything they can to pay bills or stick it to the bank that's giving them the boot. [...] From ceiling fans to furnaces, light fixtures and water heaters, some homeowners are taking whatever they can. And since they're usually unskilled and doing this in haste, they're damaging things along the way.

  • [Real estate agent Patrick] Zomparelli recently sold a foreclosed house in Orland Park for $89,000. Its entire kitchen had been removed, leaving only the paint outlines of where the cabinets once were. Someone had tried to take the tub, damaging it in the process. They even took the carpet, Zomparelli said, leaving a home that would have sold for much more if left intact.

  • Rich Hofeld, owner of HouseMasters home inspection services, said his employees see items stripped from about 20 percent of foreclosed homes they inspect. "Often, the plumbing is gone, the water heater, furnace," said Hofeld, who is the mayor of Homewood. "I can't say that it's people who've lived there, or someone who came along after they moved out."

For more, see Foreclosure stripping leaves some suburban homes bare.

See also, Chicago Sun Times: Evicted owners stripping homes of all valuables (FORECLOSURES: 'They took everything' -- some homes stripped bare by ex-owners). foreclosure fixture stripping apple

Foreclosure Stripping Among Charges Landing Oregon Man 45 Months In Jail; Ukrainian National May Now Face Deportation

In Clackamas County, Oregon, The Oregonian reports:
  • The Damascus man who stripped his own foreclosed home of more than $50,000 worth of property was sentenced [...] to 3 years and 9 months of prison, as part of a plea bargain that included the defrauding of an electric company. Grigoriy Bogoslavets, 33, was convicted in a Clackamas County Circuit Courtroom of one count of first degree aggravated theft for taking everything from the air conditioning system to the kitchen cabinets in his former home. He was found guilty of four more counts of first degree aggravated theft for his crime involving $400,000 in electrical supplies.


  • "The unfortunate thing about this is that you were kind of living the American Dream," [Judge Robert] Herndon said as he addressed Bogoslavets [an electrical supply business owner and non-U.S. citizen from Ukraine], who may now face deportation.

For more, see Man who stripped his own foreclosed home gets prison time. foreclosure fixture stripping apple foreclosure stripping

Owner In Foreclosure Loses Personal Possessions; Contents Seized & Auctioned Off As Alleged Drug Dealer Holding 3rd Mortgage Moves Into $2M+ Home

In Vancouver, British Columbia, The Vancouver Sun reports:
  • The owner of a Shaughnessy heritage home was in tears after learning that all her worldly possessions had been seized by a bailiff and sold at auction. Gail Hewitt is also angry that the man who has taken possession of her $2-million-plus home is an accused drug dealer, Robert Luigi Poloni. Poloni holds a $600,000 third mortgage on Hewitt's house, [...] which is in the midst of foreclosure proceedings. Hewitt, who is living in California, said her neighbours called her about three weeks ago and told her someone had moved into her house.(1)


  • Hewitt said the contents of her home were worth about $400,000. "I had about $100,000 worth of clothes, fur coats, at least $50,000 worth of jewelry, furniture, a $40,000 grand piano and five oriental rugs, some worth $15,000," she said in an interview. [...] "I can't believe it's all gone and it's all sold," Hewitt said, crying. "There's nothing I can do. Everything I own has been taken away from me."

For more, see Shaughnessy homeowner stunned by sale of possessions (Says she did not know she was dealing with an accused drug trafficker).

For story update, see Judge rules against Shaughnessy homeowner who sought more time to sell home.

(1) According to the story, Hewitt's neighbors took photos of two men on the property and she recognized them as Poloni and Robbie Della Penna, who were jointly charged with cocaine trafficking offences but were acquitted by B.C. Supreme Court Justice Peter Leask. The Crown has filed a notice to appeal those acquittals. Neighbours called Hewitt again Sept. 10 to tell her that trucks had arrived on her property and were taking out her furniture and personal property.

Friday, September 25, 2009

Slumbering Foreclosing Lenders Unable To Document Loan Ownership Beginning To Face Complete Wipeout Of Mortgage Interests Thru "Quiet Title" Actions?

A recent story in The Huffington Post on the "Produce The Note" strategy of defending against foreclosure actions contained the following tidbit:
  • In Florida, Jacksonville Area Legal Aid attorney April Charney has been using the missing-note argument since she first identified the lenders' weakness in 2004. She began arguing that those initiating foreclosure proceedings on behalf of securitized pools of mortgage loans had no right to do so, because they couldn't prove they actually owned the debt.

  • Five years later, some of those homeowners are still in their homes, she says. Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action "quiets" all other claims).(1)

Source: Who Owns Your Mortgage? "Produce The Note" Movement Helps Stall Foreclosures.

Go here for other posts referencing the work of attorney April Charney.

(1) An earlier post (see Using Statute Of Limitations To Wipe Out Lenders' Right To Foreclose A Mortgage?) referred to a December, 2008 story reported on which alluded to Charney's intent to apply the Florida statute of limitations (see Sec. 95.11(2)(c), 95.281(1)(a), Florida Statutes) to terminate a foreclosing lender's right to foreclose when her clients' cases became ripe for such an attack:

  • Charney said that in a number of her cases, once there is no longer an ability for the loan servicer to profit, the foreclosure “just goes to sleep, and unless I’m going to pursue it, nobody’s setting hearings, nobody’s pursuing anything to get it to trial.”

  • After five years, which is the statute of limitations to enforce a contract in Florida, she can try to help her clients own their homes mortgage-free, Charney said. The first opportunity for her to help clients do that may arise next year.

  • And that legal limbo is where the lion’s share of her cases stand now, Charney said. So far this year, she has achieved two “workouts” and lost two cases. “Many, many, many” of the rest are in sleep mode or getting a single filing each year by plaintiffs’ attorneys just to keep them alive.

For the story, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers) (for the entire story on one web page, try here). EpsilonMissingDocsMtg

Mortgage Servicer Sued For Wrongful Death For Allegedly Making Caustic Collection Calls That Lead To Delinquent Homeowner's Fatal Heart Attack

In Tampa, Florida, The Associated Press reports:
  • A widow claims that debt collectors hounded her husband to death with as many as nine caustic calls per day, causing stress that contributed to his fatal heart attack. She's suing the Florida couple's mortgage company in a unique wrongful death case.

  • Dianne McLeod wants Green Tree Servicing to pay damages for what she said are illegal collection practices that led to her husband's heart failure on Dec. 4, 2005. Her 57-year-old husband, Stanley, was already in poor health from a heart attack years earlier that also had left him on disability. An executive at Green Tree Servicing called the claim "outrageous and meritless."

  • Lawsuits against debt collectors alleging illegal practices are common. But McLeod's Tampa attorney, William Howard, believes it's the first time one has ever been sued for wrongful death. [...] Some of the calls were recorded on the family's answering machine, and Howard said he is eager to play them for a jury.


  • Howard sued Green Tree on the family's behalf in 2005, then added the wrongful death count in 2006 after Stanley McLeod died. The case has been winding its way through courts since. Earlier this month, the 2nd District Court of Appeal in Florida again ruled against Green Tree in the company's efforts to force the case into arbitration. Howard said he will ask a judge to set the case for trial soon. He hasn't decided yet how much he will seek.

  • "What happened to Stanley McLeod happened to a lot of people," said Howard, who has about 500 pending cases that claim undue harassment by debt collectors. "To be held hostage in your own home is a terrible thing. It's a helpless feeling." Howard works for the law firm of Morgan & Morgan, which has offices around the state, heading a division that sues debt collectors for unfair collection practices.

For the story, see Widow: Debt collectors hounded husband to death.

Veteran Fraudster Gets 97 Months For Running Realty Scams; Bogus Sale Leaseback Foreclosure Rescue Deals Among Rackets Resulting In $1M+ In Losses

From the Office of the U.S. Attorney (New Jersey):
  • A Phoenixville, Pa., man was sentenced to 97 months in prison [...] for his leadership role in operating two Ponzi schemes upon members of a Toms River church, which resulted in total losses of more than $1 million, Acting U.S. Attorney Ralph J. Marra, Jr., announced. U.S. District Judge Joseph H. Rodriguez also ordered Terence Mayfield, 47, to serve three years of supervised release upon the completion of his prison term.


  • According to the Information, Mayfield operated two frauds from November 2006 through July 2008. In Count One, Mayfield is charged with mail fraud in connection with his scheme to defraud numerous members of The Church of Grace and Peace of more than $1 million through a phony real estate investment scheme.

  • Count Two charges Mayfield with wire fraud relating to his scheme to defraud three sets of homeowners, who participated in three “foreclosure bailouts” purportedly involving two properties in Georgia and one in Pennsylvania, of more than $75,000.(1)

For the entire U.S. Attorney press release, see Phoenixville, Pa., Man Sentenced to 97 Months in Federal Prison for Operating Ponzi Schemes Upon Members of a Toms River Church.

See also, The Philadelphia Inquirer: Pa. man sentenced to prison for Ponzi scheme at church:

  • This was not Mayfield's first fraudulent venture. In 2005, he was sentenced to two years' probation for a Ponzi scheme in Philadelphia in which eight victims reported losing $198,000, Smith said. In October, he was indicted on securities-fraud charges in Delaware, accused of taking money from two investors who had trusted him with a combined $225,000, state Deputy Attorney General Greg Strong said.

(1) The press release states that, in regards the foreclosure rescue scam, Mayfield admitted that he solicited potential investors to invest in the program he referred to as “foreclosure bailouts.” To induce these individuals to invest in this program, Mayfield explained that the investor would buy the home of a homeowner who was at risk of foreclosure and then lease the home back to the homeowner for a two-year period. The homeowner would then use a portion of the proceeds to pay the investor an “investment fee” and Mayfield a “broker’s fee.” Additionally, the homeowner would place two years’ worth of rent payments into an escrow account, which would be maintained by Mayfield, as a security deposit. At the end of the two-year period, Mayfield explained, the homeowner would have the opportunity to repurchase the home from the investor.

Mayfield made substantially the same representations to homeowners with a significant exception: That the escrow account funds would not serve as security for the investor, but rather would be “drawn down” on a monthly basis and used to pay the homeowner’s monthly rent payments. Mayfield admitted he did not maintain the funds in escrow, but instead pocketed the funds for his own benefit.

Title Agent Cops Plea To Illegally Dipping Into Escrow Funds From Real Estate Closings; "Katrina" Credited For Slamming Brakes On Ponzi-Style Scam

In New Orleans, Louisiana, the Times Picayune reports:
  • A 68-year-old Metairie man pleaded guilty Wednesday in federal court to wire fraud for his role in a local refinancing scheme, authorities said. Hubert Edward Ellzey Jr. acknowledged that, as an independent title agent for Commonwealth Land Title Insurance Company of Louisiana, he wired money from the refinanced properties to a special escrow fund, court records show. He dipped into this account and used the money for personal use [...], according to a news release from U.S. Attorney Jim Letten's office. Ellzey also used the company money from future home closings to pay off some of the previous loans he should have canceled.

  • The scheme was unearthed shortly after Hurricane Katrina because all the closings came to a halt and Ellzey was unable to account for the money he had taken, Letten's office said. In all, Ellzey defrauded his employer of about $775,000. He is scheduled to be sentenced in January.

Source: Title agent pleads guilty to misusing money in wire fraud case. EscrowRipOffKappa

Title Agent Admits To Stiffing Existing Lienholders In Real Estate Closings; Pocketed Cash Due Lenders, Wrote & Sold Phony Secured Notes, Kited Checks

From the Office of the FBI (Louisville, Kentucky Field Office):
  • Candace Hill, United States Attorney for the Western District of Kentucky, announced that Wavy Curtis Shain, age 26, of Louisville, Kentucky, pled guilty on September 18, 2009, to nine counts of wire fraud, and one count of bank fraud.

  • Shain pled guilty to using businesses he owned and operated, Derby City Title and Capital Distribution, LLC, to perpetrate fraudulent schemes on various lending institutions and mortgage companies. The schemes perpetrated by Shain included misappropriating substantial amounts of loan proceeds received by him on behalf of borrowers using Derby City Title to obtain loans to purchase homes or to refinance existing home loans, and, by doing so, failing to pay off existing loans and mortgages held by previous lenders.

  • Additionally, Shain pled guilty to preparing false and fraudulent notes and mortgages purportedly associated with the purchase of houses and selling these instruments to willing buyers. Lastly, Shain plead guilty to perpetrating a check kiting scheme using business accounts maintained with US Bank and BB&T Bank.

For the entire FBI press release, see Louisville Man Pleads Guilty to Defrauding Loan Companies and Banks. EscrowRipOffKappa

Lender Knowingly Wrote Millions Of Dollars In Crappy Loans, Abandoning Prudent Underwriting Standards, Says Mortgage Insurer In Lawsuit

In Los Angeles, California, Courthouse News Service reports:
  • MBIA Insurance Corp. says IndyMac Bank knowingly loaned millions of dollars to borrowers who could not afford to repay the loans, leaving the stock insurance company to pay out more than $487 million on its guarantees with an expected $566 million more to come, MBIA claims in Superior Court.(1)

  • MBIA says IndyMac "abandoned any reasonable and prudent underwriting standards" in an "effort to expand its market share during the mortgage lending boom," according to the complaint. MBIA also says IndyMac encouraged its workers to inflate borrowers' incomes on loan applications to get them loans for which they wouldn't have qualified. MBIA says the thousands of mortgage loans in default or foreclosure "would not have occurred if IndyMac had followed the loan-origination practices that it represented to investors it was following."


  • In May, 20 banks and financial services companies sued MBIA with allegations that it fraudulently restructured itself to strip it of $5 billion in cash and securities and to start a new insurance business to duck its obligations to the banks.

For the story, see MBIA Insurance Sues IndyMac.

(1) MBIA provided financial guaranty insurance in the form of guarantees of the trust obligations to make principal and interest payments on the loans.

Ringleader In Cash Back Mortgage Scam Gets 30 Years; Used Phony Repair Invoices, Shell Corporations To Skim $1.1M From Closing Proceeds On 34 Homes

In Denver, Colorado, The Denver Post reports:
  • The ringleader of a multimillion-dollar mortgage-fraud ring was sentenced [...] to 30 years in the Colorado Department of Corrections. Uto Essien, 45, a Nigerian national, will be deported after completing his sentence. Essien was convicted in July of four felony counts related to the use of shell corporations and false invoices to skim money off the top of nearly three dozen real estate transactions. Essien's conviction resulted from a 45-count, 10-person indictment handed down in March 2008. The indictment alleged that Essien and his colleagues fraudulently obtained $10.9 million in mortgages to buy 34 properties in Adams, Denver and Jefferson counties between April 28, 2004, and Dec. 29, 2006.

  • Essien and his colleagues then skimmed $1.1 million from the real estate transactions, which they said paid for repairs the shell corporations never did to the properties. Essien and his colleagues used false invoices from the shell corporations to justify the payments. The jury convicted Essien of violating the Colorado Organized Crime Control Act and of two counts of forgery and theft by receiving. According to the indictment, Essien, while acting as a real estate broker, negotiated the property acquisitions and directed the buyers to create the shell corporations. Nine of Essien's co-defendants have either pleaded guilty or been convicted following a jury trial.

Source: 30-year term for leader of fraud ring (Nigerian Uto Essian was convicted of skimming off the top of real estate deals).

Thursday, September 24, 2009

Ex-Real Estate Agent Faces Forgery, Theft Charges For Use Of Fraudulent HUD-1s To Dupe Lenders Into Giving 100% Financing To Same Buyer For 6 Homes

In Weld County, Colorado, The Greeley Tribune reports:
  • A former Greeley Realtor whose license was yanked last year faces 12 felony charges in Weld District Court upon a grand jury indictment. The Weld County Sheriff's Office has a warrant out for the arrest of Tracy Todd, 35, of Greeley. The grand jury handed down the 20-page indictment against Todd in late August, alleging he participated in a kickback scheme on six home sales in February 2006. Todd's Realtor license was suspended in June 2006, and it was revoked last year for his participation in mortgage fraud schemes.

  • The indictment charges Todd with six counts of felony forgery and six counts of felony theft. The forgery charges stem from misrepresentations alleged on the Housing and Urban Development [closing] statements [also known as HUD-1] that are included in any home sale closing. The indictment also charges six counts of felony theft, each of which could put him in prison for 12 years. According to the indictment, Todd participated in a scheme to sell six homes to the same investment buyer, Tom Lee, paying $78,000 on all the sales for the buyer to qualify for 100 percent financing, plus an additional $36,000 after the sales went through, without disclosing it in the sale documents. The kickback schemes all apparently have many forms, but the common theme for most is forgery, or misrepresentations on closing documents.

For more, see Greeley man faces 12 felony charges for his alleged role in mortgage fraud.

Mandatory Foreclosure Mediation Programs Get Low Grades From National Consumer Advocacy Group

From a press release from the National Consumer Law Center:
  • A spate of new state and local programs that have emerged over the last year requiring mediations or conferences before foreclosures sales take place have great potential to help homeowners, but are suffering from the same lack of industry accountability that has plagued voluntary federal mortgage modification programs, according to a major new study from the nonprofit National Consumer Law Center (NCLC).(1)

For the entire press release, see REPORT: Foreclosure Mediation Programs' Potential To Help Homeowners Now In Jeopardy Due To Lack Of Accountability (NCLC Looks at 25 Programs in 14 States; Mediation Programs Seen as Faltering For Same Reasons as Struggling Federal Voluntary Foreclosure Modification Efforts).

For the report, see State and Local Foreclosure Mediation Programs: Can They Save Homes?

(1) Mediation programs were reviewed in the following 14 states: California, Connecticut, Florida, Indiana, Kentucky, Maine, Michigan, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon and Pennsylvania.

Some In Congress Seek To Make "Produce The Note" Strategy Mandatory To Level Playing Field In Defending Against Sloppy Foreclosing Lenders, Servicers

The Huffington Post reports:
  • Modern-day home mortgages have been so sliced and diced by rapacious financiers that some homeowners are successfully delaying -- or even blocking -- foreclosures through the simple tactic of demanding that banks produce the original mortgage note, which amazingly enough is often not so easy for them to do. As the foreclosure rate continues to set new highs, a little-noticed legal provision that requires bankers, if challenged, to prove they hold the original mortgage documents before getting possession has spawned a minor homeowner rebellion, alternately called "produce the note" or "show me the note". For homeowners trying desperately to keep their homes, the tactic is one way to buy some time -- and maybe even get the upper hand on the lender.


  • The fouled-up paperwork or other lack of legal compliance "has resulted in a much higher rate of negotiated [mortgage] modifications" [...], said [North Carolina congressman and House Financial Services Committee member Rep. Brad] Miller. "It gave the homeowner additional defenses and counterclaims that strengthened their hands substantially."


  • Some in Congress are trying to make it easier for homeowners. Rep. Marcy Kaptur, an Ohio Democrat, introduced a bill in February with Rep. John Conyers (D-Mich.) that would actually prohibit foreclosures unless lenders produced necessary documentation in court, including the note and evidence that the homeowner was, in fact, notified each time the note was transferred.

  • "I am encouraging [homeowners] to stay in their homes [and] go through the court proceedings until the institution in question can produce [the] note, because chances are, they can't," Kaptur said in an interview Monday. "Somehow the playing field has to be leveled here, and [the bill] provides a very strong means of doing that." The bill is languishing in the House Financial Services Committee, headed by Rep. Barney Frank (D-Mass.), she said.

For more, see Who Owns Your Mortgage? "Produce The Note" Movement Helps Stall Foreclosures. EpsilonMissingDocsMtg

Conn. AG Puts Kibosh On Shaky "Option To Buy" Obtained By Pair From Hospitalized Dying Woman; Deal Would Have Allowed Purchase For Less Than 50% FMV

From the Office of the Connecticut Attorney General:
  • Attorney General Richard Blumenthal [...] announced that his office has successfully challenged a questionable agreement to sell the home of a deceased Greenwich woman, securing at least $300,000 more for charities named in the woman's will. [...] Probate Judge Daniel F. Caruso voided an agreement under which Mona Lee Johnson of Greenwich granted her neighbor Mark L. Lovallo and her long time accountant, David Alfano, an option to buy her home for $500,000 after her death. In fact, the home was estimated to be worth more than twice as much -- about $1.2 million -- when she died in 2005. Johnson signed the agreement at Lovallo's urging a month before she died when she was in the hospital.(1)(2)

For the entire AG's press release, see Attorney General Successfully Challenges Questionable Agreement To Sell Greenwich Home, Secures At Least $300,000 More For Charities.

(1) According to the press release, because real estate values have fallen since Johnson's death, it's unlikely the home's fair market value is still the $1.2 million estimated in 2005. In the current market, Blumenthal's office expects the house to fetch at least $800,000. It seems to me that these two characters should be hammered for the damages suffered by the estate and the beneficiaries of the will for the home's $400,000 diminution in value during the time they improperly clouded the title to the deceased woman's home with this bogus deal.

(2) Attorney General Bloomenthal said:

  • "The net result in this long legal battle is at least $300,000 more for good causes, particularly educational institutions, for a total of about $1.5 million or more. I fought successfully to stop this suspect agreement denying hundreds of thousands of dollars to charities intended to benefit from the home's sale. In charity law, the donor's wishes are paramount, and this extraordinarily generous donor sought to benefit charities, not these two men. This donor never wished to sell her home at a bargain basement price, less than half its estimated value at the time, significantly slashing proceeds to charities named in her will."

  • "Ill and infirm -- this woman supposedly signed papers while hospitalized and in the last month of her life -- raising grave doubt the agreement reflected her true wishes. This decision restores moneys rightfully belonging charities -- as well as charitable intentions. My office will continue to carefully monitor estates, intervening when appropriate to assure that the wishes of the deceased are respected and realized."

LA Man Charged With Stealing, Flipping House; Girlfriend Accused Of Notarizing Falsified Documents Used In Deed Theft

In El Monte, California, KTTV-TV Channel 11 reports:
  • A Los Angeles city firefighter who works as a part-time real estate broker and his ex-girlfriend pleaded not guilty [...] in connection with an alleged real estate scam. Brent Lamont Mathews, 43, is charged with six counts of forgery, three counts of attempt to file a false or forged instrument and two counts of grand theft, according to the Los Angeles County District Attorney's Office. Joi Rochelle Smith, 33, a notary public who was Mathews' girlfriend at the time of the alleged crimes, faces the same charges.

  • Prosecutors allege that Mathews put himself on the title of a Hacienda Heights property without the owner's knowledge or consent through a series of forgeries and false filings. Mathews allegedly went on in 2008 to defraud two investors he had solicited as partners to flip the house and who collectively lost $146,000, according to the District Attorney's Office. Smith is accused of notarizing key documents, enabling the illegal transactions, according to prosecutors. Mathews sold the property for $699,000 and netted $203,969, though none of the proceeds from the sale were used to satisfy the trust deeds or to benefit the property owner, according to the District Attorney's Office.

Source: LA Firefighter Facing Scam Allegations (Man, ex-girlfriend charged in real estate case).

Minnesota Man Dodges Add'l Jail Time For Swindling Dying Mom; Pocketing Proceeds Of Home That Subsequently Fell Into Foreclosure Among Bad Acts

In Duluth, Minnesota, the Duluth News Tribune reports:
  • A Twin Cities man has been sentenced to time served and nearly $10,000 in fines and restitution after pleading guilty to swindling his dying mother in Duluth, including draining her bank accounts of more than $170,000. Errol John Gilbertson II, 31, of Woodbury, Minn., told police he used his mother's money because of his addictions to methamphetamine and gambling, according to the criminal complaint.

  • His mother, Vicki Gilbertson, was diagnosed in January 2007 with brain cancer and suffered from dementia and aphasia. At the time of her cancer diagnosis, she had more than $160,000 in bank accounts, according to the complaint. When she died at age 58 on July 22, 2007, Vicki Gilbertson's bank accounts had negative balances totaling nearly $11,000.


  • [Among his bad acts,] Gilbertson refinanced his mother's home and received an equity check for about $30,000. The home was refinanced for $112,000 and payments were not made. The home is in foreclosure.

For more, see No prison for swindler of dying mom. DeedContraTheft

Mortgage Broker Charged With Using I.D. Stolen From Customers To Buy Two Homes That Have Since Gone Into Foreclosure

In Marion County, Oregon, KTVZ-TV Channel 21 reports:
  • Salem police arrested a mortgage broker accused of stealing personal information to buy houses - one during the height of the housing bubble and the other after it popped. Lt. Steve Birr says 38-year-old Julian Ruiz of Keizer financed a $376,000 home in 2006 by using stolen personal information from a customer. The house went into foreclosure the next year. Birr says Ruiz stole another customer's information to buy a $417,000 house in 2008, and that place also went into foreclosure. Ruiz has been lodged at the Marion County jail on charges of mortgage fraud, identity theft, theft by deception, forgery and issuing a false financial statement.

Source: Salem mortgage broker charged with fraud.

Wednesday, September 23, 2009

Final Conspirator In Maryland Sale Leaseback Foreclosure Rescue Scam Gets 46 Months

From the Office of the U.S. Attorney (Maryland):
  • U.S. District Judge Deborah K. Chasanow sentenced Cheryl Brooke, age 52, of Upper Marlboro, Maryland [...] to 46 months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud in connection with a scheme in which she and her conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

According to Brooke's plea agreement:

  • [Miachael K.] Lewis, Brooke, and co-conspirator Winston Thomas specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The goal of the conspirators was to steal the homeowners’ equity out of their property by inducing the homeowners to sell their property to co-conspirator Earnest Lewis and converting sale proceeds to the use of the conspirators. Lewis and his co-conspirators did this by fraudulently representing to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes.

For the entire U.S. Attorney press release, see Final Conspirator Sentenced in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads (Defendants Ordered to Forfeit Over $2 Million).

For the earlier press releases announcing the sentencing of the three other conspirators, see:

Mortgage Servicers Drifting Into Upfront Fee Loan Modification Scam Racket??? Media Intervention Helps Undo Screwing Over Of Two Arizona Homeowners

In Phoenix, Arizona, KPHO-TV Channel 5 reports:
  • Many homeowners say their banks won't call them back regarding a loan modification; however, some homeowners are paying hundreds of dollars for a loan modification only to have the bank foreclose on them.

  • Valley resident Miguel Lozania said he was approved for a loan modification, so he signed his paperwork and sent the bank the $900 fee. "It sounded like it was going to work," he said. "I even got a letter from IndyMac Bank saying they were going to do a modification." IndyMac foreclosed on his house anyway, selling the home for $70,000. Lozania's original loan was for $205,000.

  • Another Valley resident, Joan Hoyt, said she wanted to refinance her loan before the interest rate on her current mortgage reset. Her lender, Washington Mutual, said it just needed a $750 application fee; Hoyt paid it. As it turned out, Washington Mutual did not offer the type of loan Hoyt applied for. The bank did not offer a refund of the application fee.

  • Homeowners across Arizona have written to 5 Investigates to complain about lenders losing modification documents, changing requirements for modifications and being unable to answer basic questions about the process. Arizona Attorney General Terry Goddard stopped short of saying the banks' behavior is criminal; however, he called the complaints "very troubling." "It may constitute deception on the part of the individual company that's leading these people along," he said.

  • Goddard said his office is swamped with complaints that he believes many of the larger banks should have been prepared for. "What we're seeing is a financial industry that doesn't want to handle this problem," he said. He also encouraged people who are having trouble with their modifications to contact his office.

  • As for Lozania, five hours before the story was set to air Monday, a spokeswoman for IndyMac's new owner One West Bank called 5 Investigates to say the company had made a mistake, and they are rescinding Lozania's foreclosure. Washington Mutual refunded $750 to Hoyt after 5 Investigates contacted the bank about the investigation.

Source: More Loan Mod Problems Reported (Ariz. AG Terry Goddard: Complaints 'Very Troubling').

Loan Officer Gets 37 Months For Role In Maryland Foreclosure Rescue Equity Stripping Scam Peddling Bogus Sale Leaseback Deals To Desperate Homeowners

From the Office of the U.S. Attorney (Maryland):
  • U.S. District Judge Deborah K. Chasanow sentenced Winston Thomas, age 43, of New Carrollton, Maryland today to 37 months in prison, followed by three years of supervised release, for failure to file federal tax returns and for conspiracy to commit wire fraud in connection with a scheme in which he and his conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

Thomas was one of the participants in the foreclosure rescue, equity stripping conspiracy headed by Michael K. Lewis, and included Cheryl Brooke and Earnest Lewis.(1)

  • [Michael K.] Lewis and Thomas, a senior loan officer with a mortgage lender, told the homeowners that the “good credit” of Earnest Lewis would be used to temporarily refinance their homes, that they had to sign their homes over to Earnest Lewis and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes only by paying inflated “rent” and fees, which payments were directly debited from their bank accounts to an account belonging to co-conspirator Cheryl Brooke’s company “In the House Technologies.” Brooke then made payments to Earnest Lewis and Thomas, with the remaining funds being used by Michael K. Lewis and Brooke for their personal benefit.

For the entire press release, see Senior Loan Officer Sentenced in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads.

(1) For an earlier press release on the sentencing of both Lewis brothers, see Leader of Mortgage Fraud Scheme Sentenced to 6 ½ Years in Prison - Targeted Victims with TV Ads.

Connecticut AG: Foreclosures Might Be Void Where Unauthorized Process Servers Are Used To Deliver Legal Papers To Delinquent Homeowners

In Hartford, Connecticut, The Hartford Courant recently reported on state Attorney General Richard Blumenthal slamming some state marshals for charging inflated fees when engaged in process serving in foreclosure actions. Another issue of concern raised by the AG was whether non-marshals were being subcontracted out to deliver the legal papers on the delinquent homeowners.
  • Blumenthal also said that [...] state law does not allow the use of non-marshals to deliver most legal papers,(1) comparing the practice to a police officer delegating arrest powers to a non-officer.


  • [U]nclear is whether any foreclosure actions might be in jeopardy. Blumenthal said that overcharging would not invalidate a lawsuit, but that if legal papers were served on a homeowner by someone other than the marshal who attested that the papers were delivered, then that service might be deemed defective, and that could jeopardize the underlying suit.

For the story, see Blumenthal: Some State Marshals Broke Law By Double-Billing.

(1) According to a recently-issued legal opinion by Attorney General Blumenthal:

  • State statutes direct that State Marshals serve legal process without the use of indifferent persons except in narrowly defined circumstances. The sole exceptions to this general rule are for matters where there is express statutory authority for an indifferent person to make service, such as subpoenas, service of notices of lis pendens on a property owner, and service of notices to quit.

  • Where there is express statutory authority (such as for service of a subpoena, service of a notice to quit, or service of a notice of lis pendens on a property owner) for use of an indifferent person to make service, the use of an indifferent person is permissible. It is not permissible under any other circumstances.

See: Connecticut AG Legal Opinion issued to Herbert J. Shepardson, Esq., Chairperson, State Marshal Commission (p.19). SewerServiceAlpha

Arizona Couple Seeks Loan Modification; Lender Responds By Freezing Funds In Checking, Savings Accounts

In Scottsdale, Arizona, KPHO-TV Channel 5 reports:
  • A Scottsdale couple who asked for a loan modification and then got behind on their payments recently got a rude surprise. Roger and Staci Schneider went to their bank, the Desert Schools Credit Union, on Thursday to make a withdrawal. They claim the branch manager denied the transaction because their assets had been frozen, even though the Schneiders had $20,000 in their checking and savings accounts. "We've done everything the bank has asked us to do and now they're seizing our funds and I have no idea why," Roger Schneider said. "We haven't been able to get a response." [...] The couple said they have some advice for struggling homeowners. Do not keep your money in the same bank that holds your mortgage.

For more, see Couple: Bank Froze Our Assets (Couple Asked For Loan Modification, Gets Rude Surprise).

Loan Servicer Drags Feet On "Deed In Lieu" Offer By Delinquent Borrower; Home Sits Vacant For A Year Before Title Finally Passes In Foreclosure Sale

In Hopkins, Minnesota, the Minneapolis Star Tribune reports:
  • Bob Lerner knew he couldn't afford the mortgage payments on his family's home in Hopkins. So in January, Lerner told the bank: The house is yours. Eight months later, Lerner is still wondering why the bank wouldn't take it. [...] In October 2008, as they prepared to file for bankruptcy, the couple and their teenaged son moved out of their Cape Cod-style house [...] and into an apartment in Minnetonka.


  • Lerner's attorney sent a letter to Lerner's lender, U.S. Bank, saying the family was prepared to walk away from the house. Called a "deed in lieu of foreclosure," the deal would spare everyone the costly process of foreclosure, which can drag on for months. Lerner said bank employees were agreeable, but wanted to make sure there were no title problems or other hang-ups. He checked back every few weeks but was always told that no decision had been made.

  • Then in March, a worker arrived at the empty house and changed the locks. That same month, the bank filed paperwork in Lerner's bankruptcy case to protect its stake in the house, acknowledging "Debtor intends to surrender the property." Lerner figured the deal was finally done. "To me, that means for all intents and purposes, they've taken possession," said Lerner, 48, who works in tech support for Hennepin County.


  • On Sept. 10, U.S. Bank finally made its intentions clear: It bought the house at a sheriff's foreclosure sale. [...] Lerner figures he is out as much as $3,500 in property taxes, home insurance and gas bills -- money he thought he had saved by leaving the property in the hands of U.S. Bank early this year.(1)

For the story, see Owner tried to give house to bank - but bank balked (Hoping to avoid foreclosure, Bob Lerner tried to give his house back to the bank. Eight months and $3,500 later, the bank bought it at auction).

(1) As if it wasn't bad enough that the mortgage servicer's foot-dragging resulted in the home sitting vacant for about a year before the foreclosure sale took place, Minnesota law (see Section 580.23, Minnesota Statutes (2009)) gives foreclosed homeowners a six-month right of redemption period to reclaim their home, which may mean that the home will continue to sit vacant for at least an additional six months before the servicer can legally take possession of the home and prepare it for resale.

Mortgage Servicer Threatens Foreclosure, Initiates Debt Collection Proceedings Despite Valid Loan Mod Being In Effect, Says Ohio Homeowner In Lawsuit

In Hamilton County, Ohio, The Cincinnati Enquirer reports:
  • Carolyn S. Cable thought she had worked out a deal with her mortgage company to save her home from foreclosure after she had multiple brain surgeries and suffered a stroke that made her unable to work. But in a lawsuit filed in Hamilton County Common Pleas Court Friday, the Colerain Township woman alleges that Bank of America reneged on the deal and threatened foreclosure - even sending debt collectors after her. [...] In [her] case, she said a Bank of America representative told her that her loan modification was lost in the computer system.


  • When she fell behind on her payments in 2008, Countrywide Home Loans - under pressure from the Ohio Attorney General to offer loan modifications - lowered her interest rate and extended the loan term. Her payment went from $524 a month to $401 a month - which Cable said she paid. But then Countrywide went out of business, and Bank of America bought its mortgages. Cable's lawsuit says Bank of America told her the loan modification agreement was still in effect, but then initiated debt collection proceedings against her anyway.

  • Cable is represented by the Legal Aid Society of Southwest Ohio. Lawyer Noel M. Morgan also represents a Clinton County couple in an almost identical situation, and said Bank of America's actions have become part of a growing practice by the bank to breach its agreements.

For the story, see Lawsuits: Bank reneged on loan deals.

Tuesday, September 22, 2009

Minister, Wife Charged Of Duping Elderly Man Into Signing Over Home; Subsequent Refinancing, Failure To Make Payments Leave House In Foreclosure

In Ventura, California, the Ventura County Star reports:
  • The pastor of the Solid Rock Christian Center in Ventura and his wife were arrested Thursday for allegedly duping an elderly man into signing over the deed to his home. Alonzo Gene McCowan, commonly known as the Rev. Lonnie McCowan, 49, was charged with two counts of theft from an elderly person and two counts of money laundering in an amount that surpassed $500,000, according to a felony complaint. His wife, Kimberly Ann Oglesby McCowan, 45, is charged with one count of grand theft and one count of money laundering in the same complaint.


  • Alonzo Gene McCowan is accused of taking advantage of Leo Gilmond, now 86, by getting him to sign over the deed to his Ventura house in October 2004. In exchange, the pastor promised to pay Gilmond $460,000. McCowan told Gilmond “he wanted to buy the home so he could use it as a rental for church dignitaries and students,” according to an affidavit filed by Frank Huber, investigating officer for the Ventura County District Attorney’s Office.

  • When negotiating the purchase, McCowan told Gilmond he needed a signed grant deed that “would be held in the church office solely for the purpose of verifying the purchase of the property to church leaders and to demonstrate his authority to rent the property,” the affidavit states. It adds that Gilmond “knew signing a grant deed was risky but he trusted (A. McCowan) because he represented himself as a religious man; it was these religious representations that made Gilmond more trusting of (A. McCowan).”

  • In the years that followed, the McCowans made installment payments totaling $10,000 according to the agreement, said investigators. A balloon payment of $450,000 was due in January 2008. When Gilmond tried to collect it, he found his home was in foreclosure, according to court records. According to the investigator, “Gilmond was in disbelief. (A. McCowan) admitted to Gilmond that he had taken out a $420,000 loan on the property and had lost the money in the stock market.”

  • McCowan offered to continue the monthly payments while he worked with the bank but Gilmond went to his son, Gary Gilmond, and attorney Greg Jones to find out how McCowan was able to take out the $420,000 loan, according to the affidavit. They learned the McCowans had withdrawn $420,000 in equity by refinancing the property in Kimberly McCowan’s name.(1)

For more, see Pastor arrested in bilking of senior (Deed to Ventura home signed over).

For story update, see Judge cuts bail for the Rev. McCowan, who is charged in theft.

(1) For the McCowans to have obtained $420,000 in refinancing proceeds, the $450,000 payment the elderly homeowner was due to receive on the purported home sale was either unsecured by a mortgage/trust deed on the home he sold, or, if secured, the security agreement may have contained some form of subordination clause making it inferior in priority to any future mortgage/trust deed (thereby enabling the McCowans to refinance out $420,000 with a first mortgage and leaving the unwitting elderly homeowner in second position). DeedContraTheft

Conn. AG Slams State Marshals For Double Billing When Process Serving In Foreclosures; Practice Coincided With Possible Attorney Kickback Arrangement

In Hartford, Connecticut, The Hartford Courant reports:
  • Attorney General Richard Blumenthal, in a sweeping action against some of the highest-earning state marshals, has concluded that a handful of marshals broke the law when they double-billed for the delivery of papers in foreclosure actions. In a 21-page legal opinion, Blumenthal called on the State Marshal Commission to seek restitution from marshals who overcharged, and he said that his investigation was continuing and could lead to legal action. A Courant story last month reported that marshals collected as much as $1 million in unnecessary fees in foreclosure cases, before the practice was halted this summer. "Piling unlawful fees on property owners facing foreclosure adds both insult and injury," Blumenthal said. "There is a clear and unequivocal message going forward that multiple fees for a single action are illegal and improper and cannot be charged."


  • The double-billing began in early 2007, with a small group of marshals who regularly worked for the state's two large foreclosure law firms, Hunt Leibert and Bendett & McHugh. The marshals included a three-page lien document known as a lis pendens each time they delivered legal papers in a foreclosure suit, but treated the delivery of that document as an entirely separate action, charging a second service fee and even double-charging for mileage. The practice typically added $30 to $150 to each service. After the fee increases, the firms filed about 30,000 foreclosure suits before abandoning the practice following reports in The Courant and questions from Blumenthal's office. Blumenthal said that not only were the extra fees excessive, but that state law does not even require that the document be served on defendants in a foreclosure suit.


  • The extra fees in foreclosure cases coincided with an attempt by principals of the two large law firms to set up a separate company, called Connecticut Service Network, that would collect money every time a marshal served a foreclosure suit.(1) In 2007, Blumenthal declared that arrangement illegal. Neither the firms nor the marshals have said why they began charging extra for delivering the lis pendens.

For thr story, see Blumenthal: Some State Marshals Broke Law By Double-Billing.

From the Office of the Connecticut AG:

(1) In an earlier story (see Courant Probe: Marshals Charged Unnecessary Fees From 2007 Until Recently), The Hartford Courant reported:

  • Principals of the state's two main foreclosure law firms — Hunt Leibert Jacobson and Reiner, Reiner — had quietly set up a private bookkeeping company and were asking marshals to pay money to the new business for every foreclosure suit they served. Marshals working for those firms stood to lose at least half a million dollars a year in payments to the new business, called Connecticut Service Network. But by the time the company started operating, the marshals were offsetting those costs with the extra fees they were charging, The Courant found. SewerServiceAlpha

Jury Finds Central Florida Couple Guilty Of Grand Theft For Tricking Elderly Widow Into Signing Away Title To Her Home

In New Port Richey, Florida, the St. Petersburg Times reports:
  • To Cynthia and Joseph Clancy, it wasn't enough to spend Eloise Mudway's savings, take her home and isolate the elderly widow from her friends. Mudway didn't die fast enough for the couple, Assistant State Attorney Mike Halkitis told jurors on Monday. He said Cynthia Clancy told Mudway's new caretakers: "If she gets ill, don't call EMS. Let her die."

  • After hearing a week's worth of testimony and deliberating an hour and a half, a jury convicted the Clancys on Monday afternoon of grand theft of a person aged 65 or older. During a six-day trial that included emotional testimony from Mudway, now 92, the prosecution said the Clancys tricked Mudway into signing over the deed to her Hilltop Drive home. The couple also emptied Mudway's bank account, then sent her to live with friend Jeff Kores and his wife after the elderly widow had a heart attack in 2004.

For more, see Pasco County couple convicted of stealing from elderly woman.

See also The Tampa Tribune: Pasco couple face up to 30 years for bilking elderly woman. DeedContraTheft FinancialAbuseOfElderlyAlpha

Attorney/Ex-Georgia Lawmaker Gets Six Years In Sale Of Forged Title Insurance Policies To Unwitting Homebuyers; 180 Files Involved, Says Underwriter

In Carroll County, Georgia, the Times Georgian reports:
  • A Carroll County attorney was sentenced [last week] to six years in prison after he pleaded guilty to 57 counts of theft by taking and forgery. Charles A. Thomas Jr., who at one time represented the city of Temple and the Carroll County Board of Education and formerly served in the Georgia House of Representatives, had been under investigation by the Georgia Bureau of Investigation since June 2008. That’s when agents received information that he had sold forged title insurance under the guise that he was an agent for Stewart Title Guaranty Co.


  • According to investigative reports, Thomas had the authority to sell insurance under Stewart Title until March 2004 when that right was terminated for undisclosed reasons. Thomas then continued selling title insurance through forged Stewart documents and collected the premiums himself.

  • In one of the 11 felony counts, Thomas reportedly sold fraudulent title insurance to Jack and Susan Waller of Alma in February 2006. “We had been living in our new home for several months when the mortgage company notified us that we didn’t have title insurance. They were blaming us, so we were very frustrated and it took several days for everyone to figure out what was going on,” Susan Waller said. “He was so relaxed the day of the closing and while we were signing the papers he was very chatty. I think he probably is going where he needs to be and I’m just glad he pleaded guilty.”


  • Carol V. Clark, who represented Stewart Title during the case, said that there was no way that Thomas simply made a mistake. “He was sent notification by certified mail detailing the fact that he had no right to sell title insurance,” Clark said. “So far, we have identified 180 different files involved in the case and we are working diligently to resolve all of the claims.”

For the story, see Attorney sentenced to 6 years for theft, forgery.

Use Of "Blanket Receivership" By Florida Condo Associations In Struggle To Stay Afloat Continues; Rent Skimming, Deadbeat Landlords Left Furious

In Tampa, Florida, The Tampa Tribune reports:
  • Each month, Judd Tyler, the president of his townhome association, discovers his community doesn't have enough money to pay all of its bills.(1) So the townhome board took action. It is among the first in the area to obtain a court order to force delinquent landlords to turn over rent payments to them. [...] The court order, signed late last month, grants what's called a blanket receivership. It requires many of the tenants to pay their rent to a court-approved, third-party receiver instead of the landlord. In fact, it's against the law for the landlord to collect rent until all past-due fees and legal costs are paid.

  • The blanket receivership method is catching on, and at least 25 other associations in Florida are using them. Legal experts expect many more to follow suit. In some cases, associations are owed hundreds of thousands of dollars. "When a good idea begins to work, others tend to follow," said Peter Dunbar, a Tallahassee lawyer and former Bay area legislator.


  • The blanket receivership method is spreading through the legal community, although it is unclear how many associations have asked for or received such an order. Ben Solomon, at attorney with Association Law Group in south Florida, said his firm came up with the new legal tool by "reinterpreting" existing statues. [...] With the blanket receivership method, a homeowner's association can file one petition to cover every unit with past-due assessments, as long as the association has already filed for foreclosure. "It's affordable for the condo association because one petition covers all the units that qualify," Solomon said. "Every time the association files another foreclosure, it's eligible for receivership."

  • Solomon said his firm wasn't sure how judges would interpret their petitions and have been pleased so far. Landlords, however, are furious to learn about the court order. One even tried to have the decision overturned.

For more, see Some deadbeat landlords must forfeit rents to condo associations.

Go here for other stories on blanket receiverships.

(1) Reportedly, more than half of the 84 unit owners are stiffing their association out of the $300 monthly maintenance fee.

200 Families In C. Florida Condo Complex Temporarily Dodge The Boot As Association Coughs Up $10K For Unpaid Water Bill; Most Units Face Foreclosure

In Kissimmee, Florida, WFTV-TV Channel 9 reports:
  • The water was still flowing Monday afternoon for nearly 200 families in a Kissimmee condo complex. Toho Water Authority put up a giant lighted sign in the Cascades condo complex last week, warning residents their water would be turned off at noon on Monday because of a $50,000 unpaid water bill. However, a last minute compromise is keeping the water on. It's good news for the residents of the condo complex.

  • Many residents were making arrangements to move or find a temporary place to live. It took a $10,000 check to bring them peace of mind. The Toho Water Authority threatened to turn the water off, because the condo association hasn't paid the water bill in seven months. The water bill had climbed to $48,000. The condo association hired a lawyer over the weekend, who was able to make a deal with Toho Water Authority, and they set up a payment plan. [...] The first payment of $10,000 was made around 11:00 am Monday morning. The next payment is due on October 15.

  • The association says they aren't able to pay the water bill because most of the homes are in foreclosure and homeowners aren't paying HOA fees.

Source: Condo Residents' Water Not Shut Off. RentSigmaSkimming

City Turns On Spigot For Tenants In Home In Foreclosure; Landlord Bolts After Skimming Rent & Stiffing Bank, Leaving Unpaid Water Bills Behind

In Grand Rapids, Michigan, WOOD-TV Channel 8 reports:
  • An apartment building left dry for five days after the landlord failed to pay the water bill has water again. A city water employee turned the valve near the curb just after 1 p.m. [Friday]. "Thank you. Now we can flush our toilets, take a shower, do our dishes," tenant Patricia Hammond told the city employee. "That's good. I'm happy." As 24 Hour News 8 reported Thursday, the city had shut off the water [...] after landlords Christina and Todd Bialas fell $702 behind in their water bill.(1) Tenants say water is included in their rent -- which totals $1,250 a month between the three occupied apartments. [...] The home [...] has been in foreclosure since April, city tax records show. The Bialases have until Oct. 8 to come up with $119,000, or the home goes back to the bank. City officials say they haven't been able to find the landlords, who own four other homes in Grand Rapids.

For the story, see Tenants get water, though bill not paid (Landlord nowhere to be found).

(1) According to an earlier story, one mom was forced to take her three young children to a neighbor's house so they could clean up. They flush their toilets with buckets of water from their neighbors. Sometimes, they walk to the nearby library to use the bathroom. Another mom was forced to temporarily cease her 2-year-old son's potty training and put him back in diapers because there was no way for him to flush the toilet. (See Tenants without H20; landlord won't pay) RentSigmaSkimming

Monday, September 21, 2009

Calif. Bar Official: "The Number Of Attorneys Using Their Law Licenses To Essentially Take Money From Unwary But Trusting Consumers Is Astounding!"

From a recent press release from The State Bar of California:
  • The State Bar of California, alarmed by the number of lawyers preying on vulnerable homeowners, [last week] identified 16 attorneys who are under investigation for misconduct related to loan modification. “In my 21 years in attorney discipline, I have not seen a crisis of this magnitude. It is truly unprecedented,” said Interim Chief Trial Counsel Russell Weiner, who is waiving investigation confidentiality in favor of public protection. The waiver, allowed by law, is used only occasionally, but Weiner said the seriousness of the problem demanded a strong reaction by the bar in order to protect consumers. This is the first time the names of more than a few lawyers being investigated have been made public.

  • The number of attorneys using their law licenses to essentially take money from unwary but trusting consumers is astounding,” Weiner added. “There are literally thousands of victims who have lost money they could not afford to lose. Under the circumstances, the need for public information and protection is paramount.(1)

For more, including the list of the 16 attorneys and their law firms currently the target of a State Bar probe into homeowner complaints about loan modification services, see State Bar takes action to aid homeowners in foreclosure crisis.

For more on the efforts of The State Bar of California in fighting loan modification foreclosure rescue scams engaged in by its members and others, see:

(1) The State Bar suggests that consumers be wary of attorneys offering loan modification services under any of the following circumstances:

  • Advertisements of the office do not expressly identify by name the attorney who is responsible for the business;
  • Office staff will not readily identify by name the attorney responsible for oversight of the business;
  • The attorney in charge of the office is too busy or not willing to meet personally with prospective clients;
  • The firm advises a consumer to stop paying the existing mortgage;
  • The business, through its advertisements or claims of its representatives, makes claims that sound too good to be true, such as claims of a 90 or 100 percent rate of success in obtaining loan modifications, or claims that a reduction in the mortgage principal is likely to be achieved;
  • The business demands payment of a large fee, even before obtaining a prospective client’s basic income and expense information, and information about the existing mortgage and present home value;
  • The attorney responsible for the business is not licensed to practice law in the state where the consumer resides.

Lack Of Resources, Capabilities, Knowledge Or Manpower Doesn't Stop Some Operators From Pocketing Upfront Fees For Bogus Loan Modification Services

ABC News reports:
  • The housing crisis has left millions of homeowners desperately trying to avoid foreclosure, but their plight is only made worse by schemers who promise help but instead seek only to scam. Now the Obama administration is highlighting its multi-agency effort to stop these scams.


  • One such company targeted by authorities is Nation's Housing Modification Center,(1) a California loan modification company that had civil charges filed against it Wednesday. The company was the subject of a recent ABC News investigation. Former employees of the company told ABC News that it was little more than a "boiler room" operation filled with telemarketers reading from a special script targeted at anxious homeowners facing foreclosure. "They're convincing people to give money to them in advance, promising to do something that they're not doing, that they don't even have the resources, capabilities, knowledge or manpower to do," said former employee Tom Fatica, who said he was fired from NHMC after he questioned the absence of the attorneys and accountants who were supposed to help homeowners.

  • Civil charges were also filed against another California company, Infinity Group Services of Orange County.(2)

For more, see Fighting Mortgage Scams: Governments Team Up (State and Federal Officials Try to Stop Scammers Who Prey on Those Facing Foreclosure).

For the FTC press release announcing the two recent lawsuits against these loan modification outfits, and updates on previous suits filed against other firms, see FTC Announces New Enforcement Actions In Continuing Crackdown On Mortgage Relief Services Scams.

(1) For the lawsuit, see FTC v. Federal Housing Modification Department, Inc. (doing business as Nations Housing Modification Center and Loan Modification Reform Association; other defendants: Michael A. Trap, Glenn Rosofsky, and Bryan Rosenberg).

(2) For the lawsuit, see FTC v. Infinity Group Services (d/b/a IGS, Hope to Homeowners, ASKIGS, and ASKIGS, Inc.; other defendants: Kahrami Zamani, individually and as an officer of Infinity Group Services).

Nevada AG Calls For More Criminal Prosecutions & Jail Time For Loan Modification Scammers

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • Nevada ranks number one in the nation for mortgage modification scams. Most of the resources in the Nevada Attorney General's Office have been dedicated to tracking down and prosecuting fraudulent loan modification companies. [...] Right now, the AG's office in Las Vegas has complaints against 128 loan modification companies and has dozens more under investigation.

  • Chief Deputy AG John Kelleher says each company has anywhere from 20 to 200 loan modification victims each. [...] Kelleher says he now spends 90-percent of his time putting together complaints against loan modification scammers. He says in one case they served search warrants and the company owner flew to the Philippines. The FBI is tracking that person down right now.

  • Attorney General Catherine Cortez Masto wants the scammers to know there is nowhere in the world they can hide. "We are going to hold them accountable. It's a crime to come into this state and take advantage of people who are already victimized because of the economy," she said. The AG wants to charge these companies on anything from theft to mortgage fraud to racketeering. If convicted, the people doing loan modification scams could spent two to 20 years in prison per count. There are an estimated 14,000 victims in Las Vegas. "If you are working in this industry and you are defrauding people, we are going to find you. We are going to prosecute you and we are going to seek jail time," said Kelleher.(1)

For the story, see Nevada AG Targeting Mortgage Modification Scams.

(1) Up until now, the vast majority of prosecutions of loan modification scammers by the various state attorneys general around the country, as well as by the Federal government, have been in the form of civil lawsuits. Civil suits, while easier to bring and win in court for the prosecuting agency than criminal actions (due to the lessened burden of proof in presenting a case), offer no threat of felony conviction and jail time for the scammer.

Michigan AG Criminal Prosecution Yields Guilty Pleas From Three Outfits For Bogus Loan Modification Services

In Lansing, Michigan, The Bay City Times reports:
  • Victims of foreclosure fraud schemes by three Michigan companies will be able to receive refunds, state Attorney General Mike Cox announced [...]. SaveMyHome USA, Payment Doctors and the Michigan Economic Reinstatement Program each pleaded guilty to one count of violating the Michigan Credit Services Protection Act, Cox said in a press release.

  • According to an undercover investigation by the Attorney General's office, the three companies charged borrowers upfront fees as part of mortgage modification assistance to homeowners facing foreclosure. Charging the fees upfront is prohibited by law, Cox said. The companies claimed they would help homeowners keep their homes by working with their lenders, but in many cases, were unable to do so, and the victims could not get their money back. The companies, which are based in southeast Michigan, had customers all around the state.

Source: State Attorney General seeks to refund victims of foreclosure fraud.

For the related Michigan AG press releases, see: