Saturday, November 07, 2009

Increase In Housing Discrimination Against Families With Children Attributed To Growing Use Of Internet To Advertise Rentals

In Grand Rapids, Michigan, The Grand Rapids Press reports:
  • When a landlord told a young Grand Rapids mother interested in renting a duplex that she would have to pay twice the regular security deposit because she had three children, the woman was shocked. “I know I have kids, but I don’t have animals for children,” said the 24-year-old, whose children are 5, 2 and 2 months. “I don’t know what kind of damage they would do that would take two months’ security deposit.” The mother, who asked not to be identified, eventually learned the requirement was illegal: The Fair Housing Act bans discrimination on the basis of “familial status.”


  • Nationwide, familial status complaints rose from 3,500 in 2006 to 5,300 last year, according to the National Fair Housing Alliance. The increase is attributed to the growing role of Internet advertising. Newspapers are held liable under the Fair Housing Act for their advertising content, but Web sites such as or are held to a different standard: The burden is on the poster, not the site owner.

For mrore, see More renters claiming landlords are unlawfully discriminating against families.

Mass. Landlords Get Hammered For Failing To Lease To Renters w/ Kids To Avoid Lead Paint Abatement Requirements, Tenants w/ "Section 8" Subsidies

The Office of the Massachusetts Attorney General has taken recent action in connection with enforcing housing discrimination laws involving the alleged refusal by landlords to rent to families with children & tenants receiving housing subsidies, as well as the refusal of landlords to remediate lead based paint hazards in rental units and common areas:
  • Coakley Obtains Consent Judgment Against Quincy Landlords for Discriminating Against Section 8 Recipients: Attorney General Martha Coakley’s Office obtained a consent judgment against Inna Bogina, the owner of a three-bedroom rental property in Quincy, and her daughter Tatiana Bogina, the rental agent for the property, resolving allegations that they violated state anti-discrimination laws by refusing to rent to recipients of housing subsidies and a family with children. The consent judgment, entered yesterday by Judge Barbara A. Dortch-Okara in Norfolk Superior Court, orders Inna and Tatiana Bogina to pay $5,000 to the victims, bars the Boginas from discriminating in the future, and requires Tatiana Bogina to attend a training on fair housing laws.

  • Coakley Reaches Settlement with East Boston Landlord Resolving Allegations of Housing Discrimination: Attorney General Martha Coakley’s Office reached a settlement with an East Boston landlord, resolving allegations that he unfairly discriminated against prospective tenants, denying them the opportunity to rent an apartment. The Assurance of Discontinuance, filed [...] against Russell Tremaine, the landlord, alleges that he violated state anti-discrimination and lead paint laws by denying a couple with a young child the right to rent an apartment in East Boston because of the presence of lead paint. "It is against the law to deny a family the opportunity to rent an apartment because the family has a child under six, which would require the landlord to abate or remove any lead paint from the unit and common areas. Those who choose to be landlords and participate in the rental market must play by the rules and abide by the laws meant to ensure people’s health and safety,” said Attorney General Martha Coakley.

  • Coakley Reaches Statewide Settlement with 20 Landlords and Real Estate Agents for Discriminatory Advertisements on Craigslist and Files Suit Against Six Others: Attorney General Martha Coakley’s Office reached settlements in 20 cases against landlords and real estate agents across the Commonwealth accused of violating state anti-discrimination laws by making discriminatory statements in rental advertisements posted on the popular classified advertising website (“Craigslist”). The Attorney General’s Office also filed lawsuits against six other defendants based on similar allegations. The settlements and lawsuits are a result of a statewide investigation into reports of widespread discriminatory Internet advertising, [...]. Under Massachusetts law, it is illegal to discriminate against someone because the presence of children might trigger a property owner’s duties under the lead paint laws or because someone receives a housing subsidy, such as a Section 8 voucher, to pay for some or all of their rent. The advertisements in question in this investigation include such language as “no children” or “no Section 8,” in blatant violation of the law. The settlements, [...] require the property owners and real estate agents to pay the Commonwealth $18,250, ($8,750 of which is suspended pending compliance with the agreements), attend trainings on state and federal fair housing laws, remove lead paint hazards from the rental units, and prohibit the defendants from placing discriminatory advertisements or otherwise discriminating against any person who seeks or applies for housing because they are a member of a protected class.

  • Coakley Settles with Cambridge Real Estate Company That Discriminated Against Family with Young Child: Attorney General Martha Coakley’s office obtained a consent judgment against ABG Residential, a Cambridge-based realty company, and its agent, Georgina Zala, resolving claims that the company refused to rent an apartment to a couple because they had a nine-month old child whose presence would require abatement of lead paint hazards under state law. The consent judgment, [...] orders the defendants to pay $3,500 to the couple and bars the defendants from future acts of discrimination.

Ex-HOA President Gets 18 Months House Arrest For Swiping $87K By Dipping Into Association's Funds; Lien Placed On Home To Secure Restitution Payments

In Dayton, Ohio, the Dayton Daily News reports:
  • The former president of the Gander Road Homeowner’s Association, who admitted to embezzling $87,000 from the group, was sentenced [...] to five years probation. Rose Griffin, 69, of Dayton, appeared before U.S. District Senior Judge Walter H. Rice, who ordered her to pay full restitution to the association. Griffin will spend the first 18 months of her probation on home confinement, under Rice’s sentence. Griffin pleaded guilty [...] to one count of honest services mail fraud.


  • Griffin must repay the restitution at the rate of $1,000 per month and receive counseling for gambling addiction. Rice also ordered that a lien be placed on Griffin’s home.

For the story, see Homeowner association president sentenced for embezzling $87,000.

Lawyer Convicted In Scam Involving 85-Year Old Client Beat Out Of $160K In Phony Morgtage Deal

In Barrie, Ontario, the Barrie Advance reports:
  • A former Barrie and Innisfil lawyer was convicted of fraud and forgery in Barrie Superior Court in connection with a false mortgage scheme. Myles McLellan, 56, has had a continuing trial in Barrie since January this year. He was charged in 2006, following an extensive investigation by South Simcoe Police in relation to a mortgage fraud involving an elderly victim.(1)

Source: Lawyer convicted in scheme.

For earlier post on this story, see Attorney On Trial For Forgery, Criminal Breach Of Trust For Allegedly Duping 85-Year Old Man Out Of $160K In Bogus Mortgage Investment Deal.

(1) For those in Canada, if a Canadian attorney, in the course of representing you, screws you out of money or property through dishonest conduct, click on your province on the Canada Client Protection Funds Map to contact the appropriate Law Society Client Compensation Fund about filing a claim to seek some reimbursement for your losses.

For those in the United States, see:

Illinois Man Accused Of Ripping Off $225K From Now-Deceased Mother-In-Law Asserts "Promissory Note" Defense In Attempt To Beat Charges

In McHenry County, Illinois, the Daily Herald reports:
  • The defense for a Lake in the Hills man accused of stealing $225,000 from his mother-in-law asked a judge to throw out the charges Tuesday, claiming authorities misled the grand jury that indicted him and ignored evidence proving his innocence. Michael W. Greer, 46, faces felony charges of financial exploitation of an elderly person and forgery stemming from an investigation into allegations he used a position of authority over his now-deceased mother-in-law to gain control of substantial assets.

  • But defense lawyer Thomas Loizzo argued in court [...] that Greer received the money as a loan to his business and that there are documents - including a promissory note signed by Greer's brother and business partner - supporting that claim. "If the grand jury had known that fact, if they had known it was a loan for $225,000, they would have known this was a civil matter that doesn't rise to the level of criminality," he said.


  • Addressing the promissory note, [Assistant McHenry County State's Attorney Ryan] Blackney said authorities believe Greer forged it in order to cover his tracks once his financial transactions began drawing scrutiny.

For the story, see Defense claims grand jury misled in theft case.

Caregiver Charged In Alleged Ripoff Of Elderly Couple; Increased Victims' Reverse Mortgage Payments To Hide Effects Of Illicit Spending, Say Cops

In Fairfax, California, the Marin Independent Journal reports:
  • An in-home caregiver wanted on suspicion of stealing $100,000 from a retired Fairfax couple was arrested in Marin Superior Court after showing up for her scheduled arraignment. Jane Macam McClellan, also known as Jane Macam Deleon, pleaded not guilty during her initial court appearance [...], said her defense attorney, Anthony Lowenstein. McClellan, a 46-year-old Brentwood resident, was then booked into jail on allegations of embezzlement from an elder or dependent adult, forgery, possession of stolen property, burglary and theft. Her bail is set at $100,000.

  • McClellan worked for the Fairfax couple, a 98-year-old woman and her 92-year-old husband, for about six months. She was fired in August when the couple's family discovered financial irregularities, police said. McClellan allegedly used the couple's credit cards and also spent their money to hire her own family members for housekeeping work, according to the Fairfax Police Department. In addition, McClellan allegedly increased the couple's reverse-mortgage payments to help disguise the effects of her spending.

For the story, see Caregiver sought in Fairfax theft case shows up for court, gets booked.

Friday, November 06, 2009

Sheriff's Alleged Failure To Follow Proper Procedure Raised As Issue In Proposed Class Action Suit In Attempt To Set Aside Detroit-Area Foreclosures

In Detroit, Michigan, The Detroit News reports:
  • Tens of thousands of Wayne County foreclosures -- and potentially hundreds of thousands across the state -- are unlawful because sheriffs did not follow state law when they conducted foreclosure auctions, an attorney said Wednesday. On Tuesday, Bloomfield Hills attorney Paul Nicoletti filed a proposed class-action suit in federal court seeking to set aside the Wayne County foreclosures of 46 plaintiffs and potentially hundreds of thousands of others in similar circumstances.

  • The main issue relates to the sheriff's deeds issued to buyers of properties sold by the court order to satisfy debts. The complaint alleges that former Sheriff Warren Evans did not sign the appointment of the sheriff's deputy who executed the deeds, as required by the letter of the law. Instead, as in most Michigan counties, the undersheriff made the appointment, Nicoletti said. "It's a hyper-technical argument, but it's due process," said Nicoletti, who points to a handful of rulings he says support his position.(1)

For more, see Lawsuit claims Wayne County foreclosures were illegal.

(1) According to the story, Nicoletti points to an August ruling by a U.S. bankruptcy judge that set aside a foreclosure based on a similar technical argument -- the time period for which the deputy who handled the sale was appointed. The bankruptcy judge ruled evidence suggested the deputy was appointed for 2008, but not for 2007, when the sale took place. The judge set aside the foreclosure but reinstated the mortgage, meaning the plaintiff still had the debt to deal with.

Ohio AG, Loan Servicer Trade Lawsuits Over Legality Of Firm's Business Practices

In Cleveland, Ohio, Reuters reports:
  • American Home Mortgage Servicing and Ohio's Attorney General on Thursday filed lawsuits against one other marking the latest battle between a U.S. state and firms charged with easing payments for troubled home owners. American Home, owned by billionaire investor Wilbur Ross, said its lawsuit disputes the state's allegations of unfair practices, which were affirmed later as Attorney General Richard Cordray announced he had sued the Coppell, Texas-based mortgage servicing company.

  • It is the second offensive by Cordray against mortgage servicing companies that are on the front lines of state and federal efforts to stop foreclosures plaguing the economy. Among complaints, Cordray said American Home forced consumers to pay excessive fees and waive rights in order to get help, and that contracts to ease terms on loans were "unconscionably one-sided" in favor of the company.

For more, see American Home, Ohio AG sue each other over mortgages.

For the Ohio AG press release, see Cordray Files Second Suit Against Mortgage Servicers:

  • The lawsuit alleges numerous violations of the Ohio Consumer Sales Practices Act including but not limited to: incompetent and inadequate customer service, failure to respond to requests for assistance, failure to offer timely or affordable loss mitigation options to borrowers and unfair and deceptive loan modification terms.

The Ohio AG warns consumers to watch for the following red flags when entering into a loan modification with a loan servicer:

  • Agreements in which you waive your right to take legal action against the servicer or to challenge the foreclosure process. Look for words like “borrower has no right of set-off or counterclaim” or “no defense related to the loan or the property,”
  • Demands for advance payment of extra fees not included in the agreement, such as taxes, attorney fees and insurance costs,
  • Failure to return your calls or respond to inquiries in a timely matter,
  • Failure to respond to you entirely,
  • Lost documents.

Class Action Suits Against Major Builder, Lender Accused Of Controlling Apraisal Process To Artificially Inflate Home Values Expand To Florida, NC, SC

From a press release from the law firm of Hagens Berman Sobol Shapiro:
  • A Central Florida homeowner forced into foreclosure filed a class-action lawsuit last week against KB Home, Countrywide Financial and LandSafe Appraisal Services, claiming the three conspired to rig housing prices in Florida, South Carolina and North Carolina, costing home purchasers millions of dollars, and fueling the collapse of the region's housing market.

  • The suit, filed in U.S. District Court in Orlando, Fla. on Friday, October 30, claims the three companies employed a well-planned scheme to control the typically independent appraisal process, jacking up home values, which, in turn, were used to determine the value of other homes sold by KB, affecting thousands of homeowners. This is the third lawsuit Hagens Berman Sobol Shapiro filed against KB Home, Countrywide and LandSafe alleging a widespread and complicated inflation scheme. The other lawsuits represent homeowners in California, Arizona and Nevada.

For the entire press release, see Class-Action Lawsuits Against KB Home Expand to Florida, NorthCarolina and South Carolina (Lawsuit cites similar claims to California and Arizona complaints, alleging price inflation scheme).

For the lawsuit, see Sullivan v. KB Home et al.

Go here for information on the other class action lawsuits filed against KB Homes.

California Couple Ripped Off By Loan Mod Outfit Obtains Triple Damages In Lawsuit Under New State Law Allowing For Punitive Damages Scam Cases

In Victorville, California, the Victorville Daily Press reports:
  • A local couple who say they were scammed by a loan modification company are the first in the country to use a new organization that guided them through the small claims court process and helped win a fight to get their money back. [... Jeff] Lomax said he paid Certified Financial Protection Group, based in Temecula, $1,000 to begin a loan modification but nothing was ever done, so he sued to get their money back. In Civil Court on Monday the couple won a big victory against Certified Financial Protection Group and its agent Mike Wayman after they failed to appear in court for a second time.

  • Judge Bruce Austin awarded the couple more than $7,000, three times the amount they were actually seeking including all court fees and other legal costs the defendant is ordered to pay. A new California law just passed in June allows victims of scammers to receive punitive damages up to three times the amount they paid.

For the story, see Home owners fight back (Awarded $7,000 in court case against reported loan scammer).

Michigan Woman Charged With Stealing Sister's I.D. To Obtain Mortgage & Then Allowing It To Fall Into Foreclosure

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox [...] announced that his office has filed charges against a Wyoming, MI woman accused of defrauding the Michigan State Housing Development Authority (MSHDA) by fraudulently obtaining a mortgage, defaulting on that mortgage and leaving taxpayers to pick up the tab. Maria Antonia Franks Hernandez is accused of stealing her sister's identity [...] to fraudulently obtain an $83,000 mortgage through MSHDA. She then defaulted on the mortgage, leaving taxpayers with a balance of more that $76,000. Franks Hernandez's sister resides in Mexico.

For the entire press release, see Mortgage Fraud Results in Charges for West Michigan Woman.

Thursday, November 05, 2009

Lower Court Order Upheld Prohibiting Option One/H&R Block Massachusetts Foreclosure Actions Without First Obtaining State AG Or Court Approval

From the Office of the Massachusetts Attorney General:
  • The Massachusetts Appeals Court has affirmed a preliminary injunction obtained by Attorney General Martha Coakley’s Office against Option One Mortgage Corp. (“Option One”) and H&R Block Mortgage Corp. (“H&R Block Mortgage”), subprime lenders that originated thousands of loans in Massachusetts. The preliminary injunction, issued by then Judge Ralph D. Gants in Suffolk Superior Court last November, prohibited Option One and American Home Mortgage Servicing, Inc. (“AHMSI”) from initiating or advancing foreclosures on mortgage loans that the Court found to be “presumptively unfair.”(1) Under the order, which affects up to 9,700 Massachusetts loans originated by Option One, AHMSI must give the Attorney General’s Office advance notice before it intends to foreclose on any such loan, and if the Attorney General objects, obtain approval from the Court before foreclosing on a loan.

  • In a summary order issued late last week, the Appeals Court affirmed the preliminary injunction. The Appeals Court cited the Supreme Judicial Court’s decision in Commonwealth v. Fremont Investment & Loan [452 Mass. 733; 897 N.E.2d 548; 2008 Mass. LEXIS 797 (2008)] and determined the Superior Court’s injunction was proper.

For the Massachusetts Attorney General press release, see Appeals Court Affirms Preliminary Injunction Against Option One and H&R Block Mortgage, Restricting Foreclosures on Unfair Subprime Loans.

For the 11/12/2008 Massachusetts AG press release on this matter, see Coakley Obtains Preliminary Injunction Against Option One and H&R Block, Accused of Deceptive and Discriminatory Lending Practices.

(1) Under the order, a loan is “presumptively unfair” if it possesses the following characteristics:

  • The loan is an adjustable rate mortgage with an introductory period of three years or less;
  • The borrower has a debt-to-income ratio (the ratio between the borrower’s monthly debt payments, including the monthly mortgage payment, and the borrower’s monthly income) that would have exceeded 50% if Option One had measured the debt, not by the debt due under the teaser rate, but by the debt due under the fully-indexed rate, except when the borrower had a student loan in which payment had been deferred at least six months from the date of submission of the mortgage loan application, in which case debt-to-income ratio need exceed only 45 percent;
  • The loan has an introductory or “teaser” rate for the initial period that is at least 2 percent lower than the fully indexed rate, (unless the debt-to-income ratio is 55 percent or above, in which case the difference between the teaser rate and fully indexed rate is not relevant);
  • The loan-to-value ratio of the loan is 97% or the loan carries a substantial prepayment penalty or a prepayment penalty that lasts beyond the introductory period.

Tampa Feds Announce Mortgage Fraud Charges Against 100+ Suspects Involving $400M+ In Fraudulently Obtained Loans Affecting 700+ Properties

In Tampa, Florida, the St. Petersburg Times reports:
  • An intensive, nine-month federal investigation of mortgage fraud that stretched from Jacksonville to Tampa and Fort Myers has resulted in charges against 105 people, authorities said Tuesday. U.S. Attorney A. Brian Albritton called Florida ground zero for mortgage fraud in the nation. He released details of an investigative "surge" in May, saying the goal was to restore confidence in the real estate market and send a message that "mortgage fraud won't be tolerated." "This is by no means the end of vigorous mortgage fraud prosecution in the Middle District of Florida," Albritton said at a news conference Tuesday, where he touted the successful effort.


  • The U.S. Attorney's Office said the joint investigation with the FBI and other federal and state agencies involved more than $400 million in loans procured by fraud on more than 700 properties. Those charged in the surge range from multiple borrowers to real estate and title agents, investors and the president and owners of mortgage companies. [...] Seven cases among the 105 charged individuals remain sealed, but Albritton said those should become public soon.

For the story, see Feds announce more than 100 prosecutions in mortgage fraud surge.

Go here to see the list of all the defendants.

Missing Trust Funds Could Approach $500M In Suspected Ponzi Scheme Allegedly Run By Prominent South Florida Attorney

In Fort Lauderdale, Florida, the Daily Business Review reports:
  • Fort Lauderdale, Fla., attorney Scott Rothstein's meteoric rise in the South Florida legal and political worlds ended over Halloween weekend with the revelation that investors claim he stole in excess of $200 million.(1) The money is tied to a side business started by Rothstein, [...] which converts a lump sum award to installments for tax and cost-of-living reasons.

  • Rothstein Rosenfeldt Adler founding partner and law firm president Stuart Rosenfeldt, in a complaint filed Monday by Coffey Burlington partner Kendall Coffey, asked Broward Circuit Judge Jeffrey Streitfeld to dissolve the law firm and appoint a receiver to take over the firm's finances but not its legal practice.

For more, see Fla. Law Firm Rocked by Fraud Allegations Against Partner.

For the lawsuit, see Rosenfeldt v. Rothstein.

See also, The Miami Herald: Feds probe prominent Broward attorney Scott Rothstein (Federal authorities on Monday were conducting a criminal investigation into high-profile Fort Lauderdale attorney Scott Rothstein, who is suspected of operating a Ponzi scheme by selling tens of millions of dollars in fabricated legal settlements to investors).

(1) According to the story, money was taken "from investor trust accounts that made use of the law firm's name," the lawsuit said. The money was not associated with cases handled by the law firm but from the structured settlement business created and operated by Rothstein, according to the complaint. The business purchased structured legal settlements and sold them to investors. A source told the Daily Business Review the amount allegedly misappropriated by Rothstein was at least $200 million but could be as high as $500 million. EscrowRipOffKappa

Landlord $lapped With $80K Fine In Attempt To Force Rent Controlled Tenant From Home By Refusing To Allow Disability-Related Modification To Bathroom

In Brooklyn, New York, the New York Post reports:
  • A Brooklyn landlord faces $80,000 in penalties, all because he refused to say two words: "I approve." For nearly two years, according to the city's Human Rights Commission, Kong Chae Choi wouldn't give permission for a walk-in shower to be installed in the apartment of an elderly, disabled tenant in hopes she'd move from her home of 40 years, a $250-a-month rent-controlled railroad flat at 192 Nassau Ave. in Greenpoint. The installation would have cost the landlord nothing.(1)


  • "He wants me out," Russell, who walks with a cane, told a reporter who visited her cramped third-floor walk-up. "But he's not getting me out until my legs give out." For months, Russell bathed only every other day. Sometimes, she walked several blocks to bathe at a daughter's house. Other times, she'd call one of her children before and after bathing so they could rush to her aid in case of an accident. "What happened here was a nightmare," she recalled. Choi ignored every letter sent to him from Russell and the city.


  • On Sept. 25, administrative law Judge Julio Rodriguez slapped Choi with a $50,000 fine, citing his "wanton failure to participate" in any proceeding. He also ordered that he pay Russell $30,000 for mental suffering. Finally, the judge ordered that the shower be installed at Choi's own expense. "Respondent [Choi] is unhappy with the low rent Ms. Russell currently pays and hoping that by not allowing her to properly modify her bathtub, she would vacate her unit," Rodriguez concluded.

For the story, see Horror landlord $oaked.(2)

(1) Since the 77-year-old tenant, Ruth Russell, was suffering from emphysema, heart disease, sciatica and rheumatoid arthritis, United Cerebral Palsy agreed to put it in for free to replace a bathtub she was afraid to use, the story states.

(2) For other "Brooklyn-landlord" horror stories from the New York Post, see:

  • Landlord Duped Old Lady Out Of Apt.: Son (A Brooklyn landlord sneaked into an 84-year-old tenant's nursing-home room and got the ailing widow to give up her rent-stabilized apartment, her outraged relatives are charging in court),
  • Dead Cats In Housing Feud (A Brooklyn landlord who had been harassing his tenants left a bag of dead cats in a vacant first-floor unit in an ongoing effort to force lessees out of the building, City Council Speaker Christine Quinn charged),
  • Deadbeat Slumlord $lapped (A Brooklyn landlord was slapped with a staggering 1,300 violations against his empire of decrepit, rat-infested buildings during a multi-agency sweep that also found his housing group owed more than $8 million in taxes. At one property, tenants were terrorized by a rat so large that they named it "Big Ben").

SC Councilwoman Suspended After Allegations Of Abusing POA To Place Reverse Mortgage On Elderly Mom's Home & Pocketing Loan Proceeds

In Columbia, South Carolina, The Pickens Sentinel reports:
  • Gov. Mark Sanford has suspended Clemson City Councilwoman Elouise James following her indictment on several charges in Pickens County. Sanford signed the suspension order on Thursday, following the Pickens County Grand Jury’s Oct. 20 indictment of James on charges that include exploitation of a vulnerable adult, forgery and obstruction of justice.


  • In Pickens County, James is charged with two counts of obtaining goods by false pretenses and one charge of exploitation of a vulnerable adult. According to a Pickens County Sheriff’s Office warrant, James did “improperly and unlawfully use the power of attorney of a vulnerable adult for the profit or advantage of Kirstyn James.” James allegedly used her power of attorney to reverse the mortgage on her 90-year-old mother’s home, warrants state. “The defendant used $15,451.60 from the mortgage to pay the remaining restitution balance for her daughter’s probation,” the warrants allege. James is also charged with obtaining money “with the intent to cheat and defraud,” warrants state. James allegedly “solicited money from the victim to aid in the treatment of Kirstyn James, her daughter, who purportedly suffered from cancer,” warrants state.

For the story, see Governor suspends Clemson City Councilwoman following indictment. DeedContraTheft FinancialAbuseOfElderlyAlpha

Wednesday, November 04, 2009

Nevada Regulator Orders Shutdown Of 26 Loan Modification Outfits For Failure To Comply With Licensing, Bonding Requirements

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • The Nevada Mortgage Lending Division said Monday that it is ordering 26 residential mortgage loan modification consultant companies to close and refund unearned payments from customers. Another 18 firms are allowed to continue working while their licenses are processed. Law firm Frederickson, Mazeika & Grant is the only firm that has obtained a license. The division is forcing companies to close if they failed to obtain a $75,000 surety bond required by a new state law.


  • The Nevada Legislature this year enacted a law requiring licenses and bonds for loan modification companies. [...] The Legislature required bonds and licensing because of reports that homeowners paid mortgage modification firms upfront for assistance, received no help and were unable to get a refund. "We will not allow those companies who have not met their legal obligations to operate," Commissioner Joseph Waltuch said in a statement Monday. "If consumers are going to pay for loan modification assistance, they must be able to trust that there's recourse if they've been harmed in some way."(1)(2)

For more, see Agency closes alterers of loans (Division calls for shutdown of 26 mortgage modifiers).

For the Nevada Mortgage Lending Division press release, see As bonding deadline passes, State Mortgage Lending Division moves to close down some loan modification providers.

In a related story, see Las Vegas Business Press: State trying to stop the scams (Government agency says complaints about unethical mortgage loan modifications mounting).

(1) The story states that many loan modification consultants have been unable to get or pay for surety bonds because they lack financial strength or have bad credit, according to Cynthia Duffy, part owner and the qualified employee for All Vegas Foreclosure Prevention. Duffy reportedly paid $3,000 for a $75,000 bond but some were quoted $15,000 for bonds.

(2) The Nevada Division of Mortgage Lending recently released this list of companies authorized to work with consumers in modifying home loans.

Home Lending Industry's "Waterfall Of Excuses" & "Abysmal Numbers Of Modifications" Force State AGs Closer To Filing Consumer Fraud Lawsuits

The New York Times reports:
  • Newly empowered by the Supreme Court, the attorneys general of several states hit hard by the housing collapse are exploring consumer fraud suits against major mortgage lenders. Frustrated by the banks’ inability or unwillingness to stop an avalanche of foreclosures, the states are considering lawsuits over the creation and marketing of millions of bad loans as well as the dismal pace of mortgage modifications.

  • Such cases would have been impossible until recently, because federal regulators had exclusive oversight of national banks. But a 5-to-4 Supreme Court decision in June allowed the states to exercise their own supervision, giving them significant leverage.(1)(2)We tried to use the tool to be persuasive with the banks,” Arizona’s attorney general, Terry Goddard, said in an interview. “But their waterfall of excuses, the abysmal numbers of modifications, tells us persuasion is not working.” As a result, he said, “we’re moving much closer to litigation.”

  • While statutes vary, those of every state prohibit fraud in consumer lending. The attorneys general are considering the theory that the banks essentially perpetrated a vast fraud on consumers by marketing exotic loans that would prove impossible to pay back.

For more, see States Are Pondering Fraud Suits Against Banks.

(1) According top the story, the states’ new power to sue banks arose from an effort in 2005 by Eliot Spitzer, then the New York attorney general, to discover whether several banks had violated the state’s fair-lending laws. The banks balked at surrendering any information. The Clearing House Association, a consortium of national banks, and the federal Office of the Comptroller of the Currency filed suit, asserting the states had no authority over national lenders. Mr. Spitzer’s successor, Andrew M. Cuomo, took up the battle. Lower courts agreed with the banks, but the Supreme Court, narrowly, did not. Already, the states’ victory in Cuomo v. Clearing House is beginning to affect the legal landscape. “The handcuffs are off,” said Ann Graham, a professor of banking law at Texas Tech University. “The states can pursue justice now.”

(2) For the U.S. Supreme Court's ruling, see Cuomo v. Clearing House Assn., L.L.C., 129 S. Ct. 2710; 174 L. Ed. 2d 464; 2009 U.S. LEXIS 4944 (June 29, 2009).

Report: Goldman Sachs Peddled $40B+ In Subprime Securities While Betting On Housing Market Crash

In Washington, D.C., McClatchy Newspapers reports:
  • In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting. Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

  • Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk. Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.(1)

For more, see How Goldman secretly bet on the U.S. housing crash.

Thanks to Mike Dillon at for the heads-up on the stories.

(1) In a related story from McClatchy, see Mystery: Why did Goldman stop scrutinizing loans it bought?

  • Before they bought pools of thousands of mortgages, Goldman and other Wall Street firms hired contractors to comb through sample batches of the loans to weed out unsound or fraudulent applications. Not much weeding occurred, however, several of the contractors said, because the Wall Street firms had agreed to accept mortgage lenders' relaxed credit guidelines. Melissa Toy and Irma Aninger, among scores of contract risk analysts who thumbed through mortgage files for the San Francisco-based Bohan Group from 2004 to 2006, said that supervisors overrode the bulk of their challenges to shaky loans on behalf of Goldman and other firms. They couldn't recall specific examples involving loans bought by Goldman, but they said their supervisors cleared half-million-dollar loans to a gardener, a housekeeper and a hairdresser.

State-Sanctioned Ripoffs Of The Elderly By Government Agencies Running Rampant On Both Sides Of The Atlantic?

In Great Britain, the Daily Mail reports:
  • A secret court that seizes the nest eggs of the elderly and vulnerable has triggered 3,000 complaints in the 18 months since it was set up, it was revealed [last month]. The obscure Court of Protection [of the Office of the Public Guardian] has taken control of £3.2billion in assets from those deemed unable to look after their own financial affairs because they are suffering from dementia or another mental incapacity. It adjudicates on contentious cases handled by the Office of the Public Guardian, a Ministry of Justice department which appoints 'deputies' to act for the mentally impaired when they have not written a living will.
  • The OPG often appoints relatives as deputies, but it also gives the role to solicitors or local authority officials if family members are deemed unsuitable. Families of those suffering from dementia complain that they have been treated like criminals and sent bullying letters from the court. The OPG has also charged £23million in fees from the bank accounts of those suffering from dementia to supervise the activities of deputies. The court, which is held in private, also pays just 0.5 per cent interest on savings it has seized, far lower than can be found at many high street banks.(1)
For more, see Anger as court seizes £3.2bn from elderly.
See also:
(1) For similar stories of alleged state-sanctioned ripoffs of the elderly, infirm and others deemed unable to take care of themselves by government agencies from the North American side of the Atlantic, see:

Tenant Charged With Ripping Off Elderly Landlord; Rental House Lost To Foreclosure, Cash Taken From Investment Property Refinancings

In Pekin, Illionois, the Pekin Daily Times reports:
  • A South Pekin woman was arrested [...] for allegedly bilking an elderly man out of cars, loans and his pension money. Gina Y. Robinson, 38, [...] was arrested for financial exploitation of the elderly, forgery and altering titles, according to Pekin Police Public Information Officer Mike Sanders.

  • In August the son of an 83-year-old Pekin man called police saying he feared his elderly father had been the victim of forgery by the father’s power of attorney, Robinson. [...] The victim owned several properties in Pekin and one of the properties had been foreclosed on in May. The elderly man had been renting the house to Robinson, said Sanders.


  • During the investigation, police learned that Robinson had also convinced the victim to make her his beneficiary at the time of his death. The victim told police he had been coerced by Robinson to take out loans on the homes he owned to help Robinson open a business, [...] which never opened, said Sanders.

For the story, see Woman allegedly scams elderly man. DeedContraTheft FinancialAbuseOfElderlyAlpha

Tuesday, November 03, 2009

Nightmare Continues For Some Foreclosed Homeowners As Lenders, Collection Firms Begin Chasing Unpaid Loan Balances

In Boston, Massahusetts, the Boston Herald reports:
  • Hank Lane figured that when he lost his Groton home to foreclosure in 2008, at least his long-running financial nightmare had come to an end. He was wrong. The $550,000 that Lane’s home fetched at auction covered most of his $650,000 first mortgage, but none of his $200,000 second mortgage - and the second lender wants its money. “I thought this was finally over, but it’s one of these things where there’s no end in sight,” said Lane, a 65-year-old biotech executive who fell on hard times after losing his job and coming down with cancer.

  • Massachusetts homeowners who’ve lost properties to the state’s foreclosure crisis are finding that their troubles don’t necessarily end when the auctioneer’s gavel falls. That’s because foreclosure auctions in today’s weak housing market rarely net enough to pay off properties’ first mortgages, let alone any second liens. Bay State consumers are often technically on the hook for any remaining balances under laws lenders haven’t traditionally enforced, but are beginning to employ more and more. For instance, Bank of America keeps billing Lane for the $200,000 he owes on his second mortgage, plus some $10,000 in penalties and interest. The ex-homeowner also recently began getting a second set of bills from Dyck O’Neal, a Texas firm that buys bad debts on the cheap and tries to collect them. "They want a quarter-of-a-million dollars from me, but I don’t have it and I don’t know how to get it unless I rob one of their banks,” Lane said.


  • Unfortunately for consumers, [Massachusetts] state law allows second-lien holders to go after some post-foreclosure debts for as long as 20 years. Firms can also go to court and get “deficiency judgments” good for a second 20 years. With such judgments in hand, collectors can place liens against any future properties foreclosed homeowners buy, or even seek court orders garnishing debtors’ wages. Typically, collection activities begin months or years after people have lost homes to foreclosure and moved on. [...] Experts say consumers faced with such collections often end up declaring bankruptcy, sullying credit scores that had just begun recovering from the underlying foreclosures. Even when lenders don’t try to collect unpaid second liens, merely having one on your credit report can disqualify you from future loans.

For the story, see Banks, collection firms pursue claims after homes foreclosed (Nightmare returns).

Lien Stripping Of Completely Underwater 2nd Mortgages, HELOCs Can Convert Some Home Loans To Unsecured Debts In Chapter 13 Bankruptcy Proceedings

In Bradenton, Florida, bankruptcy attorney Cynthia A. Riddell writes in the Bradenton Herald:
  • The current law prohibits stripping or modification of first mortgage liens on a Chapter 13 debtor’s primary residence. However, in many bankruptcy districts, [...] you can modify or “lien strip” a second or other subordinate mortgage which is not supported by any value in the property over the amount owed on the first mortgage. Under the current bankruptcy law, a second mortgage that is completely [underwater] can be stripped and reclassified as unsecured in a Chapter 13 bankruptcy case and, in most cases, paid only pennies on the dollar, while the homeowner keeps the home! The caveat is that the debtor in Chapter 13 must complete the plan in order to benefit from this action.


  • This lien stripping tool may be helpful to homeowners with home equity lines of credit secured by a second mortgage on their primary residence or homeowners that purchased the home using the 80/20 loans with the simultaneous second mortgage funding that enabled borrowers to get 100 percent financing. If such a lien is stripped in a Chapter 13, it can be treated as an unsecured debt in the Chapter 13 plan and paid the dividend amount provided for all unsecured claims over five years. The second mortgage holder would be paid only a fraction of the total amount of the loan.

For the column, see Lien stripping among Ch. 13 provisions.

In a related story, see Court Strips Second Mortgage In Chapter 7 Bankruptcy. Is It Precedent?

New Service Promises To Alert Homeowners Of Possible Deed Thefts

The New York Times reports:
  • MORTGAGE fraud continues to expand, in both the number of incidents and the methods that criminals use to strip equity from homeowners and lenders. Now a new online service offers free help to keep homeowners safe from an emerging form of fraud known as “house theft.”

  • Like other real estate Web sites, this new service, called, provides informal home appraisals and other information to help track neighborhood real estate activity. But unlike the others, it also monitors public documents associated with a home and promises to alert homeowners to possible criminal activity, like a forged deed that purports to transfer a home’s title in order to release an existing mortgage. In this form of fraud, thieves take “ownership” of the home so they can “sell” it to nefarious associates who have taken out another loan on the property. The “seller” then splits the sale proceeds with the fraudulent buyer.

  • Industry analysts called ePropertyWatch’s service a useful tool for homeowners, though it is being offered only in major metropolitan areas right now. EPropertyWatch is owned by First American CoreLogic, a company based in Santa Ana, Calif., which, among other things, collects real estate and mortgage data from municipalities and sells it to businesses.

For more, see Fraud Watch for Homeowners. DeedContraTheft

Jury Convicts Scammer Of Illegally Taking Title To Home With Forged Deed & Pocketing Proceeds Of Subsequent Mortgage Refinance

From the Office of the San Bernardino County, California District Attorney:
  • On Tuesday, October 27, 2009, [...] 9 guilty verdicts were read in the case of People v. Oralia Hidalgo, 46, of Colton. The jury found the defendant guilty on felony counts ranging from forgery, grand theft, filing of false instruments, and a grand theft enhancement.

  • In July 2003, Hidalgo forged the victim’s name on a Grant Deed illegally taking title to a residence in Colton. She encumbered the property by taking a loan on it. Subsequently, the victim discovered the fraud and confronted Hidalgo at the property. Hidalgo immediately sold the property to an unsuspecting real estate agent for $125,000.

  • The defendant falsified several real estate deeds and forged the signature and stamp of a notary public. Hidalgo, a tax preparer who owned her own business, was extremely sophisticated in falsifying several deeds. The fraudulent deeds were later recorded at the San Bernardino County Recorder's Office.

For the San Bernardino County DA press release, see Guilty Verdicts in Real Estate Fraud Case. DeedContraTheft

Disbarred NH Lawyer Expected To Cop Plea To $2.3M Ripoff Of Heirs Of Now-Deceased Client; Use Of Bogus POA To Sell Family Home Among Alleged Bad Acts

In Manchester, New Hampshire, the New Hampshire Union Leader reports:
  • A once-prominent, politically connected Manchester lawyer has been charged with bilking a client of more than $2.3 million and is expected to plead guilty to fraud-related charges [...] in U.S. District Court, federal prosecutors said [last week].(1) Thomas J. Tessier, 71, [...] is expected to appear in court [...] and enter guilty pleas to bank fraud, mail fraud and money laundering, said Assistant U.S. Attorney Robert Kinsella.


  • The case involves the family of Beatrice Jakobiec, who died in 2001 and had set up trusts for her two sons. [...] According to documents provided by the IRS Criminal Investigation Division, Tessier allegedly submitted documents to banks with forged signatures, which gave him access to certificates of deposit. He also allegedly used a fraudulent power of attorney to sell the family home. Finally, he alledgedly cashed in Jakobiec insurance policies, investment accounts and trust accounts, allegedly claiming he had the legal right to do so.

  • Although he funneled small amounts to the family, Tessier is accused of keeping more than $2.3 million for himself. Kinsella said Tessier spent most of the money on personal expenses. A substantial amount of money has been repaid to the victims, Kinsella said.

For the story, see Once at top, now disgraced.

For the U.S. Attorney press release, see Fraud And Money Laundering Charges Filed Against Former Lawyer And Resident Of Manchester.

(1) Reportedly, Tessier was disbarred in December 2008. Still unresolved are a civil suit filed by the Jakobiecs and state charges out of the Cheshire County Attorney's Office, the story states. DeedContraTheft

Monday, November 02, 2009

California AG Requests Details Of Home Loan Industry Plans To Defuse Pay Option ARM "Ticking Time Bombs"

From the Office of the California Attorney General:
  • Concerned about a "new wave" of foreclosures, Attorney General Edmund G. Brown Jr. [...] called on ten major banks and loan servicers to detail their plans to assist homeowners facing dramatic monthly payment increases on Pay Option Adjustable Rate Mortgages.(1) "Homeowners with Pay Option ARMs are sitting on ticking time bombs that the lending industry has the power to defuse," Brown said. "Unless these banks and loan servicers act quickly, hundreds of thousands of mortgages will reset across the state, creating a new wave of foreclosures."


  • California homeowners hold almost 60 percent of the nation's exotic Pay Option ARMs originated between 2004 and 2008. Approximately one million of these mortgages will reset nationwide in the next four years, resulting in higher payments and a dramatic increase in foreclosures.

For the California AG press release, see Brown Calls on Banks and Loan Servicers to Detail Plans to Stem New Wave of Foreclosures.

(1) Brown's request was made in a letter sent to: Bank of America Home Loans & Insurance; Wells Fargo & Company; JP Morgan Chase & Co.; Litton Loan Servicing; ResCap, LLC; Ocwen Financial Corporation; OneWest Bank; American Home Mortgage Servicing; Saxon Mortgage Services, Inc.; and Select Portfolio Servicing. Banks and loan servicers are asked to respond by November 23, 2009.

Disbarred Attorney Cops Plea In Fraudulent Rescue Scam; Homes Drained Of Equity, Then Fall To Foreclosure; Owners Get Boot; Investors Left Holding Bag

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:
  • Disbarred lawyer Raymond A. Desautels III of Oxford, awaiting sentencing on wire fraud charges in U.S. District Court, pleaded guilty [...] in Worcester Superior Court to charges related to his role in what prosecutors said was an elaborate mortgage fraud scheme. Mr. Desautels, 43, [...] is to be sentenced Dec. 1 [...] after entering guilty pleas [...] to five counts of inducing a mortgage lender to part with property by false pretenses. The former real estate lawyer was one of four people indicted last month in what authorities said was a scheme organized by Allen J. Seymour of Oxford under which Mr. Seymour transformed apparent equity in distressed properties into cash after targeting homes in danger of foreclosure and offering the owners various rescue options.(1)


  • On five occasions [...], Mr. Desautels was an active participant in a plan to obtain mortgage lender funds through fraudulent real estate transactions, Assistant Attorney General Andrew Doherty told Judge [James R.] Lemire [...]. Nearly $3 million in loans were obtained for such purchases and Mr. Desautels conducted the closings for Mr. Seymour, according to Mr. Doherty. The homeowners were not present and their documents were signed using a false power of attorney, the prosecutor said.

For the story, see Disbarred Oxford lawyer pleads guilty in mortgage fraud scheme.

For the Massachusetts Attorney General press release, see AGO Announces Guilty Plea of Former Real Estate Lawyer and Arraignment of Worcester Woman in Complex Mortgage Rescue Scheme.

(1) According to the Massachusetts AG, Seymour allegedly found individuals with good credit who were looking to begin investing in real estate. Many of these “investors” were allegedly told they would be helping homeowners in danger of foreclosure. Seymour allegedly told several investors that the purchase would only be temporary, and the homeowners would purchase the property back from them after Seymour repaired the homeowner’s credit (ie. sale leaseback arrangements). After the closing, several investors state that Seymour abandoned them to the mortgage payments. Without Seymour’s assistance, the investors were unable to pay the loans, and these mortgages themselves fell into foreclosure. Some homeowners, allegedly promised lifetime leases, have been evicted from their homes by these foreclosures. foreclosure rescue equity stripping sale leaseback

Loan Modification Outfits Begin Charging For Services In Steps In Attempt To Dodge Upfront Fee Prohibition

In Southern California, the Orange County Register reports:
  • Some companies that advertise help avoiding foreclosure are trying to avoid a ban on advance fees by charging consumers in steps, according to loan brokers and state regulators. That’s illegal, said Tom Pool, a spokesman for the California Department of Real Estate (DRE).

  • The bill, dubbed SB 94, clearly prohibits loan modification companies from collecting any money until all services are performed, Pool said. He said the DRE will investigate any consumer complaints related to companies skirting the advance-fee ban. “We knew folks were going to be looking for ways around the bill, and we are seeing these creative and clever approaches,” Pool said. “We are not buying it.”

For the story, see Loan aid firms skirt ban on advance fees.

Brooklyn Court Rulings Void Deeds & Subsequent Mortgages Used To Drain Home Equity In Bogus Sale Leaseback Foreclosure Rescue Scams

A pair of 2008 Brooklyn, New York lower court rulings may provide some guidance to those seeking an approach to undoing bogus sale leaseback, foreclosure rescue scams on behalf of financially strapped homeowners who have been screwed over in these equity stripping rackets.

In each case, both the deed that was unwittingly signed over by the victims to the scammers, as well as the subsequent mortgage that was put on the subject home by the operator and used to drain the equity out of it, were successfully voided by the attorney for the homeowners, Brooklyn Legal Services Corporation A.(1)(2)

The cases are both fact-heavy, and describe the convoluted fact patterns that are typical of these sale leaseback scams.(3) There's no easy-to-read media report for this post; for those interested in the reading the rulings themselves, see:

(1) However, the lenders left holding the bag with the voided mortgages were entitled to be subrogated to the rights of existing lienholders to the extent the new money they supplied to the scam was applied to satisfy the homeowners' existing mortgages on the homes that were encumbering the properties immediately prior to the ripoff.

(2) Brooklyn A is a non-profit law firm that provides high-quality, neighborhood-based civil legal services to low-income individuals and groups in North and East Brooklyn. For more, see Wagner Casts Shadow over BLS Consolidation.

(3) These cases serve as a reminder that, when attepting to undo a foreclosure rescue scam, it's not enough to simply void the deed used by the foreclosure rescue scammer to swipe the title to the home; the mortgage placed on the property by the scammer to drain out the home equity as well has to be voided as well. In one case, this was done by establishing that the deed transfer involved was void ab initio, in which case the lender's mortgage was never a valid mortgage to begin with, and therefore, void as well. In the other case, it was established that the deed involved, while not void ab initio, was nevertheless voidable. In that case, because the deed was only consisdered voidable, it was then necessary to establish that the mortgage lender providing the financing for the equity stripping scam was on notice of the scam, thereby disqualifying it from status as a bona fide purchaser / bona fide encumbrancer and, accordingly, not entitled to the protection of the state recording statutes.

One point in this regard not addressed by these cases but deserves mentioning anyway is the effect, on the mortgage lender providing the financing for the equity stripping transaction, of the scammed homeowner's continued possession of the premises after signing away title to the property. Generally, when ordinary inspection of the premises by a purchaser or mortgage lender, followed by reasonable inquiry, would reveal the existence any right held by persons in possession, the title transfer, and any mortgage given contemporaneous therewith or subsequent thereto, would be subject to those rights (whether recorded or unrecorded). "Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish." Phelan v. Brady, 119 N.Y. 587; 23 N.E. 1109; (NY 1890).

The following excerpt describing the fact pattern involved in Phelan v. Brady captures this point:

  • At the time of the execution and delivery of the mortgage to the plaintiff, the defendant Mrs. Brady was in the actual possession of the premises under a perfectly valid but unrecorded deed. Her title must, therefore, prevail as against the plaintiff. It matters not, so far as Mrs. Brady is concerned, that the plaintiff in good faith advanced his money upon an apparently perfect record title of the defendant John E. Murphy. Nor is it of any consequence, so far as this question is concerned, whether the plaintiff was in fact ignorant of any right or claim of Mrs. Brady to the premises. It is enough that she was in possession under her deed and the contract of purchase, as that fact operated in law as notice to the plaintiff of all her rights.

  • It may be true, as has been argued by the plaintiff's counsel, that when a party takes a conveyance of property situated as this was, occupied by numerous tenants, it would be inconvenient and difficult for him to ascertain the rights or interests that are claimed by all or any of them. But this circumstance cannot change the rule. Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish. Governeur v. Lynch, 2 Paige, 300; Bank of Orleans v. Flagg, 3 Barb. 318; Moyer v. Hinman, 14 N. Y. 184; Tuttle v. Jackson, 6 Wend. 213; Trustees of Union College v. Wheeler, 61 N. Y. 88, 98; Cavalli v. Allen, 57 id. 517.)

(It should be obvious that, based on the foregoing, the importance to a real estate purchaser or mortgage lender of determining who, if anyone, is in possession of the subject property on the date of closing (ie. by conducting a so-called "walk-through" on the closing date, whether it be on a purchase transaction or a refinancing transaction, and by obtaining estoppel certificates from anyone in possession of the premises on that date attesting to the nature of their rights, if any) can't be emphasized strongly enough. If, on the date of closing, the homeowner being scammed has yet to move his/her belongings out of the premises and is still in possession thereof, this fact would appear to be enough to lead a reasonably prudent purchaser or mortgage lender to make further inquiry as to the true nature of the transaction - and obtain estoppel certificates from those in possession fully disclosing the nature of their occupancy).

For some relatively recent New York cases referencing the effect of continued possession of an occupant on the status of a buyer or lender as a bona fide purchaser / bona fide encumbrancer, see:

  • Ward v. Ward, 503624,2008 NY Slip Op 4984; 52 A.D.3d 919; 859 N.Y.S.2d 774; 2008 N.Y. App. Div. LEXIS 4816 (App. Div. 3d Dept. 2008;
  • Doyle v. Siddo, 31 A.D.3d 697, 818 N.Y.S.2d 474, 2006 N.Y. App. Div. LEXIS 9569 (N.Y. App. Div. 2d Dep't, 2006).

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Brooklyn Judge Weighs In With State Lawmakers On "Rescue Scams, Straw Men, Fraudulent Loans"

In Brooklyn, New York, the Brooklyn Daily Eagle reports:
  • A local judge and prosecutor who have worked on real estate crime in Kings County told state senators at a special joint committee hearing [last week] that more legal steps may need to be taken to protect Brooklyn families and homeowners. Brooklyn Supreme Court Justice Arthur M. Schack, who is known for his experience handling a vast number of foreclosure motions, testified before a special joint Senate hearing about “rescue scams, straw men, fraudulent loans.” These are real estate crimes that are typical in Brooklyn, according to Schack. “These are the people who go after people who are in financial trouble, and say, ‘We’ll save your house,’” Justice Schack explained to the Eagle. "We see some bizarre things.”

For the story, see Three Branches of Government Converge in Mortgage Fraud Fight.

Sunday, November 01, 2009

California Man Gets 32 Months For Filing Phony Deeds To Illegally Claim Title To Homes In Foreclosure

In San Diego, California, XETV-TV Channel 6 reports:
  • An ex-con who filed bogus grant deeds with the county Recorder's Office on six properties he claimed he owned was sentenced Friday to two years and eight months in prison. Maurice Antoine Simmons, 32, was convicted Aug. 31 of 15 counts, including filing and possessing false documents and forgery.


  • [Prosecutor Marlene] Coyne said Simmons and co-defendant King Solomon II, also known as Terry Lee Herron, would lay claim to properties that were in default, foreclosure or where the owners were behind in their payments. [...] She said Simmons showed great "braggadocio" by testifying that he had the right to claim the properties if they weren't cared for.


  • Defense attorney Jeff Carver said Simmons had a legitimate belief that he had a right to file the grant deeds on the troubled properties in Chula Vista and San Diego. "He was incorrect," Carver told the judge, noting Simmons paid $5,000 to get into the program to claim the properties under the guise of a religious order known as the Sovereign Solomon Brothers Archbishop Corporation Sole. Carver said Simmons made no effort to hide what he was doing.

For the story, see Man Who Filed Bogus Grant Deeds Sentenced to Prison.

Ex-Real Estate Agent Cops Plea To Duping Dementia Suffering Senior Into Signing Away Title To Home

From the Office of the Arizona Attorney General:
  • Attorney General Terry Goddard [...] announced that former real estate agent Ammar Dean Halloum, 46, of Phoenix, has pleaded guilty to felony charges in connection with a fraudulent real estate transaction with an elderly Tucson resident. At a hearing before Judge Richard S. Fields in Pima County Superior Court, Halloum pleaded guilty to one count of theft/financial exploitation of a vulnerable adult and one count of fraudulent schemes and artifices, both felonies. Halloum also agreed to pay over $200,000 in restitution to the victim and over $30,000 to the Attorney General’s Office for prosecution costs.


  • At the hearing, Halloum admitted that while working as a licensed real estate agent, he obtained title to a Gilbert home through misrepresentations and omissions. The homeowner he victimized was suffering from dementia and living in a nursing home at the time the sales documents were signed. Halloum subsequently flipped the property and kept the profit. Halloum was indicted following an investigation by Tucson Police Detective Jim Williamson, who is assigned to the Elder Abuse Task Force of the Attorney General’s Office. The Arizona Department of Real Estate has revoked Halloum’s license.

For the Arizona AG press release, see Ex-Real Estate Agent Pleads Guilty in Fraudulent Sale. DeedContraTheft FinancialAbuseOfElderlyAlpha

Colorado AG: Mortgage Broker Misrepresented Loan Terms, Inflated Borrower Income Levels, Worked With Appraisers To Create Inflated Home Values

In Colorado Springs, Colorado, The Gazette reports:
  • A Colorado Springs mortgage company and two of its officials have been sued by the Colorado Attorney General’s office for misrepresenting the interest rates, monthly payments and other terms of loans they made, many of which ended up in foreclosure. The lawsuit, [...] alleges that 84 of the 192 loans made by April Bigler, the top loan originator for Alternative Lending of Colorado, [...] ended up in foreclosure because she led borrowers to believe they were taking out a fixed-rate loan and instead found later they had gotten two variable-rate loans with much higher interest rates and monthly payments than they expected.(1)


  • The lawsuit also names James W. Dale III, 64, also of Pueblo West and who is managing general partner of Alternative Lending of Colorado, as a defendant for failing to enforce the company’s policies or discipline Bigler for violating them. The civil lawsuit charges Bigler with 15 violations of Colorado consumer protection laws, Dale with nine such violations and the company with four violations, and seeks fines of up to $10,000 per violation and restitution to all victims of the alleged scheme.

For the story, see State sues mortgage lenders alleging misrepresentation.

For the Colorado AG press release, see Attorney General announces lawsuit against Colorado Springs mortgage company engaged in deceptive trade practices.

For the Colorado AG lawsuit, see State of Colorado v. Independence Planning LLLP, et al.

(1) According to the story, Bigler, 29, also failed to tell borrowers that their loan payments didn’t include property tax and insurance costs, repeatedly delayed closings to leave borrowers with few alternatives to the loans she arranged, inflated borrowers’ incomes on loan applications and worked with appraisers to inflate the value of homes being mortgaged, the lawsuit alleges. As a result, borrowers ended up with loans they could not afford, according to the lawsuit.

Texas AG Files Civil Suit Against Real Estate Broker Accused Of Creating Rent To Own Deals For Customers Falsely Promised Legal Title To Homes

From the Office of the Texas Attorney General:
  • Texas Attorney General Greg Abbott [...] charged Fern Hernandez Realty, Inc., with defrauding Hispanic home buyers. The state’s enforcement action names the corporation; its owner, real estate broker Jose Fernando “Fern” Hernandez and his wife, Odessa S. Hernandez. According to court documents filed [...] in Travis County, the defendants falsely promised their customers home ownership when, in fact, the customers’ homes were actually owned by the defendants.(1)


  • When Spanish-speaking clients did not qualify for traditional financing, Mr. Hernandez would offer them financing through a group of “investors.” He promised them if they made monthly payments to this group for a year, the house would be transferred to the home buyer. Investigators discovered there were no outside “investors.” Mr. Hernandez would close on the houses, with either he or his wife acting as the official buyer and taking title to what the home buyers thought was their property.


  • According to state investigators, at least six properties in the defendants’ names were leased to individuals who thought they owned the home in which they resided.

For the entire Texas AG press release, see Attorney General Abbott Takes Legal Action Against Housing Scam That Targeted Austin-Area Hispanic Home Buyers (Fraudulent real estate scheme promised customers homeownership but never gave purchasers title to their homes).

For the Texas AG lawsuit, see State of Texas v. Hernandez, et al.

(1) The Office of the Attorney General is seeking restitution for affected home buyers and a civil penalty of up to $20,000 for each of the defendants’ violations of the Deceptive Trade Practices Act. rent to own lease purchase option scams yellowstone

Nevada AG Indicts Las Vegas Man In Alleged Refinancing Scam Targeting Strapped Homeowners; Accused Of Illegally Pocketing Proceeds From Mortgage Loans

From the Office of the Nevada Attorney General:
  • Nevada Attorney General Catherine Cortez Masto announced [...] that Wayne Goldenbaum, also known as Robert King, of Las Vegas, Nevada, has been indicted on multiple charges of theft, including theft from an individual over the age of 60. The charges stem from instances where King fraudulently obtained the proceeds from his victims’ mortgage loans or obtained money for the lease of property which he did not own. The case is being prosecuted by the Attorney General’s Mortgage Fraud Task Force.


  • The indictment alleges that King, through his company, King Highway Estates, promised to obtain refinancing for local homeowners who wished to use the proceeds to clear up outstanding debts or make improvements on their homes. After arranging the loans with hard money lenders, King would withhold most of the proceeds under the pretense of using them to pay off the homeowner’s bills or authorizing the home improvement projects.

For the entire press release, see Attorney General Masto Announces Indictments In Connection With Mortgage Scam.