Saturday, November 28, 2009

Long Term Residents In 43-Unit NJ Hotel Facing Foreclosure Claim Foul; Say Management Gave Them The Boot Without Going Thru Proper Eviction Proceeding

In Pitman, New Jersey, The Gloucester County Times reports:
  • Claiming that she and fellow residents at the [43-unit] Hotel Pitman were illegally evicted on Nov. 14, Christy Blair cites the New Jersey statutes for proof. "My husband and I were both residents of the Hotel Pitman and I say residents, not guests, because we lived there for almost 14 months," said Blair. "Many of the people living there were long-term, and according to NJSA 55:13-B-3 (h), if at least 15 percent of the rooms of a hotel are occupied by people who have lived there for more than 90 days, the law considers that property a rooming or boarding house, which means we should have the same rights as boarding house residents, including the right to be legally evicted." Instead, said Blair, residents encountered only a flier hanging in the lobby six weeks before the hotel's closure.


  • Another resident, Jesse Evans, says he has been living in a pick-up truck since he lost his room at the hotel. He was also unable to get back in to retrieve his possessions, he said. "A rumor started in the summer that the hotel would go into foreclosure, but we mentioned it to management and they flatly denied it," said Evans. "All that appeared was that letter mentioning economic circumstances six weeks before it closed, and that was unsigned. Based on the law (specifically, NJSA. 2A: 18-61.2), New Jersey required him to give us 18 months' notice." Evans echoed Blair's complaint about the lack of a signed notice.(1)

  • According to borough officials, the hotel will go to sheriff's sale on Dec. 9.

For more, see Pitman Hotel closing illegal, evicted claim.

For more on tenants' rights in New Jersey, see:

(1) According to the story, New Jersey Department of Community Affairs Public Information Officer Lisa Ryan confirmed the residents' reading of the law. "If at least 15 percent of the dwelling units were, in fact, occupied over 90 days, the building would have been subject to the Rooming and Boarding House Act of 1979 and to the protections accorded under the Residential Eviction Law, NJSA 2A:18-61.1," said Ryan. "The people impacted are free to seek legal representation at their local legal aid office."

"If it was considered a boarding house, those residents should be covered by the anti-eviction act. Even some hotel residents are protected by that act," said Joanne Gottesman, a clinical associate professor at Rutgers University School of Law in Camden. "It sounds like there are some good arguments that the anti-eviction act would apply to them." Gottesman said it seemed like some procedural issues were not followed, and she encouraged the residents to contact South Jersey Legal Services at (800) 496-4570 for help in determining their rights.

Life At 186-Unit Apt. Complex Hits The Skids As Landlord Defaults On Loan Payments; Services Stop, Hot Water Cut, Mold Thrives, Bats & Roaches Move In

In Columbus, Ohio, The Columbus Dispatch reports:
  • Bats in the living room and cockroaches in the kitchen scared him enough. Now, the 4-year-old cries because he can't even enjoy a warm bath before bed, said his mother, Mona Anstaett. "I'm on day 17 with no hot water," said Anstaett, who lives at Westview Gardens apartments on the West Side. "I just don't know what to do anymore." The last time she went into the office to plead for help with repairs and pests, the managers had no answers, she said, so she left in tears.

  • The Hall Road complex is in receivership. Courts, banks and a newly appointed receiver are wading through a mountain of unpaid bills and maintenance needs, trying to keep the 186-unit property viable in the wake of the owner's mortgage default. In the meantime, Anstaett and others live amid the fallout.


  • The rights of tenants aren't supposed to change when a property goes into default. But the law and the reality of living conditions don't always mesh as quickly as everyone would like. "This, unfortunately, is an example of what's out there," said Cynthia Rickman, spokeswoman for the Columbus Development Department. "I can't say it's the norm, but it's what can happen in foreclosure or when these properties start to change hands. Everything stops." She said code-enforcement officials have received complaints about mold, exposed wiring, roaches and a lack of hot water at Westview.

For more, see Renter has roaches aplenty, but no hot water (Living conditions deteriorate at complex after owner defaults).

Grand Rapids "Grave Robber" Cops Plea In $4.2M Cemetary Trust Funds Ripoff; Suspected Of Similar Swindle Of $20M In Indiana

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox [...] announced that Robert Earl Nelms pleaded guilty to two felonies for embezzling more than $4.2 million in cemetery trust funds from Chapel Hill Memorial Gardens in Grand Rapids, and failing to properly administer numerous funeral contracts over a three year period. "Stealing from the dead is a betrayal of the highest order," said Cox. "Families who have laid their loved ones to rest have a rightful expectation that this sacred ground will forever be protected."


  • In total, it is alleged Nelms stole more than $24 million from cemeteries and funeral homes he controlled in Michigan and Indiana. He did this by selling cemetery products and services but failing to deposit the required portion in trust for cemetery upkeep and consumers' use. Approximately $4.2 million dollars were from the Grand Rapids cemetery, with Nelms facing charges in Indiana for the rest.(1)

For the Michigan AG press release, see Cemetery Swindler Convicted of Felony Embezzlement.

(1) According to the press release, this is the second defendant convicted by Attorney General Cox for involvement in a major theft of cemetery trust funds. Carter Green of Nevada was convicted in Wayne County Circuit court in December of 2007 for his role in aiding co-defendant Clayton Smart. Cox alleges that Smart embezzled as much as $70 million in cemetery trust funds from 28 Michigan cemeteries. Clayton Smart is awaiting trial in Tennessee on related charges. Upon completion of that trial, Smart will be transferred to Michigan for arraignment on charges filed by Cox, the press release states. EscrowRipOffKappa

Prohibition Against Upfront Fees Fails To Stop Out-Of-State Loan Modification Racket, Leaving North Carolina Woman Out Cash, Home

In Greensboro, North Carolina, WXII-TV Channel 12 reports:
  • Susan Pifer, who drives a bus and works at Ellis Middle School, said her family lost $2,000 to a company in Arizona that claimed it would keep her and her family from losing their home. Despite paying the company, Pifer's home was foreclosed on last April. Pifer said the company promised to refund the money if it couldn't negotiate the lower payment. Pifer, who has since moved into a rental property, said the company no longer returns her phone calls.


  • An independent processor who worked on Pifer's loan modification said she knew of at least three other families who lost their money to the same company. According to North Carolina law, it's illegal to charge up-front for these types of services.

For the story, see Family Lost Cash, Home To Mortgage Scam (Mortgage Scam Complaints Soar In NC).

Prosecutor Drops Charges Against Woman Accused Of Forging Hubby's Name On POA In Sale Leaseback Of Family Home Resulting In Both Getting The Boot

In Bantam, Connecticut, The Register Citizen reports:
  • A criminal case brought against a Bethlehem woman for allegedly selling her family’s home without her husband’s knowledge was dismissed [...] at her husband’s request.(1) Shelley Ciriello, 55, was arrested Sept. 19 [...] and charged with second-degree forgery, for allegedly signing her husband’s name to a power of attorney to sell their marital home. Further, without her husband knowing, Ciriello reportedly agreed to rent the house from the new owner. [...] The Ciriellos were evicted from the house after rent checks for $3,767 bounced, according to court records.(2)

Source: Case dismissed for woman who sold husband's family home.

For earlier story, see Wife sold house, husband clueless.

(1) According to the story, the prosecutor said he decided to drop the charge against Ciriello after the husband agreed to adopt his wife’s property transactions. “The defendant’s husband wrote a letter indicating he didn’t want to pursue case because they are under great financial hardship and it would only further victimize him,” Supervisory Assistant State’s Attorney Devin Stilson reportedly said. “He did not want to pursue the case or testify.”

(2) According to an earlier story, Ciriello found herself in financial trouble by reportedly abusing a line of credit, using the family home as collateral. Ciriello then responded to an advertisement from a now-defunct lending company, which arranged a sale leaseback with a third party in an attempt to provide relief from the financial pressure. The lending company reportedly has since been shut down by the State of Massachusetts for offering sub-prime loans and inflating borrower assets.

Offer Of "Free Consultation" To Would-Be Client Gets Expensive For Florida Personal Injury Attorney

In a recent column, Texas attorney John G. Browning writes in The Southeast Texas Record on some oddball court cases that affirm the age-old adage that reality is often stranger than fiction. Here's one example:
  • Most people who visit a plaintiff's personal injury attorney expect to find a sympathetic ear and a champion to take up their cause, not a basis for another lawsuit. At least one person arriving at the Palm Beach, Fla., law offices of Fetterman and Associates in response to an ad proclaiming "If you are the victim of injuries... please contact us for a free consultation" didn't have far to go.

  • Robert Friedrich visited the law firm in 2003 to discuss suing someone as a result of a car accident nine days previously. During his consultation, however, he gained a whole new cause of action when the chair he was sitting in collapsed and he struck his head on another piece of furniture in the firm's conference room. Friedrich then sued the law firm as well as the company that sold the allegedly defective chair, claiming serious neck injuries.

  • In May a Palm Beach County [jury] found both defendants liable for the chair collapse, and awarded over $2.2 million in damages. For a "free" consultation, this turned out to be pretty expensive indeed for the Fetterman law firm.

For other examples, see Still Litigating In The Twilight Zone.

Friday, November 27, 2009

Homebuilder's Trade-In Offer To Prospective Buyers Sours, Leaving Them Mired In Mess

In Genesee Township, Michigan, WJRT-TV Channel 12 reports:
  • Some homebuyers are calling it one of the worst mistakes of their lives. A deal that promised the house of their dreams turned sour. [...] The pitch sounded great: Trade in your old home, trade up to a new one. "To tell you the truth, I think it's a great deal," said Carol Eberhardt from Symphony Homes during a 2007 interview. But for Tony Grubish, it was no deal at all. "It's probably one of the biggest regrets I have in my life."


  • Grubish says he and his then-pregnant wife filled out the paperwork and were about to move into a new Symphony home in Genesee Township. But one week before closing, the deal ran into a snag. "At the last second, they said, 'Oh, I have bad news. We can't finance you for two FHA loans," Grubish said.

  • So instead, he says, Symphony convinced him to sign a land contract for that new home. "My first instinct was to get up and walk out. But again, I had a pregnant wife who was pretty torn and distraught about it. We were pretty much led up, up until that point, to believe this was going to happen."

  • He learned Symphony wouldn't lease or buy his old house, either. Eventually, the old home slid into foreclosure, and Grubish couldn't afford the new one. Now, he says he's out roughly $25,000 and 180 points off his credit score. "I probably won't be able to get financed for at least 10 years, probably," he said. "We're throwing the thought around of even just filing for bankruptcy."(1)

For more, see ABC12 Investigates: Symphony Homes.

(1) Reportedly, Symphony Homes' headquarters in Davison is empty. That hasn't changed for months. But what has changed is the growing list of debt collection notices on the front door, according to the story. The company filed for Chapter 11 bankruptcy protection in August 2008 and had been run by two men: realtor Steve Burges and builder Don Mahoney, the story states.

Soured Investment In Alleged $4M+ Ponzi Scheme Leads To Home Foreclosure For One Victim

In Sacramento, California, The Sacramento Bee reports:
  • A Sacramento insurance agent [...] was accused of running a $4 million-plus Ponzi scheme, squandering the money on ludicrous investments while buying himself fancy cars and homes. Authorities said William Arthur Sassman II even invested customers' money with a Folsom man who has been charged with running a much larger Ponzi scheme. Sassman, 41, was arrested on 100 counts of theft and other charges.


  • One client, who wasn't identified, invested $200,000 in 2007, with the money supposedly going into a Mare Island real estate deal. She got $5,000 monthly payments for a while. But when she tried to cash out of the investment, Sassman told her the money had first gone into a certificate of deposit and then "had gone overseas," according to [California AG office's special agent Jason] Nichols. Sassman told the woman he had hired a lawyer to recoup her money. The woman eventually lost her home to foreclosure, Nichols wrote.

Source: Sacramento insurance agent accused of running Ponzi scheme.

Illinois AG Cracks Down On Home Repair Companies In Various Alleged Scams; One Equity Stripping Ripoff Cost Victims Nearly $1.3M, Says Lawsuit

The Office of the Illinois Attorney General Lisa Madigan has recently filed a string of civil lawsuits against home repair companies alleging various acts of misconduct perpetrated against homeowners:
  • Madigan Cracks Down On Chicago Mortgage And Home Repair Fraud Scheme ($1.3 Million Swindled from Elderly, African-American Homeowners in Subprime Loan Scam): Lawsuit filed against a Chicago man and five home repair and mortgage companies for conducting a wide-spread scheme that targets African-American consumers on Chicago’s South and West sides and has stripped nearly $1.3 million in equity from the homes of at least 36 consumers, including several who lost their homes to foreclosure.

FTC Consumer Video Warns Against Loan Modification Rackets

As part of their "consumer enlightment" program on loan modification foreclosure rescue scams, the Federal Trade Commission has put out a video intended to discourage homeowners needing help with their mortgage payments from patronizing outfits seeking upfront fees while making promises they can't keep.

For the video, see Real People, Real Stories (Avoid Foreclosure Rescue Scams) (Vea en español).

Thursday, November 26, 2009

Feds, States Unveil "Operation Stolen Hope" In Effort To Curb Upfront Fee, Foreclosure Rescue Loan Modification Rackets

The Federal Trade Commission recently announced:
  • [FTC] Chairman Jon Leibowitz, joined by [others ... a]nnounced Operation Stolen Hope as part of a continuing federal-state crackdown on mortgage foreclosure rescue and loan modification scams. The operation involves 118 actions by 26 federal and state agencies. The FTC actions were announced in Nevada, where one in every 23 homes is facing foreclosure. [...] The FTC announced six lawsuits, bringing to 28 the number of mortgage relief cases the Commission has brought since the housing crisis began.(1) Twenty-five state attorneys general and other state and local agencies announced 112 similar actions.(2)

For the entire FTC press release, see Federal and State Agencies Target Mortgage Relief Scams (FTC Leads “Operation Stolen Hope” to Stop Fraud and Help Troubled Homeowners).

(1) According to the FTC's recent announcement, the defendants in these lawsuits are alleged to have falsely claimed that they would obtain mortgage modifications that would make consumers’ monthly mortgage payments substantially more affordable. After charging large up-front fees, they often did little or nothing to help homeowners renegotiate their mortgages. Some of the defendants falsely claimed a high success rate and promised to give consumers refunds if they failed to modify their mortgages, and others misrepresented that they were affiliated with the federal government or consumers’ mortgage lenders or servicers. Each of the cases allege violations of the FTC Act. In addition, several cases allege violations of the Telemarketing Sales Rule (TSR) or the Credit Repair Organizations Act (CROA). In each case, the FTC is asking the court to stop the defendants’ deceptive claims and make them forfeit their ill-gotten gains. In five of the cases, the court already issued a temporary restraining order and froze the defendants’ assets.

The alleged rackets targeted in the FTC lawsuits, linked to the relevant lawsuit documents filed in Federal court, are:

(2) The FTC legal actions are all civil lawsuits, not criminal prosecutions. Aside from one criminal prosecution that I know of brought by the Michigan Attorney General, the legal actions brought by the various states in this newly-announced law enforcement effort all appear to be either civil lawsuits brought by state attorneys general, or adminsitrative actions/cease & desist orders brought/issued by state regulatory agencies. Inasmuch as there is no threat of jail time for the individual operators in any of these cases (except for one individual in the Michigan case), some may say that Operation Stolen Hope would be more appropriately named Operation Whac-A-Mole, since, in the view of some, only an operation involving criminal prosecution of these operators, coupled with consumer education will be effective in reducing loan modification rackets. Putting these guys out of business using civil lawsuits might shut them down - but others will just "pop up" elsewhere in the future and will operate until they get caught. See Ineffective "Whac-A-Mole" Approach To Battling Loan Modification Scams Leads Housing Non-Profit To Launch National Consumer Education Campaign.

Michigan AG Files Criminal Charges In Separate Cases Alleging Loan Modification Firms Clipped Homeowners For Upfront Fees, Then Failing To Help

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox today announced the filing of three criminal complaints and a total of 10 charges against illegal advanced fee "foreclosure rescue" operations accused of defrauding Michigan families of thousands of dollars. Global Financial Consulting Services of Dearborn Heights, Advanced Mediation Services of Midland and James Klein of Midland are accused of illegally charging homeowners facing foreclosure upfront fees for mortgage modification assistance.(1) The defendants claimed they would help homeowners by working with their lenders in an attempt to modify the borrower's mortgage. After paying the upfront fee, borrowers found that the companies could not secure a modification and were subsequently unable to get their money back.


  • In addition to [the above] charges, Cox announced that he has partnered with the Federal Trade Commission and delivered Notices of Intended Action (NIAs) to 13 out-of-state companies accused of illegally demanding upfront fees from Michigan consumers for loan modification services.(2)

For the entire press release, see Cox Takes Aim at Advanced Fee "Foreclosure Rescue" Scams.

(1) According to the AG's press release, Global Financial Consulting Services faces four criminal counts including two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and two counts of making misleading statements. Advanced Mediation Services and James Klein each face two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and one count of making misleading statements. Each of the charges carries a penalty of up to 90 days in jail and/or a fine of $1,000 in addition to the requirement that the companies make full restitution to each of their victims.

(2) The companies receiving NIA warnings from Cox today include:

  • 1 Global Financial, Inc., of Fort Lauderdale, FL;
  • 21st Century Legal Services and Fidelity National Legal Service, of Rancho Cucamonga, CA;
  • Best Interest Rate Mortgage, of Westmont, NJ;
  • Echo Loans & Financial Solutions, of Foothill Ranch, CA;
  • Elect Group LLC, of Oakland Park, FL;
  • Federal Home Savers, of Commack, NY;
  • Fresh Start Home Modification, of Woodbury Heights, NJ;
  • Hope N Housing, of Norwalk, VA;
  • IMC Financial, of Clearwater, FL;
  • Lifeguard Financial, of Fort Lauderdale, FL;
  • National Modification Corp., of Hauppauge, NY;
  • North American Relief, LLC, of Costa Mesa, CA; and
  • Peoples First Financial Inc., of San Diego, CA.

Pennsylvania AG Tags Four Loan Modification Outfits For Pocketing Upfront Fees, Failing To Provide Promised Foreclosure Relief

From the Office of the Pennsylvania Attorney General:
  • Consumer protection lawsuits were filed [...] against four loan modification or "mortgage rescue" businesses, along with their officers, who are accused of deceiving Pennsylvania consumers seeking help modifying their mortgage loans. "Consumers struggling with high interest rates or large loan payments were drawn to these businesses by misleading ads, deceptive websites and false promises of 'permanent changes' to their mortgages," Attorney General Tom Corbett said. "Instead, many consumers paid large up-front fees that resulted in little, if any, relief from their mortgage problems - leaving them in even worse financial situations."

For more, including a description of the charges in each lawsuit, see Attorney General Corbett announces lawsuits against four loan modification businesses accused of deceiving consumers about "mortgage rescues".

(1) According to the AG's press release, Corbett said the civil lawsuits were filed by the Attorney General's Bureau of Consumer Protection against the following businesses and individuals:

  • Foreclosure Awareness Inc., of Bensalem and Boca Raton, Florida, along with owner Michael Squillace,
  • Nationwide Foreclosure Prevention Center LLC, of Williamstown, NJ, and owner Robert P. Valentin,
  • Best Interest Rate Mortgage Company LLC, of Huntingdon Valley, PA and Westmont, NJ, as well as company President Michael J. Diplacido,
  • U.S. Mortgage Mod LLC, of Philadelphia, and owner Marc Dambrosio.

Corbett said that in addition to false or misleading claims about the ability to actually modify loans, some of the companies named in these lawsuits also allegedly:

  • used deceptive mailings to consumers designed to appear as if the correspondence came from a government agency or government-related program,
  • did not provide consumers with state-required financial disclosure information,
  • failed to inform consumers about their five-day right to cancel and accepted up-front fees without posting the necessary surety bond or trust account,
  • were not licensed by the Pennsylvania Department of Banking to handle mortgage loans or loan refinancing.

Connecticut AG Files Suit Against Out-Of-State Company Running Allegedly Bogus Upfront Fee Loan Modification Scam

In Hartford, Connecticut, the Hartford Courant reports:
  • The state is suing a South Florida mortgage rescue company that charged Connecticut homeowners tens of thousands of dollars but failed to help them avoid foreclosure. The company, FHA All, also refused to refund the fees, between $2,500 and $4,500. [...] As of Oct. 1, the state began banning companies from demanding up-front payments for mortgage help.


  • FHA All Day couldn't be reached for comment. FHA All Day's website said it is no longer accepting new applications. A call to a telephone number on the site yielded a recording saying the number was not accepting calls. FHA All Day was sued by the state of Florida in July.

Source: Connecticut Sues Florida Mortgage Rescue Company.

See also, Connecticut AG news release: Attorney General, DCP Sue Florida Mortgage Rescue Company For Allegedly Defrauding CT Homeowners.

Wednesday, November 25, 2009

Residents In Uninsuired, Fire-Damaged Bronx Apartment House In Foreclosure Lack Cooking Gas For Thanksgiving Dinner; Heat, Hot Water Recently Restored

In The Bronx, New York, NY1 reports:
  • Residents of a Bronx building that was damaged by a fire this past summer may have to cook their Thanksgiving dinner on hot plates as they continue to wait for repairs to be made. Tenants of 2285 Sedgwick Avenue say they have been without cooking gas for months. They say the trouble started after a fire broke out in the University Heights building back in July. Residents only recently had their heat and hot water restored. "It's like living in a cave. And this New York, it's supposed to be the best city in the world. Well, cold showers will change your opinion very quickly," said one resident.

  • "Since there's no gas we got to buy food from outside. It's coming to a stage that we not able to be able to pay for food," said another resident. The building also went into foreclosure and there's no insurance on it. Tenants say they were told it could be four to six months before the gas in their stoves comes back. NY1 was unable to locate the owner for comment.

For more, see Four Months Later, Bronx Tenants Still Unable To Cook.

California Woman Gets Five Years For Using Forged Documents To Swipe, Mortgage & Sell Widow's Home Out From Under Her

From the Office of the San Bernardino County, California District Attorney:
  • [J]udge Rod Cortez sentenced Oralia Hidalgo, 46, of Colton to prison for real estate fraud related crimes.(1) [...] In July 2003, Hidalgo forged the victim’s name on a Grant Deed illegally taking title to a residence in Colton. The signature of the victim's husband was also forged on the Grant Deed. The husband had died approximately two years prior to the forgery. The defendant encumbered the property and subsequently sold it for $125,000. The defendant falsified several real estate deeds and forged the signature and stamp of a notary public. The fraudulent deeds were later recorded at the San Bernardino County Recorder's Office. The issue of restitution has been reserved for an upcoming hearing.

For the DA's press release, see Colton Woman Sentenced to Prison for Real Estate Fraud.

(1) According to the DA's press release, Hidalgo was ordered to serve five (5) years in the California state prison system. The defendant was found guilty on nine (9) felony counts ranging from forgery, grand theft, filing of false instruments, and a grand theft enhancement, which were filed by the San Bernardino County District Attorney’s Real Estate Fraud Unit.

Elderly Parents Accuse Daughter Of POA Abuse; Suit Says Woman Pocketed Cash By Mortgaging Family Residence, Moved 90-Year Old Couple Into Nursing Home

In Chicago Illinois, the Chicago Tribune reports:
  • An elderly couple are suing their daughter, accusing her of cheating them out of their South Side home and moving them to a nursing home. Overton and Bernice Williams, both born in 1917, say in their lawsuit that they are "unsophisticated in legal matters." They had lived in the home with their daughter, whom they say they trusted "implicitly as to all their financial affairs." In 2006, the daughter sought and received power of attorney for her parents, the lawsuit states. In 2008, the daughter took out a home equity loan on the house and pocketed the money, it says. The daughter then placed her parents in a nursing home, the suit states. The couple are suing their daughter, Leshia Williams, and EquiFirst Corp. The couple say their son later took them to live with him in Alaska. They want their house back and want their daughter to return the loan money.

Source: Elderly couple sue daughter, say she cheated them out of their Chicago home (Daughter moved couple in their 90s to a nursing home, lawsuit says). DeedContraTheft FinancialAbuseOfElderlyAlpha

Straw Buyer Gets 30 Days In Scam To Steal Home Out From Under 93-Year Old, Now-Deceased Alzheimer's Victim

From the Office of the Queens District Attorney:
  • Queens District Attorney Richard A. Brown [...] announced that a 32-year-old Long Island woman who acted as a “straw buyer” to steal the Jamaica, Queens, residence of a 93-year-old Queens man suffering from Alzheimer’s disease has been sentenced to thirty days in jail and five years’ probation, during which she must appear at mortgage fraud forums and educate people on the ramifications of being a “straw buyer” and why being one is a crime. This is believed to be the first prosecution and conviction of a straw buyer in a mortgage fraud scheme in Queens County.


  • District Attorney Brown said that, according to trial testimony, [straw buyer Rebecca] Tharpe assisted Alexandra Gilmore, an acquaintance, in stealing the Jamaica, Queens, residen[ce] of 93-year-old Artee McKoy, a retired barber with diminished mental capacity, between August and September 2005 by acting as a “straw buyer” to purchase the property. McKoy’s signature was forged on a contract of sale – between him as the seller and Tharpe as the buyer – that was then used, along with other false information, to obtain a mortgage on the property. The house was eventually sold for $395,000, of which Tharpe received the benefit of $102,000 (a “seller’s concession” and a seller’s purchase money mortgage – none of which Mr. McKoy had consented to) and Gilmore received more than $200,000 in proceeds, including a $97,000 check that had been made payable to McKoy and an additional $130,000 which she secured by setting up a real estate company and falsely claiming to have been owed the money from a previous mortgage loan on the property.(1)(2)

For the entire Queens DA press release, see “Straw Buyer” Sentenced To Jail In Mortgage Fraud Scheme (Must Give Lectures On Being a Straw Buyer At Mortgage Fraud Forums As Part Of Sentence).

See also, New York Daily News: Con artist turns teacher as punishment.

(1) According to the Queens DA, Gilmore, 37, formerly of 14 East Grove Street in Massapequa and presently of 1550 Clark Street in Pittsburgh, Pennsylvania, pleaded guilty to two counts of second-degree grand larceny as a hate crime earlier this year and was sentenced to two to six years in prison.

(2) Some guidance to those seeking an approach to undoing home equity ripoffs like this one can be found in a couple of 2008 Brooklyn, New York lower court rulings favorable to the scammed homeowners. See Brooklyn Court Rulings Void Deeds & Subsequent Mortgages Used To Drain Home Equity In Bogus Sale Leaseback Foreclosure Rescue Scams. For a couple of other New York cases dealing with voiding/cancelling deeds, see:

(If there is a problem accessing any of these cases, drop me a note at and I'll email them to you.)

Further, any attempt to wipe out the mortgage obtained by the scammers on the stolen home may be met with the lender's assertion that it did not knowingly participate in the scam, and had no knowledge of it, thereby entitling it to the protection of the recording statutes as a bona fide purchaser / bona fide encumbrancer. For considerations in attempting to overcome a claim/defense of bona fide purchaser by the lender by imputing constructive notice on the lender (assuming that the deed conveyance did not involve a forgery; in the case of a forgery, the deed would be considered void ab initio (ie. void from the outset) - and, accordingly, would render a subsequent mortgage granted in reliance on the forged deed void as well), see footnote 2 of an earlier post, Staten Island DA Charges NJ Man w/ Felony Grand Larceny In Alleged Sale Leaseback, Foreclosure Rescue Ripoff That Victimized 86-Year Old Homeowner.

See also, Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

New Mexico Man Faces 13 Counts In Alleged Home Hijacking Scam; Targeted Houses In Foreclosure, Unwitting Tenants Seeking Rentals, Say Investigators

In Albequrque, New Mexico, KRQE-TV Channel 13 reports:
  • A purported landlord who used foreclosed homes to scam unsuspecting tenants will face charges once he is located, according to Albuquerque police. Last summer KRQE News 13 interviewed three women who said they rented houses from Ernest Garcia. But according to police Garcia had broken into foreclosed homes which he then pretended to own while collecting cash from would-be tenants.


  • Now a grand jury has indicted Garcia on 13 counts including fraud, forgery and burglary. "It's a scheme that I don't think any of us have ever seen before and certainly one that is propelled by the economy," Pat Davis, a spokesman for Bernalillo County District Attorney Kari Brandenburg, said. [...] But there's one problem. Investigators don't know where to find Garcia. A warrant is out for his arrest, and he has a court hearing scheduled Thursday in an aggravated DWI case. If he shows, he will be arrested. Garcia has a criminal history dating back to 1989 that includes burglary, forgery and conspiracy.

For the story, see Indictment: Fake landlord duped tenants (Passed off foreclosed homes as his). KappaPhonyLandlordScam

Financial Problems At Some Assisted Living & Continuing Care Communities Raise Worries For Senior Residents & Their Families

Newsweek reports:
  • The recession is hitting elderly people where they live, literally. Financial problems have been mounting at a number of assisted living and continuing care communities, forcing some facilities into bankruptcies and inflicting new worries on residents and their families who thought their life plans were comfortably set.


  • In some cases, residents may find that the sizeable deposits they made to get their apartments in the first place have disappeared. [...] That's what happened to the 170 people who lived in Covenant at South Hills in Lebanon, Pa. Their deposits went up in smoke when their facility was sold in bankruptcy to Concordia Lutheran Ministries, which did not take on that liability. Several are now suing B'nai Brith Housing, the original operator of Covenant.

For more, see Bankruptcies Hit Retirement Communities (Elderly residents who thought they'd secured their futures are finding their homes and savings at risk).

State Budget Cuts Drive Group Facility For Mentally Ill Into Foreclosure, Forcing Patients From Their Long-Time Home

In Chillicothe, Ohio, The Columbus Dispatch reports:
  • A state budget cut forced one of Rob Stanley's group homes for the mentally ill into foreclosure - and pushed "Sheriff Bob" off the front porch where he had sat nearly every day for 15 years waving and smiling at passers-by on Paint Street. Of all the groups affected by state budget rationing, the mentally ill may been hit the hardest.


  • Small group homes like Stanley's are one of the last refuges for mentally ill adults turned out of state hospitals. Stanley had 10 residents in two group homes. When two moved out, he was unable to replace them because budget cuts froze funding for new residential state supplemental payments. As a result, he lost $1,548 a month, couldn't pay his mortgage, and watched as the sheriff padlocked the front door on his home at 104 S. Paint St.

  • The residents, some of whom had lived there since the early 1990s, had to move elsewhere; two were able to move to Stanley's other home. But Robert Chester, 88, affectionately known as "Sheriff" by fellow residents and people who recognized him from his regular spot on the front porch, had a particularly hard time adjusting. "It was the most horrible thing I've every gone through in my life," Stanley said. "It was like losing your child."

  • Stanley fought to hold back tears when he said he feels he let the residents down. "This was their home. They were settled in." [...] Mental-health "drop-in centers," where many people with mental illness spend their days, are closing or greatly reducing hours. Most programs providing help with housing, education and employment already have fallen by the wayside, officials said.

For the story, see Mentally ill are losing some of their last refuges.

Tuesday, November 24, 2009

L.I. Judge Gives Foreclosing Lender Verbal Horse-Whipping As He Wipes Out Mortgage Debt, Cancels Lien For "Repugnant, Shocking, Repulsive" Conduct

In Riverhead, New York, Suffolk County trial judge Jeffrey Arlen Spinner gave plaintiff IndyMac Mortgage Services, division of OneWest Bank F.S.B., and its Regional Manager of Loss Mitigation, Karen Dickinson, one hell of a beat-down last week in a home foreclosure ruling in which he wiped out the mortgage holder's security interest in the subject home, cancelling the debt and apparently leaving a financially strapped homeowner with a mortgage-free home in the process. In doing so, the judge cited the "harsh, repugnant, shocking and repulsive" conduct of the plaintiff during the course of the foreclosure action.

The court ruling sets forth the judge's descripition of the plaintiff's conduct that got it in hot water; the following excerpt addresses Justice Spinner's legal basis for taking the action he did (citations to legal authority omitted for ease of reading, bold text is my emphasis):
  • Since an action claiming foreclosure of a mortgage is one sounding in equity, [...] the very commencement of the action by Plaintiff invokes the Court's equity jurisdiction. While it must be noted that the formal distinctions between an action at law and a suit in equity have long since been abolished in New York [...], the Supreme Court nevertheless has equity jurisdiction and distinct rules regarding equity are still extant, [...] . Speaking generally and broadly, it is settled law that "Stability of contract obligations must not be undermined by judicial sympathy..." [...] . However, it is true with equal force and effect that equity must not and cannot slavishly and blindly follow the law, [...] . Moreover, as succinctly decreed by our Court of Appeals in the matter of Noyes v. Anderson 124 NY 175 (1890) "A party having a legal right shall not be permitted to avail himself of it for the purposes of injustice or oppression..." [...].

  • In the matter of Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), Special Term stated that "The maxim of "clean hands" fundamentally was conceived in equity jurisprudence to refuse to lend its aid in any manner to one seeking its active interposition who has been guilty of unlawful, unconscionable or inequitable conduct in the matter with relation to which he seeks relief." [...] .

  • In attempting to arrive at a determination as to whether or not equity should properly intervene in this matter so as to permit foreclosure of the mortgage, the Court is required to look at the situattion in toto, giving due and careful consideration as to whether the remedy sought by Plaintiff would be repugnant to the public interest when seen from the point of view of public morality, [...]. Equitable relief will not lie in favor of one who acts in a manner which is shocking to the conscience, [...], neither will equity be available to one who acts in a manner that is oppressive or unjust or whose conduct is sufficiently egregious so as to prohibit the party from asserting its legal rights against a defaulting adversary, [...]. The compass by which the questioned conduct must be measured is a moral one and the acts complained of (those that are sufficient so as to prevent equity's intervention) need not be criminal nor actionable at law but must merely be willful and unconscionable or be of such a nature that honest and fair minded folk would roundly denounce such actions as being morally and ethically wrong, [...]. Thus, where a party acts in a manner that is offensive to good conscience and justice, he will be completely without recourse in a court of equity, regardless of what his legal rights may be, [...].

  • An objective and painstaking examination of the totality of the facts and circumstances herein leads this Court to the inescapable conclusion that the affirmative conduct exhibited by Plaintiff at least since since February 24, 2009 (and perhaps earlier) has been and is inequitable, unconscionable, vexatious and opprobrious. The Court is constrained, solely as a result of Plaintiff's affirmative acts, to conclude that Plaintiff's conduct is wholly unsupportable at law or in equity, greatly egregious and so completely devoid of good faith that equity cannot be permitted to intervene on its behalf. Indeed, Plaintiff's actions toward Defendant in this matter have been harsh, repugnant, shocking and repulsive to the extent that it must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against Defendant. The Court cannot be assured that Plaintiff will not repeat this course of conduct if this action is merely dismissed and hence, dismissal standing alone is not a reasonable option. Likewise, the imposition of monetary sanctions [...] is not likely to have a salubrious or remedial effect on these proceedings and certainly would not inure to Defendant's benefit. This Court is of the opinion that cancellation of the indebtedness and discharge of the mortgage, when taken together, constitute the appropriate equitable disposition under the unique facts and circumstances presented herein.

  • After careful consideration, it is the determination of this Court that the indebtedness evidenced by the Adjustable Rate Note [...] in the original principal amount of $292,500.00 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. should be cancelled, voided and set aside. In addition, the Mortgage which secures the Adjustable Rate Note, given to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. [...] and recorded with the Clerk of Suffolk County [...] should be cancelled and discharged of record. Further, Plaintiff, its successors and assigns should be forever barred and prohibited from any action to collect upon the Adjustable Rate Note. In addition, the Judgment of Foreclosure & Sale granted on January 12, 2009 and entered on January 23, 2009 should be vacated and set aside and the Notice of Pendency should be cancelled and discharged of record. For this Court to decree anything less than the foregoing would be for the Court to be wholly derelict in the performance of its obligations.

For Justice Spinner's court ruling, see Indymac Bank F.S.B. v Yano-Horoski, 2009 NY Slip Op 52333(U), November 19, 2009.

For media reports on this court ruling, see:

Thanks to Rob Harrington for the heads-up on this court ruling. EpsilonMissingDocsMtg

IndyMac Intent On Foreclosing On 89-Year Old Widow, Despite Two Court Orders Telling Them To Stop

In Oakland, California, Courthouse News Service reports:
  • Indymac Bank and its successor, One West Bank, keep trying to foreclose on an elderly widow's house despite two court orders telling them to stop, the 89 year-old woman says in Alameda County Court, Oakland. She says stress from the repeated threats of foreclosure made her husband depressed and may have contributed to his death. Irene Jones says foreclosure proceedings on her Oakland home were halted twice, first by an order restraining Indymac from foreclosing in February 2008, then by a second order invalidating Indymac's foreclosure proceedings in March 2009. Nonetheless, Jones says Indymac and One West notified her they would begin foreclosing again in October.


  • She demands quiet title and damages of $350,000 for elder abuse, negligence, distress and suffering, punitive damages, and an injunction telling the bank to stop trying to take away her house.

For the story, see Bank Won't Quit Demands on Elderly Widow.

For the lawsuit, see Jones v. One West Bank F.S.B., et al.

New Video To Provide Instruction On Navigating HAMP

PMI Mortgage Insurance Company recently announced:
  • PMI Mortgage Insurance Co. [...] introduced a new video to help homeowners experiencing financial hardship understand the benefits of the Home Affordable Modification Program (HAMP) and how they can take advantage of this important program. HAMP is the national loan modification program offered in the Obama Administration’s Homeowner Affordability and Stability Plan which mortgage servicers are implementing broadly to bring long-term affordability to homeowners struggling to keep their homes. Navigating the Home Affordable Modification Program, one of the first videos available for homeowners, explains the benefits, eligibility requirements and types of adjustments that can be made to mortgage loans. The video also provides a realistic example of a couple’s experience before-and-after receiving a HAMP modification.


  • Navigating the Home Affordable Modification Program is divided into two parts. Part I is a basic orientation for viewers who may not have heard of HAMP, the objectives of the program, how to determine if your loan is owned by Fannie Mae or Freddie Mac, and how to find out if you qualify. Part II discusses the information homeowners need to provide their mortgage servicer, demonstrates how affordability is achieved through a realistic example, and the steps homeowners need to take to ensure success in modifying their loan.

For more, including links to the video, see PMI Introduces New Video To Help Distressed Homeowners (Navigating the U.S. Treasury's Home Affordable Modification Program (HAMP)).

More On Class Action Seeking To Void Foreclosure Sales Due To Alleged Sheriff's Office Screw-Up; Some Auctions Didn't Even Take Place: Plaintiff

In Detroit, Michigan, The Michigan Citizen reports:
  • Over 40 Wayne County homeowners have filed a $10 million class action lawsuit that could invalidate tens of thousands of mortgage foreclosure sales executed while Warren Evans was Sheriff. The lawsuit is a significant step in a long battle led by Yvonne Cross, the owner of several family properties in Detroit. It was filed by Bloomfield Hills attorney Paul J. Nicoletti.
  • In addition to the technicalities listed in the lawsuit, such as the fact that Evans’ subordinates were not authorized to sign deeds of sale, we are contending that sheriff’s auctions were not even held in many cases,” said Cross. “The sales should be null and void, and the original property owners should still own their homes under the law.”
  • Cross herself won back ownership of her home [...], which originally belonged to her grandmother. She obtained an affidavit from Attorney Kate Ben-Ami of the sheriff’s office stating that no sheriff’s auction had been held on the date and time specified in the sheriff’s deed. She has obtained similar affidavits regarding other properties, including one in Macomb County. Cross has also filed actions with the state’s attorney grievance commission against six attorneys from the law firm of Trott and Trott who were involved in the sale of her grandmother’s home.
For the story, see Fight against foreclosures gaining momentum (Michigan, Kansas, Massachusetts cases set precedents).

For an earleir story, see The Detroit News: Lawsuit claims Wayne County foreclosures were illegal. EpsilonMissingDocsMtg

Ratings Agency Analyst On MBS Offerings: "We Rate Every Deal - It Could Be Structured By Cows & We Would Rate It" - CEO Admits "Drinking The Kool Aid"

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Richard Cordray [...] filed a lawsuit against Standard & Poor’s, Moody’s and Fitch, three national agencies that are responsible for providing accurate credit ratings of investments. The lawsuit, filed in United States District Court for the Southern District of Ohio on behalf of five Ohio public employee retirement and pension funds, charges the rating agencies with wreaking havoc on U.S. financial markets by providing unjustified and inflated ratings of mortgage-backed securities in exchange for lucrative fees from securities issuers.


  • Public statements and testimony indicate that rating agency executives and analysts knew their ratings of mortgage-backed securities were wrong. Indeed, one rating agency analyst admitted that the market for mortgage-backed securities was “little more than a house of cards” with a much higher risk of devaluation than indicated by the purported investment-grade “AAA” rating. Another rating agency analyst said that “we rate every deal. It could be structured by cows and we would rate it.”

  • Raymond McDaniel, CEO and Chairman of Moody’s, described the ratings frenzy: “What happened in ’04 and ’05 … is that our competition, Fitch and S&P, went nuts. Everything was investment-grade. It really didn’t matter… No one cared because the machine just kept going.” McDaniel added that Moody’s also “[drank] the Kool-Aid.”

  • This misconduct has caused immense harm to Ohio police officers, firefighters, teachers, government workers, investors and retirees,” said Cordray. “Our lawsuit against these rating agencies is another step toward holding Wall Street accountable for its wrongs.”

For the Ohio AG press release, see Cordray Sues National Rating Agencies for False and Misleading Ratings.

For the lawsuit, see Ohio Police & Fire Pension Fund, et al. v. Standard & Poor's Financial Services LLC, et al.

For a summary of securities litigation managed by the Ohio Attorney General’s Office, see Holding Wall Street Accountable (Protecting Investors, Retirees, Workers and Families).

(1) Attorney General Cordray noted his reasons for bringing this lawsuit: “The rating agencies were central players in causing the worst economic crisis in Ohio since the Great Depression. The rating agencies assured our employee pension funds that many of these mortgage-backed securities had the highest credit ratings and the lowest risk. But they sold their professional objectivity and integrity to the highest bidder. The rating agencies’ total disregard for the life’s work of ordinary Ohioans caused the collapse of our housing and credit markets and is at the heart of what’s wrong with Wall Street today.”

Monday, November 23, 2009

Western Missouri Feds Flag Title Agency Owners For "Illegal Dip" Into Clients' Escrow Cash; Used Check Kiting Scam To Conceal $2.6M Racket: Grand Jury

From the Office of the U.S. Attorney (Springfield, Missouri):
  • Matt J. Whitworth, United States Attorney for the Western District of Missouri, announced [...] that the owners of Guaranty Title, formerly headquartered in Nixa, Mo., have been indicted by a federal grand jury for participating in a $2.6 million conspiracy to commit bank fraud, wire fraud and money laundering. Richard G. “Rick” Burton, 59, of Nixa, and Kathy Cyrena Allen, also known as Kathy Stanton, 66, of Sarcoxie, Mo., were charged in a 19-count indictment returned by a federal grand jury in Springfield [...].(1)

  • The federal indictment alleges that Burton and Stanton, through their companies, conspired to defraud financial institutions of more than $2.6 million through a series of illegal financial transfers related to stolen escrow payments. The indictment also alleges that Burton and Stanton attempted to conceal their criminal activities through a substantial check-kiting scheme.

For the rest of the U.S. Attorney press release, see Owners of Guaranty Title indicted for $2.6 million bank fraud, wire fraud, money laundering conspiracies.

(1) According to the press release, Burton and Stanton were the co-owners of Guaranty Title Company of Southwest Missouri, Guaranty Title Company d/b/a Guaranty Title and Closing Company, and Guaranty Properties, Inc. The companies provided real estate title and closing services. Guaranty’s main office was located in Nixa, with at least 10 branch offices located in Aurora, Branson, Mount Vernon, Ozark, Springfield and Republic, Mo. EscrowRipOffKappa

Ineffective "Whac-A-Mole" Approach To Battling Loan Modification Scams Leads Housing Non-Profit To Launch National Consumer Education Campaign

The Columbus Dispatch reports:
  • Preventing people from getting ripped off by mortgage loan modification scams is like playing Whac-A-Mole. "You knock them down in one place, and they pop up in another," said Ohio Attorney General Richard Cordray of the illegal operations. "They're a nimble and savvy group, and they target vulnerable, desperate people." The best way to put these scammers out of business is to educate homeowners, said Cordray and other local, state and federal officials who gathered [last week] at the Statehouse to roll out the Loan Modification Scam Alert campaign.


  • "We can't afford to wait any longer," said Kenneth Wade, executive director of NeighborWorks America, a national nonprofit organization created by Congress, and the sponsor of the scam-alert campaign. "Loan-modification scams have reached epidemic proportions. There are thousands of fraudulent companies out there making a mint," he said. Homeowners in distress should avoid every company that asks for a fee in advance, guarantees it can stop a foreclosure or modify a loan, or says to stop paying the mortgage company and start paying it instead, Wade said. "The best defense is information, education," he said. "That stops these scammers in their tracks."(1)

For more, see Scammers prey on at-risk homeowners.

See also, The Waco Tribune Herald: New program shines light on shady mortgage scams:

  • Congress asked NeighborWorks America to develop a public education campaign, which was unveiled locally Wednesday with the help of NeighborWorks Waco, the local branch of the national community development organization. The focal point of the campaign is a new Web site, It contains information about what loan modification scams are, how to spot them and stories from victims. The site also has information about how homeowners can get free assistance if they are facing foreclosure or other mortgage pressures. “We know that knowledge is the best defense,” said Celine Thomasson, a public affairs employee for NeighborWorks America.

See also, NeighborWorks America press release: NeighborWorks Fight Against Loan Modification Scams Kicks Off in Ohio.

For customizable materials to fight loan modification scams in your community (available in 5 languages), see Scam Alert Partner Toolkit.


(1) It wouldn't hurt if law enforcement starting bringing criminal prosecutions against these rackets (ie. theft by deception, theft by failing to make required disposition of funds, theft by misapplication of funds, deceptive business practices, obtaining money/property by false pretenses, securing writings by deception, conspiracy, engaging in a pattern of corrupt activity, organized scheme to defraud, exploitation of the elderly/vulnerable adult, theft from an at-risk adult, mail fraud, wire fraud, etc.).

There appears to be a reluctance to criminally prosecute these loan modification rackets (the preference appears to be to go after them with civil lawsuits brought by government agencies - ie. Federal Trade Commission, state attorneys general, etc.), possibly based on the mistaken belief that the operators insulate themselves from criminal liability by reason of the contractual nature that these arrangements take with the victims. The notion that the scammers can insulate themselves from criminal charges by using legal contracts to disguise their scams as legitimate arms-length business transactions with consumers is not only incorrect, but borders on the ridiculous. Courts have addressed the issue of whether the terms in a business contract between two parties can operate to restrict law enforcement from prosecuting a crime in relation to said contract. See People v. Frankfort, 114 Cal. App.2d 680, 251 P.2d 401 (Cal.App. 2nd Dist., Div. 2; 1952):

  • Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra p. 605.)

Followed in People v. Nesseth, 127 Cal.App.2d 712; 274 P.2d 479 (Cal App. 2nd Dist., Div. 2; 1954).

Report Reveals Questionable Real Estate Deals For Once-Respected, Now-Convicted University Administrator

In Nashville, Tennessee, The Tennessean reports:
  • She's a university administrator. A nurse. A grandmother. A grifter. And now, a felon. The strange separate lives of Pamela Gail Holder collided in a federal courtroom in Nashville last week. Holder, who once chaired the nursing programs at both Middle Tennessee State University and the University of Tennessee at Chattanooga, faced four felony charges of bank and wire fraud.

  • Her defense, laid out by her attorney, character witnesses and even one of her sons, was that she was a victim who had been bullied and verbally abused by her husband. Fred Rudder Holder, the defense argued, was a con man who brainwashed his cowed wife into going along with his schemes. The court heard her defense, then convicted her on all four counts and sentenced her to a year and a day in prison.

  • She and her husband, who died in 2008, had used the name and good credit history of a woman who makes less in a year than Holder earned in one semester. They used it to buy diamond jewelry and a $1.5 million home for themselves. When they couldn't make the payments, the home went into foreclosure and the creditors went after the name on the loan payments — the so-called straw buyer.

  • But what didn't come up in trial were the other times she's apparently done the exact same thing.(1)

For more, see MTSU professor left trail of deceit, shady dealings (Fraud conviction is just the latest in decade of duplicity).

(1) Over the past decade, Pam Holder has headed the MTSU nursing program, served as interim associate dean for the College of Basic & Applied Sciences and headed the online nursing degree program for the Tennessee Board of Regents, according to the story. At the same time, Pam and Fred Holder reportedly went through two bankruptcies and were hauled into small-claims court almost two dozen times by angry creditors, which forced the university to garnishee part of Holder's paycheck to repay part of her debts. The past decade also saw the Holders move into and out of more than a half-dozen homes in Middle Tennessee, some with seven-figure price tags, the story states.

Hanky Panky On Courthouse Steps Alleged At Phoenix Foreclosure Sales As Last-Minute Price Drops In Opening Bids Become More Common

In Phoenix, Arizona, The Arizona Republic reports:
  • When foreclosure homes come up for public auction in Phoenix, a minimum opening bid is set and bidding is open to anyone. At least that is the way it's supposed to work. But a Republic investigation into the daily public auctions held on the Maricopa County Courthouse steps and at some local law offices suggests a growing number of homes are sold for less than the posted opening bid.

  • Prices on some foreclosure homes are being dropped below the opening bid just hours or even minutes before the auction. Buyers aware of the "drop bids" scoop up the houses before other bidders know about the price drops. Drop bids violate the state's foreclosure sale laws, say the state's leading court-appointed foreclosure-trustee attorneys.


  • Why lenders would drop prices at the last minute, instead of posting a lower opening bid the day before as required by law, is unclear. Drop bids compromise what was intended to be a fair and transparent way for lenders to foreclose on homes and liquidate them, as well as a way for people to obtain homes at sometimes bargain prices. The practice of drop bids hurts a number of parties [...]

For more, see Illegal housing bidding on rise (Many flouting law at foreclosure auctions).

NYS To Expand Protections To Homeowners Facing Foreclosure; Upfront Fees For Loan Modification, Distress Property Consulting Services Now Banned

In Albany, New York, The Associated Press reports:
  • The state Legislature has passed a bill that will give New York state homeowners and renters more protection during foreclosures. It will expand the mandatory 90-day pre-foreclosure notice to all types of home loans -- not just subprime mortgages -- so all homeowners are given information and time to take action.(1)

  • Gov. David Paterson introduced the bill. It will allow the Banking Department and the Division of Housing and Community Renewal to find and help homeowners facing foreclosure. It also creates new protections for renters living in foreclosed properties, allowing them to remain for the remainder of their lease or 90 days -- whichever is longer. The bill also protects homeowners by barring brokers who perform distressed property consulting services from accepting upfront fees.(2)

Source: NY passes new foreclosure protections.

See also, The New York Times: Foreclosure Protections for All.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on the pending legislation.

(1) The required pre-foreclosure settlement conference will now be available to all homeowners as well, not just to high-interest mortgagors.

(2) The law also requires mortgagees to maintain the properties up to code if vacant, or abandoned by the owner and occupied by the tenant, such obligation beginning on the date the mortgagee obtains the foreclosure judgment in court. The bill now awaits the governor's signature.

Sunday, November 22, 2009

Murder Suspect Accused Of Killing Wife Now Charged With Using Forged Docs To Swipe Adjacent Cemetery Plot So He Could Be Buried Beside Her

In Bedford County, Pennsylvania, The Associated Press reports:
  • A man accused of murdering his wife has been charged with forging documents to steal a cemetery plot so he could be buried beside her. Bedford County District Attorney William Higgins contends the alleged scam is 39-year-old John Gerholt's latest effort to harass his late wife, Karen, and her relatives. [... ] Gerholt's defense attorney, Thomas Dickey, denied that his client is harassing his late wife's family. "This is just another sign of his true love and devotion to his wife, albeit deceased," Dickey said.(1)


  • Higgins said Gerholt has placed newspaper ads mourning his wife's passing on her birthday, on Valentine's Day, and on the anniversary of her death. He called the ads an effort to win public sympathy and further harass his wife's relatives. The anniversary ad says, "I won't stop looking for you until I meet up with you again in Heaven." [...] "He's letting her know that he's going to track her down in heaven, and be buried next to her," Higgins said. "That's the way we see this and it's extremely disturbing."

For the story, see DA: Pa. Man Scammed Burial Plot By Wife He Killed (DA: Pa. Murder Suspect Scammed To Get Burial Plot Next To The Wife He's Accused Of Killing).

(1) According to the story, Gerholt is accused of shooting his 24-year-old wife twice with a sawed-off shotgun as she left for a break at the McDonald's where she worked near Everett, about 90 miles east of Pittsburgh. District Attorney Higgins is reportedly pursuing the death penalty because Karen Gerholt had a protection-from-abuse order against her husband, and because John Gerholt allegedly endangered others outside the restaurant. Gerholt, of Mount Union, was already jailed when the forgery and theft charges were filed. DeedContraTheft

Attorney BS Leads Homeowner Seeking Foreclosure Defense To Unwittingly Find Himself In Bankruptcy Court?

In Westchester County, New York, The Journal News reports:
  • When the Yonkers home where his parents lived was threatened with foreclosure, Domingo Hernandez went to White Plains lawyer Christopher Cabanillas to fight the proceedings. Cabanillas told him that his firm had a "special program" designed to hold off foreclosure proceedings for up to two years. The "special program" used a legal defense against foreclosure combined with modification of the mortgage loan. Hernandez agreed to a $7,500 retainer for Cabanillas and the special program and on March 9 gave the lawyer $1,250. But instead of a "special program," Cabanillas put Hernandez in bankruptcy, filing a petition for Chapter 7 bankruptcy in White Plains on Oct. 1 — all without Hernandez’s knowledge or permission. Those charges are contained in papers filed by Hernandez in U.S. Bankruptcy Court in White Plains that seek sanctions against Cabanillas.

  • "At no time did attorney Christopher Cabanillas or anyone at the law firm Cabanillas and Associates advise, suggest, or otherwise tell me that filing a false petition was part of their ‘special program’ or that filing for bankruptcy would be part of defending me in the foreclosure matter," Hernandez wrote in court papers. He has a new lawyer, and she filed papers asking for the withdrawal of the bankruptcy filing.(1)

For more, see Owner of Yonkers home says lawyer put him in bankruptcy without permission.

For follow-up story, see Judge: Lawyer wrongly submitted bankruptcy documents.

(1) Reportedly, the petition was filed by attorney Cabanillas without Hernandez’s required signature. According to the story, the U.S. Trustee’s Office, which oversees compliance with bankruptcy laws, has filed papers in the case recommending that Cabanillas be sanctioned. "The Cabanillas Firm has engaged in egregious conduct that directly impacts on the integrity of the bankruptcy system by filing a Chapter 7 petition without obtaining a signature of its client prior to filing the petition," wrote Greg Zipes, a lawyer for the U.S. Trustee’s Office in Manhattan. Zipes said the filing was "not an isolated case of misconduct by the Cabanillas Firm."

In a letter to Cabanillas, he noted two other cases where bankruptcy petitions "do not appear to meet professional standards." In an e-mail to Zipes filed with the court, Hernandez’s new lawyer, Linda Tirelli, said Hernandez "comes across as a very calm, level-headed person but is clearly upset about having the petition filed unbeknownst to him." The e-mail also says Hernandez never met the lawyer from Cabanillas’ firm, Jan Hudgins-Riley, listed as his attorney on the filing, never saw or signed the petition and never retained Cabanillas’ firm for bankruptcy purposes. Tirelli said in the e-mail that Hernandez would likely need to file a Chapter 13 bankruptcy — which provides for a scheduled repayment of debts — rather than a Chapter 7 filing — which requires liquidation of petitioners’ non-exempt assets.

Financially Failing Chicago Condo Bldgs. Struggle To Stay Afloat; Unit Owners Begin Invoking State Law To Take Possession Of, Rent Out Delinquent Apts

In Chicago, Illinois, Chicago Public Radio WBEZ 91.5 FM reports on the plight of a 27-unit condo building in Chicago’s Washington Park neighborhood that is almost completely empty and the effort by three determined unit owners to keep the building from being condemned. In view of most of the units being foreclosed or abandoned, and some inhabited by squatters, the three are fighting back, armed with the Illinois Condominium Property Act which allows them to obtain a court order to take possession of the units if the owner stops paying monthly assessments. They aren't alone in fighting battles throughout the city to save their financially failing condo buildings from going under.

  • It was [local attorney Ebony] Wilkerson’s idea to file for possession to rent out the units to shore up the building’s finances. And she put them in touch with a wife-and-husband team called Haus Financial Services that helps condo associations manage their books. For this building, they’re cleaning up and finding renters for the units. It’s the first ray of hope for these three owners in a great big empty building that’s suffering the effects of the global banking meltdown.

  • And they’re not alone. Angela Maurello of the non-profit Community Investment Corporation has been working on this for years. Her program acts as a receiver on behalf of the city for distressed condo buildings. "Oh there’s hundreds because we already have 200 of the ones we have, so I’d say there’s got to be 400, 500 of these buildings in the city. This is a serious problem," [Maurello said]. And that means lots more condo owners [...] trying to shoulder the expense of a whole building without help from their neighbors. Maurello calls these fractured buildings and says many are clustered in South Side neighborhoods like Washington Park. But they’re also scattered throughout the city.

For more, see Condo Owners Struggle to Salvage an Almost-Empty Building.

In a related story from Chicago Public Radio, see Untangling Mortgage Fraud in Chicago Condo Buildings:

  • All over Chicago, but especially in South Side communities like Washington Park and Woodlawn, people are coping with half-empty and sometimes completely vacant condo buildings. How did they get that way? Why did so many units go into foreclosure all at once? In some cases, the reason can be traced to mortgage fraud. But untangling that web of financial transactions and unearthing the reasons behind a building’s collapse are difficult and time-consuming.

Another Homeowner Falls Thru The Cracks; Conflicting Statements, Lack Of Straight Answers From Loan Servicer Leads To F'closure For Bakersfield Family

In Bakersfield, California, KBAK/KBFX-TV reports:
  • In October, Eyewitness News told the story of a woman who was trying to save her home from foreclosure. Unfortunately, the situation has only gotten worse for her, [...]. "I've been in that home for 10 years," said homeowner Linda Harness. "Now, I have to uproot my kids and start over with a business?"

  • Harness is frustrated, and with good reason. Her home is being foreclosed. But the most frustrating part is that Harness said she doesn't know how it happened. A few months ago, Harness contacted her lender, Aurora Loan Services, about going from an adjustable mortgage to a fixed rate. "I made sure the payment was on time," Harness recalled after being enrolled in the program. "I was so happy when they said we can resolve this."

  • But in mid-September, ALS told Harness she didn't qualify for the program. So Harness enrolled in another program, or so she thought. "On October the first, they knocked on my door and said my house was in foreclosure," she said. Eyewitness News tried asking ALS about what happened, but it said its policy is to not talk to the media about their clients. Harness called, again, to try and get a straight-forward answer. But after numerous attempts to save her home, Harness' house has been foreclosed, and she's now wondering what to do next.

For the story, see Woman loses foreclosure fight; others have hope.

Indiana AG Files Suit To Force Landlord To Remediate Lead Paint Hazard In Rental Home

From the Office of the Indiana Attorney General:
  • [I]ndiana Attorney General Greg Zoeller filed a first-of-its-kind lawsuit against two Evansville landlords who allegedly ignored multiple warnings to correct a lead-paint hazard in a rental house that could endanger the health of any occupants living there, including children. The Indiana Attorney General's Office and the Vanderburgh County Health Department filed suit under environmental laws to halt a public nuisance.

  • "This is the first time the Attorney General's office has brought such a suit on behalf of a county, but the case could be a template for other counties to follow in taking action when landlords refuse to correct lead-paint hazards," Zoeller said.(1) [...] Exposure to lead-paint chips and dust is especially hazardous to the neurological development of young children and can result in brain damage and learning disabilities.


  • The lawsuit, [...] seeks an injunction ordering the landlords to remediate the nuisance. Remediation techniques may include removal of the paint from the house by a licensed contractor or encapsulation of the lead-based paint by properly repainting it with latex paint. The suit also seeks reimbursement of the government's costs, attorneys' fees and other relief.(2)

For the entire Indiana AG press release, see Attorney General Zoeller files suit to correct lead-paint hazard (Landlord ignored county's warnings; now state takes action).

For the Indiana AG's Complaint to Compel Remediation of Lead Hazard, see State of Indiana v. Bryan.

(1) According to the complaint, the landlords own a house, built in 1918, in Evansville that they lease to tenants. During a lead-screening program for children in January 2008, a child of the tenant tested positive for an elevated blood-lead level. The Vanderburgh County Health Department alerted the tenant and also collected samples of paint, soil and dust that tested positive for lead. The county health department sent warnings to the landlords at both addresses on file for them in January and February 2008, instructing them that the lead-based paint in the rental house was a health violation requiring remediation measures. The county received no response and the landlords appear to have made no attempt to remediate the hazard by repainting or removing old paint. The Vanderburgh County Health Department in February 2009 issued a $50 fine the landlords never paid. Due to the lack of cooperation by the landlords, the county health department enlisted the assistance of the Attorney General's office in bringing the lawsuit.

(2) The Indiana AG press release states that because of potential health hazards, lead paint has been banned for use in residential homes since 1978. Lead paint continues to be a problem in the pre-1978 homes usually found in older, low-income neighborhoods, however. Under the federal Residential Lead-Based Paint Hazard Reduction Act of 1992, owners must disclose any lead-paint hazards prior to selling or renting any pre-1978 home, according to the press release.

Landlords Discriminating Against Families w/ Young Kids In Attempt To Skirt State Lead Paint Clean-Up Requirements Continue Feeling Mass. AG Wrath

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s office obtained a consent judgment against a Boston-based realty company, and its agent, resolving claims that the company refused to rent an apartment to a tester from the Boston Fair Housing Commission posing as a woman with a three-year old child whose presence would require abatement of lead paint hazards under state law. The consent judgment orders the defendants to pay a total of $5,000 to the Commonwealth of Massachusetts and the Boston-based Lead Action Collaborative and bars the defendants from future acts of discrimination.(1)

According to the AG press release, the Massachusetts Anti-Discrimination Act prohibits real estate companies, agents, landlords and others involved in property rentals, from discriminating against families. In addition, the Massachusetts Lead Paint Statute requires landlords who rent to families with children under the age of six to abate lead hazards in a rental unit in order to prevent lead poisoning. It is illegal to discriminate against families with children in order to avoid compliance with the lead paint law.

For the Massachusetts AG press release, see Coakley Enters into Settlement to Address Alleged Discrimination Against a Woman and Her Young Child by a Boston Real Estate Company.


In a separate case from the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office has obtained a consent judgment in a housing discrimination case against the owner of a three-unit building located in Everett, who is accused of violating state anti-discrimination laws for refusing to de-lead an apartment after learning that a long-time tenant was pregnant. The judgment requires the landlord to pay the victim $10,000 and prohibits her from discriminating against any person because they have a child, whose presence would trigger her obligations under the lead paint laws, or otherwise discriminate against any person in violation of state and federal fair housing laws.(2)

For the Massachusetts AG press release, see Coakley Obtains Consent Judgment Against Everett Landlord for Discriminating And Retaliating Against Family with a Young Child to Avoid Lead Paint Obligations.

(1) According to the complaint, the fair housing tester inquired about an apartment advertised on Craigslist. After the tester informed the agent that she had a three-year old child, the agent refused to show her the apartment unless she agreed to sign a waiver that purported to absolve the owner of the unit from liability due to any lead paint found in the apartment.

(2) According to the complaint, the tenants notified the landlord several months advance that they were having their first child and were worried about possible lead hazards, but she refused to do an inspection or remove any lead hazards before or after the child was born. The tenants then complained to the Everett Board of Health, who ordered her to comply with the lead paint laws. After receiving the order, she allegedly called the tenants and yelled at them and threatened to increase their rent. Days later, the landlord sent them a letter with a 50 percent rent increase as retaliation for reporting her to the city. The rent increase was directed only at the tenants who complained. She failed to abate the lead until one year after first being informed of the impending birth, and only after being ordered to do so by the Board. The tenants were forced to live in fear that their child would get lead poisoning and had to dramatically alter their lives to avoid harm to their child.