Saturday, December 05, 2009

Prosecutors: Scam Artist Used Parents' Stolen I.D. To Buy & Use Five Condos In Rent Skimming Racket Ultimately Ending In Foreclosure Of Each Unit

In San Diego, California, NBC San Diego reports:
  • Tyler Adams is a fraud artist with many faces and many names, prosecutors said. He targeted his own parents in a real estate scam. [...] According to court documents from San Diego, Adams stole the identity of his mother and stepfather to buy five condos in San Diego worth more than $3,000,000 combined. The documents say he then collected rent on the units, but never paid the mortgage. All five condos eventually went into foreclosure. The allegations also allege Adams posed as the Realtor in the sale of the condos and collected another $180,000 in commission fees.

  • His mother and stepfather live in a mobile home in Pennsylvania worth an estimated $50,000. When they were contacted about the condos going into foreclosure, they suspected their son, but were unable to reach him.

Source: A Fraud of Many Faces (A man, who allegedly even conned his parents, used cosmetic surgery to scam people).

BofA Locks Financially Strapped Borrower Out Of Home Days After Agreeing To Revised Loan Payment Program

In Trenton, New Jersey, WPVI-TV Channel 6 reports:
  • A 57-year-old woman in Trenton is trying to put the pieces back together after being victimized by a mistake by her mortgage company which just happens to be the Bank of America. Three days after being locked out of her house because of a bank mistake, Nina Morra was let back in [Friday], only to find she had no water, no electric, and no heat.


  • After spending several months in the hospital following a stroke in January, Russian-born Nina fell behind in her mortgage payments to Bank of America and was facing foreclosure, but on November 19 she'd been accepted in to a repayment plan. Nina then went away for a week to visit relatives for Thanksgiving, but when she returned late Tuesday night to her Division Street home she found the locks had been changed.


  • Apparently Nina's paperwork for the repayment plan didn't clear quickly enough to stop an inspector for the bank from changing the locks and declaring her house abandoned while she was away. [Company s]pokeswoman Jumana Bauwens says Bank of America takes responsibility because it was their contractors and promised to pay any costs associated with the mix-up.

For the story, see Mortgage mix-up in Trenton. ForeclosureLockOuts

NJ Woman Accused Of Abusing POA To Steal Nursing Home-Bound Mom's Monthly Social Security, Pension Payments & Stiffing Care Facility

From the Office of the New Jersey Attorney General:
  • Attorney General Anne Milgram and Division of Criminal Justice Director Deborah L. Gramiccioni announced that a Toms River woman has been indicted for allegedly stealing monies that her mother received from Social Security and a pension plan. [...] Laura Lembo, 46, of Toms River, was charged [...] with third-degree theft by unlawful taking or disposition.

  • The Ocean County grand jury indictment alleges that [...] Lembo exercised unlawful control of the property of her 80 year-old mother, a Medicaid recipient. An investigation determined that Lembo, who had power of attorney over her mother’s income – including her monthly Social Security and pension checks – allegedly failed to remit all of her mother’s income to the nursing care facility in which her mother resided. As a condition of continued Medicaid eligibility, this income, minus a small personal needs allowance, must be paid to the facility to partially cover the cost of the mother’s ongoing care. The investigation revealed that during the time in question, this income was $40,052.88 but, of this amount, Lembo allegedly paid the facility only $21,233.13 and kept the remainder for her own use.

For the NJ AG press release, see Toms River Woman Charged With Theft for Diverting Part of Her Mother’s Social Security And Pension Income.

Attorney Charged In £90,000 Ripoff Of Recently Widowed Blind 90-Year Old; Allegedly Forged POA Before Looting Senior's Savings Accounts

In Codsall, U.K., the Express & Star reports:
  • A scheming solicitor branded The Vulture swindled £90,000 from the blind widow of a millionaire Black Country industrialist, the Express & Star can reveal. Veronica Wilkinson spent thousands on plastic surgery, designer clothes, pets and a £37,000 Audi within days of the death of 86-year-old Les Carrier. Mr Carrier, former chairman of Wednesbury-based steel firm FH Lloyds, lived with his wife Doris, known as Dot, for most of their married life in Codsall.

  • Wilkinson was head of the wills and probate department at the Codsall office of law firm Dunham, Brindley and Linn – now DBL Talbots – when she forged a document to give her power of attorney over Mrs Carrier’s financial affairs. In less than two months, the debt-ridden lawyer plundered £72,086 from the 90-year-old’s Lloyds TSB bank account and £21,150 from her Hinckley Building Society account.

For more, see Lawyer stole from widow. FinancialAbuseOfElderlyAlpha

Justice Department Scores Win Against Rogue Towing Outfit For Repossessing, Selling 20+ Vehicles Belonging To Servicemembers Without Court Orders

In Norfolk, Virginia, Air Force Times reports:
  • The Justice Department has scored a victory for service members against a Norfolk, Va., towing company that sold off more than 20 service members’ cars without court orders in recent years. The civil case is not over; it will go to trial next year to determine damages owed to the service members whose vehicles were towed by B.C. Enterprises Inc., doing business as Aristocrat Towing.

  • But the decision clarifies protections for troops under the Servicemembers’ Civil Relief Act and sends a clear message to industry, according to SCRA experts. The decision affirms that service members “have the right not to have their vehicles sold at auction without a court order ... even if they did not notify the towing company of their military status in advance,” said Justice Department spokesman Alejandro Miyar.

For more, see Towing company improperly sold off troops’ cars, court rules.

(1) According to the story, Section 537 of the Servicemembers’ Civil Relief Act states that without a court order, a person holding a lien on the property or effects of a service member cannot foreclose or enforce any lien during any period of military service by the member and for 90 days afterward. The U.S. District Court, Eastern District of Virginia, reportedly ruled that Section 537 is a “strict liability” provision, meaning service members do not need to take any action to be protected. “Even if the defendants exercised utmost care in investigating their victims’ military status, they face liability for their actions,” wrote District Judge Robert Doumar in his Nov. 6 order, the story states.

Go here for free legal assistance for military servicemembers and their families.

Friday, December 04, 2009

Financially Strapped Couple Scores Against Home Lender; Pays $1K In Full Payment Of Allegedly Fraudulent $103K Loan

In Bradenton, Florida, the Sarasota Herald Tribune reports:
  • Pedro Torres and his wife purchased the Bradenton home they were renting in 2007 because it reminded them of their native Puerto Rico. They were told their monthly payment would be $670, but it turned out to be $800, about half of their income from Social Security. The couple, both over 65, struggled so much to make payments that Torres collected aluminum cans for food money. Torres and his wife, Ederlinda Soto, likely would have lost the home to foreclosure over the $103,000 mortgage.

  • But when a Gulfcoast Legal Services attorney(1) found numerous problems and fraud in the loan, the lender offered to give them the home for a single $1,000 settlement payment.(2)

For more, see Bradenton couple prevail in mortgage imbroglio (Pedro Torres and his wife, Ederlinda Soto, struggled to pay their mortgage, which they thought would be $670 a month but ended up being $800. An attorney discovered so many problems in their loan document that they now own their Bradenton home free and clear).

(1) Gulfcoast Legal Services is a non-profit corporation providing free legal aid to income eligible residents of the greater Tampa Bay area, with offices in Pinellas, Manatee, Sarasota and Hillsborough counties.

(2) According to the story, the retired couple's mortgage contained problems common to loans approved during the height of Florida's real estate boom, said their attorney, Dawn Marie Bates-Buchanan. Torres and Soto reportedly got the low settlement offer from an attorney for California-based Accredited Home Lenders because the loan would likely have been voided if the case had gone to trial, Buchanan said. Also, Accredited could have faced up to $2,000 sanctions for each violation under truth in lending and unfair business practices laws, the story states. Accredited's attorney reportedly called Buchanan and said, "Basically, 'What do you want?'" she said. "My answer is, 'I don't want them to have a mortgage.'" Now, Torres and Soto are continuing their lawsuit against the mortgage broker and the sister and brother-in-law who helped arrange the loan, the story states. Gulfcoast Legal Services reportedly took the case because the couple is over 65 and has low income. The legal fees would have been unaffordable otherwise, something that leaves many Spanish-speaking victims of mortgage fraud unable to fight. UndoMortgageLoans TILAdelta

Maryland Regulator Issues C & D Orders Against Five Firms Accused Of Running Illegal Upfront Fee Loan Modification Schemes

In Baltimore, Maryland, The Daily Record reports:
  • State officials have ordered five companies to shut down illegal home loan modification schemes that targeted Maryland residents facing foreclosure, the Department of Labor, Licensing and Regulation announced [late last month].(1) Homeowners paid thousands of dollars in upfront fees to companies that promised to modify their loans in order to avoid foreclosure, according to DLLR. Not only did the companies fail to deliver, but they stopped returning phone calls, misrepresented the loan modification process and ignored requests for refunds, the department alleged.


  • The cease and desist orders are usually enough to bring the companies to the bargaining table to discuss refunding consumers' upfront fees, which typically amount to about $3,500, [Assistant Commissioner for Enforcement Stephen] Prozeralik said. It is illegal for foreclosure consultants and credit services companies to charge such fees. "We've been successful in the past with Maryland companies," he said "They've sat done with us and worked something out. It is a little more difficult with these entities in California and Florida." [...] "We have well over 120-odd cases under investigation," Prozeralik said. "And then when you look at those cases, they're multiplied by the number of consumers under them. It adds up to thousands of consumers who have been ripped off."

For the story, see Md. Department of Labor, Licensing and Regulation orders 5 firms to end loan modification schemes.

(1) Companies served notices were:

  • Equity Recovery Services, Towson, Md.;
  • U.S. Equity Solutions, Owings Mills, Md.;
  • GIAN Inc., Laurel, Md.;
  • Save My Home USA Co. Inc., Michigan;
  • Help Modify Now Inc., California (The owner, Larry Ervan Gunter, 34, has reportedly recently been arrested by Newport Beach, California police in connection with alleged ripoffs his firm is accused of - see CBS 2/KCAL-TV Channel 9: Newport Beach Man Accused Of Loan Mod Fraud).

Rhode Island Closing Attorney Gets 42 Months For Pocketing $2.5M In Escrow Funds & Failing To Pay Off Existing Mortgages In Real Estate Transactions

From the Office of the U.S. Attorney (Providence, Rhode Island):
  • A federal judge has sentenced Pasquale Scavitti, III, a former attorney based in Cranston, to 42 months in prison for diverting more than $2.5 million in mortgage funds from his firm’s client account for personal use.


  • As part of his practice, he maintained a client escrow bank account. Mortgage Guarantee and Title Company, a real estate title and closing company, utilized the services of Scavitti’s law office to facilitate mortgage lending. As part of those services, mortgage and refinancing proceeds were wired into the client escrow account at Scavitti’s firm. The firm’s obligations were to pay off existing liabilities from those loan proceeds. Between 2003 and August 2008, Scavitti directed that client escrow account funds not be used to pay off the corresponding existing mortgages but rather to pay for various personal and business expenses. Escrow funds were also used to pay off previously negotiated mortgages that were already delinquent, since they had not been paid off in a timely fashion.


  • In September 2007, Mortgage Guarantee terminated the authority of Scavitti’s law office and its attorneys from acting as approved attorneys for Mortgage Guarantee. However, for subsequent mortgages, Scavitti contacted other attorneys to act as title attorneys on real estate transactions and closings. For these transactions, Scavitti falsified letters purporting to authorize his firm to act as the approved attorney for Mortgage Guarantee.(1)

For the U.S. Attorney press release, see Attorney is sentenced in $2.5 million mortgage fraud scheme.

(1) As a result of Scavitti’s fraudulent scheme, he failed to pay off 13 mortgage loans and refinancing transactions, resulting in total losses of approximately $2.5 million to borrowers and financial institutions, the press release states. EscrowRipOffKappa

Discipline Recommended For Title Agency Owner Accused Of Pocketing Premiums & Failing To Remit To Insurance Underwriter

In St. Paul, Minnesota, the Duluth News Tribune reports:
  • An administrative law judge in St. Paul is recommending that the owner of Scenic Title & Abstract be disciplined for failing to remit title insurance premiums in the last four years. Kevin Eckholm, owner of the now-closed title company in Duluth and Two Harbors, was accused in October of fraud and operating without proper licenses after an investigation by the Minnesota Department of Commerce. Eckholm was then accused of collecting title insurance premiums 237 times dating to 2006 and failing to submit that money to the title insurance company. Judge Eric L. Lipman concluded after a hearing in late October that in “nearly 100 separate transactions” Eckholm failed to “maintain sufficient account balances so as to timely remit premiums to Land America.”


  • Title insurance is packaged with the purchase of property to protect new owners or their lenders against unforeseen challenges to their ownership. Minnesota Department of Commerce officials said purchasers of title insurance through Scenic Title should not worry about insurance coverage. “It would be fair to say that they all have title insurance,” Rochelle Barnhart, a former department spokeswoman told the News Tribune in October. “So there is no repercussion to those customers at all.”

For more, see Judge recommends discipline against Duluth title company (Kevin Eckholm, owner of Scenic Title in Duluth and Two Harbors, was accused of collecting title insurance premiums and failing to submit that money to the title insurance company).

See also, Minnesota Department of Commerce press release: Title Insurance Company in Duluth and Two Harbors charged with fraud.

State Protection Fund Coughs Up $122K To Cover Client Losses From Illegally Pocketed Real Estate Closing Cash, Unearned Fees By Dishonest NJ Attorneys

The New Jersey Lawyers’ Fund for Client Protection recently announced:
  • During the third quarter of 2009, the New Jersey Lawyers’ Fund for Client Protection, funded by the State’s lawyers and judges, paid $122,606.14 to clients for losses caused by 7 lawyers,(1) the Board of Trustees announced [...]. The Fund’s purpose is to pay on behalf of the honest majority of lawyers for the wrongdoing of the few who are suspended or disbarred for misappropriation.(2)


  • For a claim to be paid, the attorney against whom it is filed must have been a member of the Bar, acting as either attorney or fiduciary, at the time of the incident; and unless deceased, must have been disbarred or suspended from the Bar, or convicted of embezzlement or other misappropriation of property. An individual client can receive up to $400,000 (for claims arising after January 1, 2007, lesser amounts for claims arising prior to that date) and the Fund can provide up to $1,500,000 in claims against a given lawyer. Special permission can be granted by the Supreme Court to exceed the aggregate limit.(3)

For the announcement, see Lawyers’ Fund for Client Protection Releases Third Quarter Report.

(1) Go here for the list of the third quarter claim awards and status of each attorney under the Supreme Court discipline system. The Fund's findings involve improperly pocketed client money by attorneys derived from real estate closings, an estate settlement, and the dishonest retention of unearned legal fees.

(2) The Fund only covers client losses due to dishonest conduct by the attorney who is licensed in New Jersey. Cases involving legal malpractice and negligence are handled through Civil Court actions and fee disputes through the District Fee Arbitration Committees established by the Supreme Court.

(3) If a New Jersey attorney, either in the course of representing you or acting as a fiduciary, screws you out of money or property through dishonest conduct, go to the New Jersey Lawyers' Fund for Client Protection for information on how to recover some or all of your losses from the fund.

For other states and Canada, see:

Victimized In Equity Stripping Scam, Minnesota Couple In Foreclosure Now Fight Feds In Attempt To Avoid Being Booted From Home

In Golden Valley, Minnesota, the Star Tribune reports:
  • Raise your hand if you've heard something like this before: A couple looking to save money in tough times refinanced their home -- only to discover they'd been taken in by fraud.(1) Now they are fighting foreclosure and the loss of their home. What you probably haven't heard before is that they are being foreclosed on by the Federal Deposit Insurance Corp., a federal agency that generally pushes to keep people in their homes by reworking loans rather than foreclosing them. So Glenn and Brenda Clark of Golden Valley are taking another unusual step -- they are fighting their foreclosure in federal court.

For more, see Victims of mortgage scam fight foreclosure in court (A Golden Valley couple take their case to federal court to avoid eviction).

(1) The homeowners in this story were reportedly ripped off in an equity stripping scam by Michael Fiorito, 41, who a federal jury convicted in May, 2009 on seven criminal counts in connection with a scheme that targeted vulnerable homeowners, according to the story. Working with an assistant, he reportedly devised a program to defraud homeowners who were in foreclosure or behind on their payments. He and the assistant convinced homeowners to refinance their homes -- often after inflated appraisals -- and then stole some or all of the equity checks the homeowners were to receive, the story states. In all, Fiorito reportedly stripped more than $400,000 in equity from at least 17 victims, and is scheduled to be sentenced in federal court on Dec. 30.

Thursday, December 03, 2009

Colorado AG Receives "Good Behavior" Promises From Ten Loan Modification Outfits Accused Of Failing To Deliver Results, Deceptive Advertising

From the Office of the Colorado Attorney General:
  • Colorado Attorney General John Suthers announced [...] that his office has taken action against 10 loan-modification firms doing business in Colorado as part of his office’s efforts to crack down on loan-modification companies preying on Coloradans in foreclosure. These 10 companies, nine of which are located outside Colorado, either failed to deliver results to Colorado consumers or engaged in deceptive advertising. The actions taken against the companies will require them to either comply with Colorado law or not do business in the state.(1)

  • These companies are barred from doing business in Colorado unless they comply with state laws, including requirements that only mortgage brokers licensed in Colorado or attorneys licensed in Colorado perform loan modifications. The companies also will be barred from using false or deceptive advertisements. The companies also will be required to comply with provisions of the Colorado Foreclosure Protection Act, such as not charging an upfront fee and using contracts that specifically lay out the agreement between the consumer and the loan-modification company.

For the entire Colorado AG press release, see Attorney General announces actions taken against 10 companies preying on Colorado borrowers.

(1) Acxcording to the press release, since the last sweep in July, the Office of the Attorney General has obtained assurances of voluntary compliance with:

  • Abbotsford, LLC, d/b/a and United Financial Solutions Group LLC located in Queen Creek, Ariz., and Phoenix, Ariz.;
  • Airan2, Airan-Pace, Crose & Fernandez, P.A. a law firm located in Coral Gables, Fla.;
  • American Summit Financial Services, Inc. and its owner Peter Johnson located in Boulder;
  • Best Interest Rate Mortgage Company (BIRMCO) and its owner Michael DiPlacido, located in Westmont, N.J.;
  • Financial Solutions Law Group, d/b/a Financial Solutions, and Echo Loans and its owner Kelly David Christensen located in Rancho Santa Margarita, Calif.;
  • Hope 4 Homeowners America, LLC and its owner Cheryl Barnett located in Birmingham, Mich.;
  • Key Mortgage, Inc. located in Baltimore, Md.;
  • Gabee, LLC, d/b/a Modification HUB located in Granite Bay, Calif.;
  • Modify Loans, Inc. located in Irvine, Calif.; and
  • Pier West Captial, Inc., d/b/a Loan Modification Solutions located in San Clemente, Calif.

NJ Regulator Cites Nine Loan Mod Outfits For Operating Without State License; Demands $5K Fine From Each Plus Restitution In Offer To Resolve Charges

From the Office of the New Jersey Attorney General:
  • The Division of Consumer Affairs has mailed notices of violation to nine New Jersey-based companies that allegedly offered loan modification services to consumers without being licensed. The nine companies each were cited for violating the state's Consumer Fraud Act for engaging in unconscionable commercial practices by allegedly offering to negotiate mortgage modifications without being licensed as a debt adjuster by the Department of Banking and Insurance.(1) [...] Each company has the option of not contesting the charges contained in the Notice of Violation and paying the civil penalty and restitution within 15 days. Each company also has the option of contesting the charges and requesting an administrative hearing before the Division.

For the entire NJ AG press release, see Nine Unlicensed Companies Cited for Offering Mortgage Loan Modifications.

(1) Each company has been assessed a $5,000 civil penalty, in addition to the restitution noted below:

Ex-Met, Red Sox 1st Sacker Snags Control Of 14 Dilapidated Bronx Apt. Houses In Foreclosure Limbo As Fannie Dumps Delinquent Debt Secured By 416 Units

In The Bronx, New York, Crain's New York Business reports:
  • A collection of 14 deteriorating South Bronx apartment buildings have been snapped up by a real estate development company led by former New York Met first baseman Maurice “Mo” Vaughn in a foreclosure auction, the city announced Wednesday. The properties were owned by entities of the Ocelot Capital Group, which abandoned them, let them fall into disrepair and eventually defaulted on their mortgage.(1) Omni New York, the winning bidder, purchased the collateral for the current loan portfolio of 14 buildings—consisting of 416 units, with a mortgage debt totaling $23.8 million—from Fannie Mae and Deutsche Bank at a discount. The sale price was not disclosed.


  • The sale of these buildings to an affordable housing developer with a track record as strong as Omni's is a home run for the residents, the neighborhood, and all of New York City,” said Mayor Michael Bloomberg, in a statement.

For more, see Ex-Met bags Ocelot buildings in foreclosure (Maurice "Mo" Vaughn is the winning bidder for 14 decaying South Bronx apartment buildings; will rehab and manage the 416 units).

See also, The New York Times: New Landlord Is Chosen for Troubled Bronx Buildings:

  • The mortgage debt on 14 of Ocelot’s 25 original buildings was put up for bid. On Wednesday, officials announced that Omni New York had been selected as the winning bidder. [...] Tenant advocates say they believe that the bids by several qualified developers, including Omni, did not exceed $5 million, a significant step in stopping the cycle of overleveraging.


In a related story on failing predatory equity real estate investment deals in New York City, see Crain's New York Business: Bronx is burning over failed deals (Overleveraged buyers of rent-regulated apartments create one big mess throughout city).

(1) For other posts on the Ocelot Capital "predatory equity" real estate investment fiasco, see:

Now-Disbarred Closing Attorney For Alleged Equity Stripping Foreclosure Rescue Operator Dodges Add'l Prison Time On State Court Charges

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:
  • Disbarred Oxford lawyer Raymond A. Desautels III, who was sentenced last month to 2-1/2 years in federal prison on wire fraud charges, was sentenced [...] to a concurrent term of 2 years to 2 years and a day in state prison on charges related to what prosecutors said was an elaborate mortgage fraud scheme orchestrated by another Oxford man, Allen J. Seymour.(1) Mr. Desautels, 43, [...] pleaded guilty Oct. 29 in Worcester Superior Court to five counts of inducing a mortgage lender to part with property by false pretenses in connection with the alleged scheme. [...] The sentence imposed [...], which will not require Mr. Desautels to spend any additional time behind bars, was stayed until he begins his federal sentence later this month.

For more, see Desautels gets concurrent time in mortgage fraud scheme.

(1) According to the story, prosecutors said Seymour offered a variety of mortgage rescue options to homeowners in danger of foreclosure. The options included lifetime leases, reverse mortgages and refinancing, prosecutors allege. Some homeowners were reportedly told they would need to transfer title to their property to an investor, while others were not. Over an 18-month period, Mr. Seymour allegedly used false powers of attorney to cash more than $1 million in proceeds checks made payable to homeowners. Some investors who were reportedly lured into the alleged scam and used to take title from the homeowners facing foreclosure later said Seymour abandoned them to make the mortgage payments, causing those mortgages to fall into foreclosure and homeowners who had been promised lifetime leases to be evicted.

New Rule Now Mandates Foreclosing Lenders To Advise New Jersey Tenants Of Their Legal Right To Stay Put

In Northern New Jersey, The Record reports:
  • New Jersey tenants whose landlords fall into foreclosure have a right to stay in their homes — and lenders must tell them that, under a new rule adopted by the New Jersey Supreme Court. [...] Under the rule, before lenders obtain a final foreclosure judgment, they must inform tenants living in the property that they have the right to stay. The rule also requires sheriffs to post notices about tenants' rights on the buildings before a foreclosure auction.

  • New Jersey has some of the strongest tenant-protection laws in the nation. While the rising tide of foreclosures in other states has pushed out tenants, a New Jersey tenant "in good standing comes with the property when the property changes hands because of a foreclosure," [New Jersey Public Advocate Ronald K.] Chen wrote recently.(1)

  • Matt Shapiro, president of the New Jersey Tenants Organization, praised the new rule. "Tenants have a lot of rights in New Jersey, but they don't always know it," he said. "A lot of tenants are being intimidated and displaced because they don't know their rights."

  • Tenants in other states have much weaker protections, though a federal law passed earlier this year allows tenants to remain in their foreclosed rentals for at least 90 days.(2) Previously, many received almost no notice.

For the story, see In foreclosures, N.J. tenants have rights.

(1) "Tenants are the invisible victims of the foreclosure crisis,'' Chen reportedly said Tuesday. "It is critical that tenants are notified in these situations because many are unaware that, under New Jersey law, they cannot be evicted solely because of a foreclosure." Chen said his department has received nearly 200 calls since the beginning of the year from tenants who have been told — incorrectly — that they may have to move because their building is in foreclosure. Tenants living in foreclosed properties should call (609) 826-5070 if they are being pressured to leave, he said.

(2) Among other things, the new federal law requires lenders taking title to foreclosed homes respect any existing tenant leases, and provide at least 90 days notice when vacating month-to-month renters. See Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009. The new federal law appears to have little or no practical application in the state of New Jersey in light of existing state law that provides for greater protections for tenants.

Wednesday, December 02, 2009

Short Sale Flipping: Today’s Equivalent Of California Gold Rush?

The Washington Independent reports:
  • With home prices continuing to fall and more foreclosures yet to come, it’s clear that tough times remain for a housing market recovery. And to add to the troubles, another threat to any rebound is emerging: mortgage fraud.

  • Interthinx, [a firm] which analyzes mortgage fraud nationally, and uses its risk measure to show where it may be increasing the most, found a continuing shift to schemes involving bank-owned foreclosed homes, and short sales, in which an owner sells the house for less than what’s owed on the mortgage and the lender forgives the remaining debt. The firm also reported that real estate agents and other professionals increasingly are involved in the schemes, which are growing in popularity due to the abundant supply of foreclosures, and the fact that appraisals frequently aren’t required in order to sell distressed properties.


  • Flipping properties isn’t illegal, but it can involved fraud in several ways, explained Ann Fulmer, vice president of business relations for Interthinx. It’s when a seller never mentions higher offers on the table from bona fide purchasers, or fails to disclose that the seller already has a contract with a buyer for a higher price. Red flags sometimes should be raised when borrowers use transactional funding, which means essentially renting someone else’s money for one day, in order to appear in a stronger financial position. Then there’s the use of land trusts – they’re not illegal, in and of themselves. Land trusts are organizations created to purchase and hold real estate. But short sale gurus are advising investors to set them up to evade FHA anti-flipping rules, and to hide the true borrower’s identity, which can amount to fraud.(1)

  • Short sale flips are today’s equivalent of the California gold rush,” Fulmer wrote recently. She and other mortgage experts noted that banks already are on to some of the schemes. In some cases, banks are requiring everyone involved in a transaction, from the real estate agent to the mortgage broker, to sign affidavits swearing they have aren’t [sic] in the flipping business with anyone else involved in the sale.(2) [Guy] Cecala, [publisher] of Inside Mortgage Finance, said federal law enforcement agents also are moving more aggressively even on smaller cases of mortgage fraud, unlike during the housing boom, when only major cases drew attention.(3)

For more, see Mortgage Fraud Threatens Housing Rebound (Taxpayers, Communities Ultimately Hit When Banks Get Scammed).

(1) See Land Trusts - The Answer to Flipping Short Sales?

(2) For one perspective on illegal short sale flipping, see National Mortgage News: The Gold Rush of 2010.

(3) For examples of recent federal indictments involving alleged fraud in connection with short sale flipping, see the following U.S. Attorney press releases:

Feds To Lean On Loan Servicers With "SWAT Teams" In Attempt To Get More Mortgage Modifications

The Wall Street Journal reports:
  • The Treasury Department announced plans Monday to beef up its foreclosure-prevention effort by pressuring mortgage companies to complete more loan modifications. [...] The Treasury said Monday that it would send "SWAT teams" to the largest mortgage servicing companies and talk twice a day with mortgage executives to boost their success rates.

For more, see Some Borrowers Find Little Relief.

See also:

Feds Issue "Guidance" To Speed Up Short Sales, Other Loan Mod Efforts In Effort To Tamp Down Foreclosures

Reuters reports:
  • The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed "short sales" of homes and other loan modification alternatives to stem a rising tide of foreclosures.


  • Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt. It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings. In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.

For the story, see Treasury sets guidance to simplify "short sales."

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

Ohio AG Files Civil Suits Against Two Firms For Allegedly Running Upfront Fee Loan Modification Rackets

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Richard Cordray [...] sued two companies that allegedly targeted then ripped off homeowners threatened by foreclosure.(1) The lawsuits are part of a national sweep on foreclosure rescue scams announced this afternoon by the Federal Trade Commission.


  • [The] lawsuits are the result of an ongoing effort by Cordray in holding companies accountable for violating Ohio law in the wake of the foreclosure crisis. To date, Cordray has issued approximately 30 cease and desist notices and filed seven lawsuits against foreclosure rescue operations targeting Ohioans. Additionally, Cordray has sued two loan servicers for unfair or deceptive loan modification practices.

For the Ohio AG press release, see Cordray, FTC Take on Foreclosure Rescue Companies.

(1) In a lawsuit filed in Cuyahoga County (see State of Ohio v. Debt Advocacy Center), Cordray accused Debt Advocacy Center (DAC) of failing to deliver services it promised. The lawsuit alleges that the Cleveland-based DAC advertised loan modification and loss mitigation services to consumers backed by a 100% money-back guarantee. DAC then collected upfront payments ranging from $500-$3,800, advised consumers to not make monthly mortgage payments and then never delivered the services.

In a lawsuit filed in Franklin County (see State of Ohio v. Kirkland Young, LLC), Cordray alleges that Kirkland Young, LLC, based in Florida, charged consumers an upfront fee that exceeded the $75 initial fee allowed by Ohio law. In complaints filed with the Attorney General’s office, consumers said that Kirkland Young required customers to pay approximately $500 into an escrow account monthly and pay “closing costs” if a loan modification was obtained. Additionally, the lawsuit alleges that the company solicited consumers through phone calls but is not registered in Ohio as required by law and further violated the law by making misleading or false statements to consumers during the call.

Tuesday, December 01, 2009

One Underwater Homeowner's Experience With A Short Sale Flipping Operator

In Seneca, South Carolina, the Sarasota Herald Tribune reports:
  • DAN EGGER MAY HAVE LOST HIS job and is now underwater on his $500,000 mortgage, but the 41-year-old former telecommunications salesman is not desperate. A resident of Seneca, a small city in the northwest corner of South Carolina, Egger said he was approached by a real estate investment firm earlier this month that wanted to flip his house. [...] At first, the deal looked good to Egger. But he began to dig into the details and ultimately decided to pass.


  • All across America, people like Egger are being approached by investors looking to make a profit by buying properties inexpensively from banks through short sales and reselling them to end buyers at a profit. In some cases -- where investors lie to banks about what properties are worth -- the deals can be considered fraudulent, and Fannie Mae and the FBI have sent out warnings about unscrupulous operators.

  • What bothered Egger most was that the companies he was dealing with were a hodgepodge of entities in a slew of states.(1)

For more, see One man's time with the real estate flippers (Dan Egger was approached by real estate investors trying to convince him to let them flip his house in Seneca, S.C. To their surprise, he declined their offer after he found he was dealing with a hodgepodge of entities in several states).

(1) Go here for the string of e-mails that were sent back and forth between South Carolina underwater homeowner Dan Egger and Dennis Funk, a sales representative who was trying to convince Egger to sell his house to the flipping operator he was representing through a short sale.

Go here for the Short Sale Package (28 pages) homeowner Dan Egger was presented with by the short sale flipping operator and declined to enter into.

Recent NY Court Foreclosure Ruling Wiping Out Mortgage Debt Not Expected To "Open The Floodgates" Against Lenders

In Suffolk County, New York, Newsday reports:
  • A Suffolk judge's decision to wipe out the mortgage debt of a foreclosed-upon East Patchogue couple may send a message to predatory subprime lenders that unless they work to save their customers' homes, they stand to lose everything, some real estate attorneys said. "This case shows the change in the tide as to the sentiment about mortgage foreclosures in general," said Woodbury bankruptcy attorney Craig Robins, who called Suffolk County Court Judge Jeffrey Spinner's decision "a good demonstration that courts are not going to tolerate this type of conduct by the mortgage companies anymore."


  • Robins said such improper and irresponsible practices were not isolated to IndyMac. But, while Spinner's decision could create important case law that will likely be cited by homeowners' attorneys in future foreclosure proceedings, Robins said he did not think it should "open the floodgates" for similar decisions.

  • "I do see a lot of the irresponsible practices that mortgage lenders commit frequently, but I think what sets this case apart was that there were several irresponsible practices in this one case," said Robins, adding that Spinner "used this case to send a loud warning to all mortgage companies . . . that they better shape up and get their act together."

For the story, see Foreclosure ruling sends message to lenders (requires paid subscripition to Newsday; those without a subscription can try here).

Debt Collection Law Firm Faces Hot Water For Dragging Wrong Person Into Court; Resists Judge's "Suggestion" To Compensate Victim For Lost Day's Pay

In Brooklyn, New York, The New York Times reports:

  • A person who blows off a civil court summons — even if wrongly identified — faces a default judgment and frozen bank accounts. But to date, there have been few penalties against collectors for dragging the wrong people into court. Until [Mark] Hoyte turned up last week in Brooklyn.

  • After trying to settle the case in the hallway — the 11th floor of 141 Livingston Street is an open bazaar of haggling — the collections lawyer realized he had the wrong man. He got Mr. Hoyte to sign an agreement that would end the case against him, but not against the Mark Hoyte who actually owed the $919. In front of the judge, the lawyer, T. Andy Wang, announced that the parties had reached a stipulation dismissing this Mr. Hoyte from the suit.

  • Not so fast, said the judge, Noach Dear. “Why didn’t you check these things out before you take out a summons and a complaint?” Judge Dear asked. “Why don’t you check out who you’re going after?” [...] “So you just shoot in the dark against names; if there’s 16 Mark Hoytes, you go after without exactly knowing who, what, when and where?” Judge Dear asked. [...] The judge turned to Mr. Hoyte, who works as a building superintendent, and asked him how much a day of lost pay would cost. Mr. Hoyte said $115.


  • The judge said he was prepared to dismiss the case and wanted Mr. Hoyte compensated for lost wages. “Your honor,” Mr. Wang said, “I’m personally not willing to compensate him.” No, the judge said; he meant that the law firm, Pressler & Pressler — one of the biggest in the collection industry — should pay the $115. He would hold a sanctions hearing, a formal process of penalizing the law firm for suing the wrong man.


  • He told Mr. Wang and Mr. Hoyte to come back to court in January. “If, somehow, counsel, you decide that you’re going to compensate him for his time off,” Judge Dear said, “I will reconsider sanctions.”

For the story, see Hello, Collections? The Worm Has Turned.


In a related story, see The Village Voice: An Unlikely Rescuer from the Jaws of Debt (By 9:30 a.m., the 11th-floor hallway of a courthouse in downtown Brooklyn is filled with tight huddles made up of people in debt and the lawyers who are after them to pay):

  • It's a scene that will be repeated over and over again in the courtroom of Judge Noach Dear, as he repeatedly dismisses lawsuits, denies attorneys seeking payment, and sends people on their way, amazed that they are free from further harassment by collection agencies. Twice on a recent morning, his rulings are met with standing ovations.

Right Of Redemption Creates 6-Month Period Of Legal Limbo For Vacant Minnesota Foreclosures, Forcing Cities To Step In With Maintenance Effort

The Minneapolis Star Tribune reports:
  • Redemption -- in Minnesota, usually a six-month period following a sheriff's sale during which the people who owned the house can buy it back -- poses a problem for cities. If a home winds up vacant or vandalized during that time, the homeowner and bank often deny responsibility, putting the burden of fixing it on the city. "It's essential for the city to [maintain a house], because in the period of exchanging ownership we have to," said Larry Lee, Bloomington's community development director. "We hire the contractor and bill the responsible owner." Then, he said, "If they do not pay, we get the money back as special assessments on property taxes."(1)


  • In Minneapolis, where thousands of homes have been moving through foreclosure over the past four years, the city has tried to minimize the threat to its housing stock by adding an array of stiff fees for violations. [...] Faraway banks "are draining city resources under the guise of being in the redemption period," [Minneapolis' manager of the problem property unit Tom] Deegan said. "The whole thing is to incentivize that bank to do something." Deegan hopes that the financial cost of letting a Minneapolis home linger in redemption will prompt more banks to use a new state law that allows them to petition courts for a five-week redemption period to speed along repossession of a house.

For more, see If no one owns the home, who's watching the house? (With foreclosure comes a six-month purgatory for some houses, and cities have to step in to keep them from becoming a nuisance).

(1) Michigan has a similar rule regarding a right of redemption after foreclosure sales, and probably has a similar problem.

Monday, November 30, 2009

Government Will Attempt To Shame The Shameless Into Increasing Permanent Loan Modifications

The New York Times reports:
  • The Obama administration to[day] plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering. "The banks are not doing a good enough job,’’ Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview. “Some of the firms ought to be embarrassed, and they will be.’’


  • Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments. “They’re not getting a penny from the federal government until they move forward,’’ Barr said.

For more, see US to prod mortgage firms on lowering loan payments (Treasury will link reductions to incentives).

See also, ABC News: White House to Play 'Name-and-Shame' With Lenders (Banks Are Not Helping Enough Homeowners Facing Mortgage Problems).

Far More Underwater Homeowners Should Stiff Their Lenders, Pack Their Bags & Take A Hike, Says Study

ABC News reports:
  • Millions of Americans, whose homes are now worth significantly less than their mortgage, could be making an expensive mistake by continuing to try and pay their loan off when they should, instead, be walking away. In fact, owners are willing to keep piling money into a losing investment simply because they're ashamed to foreclose, according to a controversial new study.

  • "Homeowners should be walking away in droves. But they aren't," writes Brent White, an associate professor of law at the University of Arizona. He explains that some owners who bought at the peak of the market now owe more on their mortgage than they can ever recoup in their lifetime. Although it would make financial sense to cut losses and abandon their homes, feelings are getting in the way. "A lot of it has to do with shame, guilt and fear," says White.


For more, see Walk Away: Why More People Should Abandon Their Homes (Study Finds Homeowners Fight Foreclosure Even When It Doesn't Make Sense).

Central Florida Chief Judge Ramps Up Court Foreclosure Mediation Effort

In Central Florida, The Tampa Tribune reports:
  • Pasco homeowners in foreclosure could have more of a chance to keep their homes if a court system emphasis on mediation succeeds. The push began last month when Chief Judge Thomas McGrady signed an administrative order adding more prominent language about mediation into paperwork homeowners receive when they're served with foreclosure lawsuits. The drive for mediation is a response to the continued onslaught of foreclosure filings and to the inability of homeowners in foreclosure to get in touch with their lenders, McGrady said. [...] Homeowners interested in mediation can find information and a form motion requesting mediation at the Sixth Judicial Circuit's Web site, [...].

For the story, see Pasco courts move to help homeowners.

Go here for standard form Defendant's Motion for Mediation in Mortgage Foreclosure Action.

See also, Administrative Order 2008-081 (Re: Mortgage Foreclosure Actions By Institutional Lenders; 6th Judicial Circuit in and for Pasco and Pinellas Counties, Florida).

More Heat For Foreclosing Lender That Bought IndyMac Mortgages For Failing To Offer Loan Modifications

In Southern California, the Pasadena Star News reports:
  • A group of nearly 30 homeowners converged on the Pasadena offices of OneWest Bank [last] week to protest the bank's alleged refusal to modify their mortgage loans. The homeowners [obtained] their mortgage loans from IndyMac Bank, which failed last year and was seized by federal regulators. After several months of operation by the Federal Deposit Insurance Corp., the bank was taken over by OneWest Bank, a newly formed Pasadena-based federal savings bank organized by IMB HoldCo LLC.(1)

For the story, see: Homeowners demonstrate against bank in Pasadena.

(1) This is the same outfit that drew recent attention for:

(A) reportedly trying to boot an 89-year old widow from her Oakland, California home by initiating a foreclosure action against her despite two court orders telling them not to:

(B) having a Suffolk County, New York judge hit the "delete button" on the mortgage debt and lien it held on the home of a Long Island homeowner that was the subject of a foreclosure action. In cancelling the debt and the lien of the mortgage, the judge described this outfit's conduct toward the homeowner as "inequitable, unconscionable, vexatious and opprobrious" and "harsh, repugnant, shocking and repulsive":

Sunday, November 29, 2009

Electric Co-Op Stiffed By Short Sellers Of Vacant Homes Refuses To Turn On Lights For Buyer Inspections; Makes Deals Tougher To Close

In Hudson, Florida, The Suncoast News reports:
  • Withlacoochee River Electric Cooperative policies could pull the plug on potential short sales of vacant homes, a West Pasco real estate leader fears. A gray area exists when a homeowner abandons a home but the bank hasn't officially foreclosed on the property, a WREC spokesman counters. The recession also has saddled WREC with more bad debts.


  • About seven out of 10 residential real estate deals these days are short sales or foreclosures, broker Greg Armstrong with Coldwell Banker F.I. Grey Residential Inc. explains. [...] Withlacoochee executives have been refusing to turn on the power at a vacant house for inspectors if the previous owner left an unpaid balance. Without inspections, a sale can't be concluded, according to Armstrong.


  • The utility is contending with more and more bad debts as people skip out and leave unpaid electric bills, according to David Lambert, manager of member relations for the Dade City-based member-owned cooperative. Problems arise when a former owner simply walks away from a house he or she no longer can afford. "The house hasn't changed hands," Lambert said. "They still own it. It's not a foreclosed home." WREC can't turn on the power until the debt is repaid.

For the story, see Real estate leaders and utility have been at an impasse.

Senior "$CAMS" Detection Project Focuses On Identifying Nursing Home Residents With Past Due Accounts In Effort To Stamp Out Elder Financial Abuse

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox [...] announced criminal charges against six individuals accused of financially exploiting senior citizens. The charges are a result of Project $CAMS (Stop Crimes Against Michigan Seniors), an initiative to protect nursing home residents from scams, misappropriated resources and embezzlement. Operated by the Attorney General's office, along with the Office of Inspector General for the Social Security Administration, Project $CAMS uncovers potential financial exploitation by identifying nursing home residents with past due accounts. Since the project was announced in May of 2008, 43 criminal cases have been filed.


  • [N]ursing home residents are the most vulnerable and the least likely to be able to detect or report it. It is estimated that only one in 100 instances of victimization is typically reported.

  • Servicing 39 counties when launched in 2008, Project $CAMS currently protects seniors in over 250 nursing homes across 75 counties. The nursing home facilities participate by identifying residents who are behind in their payments and providing the Attorney General's office with relevant documentation. Nursing home arrearages as a result of thefts have been as high as $75,000. In the majority of the cases, the perpetrator was a relative.

For the entire Michigan AG press release, see Cox Charges Six for Scamming Seniors. FinancialAbuseOfElderlyAlpha

Miami-Dade Courthouse Foreclosure Sales Readying To Go Online

In Miami, Florida, The New York Times reports:
  • Buying into Miami’s foreclosure glut will soon be a whole lot easier. Seeking ultimately to eliminate a record backlog and a system that favors insiders, Miami-Dade County announced plans [...] to use online auctions for the thousands of delinquent properties that have made South Florida a center of the recession.

  •, the Web site, will become fully operational on Dec. 7, making Miami-Dade the largest of 12 Florida counties in the process of replacing courthouse auctions with online sales. “The goal is to make it more convenient for people to bid and to research properties,” said Harvey Ruvin, the clerk of courts. “It kind of levels the playing field.” The online system would end, or at least make digital, what many officials describe as a process steeped in speculation, trickery and, occasionally, physical conflict.


  • In Miami and elsewhere in Florida, scuffles have broken out as one investor tried to block another, or tried to sell a property at a higher price than he paid minutes earlier. Mr. Ruvin said that he installed cameras and a full-time police officer a few years ago to keep things under control. He said he looked forward to making the system computer-based, so bidders would make offers from home. “My approach is to serve more and more people online instead of in line,” he said.(1)

For more, see Miami-Dade Hopes Online Auctions Will Help Reduce Backlog of Foreclosures.


In a related story from Central Florida, see The Tampa Tribune: Pasco County moves foreclosure auctions to the Web:

  • Pasco County is moving its foreclosure auctions from the courthouse to the Internet. The county will hold its first Web site auction on Monday and phase out on-site sales by Dec. 15. The new online auction site,, will save money on auction costs and broaden the pool of potential buyers, the county said.

(1) Stories of novice, wanna-be real estate investors getting burned because they don't know what they're doing should begin to increase as these online auctions become more prevalent throughout the country. For examples of people screwing themselves at real estate auctions due to their own lack of knowledge and experience, see:

County Property Appraiser To Slap $458K Lien On Fla. Mansion For Allegedly Bogus Homestead Tax Exemption Claim; Calls For Criminal Prosecution

In Ft. Myers, Florida, The News Press reports:
  • The Lee County Property Appraiser’s Office will file $458,396 in liens against Charles and Barbara Parsons for back taxes and penalties as the State Attorney investigates the couple for homestead fraud. The liens will be filed Dec. 4 if the couple does not pay back taxes and penalties the county appraisers’s office says the couple owes for renting their homesteaded property for upscale getaways, business trips and weddings since 2002.


  • Valued at $4.5 million by the county appraiser, the property’s homestead exemption allows for the Save Our Homes benefit that caps taxable value increases at 3 percent each year. The riverfront home [...] in south Fort Myers is advertised online as the Villa Aloreon, an upscale private or corporate retreat costing as much as $19,500 per week. It’s also advertised online as the Buena Vista Center, where Barbara Parsons gives business seminars.


  • The state attorney’s office said it is investigating the possible fraud. It would be the most expensive such case in the county’s history. Property Appraiser Ken Wilkinson wants the state attorney to prosecute the couple. Homestead exemption fraud in Florida is a misdemeanor carrying penalties up to one year in prison and a $5,000 fine. “That would send a message,” Wilkinson said.

For more, see South Fort Myers homeowners face $458,396 in liens.

Tenants, City Call Foul On Ex-NBAer; Deteriorating Conditions Force Residents To Flee Buildings Owned By Star B-Baller Named In Slew Of "Slum Suits"

In Chicago, Illinois, the Chicago Tribune reports:
  • The Prairie Avenue apartment building -- described by the city as a slum nuisance -- sits a short drive from where Antoine Walker once dominated basketball games, a prodigy at Mount Carmel High School on his way to escaping South Side poverty to become a fabulously wealthy NBA star.

  • At one point, bricks fell off the building's facade, a hazard that went unfixed for months, city records show. Before that, a broken sewer pipe filled the basement with feces, toilet paper and other debris, creating an odor that forced families to move their children out. The angry tenants don't know Walker, 33, who reportedly earned $110 million during a 13-year pro career that included winning an NBA championship ring. But the 6-foot-9 former all-star -- known for a partying lifestyle that stretches from the golf course to the velvet-rope club -- plays a big role in their lives. His company owns the building.


  • Real estate investment companies that list Walker as an investor or principal -- Walker Ventures LLC and AW Realty LLC -- are the target of more than a dozen lawsuits alleging poor management of numerous properties, unpaid debts and damages caused by shoddy repair work.(1) In one case last month, the city won $950,000 in court-ordered fines against Walker Ventures. [...] Known as affable and media friendly, Walker has been elusive when it comes to many of the property accusations. The tenants haven't seen him, and lawyers have been unable to find him to serve papers.


  • Walker has left day-to-day operations of Walker Ventures to one of the company's two other members, Frederick G. Billings, 44, who Walker said had been a friend for 18 years. Billings, who has owned construction and tax consultant companies, is out on bond after being arrested in March on charges of running a mortgage scam in Chicago that netted him more than $700,000 in illegal loans, court records show.(2)

For more, see City targets ex-NBA star for 'slum' housing (Walker 'humbly apologizes' for 'failings of my company').

(1) According to the story:

  • On Cornell Avenue, a 13-unit building developed a mold problem so bad that a 7-month-old boy repeatedly woke up coughing, a tenant lawsuit says. The toxic fumes and a lack of heat drove all the tenants to abandon the building, which the city declared "a hulking public nuisance" before Walker Ventures eventually lost it in a bank foreclosure.
  • On Minerva Avenue, another Walker Ventures building suffers from spotty electricity and a mouse and roach infestation that resulted in its failing several inspections tied to federal rent subsidies, government records show. Shoddy conditions and a problem with squatters drove most tenants away, and this month a team of city inspectors and police found several code violations, city officials said.
  • In Country Club Hills, raw sewage leaked from bad pipes inside a condominium owned by Walker's AW Realty and managed by his mother, Diane Walker, according to a Cook County lawsuit that described how the leak destroyed the unit below.
  • Steven McKenzie, an assistant city corporation counsel, said that a number of foreclosed and now-abandoned properties have grown into neighborhood nuisances. One of the examples he cited was the Cornell Avenue building, which leaked natural gas in the vestibule as squatters were smoking upstairs, a fire hazard documented in court records.

(2) Walker reportedly said that he was unaware of Billings' other legal problems. "I wouldn't have put my reputation on the line had I known about them," Walker said. Walker said he became aware of his companies' problems only when court summonses from Chicago began arriving on his doorstep in late 2008 in Miami, where he currently lives. He said he was "saddened" by the allegations. "I was misguided into trusting other people and put my money and faith into other people's abilities," he said. Walker Ventures tenants, some of whom remembered watching Walker's buzzer-beating shots on TV, have mostly interacted with Billings about their living conditions, the story states.