Saturday, January 23, 2010

Elderly Couple's Caregiver Gets Three Years In $80K+ Swindle; Allegedly Boosted Victims' Reverse Mortgage Payments To Conceal Ripoff

In Fairfax, California, the Marin Independent Journal reports:
  • An in-home caregiver was sentenced to three years in state prison Thursday for embezzling more than $80,000 from the retired Fairfax couple who hired her.(1) Jane Macam McClellan [also known as Jane Macam Deleon], a 47-year-old mother of eight, was also ordered to pay $83,099 in restitution to the couple, who are in their 90s.


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

For the story, see Fairfax couple's caregiver gets prison for embezzlement.

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

(1) McClellan accepted a plea deal in November, admitting to a charge of embezzlement. The district attorney's office dismissed charges of forgery, receiving stolen property, residential burglary and grand theft by false pretenses.

Man Gets 27 Months In Federal Prison For Using POA To Rip Off Elderly Mom Of $99K, Leaving Her With No Money To Pay Retirement Home Bill

In Peoria, Illinois, the Journal Star reports:
  • For taking nearly $100,000 from his elderly mother four years ago, a Bloomington man was sentenced to 27 months in federal prison Thursday. Douglas Shadewaldt, 59, [...] used the money to buy a motorcycle, a condo and a car, and not to pay for his mother's retirement home expenses. In addition to the prison term, which was at the bottom of his guideline range, Shadewaldt also must pay about $78,000 in restitution; $47,000 will go to his mother's retirement home and the rest to Medicaid.

  • According to his plea agreement, the State Farm worker had power of attorney for his mother beginning in 2005 and cashed out four certificates of deposit at the Heartland Bank branch in El Paso, telling the clerks he was transferring the money to another account with a higher interest rate. Instead, the plea agreement states, he took the money and put it into his own account. His mother was left with no money to pay her retirement home bill and was forced to auction off all her belongings and go on Medicaid.

  • He pleaded guilty in October to transporting stolen property across state lines. Four other transportation counts and five counts of wire fraud were dismissed as part of the plea agreement.

For the story, see Man gets 27 months for stealing from mom (Douglas Shadewaldt also ordered to pay $78,000 in restitution).

Man Gets 90 Days In Home Repair Ripoff Victimizing Senior Out Of $21K

In Chatham, Ontario, The Chatham Daily News reports:
  • A 48-year-old Chatham man who bilked an elderly man out of more than $21,000 will spend 90 days behind bars. William Joseph MacDonald pleaded guilty [...] to fraud over $5,000. "You preyed upon and you stole from an ill and vulnerable person," said Superior Court Justice Edward Ducharme. "You did it not once or twice, but repeatedly over a long period of time."

  • Assistant Crown attorney Fred Creed told the court the victim, a 76-year-old Ottawa man, took over management of his elderly sister's Chatham properties in 2006. Creed said the man had an agreement with Do It Right Handyman, owned by MacDonald, to take care of the eight houses. "Much of the work that had been paid . . . had never been completed or started," he said. The Crown said between September of 2006 and April of 2007, MacDonald billed, and received payment for, a variety of home improvements he didn't do. The improvements ranged from new roofs and siding to cleaning and painting and totaled $21,662.

For the story, see Elderly man defrauded out of $21,000 .

Luxury Home Developer Charged With Cutting Down Trees On Neighbor's Property To Enhance Coastline View From His Ridgetop Chateau

In Santa Cruz, California, the Santa Cruz Sentinel reports:
  • A luxury home developer faces felony charges after allegedly cutting down 49 trees on his neighbor's property without permission, giving his new ridgetop "chateau" an unobstructed view of the Monterey Bay coastline. Charles Storey, 49, of Santa Cruz was arrested in December and charged with felony vandalism after a forest owner below his new custom home on Glen Canyon Court reported redwoods, pines and firs that once stood hundreds of feet tall had branches stripped, crowns lopped off and trunks cut in half, according to court and property owner reports. Others trees were felled at the base.

  • "He just mowed them down like a lawnmower wherever the horizon line or the beach line was," said forest owner and Scotts Valley resident Roger Roesner. "Whatever was in his way, he just cut it off."(1) Storey also faces misdemeanor charges of trespassing and cutting trees on neighboring property. His preliminary hearing is set for Feb. 8.

For the story, see Developer arrested after neighbor's trees illegally felled.

(1) According to the story, Roesner said the tree-felling happened in two spurts in 2008. All the trees cut were in the sight line of Storey's nearly 5,000 square-foot-house named "Le Petit Chateau de Santa Cruz." The home's amenities include a three-car garage, five potential bedrooms, three fireplaces and a gathering room with 20-foot ceilings and 18-foot-tall gothic arches, according to the home's promotional Web site. The house is listed for sale at $1.999 million, and the seller descriptions emphasize its sweeping ocean and mountain views, the story states.

Landlord Accused Of Using "Self-Help" Eviction Tactics; Shut Off Heat & Power, Trashed Toilet & Crib In Attempt To Coax Woman, Baby To Vacate

In Brooklyn, New York, the New York Post reports:
  • A landlord from hell was busted for shutting off a tenant's power and heat and tossing her toilet out into the street to try to get her to move out of his Crown Heights building, sources said. Mario Eugene, 46, ordered the woman and her baby to vacate the Buffalo Avenue apartment near St. John's Place, but she wouldn't budge, sources said. So, at 10:30 a.m. Wednesday, he took her door off the hinges, shut off the electricity and radiators, trashed the baby's crib, removed the toilet and left it in front of the building. They argued again the next day -- and she finally called the cops, who got Eugene to admit that he took her belongings to force her to move. He was charged with burglary and criminal mischief, sources said.

Source: NYPD Daily Blotter - Brooklyn.

Murder-Suicide Suspected Involving Homeowner Facing Foreclosure; Reportedly Gave Up After Failed Attempts To Negotiate Workout With Lender

In Spencer, Massachusetts, the Worcester Telegram & Gazette reports:
  • Police believe a man facing a foreclosure auction yesterday took his own life after shooting his sick wife, shooting their horse, setting fire to the home they shared and torching his pickup truck. Michael S. Khoury, 69, and his wife, Joyce M. Khoury, 66, owned the house at 19 Woodchuck Lane, which was scheduled to be auctioned at 10 a.m. A neighbor called 911 to report the house fire. When police arrived they found the burning truck in the driveway and the house ablaze.


  • A former employer said yesterday he had talked to Mr. Khoury [recently] and he said Mr. Khoury told him he was facing the imminent loss of his house — and his wife. Vincent P. Iuliano, owner of American Reclamation of Charlton, said Mrs. Khoury had terminal cancer. “He told me Joyce was real bad. He wanted to move to Florida but because of the foreclosure of the house, there was nothing left,” Mr. Iuliano said. “He could not move out. Joyce was too ill to move,” he said.

  • According to Mr. Iuliano, Mr. Khoury tried to negotiate with the bank. “He tried, but they would not accept the deal, and that was last week, so he gave up,” Mr. Iuliano said. North Brookfield Savings Bank President and Chief Executive Officer Donna L. Boulanger did not return a telephone call from a reporter seeking comment yesterday.

For the story, see Couple found dead hours before foreclosure auction (Losses loomed for Spencer pair).

Friday, January 22, 2010

NYC Hatches Plan To Help Clean Up Mess Left Behind By Predatory Equity Investors Who Overpaid For, Then Abandoned, Apartment Buildings Throughout City

In New York City, The New York Times reports:
  • New York City has launched a new plan to rescue moderate-rent apartment buildings that were swept up by private equity firms during the financial boom, then left to deteriorate as they drifted toward foreclosure when the new owners were unable to repay their loans.

For more, see City Bids to Save Housing Imperiled by Investors.

Condo Associations, HOAs Facing Perfect Storm?

The Providence Journal reports:
  • The worst housing crisis and economic crash since the Great Depression have created a dangerous financial storm that threatens to destroy thousands of Shared Ownership Communities (condos, co-ops and Home Ownership Associations) across America. The danger is quiet, but staggering — over 60 million Americans live in SOCs, or almost 20 percent of the population.

For more, see Perfect storms could sink condos.

Central Florida Condo Complex "Like A Ghost Town" As Almost Half Of Units In Some Stage Of Foreclosure

In Central Florida, MyFox (Channel 13) Tampa Bay reports:
  • The Belmont condominium complex in Zephyrhills feels a lot like a ghost town. "It's such a beautiful place and it's empty. People can't enjoy it," lamented Patty Van, who was visiting friends there. The complex is almost empty because foreclosures have driven most of the one-time condo owners away. According to Kimberly Gibbs, a condo association board member, 105 of the 224 units are in some stage of foreclosure.

  • "It's great if you like being alone," Vickie Brush said as she pointed to her nearly empty building. Brush may feel alone because of the foreclosure crisis, but last week she felt scared. Friday night, all the security lights were turned off because of an unpaid light bill. "It's a dark hole. It's scary, and not all the lights on the facility work because there's been no maintenance here," Brush said.

For the story, see Foreclosures take toll on condo complex.

Continuing Nightmare For Residents In Condos Flooded With Foreclosures; Some HOAs Drain Cash Reserves To Avoiding Boosting Maintenance Fees

In Palm Beach County, Florida, The Palm Beach Post reports:
  • Nearly 70 percent of the owners at the Kensington of Royal Palm Beach condominiums are delinquent on their association fees. At the Paradise Cove at Palm Beach Lakes, 48 percent of owners owe back dues. And at Cypress Estates of Palm Springs, 56 percent of units are in arrears. The three communities share the same story. Investors bought heavily during the boom, but now sit on units worth half what they paid.


  • "There's anger. The owners who live here are disheartened because they work hard and care about the community," said Karen Cicciari, Kensington of Royal Palm Beach association president. "It's a nightmare." [...] Cicciari said her condo fees are about $320 a month. The association chose to drain its reserve this year to pay for services instead of raising monthly dues. Cicciari said the association feared losing more paying owners if fees went up. "We're providing cable to the whole community, but there are only a handful of us paying," Cicciari said. "It's becoming out of control."

  • The real problem, [Banyan Property Management's Mark] Quinn said, is when major repairs are needed, but there's no rainy day fund. "If we had a hurricane, communities like this, with no cash cushion, I don't know how they would ever pay their insurance policy deductible, or clean up," he said.

For more, see Condo associations are turning to receiverships to collect rent on foreclosed units.

Spokane Condo Feels Financial Squeeze As Abandoned Units, Foreclosing Lenders Dodging Maintenance Fee Payments Boost Burden On Remaining Residents

In Spokane, Washington, The Seattle Times reports:
  • Pipes freezing. Strangers changing the locks. These are difficult times at Wingate Place on the South Hill in Spokane. Two of 10 units at the condominium have been vacated by owners who could no longer make payments. The remaining residents are paying the heating bills to prevent more water damage. Maintenance fees, now split eight ways instead of 10, are also becoming burdensome, especially to the three owners on fixed incomes.

  • Meanwhile, Wingate owners' association president Brian Pangrle says he has been playing hide-and-seek with banks holding mortgages on the abandoned units. He wants them to pay the fees. He suspects a lender was behind the change of locks on one empty unit. It took several phone calls to obtain a key from the property-preservation company that did the work. He threatened a second group of intruders with trespass charges and called the police.

  • "It's like layers of the onion," he says, with mortgage servicers reluctant to unmask banks that do not want the units. If the banks foreclose, not only do fees become their responsibility, but they also must take substantial losses on balance sheets already running red with bad debt. When they do foreclose, they can dodge fees for some time by simply not informing the owners' association. [...] Pangrle warns of a potential "snowball" effect if ever-higher assessments push more owners out, increasing the burden on those who stay behind.(1)

For the story, see Remaining condo owners fighting to keep building going (If banks foreclose on condos, not only do fees become their responsibility, but they also must take substantial losses on balance sheets already running red with bad debt. When they do foreclose, they can dodge fees for some time by simply not informing the owners' association).

(1) No one wants to raise monthly maintenance fees, 2010 president of the Washington State Chapter of the Community Associations Institute Brian McLean said, but exhausted reserves are a big red flag to any buyer who takes the time to examine the resale certificate required of sellers. Too few buyers pay the certificate the attention it deserves, he adds.

City Seeks Arrest Of Ex-Landlord Who Abandoned 16-Unit Building; Tenants Left Without Heat, Hot Water; Bidders Show No Interest At Foreclosure Sale

In Springfield, Massachusetts, The Republican reports:
  • An Illinois-based bank has agreed to make repairs and correct code violations at [a 16-unit] apartment block on Belmont Avenue, replacing a landlord who is accused of abandoning the building and leaving tenants without heat and hot water the day before Christmas.


  • Some families have “lived through chaos and fear” since the landlord, Paul Woodward of Dracut, apparently abandoned the building, said Assistant City Solicitor Lisa C. deSousa said, during the hearing before Judge Robert G. Fields. One family had to be moved to a hotel after their apartment was condemned recently due to severe water damage caused by a water pipe break from an upstairs, unheated apartment, deSousa said. Tejanae Wilson, among tenants attending the hearing, said there is mold in the building and trash piled outside. “It’s really disgusting,” Wilson said. “It’s a disgrace.”


  • The city has been unable to locate Woodward, and will seek his arrest on a civil warrant issued recently by Fields. The bank is willing to take responsibility for the building after a recent foreclosure auction apparently found no successful bidders, Johnson said.

For more, see Banco Popular North America agrees to make repairs to apartment block at 65 Belmont Ave., Springfield. frozen pipe

Tenant Troubles In Buildings Facing Foreclosure Spreading Throughout New York State

In Rockland County, New York, The Journal News reports:
  • It's a situation that is becoming common at rental properties throughout the state owned by questionable landlords who do minimal maintenance then default on their loans, leaving the buildings in the hands of banks, and tenants with little recourse. "It's a looming crisis that we haven't felt the full effect of yet," said Dennis Hanratty, executive director of Mount Vernon United Tenants, a Westchester advocacy group.

  • "Landlords like that are heavily leveraged, they go into foreclosure, they lose the property and the tenants are left holding the bag," Hanratty said. At least 16 properties in Rockland owned by [Spring Valley landlord Joseph] Klein and holding companies controlled by him are in various stages of foreclosure. A man answering the telephone at his office [...] said Klein was not available and promised to give him a message. Klein did not return the call. Lawyers who have represented him in the past said they are no longer in contact.

  • Even before Klein ran into problems with lenders, he and his properties had come to the attention of local authorities. "He's well known among building inspectors in the county," said Gordon Wren Jr., the county's emergency services coordinator who also serves as head of a new task force on illegal and substandard housing. "Infamous, I'd say."


  • Klein has frequently been cited by the Rockland Department of Health for numerous health and safety violations at his properties throughout the county. Now that many of those properties are in foreclosure, it's even more difficult for local governments to deal with the banks that own the buildings and the receivers appointed by courts to administer them.

For more, see Tenants suffer as more landlords default.

In a related story, see The New York Times: Struggling Landlords Leaving Repairs Undone.

(1) According to The Journal News, two tenants spoke for the story. "This reminds me of when I was in the service and we had to sleep outside in a field," said Teddy Baker, 78, an Army veteran and retired state worker who has lived in the Tomkins Cove bungalow for more than 20 years. "It's freezing cold, no heat, no water." "We're living like a bunch of animals up here," said tenant Joseph "Rusty" Ridlon. "No heat, no water — we have to go to the creek to get water to make the toilet flush."

Predatory Equity Apartment Building Investments Bought At Height Of Bubble Spell Trouble For Thousands Of Tenants In NYC Neighborhoods

In The Bronx, New York, The New York Times reports:
  • Here, it is not individual homes that are most under threat of foreclosure — it is whole apartment buildings occupied by hundreds of families. And it was not the residents who took out the heavy loans — it was investors who live far from the overleveraged properties. While banks and owners seek to recoup staggering losses from overly optimistic real estate deals in neighborhoods like the South Bronx, Washington Heights and Corona, Queens, tenants have been left with some of the worst of the bust: crumbling buildings, rats and roaches, the threat of foreclosure.


  • During the height of the boom, real estate investors, many of whom were backed by private equity funds, paid top dollar for as many as 120,000 apartments across the city, most of which were either rent-regulated or were in buildings that had recently been removed from the state’s Mitchell-Lama housing program, which had kept rents relatively low, according to the Department of Housing Preservation and Development. But the market collapsed, and the new residents willing to pay higher rents never came, leaving the buildings overleveraged and vulnerable.

  • About 300 of those buildings were in the Bronx, and at least 40 are in foreclosure, according to the University Neighborhood Housing Program. About 100 more buildings in the borough are at risk, the Urban Homesteading Assistance Board says.(1)

For more, see Problems Mount at a Bronx Building Bought in a Bubble.

In a related story, see The New York Times: Struggling Landlords Leaving Repairs Undone.

(1) According to the story, Rafael E. Cestero, the commissioner of the New York State Department of Housing Preservation and Development, divides the city’s overleveraged buildings into three categories. There are about 4,000 apartments, mostly in the Bronx and Washington Heights, with terrible physical and financial problems that have left tenants in housing nightmares. There are at least 90,000 apartments burdened with debt but not in immediate danger of collapse. In between sit some 16,000 apartments at risk, teetering between stability and disrepair.

Thursday, January 21, 2010

BofA, Countrywide Strike Again; Mistakenly Seize Another Home Misidentified As A Foreclosure, Says Homeowner

In New Bedford, Massachusetts, WCVB-TV Channel 5 reports:
  • A Massachusetts couple says their son's homecoming from Iraq was spoiled when Bank of America/Countrywide foreclosed on their Florida home, which they owned free and clear, according to a lawsuit. Homeowner Charlie Cardoso, of New Bedford, was shocked to hear that the bank, with whom he never had a mortgage, foreclosed on his Spring Hill, Fla., home, despite telling the bank it had the wrong house.

  • The Cardoso's tenant was forced to leave the Florida home, and the bank seized the home, changed the locks and removed personal property from the house and garage, the family claims. They said Bank of America's foreclosure spoiled the couple's plans to welcome home Cardoso's wife's son, who had just completed his third tour of duty in Iraq. Upon notice of the seizure, Charlie Cardoso drove to Florida to protect his house, missing the homecoming.


  • When Cardoso arrived in Florida with his deed for the property, the police denied him access to his house. Only after a later meeting at the police station was Cardoso able to convince the police that Bank of America/Countrywide had foreclosed on the wrong home. At that point, he was allowed to break down the door to his house, remove the locks and enter it, only to discover that the electricity had been turned off, that the pipes had frozen(1) due to the unseasonably cold temperature in the Tampa area, and that possessions stored in the house and garage had been removed, attorneys for the family said.

  • Court records indicate that this is not the first time that Countrywide foreclosed on the wrong home. A 2008 decision by the Nevada Supreme Court(2) upheld a jury verdict on behalf of a Nevada couple when Countrywide foreclosed on the wrong Las Vegas condominium unit in 2003.

For the story, see Iraq Homecoming Spoiled After Bank Forecloses On Wrong Home (Bay State Couple Says Bank Took Possession Of Wrong Home In Florida).

For a follow-up story, see Couple: Bank Foreclosed On Wrong House (New Bedford Couple Suing Bank Of America):

  • A New Bedford couple is suing Bank of America for $500,000 because of what they call a foreclosure nightmare. [...] The Cardoso's don't have a mortgage on the home that was supposed to be their retirement spot and despite repeated pleas to the bank, telling officials they had the wrong house, the bank forced their tenants out, stripped the house and changed the locks. [Charlie] Cardoso is a construction worker. He and his wife are suing the Bank of America for loss of the home, personal property and the tenants whose rent helped balance the bills. The federal lawsuit was filed this week.

For other stories on Bank of America or Countrywide being accused of improperly seizing or foreclosing on homes, see:

(1) For another recent story where the power in a vacant BofA foreclosure was shut off, see Power Shutoff In BofA-Owned Foreclosed Condo Leads To Frozen, Burst Pipes; Elderly Couple With Downstairs Unit Left With Flooded Apartment.

(2) Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008).

Now-Disbarred Attorney Gets 6 Months House Arrest, 3 Years Probation For Ripping Off Client/Foreclosing Lender Of $66K Proceeds From Public Auctions

From the Office of the U.S. Attorney (Indianapolis, Indiana):
  • Brian L. Nehrig, 43, Fishers, Indiana, was sentenced to three years' probation today by U.S. District Judge Sarah E. Barker following his guilty plea to mail fraud. This case was the result of a investigation by the Federal Bureau of Investigation.

  • During 2005 and 2006, Nehrig worked as a foreclosure attorney doing foreclosure work for Citifinancial. Citifinancial required Nehrig to submit a bid at sheriff’s sales for foreclosed houses, sell the houses at arm’s length transactions, and then submit the proceeds if the home sold to a third party. Instead, Nehrig sometimes submitted inflated bids and had arrangements with friends and associates to buy the properties. Nehrig did not tell Citifinancial about the side deals, which were usually for a few thousand dollars more than the minimum bid requested by Citifinancial. Nehrig did not send Citifinancial the profits. The Court determined the loss to Citifinancial to be $66,000. Citifinancial has been paid through an insurance claim.

For the press release, see Former Attorney Sentenced in Fraud Case.

(1) According to Assistant U.S. Attorney Gayle L. Helart, who prosecuted the case for the government, Judge Barker also imposed six months' home confinement, and a requirement that Nehrig perform eight hours of community service per month for each of the 36 months that he is on probation. Nehrig was fined in the amount of $2500. Judge Barker noted that Nehrig’s law license was previously revoked and ordered that he not be self-employed and give full disclosure of this felony conviction to any future employer.

More On Zombie Debt Buyers

A recent press release from the Federal Trade Commission announced that it has ordered the nation’s largest consumer debt buyers (ie. zombie debt buyers) to turn over information about their practices in buying and collecting consumer debt, which the FTC intends to use for a study of the debt-buying industry.

For resources that provide insights on defending consumers in cases involving attempts to collect zombie debt, see:

Help Guide For Connecticut Homeowners Representing Themselves In Foreclosure

In Hartford, Connecticut, NewsTimes reports:
  • A shortage of legal aid for the thousands of homeowners facing foreclosure has prompted one nonprofit organization to publish a guide on self-representation that might help people save their homes. The Hartford-based Connecticut Fair Housing Center(1) began mailing Tuesday its free foreclosure guide, a 72-page document that details what to expect and what to file when a bank starts foreclosure proceedings. The document includes tips on the need to keep a diary and log everything that happens in the process. It's important, the housing center says, to track the names of people you talk to, who they represent, what you talked about and when you spoke. The guide also includes forms the borrower can fill out in response to a bank's filings.

  • "People in foreclosure do not have money for lawyers," said Erin Kemple, the group's executive director, adding that there also is a shortage of free help for families facing foreclosures as the financial crisis enters its third year in the state. She said her group has one attorney on staff handling some cases and the hope is this guide will provide assistance to those who need it most. The guide can be downloaded from the housing center's Web site, [...] or ordered by mail or phone from the group. There is no charge.

For more, see Foreclosure fighters offer self-help guide.

For the self-help guide, see Representing Yourself in Foreclosure: A Guide for Connecticut Homeowners.

(1) According to their website, the Connecticut Fair Housing Center is a statewide non-profit organization dedicated to ensuring that individual choice, and not discrimination, determines where people live in Connecticut.

Wednesday, January 20, 2010

Homeowner Credits Media For Help Getting Refund From Loan Modification Outfit After Fearing Ripoff

In Atlanta, Georgia, WGCL-TV reports:
  • Beth Hall wasted no time cashing a refund check for $1,495 from the Mortgage Relief Group in Tucker. "I couldn't have done it by myself. I wasn't getting anywhere," said Hall. She received the refund only after CBS Atlanta News began asking the company the tough questions about their questionable business practices. "I thought it would work. They made all kinds of promises saying it would work, but they didn't live up to those promises," said Hall.

  • Hall said the Mortgage Relief Group offered to help her avoid foreclosure on her home in September by lowering her payments. They also claimed to be 100 percent effective, but Hall said it never happened. CBS Atlanta paid a visit to the Mortgage Relief Group a few days ago and no one would discuss the issue on camera. CBS Atlanta was able to speak with the owner over the phone and he agreed to refund Hall's money. "Well if it wasn't for you I don't think I would have gotten the check back. I was trying to do it all on my own and I wasn't getting anywhere," said Hall.

Source: Atlanta Family Gets Mortgage Relief (Mortgage Relief Group Issues $1,495 Refund Check).

Mortgage Company Owners Arrested For Stealing, Using Ex-Employee, Potential Customer IDs To Obtain Secured Credit Lines

In Suffolk County, New York, the Long Island Press reports:
  • A Massapequa couple was arrested [...] after they allegedly used the identities of two people to obtain mortgages, Suffolk police said. Angela Sutphen and her husband, Matthew Sutphen, owners of Cornerstone Bancor Mortgage Corporation on Merrick Road, used the identities of a former employee and a potential customer to obtain mortgage lines of credit, according to Identity Theft Unit detectives.

  • Following a search of their home and business, the Sutphens were arrested outside Second District Court in Lindenhurst, where they were scheduled to appear on an unrelated real estate dispute. Matthew, 47, and Angela, 50, were each charged with two counts of identity theft. Angela was additionally charged with two counts of forgery. [...] United States Postal Inspectors and Suffolk police are continuing to investigate.

Source: Massapequa Couple Charged With ID Theft.

Judge Faces Charges Of Forging Docs To Obtain Mortgage Loan On Home Co-Owned With Another

In Elsa, Texas, The Monitor reports:
  • Municipal Judge Hilda Caceres has been indicted on charges that she forged a signature on a loan application, an accusation her supporters say is politically motivated. An indictment handed down in late December and unsealed [earlier this month] charges the public official with four counts of forgery and three counts of tampering with a government record.


  • Hidalgo County Sheriff Lupe Treviño has said his office’s investigation centers on a piece of real estate that Caceres shares with Nora Delgado and used as collateral for the loan. Caceres allegedly forged Delgado’s signature before a notary public to obtain authorization for the loan. [...] The seven-count indictment filed Dec. 23 alleges Caceres forged Delgado’s signature on three documents on May 14: a deed of trust, an assignment of leases and rents, and an affidavit of identity.

For more, see Grand jury indicts justice of the peace candidate on forgery charges.

Accounting Clerk For Mortgage Lender Gets 30 Months For Ripping Off Employer Out Of $1 Million Attributable To Loan Payoffs At Real Estate Closings

In New Orleans, Louisiana, The Associated Press reports:
  • A Houston woman who worked for a New Orleans mortgage lender has been sentenced to 30 months in federal prison for stealing more than $1 million from the company. U.S. District Judge Frederick Block also on Thursday ordered 34-year-old Jodie Hoang to pay $1,017,701 in restitution to Standard Mortgage Corp., where she was an accounting clerk. Hoang pleaded guilty to a computer fraud charge in September. Prosecutors said she used the company's computer system to change deposit codes for payments customers made at mortgage closings, then created checks payable to herself or her credit card providers.

Source: Houston Woman Gets Prison for $1M Computer Fraud (Houston woman sentenced to federal prison after pleading guilty to $1M computer fraud charge).

For the U.S. Attorney's Office press release, see Former Standard Mortgage Corporation Clerk Sentenced To 30 Months In Federal Prison For $1 Million Computer Fraud.

Tuesday, January 19, 2010

Closing Agent Gets 35 Months In $777K Ponzi-Style Escrow Ripoff; Feds Credit 'Katrina' For Foiling Scam; Restitution To Title Underwriter Ordered

In New Orleans, Louisiana, The Times Picayune reports:
  • Hubert Ellzey Jr. secretly bilked clients out of $777,000 before Hurricane Katrina put an end to his scheme. When the storm hit Aug. 29, 2005, all real estate closings in the New Orleans area halted for a time, upsetting the Metairie title agent's practice of converting clients' mortgage money to his personal use then covering the misappropriation with money from future mortgage payments.(1) As a result, he pleaded guilty Sept. 23 to wire fraud, and U.S. District Judge Eldon Fallon sentenced him Thursday to almost three years in prison. Ellzey, 68, worked nine years as an independent agent for Commonwealth Land Title Insurance Co.


  • "The scheme was discovered when, after Hurricane Katrina hit New Orleans ... all closings came to a halt and Ellzey was unable to cover some of the funds converted to his own use and to close the pending mortgages," said a statement from the U.S. attorney's office. [... Judge Eldon] Fallon [...] sentenced Ellzey to 35 months in prison, followed by three years' probation. He also ordered restitution to Commonwealth.

For the story, see Metairie title agent imprisoned for $777,000 wire fraud.

(1) Go here for a description of the mechanics of the swindle on the six specific deals involved in this prosecution.

Iowa Attorney Faces Charges Of Illegally Dipping Into Trust Account Cash Intended For Clients' Real Estate Transactions

In Des Moines, Iowa, The Des Moines Register reports:
  • A Des Moines attorney has been accused of theft in a real estate fraud investigation. Kristine Corcoran Frye, 51, faces two counts of first-degree theft for allegedly pocketing some $30,000 in one real estate transaction and $58,000 in another one.


  • Randall Archer of Archer Construction Inc., one of the victims listed on a Des Moines police report, gave Frye a $40,000 cashier's check from Bankers Trust on Jan. 12, 2009, police said. The check was made payable to Kristine Corcoran Frye's trust account. Police said only $10,000 of the total amount owed on the West Des Moines property was paid. The police report says, "Suspect took the remaining $30,000 from the victim and at no time did the suspect repay the victim or pay the debts she was suppose to in the first place." Archer allegedly had to make up for the missing money by taking it out of his own pocket.


  • The other alleged victim is Edward Jones Mortgage of Minneapolis. Police said in a report the company was working with Frye to refinance a home [...] last February. Some $115,000 was placed in Frye's trust fund so the deal could go forward, according to Detective Tarry Pote. But Edward Jones Mortgage received just a little over $15,000. Two weeks later Edward Jones received just over $50,000. Together, the two amounts were still short of what was needed."They contacted (Frye) and said that that was not the right amount," Pote said. "She told them to wire back the amount that was sent and she would send them the correct amount." Pote said Frye tried again, but the amount was still some $58,000 shy of the mark required for refinancing and the amount she was given.(1)

Source: Lawyer faces theft charges in real estate fraud case.

(1) If an Iowa attorney screws you out of money or property through dishonest conduct, contact the Iowa Client Security Commission for information on the qualifications to recover some or all of your losses from their fund. Their fund reimburses clients of lawyers who have misappropriated or lost a client's money. According to their website, the purpose of the fund is to prevent defalcations by members of the Iowa bar, and insofar as practicable, to provide for the indemnification by the profession for losses caused to the public by the dishonest conduct of members of the bar of this state. The claim form to be used to apply for compensation from the Commission may be downloaded here: In Rich Text Format; In PDF Format.

For other states and Canada, see:

NJ Law Seeks To End Illegal "Bulldozing" Of Tenants Out Of Foreclosed Homes; F'closure Purchasers Now Required To Inform Renters Of Right To Stay Put

In Trenton, New Jersey, The Philadelphia Inquirer reports:
  • A bill passed by the New Jersey Legislature [last week] would give tenants living in foreclosed buildings a better understanding of their rights. Part of a push by Public Advocate Ronald Chen's office, the bill requires that when a property is sold at a foreclosure sale, the buyer must notify tenants of their right to stay in their homes and explain to whom they should pay rent. The bill, which goes to the governor's desk, also makes lenders responsible for maintaining a property between the time a foreclosure filing is made and the sale. New Jersey law does not allow tenants to be evicted simply because of foreclosure.(1)

Source: Bill to aid tenants in foreclosed buildings passes.

(1) According to a recent story in The Star Ledger [see Tenants take fall for unpaid mortgages], there was an apparent urgent need for this law in New Jersey:

  • "Realtors, lenders and property managers are all taking advantage of the fact that tenants don't know their rights," said state Public Advocate Ronald K. Chen, whose office handled complaints from more than 200 tenants, [...] who said they were unfairly treated in foreclosure cases last year. "It's all over the state. Realtors seem to be the biggest offenders in the suburbs and rural areas, and lenders, lawyers and management companies" are misinforming tenants in the cities, Chen said. "When we challenge them, they claim they didn't know they were violating tenants' rights. That is inexcusable."

  • In a Housing and Urban Development survey last year, 2,000 New Jersey adults said they were homeless because they had been forced from their apartments. While some, no doubt, had been evicted legally for nonpayment, the HUD survey concluded foreclosure-based evictions accounted for much of the 70 percent increase in the number of homeless former renters.

  • "A lot of homeless people are being shoved out of their buildings, and it is even worse for new immigrants who may have trouble with English and don't have leases," said Victor Salvo, director of Newark NOW, [a] storefront nonprofit referral agency [...]. "They feel they have no choice but to leave."


  • Most tenants [in New Jersey] don't know that, unless the new owner of their building is moving in, they not only can stay but can renew their leases. In New Jersey -- which, Chen says, has the strongest tenant-protection laws in the country -- new owners can evict only with cause, such as nonpayment. No lease? Tenants are still protected under whatever arrangement they had before the property changed hands. When a property reverts to the lender, any responsibility for tenants' security deposits is conveyed with the property, Chen says. If the apartment is sold, the deposit liability passes on to the new owner. Chen adds: "We know there are people out there still telling tenants -- wrongly -- to sue the former owner."

Indiana Man Faces Forgery, Theft Charges For Allegedly Renting HUD-Owned Homes To Would-Be Tenants; Used Craigslist To Reel In Unwitting Renters

In Indianapolis, Indiana, WRTV-TV Channel 6 reports:
  • A man was charged with multiple counts of forgery and theft in a real estate scam that investigators said ensnared several victims in Marion and Hamilton counties. Indianapolis police Sgt. Matt Mount said Richard Swoveland, 38, used online postings of homes for sale on the Department of Housing and Urban Development Web site and listed them on as homes for rent. Using the e-mail alias of and the name David Aldrich, authorities said Swoveland met and "leased" homes to several people who responded to postings.

  • "During the meeting at the homes, the suspect would use a HUD master key to open the front door and allow the victims to view and tour the homes," Mount said. Victims signed month-to-month leases with the suspect and paid him a deposit and the first month's rent, police said. "The victims later discovered the homes they agreed to lease were HUD owned and were for sale, not rent," Mount said.

  • Swoveland was being held in the Hamilton County Jail in connection with similar charges there. Police think there are likely more victims in the Indianapolis area and, perhaps, in other Indiana counties.

Source: Several Residents Duped By Real Estate Scam (Police: Man Used HUD Master Key To Open Homes).

Monday, January 18, 2010

Ind. Homeowner Seeks Class Action Status In Suit Alleging Lender Declined Loan Mod Request W/out Giving Written Reason; 3rd Suit Filed By Chicago Firm

In Hammond, Indiana, the Northwest Indiana Times reports:
  • As the Obama Administration tries to heal the sickly housing market by pressing lenders to modify loans for struggling homeowners, a Gary couple is taking their personal mortgage fight with GMAC into Hammond federal court. A lawsuit filed [last week] seeks class-action status for borrowers who sought loan modifications from GMAC but were denied the modifications without being given a written reason for the denial.

  • The suit seeks an injunction against GMAC as well as attorney fees and damages from the economically bruised lender. [Consumer rights and class action] Chicago lawyer Daniel Edelman filed the lawsuit on behalf of Robert and Brenda Cole, of Gary's Miller neighborhood. Edelman said the Coles took out a "predatory" loan through the now-defunct Ameriquest. The couple suffered through a "last minute" interest rate hike and bogus fees, Edelman said. Edelman said the loan was later taken over by the mortgage arm of Detroit-based GMAC, a lending firm that has now taken three federal bailouts. In June 2008, the Coles applied through GMAC for a loanmodification. GMAC never responded to the request, the suit claims. "A request for (modification) is an application for credit and needs to be appropriately treated as such," Edelman said. [...] The Cole suit is one of three modification-denial suits Edelman has filed in midwestern federal courts.

  • Lenders should expect a trend toward this kind of litigation, said Louis Pizante, an expert in real estate law compliance and CEO of the California-based Mavent Inc.(1)

For the story, see Gary couple sues GMAC over loan (Expert thinks suit could be start of trend; GM credit arm denied modification with no written reason).

For the lawsuit, see Cole v. GMAC Mortgage, LLC.

(1) According to the story, Pizante pointed toward a December directive issued by the Federal Reserve Board explicitly stating that, under the Equal Credit Opportunity Act, lenders must issue "adverse action notices" to borrowers when a modification request is declined. Damages for these sorts of suits are capped at $10,000, and class-action damages can't go above $500,000, Pizante said. But federal law provides for attorney fees in these cases, Pizante said. The right of the consumer's attorney to recover his/her legal fees from the lender, through a court order, in the event of a successful lawsuit is generally recognized as the element in these types of cases that "puts the teeth" into the law.

For the Federal Reserve Board directive, see CA 09-13: Mortgage Loan Modifications and Regulation B's Adverse Action.

Federal Judge, IRS Put Kibosh On Wells Fargo Sale Leaseback Scheme; Bank Took Improper $115M Tax Deductions On Deals Lacking Economic Substance: Court

USA Today reported last week on another way that a sale leaseback transaction can be employed in an abusive manner. Were it not for the Federal judge slamming the door shut on this attemped scam by recharacterizing the transactions as an attempt to buy tax deductions in exchange for an upfront fee, the victims of this type of sale leaseback ripoff would have been the American taxpayers. The failed "evil-doer" in this case - none other than the somewhat less-than-beloved alleged "ghetto loans" peddler, Wells Fargo:
  • Wells Fargo has lost a lawsuit over more than $115 million in tax deductions based on complex transactions that a Court of Federal Claims ruling said lacked "economic substance." In a ruling issued Friday, the court sharply criticized the large, California-based bank's use of 26 sale and lease transactions with public transit agencies and other tax-exempt entities in 2002.

  • The transactions involved assets such as rail cars, locomotives, buses or telecommunications equipment the agencies sold, then leased back from Wells Fargo. The agencies got fees from the deals, and the bank got the opportunity to seek tax deductions on the assets. But the court ruled the bank wasn't entitled to the deductions because the transactions didn't give Wells Fargo the "burdens and benefits" of true ownership.(1)


  • If the court approved the transactions, "the big losers would be the Internal Revenue Service, deprived of millions in taxes rightfully due from a financial giant, and the taxpaying public, forced to bear the burden of the taxes avoided by Wells Fargo," the judge wrote.

For the story, see Wells Fargo loses tax case on dubious sale-leaseback deals.

For the court ruling, see Wells Fargo & Co. v. U.S. (Tax Refund Suit; Sale In/Lease Out (SILO) Tax Shelters; Depreciation and Interest Deductions; Substance Over Form Doctrine; Genuine Indebtedness; Economic Substance).

(1) In his ruling, Judge Thomas C. Wheeler made this observation in recharacterizing the alleged sale leaseback transactions involved in this racket involving "phantom payments" that purportedly circulated back and forth between the lessor (Wells Fargo) and the lessees, which took place in 2002:

  • Although well disguised in a sea of paper and complexity, the SILO [sale in/lease out] transactions essentially amount to Wells Fargo’s purchase of tax benefits for a fee from a tax-exempt entity that cannot use the deductions. The transactions are designed to minimize risk and assure a desired outcome to Wells Fargo, regardless of how the value of the property may fluctuate during the term of the transactions. Indeed, nothing of any substance changes in the tax exempt entity’s operation and ownership of the assets. The only money that changes hands is Wells Fargo’s up-front fee to the tax-exempt entity, and Wells Fargo’s payments to those who have participated in or created the intricate agreements. The equity and debt “loop” transactions simply are offsetting accounting entries not involving actual payments, or pools of money eventually returned to the original holder. If the Court were to approve of these SILO schemes, the big losers would be the Internal Revenue Service (“IRS”), deprived of millions in taxes rightfully due from a financial giant, and the taxpaying public, forced to bear the burden of the taxes avoided by Wells Fargo.

2nd Mortgage Holders Accused Of Illegal Arm-Twisting By Squeezing "Off-Closing Statement" Cash From Agents, Buyers When Approving Short Sale Payoffs

CNBC Real Estate Reporter Diana Olick reports:
  • Just as regulators, lawmakers and all forms of financial oversight boards are talking about new regulations to guard against mortgage fraud and another mortgage meltdown, there appears to be yet a new mortgage fraud out there today, allegedly perpetuated by agents of, yes, the big banks. I was first alerted to this by Jeremy Brandt, the CEO of several companies that bring short sale agents, investors and sellers together.


  • [H]ere's what's not legal and what's apparently happening quite often recently. Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale. When I say "on the side," I mean in cash, off the HUD settlement statements, so the first lien holder doesn't see it. "They are pretty clear and pretty upfront about the fact that if the first lender knows they are getting paid, the first lender will kill the short sale," says Brandt. "So these second lenders are asking for the payments off the closing documents, off the HUD statement, usually in a cashiers check prior to closing. Once they receive that payment, they will allow the short sale to go through, which according to RESPA laws and the lawyers that we have spoken to on the topic is not legal." I told RESPA specialist Brian Sullivan over at HUD about all this and he replied, "That's a red flag!" Clearly illegal.

  • Brandt told me he's heard from at least 200 agents that they've had these requests made by representatives of Citi Mortgage , JP Morgan Chase , Bank of America and other large banks. Most agents wouldn't go on the record with me, for fear of retribution by the banks with whom they have to work every day. But one agent, Kayte Gentry, of Keller Williams Integrity First Realty, was brave enough to blow the whistle.

For the rest of the story, see Big Banks Accused of Short Sale Fraud.

Fair Housing Attorney Welcomes, Encourages Feds In Effort To Pursue Alleged "Ghetto Loans" Peddlers Engaging In "Reverse Redlining"

The New York Times reports on the recent decision by the U.S. Justice Department to increase its focus on discrimination in the area of home loan originations. The following excerpt describes the efforts of one Washington, D.C. civil rights attorney who is currently pursing a large, high profile lender accused of reverse redlining in originating home mortgages on behalf of two cities:
  • John Relman, a housing lawyer, said there was plenty of evidence that some banks violated fair housing laws during the subprime boom. Mr. Relman has helped the Cities of Baltimore and Memphis sue Wells Fargo over the costs taxpayers incurred because of foreclosures. As part of those lawsuits, he obtained affidavits from former Wells Fargo loan officers who said the bank had systematically singled out minority borrowers for high-interest, high-fee mortgages, bypassing its own underwriting rules. The State of Illinois has also sued the bank.

  • Wells Fargo has denied any wrongdoing. Last week, a judge dismissed Baltimore’s lawsuit, saying there were too many other causes of the damage to inner-city neighborhoods to blame the bank. Mr. Relman said the city intended to file a new complaint that focused more narrowly on recouping costs associated with specific properties.

  • But it is much easier for the federal government to sue banks like Wells Fargo. Mr. Relman said he hoped the Justice Department decided to join the cases. “Not only would we welcome them; we encourage them to get involved,” Mr. Relman said. “It’s long overdue.”

Source: Justice Dept. Fights Bias in Lending.

Fight Against Rent Skimming Condo Investors Advances As Recent Florida Court Ruling Permits Blanket Receivership W/out Need To File Foreclosure Action

In Miami, Florida, the South Florida Business Journal reports:
  • South Florida businesses and attorneys are developing new tools for homeowner associations struggling with unpaid fees and foreclosures. The latest developments are a legal precedent that allows associations to collect rents immediately when a landlord fails to pay association fees, and a property management company that advances loans to struggling condos with no risk attached.

  • Attorney Stuart Zoberg, of Katzman Garfinkel Rosenbaum, won a ruling for his client, Nirvana Condominium Association in Miami, allowing it to collect rents for unpaid fees as soon as a landlord unit owner falls behind. It’s an evolution of the limited “blanket receivership” tool that took hold in local courts last year, where receivers can collect rents directly when a unit is in foreclosure. But, in the new ruling, associations are not required to wait for a foreclosure action.

Source: New tools arrive for struggling homeowner associations.

Sunday, January 17, 2010

California Bumps Up Homestead Exemption Protection For Homeowners Against Forced Sale By Judgment Creditors

In California, the Sierra Sun reports on, among others, the following change in California law:
  • Assembly Bill 1046 [Section 2] increases homestead exemptions for homeowners across the board by $25,000 each, so the exemption for a single person is now $75,000, for a married couple it is $100,000 and for the disabled and the elderly, it is $175,000. That is the amount of equity in your home you can protect from creditors.

Source: New laws for the new year.

Feds To Scrutinize Lenders For Evidence Of "Ghetto Loans" Peddling, Reverse Redlining In Home Loan Originations

Reuters reports:
  • The U.S. Justice Department has set up a new unit to pursue home lending discrimination and already has more than three dozen cases pending, a senior department official said on Thursday. The unit will target "unscrupulous" mortgage brokers and so-called redlining cases in which lenders charge more or refuse to loan money in certain areas like poorer neighborhoods or to lower income individuals, said Thomas Perez, assistant attorney general for the department's civil rights division.

  • In Maryland only 18 percent of white homeowners had subprime loans while 54 percent of African Americans and 47 percent of Hispanics had subprime loans, he said. Perez said that there are already 38 fair lending investigations pending and that in addition to focusing on bad loan acts in the past, there are signs already that lenders are turning their attention to loan modifications.

  • "All too many homeowners in distress are getting solicitations for help with offers that sound too good to be true, because they are," Perez said. Such cases would fall under the Fair Housing Act and Equal Credit Opportunity Act.

Source: US Justice Dept boosting loan discrimination focus.

Residents In 26-Story Landmark Miami Condo Face Boot Over Condemnation Order Due To Rotten Windows; Cost To Replace Could Force Some Into Foreclosure

In Miami, Florida, The Miami Herald reports:
  • Shortly before the Christmas holidays, residents of Miami's landmark Palm Bay Towers condo -- a bastion of privilege where the monthly maintenance fee exceeds most folks' mortgage payment -- found a letter taped to their doors outlining what one unit owner later called 'extremely unpleasant' news: The city had condemned the building. Water and power would be cut Jan. 3, and the building would be torn down.


  • The building hasn't been shut down, though it took an emergency court order and the unusual intervention of the City Commission to override, temporarily, the actions of its own chief building official, who declared the ultra-posh tower unsafe under a law typically used to condemn blighted properties.


  • The feud -- and Miami building official Mariano Fernandez's condemnation order -- centers on the 26-story tower's nine-foot-tall windows, at least some of which are badly deteriorated and unsafe in a hurricane. Because this is no ordinary building, these are not just any windows -- but 1,875 floor-to-ceiling sliding doors and glass panels that constitute the exterior walls of the three-cornered tower, which rises dramatically on massive pylons sunk into Biscayne Bay at Northeast 69th Street.(1)

For more, see Residents of landmark Miami condo building at war over windows.

(1) According to the story, full window replacement is a job that, by some estimates, would cost around $5 million. Because the building has just 72 units, most as big as a house, that reportedly works out to special assessments ranging from $60,000 to $100,000 for each owner -- and even more for some residents who own more than one unit. Although the building was constructed as a private club for a select slice of the city's social elite -- some longtime residents are now elderly or ill, no longer wealthy, and say they would be forced out of their homes or into foreclosure because they cannot afford the assessment, the story states.

Would-Be Renter Stumbles Into Home Hijacking Scam; DA's Fraud Investigator: "These Crooks Are Really Brazen"

In Vallejo, California, the Vallejo Times Herald reports:
  • The tip-off, Jennifer Casey said, was when her e-mailed application to rent the Vallejo property was approved within 20 minutes of sending it. "He never asked for a Social Security number, or bank account numbers, but he did ask for references. But that's not enough time to check anything, so I knew it was a scam then," said Casey, a divorced mother of four living in Vallejo. An ad on Craigslist offered the Vallejo house for $800 per month, plus a $200 deposit. It appeared directly above another ad, for the same property, for significantly more. And that's how Krystle Murphy of Vallejo's Krystle Property Management, Inc. said she discovered what appears to be a case of fraud. She still doesn't know if anyone's fallen for it, she said.


  • "These crooks are really brazen, especially in Vallejo," [Solano County District Attorney's Office real estate fraud investigator Sonny] Ash said. "They keep an eye on the place to make sure it's empty long enough. They change the locks, print up a rental agreement and just rent the place out. It happens everywhere. [...]."

For more, see Property manager, prospective renter foil apparent scam.

Another Homeowner In Foreclosure Faces Premature Boot As Trigger-Happy Lender Changes Locks Before Public Sale

In Columbus, Ohio, The Columbus Dispatch reports:
  • After she lost her job more than a year ago, Deborah Stevens knew she would not be able to keep her Galloway home. She didn't know she would be locked out of the home while she still had title or spend seven weeks trying to reclaim her possessions.


  • This past fall, as foreclosure became imminent, she began moving some belongings to her boyfriend's home in Canal Winchester. She spent more and more time there as she approached the sheriff's sale of her home, scheduled for Friday. On Oct. 20, she mentioned to a Flagstar attorney that she was considering turning off the utilities, because she could no longer afford them. She thought she was doing the bank a favor with the notice, but in fact, it initiated the steps that pushed her from the home.

  • Flagstar, based in suburban Detroit, contacted another suburban Detroit company, Wolverine Real Estate Services, which secures foreclosed properties for lenders. On Oct. 30, Wolverine's crew removed the screen from Stevens' dining-room window, jimmied open the window, entered the home and replaced the locks. In addition to a pile of door locks and handles, the workers left a notice pasted to the window: "Attention: entry by unauthorized persons is strictly prohibited." More than a week later, Stevens found her home locked.

For more, see Foreclosure can bring lockout.