Saturday, April 03, 2010

Ohio Man Charged In Alleged $500K+ Ripoff Of 70-Year Old Woman; Leaves Her Essentially Penniless, Facing Foreclosure

In Springdale, Ohio, the Cincinnati Inquirer reports:
  • A financial planner is accused of stealing a 70-year-old woman’s life savings -- more than half a million dollars – and leaving her essentially penniless. When Springdale police arrested Martin Morris, 50, at his Mason home Thursday, night, they said he was on the phone with his attorney.

  • A Hamilton County grand jury indicted Morris earlier this week on 14 counts, including aggravated theft, theft from an elderly person and forgery. Springdale Police Detective Keenan Riordan said Morris stole $509,637 by forging checks while handling all of the woman’s finances -- even doing her taxes -- and investing through Scottrade, an online brokerage. “It’s a shame, it really is,” Riordan said Friday.


  • She discovered she was broke earlier this year when foreclosure proceedings began on her Springdale home. “That’s when she became suspicious,” he said. With someone’s help she checked her account on Scottrade online and discovered she had just $7.01 left, Riordan said. The woman is now struggling to make ends meet on her only source of income, monthly Social Security checks. She also received assistance from relatives that has staved off foreclosure, at least for now, police said.


  • It doesn’t appear likely the woman will be able to get her money back. “He spent it,” the detective said. “It’s gone.”

For the story, see Cops: Woman bilked of $500K.

Bay Area Woman Gets 30 Days "Time Served," 3 Months House Arrest For Using Forged POA, Stolen IDs In Attempt To Steal Long-Time Friend's Home

In Alameda County, California, Laney Tower reports:
  • A former College of Alameda counselor was sentenced March 29 to five years probation and 120 days jail time(1) for multiple felony charges including forgery and identity theft. Shirley Robinson, 69, who has been in custody at Santa Rita Jail since a jury convicted her of 10 felonies on March 1, was sentenced at Alameda County Superior Court on March 29 and ordered to pay restitution and stay away from the victims.

  • The convictions stem from a real estate fraud and identity theft scheme perpetrated at the height of the real estate boom in 2005, according to prosecutors. Robinson and the victim, former COA counselor Alze Roberts, were friends for 50 years. Robinson created a forged power of attorney authorization to act on behalf of someone else - in an attempt to sell the property without Roberts' knowledge, prosecutors said. To make that transaction appear legitimate, Robinson also stole the identity of three other individuals.

For the story, see Ex-COA counselor convicted of forgery (Sentenced to five years probation, house arrest, fined).

(1) Robinson's four months in jail includes 30 days time served with the remaining to be under electronic home confinement (house arrest).

Hubby's Failure To Disclose Cheating Relationship Results In Favorable Ruling In Wife's Attempt To Undo Mortgage Refinancing Of Family Home

In Gorelston, Norfolk (UK), Norfolk News reports:
  • A Norfolk mother has won a landmark court ruling that may give her judicial protection against her home being repossessed - because she was unaware her husband was cheating on her.

  • Top judges ruled that Jayne Hewett was “unduly influenced” by her husband Darren Hewett, who had kept quiet about his affair when he persuaded her to charge his massive credit card debts against their family home, a breach of his “duty of fairness and candour”. Mrs Hewett had reluctantly agreed to take out the substantial loan against their home in [] Gorleston, in January 2004.

  • She had faced the choice of agreeing to the deal or saying no and holding on to her half of the already-mortgaged house, a move Mr Justice Briggs described as akin to having a “plank in a shipwreck.(1)


  • However Mrs Hewett may not necessarily be able to remain in her home, because a County Court judge will now have to decide whether First Plus is entitled to enforce the debt against Mr Hewett's former half share in the property. If that is the case, Colomb Road will have to be sold, although Mrs Hewett will not be as badly off.

For the story, see Norfolk mum wins landmark property ruling.

(1) The court's additional observations in support of their decision is reflected in this excerpt from the story:

  • I am persuaded that Mr Hewett's concealment of his affair from his wife did amount to the exercise of undue influence against her, sufficient to vitiate the re-mortgage transaction, as between them,” said the judge. Mr Justice Briggs added that the affair was “plainly a material fact calling for disclosure” as Mrs Hewett had agreed to enter into the mortgage transaction because she believed her husband was as “committed to the marriage as she was”. He said Mr Hewett was “guilty of a deliberate concealment of the affair” because he knew that if he had told his wife about it, she may not have consented to his proposal. “It is evident from his forgery of his mother-in-law's signature on the consent form that Mr Hewett was prepared to stop at nothing to achieve his objective,” added the judge, observing that Mr Hewett was later convicted over that matter.

Caretaker Dodges Charges After Pocketing 2nd Mortgage Cash On Alzheimer's Victim's Home, Then Failing To Make Payments; Cops Say No Crime Committed

In Anderson County, Tennessee, the Knoxville News Sentinel reports:
  • Living alone in his Claxton area house, elderly Auburn Casey apparently became smitten with his caretaker, a detective said. The 86-year-old signed blank checks for the 39-year-old woman to fill in the amount and cash.

  • He allowed the woman to take out a second mortgage on his house, valued at $177,900. The caretaker then didn't make mortgage payments, sending the home into foreclosure proceedings.


  • A family member and friend of Casey's became aware of the situation late last year and rushed to obtain power of attorney over his affairs. By that time, "everything was gone," Anderson County Sheriff's Department Investigator Danielle Alexander said. Casey was broke, his house had been sold at a foreclosure auction for $19,000, and he had moved into an assisted living facility.

  • For weeks, Alexander investigated the incidents. The Tennessee Bureau of Investigation looked at the case, records show. The Anderson County District Attorney's Office checked it out. Employees of the Department of Human Services' Adult Protective Services Division also became involved. But all law enforcement officials have concluded no crime was committed. The case is closed.(1)


  • Cora Logan-Lunny, director of the Anderson County Office on Aging, said last week she was aware of the situation, which she described as "the worst case we've ever seen." Logan-Lunny said Casey has Alzheimer's, and "he really didn't know what he was doing. That's the saddest part of it." "This is a shame," Alexander said of the case. "I'm seeing it happen more and more when these elderly people form relationships with young girls."

For the story, see Police say more taking advantage of the elderly.

(1) The story states that Casey repeatedly insisted he willingly gave the money to the caretaker, whom he described as "a great person" with a "good heart," according to a detective's report.

Live-In Caregiver Surrenders State Nursing License After Convincing Now-Deceased 91-Year Old Oregon Man To Sign Over $900K Estate

In Portland, Oregon, Willamette Week reports:
  • A licensed practical nurse accused of manipulating an elderly Portland man into giving up his estate has surrendered her Oregon nursing license. The state Board of Nursing uncovered disturbing new details of the case in the investigation that led to Patricia McIntosh surrendering her LPN license last month.

  • Last year WW reported the story of Warren Cummins, who died at age 91 in his Southwest Portland home shortly after giving his property and savings to McIntosh. She had been his live-in caregiver for four months when he died.

  • Cummins’ stepson and three adopted children challenged McIntosh in court. Multnomah County Circuit Court Judge Katherine Tennyson ruled in their favor last May, saying McIntosh used “undue influence” and “manipulation” to convince Cummins to sign over his estimated $900,000 estate.

  • The case also went before the Oregon State Board of Nursing. On Feb. 10, McIntosh voluntarily surrendered her license because of “conduct derogatory to the standards of nursing.” She also promised never to practice nursing in Oregon again. The nursing board’s six-page report (PDF) contains details not yet made public about the case, [...].

For more, see ‘Manipulative’ Caregiver Surrenders her Nursing License.

See also:

Oregon Woman Charged With Abusing POA In $224K Ripoff Of 85-Year Old, Now-Destitute Mother; Victim Puts Home Up For Sale To Pay Nursing Home Bills

In Milwaukie, Oregon, KPTV-TV Channel 12 reports:
  • A woman accused of stealing more than $224,000 from her 85-year-old mother's bank accounts was arrested Thursday on charges of aggravated theft and criminal mistreatment. Milwaukie police said Janet Durkee left her mother destitute after taking the money over a five month period. The financial exploitation began, police said, when Durkee's mother, Geneva Smith, suffered serious injuries in a fall. Friends said Smith was no longer able to care for herself and that Durkee made her mother sign over her power of attorney.


  • Smith is now living at an assisted living home. She has her home up for sale so she can pay the bills.

For more, see Police: Woman Stole $224K From Elderly Mom.

Friday, April 02, 2010

Fannie-Related Mortgage Foreclosures No Longer To Be Carried Out In The Name Of MERS reports:
  • In new policy guidelines released this week, Fannie Mae told servicers that they can no longer name MERS [Mortgage Electronic Registration Systems] as the plaintiff in any foreclosure action, whether judicial or non-judicial, on a mortgage loan owned or securitized by the GSE.


  • Fannie Mae stated in its new servicing guidelines that when MERS is listed as the mortgagee of record, the servicer must prepare a mortgage assignment transferring the position from MERS back to the servicer, and then bring the foreclosure in its own name.

For more, see Fannie Bars Foreclosure Actions in the Name of MERS.

Go here for Fannie Mae's new servicing guidelines.

More Spotlight On Short Sale Fraud

The Orange County Register reports:
  • The [California] Department of Real Estate is issuing warnings about fraudulent short sales. [...] Short sales, in which properties are legally sold for less than what’s owed on the mortgage as long as the lender agrees, have been on the upswing this year. The DRE says it’s also been alerted to fraud surrounding short sale transactions.

For some examples, see Watch out for fraud in short sales.

Unwitting Family Gets The Boot Six Months After Paying $11K Deposit On Home "Purchase" From R/E Agent Now On Trial On Fraud, Forgery Charges

In Kitchener, Ontario, The Record reports:
  • [Natasha] Embro said she and her former husband, David, had been looking for a house, but didn’t have much money for a down payment, when they saw a newspaper advertisement for assumable mortgages requiring no approval.

  • [Real estate agent Steven] Stojadinovich(1) took them to three places and they agreed to buy the Wooley Street house for $189,900, with an $11,000 down payment, without negotiating the price or knowing the interest rate on the mortgage. “We were just excited to be able to get a house,” Embro said.

  • Naïve and inexperienced, she said, the couple didn’t use a lawyer and began paying Stojadinovich in cash after leaving their rented quarters and moving into the house with four children under 10 in the fall of 2005.


  • The eviction notice came without warning about six months later, leaving the couple scrambling to load all the belongings they could into a truck while officials secured the house behind them. [...] Embro said they lost their $11,000 “down payment” and all the money they gave Stojadinovich while thinking they were paying a mortgage.


  • The legal owner of the house was really Ryan Dewulf, a young friend of Stojadinovich. He testified he thought it had been sold until he began receiving notices about mortgage arrears. Dewulf was involved in all three of the house deals, but said he trusted Stojadinovich to handle the details. He was eventually sued in relation to the transactions and had to declare bankruptcy. Shown several documents in court, Dewulf said he had never seen them before and that the signatures on them weren’t his.

For the story, see Family evicted after thinking they had purchased house.

(1) Steven Stojadinovich, 49, is on trial after pleading not guilty to fraud and forgery charges related to three house deals in 2005 and 2006.

Trial Begins For Real Estate Broker Accused Of Using Stolen IDs To Obtain 47 Loans For $17.5M+ On 35 Properties; Two Other Suspects On The Lam

In Orange County, California, The Orange County Register reports:
  • A real estate broker is on trial for allegedly conspiring with her boyfriend and his brother to commit $17.5 million in real estate fraud by buying 35 properties using stolen identities and purposely defaulting on loans to get the money.

  • Kathy Chen, 49, Westminster, is charged with 157 felony counts, including conspiracy, grand theft, forgery, recording false documents, identity theft and other crimes. They carry a total maximum of 109 years in state prison.

  • Chen’s boyfriend, Richard Salgado Gonzalez, 60, and his brother, Daniel Gonzalez, 57, face the same charges and sentence as Chen. The brothers are fugitives and have outstanding arrest warrants. Both may currently be living in Puerto Vallarta, Mexico, according to the Orange County District Attorney’s office.

  • Chen worked as a real estate broker and owned several businesses including Chen Financial, Western Escrow, Nationwide Tax Services and SBC Financial.

  • The trio is accused of obtaining 47 fraudulent loans from 13 lenders on 35 properties for more than $17.5 million. Prosecutors say they used the identities of unsuspecting or unqualified victims to get the loans. The victims often spoke little or no English, had no jobs or little income and never intended to live in the homes or repay the loans in their names, according to the D.A. The properties included 13 in Orange County, 16 in San Bernardino County, and 6 in Kern County.

Source: $17.5M real estate fraud trial underway.

Cops Seek Real Estate Agent Accused Of Swiping Cash From Company Trust Account

In Rancho Cucamonga, California, the Inland Valley Daily Bulletin reports:
  • District attorney's fraud investigators are hoping that a woman wanted on suspicion of real estate fraud will turn herself in. Authorities served a search warrant at the Rancho Cucamonga home of Jodi Lee Nazir, 40, [...] said Vance Welch, prosecutor with the San Bernardino County District Attorney's Real Estate Fraud Unit. Three people, including Nazir's son, were in the house at the time, Welch said.


  • The case against Nazir has been building since 2007 when she was first arrested, Welch said. The District Attorney's Office has filed six counts of grand theft and embezzlement against Nazir.

  • One count of the criminal complaint alleges that Nazir fraudulently obtained cash from a trust account for her personal use. She was able to obtain the cash using her position as a real estate agent with the Inland Empire Real Estate Solutions Trust Co. The criminal complaint also alleges grand theft in which Nazir "took, damaged and destroyed property exceeding $200,000."

Source: Real estate fraud suspect eludes authorities.

Thursday, April 01, 2010

Homeowner Accuses Loan Servicer Of Payment Posting Screw-Ups, Improper Charges For Force-Placed Insurance, Erroneous Reports To Credit Bureaus

In Galveston, Texas, The Southeast Texas Record reports:
  • After being threatened with foreclosure despite properly disputing a number of delinquencies on his mortgage, a Galveston County man has filed a $210,000 lawsuit against a Florida-based loan management company. Theordia L. McMahon accuses Bayview Loan Servicing LLC of failing to post payments and credits to his account in a timely and accurate manner after the defendant assumed the debt in early 2009, additionally claiming it refused audit for errors regarding premiums for force-placed windstorm insurance.

  • The suit was filed March 18 in Galveston County District Court. According to the complaint, McMahon, a disabled veteran, obtained the home equity mortgage in 2007. CitiMortgage allegedly purchased the debt and assigned it to Bayview two years later. The suit states that CitiMortgage had informed the defendant that the plaintiff did not owe the premiums, but Bayview continued to demand payment.

  • Bayview's subsequent actions resulted in the creation of erroneous reports of late payments to the credit bureaus, court papers assert. McMahon received a letter dated July 28, 2009, stating he failed to make multiple installment payments although there was no delinquency. The plaintiff responded to the notice with additional written disputes of delinquencies without success, the suit argues. Bayview ultimately filed an application for expedited foreclosure on Feb. 10.

  • The suit alleges that McMahon "suffered significant mental distress due to the attempted wrongful foreclosure, libelous errors, and the credit denial."

Source: Man claims loan company improperly foreclosing on home.

State Regulator Clips Loan Modification Operator Out Of $2,500 For Unlicensed Activity; Seeks Refunds For Cash Collected From Homeowners

From the Nevada Division of Mortgage Lending:
  • After investigation, the Division [of Mortgage Lending] found that Las Vegas-based Felipe J. Urbina, dba Conceptos Home Retention Team, was providing loan modification and foreclosure consultant services without a license from the Division. As a result, the Division issued a $2,500 fine, plus $438 in administrative costs. The Division is also seeking to require Mr. Urbina to refund payments he collected from homeowners while he conducted the unlicensed activity.

For the press release, see Division of Mortgage Lending Issues Fines and Takes Enforcement Action in Four Matters.

Bldg Inspectors Shut Down Another NYC Deathtrap, Giving Occupants "Hours" Notice; Illegal Hostels Said To Cram Up To 16 Residents In Each Apartment

In Williamsburg, Brooklyn, the New York Post reports:
  • Talk about a hostel living environment! City officials raided and cleared a six-story Williamsburg building that contained two allegedly illegal hostels [] after an inspector found that the commercial building was not zoned for residential use.
  • Twenty tenants, mostly in their 20s and early 30s, were told to gather their things and leave the building [...]. The Red Cross arrived at the scene shortly after 2 pm to provide emergency services including temporary housing for those with nowhere else to go. “We were told we had a few hours to get out,” said Adriana Lee, an employee at Loftstel, one of the two hostels in the building. “Some people have been living here a couple of years.”
  • Two hostels, [...] managed 12 apartments total, which could house up to 16 people each with a capacity of 192 people. Tenants, many of them international students and interns at local hospitals and the United Nations, paid upwards of $1,100 per month to live in the communal setting.
  • According to city officials, in addition to not having the proper permits, the building did not have a fire escape, sprinkler system or a secondary exit in case an emergency arises.
For more, see Hostel takeover in Williamsburg! (The city kicks out two allegedly illegal hotels inside a normal residential building). subdivided
(1) According to the story, the building is just one of what city officials estimate are dozens of hostels operating out of illegally converted warehouses, commercial buildings, and residential lofts. In some cases, the owner has launched the hostel, and in others, a tenant has sought to earn extra cash by converting his apartment into a mini-dormitory. The proliferation of hostels and illegal hotels has so concerned residents and community leaders in Brooklyn that state legislators are proposing four bills that would make it illegal to rent residential buildings on a nightly basis, the story states.

Lenders File Challenges To Providence Foreclosure Mediation Ordinance

In Providence, Rhode Island, The Providence Journal reports:
  • Wells Fargo and Bank of New York Mellon have joined Deutsche Bank in filing a suit against the city over a recently enacted ordinance dealing with foreclosures,(1) according to Deputy City Solicitor Anthony F. Cottone. The two commercial and investment banks filed separate suits soon after Deutsche Bank filed its suit in January, he said.

  • Like Deutsche Bank, both banks argue that the city’s foreclosure-mediation ordinance, proposed by Mayor David N. Cicilline and City Councilmen Kevin Jackson and Luis Aponte, violates state law, according to Cottone.

For more, see Banks sue over foreclosure ordinance.

(1) According to the story, the ordinance, which has been in effect since September, requires lenders and homeowners to attempt to meet with an independent, third-party housing counselor before completing a foreclosure. Any lender who fails to make a good faith attempt at mediation will not be able to file a deed of ownership with the city Recorder of Deeds, a step necessary to complete the foreclosure process, and are also assessed a $2,000 fine, the story states. According to an earlier story (see Council OKs fine for disregarding foreclosure law), the city has found that failure to comply with the ordinance can lead to breaking the chain of title, which affects the value of the property and creates problems for the purchaser (ie. title to foreclosed property will be muddled up, which will affect its value, and the ability to obtain financing and title insurance for future buyers).

Reportedly, Deutsche Bank argues inits lawsuit that the city has no legal right to impose a different set of requirements for completing a foreclosure from other cities and towns in the state.

Wednesday, March 31, 2010

NJ Feds Squeeze Guilty Plea From Brooklyn-Based Foreclosure Rescue Operator; Admits To Role In Peddling Sale Leaseback, Equity Stripping Scams

From the Office of the U.S. Attorney (Newark, New Jersey):
  • A Brooklyn man pleaded guilty [] to conspiracy to commit wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, U.S. Attorney Paul J. Fishman announced. Garth Celestine, 44, of Brooklyn, New York – formerly an owner of Home Savers Consulting Corp., which was located in Brooklyn and Freeport, New York – pleaded guilty [] to the conspiracy charge before U.S. District Judge Dennis M. Cavanaugh.


  • On August 5, 2009, Celestine was arrested pursuant to a Complaint along with former Home Savers co-owner Phil A. Simon. According to the Information to which Celestine pleaded guilty, other documents filed in this case, and statements made during Celestine’s guilty plea proceeding:

  • Celestine and Simon owned and operated Home Savers, which held itself out as a foreclosure rescue company, at 946 Fulton Street, Brooklyn, New York, and 350 North Main Street, Freeport, New York. Celestine and Simon allegedly conspired with each other and others to defraud both homeowners facing foreclosure and mortgage lenders by making materially false representations and promises.(1)


  • Celestine admitted that as a result of their actions, he and Simon fraudulently obtained more than $1 million and caused the mortgage lenders to fund dozens of fraudulent loans worth more than $10 million.

Reportedly, Simon has pleaded not guilty, and a criminal complaint against him is still pending, said Rebekah Carmichael, a spokeswoman for the U.S. Attorney’s Office. An investigation into the scheme continues, Carmichael reportedly said.

U.S. Attorney Fishman credited Federal investigators with the FBI, and Postal Inspectors of the U.S. Postal Inspection Service for their investigation leading to the guilty plea, and thanked Brooklyn District Attorney Charles J. Hynes for the assistance and cooperation that was provided by his Office.

For the U.S. Attorney press release, see Former Owner of Home Savers Consulting Corp. Pleads Guilty to Mortgage Foreclose Rescue Scheme.

See also, The Record: Brooklyn man pleads guilty to foreclosure scam in Bergenfield, Paterson.

Go here for earlier posts on the now-defunct New York City-area foreclosure rescue operator, Home Savers Consulting Corp.

(1) According to the press release, Celestine admitted that, doing business as Home Savers, he and his partner Simon advertised to homeowners and promised to help them avoid foreclosure, keep their homes, and repair their damaged credit. Celestine told the homeowners that they could avoid foreclosure by signing contracts of sale and transferring title to their homes to individuals who would act as “straw buyers” of the properties. Celestine promised the homeowners that after they transferred their title to these straw buyers, Home Savers would improve their credit ratings, help them obtain more favorable mortgages on their homes, and ultimately direct the straw buyers to transfer the title to their homes back to the homeowners within six months to one year. Celestine and Simon typically told the homeowners that the equity withdrawn from their properties would be kept in a separate account and used to pay the mortgages and expenses on their homes.

San Bernardino DA Bags Five In Alleged Conspiracy That Used Unwitting Victim's ID To Obtain $1M In Home Loans

From the Office of the San Bernardino County, California District Attorney:
  • [A]ndy Williams, 38, of San Bernardino, surrendered himself to San Bernardino County District Attorney's Investigators for real estate fraud related charges. Williams was arrested for numerous felony counts including grand theft, forgery, and filing forged documents with the County Recorder’s Office. Within the last two weeks, four other co-conspirators, Angela Cotton, 38, of Fontana, Frederick White, 31, of Beaumont, Terry Wallace, 41, of Mira Loma, and Donell Spencer, 43, of Lancaster, were arrested on similar charges on the same investigation.

  • In 2006, the suspects conspired to obtain real estate loans by fraudulently using the victim's identity. [...] The victim's signature was forged on loan documents and Deeds of Trust. Approximately $1,000,000 was stolen due to these fraudulent loans. The victim had no knowledge of these loans until months later when she was contacted by lending institutions for lack of payment.

For the DA press release, see San Bernardino Man Arrested for Real Estate Fraud.

Missouri AG Obtains Money Judgments Against Two Loan Modification Outfits In Separate Cases; Firms Allegedly Failed To Provide Promised Services

From the Office of the Missouri Attorney General:
  • Attorney General Chris Koster said [] his office has obtained judgments against two foreclosure rescue companies who allegedly took money from distraught homeowners and failed to provide promised services.


  • Koster said his office reached a settlement with Gateway Mortgage Modification, owned by Richard R. Reichert, Jr. Gateway was alleged to have unlawfully charged up-front fees for foreclosure and mortgage modification services and to have falsely promised consumers that attorneys would negotiate loan modifications on their homes. Koster said the court ordered Gateway and Reichert to pay $65,000 restitution.(1)


  • Koster said First Universal Lending, LLC, based in Palm Beach Gardens, Florida, marketed its services to homeowners who were having difficulty paying their mortgages or facing foreclosure, promising them lower house payments or lower interest rates. Company representatives told some clients to stop making mortgage payments while the modification process was proceeding, which harms consumers by injuring their credit rating and increasing likelihood of foreclosure. The business also illegally required homeowners to pay up-front fees before they would provide any services. Koster said the court ordered First Universal to pay more than $51,000 restitution and $23,000 civil penalties.(2)

For the Missouri AG press release, see Attorney General Koster obtains judgments against two foreclosure rescue companies (Court orders $116,000 in restitution).

(1) In addition, the court permanently prohibited the company from charging up-front fees for services and from falsely representing to consumers that attorneys would negotiate modifications, the press release states. The court also permanently prohibited Gateway and Reichert from violating the state's merchandising practices and foreclosure consultant laws and ordered them to pay attorney fees and costs. Koster said that if the company fails to pay restitution as ordered, an additional $10,000 penalty will be imposed.

(2) The company also is prohibited from charging up-front fees; advising homeowners to stop making mortgage payments; and promising loan modifications they fail to follow through with, according to the press release.

Foreclosure Eviction Attempt Lands Lender In Federal Court; Tenant Accuses Bank Of Using Misleading Letter To Intimidate Her Out Of Rented Home

In Cincinnati, Ohio, the Cincinnati Enquirer reports:
  • A College Hill woman sued GMAC Inc. on Monday to stop the company from evicting her and other tenants after their rented homes were sold at sheriff's sales. Rosalyn Pratt said GMAC purchased her home in December after the property fell into foreclosure and then sent her a letter stating she would receive $500 if she left within two weeks. If Pratt didn't leave, the letter said, she would be evicted.


  • Her Legal Aid lawyer, Nicholas DiNardo, said the company's letter violates a 2009 federal law that requires landlords to give tenants at least 90 days notice before evicting them from properties that have gone into foreclosure or changed hands in a sheriff's sale."This is a direct violation," DiNardo said. "They misinformed her. They said if you don't take this deal, we'll file an eviction notice against you."(1)


  • The lawsuit, filed in U.S. District Court in Cincinnati, seeks a court order barring GMAC from evicting Pratt and from continuing to use the eviction letter the company sent her earlier this year.

For the story, see Suit seeks to block foreclosure evictions.

Representing the tenant is the Legal Aid Society of Southwest Ohio, LLC.

(1) For the lawsuit and the attached exhibits that allege violation of the Federal Protecting Tenants at Foreclosure Act (among other causes of action), see Pratt v. GMAC, et ano.

Lender's Bookkeeping Screw-Up Lands Long Island Homeowner In Foreclosure; Bank Corrects Error, Issues Apology Only After Local Media Intervention

In East Hampton, New York, WABC-TV Channel 7 reports:
  • She's an architect who's helped build scores of homes. But now - the struggling businesswoman is trying to save her own house from foreclosure after she says her bank tried to literally run her out of town - that is until 7 on your side stepped in. "It's ridiculous. It's gotten me ill." Amagansett homeowner, Eva Growney's talking about foreclosure notices she's been receiveing since last year from her mortgage company, Chase. "It's exasperating. The phone rings all the time because I'm always getting threatening phone calls," the Hampton's homeowner.

  • At issue? Two mortgage payments, one from last April, the other from August totaling more than $4,890. Chase says they're both owed. But Eva and her business partner, Michael O'Sullivan, say both were paid months ago, when they were originally due.


  • So 7 On Your Side contacted Chase. And after a flurry of phone calls, Chase finally apologized for it's error and credited the two lost mortgage payments as sent on time. Finally, her mortgage was corrected. And Eva and Michael were breathing easier. "In that aspect we're appreciated of Channel 7 and you guys." Chase also said it had contacted the three credit reporting bureaus asking them to update Eva's account as being current and wipe the delinquencies off her record.

For the story, see Mortgage mess.

Tuesday, March 30, 2010

Unwitting Mortgage Cosigner Takes Hit On Credit Report After Daughter, Son-In-Law Subsequently Modify Loan Payments, Despite Never Being In Default

In Cherry Hill, New Jersey, The Philadelphia Inquirer reports on Roseann Ippoliti, a local woman who recently took a big hit on her credit in connection with a mortgage she had cosigned for her daughter and son-in-law to facilitate a home acquisition, despite the fact that the loan payments were always timely made.

The problem arose from the desire of the daughter and son-in-law to subsequently refinance the mortgage so that they could relieve Roseann from any personal liability on the acquisition loan.
  • Rather than leave her in a potentially vulnerable financial situation, Ippoliti said, her son-in-law decided to refinance the mortgage to put the house in his name. He contacted Wachovia and was told to apply for a mortgage modification instead. He did, it was approved, and his payments dropped to $1,100 a month from $2,159.


  • Because Ippoliti's name remained on the modified mortgage, she needed to sign the modification document. But, she said, her son-in-law was told her signature was unnecessary - that his signature, as occupant of the property, was enough.

  • In November, Ippoliti received a letter from Bank of America notifying her of a routine periodic review, "to ensure that they feature the most appropriate credit line" on her credit card. That review resulted in a drop in her credit line to $3,400 from $13,000 "because I had a major derogatory record on my credit file," which Bank of America identified as "a mortgage being delinquent." (Ippoliti has mortgages on houses in Cherry Hill and Cape May, and both are current.)

  • It was then her daughter and son-in-law told her about the mortgage modification, explaining they didn't do so before because they weren't delinquent and Wachovia said it didn't need her signature. They had no idea how the words mortgage modification are viewed by creditors.

For the story, see Cosigner bitten by refi mistake.

NYC To Offer Free Legal Support In Mandatory Settlement Conferences For Homeowners In Foreclosure

In New York City, Crain's New York Business reports:
  • The city announced [] that it will be offering free legal support for New Yorkers at risk of losing their homes to foreclosure. The new program will be offered through NYC Service, which was launched last year by Mayor Michael Bloomberg to provide volunteer services to different sectors across the city suffering from the recession. The program will train and dispatch 300 volunteer attorneys to expand the legal services already provided by nonprofits to homeowners facing foreclosure.


  • The program, dubbed NYC Service Legal Outreach, will provide homeowners legal assistance during the mandatory settlement conference, which is when the homeowner and bank meet to negotiate alternatives to a foreclosure. Under a recently passed New York state law, these conferences are required before foreclosures can proceed.

  • The city hopes to recruit 300 volunteers over the next three months. One hundred of those volunteers will be stationed at courthouses to screen homeowners, while the other volunteers will be matched with individual homeowners and represent them through the foreclosure settlement process.

  • Volunteers do not need real estate law expertise because they will be trained and supervised by Empire Justice Center, Legal Services NYC, The Legal Aid Society and the City Bar Justice Center. The Center for NYC Neighborhoods, a non profit created three years ago to assist distressed homeowners, will direct homeowners to the program.(1)

For more, see City to offer legal aid to those facing foreclosure (Mayor launches program to train and dispatch 300 volunteer attorneys; vows “no family facing the loss of their home should be without representation").

(1) For a Center for NYC Neighborhoods report on how the court-based “mandatory settlement conference” process in New York foreclosure actions has yet to live up to expectations, see LOCKED OUT: Little Relief for NYC Homeowners in the Foreclosure Settlement Process ("Of the nearly 800 settlement conferences reviewed during this study, only 3% resulted in any kind of settlement").

NY Appeals Court Dismisses Lender's Lawsuit; Says Bank Failed To Strictly Comply With State Anti-F'closure Rescue Ripoff Law When Filing Legal Action

In Brooklyn, New York, The New York Law Journal reports:
  • Failure to give proper notice to a homeowner under New York's foreclosure fraud law is a defense that can be raised at any time, a Brooklyn appeals court has ruled in a decision of first impression at the state appellate level.

  • In dismissing a foreclosure suit against homeowner Alan Silver, a panel of the Appellate Division, 2nd Department, held that the lender seeking to foreclose had the burden of showing strict compliance with the state's Home Equity Theft Prevention Act.

  • The act, codified in Real Property Law §265-a, requires that a homeowner be served with a foreclosure notice on a separate, colored page with a "bold, twenty-point type" title and "bold, fourteen-point type" in addition to a summons and complaint. Enacted in 2007, the law aims to curb foreclosure-related schemes that encourage homeowners in financial distress to sign over their houses to buyers who promise to pay off the debt but disappear once they have the title.

  • In reversing Supreme Court Justice Karen V. Murphy in Nassau County, N.Y., a four-judge appeals panel in First National Bank of Chicago v. Silver, 18539/07, disagreed with the bank's argument that complying with the statutory notice requirement was a "red herring." "We hold that this is a condition precedent which is the plaintiff's burden to meet, and which does not have to be raised as an affirmative defense in the answer," Justice Anita R. Florio wrote for the panel. Justices Mark C. Dillon, Ruth C. Balkin and John M. Leventhal joined the opinion.


  • In reversing the lower court, Florio observed that lower courts had consistently interpreted the notice provision "as a mandatory condition" that required the foreclosing party to show "compliance therewith and, if it fails to demonstrate such compliance, the foreclosure action will be dismissed."(1)

For more, see N.Y. Court Places Burden on Bank of Showing Notice of Foreclosure.

For the court ruling, see First Natl. Bank of Chicago v Silver, 2010 NY Slip Op 02511 (NY App. Div. 2nd Dept., March 23, 2010).

Go here for the standard, statutorily-required foreclosure notice required by New York's Home Equity Theft Prevention Act that the lender failed to serve on the homeowner when initiating this foreclosure action and which proved to be its undoing.

(1) Reportedly, Jeffrey D. Buss of Smith, Buss & Jacobs in Yonkers, N.Y., represented Silver and his wife pro bono. In an interview, Buss said that "it was a real pleasure" to inform his clients, a couple in their 80s, that the case had been dismissed, the story states. Buss said the bank could re-file the case but would have difficulty proving standing, according to the story.

Judge Addresses Attorney BS When Imposing Sanctions Against Lawyer For Role In Attempt To Revoke Valid Loan Modification Agreement

In Oakland, California, U.S. Bankruptcy Judge Randall J. Newsome recently found himself addressing the conduct of an attorney representing IndyMac Bank (OneWest Bank) for her role in attempting to improperly scrap a valid loan modification agreement between the bank and a homeowner facing foreclosure, and which resulted in an unappreciated waste of the judge's time.
  • [W]hen attorneys come before the court and play "fast and loose" with the truth, or rely on the bureaucratic obfuscations of their clients to dodge commitments they have made, this court is required to act to protect the integrity of its processes. If the court cannot rely on and trust the authority and words of the lawyers that appear before it, it cannot effectively handle the increasingly heavy volume of work confronting it, thus risking systemic collapse. That trust has been breached in this adversary proceeding, and the remedy of judicial estoppel perfectly suits the facts presented.

  • Accordingly, the defendants are hereby adjudged to have accepted the July 1, 2009 [loan modification] agreement signed by the [homeowner ...], and are fully bound by the terms thereof. The terms of that agreement supercede and replace any and all terms that are inconsistent therewith in any and all notes and deeds of trust previously executed by the parties, their successors and assigns.

  • As for the issue of sanctions, the defendants' failure to appear at status conferences and respond in timely fashion to court orders alone amply support a finding of bad faith in the conduct of this litigation. The total indifference shown towards the court's processes, the waste of judicial resources that resulted, and the misleading statements made to both the court and plaintiffs' counsel, constituted willful misconduct. In re DeVille, 361 F.3d 539 (9th 662 Cir.2004); see also U.S. v. McCall, 235 F.3d 1211, 1217 (10th Cir.2000).

For the ruling, see In re Clawson, 414 B.R. 655 (Bankr. N.D. CA, Oakland Div. 2009).

Thanks to Deontos .is for the heads-up on the court ruling.

Woman Accused By Siblings Of Using POA To Swipe Dying Father's Home; DC Court Of Appeals Orders Civil Trial On Allegations Of Forgery

A recent court ruling by the District of Columbia Court of Appeals may provide some insight for those who:
  • find themselves in a situation where an individual uses a power of attorney ("POA") to improperly convey title to real property belonging to another, and
  • seek to void/invalidate or otherwise undo the improper conveyance, and any transfers or mortgaging of the subject property occurring thereafter.

The abbreviated facts of the case, adapted from the ruling, follow:

  • On November 4, 2005, a frail, seriously ill (with pancreatic cancer) Willie Smith purportedly executed a document naming his daugter, Mary Smith, as power of attorney.

  • Eleven days later, asserting power of attorney for her father, Mary Smith purportedly executed a deed transferring title to the home of her dying father to herself for the consideration of ten dollars.

  • The next day, Willie Smith died intestate and was survived by eight children.

  • About one year later, in November, 2006, Mary Smith obtained a loan secured by a deed of trust (ie. mortgage) on her now-deceased father's home for $220,000.

  • Subsequently, after Mary Smith defaulted on the loan, Wells Fargo Bank, which had come to hold the note secured by the deed of trust, foreclosed on the property and eventually purchased it at a foreclosure sale.

  • At some point after the loan to Mary Smith and prior to the foreclosure sale of the home, Daral Smith, who is Mary Smith's brother and one of Willie Smith's surviving children, as well as several other siblings, sued both Mary Smith and Wells Fargo in a quiet title action, alleging that the conveyances to and from Mary Smith (and any conveyances following from them) were invalid because the power-of-attorney instrument did not authorize Mary Smith to convey the property to herself and because, in any event, the instrument was a forgery.

Ruling that there was no genuine issue of material fact to be determined that would require a trial, the lower court granted summary judgment in favor of Wells Fargo, (1) having stricken the affidavits that the brothers & sisters submitted to oppose summary judgment on the forgery issue, and (2) finding that Wells Fargo was a bona fide purchaser for value without notice of any defect in title (a "BFP").

On appeal, the District of Columbia Court of Appeals:

  • affirmed the lower ruling that, given the specific facts of this case, Wells Fargo (the foreclosing lender who wound up holding the loan on the home) was entitled to the protection of the recording statutes as a bona fide purchaser; and

  • reversed the lower court ruling on the forgery issue, saying that "the trial court erred in striking the affidavits that plaintiffs submitted in support of their forgery claim, and likewise erred in granting summary judgment, because the affidavits raised a material factual issue as to whether there was a forgery affecting the chain of title."


The court reviewed the POA, the terms contained therein, the surrounding facts of the case, and the case law precedent that it applied. It observed that the underlying deed to Mary Smith and the deed of trust in favor of her mortgage lender would be void ab initio if the POA was a forgery, or if the POA was valid but Mary Smith exceeded the authority it gave her as attorney-in-fact when she conveyed the property to herself. It concluded that:

  • the POA, assuming it wasn't a forgery, gave Mary Smith apparent authority (as opposed to actual authority) to convey the property as she did, and implied that in the event she did not have actual authority, the title conveyed would, at worst, be considered voidable (as opposed to void ab initio). In that case, Wells Fargo would be entitled to the protection of the recording statutes as a bona fide purchaser, which would preclude its deed of trust from being voided/invalidated by the court, and

  • the POA, assuming it was a forgery, would result in Mary Smith's title and Wells Fargo mortgage being void ab initio, in which case Wells Fargo would not get bona fide purchaser protection and, accordingly, would be left holding the bag with a deed of trust that would be subject to being voided/invalidated by the court.

Accordingly, the D.C. Court of Appeals booted the case back to the lower court to allow for a trial to determine whether or not the POA purportedly given to Mary Smith by her father was a forgery.

For the ruling, see Smith v. Wells Fargo Bank, 09-CV-77 (D.C. Ct. of App., March 25, 2010).

Monday, March 29, 2010

Short Sale "Flopping" Among Current Real Estate Scam Techniques Getting Attention From Feds

In Phoenix, Arizona, BusinessWeek reports:
  • [Financial Fraud Enforcement Task Force] members were in Phoenix to hear about emerging trends in mortgage fraud from professionals who work in the real estate and mortgage industry, and community organizers and lawyers who help homeowners struggling to keep their homes. Members include senior Justice Department prosecutors, FBI officials and officials with the Department of Housing and Urban Development.


  • Real estate professionals who briefed task force members outlined new and emerging fraud trends, including the "flopping" of short-sale properties. That's a technique where someone gets two price opinions from brokers, giving the low one to the bank arranging a short sale of a home nearing foreclosure and the high one to a potential buyer, said Holly Eslinger, president of the Arizona Association of Realtors.

  • Such techniques can net an unscrupulous buyer tens of thousands of dollars while shorting the bank and homeowner and taking advantage of the subsequent buyer, she said.

Source: US AG brings more money to fight AZ mortgage fraud.

Pennsylvania B'kruptcy Court Voids Sale Leaseback Scam; Victimized Homeowners' Continued Possession Leads To Invalidation Of Subsequent Deed, Mortgage

A recent ruling of a Federal bankruptcy court in Philadelphia, Pennsylvania provides a roadmap for one way in which a sale leaseback, equity stripping foreclosure rescue scam can be undone or unwound, invalidating both the initial title transfer (that was coupled with a contemporaneous leaseback of the premises with a repurchase option) by the victimized homeowner to the foreclosure rescue operator, as well as subsequent conveyances to others.

In a nutshell, the facts are as follows:

  • Homeowners (husband & wife) transfer property to a trust formed and controlled by a local foreclosure rescue operator ("Operator"),
  • Homeowners remain in possession of the property pursuant to a leaseback agreement which includes a right to repurchase the home at some future time,
  • Operator then sells property to 3rd party buyer,
  • 3rd party buyer gets a mortgage loan from bank to finance purchase.
  • Throughout the relevant time period, Homeowners maintained clear, open and exclusive possession of their home.

In ruling that Homeowners were entitled to undo this scam, U.S. Bankruptcy Judge Eric L. Frank found, among other things:

  • Operator violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL)" by running this scam,

  • Homeowners were entitled to the remedy they requested - the invalidation of the deed to Operator and have their title restored, returning them to the position they were in immediately before they were scammed,

  • The transfer of title by Homeowners to Operator, while not void ab initio, was nevertheless voidable by reason of the violations of the UTPCPL,

  • The subsequent title transfer by Operator to 3rd party buyer was subject to invalidation because the buyer, by reason of the fact that Homeowners maintained clear, open and exclusive possession of their home, had constructive notice of the scam and, consequently, was not a bona fide purchaser entitled to the protection of the state recording statutes,(1)

  • The subsequent mortgage involving the 3rd party buyer and the mortgage lender used in financing the subsequent purchase was subject to invalidation because the lender, by reason of the fact that Homeowners maintained clear, open and exclusive possession of their home, also had constructive notice of the scam and, consequently, was not a bona fide purchaser entitled to the protection of the state recording statutes.

  • Homeowners' were entitled to recover attorneys’ fees and costs from Operator.

However, Judge Frank did go further to find that, to the extent that the proceeds of the loan from the mortgage lender were applied to paying off Homeowners' existing mortgage in default, delinquent real estate taxes, and similar type expenses that in some way directly benefitted Homeowners, the mortgage lender was entitled to an equitable lien on the home for the amounts paid thereon. By granting the equitable lien on the home to the lender, Judge Frank refused to allow Homeowners the enjoyment of the significant windfall resulting from the payoff of the existing liens encumbering the property immediately before the scam was executed.

The mortgage lender, however, was not entitled to the protection of an equitable lien on the home for the amount of the excess proceeds, including any amounts pocketed by Operator, paid for closing costs, etc.

For the ruling, see In re Fowler, Chapter 13, Bky. No. 07-11692ELF, Adv. No. 07-00139ELF (Bankr. E.D. Pa. March 3, 2010).

(For those looking for a quick, easy read, don't bother clicking the link to this case. The ruling is 90+ pages and frankly, there's no way to fully address, in one blog post, all the facts and circumstances, and the related points of law, that Judge Frank exhaustively - and exhaustingly - covers.)

Representing Homeowners in the litigation in this case was The Regional Bankruptcy Center of Southeastern PA, Havertown, PA. (In detailing the events that transpired during the relevant times leading up to the lawsuit, Judge Frank noted in his ruling that Homeowners obtained pre-litigation legal assistance from Community Legal Services of Philadelphia).

(1) For more Pennsylvania case law on this point, see:

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

Paralegal Gets Three Years For Role In Sale Leaseback Foreclosure Rescue Ripoff Targeting Financially Distressed Homeoners In Brooklyn, The Bronx

From the Office of the U.S. Attorney (New York City):
  • PREET BHARARA, the United States Attorney for the Southern District of New York, announced that MARINA DUBIN, a real estate paralegal, was sentenced yesterday to two concurrent three-year prison sentences in connection with her involvement in a multimillion-dollar, sub-prime mortgage fraud scheme and another foreclosure rescue scheme.(1)

For the press release, see Paralegal Sentenced In Manhattan Federal Court To three Years In Prison For Role In Multi-Million Dollar Mortgage Fraud And Foreclosure Rescue Scheme.

(1) The foreclosure rescue scheme targeted homeowners whose homes, primarily in Brooklyn and Bronx, New York, were in foreclosure or facing foreclosure, by offering them a plan to "save" their homes. The proposed plan included the refinancing of the homeowners' debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to "sell" their homes to straw buyers, who would apply for loans to be used to "save" the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to pay off the homeowners' old debt and make one year's worth of payments on the new loans. The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit. Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to "save" their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners' signatures on various documents that transferred the homes to straw buyers without the homeowners' knowledge.

NY AG Tags Two Loan Modification Outfits In Civil Suits For Failing To Provide Promised Services

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [] filed lawsuits against two loan modification companies for engaging in nationwide foreclosure rescue scams. The lawsuits were filed against National Modification Service (“National Modification”) and its founder Joseph Romano, and Infinity Mitigation Corporation, Infinity Funding Group (“Infinity”), and their owner and principal Neil Singer. The companies and their owners prey on homeowners facing foreclosure by claiming that they can save their homes, but often fail to provide the services promised. National Modification is based in Farmingdale, New York and Infinity is based in Bohemia, New York.(1)

For the New York AG press release, see Attorney General Cuomo Sues Two New York Companies For Defrauding Homeowners In Nationwide Foreclosure Rescue Scam (Cuomo Sues National Modification Service and Infinity Mitigation Services for Illegally Charging Homeowners for Loan Modification Services That Were Not Performed; Cuomo Also Shuts Down Two Other Companies in New York in the Latest Stage of his Ongoing Investigation into Foreclosure Rescue Companies).

(1) The lawsuits against National Modification (go here for lawsuit) and Infinity (go here for lawsuit) allege that the companies charged homeowners up-front fees of several thousand dollars, a violation of New York law. In addition, the companies used misleading advertising and made false representations to customers, including unsubstantiated claims of over a 90% success rate and guarantees that they would be able to convert an adjustable-rate mortgage to a lower, fixed-rate mortgage. The lawsuits also allege that the companies promised a 100% money-back guarantee but then failed to provide refunds to customers that they scammed, often even refusing to answer the customers’ calls.

Sunday, March 28, 2010

"Business Deals Gone Bad" Defense Lets Thief Off w/ Handslap; Some Screwed Over Scam Victims To Get 41 Cents On Dollar Restitution; Others Get Stiffed

In Kennewick, Washington, The News Tribune reports:
  • A Richland real estate developer pleaded guilty Thursday to first-degree theft after being accused of bilking Tri-City residents out of $380,000 they had given him for real estate investments.(1) Armen Lucius B. Weishaar, 49, could be sentenced next week in Benton County Superior Court to up to 90 days in jail and ordered to pay $80,000 in restitution.

  • That reflects only a portion of more than $500,000 he is accused of collecting in potentially fraudulent property dealings from people in the Tri-Cities, Western Washington and Arizona.(2) As part of a plea agreement, five Benton County theft charges against Weishaar will be dropped. He originally pleaded innocent to six counts involving two couples and four individuals.

  • It's not an ideal outcome, said Benton County Prosecutor Andy Miller. But it was acceptable to most of the Tri-City residents who accused Weishaar of taking their money to invest in real estate but never completing the transactions or returning the cash. [...] The guilty plea gives Weishaar a felony record, which victims wanted, Miller said. It could help protect those he might do business with in the future.

  • Miller believed Kennewick police did a good job of investigating allegations and that he had "a very defensible case." But the prosecution still had to prove Weishaar made the deals with criminal intent and that they were not just business deals gone bad [aka "business deals gone bad" defense], Miller said. Neither Miller nor Weishaar's attorney, Sal Mendoza, were sure a jury wouldn't find Weishaar guilty on all charges or innocent of all charges, they said.

For the story, see Richland developer pleads guilty to $380,000 real estate scam.

(1) Some of the alleged victims dipped into retirement money or used home equity to invest with Weishaar, prosecutor Miller said.

(2) According to the story, the $80,000 in restitution will be split only among the Tri-City victims, according to the prosecutor. In addition to the $380,000 Weishaar was accused of taking in Tri-City deals, he also has been accused of taking $124,000 from people in Western Washington and Arizona, the story states. The agreement to pay restitution apparently stiffs the remaining alleged victims.

Unpaid Water Bills Could Lead To Home Condemnation, Resulting In Big Hit For Foreclosing Lenders

Buried in a recent story from Grand Rapids, Michigan on rent-skimming landlords facing foreclosure who are stiffing the local utility on their water bills resulting in water shut-offs is the following excerpt reported by WOOD-TV Channel 8. Those water shut-offs should be of some concern to lenders, who face taking a big hit on account of possible action by local officials arising from the lack of water to the premises being foreclosed:
  • The city can condemn an occupied property with no water and undoing that action will take more than simply paying the bill. "We require that that property be brought up to, once it's condemned, brought completely 100% up to code before it can be occupied again," said Virginia Million with the Grand Rapids Housing Commission. That means everything up to code, from electricity to structure, often a tall task on an older property.(1)

Source: Landlord not paying bills? Move (Read the lease before you sign).

(1) Depending on how old the structure is, the cost of bringing a property up to the current building code could cost a small fortune. In real estate markets where that cost exceeds the value of the property, the foreclosing lender could find its loan collateral rendered worthless. Once the property is condemned, it is no longer a question of doing the necessary repairs or otherwise curing whatever the problem was that gave rise to the condemnation. A new certificate of occupancy is necessary which, as the story points out, requires that the home be completely brought up to meet the current building code - not the one in effect when the home was built (which could be 50+ years ago in many places). This means that, in addition to fixing things that need fixing, the property owner will now have to also fix things that, prior to the loss of the certificate of occupancy, didn't need fixing.

Self-Proclaimed "Soverign King" On The Loose In Memphis Hijacking Possession Of & Claiming Title To Vacant Homes In Foreclosure

In Memphis, Tennessee, WREG-TV Channel 3 reports on Michael Cobbs, a self-proclaimed soverign king who is running around town hijacking physical possession of vacant homes and claiming title to them:
  • When [Jonah Asher] arrived [at his newly-purchased home], he noticed 'No Trespassing' signs in the yard, the locks were changed, and deeds posted in the windows saying Michael Cobbs owned the property. "Oh it's my house, because I can claim an abandoned home!" Cobbs said. Cobbs didn't pay for the house, because he says, he doesn't have to. "These is abandoned homes, every foreclosure is. If people knew what we knew right now, it'd be the end of American society, because these banks, these realtor companies, they're very evil," Cobbs said.

  • Cobbs says man-made laws don't apply to him, because he's sovereign. He filed papers with the Shelby County Register of Deeds declaring that he is exempt from federal, state, and local laws. "This guy thinks he's a sovereign king and he can take what he wants when he wants, and nobody can do anything about it," Asher said.

  • "This guy is talking bout I think I'm a sovereign king, I am a sovereign king! And he gonna find out. Yahweh gonna put him out of his house in Mississippi," Cobbs said. Cobbs says he follows the teachings of Yahweh ben Yahweh, the leader of a black supremacist movement. "We study real deep. We learned all of this from Yahweh Ben Yahweh," Cobbs said.


  • Cobbs says he filed deeds on six properties across Shelby County - from a $500,000 home in Collierville to a $4.6 million motel on Mount Moriah. Cobbs says, he's not done yet. "This ain't the only home I'm gonna take, I'm bout to take over everything I can!" Cobbs said.

  • Asher's doing what he can to keep Cobbs out of this house, by changing the locks and boarding up the windows, trying to protect what he's paid for. Cobbs says nothing -- not even a court order -- will keep him away. "Soon as the police and cops leave, we'll be bound to come, and kick the place back in, and take control of it again," Cobbs said. Both sides will have their day in court next week.

  • Meanwhile, we're told the Shelby County Attorney's Office and the District Attorney's Office have launched a criminal investigation into Michael Cobbs.

Source: Man Takes Homes Without Paying For Them.

In a related story, see NC3 Investigates: House Stealing Scheme.

Ex-NFLer, Family Win $150K Jury Award In Premature Foreclosure Lockout Case; "Trashout" Firm Accused Of Dumping Trophies, Sports Momentos In Landfills

In Forsyth County, North Carolina, the Winston Salem Journal reports:
  • A Forsyth County jury awarded about $150,000 in compensatory damages to a former running back for the Cincinnati Bengals and his family, who filed a lawsuit after their family home in Davie County was foreclosed on and some of their possessions were dumped in landfills.


  • The case involved Chris Perry, who grew up in Davie County and was a standout running back at the University of Michigan, and his mother, Irene Perry. In 2008, they, along with two others, sued several businesses and people, including Jerry W. Blackwelder, GRP Financial Services and Triad Residential LLC. They alleged in the lawsuit that the defendants took items, including trophies and other sports paraphernalia that Chris Perry had gotten throughout his athletic career, and threw them into landfills in Davie and Davidson counties.

For more, see Forsyth jury awards damages to former Cincinnati Bengals player and his mother.

Mix-Up Over American Indian Artifacts At Home In Foreclosure Results In Alleged Civil Rights Violations, False Imprisonment Suit Against Cops, Others

In Merced, California, the Merced Sun Star reports:
  • A Burbank couple is suing the city of Merced, three police officers, an area real estate company and a real estate agent, alleging civil rights violations, false imprisonment and the infliction of emotional distress, among other claims. In the lawsuit filed Feb. 26, Fred Mosbey III and his wife, Tracy Hardy-Mosbey, claim the officers and a representative of real estate company London Properties prevented the couple from removing American Indian artifacts from a home previously owned by Tracy Hardy-Mosbey's mother.


  • The home was under the threat of foreclosure in 2008. Mosbey said he thought he was working with his mortgage company to stop the foreclosure when his brother-in-law, Antonio Rushing, passed by the house and saw eviction papers stuck on the door. "We had no intentions of losing the house and no intentions of stuff happening like it did happen," Mosbey said.

For more, see Couple files suit after scuffle at distressed home (Retrieval of American Indian artifacts at center of action).