Saturday, June 26, 2010

200+ Renters Given 72 Hours To Vacate 4-Story Buildings As City Officials Declare South Florida Apartment Complex With Rusted Staircases Unsafe

In Lauderhill, Florida, the South Florida Sun Sentinel reports:
  • Sydney White and his family spent all day Wednesday loading their belongings into a moving truck, worrying about where his new home will be. His anxiety was triggered by a pink letter posted on his door Tuesday afternoon, telling him and other residents they had 72 hours to leave Brampton Court, a complex of four buildings in the 4500 block of Northwest 19th Street.

  • White is among an estimated 260 tenants who must leave their apartments by noon Friday after city officials deemed the complex's staircases unsafe. City officials said residents living on the complex's second, third and fourth floors must move because there would be no easy way to escape in an emergency. First-floor residents are allowed to stay because they don't need the stairs.


  • Some residents who haven't found new homes said they can't afford moving costs and expect anger, resentment and instability to rule their lives in the coming days..

For more, see Hundreds at Lauderhill apartment complex told to leave by Friday.

For story update, see:

Illinois AG Hammers 5 Home Repair Contractors In Seperate Suits Alleging Outfits Pocketed $167K In Upfront Payments & Performed Substandard Or No Work

From the Office of the Illinois Attorney General:
  • Attorney General Lisa Madigan [] urged consumers to use caution when choosing home repair and remodeling contractors as she announced five lawsuits filed against home repair businesses,(1) alleging they defrauded Illinois consumers of more than $167,000 in down payments by performing substandard work or no work at all.

For the Illinois AG press release, see Madigan Cracks Down On Home Repair Fraud (Attorney General Urges Consumers to Be Aware of Potential Fraud During Spring and Summer Home Repair Seasons).

(1) The five outfits who made the Illinois AG hit parade are:

  • C & P Development, Inc., and DM Realty & Building Inc., both of Chicago, and the owner of the companies, David S. Paul (five consumer complaints filed);
  • Paul Bunyon Tree Services, Inc., a Melrose Park, Ill.-based firm, and its president, Timothy Mullis;
  • All Seasons Contracting, Inc. with addresses in Manhattan, Ill., and Frankfort, Ill., and business owner Carol Richard and General Manager Patrick Richard;
  • Jody Dobrinich, who does business as AAA Bloomington Construction, AAA Bloomington Concrete Company and Bloomington Construction & Handyman Services (eleven consumer complaints filed);
  • J. Robert Rankin, who does business as Rankin Backhoe & Septic System (six consumer complaints filed).

Oregon AG Reaches Resolution Of Consumer Complaints With Two Loan Modification Outfits

From the Office of the Oregon Attorney General:
  • Oregon Attorney General John Kroger [] announced two settlements that will provide refunds to Oregon homeowners and prohibit two connected Orange County, California companies from doing further loan modification work in Oregon.


  • The settlement with Noah Savings Mortgage resulted in $6,500 in full refunds to two Oregon consumers. The company also must pay $5,000 to the Oregon Department of Justice and cease doing loan modification work in Oregon. [...] The settlement with Liberty Law Firm prohibits the company from doing modification work in Oregon. If any Oregon consumer complaints arise before August 20, 2010, Liberty Law Firm must pay restitution to those victims and $5,000 to the Department of Justice.

For the Oregon AG press release, see Oregon Bans Two California Loan Modifiers.

Lawyer Faces Bar Charges For Alleged Failure To File F'closure Objections In One Client's Case, Communication Problems In Landlord Dispute In Another

In Wilkes-Barre, Pennsylvania, The Citizens Voice reports:
  • Wilkes-Barre attorney Jim Hayward [...] is facing disciplinary action over allegations he violated professional-conduct rules. The allegations include failing to keep clients informed, not filing court documents for clients, not using a written fee agreement and not paying court fees on time. According to a May 4 report, a hearing committee for the state Supreme Court recommended Hayward receive a public censure with probation. Another committee has scheduled a July 19 hearing on another petition alleging three more misconduct charges.

Among the misconduct charges to be considered in the next hearing:

  • Timothy and Tanya Pintsch hired Hayward in 2009 to handle a foreclosure claim against their Hanover Township home. They claim a default judgment was entered because Hayward failed to file objections to the court action. A sheriff's sale of their home was postponed after they hired another lawyer, the petition says.


  • According to another charge in the petition, Frank and Carole Myers hired Hayward in 2008 for a landlord dispute involving a mobile home camp in Carbon County. They claimed they had problems communicating with Hayward and had to slip papers under his locked office door.

Source: W-B attorney faces censure.

Mississippi AG Warns Consumers Against Online Rental Scams Advertised On Craigslist

In Jackson, Mississippi, WLBT-TV Channel 3 reports:
  • A good priced house in a normally higher priced neighborhood is reason for consumers to put up a red flag. Craigslist is one of the fastest ways to find a great deal in today's market, as thousands of home rental listings dominate the online ad site. That's why the Attorney General's office sent out a notice on Monday, for potential renters to be weary of scammers.


  • "It's best to try to prevent it by letting people know those scams are out there," Hood said. Hood said these cases are popping up more and more in Mississippi. However, he says online advertisers are making bank at the expense of others. "They are making tons of money off of illegal activity and the con artists are just trying to scam people," said Hood.


  • [T]he Attorney General's office recommends for consumers to watch out for money wires through Western Union or MoneyGram. Also, to be aware of anyone out of the country listing a house or saying they just moved from the United States.

For the story, see Attorney General warns consumers of rental housing scam.

Friday, June 25, 2010

Armed With Search Warrant, Feds, California State Bar Pay A Visit To Law Center Offering Forensic Loan Auditing, F'closure/Loan Modification Services

In Oceanside, California, North County Times reports:
  • Agents with the FBI, the Internal Revenue Service and the State Bar of California served search warrants Wednesday at two related Oceanside loan modification businesses. The raids took place at the First American Law Center, 615 Mission Ave. in downtown Oceanside, and the Lead Source, 2101 El Camino Real.

  • FBI officials said there were no arrests Wednesday, and they declined further comment. Dean Chandler, president of the First American Law Center, said he was in Arizona when his office was raided. He said he had not been contacted by agents, and he was not sure why his business was being investigated. [...] Chandler is an attorney who was admitted to the California Bar in 1992, according to the California State Bar's website. He has never had any action against his license, according to the site.

For more, see Agents serve search warrants on loan modification businesses (FBI officials say no arrests made in raid).

Six To Cop Pleas In Flipping Racket That Left Unwitting Would-Be Homebuyers Under Rent-To-Own Deals, Straw Buyers, Foreclosing Lenders Holding The Bag

In Fort Myers, Florida, The News Press reports:
  • Seven defendants accused of participating in a more than $3 million mortgage fraud scheme appeared in state court [] with six of them ready to enter pleas. Before Lee Circuit Judge Edward Volz Jr., attorneys for Paul Bosnyak, Brian Chili, Erling Hall, Jeremy Hatlee, Trinity Ruffino and Mark Wallen indicated their clients were ready to enter pleas and testify against co-defendant Erich Heckler, who also was in court. A plea date has been set for July 12.

  • "We have come to an understanding with every defendant except for Mr. Heckler," assistant state attorney Douglas Sprotte said in court. "Mr. Heckler has to make a decision if he wants to plea."

  • According to court documents filed last year, Bosnyak, Hatlee, Chili, Ruffino and James Dalonzo worked with Heckler, Hall and Kim Jack as part of a conspiracy dating back to 2002. Heckler, Hall and Jack ran Alternative Home Financing Inc. on Dean Street in Fort Myers.

  • According to the documents, Alternative would find people and pay them to allow the company to apply for mortgages in their names to buy houses. Authorities allege the company would falsify application information so the person could qualify for the mortgage. Dalonzo, Hatlee, Bosnyak, Chili and Ruffino would distribute the money, knowing the loans were fraudulent. Alternative would manage the property, finding tenants who would make monthly payments in a lease-to-own option.

  • After a specified amount of time, the company would stop making payments, causing the house to foreclose. The tenant would be kicked out of the house and the person whose name was used for the loan would be associated with the foreclosure.

For the story, see Six in fraud scheme want to plead (Ready to testify against seventh).

Indiana AG Files Suit Against Loan Modification Firm Accused Of Screwing Homeowners Out Of Upfront Fees & Failing To Successfully Assist Homeowners

In Evansville, Indiana, the Evansville Courier & Press reports:
  • Attorney General Greg Zoeller came to the Civic Center [] to file the suit against Mortgage Modifiers LLC, based in Tampa, Fla. The complaint alleges that the firm took $907 from Karen Helmbock, an Evansville resident, in return for services intended to prevent her from losing her home in a foreclosure. Mortgage Modifiers “failed to successfully assist Helmbock in obtaining a postponement of her payments, a postponement of the foreclosure, a stoppage of the foreclosure, or any other services the defendant advertised,” the suit alleges.(1) Helmbock, [...] is one of 18 of Indiana residents who entered into contracts with the company, Zoeller said. “And we are likely to find in the middle of this case that there were more victims,” he said.


  • Zoeller said he has taken action in the past three months against 14 companies that claim to help clients avoid foreclosures, either filing a lawsuit against them or reaching a settlement with them.

For more, see Attorney General files suit in defense of Evansville woman.

(1) According to the story, the suit alleges that the company said it had a 100-percent-money-back guarantee but never refunded Helmbock her initial payment after failing to get her home out of foreclosure, Zoeller alleged. The suit also says that Mortgage Modifiers neglected to buy a surety bond, to be in the amount of $25,000, as required by Indiana law, which would have served as insurance for Helmbock had she not received the services she had bought, the story states. Mortgage Modifiers also reportedly failed to give her a written notice of her rights, according to the suit.

Death Threats Begin Coming In To Texas HOA That Foreclosed On Active Duty Servicemember While Away In Iraq Over Unpaid $800 Fee

In Frisco, Texas, WFAA-TV Channel 8 reports:
  • An Army officer on active duty lost his house when his homeowners' association foreclosed for back dues. It's a story first reported by News 8, and it outraged people around the world.(1)

  • Now the HOA is breaking its silence, saying the board is getting death threats — even though it did nothing wrong. [...] The [Heritage Lakes Homeowners' Association] has now hired public relations specialist David Margulies as its spokesman. He says the HOA is getting negative attention it does not deserve. "The death threats have been reported to the Addison police, and they're being investigated," Margulies said.

  • And now, other residents of Heritage Lakes, [...] are coming forward, too. They say they are embarrassed to live in a community that could foreclose on an officer's home while he is defending his country.

For more, see Frisco HOA that foreclosed on soldier getting death threats.

(1) According to the report, the Clauers owned their $300,000 home free and clear; it was a gift from family members. Capt. Michael Clauer says when he got called up, his wife May became depressed, missed two HOA payments totaling about $800, and said she did not open letters from the HOA alerting her to foreclosure proceedings, the story states. Reportedly, Select Management Company — which runs the Heritage Lakes HOA and many more in North Texas — says it is adding procedures that will keep this from happening to another family in the future, and says it will attempt to call families facing foreclosure to check on their situation, instead of relying only on certified mail, which, in the Clauers' case, was never opened.

Foreclosed Home Preservation Contractor Says It's Also A Victim Of Mortgage Crisis In Suit Against BofA; Claims Bank Gave It $400K Stiffing

WFAA-TV Channel 8 reports:
  • A property preservation company with business in Texas charges Bank of America with fraud and deceit, breach of contract, and unjust enrichment in a civil suit in California. Diversified Field Services of Tustin, California — which maintains foreclosed properties for banks — says in the lawsuit that Bank of America signed DFS to a contract to maintain repossessed homes in 14 states last year. The company says it spent nearly $2 million preparing for the work, but that the work never came.


  • "Homeowners are not the only victims of this [mortgage] crisis; it extends to firms like DFS and onward to the mom-and-pop businesses who actually mow the lawns and clean the countless homes that now sit empty," said DFS attorney Eric Goodman. DFS also alleges B of A publicly misrepresented the quality of the work DFS did, destroying its business and ruining its reputation. DFS also alleges the bank never paid it for nearly $400,000 in work that it did do. The suit seeks unspecified damages.

Source: Property preservation firm sues Bank of America.

For a press release issued by Diversified's attorney, see Diversified Field Solutions, Inc. Sues Bank of America.

Thursday, June 24, 2010

NY AG Fires Off 180+ Cease & Desist Warnings To Loan Modification Outfits Peddling Services To Empire State Residents

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [] announced that his office is sending over 180 cease-and-desist letters to mortgage rescue companies with customers in New York, warning them to immediately end all misleading and illegal conduct.

  • The Attorney General’s ongoing investigation into the mortgage rescue industry revealed that many companies routinely collect illegal up-front fees from homeowners on the brink of foreclosure and then fail to help them lower their mortgage payments or save their home as promised. Thousands of New Yorkers have been affected by mortgage rescue scams.

  • Mortgage rescue companies target homeowners facing foreclosure by claiming to be able to modify home mortgage loans and lower monthly payments. Often, these companies engage in deceptive and illegal marketing practices to lure customers and then fall short on their promises. After using a mortgage rescue company, homeowners can find themselves in worsened financial circumstances and at greater risk of losing their homes.

For the entire NY AG press release, see Attorney General Cuomo Orders Mortgage Rescue Companies To Cease Fraudulent Practices Against Homeowners (Cuomo Sends Cease-and-Desist Letters to Over 180 Mortgage Rescue Companies).

Go here for the New York AG's website on avoiding foreclosure rescue rackets.

Go here for a copy of the cease & desist letter.

Rockland County DA Charges Duo In Equity Stripping Foreclosure Rescue Scam; Allegedly Duped Struggling Homeowner Into Bogus Sale Leaseback Ripoff

In New City, New York, The Journal News reports:
  • Two men were arrested and charged today for swindling a Tomkins Cove homeowner on the verge of foreclosure, the Rockland County District Attorney's Office said.(1) Edward DeFrancesco Sr., 59, of [...] Highland Lakes, N.J., was charged with one felony count of second-degree grand larceny, District Attorney Thomas Zugibe said. DeFrancesco is accused of purchasing the Tomkins Cove home for one price, then telling the bank it cost $160,000 more than it actually did, Zugibe said.


  • A second man, [attorney] Glenn Allyn, 52, of Elmsford, was charged with one felony count of third-degree grand larceny, Zugibe said. Allyn was supposed to be representing the bank at the real estate closing for the sale of the home from the victim to DeFrancesco.(2) He stole a $5,000 check he was not entitled to after telling the victim work had been done at the house and that a contractor was owed the money, Executive District Attorney Gary Lee Heavner said.

  • Authorities believe Allyn and DeFrancesco were both involved with a company that purported to help Rockland homeowners avoid foreclosure, Heavner said. As far as the D.A.'s office could determine, DeFrancesco's business consisted of nothing more than fliers and a phone number, Heavner said.


  • Zugibe said "rescue scams" similar to the one DeFrancesco is accused of have become common. Scammers visit the County Clerk's Office to locate homeowners facing foreclosure or serious debt crisis, then target those people. Typically, the scammer offers to take temporary title to a home, with an option for the homeowner to buy it back once the homeowner has gotten caught up with their debts. But by that time, Zugibe said, costs have been run up so high by the scammer that it becomes impossible for the homeowner to buy back their house.

  • DeFrancesco paid off the victim's mortgage, but not the one he took out as part of the scam. Instead, he tried to walk away from paying it and put the home into foreclosure, Heavner said. The victim continues to live in the home for now, Heavner said.

For the story, see 2 accused of swindling Rockland homeowner facing foreclosure.

See also, Mid-Hudson News Network: Two arrested in North Rockland foreclosure scam.

(1) The investigation was carried out by the Rockland County Special Investigations Unit and the New York State Banking Department's Criminal Investigations Bureau, the story states.

(2) According to this story, Allyn has since been disbarred for unrelated matters.

One NYC DA's Office Invokes State Hate Crimes Law As Added Leverage When Hammering Scammers Targeting Elderly In Home Equity, Other Ripoffs

In Kew Gardens, Queens, The New York Times reports:
  • In the public’s imagination, the classic hate crime is an assault born of animus against a particular ethnicity or sexual orientation, like the case of the Long Island man convicted in April of killing an Ecuadorean immigrant after hunting for Hispanics to beat up.

  • But in Queens since 2005, at least five people have been convicted of, or pleaded guilty to, committing a very different kind of hate crime — singling out elderly victims for nonviolent crimes like mortgage fraud because they believed older people would be easy to deceive and might have substantial savings or home equity.

  • And this month, Queens prosecutors charged two women with stealing more than $31,000 from three elderly men they had befriended separately. The women, Gina L. Miller, 39, and Sylvia Johns, 23, of Flushing, were charged with grand larceny as a hate crime.

  • This approach, which is being closely watched by prosecutors across New York State, has won Queens prosecutors stiffer sentences, including prison for criminals who could otherwise go free, even after draining an elderly person’s savings. Without a hate crime, theft of less than $1 million carries no mandatory prison time; with it, the thief must serve for a year and may face 25.

  • The legal thinking behind the novel method is that New York’s hate crimes statute does not require prosecutors to prove defendants “hate” the group the victim belongs to, merely that they commit the crime because of some belief, correct or not, they hold about the group. “Criminals that prey on the elderly, they love the elderly — this is their source of wealth,” said Kristen A. Kane, a Queens assistant district attorney.(1)


  • Some New York prosecutors, who asked not to be named because they did not intend to criticize colleagues, said that while the approach intrigued them, they were waiting to see if convictions were overturned on appeal before considering it. The strategy has never been tested in appellate court; many of those charged have pleaded guilty, waiving their right to appeal. But Queens trial judges have allowed it against defense lawyers who argue that the hate crime charges are inappropriate.

For more, see A Novel Twist for Prosecution of Hate Crimes.

(1) Kane said the hate charges gave her extra leverage in plea bargaining; by winning felony pleas and probation, prosecutors ensured that repeat offenders would receive strong sentences, the story states.

Unforgiven Debt Balances On Foreclosure, Short Sales Leave Ex-Homeowners Stunned; Failure To Obtain Written Waivers Drive Some Into Bankruptcy Court

In Gainesville, Virginia, The Washington Post reports:
  • After the bank foreclosed on Fernando Palacios's home in March, he thought he was done with what he described as the most stressful financial situation of his life. The bank sold the home for far less than Palacios owed on it, as often happens with foreclosures. What Palacios did not see coming was the letter from his lender demanding that he pay the shortfall: $148,064.02.


  • Over the past year, lenders have become much more aggressive in trying to recoup money lost in foreclosures and other distressed sales. In many localities, lenders have the right to pursue borrowers whose homes have sold at a loss to collect the difference between what the property sold for and what the borrower owed on it, also called a deficiency.

  • Before the housing bust, when the volume of foreclosures was relatively low, lenders seldom bothered to chase after deficiencies because borrowers had few remaining assets to claim and doing so involved hassles and costs. But with foreclosures soaring, lenders are more determined to get their money back, especially if they suspect borrowers are skipping out on loan they could afford, an increasingly common practice in areas where home values have tanked.


  • To avoid personal liability for the deficiency, Palacios is filing for bankruptcy protection, as many people do who are in similar situations, said Nancy Ryan, his bankruptcy attorney.
    "I am definitely seeing more people come through my door who walked away from houses a year or two ago and thought they were as free as the dead," Ryan said. "They're stunned when they realize they're not."


  • Borrowers should get a waiver in writing from their lenders to protect themselves, said Diane Cipollone, an attorney at the nonprofit Civil Justice. "Nobody should assume the deficiency is forgiven," she said.

For more, see Lenders get aggressive in recouping foreclosure losses.

Maryland Judge Grants Ground Rent Investors Class Action Status In Suit To Preserve Their Ability To Snatch Homes Over Miniscule Debts

In Anne Arundel County, Maryland, The Baltimore Sun reports:
  • From fat-cat Wall Street financiers to oil-polluting energy companies like BP, nobody induces public rage quite like the unprincipled speculator who makes huge profits by brazenly running roughshod over the average citizen. Such purveyors of greed and their wanton disregard for others are easily spotted but not so easily deterred — they usually come armed with lawyers.

  • Four years ago, two Baltimore Sun reporters identified this sort of behavior in a previously overlooked provision of ground rent, the arcane and loosely regulated system wherein homeowners lease the land on which their houses are built. To collect overdue rental payments of as little as $24, some ground rent holders were seizing properties, selling them off and receiving the full proceeds, sometimes in the tens of thousands of dollars.(1)


  • Three years ago, the General Assembly passed reforms that allow ground rent owners to collect the rent that is due to them — and even reasonable penalties where appropriate. It gives them the right to seek liens and seek foreclosure, if necessary. But if homes are sold for overdue rent, the law calls for them to be reimbursed only for back rent and expenses they are rightfully due, not for the obscene profits some collected in the past.

  • Last week, an Anne Arundel County judge ruled for purposes of a lawsuit that the interests of ground rent owners can be represented collectively. Now certified as a class, the plaintiffs can press their case that the three-year-old reforms caused their leases to be substantially devalued and unconstitutionally impinged on their contractual and private property rights. The lease owners are seeking hundreds of millions of dollars in compensation from taxpayers. The sheer audacity of the claim is a wonder to behold.

For more, see Ground rent redux (Ground rent owners are suing to preserve their ability to seize homes over miniscule debts).

For a related story on Maryland ground rent ripoffs, see:

(1) For The Baltimore Sun's December, 2006 series on the local legalized ground rent ripoff system used by some investors to seize homes or extract large fees from people who often are ignorant of the loosely regulated process, see On shaky ground (A Sun investigation into the secretive ground rent business in Baltimore).

Wednesday, June 23, 2010

Newark Feds Charge Trio In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Ripoff

In Newark, New Jersey, CBS 3 reports:
  • Three people who offered distressed homeowners foreclosure rescue services have been arrested and charged with conspiracy to commit wire fraud, the U.S. Attorney's Office in New Jersey said Tuesday.

  • Authorities say 40-year-old Ronald Harris Jr. of West Orange, 36-year-old Sterling Bruce of Old Bridge and 46-year-old Sabir Muhammad of South Plainfield conspired to defraud numerous mortgage lenders of over $10 million in fraudulently obtained loans.


  • Court papers say the men targeted homeowners facing foreclosure, promising to help them improve their credit scores, straighten out their finances and get their homes back if they agreed to transfer the titles temporarily to a third party. The defendants allegedly used the properties to fraudulently obtain loans. Using two companies owned by Harris, Harris Capital and Skyline Capital group, as well as a group of shell companies, the three allegedly recruited distressed home owners and "straw buyers" with good credit scores to be listed as the property owners. The defendants then used the straw buyers financial information to fraudulently apply for mortgages and other loans, according to court documents.

  • Authorities said the straw buyers were allegedly promised that they would not only be helping out distressed homeowners, but would make money from interim renters and from the eventual resale of the properties back to their original owners. Authorities said most of the loans went into default.

According to the U.S. Attorney's Office in Newark, the trio allegedly defrauded numerous mortgage lenders of over $10 million, making $1.5 million for themselves.

For the story, see 3 Charged With Mortgage Fraud In New Jersey.

For the U.S. Attorney (Newark) press release, see Three Arrested And Charged In Foreclosure Rescue Scheme.

For the criminal complaint detailing the formal charges, see U.S. v. Harris, et al.

"Sun" Shines Light On Sticky-Fingered Title Insurance, Real Estate Escrow/Settlement Agents Victimizing Homeowners

In Baltimore, Maryland, The Baltimore Sun reports:
  • It's the lesser-known side of the mortgage disaster. As lenders foisted billions of dollars in mortgage debt on unqualified borrowers buying overpriced houses, too often there was a sticky-fingered settlement agent standing nearby. Since the beginning of 2008, the Maryland Insurance Administration has revoked the licenses of or imposed penalties on more than three dozen title and real-estate settlement companies, [...].

  • In 2009 alone, the agency fielded about a dozen complaints concerning misappropriation of funds by title agents, estimates Darlene Arnold, assistant chief enforcement officer for the administration. Complaints of all kinds about title-insurance companies ballooned from 90 in 2005 to more than 600 last year, according to the agency. It had to double the number of agents investigating title complaints to four. If reform of Wall Street is a priority in Washington, stopping the homeowner heartache from title-insurance scams ought to be near the top of the list for Annapolis.


  • Government knows it has a problem. In a recently concluded report, the Commission to Study Title Insurance in Maryland, appointed by the legislature two years ago, wants the insurance commissioner to study setting up a guaranty fund to pay back future victims. It also suggests making title-insurance underwriters more responsible for the behavior of agents [...] who represent them at the closing table. Those are decent ideas. But the report lacks a sense of urgency and outrage over the mounting rip-offs. It seems far too easy to obtain a title-insurance agent's license in Maryland; there are more than 400 agencies.

For more, see Lax oversight enables title-insurance crooks.

BofA Uses Computer Glitch As Excuse To Stiff Property Preservation Contractors Out Of Million$, Leaving Thousands Across Country Without Paychecks

In Fort Worth, Texas, WFAA-TV Channel 8 reports:
  • If the nation's largest bank had lost the records of thousands of its customers, federal regulators would take swift action. But that's just what Bank of America has done — directly and indirectly — with the paychecks of thousands of its contractors and subcontractors in the property preservation business.

  • The failure to pay contractors millions of dollars has created a tide of financial ruin in the backwash of the mortgage crisis. For most Americans, foreclosure is a personal tragedy. But Bank of America has a thriving business taking care of tens of thousands of foreclosed homes across the country. For months, the bank has not paid dozens of the contractors who do the work; and as a result, thousands of their employees have gone without a paycheck.


  • News 8 obtained a memo that Bank of America Field Services sent to its contractors last October announcing "delays in payment" because of computer problems. [...] News 8 has talked to contractors who worked in California, Colorado, Alabama, Mississippi, Florida and Tennessee who say non-payment by Bank of America crushed their businesses.


  • Bank of America declined to be interviewed on camera. In response to written questions, the bank said: "We apologize to our vendors for the system issues that resulted in late payments. We have been working diligently with our vendors and contractors to resolve any outstanding payments." [...] The institution won't say how much money is involved, but News 8 has learned the amount is in the millions.

For more, see Bank of America admits it did not pay dozens of contractors.

Wells Fargo Pre-Foreclosure Inspection Contractor Accused Of Repeatedly Sledge-Hammering Delinquent Borrower; Claims Self Defense

In Reno, Nevada, The Reno Gazette Journal reports:
  • When Ralph "Pete" Peterson of Spanish Springs saw a stranger taking photos of his house and suspected the man might have sinister motives, he confronted the person, who he said refused to identify himself.

  • The photographer sped off in a van, said Peterson, who went after him in his truck. The driver -- a contractor for Wells Fargo Bank who was "inspecting" the house because Peterson had missed a monthly mortgage payment -- pulled over. An argument ensued and the bank's agent, who claimed self-defense, hit Peterson repeatedly with a sledgehammer, according to a police report.

  • The Christmas Eve incident is an example of a mortgage default inspection gone horribly wrong. Each man blamed the other for the escalation of violence. Each man said the other is lying about the circumstances of the case.

For the rest of the story, see Sparks man's overdue mortgage leads to sledge hammer beating.

Tuesday, June 22, 2010

Suspect In $3.3M Mansion-Squatting Case To Continuing Pursuing Claim To It & Ten Other Foreclosed, Bank-Owned Seattle-Area Homes

In Kirkland, Washington, staff columnist Danny Westneat of The Seattle Times observes:
  • I figured the arrest of the Kirkland mansion squatter last week would be the end of that crazy story. But it only gets curiouser and curiouser. As we go down the rabbit hole of the housing meltdown. The woman who was hauled away for squatting in a $3.3 million house? She has no intention of backing down.

  • She's going to keep staking her claim to a house she insists nobody actually owns. Plus she is staking claims to 10 other houses in the Seattle area that have gone into foreclosure and been passed from bank to bank. She's doing it all, she insists, not to make money. But to stick it to the banks.

  • "Banks do whatever they want and nobody holds them accountable," Jill Lane said by phone from Disneyland, where she was vacationing after being released by Kirkland police. [...] "This is a national movement," seconded Jim McClung, a former Bothell real-estate agent and owner of NW Note Elimination, a company he runs with Lane that counsels people in how to "eliminate mortgages" as well as take over empty, foreclosed houses. "What happened in Kirkland is just the tip of the iceberg."

  • It sure is, suggests the FBI. Last week the feds released a report saying housing-related schemes are soaring, including what the agency called "property theft targeting bank-owned properties." People file false deeds on houses in foreclosure, either to try to take them over or to bamboozle the police and courts long enough to rent them out to unsuspecting tenants, the FBI says.

For more, see Mansion squatter not finished.

Maryland Title Agent Gets Eight Years In $7M+ Escrow Swindle Occurring Over 10+ Years

In Baltimore, Maryland, The Baltimore Sun reports:
  • State prosecutors say a title company executive accused of taking more than $7 million from escrow accounts has been sentenced to eight years in prison. Prosecutors say 67-year-old George Sybert Sr. of Reisterstown was also ordered to pay $2.9 million in restitution; another restitution hearing is scheduled Friday.

  • Sybert pleaded guilty in February to 13 counts of theft and was sentenced Wednesday in Baltimore City Circuit Court. Prosecutors say the thefts occurred between 1997 and 2009. Sybert owned the Maryland Title Company in Baltimore and previously owned American Title Guarantee and Maryland Commercial Title.

  • Victims said their lives were ruined by someone they trusted. Sybert apologized, saying he did not realize the full consequences of his actions.

Source: Title company executive gets 8 years in $7 million theft.

In a related column profiling Sybert's escapades, see Lax oversight enables title-insurance crooks.

Appeals Court Tells Lender To "Take A Hike" In Response To Request To Vacate F'closure Sale; Screw-Up In Calculating Minimum Bid Leads To $275K+ Hit

The Georgia Court of Appeals recently left untouched a lower court ruling that directed a foreclosing lender to provide a deed to the winning bidder at a foreclosure sale that the lender requested be invalidated due to a mistake in its calculation of its minimum opening bid that resulted in the lender taking a financial hit to the tune of $279,000.

Apparently, the "paralegal foreclosure processor" for the company that was "servicer of the non-judicial foreclosure process" for the law firm that represented the lender in the foreclosure sale mistakenly calculated the opening bid at $27,750.00 when in fact the opening bid should have been $333,000.00. The high bid came in at $54,000, resulting in the $279,000 hit.

In applying the relevant state statutes and case law, the Georgia Court of Appeals details the reasons for allowing the result to stand, and, reading between the lines, the court appears to imply that the lender would have been entitled to relief had it made the proper showings in the lower court that said relief was appropriate (ostensibly, the lender's attorney may not have been up to the challenge of making the case, relying primarily on an affidavit by the "paralegal foreclosure processor" in its request for relief).(1)

For the ruling, see Decision One Mortgage Company, LLC v. Victor Warren Properties, Inc., A10A0247 (Ga. Ct. of App. June 14, 2010).

(1) The appeals court stated, among other things (bold text is my emphasis, not in the original text of the ruling):

  • In ruling against Decision One, the trial court determined that the mortgage company had failed to demonstrate any basis for relief under various statutes and case law. Having considered Decision One's arguments on appeal, together with the scant competent evidence of record, we find no error in the trial court's grant of summary judgment to Warren Properties.

(Based on the detailed analysis of the applicable statute and case law set forth in the ruling, it appears that a better job at introducing more "competent evidence" into the record by the foreclosing lender's attorney arguably would have led to a different fate for the lender.)

MD Feds Wrap Up Metropolitan Money Store Sale Leaseback, Equity Stripping Foreclosure Rescue Criminal Prosecution As Final Defendant Cops Guilty Plea

From the Office of the U.S. Attorney (Greenbelt, Maryland):
  • Rolando Alonzo Cousins, a/k/a “Junior,” age 32, of Bowie, Maryland, pleaded guilty [] to conspiracy to commit mail fraud and wire fraud in connection with a massive mortgage fraud scheme which promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, but left them homeless and with no equity. With Cousins’ plea all 11 defendants in the Metropolitan Money Store case have now been convicted. [...] Cousins faces a maximum sentence of 30 years in prison and a $1 million fine for the conspiracy. U.S. District Judge Roger W. Titus scheduled sentencing for September 13, 2010 at 3:00 p.m.

For the entire U.S. Attorney press release, see Senior Loan Officer with Metropolitan Money Store Pleads Guilty in Mortgage Fraud Scheme (Eleventh and Final Defendant to Plead Guilty in the Metropolitan Money Store Case).

Maryland High Court Revives Ex-Owner's Attempt In Civil Lawsuit To Undo Metropolitan Money Store Sale Leaseback Foreclosure Rescue Home Equity Ripoff

In Baltimore, Maryland, The Maryland Daily Record reports:
  • Maryland’s top court has revived a woman’s attempt to retrieve the home she claims she lost in a foreclosure scam. The Court of Appeals said Harriette Julian can pursue her case even though she did not post a bond generally required in appeals of approved foreclosure sales. The instrument, called a supersedeas bond, stays execution of a circuit court’s approval while the appeal is pending.

  • But the bond is required only when the foreclosed home is bought by abona fide purchaser” — one who has no reason to doubt the seller had clear title to the property, the Court of Appeals said. In this case, U.S. Bank knew of an alleged defect when it bid at the foreclosure sale, the court noted.(1)

  • Julian had filed a notice of rescission in court, seeking to undo her transfer of title to the woman who took out the loan on which the bank was foreclosing. The bank admitted it knew of the notice before the foreclosure sale was held. “[B]ecause U.S. Bank, admittedly, had notice of an alleged defect prior to the foreclosure sale, its bona fide status at the time of the sale was in question,” Judge Lynne A. Battaglia wrote for the majority.

  • In remanding the case to circuit court, the high court said Julian must persuade the judge her rescission notice complied with the law and put the bank on legally sufficient notice of a potential claim.

  • Phillip Robinson, Julian’s attorney, called the court’s decision a warning to foreclosing lenders who, like U.S. Bank, take the property at a foreclosure sale. Lender-buyers must be diligent and make sure the foreclosed homeowner has no claim on the property under any consumer-protection law, or risk having a judge rule they are not a bona fide purchaser, said Robinson, executive director of Civil Justice Inc. in Baltimore.(2)If I have a statutory claim and the lender proceeds to sale, the lender does so at his own peril,” Robinson said.

  • Such statutes include the Maryland Protection of Homeowners in Foreclosure Act, which was the basis of Julian’s claim, as well as the Maryland Mortgage Fraud Act and the Maryland Consumer Protection Act, he said. U.S. Bank “had affirmative notice and chose to ignore it,” Robinson said.

  • The court’s ruling contrasts with its Feb. 16 decision in Mirjafari v. Cohn,(3) which affirmed the general requirement that owners appealing a foreclosure sale must post a supersedeas bond. That case, however, did not involve an alleged foreclosure scam and a filed objection, Robinson said.


  • Facing foreclosure, Julian agreed to convey her property to LaShawn Wilson. Wilson obtained a $482,000 mortgage from Wells Fargo Bank, N.A. The mortgage broker was Metropolitan Money Store, whose executives have been convicted of fraud in foreclosure scams, according to the Court of Appeals’ opinion. At settlement, Julian granted power of attorney to an investment firm, which was to put money from the sale in an account from which Wells Fargo would be paid. Wells Fargo assigned the loan to U.S. Bank. The lending institutions deny any knowledge of the alleged scam.

  • No mortgage payments were made and U.S. Bank initiated a foreclosure action on Aug. 27, 2007, in Charles County Circuit Court. That day, Julian filed with the court a Notice of Rescission to revoke the power of attorney and rescind the conveyance. Trustees of U.S. Bank bought the property for $480,000 at the Sept. 20, 2007, foreclosure sale.

  • Julian objected to the sale in circuit court, alleging U.S. Bank was not a bona fide purchaser because it had at least “inquiry notice” of her filed revocation notice. Circuit Judge Robert C. Nalley rejected the challenge. Julian appealed to the Court of Special Appeals, which did not address the bond issue but upheld Nalley’s ruling that U.S. Bank was a bona fide purchaser because it lacked knowledge of Julian’s objection on the date of its loan assignment from Wells Fargo.

  • But the Court of Appeals said the date of assignment is irrelevant in determining if the assignee is a bona fide purchaser. The relevant date is the purchase date(4) and by then — as U.S. Bank acknowledged during high-court arguments — the lender had discovered Julian’s filed notice, the court said.

Source: Foreclosure appeal revived by Maryland Court of Appeals despite failure to post bond.

For the court ruling, see Julian v. Buonassissi, CA No. 37 (Md. Ct. App. June 16, 2010).

(1) The Maryland high court also agreed with the state intermediate appellate court that a foreclosure rescue scam victim’s conveyance of her home by Deed of Trust is merely voidable, and not absolutely void (ie. void ab initio), upon proof of violations of Maryland's Protection of Homeowners in Foreclosure Act. Finding the conveyance to be voidable necessitates a determination of whether the foreclosure purchaser was entitled to the protections accorded to a bona fide purchaser. An earlier conveyance obtained through fraud, deceit or trickery is voidable as between the parties thereto, but not as to a subsequent bona fide purchaser for value and without notice of any unrecorded rights and equities claimed by others.

Had the court ruled that the foreclosure rescue scam victim’s conveyance to be absolutely void, no determination of the foreclosure purchaser's bona fide purchaser status would have been necessary because a subsequent purchaser who would otherwise qualify as a bona fide purchaser for value and without notice of any unrecorded rights and equities claimed by others receives no protection where an earlier conveyance in the chain of title is void ab initio (ie. as in the case where an earlier conveyance involves a forged deed).

(2) According to their website, Civil Justice Inc. is a Maryland not-for-profit corporation formed for the purpose of increasing the delivery of legal services to clients of low and moderate income while promoting a statewide network of solo, small firm and community based lawyers who share a common commitment to increasing access to justice through traditional and non-traditional means.

(3) 412 Md. 475 (Md. Ct. App. 2010).

(4) The date of the foreclosure sale at which the lender acquired title to the home.

Monday, June 21, 2010

Central Fla. Multiple Corporate Hat-Wearing Vice President Back In News; Gets Hand Slap For Use Of Shortened Signature When Acting As "Robo-Notary"

In Central Florida, the St. Petersburg Times reports:

  • To thousands of homeowners whose loans have been shuttled from one company to another, the name "Bryan Bly'' is very familiar. Over the past few years, Bly has signed countless mortgage assignments as either a notary public or "vice president'' of various lenders.

  • In reality, Bly works for Nationwide Title Clearing, a Palm Harbor company. And he was recently reprimanded by state regulators after acknowledging in a sworn statement that Nationwide Title had him notarizing so many documents that he scribbled his initial instead of signing his full name as required by law.(1)

  • Such a pace, critics say, shows that Bly and other so-called "robo signers'' can't possibly be sure that what they're signing is accurate. "Our entire system of real estate is founded upon the ability of courts to believe in the documents before them,'' says Matthew Weidner, a St. Petersburg lawyer who has a blog on foreclosure issues. "What this (Bly's statement) describes is assembly-line document production with no concern for the facts in front of them.''

  • Bly's name has become well known in the foreclosure defense field since the St. Petersburg Times reported last year(2) that he and Crystal Moore signed thousands of mortgage assignments as officers of Option One and other lenders even though both work for Nationwide Title.

For more, see When 'Bryan J. Bly' became 'NB,' did he know what he was signing?

(1) According to the story, Florida law says: "Once commissioned, the notary must sign precisely as commissioned by the state of Florida, in the exact name appearing on your notarial commission certificate.'' Reportedly, Bly was unaware that use of an abbreviated signature when acting as a notary was in violation of the law. This year, the governor's office notified Bly that it had put a "formal reprimand'' in his file that would be reviewed "if other complaints are filed against you for notary misconduct'', the story states.

(2) See St. Petersburg Times: Tampa Bay companies help lenders transfer home loans, foreclose:

  • Despite the turmoil in the lending industry, Bryan Bly seems to have no trouble finding a job. On Aug. 3, 2007, Bly signed a document as vice president of Option One Mortgage. On Feb. 13, 2009, Bly signed a document as vice president of Deutsche Bank. And on Feb. 18, 2009, Bly initialed dozens of documents — this time as vice president of Citi Residential Lending.

Ohio Appeals Court: Failure To Give Delinquent Borrower Notice Of Acceleration Of Amounts Due Sinks Lender's Foreclosure Attempt

An Ohio appeals court recently reversed a lower court ruling and held that a lender was not entitled to summary judgment in a foreclosure action where it failed to plead and establish that it provided a delinquent homeowner/borrower a notice of acceleration before commencing a foreclosure action, as required by the terms contained in paragraph 22 of the subject mortgage.(1)

The court rejected the lender's claim that the homeowner/borrower, by failing to raise this issue in its answer to the foreclosure complaint, constituted a waiver of an affirmative defense. It addressed the lender's claim as follows (bold text is my emphasis, not in the original text of the ruling):
  • The notice requirement set forth in paragraph 22 is not an affirmative defense. Rather, "[w]here prior notice of default and/or acceleration is required by a provision in a note or mortgage instrument, the provision of notice is a condition precedent," and it is subject to the requirements of Civ.R. 9(C). First Financial Bank v. Doellman, 12th Dist. No. CA2006-02-029, 2007-Ohio-222, ¶20.

  • Pursuant to Civ.R. 9(C), "[i]n pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred. A denial of performance or occurrence shall be made specifically and with particularity." In the instant case, LaSalle did not allege in its complaint, even generally, that it complied with the requisite condition precedent. Doellman, supra, at ¶21. "Under these circumstances, the [Kellys] were not required to plead with specificity that the bank failed to provide them with notice of default. Rather, it was sufficient that the [Kellys] alleged that the bank failed to state a claim upon which relief may be granted. Consequently, the [Kellys] appropriately raised the lack of notice in their opposition to the motion for summary judgment." Id.

For the ruling, see LaSalle Bank, N. A. v. Kelly, 9th Dist. No. 09CA0067-M, 2010-Ohio-2668 (June 14, 2010).

(1) According to the court ruling, paragraph 22 of the mortgage provided as follows:

  • "Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument ***. The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by Judicial proceeding and sale of the Property."

Miami Jury Awards Couple $2.5M For Damages Due To Defective Chinese Drywall; Company To Mull Over Possible Appeal

In Miami, Florida, The Miami Herald reports:
  • About 2 ½ years after a Miami couple first wondered about the strange odor in their home, a Miami-Dade jury awarded them $2.5 million in damages and expenses Friday, blaming odors and corrosion problems on defective Chinese drywall.

  • Armin and Lisa Seifart sued Miami-based Banner Supply after the drywall that the company provided corroded copper pipes and fixtures, ruined their air conditioner and other appliances and made their home smell. The case -- the first jury trial in the country over Chinese drywall -- could set precedent for other lawsuits.(1) Banner has been sued in dozens of cases as have other drywall companies and businesses in the drywall supply chain.


  • Banner attorney Todd Ehrenreich said the company, [...] is still considering its next move. "We are a bit disappointed. We will weigh all of our rights, including our appellate rights,'' he said.

For more, see Chinese drywall verdict is in: $2.5 million (A jury found Miami-based Banner Supply at fault for the struggles of a Coconut Grove couple whose home was damaged by Chinese drywall. The plaintiffs had sought $4.4 million in the case).

(1) A federal judge in Louisiana awarded $2.6 million to seven Virginia homeowners, finding drywall manufacturer Taishan Gypsum Co. liable for damage, but that company has not participated in U.S. court proceedings, leaving the ruling's effect in limbo, the story states. Reportedly, Judge Eldon Fallon also ruled that manufacturer KPT pay $164,000 to a Louisiana couple for repairs to their house.

Failure To Update Owner's Title Insurance Policy On Refinance Leaves Couple Facing F'closure As Escrow Agent Allegedly Failed To Pay Off Existing Lien

In Pittsburgh, Pennsylvania, WTAE-TV Channel 4 reports:
  • Team 4's Paul Van Osdol spoke with one local family in danger of losing their home after being victimized by an accused fraudster. "We've been victimized many times over and this is getting ridiculous. I just want it resolved," said Heather Cerciello. Heather and R.J. Cerciello told Van Osdol that they refinanced their home in January through Wells Fargo.

  • The Cerciellos said that their closing agent was Jason Sheppard, the owner of TruClose Financial Services in Castle Shannon. They said that Sheppard was supposed to make sure that Wells Fargo [paid] $150,000 [to] Bank of America, their previous mortgage holder. "We found out the closing agent received the money from Wells Fargo and never paid off Bank of America," said Heather Cerciello.

  • Sheppard was indicted Tuesday on wire fraud charges, accused of taking more than $830,000 from multiple victims in a fraud scheme. "That was the issue with Mr. Sheppard, he failed to cause the payments to be made on the first mortgage and borrowers were now left with two," said Assistant U.S. Attorney Brendan Conway.

  • But the Cerciellos said they can't afford two mortgages and Wells Fargo is threatening them with foreclosure even though they haven't been accused of doing anything wrong. "It's just been very frustrating. We can't get anywhere and everyone you talk to they just give you the runaround," said R.J. Cerciello.

  • Conway was asked what the Cerciellos can do to keep from losing their house. "Well, I mean we're federal prosecutors. Our role here is limited here in terms of prosecuting criminals," said Conway.(1) TruClose Financial has since been evicted from its Castle Shannon office. Van Osdol went to Sheppard's home in Collier Township, where no one answered the door, but a BMW, Jaguar and Lotus were parked in the driveway.

For the story, see Mortgage Fraud Puts Family In Danger Of Losing Home (National Crackdown 'Operation Stolen Dreams' Targeting Mortgage Fraud).

(1) It may be that the homeowners failed to obtain an updated owner's title insurance policy when they refinanced their mortgage. If they had (although I doubt that many, if any, refinancing homeowners do), they could simply continue the house payments on the new mortgage, stiff the old lender, and upon the latter's start of foreclosure proceedings, the homeowners could file an insurance claim on their updated title policy and let the title underwriter straighten out the problem (that's why you pay for title insurance).

In this case, they presumably failed to update their policy, in which case they should probably continue payments on the new loan, stiff the old lender, and upon the latter's start of foreclosure proceedings, and hopefully/probably the new lender (whose interest would also be in jeopardy because of the allegedly corrupt escrow agent's actions) will file a title insurance claim on its mortgagee's title policy (which would bail it out and, in the process, hopefully bail out the otherwise uninsured homeowners).

Of course, all this presupposes that the allegedly corrupt closing agent ever had legal authority to issue title insurance and act as an authorized agent on behalf of a title insurance underwriter in the first place. If not, or if he once did but subsequently had his authorization revoked by his underwriter prior to presiding over the mortgage refinance closing at issue in this story, it may be that the homeowners and the new lender will both find themselves left holding the bag while the old lender proceeds on its foreclosure action.

Jury Sends 62-Year Old Scammer Into Probable Retirement w/ Guilty Verdict In "Land Patent" F'closure Rescue Scam; Homeowners Losses Estimated At $260K

In San Diego, California, KGTV-TV Channel 10 reports:
  • A man who told homeowners that buying "land patents" from him would protect their properties from foreclosure was convicted Thursday of 21 felony counts, including grand theft and unlawful practices by a foreclosure consultant. Larry Smith -- who has prior convictions for second-degree murder, robbery and burglary -- faces a "very lengthy" prison term when he is sentenced Aug. 13, said Deputy District Attorney Marlene Coyne. [...] An expert estimated homeowners' losses at $260,000, Coyne said.

  • In her closing argument, Coyne told jurors that Smith[, 62] and others had homeowners hand over thousands of dollars under a false promise that their homes would be protected from foreclosure. "You buy a land patent from us, and your foreclosure is going to be stopped in its tracks" was Smith's sales pitch, the prosecutor told the jury. Smith and real estate agents who took part in the scam -- and previously pleaded guilty to various charges "were just bleeding money in this case," Coyne said.

  • Sixteen defendants -- including Smith -- have been found guilty or convicted and two remain set for trial, Coyne said.

For the story, see Man Found Guilty Of Selling 'Land Patents' (Larry Smith Told Homeowners Buying 'Land Patents' From Him Would Prevent Foreclosure).

Sunday, June 20, 2010

Sacramento Feds Say Foreclosure Rescue Operator Clipped Homeowners $1K/Month To Purportedly Fight Lenders; Used Ch. 13 Filings To Stall Legal Actions

From the Office of the U.S. Attorney (Sacramento, California):
  • United States Attorney Benjamin B. Wagner announced the unsealing of a seven-count indictment charging George M. Eggleston, 63, of Las Vegas, with wire fraud and mail fraud in a foreclosure rescue scheme.


  • According to the indictment, Eggleston targeted property owners who were facing foreclosure and offered to rescue them. Using the business names of Nexxus and Global Legal Associates, he advertised on his own Web site and would also get referrals from others individuals who marketed his services. Eggleston induced property owners to enter into a contract called the "Nexxus Engagement," the terms of which required property owners to sign an "Offer and Agreement" and pay Nexxus a monthly fee in the amount of $1,000 per month for 60 months. The terms of this agreement also required the clients to sign a Power of Attorney giving Nexxus authority to negotiate with lenders and file lawsuits on their behalf.

  • The indictment alleges that Eggleston told his clients that by using and managing attorneys, Nexxus and Global Legal Associates could negotiate with lenders and file lawsuits against lenders thereby stopping the foreclosure action. In fact, he did not provide the services, did not manage attorneys, and did not stop foreclosure actions. Instead he used the money from the clients for his personal expenses. According to the indictment, Eggleston filed Chapter 13 bankruptcy petitions in the United States Bankruptcy Court for the Eastern District of California in Fresno.

For the entire press release, see Las Vegas Man Indicted In Fresno In A Foreclosure Rescue Scheme.

For the indictment, see U.S. v. Eggleston.

Cal. State Bar Shelves Another Attorney For Association With Alleged Lawyer-Renting Loan Mod Racket; Pocketed Upfront Fees & Did Nothing, Says Judge

In Southern California, The Orange County Register reports:
  • An Orange County lawyer who signed retainer agreements with homeowners facing foreclosure but then "did little or nothing to help them'' was placed on involuntary inactive enrollment, the State Bar of California announced. The Bar cited complaints from clients in 8 states against lawyer Brian Colombana, 29, of Lake Forest.(1)


  • The action against Columbana stems from efforts by the State Bar’s Task Force on Loan Modification to stop lawyers who "exploit the vulnerabilities of frightened homeowners who face foreclosure by promising services that are never delivered,'' the Bar says.

  • Since the task force was created last April, seven involuntary enrollments have been ordered and 13 resignations obtained from lawyers who engaged in misconduct related to loan modifications. The Bar says there are 5 loan modification trials pending and 2,000 active investigations.

For the story, see Bar goes after O.C. loan mod lawyer.

(1) According to the story, The State Bar of California released the following statement:

  • State Bar Court Judge Richard Honn said in his June 17 ruling that the conduct of Brian Colombana ... “poses a substantial threat of harm to his clients or the public.” Honn cited 13 declarations against Colombana by clients from California, South Carolina, Minnesota, Nevada, New Mexico, Maryland, Utah and New York who paid upfront fees to one of the loan modification companies with which Colombana was affiliated, including Loan Negotiators of America, Housing Law Center and Mortgage Law Center.

    In most cases, clients never even met the attorney but dealt with non-attorney representatives of the loan modification companies. Through the companies, Colombana 'convinced numerous cash-strapped homeowners to pay him thousands of dollars in hopes of saving their homes from foreclosure,' Honn wrote. '. . . Many of these homeowners were worse off after retaining respondent’s services.'

    The judge noted that many of the homeowners were current with their mortgages but then were advised by Colombana’s affiliates to stop paying. “Soon these clients were behind on their mortgage payments and facing foreclosure, and [Colombana] wasn’t there to help,” Honn wrote. In ordering involuntary inactive enrollment, Honn said Colombana continues to harm clients by failing to refund unearned fees or communicate with them and demonstrates a pattern of behavior likely to continue to cause substantial harm.

NC AG Wins Temporary Shut Down Of Alleged Ripoff Operation Peddling Loan Modification, “Regulation Z Audit” Services

From the Office of the North Carolina Attorney General:
  • A Charlotte foreclosure rescue operation, which previously operated in Colfax, NC, is barred from collecting any money from consumers for foreclosure assistance or loan modifications, Attorney General Roy Cooper announced Friday.


  • On Thursday, Wake County Superior Court Judge Cressie Thigpen agreed with Cooper’s request to temporarily bar Reginald Keith Turner, who did business as Hazelton Management and The Carley Group, from offering foreclosure and loan modification services. Cooper is seeking to shut down Turner’s foreclosure assistance business permanently and win consumer refunds and civil penalties.

  • As alleged in the complaint, Turner advertised that his company identified possible legal violations by the consumers’ mortgage lenders and used this to negotiate favorable loan modifications and “save homes from foreclosure.” However, Turner charged homeowners an up-front fee of as much as $2,500, told them not to contact their mortgage lenders, and then did little or nothing to help save their homes.

For the entire press release, see AG Cooper cracks down on foreclosure assistance outfit (Hazelton Management/The Carley Group took money but failed to provide promised help).

Illinois AG Files Civil Suit Against Firm For Allegedly Pocketing Upfront Fees, Failing To Deliver Services In Running Loan Modification Ripoff

In Chicago, Illinois, The Herald News reports:
  • A Crest Hill business is among those targeted in Operation Stolen Dreams, a joint initiative of the U.S. Department of Justice and state attorney generals targeting mortgage-related fraud. [... Illinois Attorney General Lisa] Madigan filed her complaint[] in Cook County Circuit Court against: Opportunity Consultants Inc. of Crest Hill. The lawsuit also names as individual defendants Juan C. Rodriguez of Crest Hill and Mirta Deus aka Mirta Tomlinson of Joliet, who are corporate officers and are alleged to have participated in the rescue scheme.


  • [The charges] allege defendants target at-risk homeowners and, for an upfront fee, promise to save their homes by negotiating lower mortgage payments with lenders. However, after the defendants collect the fees, they fail to negotiate or perform any services on behalf of the homeowners.(1)

Source: Crest Hill business accused of fraud.

For the lawsuit, see People v. Opportunity Consultants Inc., et al.

(1) The Illinois AG alleges violations of the state's Mortgage Rescue Fraud Act, the Consumer Fraud and Deceptive Business Practices Act, and the Credit Services Organization Act.

Ohio AG Files Suits Against Two Firms For Allegedly Running Loan Modification Ripoffs; Secures Judgments Against Three Others

From the Office of the Ohio Attorney General:
  • As part of a national mortgage fraud sweep dubbed “Operation Stolen Dreams,” Ohio Attorney General Richard Cordray [] announced lawsuits against two Ohio foreclosure rescue businesses for failing to provide services for which consumers paid. JLS & Associates Financial Services LLC (JLS), based in Cleveland, and Freedom Equity Savings LLC (FES), located in the Columbus area, are accused of defrauding homeowners across the state out of thousands of dollars.


In addition to these two new cases, as part of “Operation Stolen Dreams” Cordray secured default judgments in the following three foreclosure rescue scam cases:

For the Ohio AG press release, see Cordray Focuses on Foreclosure Rescue Scams in Ohio.

Cal. AG Warns Underwater Homeowners Against Emergence Of An Entire Industry Of So-Called Short Sale Negotiators; Calls It A Field Rife w/ Scam Artists

From the Office of the California Attorney General:
  • Attorney General Edmund G. Brown Jr. [] joined the California Department of Real Estate and the State Bar of California to warn homeowners about an alarming rise in short sale fraud across California in a field "rife with scam artists". A short sale is an arrangement in which a homeowner sells his or her home for less than the outstanding mortgage, with the consent of the lender.

  • "While short sales can provide homeowners with a last-ditch alternative to foreclosure, this market is rife with scam artists," Brown said. "Homeowners and buyers, agents, and lenders should beware of short sale negotiators who operate without licenses, use straw buyers or charge illegal fees."

  • With so many homeowners now considering short sales, an entire industry of so-called short sale negotiators has emerged. These individuals solicit homeowners by promising to expedite the process and help coax lenders into taking part in the transaction. The Department of Real Estate is investigating more than 40 complaints of short sale fraud, up from "virtually zero" cases only three months ago, a spokesman said.

For the California AG press release, see Brown Issues Warning about Rise of Short Sale Fraud.

Sale Leaseback Scam Warnings Continue As Desperate Borrowers Will Do Anything To Save Homes From Foreclosure

Buried in a recent story in the Sarasota Herald Tribune is this warning on sale leaseback foreclosure rescue scams:
  • "Rent-buyback" schemes are proliferating, the Federal Trade Commission recently warned, because so many homeowners are behind on their payments and are willing to do anything to save their homes from foreclosure. In a typical scam, the con artist offers to take title to the property and simultaneously provide an official-looking rental agreement or lease-option contract that purports to give the owner the right to repurchase the house after they regain their financial footing.

  • In reality, though, the con man then starts collecting the rent but never makes any payments to the lender -- or else couches the agreement in complicated legalese with terms so burdensome that repurchasing the house becomes impossible. Either way, the original owner winds up losing the home and any equity that was in it.

Source: Rent-buyback scams target desperate homeowners.