Saturday, October 15, 2011

Texas AG Squeezes Roofing Company Into Settlement In Racket Duping Vulnerable Homeowners Hit w/ Severe Weather Events Into Signing 'Loaded' Contracts

From the Office of the Texas Attorney General:
  • A Rosenberg-based roofing contractor [] agreed to reimburse all homeowners who improperly paid the company’s “liquidated damages” contracts. In June, the Attorney General’s Office charged Holden Roofing Inc. (HRI) with subjecting homeowners to unlawful penalties if they did not hire the defendant to perform the work.(1)

  • According to court documents(2) filed by the Attorney General’s Office, HRI unlawfully coerced homeowners into using their services for roof repairs after severe weather events.


  • According to state investigators, HRI’s sales representatives targeted communities that experienced severe weather events such as hail storms or hurricanes. The defendant’s sales representatives visited individual homeowners – including senior citizens – and marketed themselves as roof repair consultants.

  • When the defendant’s sales personnel approached homeowners, they did so under the auspices of offering consulting expertise for customers seeking help with claims against adjusters and insurance carriers. As a result, many homeowners who signed the defendant’sconsultation and assistance agreementbelieved they were only consenting to a free roof inspection and work estimate. Others believed HRI was independently acting on their behalf to facilitate roof repairs or replacement under the terms of their homeowner insurance policies.

  • However, contrary to the sales staff’s in-person statements, the HRI contract obligated homeowners to hire the defendant to actually repair their damaged roofs – or pay a penalty if homeowners did not select the company to perform the roofing repairs.

  • In an apparent effort to coerce homeowners, HRI imposed a charge totaling 20 percent of the total roof replacement cost if homeowners retained another roofing contractor to perform the repair work.

  • An investigation by the Attorney General’s Office revealed that HRI failed to properly inform homeowners about their three-day cancellation rights under the Texas Home Solicitation Act. This requirement applies when services are solicited in person at prospective customers’ residences.

  • In addition to its “consulting” services, HRI is a traditional contractor that also independently offers roof repair and replacement services. State investigators revealed that HRI’s sales personnel also failed to clearly communicate homeowners’ three-day right of cancellation under its roofing contract. Then, the contract imposed a so-called 15 percentliquidated damagespayment against customers who canceled contracts outside the three-day window. The Attorney General’s Office alleged this forced payment under the contract was an invalid penalty, not “liquidated damages.”

  • According to investigators, homeowners who attempted to cancel their sales transactions received letters from the defendant demanding that the liquidated damages be paid. HRI warned homeowners that failure to pay the liquidated damages would result in a lawsuit. The State alleged that because the debts accrued under an invalid penalty provision, the defendant could not threaten litigation to collect on debts that accrued under such a provision.

For the Texas AG press release, see Rosenberg Roofing Contractor Agrees to Pay Restitution for Misleading Homeowners (State’s enforcement action charged Holden Roofing with unlawfully coercing homeowners with misleading contracts).

(1) According to the press release, HRI and its president Brett Holden were named as defendants in the State’s June 23 enforcement action. The defendant’s principal office is located in Rosenberg near Houston, but HRI also maintains branch offices in Corpus Christi, Dallas, San Antonio, Austin, Brownsville and Tyler.

(2) See:

Homeowner Nearly Driven Into F'closure After Being Victimized By Her Tax Preparer In I.D. Theft Scam That Led To IRS Problems On Taxes She Didn't Owe

In Duluth, Georgia, WSB Radio 750 AM reports:
  • More identity theft cases stemming from a bust earlier this year are coming to light. Police say the total is up to nearly 9,000 and for the first time, one of the victims is speaking out.

  • Jeanette Adams says her problems began in early 2010 when the IRS sent her a letter stating she owed nearly $2,400 in taxes.

  • "I'm paying way more than I should ever of had to pay and I don't know why," said Adams. The 66-year-old retired nurse tells Channel 2 Action News she made the payments to the IRS, but it nearly forced her into foreclosure.

  • "I would pay one month, then pay another month and pay a partial payment," said Adams. Eighteen months later, the answer to her concerns came with a phone call from Duluth police.

  • "You are the victim of an identity fraud," I said that tells it all," said Adams. In April, Duluth police arrested Annette Ford after detectives found stacks of documents containing names, dates of birth and Social Security numbers inside her home. Authorities say Jeanette Adams' name was among them.

  • Police say Ford owned a business called E-Pro Tax Service that was registered with the secretary of state's office. Ford pleaded guilty to conspiracy and identity fraud in June. Derrick Picket has been charged in connection with the ring. Charges are pending against at least two more suspects.

Source: Police: 9,000 victims in Gwinnett ID theft case.

Clock Ticks On Bankster's Short Sale Incentive; Qualified Homeowners To Be Offered Up To $20K To Bail Out Of Underwater Homes

In Central Florida, the St. Petersburg Times reports:
  • The clock is ticking on homeowners who want to take advantage of Bank of America's recently announced short-sale incentive program. To collect up to $20,000, qualified sellers must get their homes listed for sale by the end of November.

  • The bank, which services 1.1 million Florida mortgages, says it is not limiting the offer to delinquent borrowers. Homeowners with good payment histories could also qualify, said Christina Beyer Toth, a Tampa-based Bank of America spokeswoman.

  • When the nation's largest lender announced the program offer last week, it didn't specify which homeowners would qualify or whether the bank wanted to only dump toxic loans it acquired from Countrywide Financial in 2008.

For more, see Clock ticking on Bank of America short sale cash offer.

See also, The Palm Beach Post: Bank of America offers up to $20,000 short sale incentive to struggling homeowners.

Man Sues Ex-Wife Alleging R/E Ripoff; Says She Was Unauthorized To Take Title To Property In Her Name While Acting As His Agent In Parcel Purchase

In Galveston, Texas, The Southeast Texas Record reports:
  • Joseph Van Huntington is suing his ex-wife in an effort to extract a title from her. According to a lawsuit filed Sept. 19 in Galveston County District Court, Alicia Van Huntington falsely represented that she was the plaintiff's spouse to secure a transaction involving real property in Galveston County 20 years ago.

  • The parties divorced in September 1984, but continued to remain friends, the original petition says. Recent court documents show Joseph Van Huntington purchased the parcels of land in question on Dec. 28, 1988. He was out of the country at the time of the aforementioned transaction so he requested the respondent to act as his agent and affect the purchase in question, the suit says.

  • It explains that the complainant "wholly paid for the property, and Alicia Van Huntington paid (nothing) for the property."Joseph Van Huntington, however, asserts that he did not authorize Alicia Van Huntington, who reportedly resides in Argentina, to purchase the property in her name nor convey any part of the subject land to her.

  • The suit further alleges she had said property deeded in the plaintiff's name with his knowledge or consent. "To date, the plaintiff, Joseph Van Huntington, desires to sell the subject property and Alicia Van Huntington refuses to convey (the) title to Joseph Van Huntington," the suit says. Consequently, the complainant seeks a declaratory judgment stating he is the property's sole owner.

Source: Former spouses in litigation over property title.

Cops To Homeowners: Take Caution When Responding To Roadside 'Bandit Signs' Offering Mortgage Help

In Lee County, Florida, WINK News reports:
  • Signs have been popping up around Fort Myers, promising big bucks if a company can assume your mortgage. Most of the handwritten signs read: "We pay $10,000 to take over your mortgage." At the bottom, there's a phone number to call, but no name or business listed.

  • Stacey Payne, with the Lee County Sheriff's Office Fraud Line, says the lack of information should be a red flag to homeowners. "With somebody who's saying they have a mortgage company or they're going to help you with your mortgage, there should be a business, a legitimate business tied to that phone number," Payne says.

  • While local law enforcement have not gotten any complaints about the signs, Payne says she hopes people will study up on the company and its offer before diving into anything.

  • "They should due their due diligence, due their research, Google the phone number, the name of the person, the name of the business," Payne says. That's because what the signs promise closely resembles a scam that has already been documented, she says.

  • In the foreclosure "rescue" scenario, scammers target homeowners having trouble making their mortgage payments. The scammers offer to help, then trick people into handing over much more."Individuals were signing over the deed to their home," Payne says. "It wasn't that they didn't have a mortgage -- they were no longer the owner of their home." She says that is when the new owner would send a letter demanding complete payment of the mortgage and threatening eviction.

  • WINK News found three different phone numbers on similar mortgage signs around town. All of them rang to the same voicemail. The person answering the phone declined to discuss the details of the mortgage offer, and hung up when pressed for the name of the company.

  • The Better Business Bureau was unable to find complaints tied to the phone numbers listed on the signs. However, the BBB says most mortgages cannot be transferred and usually require lender permission to do so.

Source: Deputies skeptical about roadside mortgage signs.

Convicted Real Estate Ponzi Scam Operator 'Buys Out' Of Prison Time; Deal For Victims' Restitution Calls For Installment Payments With $100K Down

In Denver, Colorado, the Denver Post reports:
  • Admitted fraudster Xavier Duran bilked a Denver police officer's widow and others out of more than $1 million, but he won't necessarily serve prison time. The deal prosecutors struck Tuesday with Duran — a guilty plea on one felony securities-fraud count in exchange for a suspended sentence and restitution payments — means victims such as Kelly Young could recoup some of their losses.

  • Young lost nearly $800,000 in the death benefits and charitable contributions she collected after her husband, Detective Donnie Young, was shot to death in 2005 while working security off duty.

  • "It's a double-edged sword," Young said of the plea deal. "He basically stole a lot of money. If he were to be sent to prison for 12 years, we'd never get any of the money back."

  • Duran's plea came just as lawyers were selecting a jury. Young said she was relieved that the case wouldn't go to trial. Eight other charges related to theft and racketeering were dropped in the deal. Duran, 45, will be formally sentenced Jan. 6.

  • Chief Deputy District Attorney Joe Morales stipulated to a sentence that would keep Duran out of prison as long as he complies with strict economic probation and keeps up with restitution payments. The felony will remain on his record.
    Morales said he's asked for an immediate payment to Young.

  • "To stay out of prison, he has to come in with $100,000 cash. After that, he'll have to pay the rest of the restitution over time," Morales said. "It was enough that I could justify taking a chance and giving him a break."

  • Duran in 2006 told Young and other victims — including another officer's widow, Young's sister and a newly divorced woman — that he would use the money they invested to buy, fix up and rent run-down properties. "He liked to take advantage of women who were in unfortunate circumstances," Morales said.

  • He represented himself as a former real estate broker now acting as an investment adviser offering a risk-free opportunity, according to Duran's indictment. What he didn't disclose was that new investments were paying off old investors as well as paying for Duran's personal expenses. In reality, his business was failing, and he was losing properties to foreclosure.

For more, see Con man to pay money back to stay out of jail.

Friday, October 14, 2011

'Qualified' Intermediary For 1031 Exchange Deals Gets 7 Years In $20M+ Escrow Ripoff; Confederate To Serve 21 Months For Role In R/E Investor Ripoff

From the Office of the U.S. Attorney (Los Angeles, California):
  • Ezri Namvar, a prominent Los Angeles businessman and real estate developer, was sentenced [] to seven years in federal prison for stealing approximately $21 million from four clients who allowed his “qualified intermediary” company to hold their money in safekeeping before it was reinvested in real estate.

  • Namvar, 59, of Brentwood, was sentenced this morning by United States District Judge Percy Anderson, who also ordered Namvar to pay $20,930,648 in restitution. In May, a federal jury found Namvar guilty of four wire fraud charges.

  • A second defendant also found guilty of the four wire fraud charges – Hamid Tabatabai, 63 of Agoura Hills, who was Namvar’s right-hand man at the qualified intermediary company – was also sentenced [] and received a 21-month prison sentence.

  • The evidence presented at trial showed that four victims entered into agreements to have approximately $25 million deposited with Namvar’s company, Namco Financial Exchange Corp. (NFE), which held itself out as a qualified intermediary for real estate transactions commonly called “like-kind exchanges,” “tax-free exchanges” or “1031 exchanges.”

  • Under exchange agreements with NFE, the money belonging to the victims was to be held in safekeeping so the money would be available upon demand to effectuate 1031 exchanges.

  • However, instead of holding the money as promised, Namvar, with the assistance of Tabatabai, used the victims’ money for a variety of unauthorized and undisclosed purposes, including paying off creditors and investors of Namvar’s investment company, Namco Capital Group, Inc. (NCG).

For the U.S. Attorney press release, see Prominent L.A. Businessman Sentenced to Seven Years in Federal Prison for Stealing Nearly $21 Million Entrusted to His Company.

Real Estate Closing Attorney Gets 21 Months In $1M+ Escrow Ripoff; Pocketed Entrusted Cash While Failing To Apply Loot To Satisfy Existing Mortgages

From the Office of the U.S. Attorney (New Haven, Connecticut):
  • David B. Fein, United States Attorney for the District of Connecticut, announced that BRIAN P. McMANUS, 43, of Fairfield, was sentenced [] by Senior United States District Judge Ellen Bree Burns in New Haven to 21 months of imprisonment, followed by three years of supervised release, for misappropriating more than $1 million in funds during real estate transactions he handled.

  • According to court documents and statements made in court, McMANUS, who operated a law practice in New Haven, engaged in a series of fraudulent transactions in his capacity as the closing attorney on a number of real estate transactions. Specifically, McMANUS failed to pay off existing mortgages on the properties involved in the real estate transactions in a timely fashion and illegally used mortgage funds that had been deposited into his IOLTA account for other purposes.

  • On July 22, 2008, McMANUS handled a real estate closing involving the refinancing of a residential property located in Greenwich. At the time of the closing, there was an outstanding mortgage on the property in the amount of approximately $2 million that was to be paid off using funds being provided by a different lender as part of the refinancing transaction.

  • However, rather than paying off the existing mortgage on the Greenwich property, McMANUS used more than $1.45 million of the new mortgage monies that had been transferred to his IOLTA account to pay off outstanding mortgages from prior, unrelated real estate transactions he had handled, to make monthly payments on the outstanding Greenwich mortgage loan that was to have been paid off in full, and to pay personal and business expenses.

  • On June 24, 2011, McMANUS waived his right to indictment and pleaded guilty to one count of bank fraud. [...], Judge Burns ordered McMANUS to pay restitution in the amount of $2,041,417.41, of which approximately $568,000 has previously been deposited with the clerk of the court. U.S. Attorney Fein noted that McMANUS has withdrawn from the practice of law and the Connecticut Superior Court has appointed a trustee to oversee the closing of his practice.(1)

For the U.S. Attorney press release, see Attorney Who Mishandled Mortgage Funds Sentenced To 21 Months In Federal Prison.

(1) The State of Connecticut Judicial Branch's Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Connecticut-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Builder's Contract For Deed Scheme Used To Unload Unsold Inventory Leaves Would-Be Homebuyers Holding Bag As Bank Refuses To Extend Construction Loans

In Spokane. Missouri, KY-TV Channel 3 reports:
  • Entire neighborhoods of families in Christian County are being kicked out of their homes. The foreclosures come as quite a shock to the people living in those homes. Ernie and Sharlene Risinger and their 11 year old daughter love their Spokane home and community, but they're being forced out. Their American dream has turned into a nightmare.

  • Nearly four years ago, the Risingers moved into the place they call home. "Sounded like a great deal. He wanted $1,500 deposit or down and we would actually be buying our house," says Ernie Risinger. Or so they thought. The Risingers, like all their neighbors at River Birch Estates did owner financing with Harold Rogers. They pay him $1,100 a month on a 30 year loan.

  • All was fine until a few weeks ago. "He was taking pictures of the house, and I said, 'Are you with the insurance company or something?' and he said, 'No, I'm with the bank,'" says Risinger.

  • That man with People's Bank of the Ozarks told them to watch the mail and the paper. "It was just really hard getting information from anybody," Risinger says. In late September, the Risingers got a letter, telling them to start making payments directly to the bank. But Harold Rogers again asked the Risingers to pay him. They've decided to just put the money in the bank for now.

  • Now, the foreclosure notices are published. Rogers' attorney says the bank has refused to renew Rogers' short term construction loans. He also says the value of the houses have dropped because of the economic recession.


  • The Risingers and all their neighbors have close to 20 kids in Spokane schools, who are also taking the news hard. "She loves the teachers, she loves the school, it's just really sad," Risinger says of his daugther. With more than $60,000 invested in their American dream, the Risingers are forced to start over.

For the story, see Families in Nixa and Spokane being forced from homes in unexpected foreclosures (The Risingers and many of their neighbors did owner financing with Harold Rogers, and thought they were well on their way to owning their homes).

See also, KSPR-TV Channel 33: Ozarks Homeowners Paid Mortgages on Time but are in Foreclosure (16 homes in Nixa and Spokane are in foreclosure and the people who live in them say they never missed their mortgage payments).

Thursday, October 13, 2011

Daughter Cops Guilty Plea To Ripping Off Now-Deceased Parents In Home Equity Scam; Pocketed Proceeds From Fraudulently-Obtained Reverse Mortgage

From the Office of the U.S. Attorney (Rochester, New York):
  • U.S. Attorney William J. Hochul, Jr. announced [] that Mary Ann Fulbright, 60, of Dallas, Texas, pleaded guilty [...] to bank fraud. The charge carries a maximum penalty of 30 years in prison, a fine of $1,000,000 or both.

  • Assistant U.S. Attorney Marisa J. Miller, who is handling the case, stated that the defendant fraudulently obtained a Home Equity Conversion Loan, a type of reverse mortgage, on a Rochester home owned by her now-deceased parents, Stephanie and Michael Geremesz.

  • Fulbright obtained the mortgage in Michael Geremesz’s name, knowing that it was based upon a fraudulent quitclaim deed that falsely purported to relinquish all of Stephanie Geremesz’s rights to the property.

  • As a result of the fraud, a mortgage in the amount of approximately $176,000 was levied against the property, the proceeds of which the defendant kept for herself.

For the U.S. Attorney press release, see Woman Pleads Guilty To Mortgage Fraud.

Georgia Woman Falls Prey To Apparent Rent-To-Own Racket; Made Payments To Outfit In Hopes Of Future Ownership; Now Faces The Boot As Fannie Forecloses

In Ellenwood, Georgia, WSB-TV Channel 2 reports:
  • An Ellenwood woman says she rented a home thinking she could eventually buy it from the company who leased it to her only to have her dream of ownership come apart when Fannie Mae showed up at her front door.

  • The company that rented the home to Chiquella White said they got approval to rent the house out from the original owner who walked away from it. White said when she signed her contract, she was under the impression it was a lease-to-own contract.

  • The company said had she kept paying them rent, it would've been. "Nobody should have to go through this. This is wrong," White said. White rented her home from New Life Granted and said they told her she could eventually buy it from them. "This was their exact words. We are in the process of purchasing the home," White said.

For more, see Woman fears for her home over questionable business.

Faulty Water Meters Driving Homeowners Into F'closure? Bogus H2O Bills Lead To Mtg. Payment Hikes; City Admits Knowledge, Says Empty Coffers Block Fix

In Brockton, Massachusetts, WCVB-TV Channel 5 reports:
  • Some Brockton homeowners are up in arms over a certified letter they received from the city giving them seven days to sign an agreement to pay an abated water bill that they say doesn't reflect the true cost. This latest development stems from a controversy that began in July 2009, when thousands of homeowners got bills totaling thousands of dollars. One woman's bill was $100,000.

  • After an extensive audit, the city's water department admitted knowing that faulty meters were giving false readings, but said there was no funding to replace them.

  • In the meantime, homeowners were saddled with liens on their properties. Some of those liens were paid by mortgage companies that caused monthly mortgage payments to go up by several hundred dollars.

  • Because of the problem, some homeowners are even facing foreclosure. Homeowners say they are willing to pay what they owe, but they want to know what formula the city is using to come up with its figures. They said they also want to know what the balance on those bills are before they sign anything.

Source: Homeowners Continue To Battle City Over Water Bills (City Sends Letters Giving Residents Days To Pay Bills).

Wednesday, October 12, 2011

Feds, Mortgage Servicers Begin Paving Road To Robosigning 2.0?

Georgetown University Law School Professor Adam J. Levitin writes in Credit Slips:
  • Do you have what it takes to be a Mortgage Foreclosure File Reviewer Level 2? An intrepid researcher forwarded to me a job ad for a mortgage foreclosure reviewer who will be reviewing bank foreclosures per the OCC/Fed servicing fraud consent orders.

  • I have seldom seen a document that says more about the bullshit malarkey [striken language in the original] that the OCC and Fed are trying to pass off to cover for the banks than this job ad.

  • I think it demolishes even the thin fiction that the OCC/Fed servicing consent orders are anything more than Potemkin villages. Instead, what we have here is nothing less than a federally-blessed Robosigning 2.0.

For more, see Robosigning 2.0: Mortgage Foreclosure File Reviewers.

Thanks to Mike Dillon at for the heads-up on the post.

Reports On Federal Government Effort To Sweep Foreclosure Fraud Scandal Under Rug Continue

American Banker reports:
  • Can you count on the emperor’s handpicked ministers to tell him when he’s naked? Banking regulators seem to think so.

  • The April consent orders against mortgage servicers let the companies pick one or more professional-services firms to review their foreclosure actions for abuses and report the findings to the agencies.

  • Allowing the banks to choose their own judge, jury, and jailer presents almost untenable conflicts of interest. All of the consulting firms that were initially being considered to do the work serve the banks already. The banks, and their mortgage servicing operations, are existing or prospective clients.

For more, see Banks Hire Friendlies for ‘Independent’ Foreclosure Reviews.

Chase Sues To Collect On Erroneously-Released M'tgage; Homeowner Admits Owing Money, But Leans On Statute Of Limitations To Tell Bankster To Get Lost

In San Antonio, Texas, the San Antonio Express News reports:
  • In a strange twist in the ongoing saga of shoddy record-keeping surrounding mortgage documents, Chase bank last month sued a San Antonio couple because they were mistakenly released from having to make any more house payments — nine years ago.

  • Chase filed suit in U.S. District Court in San Antonio last month against Ramiro and Delia Guerrero Jr. to rescind a mortgage-lien release recorded in 2002. The bank also wants the mortgage declared valid so the couple will have to resume making payments.

  • Stephen Cochran, the Guerreros' lawyer, acknowledged that the couple never made their mortgage payments after a 2001 refinancing, blaming that on the then-lender apparently losing the note and the couple's confusion over where to send their payments.

  • Nevertheless, Chase, which was assigned the loan last year, waited too long to fix the problem, Cochran said. A lawsuit to correct it needed to be filed within four years of the release-of-lien filing under the statute of limitations, he said.

  • We play by the rules all the time, and one of those rules is a statute of limitations,” Cochran said. “Lots of good cases ... have been lost because you're just out of time.”


  • Collection efforts, including three or four foreclosure actions, were taken against the Guerreros, but each time the couple presented the release of lien, and the matters were dropped, Cochran said. He didn't know why efforts to fix the problem weren't taken sooner.

  • In March 2010, the mortgage was transferred to Chase by Mortgage Electronic Registration Systems Inc., acting for Fleet. Chase both owns and services the mortgage. MERS is a private company that tracks loan ownership and servicing.

  • The transfer was signed by Whitney K. Cook, a MERS vice president. Various websites show that her name appears on numerous other mortgage assignments and that she holds various titles for different companies — raising doubts that she actually reviewed the documents and had the authority to sign them.


  • In August, MERS recorded a rescission of release of lien in Bexar County property records. But that document isn't signed by the Guerreros. Chase followed up by suing the Guerreros on Sept. 16.

  • While Cochran maintains that Chase is way past the deadline for seeking to void the lien release, the bank possibly could argue that it didn't learn of the mistake until recently.

For the story, see Mortgage error sparks lawsuit (Bank wants a San Antonio couple to restart their payments nine years after a mistake).

Tuesday, October 11, 2011

Sneaky Lender Uses Loan Modification 'Pre-Negotiation' Agreement To Dupe Borrower Into Inadvertently Ratifying Void Mortgage, Waiving All Rights

Lexology reports on the use of loan modification pre-negotiation agreements that lenders use to screw over property owners:
  • The son and wife of the sole shareholder of an entity owning real property arranged for a mortgage loan to be made to the entity without the shareholder's knowledge or consent.

  • The son and wife represented to the lender that they had the authority to enter into the financing transaction in the borrower's name. After the mortgage loan went into default, the lender filed a foreclosure action.

  • In an effort to avoid foreclosure and reach a settlement or modification of the mortgage loan, the shareholder, on behalf of the borrower, signed a pre-negotiation agreement required by the lender, which:

    a) confirmed that the borrower's obligations were legal and enforceable;
    b) waived the borrower's defences, counterclaims and offsets; and
    c) acknowledged that the lender waived none of its rights or remedies under the mortgage loan documents.

  • After the parties failed to reach agreement on a modification of the mortgage loan terms, the borrower filed for bankruptcy and argued that the mortgage loan transaction was unenforceable because the son and wife lacked authority to enter into the transaction in the name of the borrower.


  • [For various reasons discussed in the story], the court held that the pre-negotiation agreement was enforceable.

  • The court also held that the mortgage loan transaction was enforceable because, among other reasons, the pre-negotiation agreement evidenced a ratification of the underlying mortgage loan by the shareholder of the borrower despite the fact that the mortgage loan was originally entered into by parties which lacked authority to enter into the mortgage loan transaction.

For more, see Enforceability of distressed mortgage loan pre-negotiation agreements (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link for the story).

See also, Borrower’s inaction ratifies unauthorized corporate loan (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link for the story).

For the court ruling, see In re Vargas Realty Enterprises, Inc., 440 BR 224 (S.D. N.Y. 2010).

Loan Servicer Screw-Up Suspected By Families Threatened By Foreclosure Despite Claim That No Payments Have Been Missed

In Orlando, Florida, WFTV-TV Channel 9 reports:
  • Several local families claim an Orange County loan company is threatening to foreclose, even though they haven't missed a payment. Michelle Martinez can't believe she's fighting to keep her parents Deltona home out of foreclosure.

  • Since she says the bank records show they have not missed a payment and yet foreclosure warnings keep arriving. "Countless calls to this company and never get a straight answer."

  • Michelle blames Litton Loan for creating the problem. Litton was sold to Ocwen Loan Servicing near UCF. She claims it's done nothing to resolve her parents nightmare. "Instead of resolution the problem it just gets bigger."

For more, see Action 9 Investigates Mortgage Loan Mess (Families fight mortgage company).

Title Company Paperwork Screw Up Leaves Houston Couple Facing Foreclosure, Despite Having Made All Mortgage Payments

In Houston, Texas, FOX Channel 26 reports:
  • For two years, a Houston couple diligently paid the monthly mortgage on their new home. Then came the unbelievable news that the home was never theirs; the title had never been transferred.

  • Soon after Brian and Khanklink Pyron bought their home in 2008, the title company they used, Esquire Title, filed for bankruptcy.

  • Therefore, the title to the home was never legally transferred to the Pyrons. It still belonged to Wells Fargo, the bank that held the previous owner's mortgage.

  • "We did everything we were supposed to do. All this had been going on for two years. Nobody has communicated with us, notified us. We had been paying our mortgage and everything," Brian said.

For more, see Family Hit by Surprise Foreclosure.

Monday, October 10, 2011

County Recording Official Discovers Robosigning Not Limited To F'closure Docs; Mortgage Release On His Own Home Signed By Notorious Signature Scrawler

In Fort Wayne, Indiana, The Journal Gazette reports:
  • Allen County Recorder John McGauley knew property documents with suspect signatures were prevalent. After all, there were so many that a year ago the nation’s largest banks had to halt foreclosures to deal with the sea of paperwork that could not be trusted.

  • The problem was so big it spawned a new word to describe it: “robo-signing,” meaning offices filled with low-paid workers signing documents they had never read, documents they were not qualified to sign and often signing someone else’s name.

  • Still, McGauley was surprised to hear that robo-signing was not limited to foreclosure documents but was being found on thousands of homeownership documents having nothing to do with seized homes.

  • He was even more surprised when a quick check of Allen County records revealed more than 8,000 suspect documents have been filed here since 2006 – records McGauley’s office is charged with preserving as the final word in property ownership. “It was just like reaching into a hat where your number was on more slips of paper than it wasn’t on,” McGauley said. “Everything you pulled out was another one.”

  • But the real surprise was when McGauley looked through the documents for his own home. The mortgage release on the house he and his wife sold in 2005 bears the signature of Linda Green – the most notorious robo-signer in the nation. “This is the kind of thing that can really upset people because the biggest investment most people will ever make is their home,” McGauley said. “It’s frustrating me.”

  • It could be frustrating millions soon and frustrating an already-battered real estate market. If invalid documents are discovered in the chain of ownership, it could delay a home sale or make it difficult for buyers to get a mortgage because title insurers will not write a policy for the property, said Justin Ailes, vice president of government affairs of the American Land Title Association, which represents the title insurance industry.

  • Banks and other mortgage lenders will not write a home loan without title insurance. That means your house – even if you’ve never missed a payment or had an ownership dispute – could be impossible to sell until the documents are verified, or it could be impossible to buy your dream home.(1)

For more, see Signing scandal hitting home (Dubious names affect verification of deeds).

(1) County Recorder McGauley had this observation on the state of affairs created by the robosigning scandal and its affect on all title to real estate, including those titles unaffected by foreclosure:

  • For a hundred years, the property ownership system in Indiana was based on trust. You assumed you could trust the documents recorded in the recorder’s office. That has deteriorated,” he said. “This is supposed to be the public record. It becomes history. … At best, it muddies that process; at worst, it turns it into garbage.”

5th Circuit Tells Judgment Creditor To 'Take A Hike!' Improper Attempt To Snatch Bankrupt Debtor's Home Sale Proceeds Violates Texas Homestead Law

Bloomberg Businessweek reports:
  • A creditor with a pre-bankruptcy judgment lien doesn't automatically have a secured claim in proceeds from the sale of a homestead in excess of the homestead exemption, the U.S. Court of Appeals in New Orleans ruled on Oct. 4.

  • The case involved an individual saddled with a pre- bankruptcy judgment for $538,000. The judgment was recorded before bankruptcy and became a lien on the home. After bankruptcy, the owner sold the homestead with approval from the court and the Chapter 7 trustee, generating over $500,000 in proceeds in excess of the mortgage.

  • The judgment creditor claimed to have a valid lien in the net proceeds in excess of the $125,000 limitation on the homestead exemption in Section 522(p) of the Bankruptcy Code.

  • Circuit Judge Priscilla R. Owen rejected the argument. She read from Texas law where a judgment lien creditor cannot enforce a lien against a homestead. Therefore, Owen said that the lien likewise was unenforceable against the property after bankruptcy.

  • She explained that Section 522(p) limits the amount of a bankrupt's exempt interest in property. The section “does not speak” to the judgment creditor's interest in the property.

  • Owen ruled that the lienholder “does not have a right specifically enforceable in the excess proceeds.” Nonetheless, Owen said that the appeals court was not ruling on whether the creditor “has an otherwise enforceable interest in the estate.” The case was returned to the bankruptcy court for further proceedings.

Source: Homestead Limit Doesn't Make Judgment Enforceable (2nd story from the bottom).

For the ruling, see In re McCombs, 08-20171, (5th Cir. October 4, 2011).

Dyck's Deeds Drive Homeowners, Recording Officials 'Wild' In Sovereign Citizen Title Snatching Scam; 'Paper Terrorist' Responsible

In Osceola County, Florida, the St. Petersburg Times reports:
  • Last year, Olga Aponte sold the New York home she'd owned for 32 years and paid cash for a foreclosure house in Kissimmee. The 67-year-old wanted a solid retirement investment. For months, she lived in peace.

  • That was, until she learned about the intruder. It happened this summer, when her son saw the name of a stranger on her property records, on a deed filed one month after she bought her house: Jacob Franz Dyck.

  • But Aponte had never met Dyck, or agreed to sign anything. And she wasn't the only one. Dyck, the Times has learned, has filed more than 100 "wild deeds" laying claim to properties in Osceola county. The deeds bear no signatures of the rightful homeowners or any evidence of their consent.

  • What is he doing and what does he stand to gain? It's unclear. Authorities can't find him to answer that question, but his track record gives them cause for concern.

  • Dyck, 72, is a self-proclaimed "sovereign citizen," purporting to be above the laws of government. He's also a felon. The St. Petersburg Times wrote about him in August after homeowners said he misled them into thinking they could avoid foreclosure by deeding their houses to him to put into a "pure trust." For this, he charged a fee. Owners lost their homes anyway.

  • "Sovereign citizens" have declared themselves free from government and believe banks don't have a right to foreclose on properties; they often flood the courts with documents, a practice known among critics as "paper terrorism."

  • The theories for Dyck's actions matter less than the implication: There is little to stop this from happening to you.

For more, see Jacob Dyck's wild deeds perplex homeowners.

Baltimore Feds Nail Two More Sale Leaseback Peddlers That Ripped Off Homeowners In Foreclosure Of At Least $1.2M In Equity Stripping Scam

In Baltimore, Maryland, The Baltimore Sun reports:
  • A Severna Park mortgage broker pleaded guilty Friday in a mortgage fraud case that left lenders with more than $940,000 in losses, robbed homeowners of at least $1.2 million in home equity and pushed 16 homes into foreclosure, the Maryland U.S. attorney's office said. Mary Anne Dean, 60, pleaded guilty to conspiracy to commit wire fraud. Charles Donaldson, a loan officer described as her co-conspirator, pleaded guilty last week.

  • The Maryland U.S. attorney's office said Donaldson, 57, recruited homeowners struggling with their mortgages for what he said would be a foreclosure rescue plan: They would sell their homes to investors, remain there as renters for a year or so and then buy the properties back after repairing their finances.

  • Dean brokered loans for the "investors" — Donaldson's relatives and acquaintances — by submitting mortgage applications with inflated income and other false information, according to their plea agreements. Donaldson promised participants that he would hold most of the homeowners' equity in an escrow account to help with the payments.

  • Instead, Donaldson spent much of the homeowners' equity, according to the plea agreement. That left both the investors and the former homeowners in dire straits, unable to make payments. Thirteen homes have been taken back by lenders and three more are tied up in foreclosure proceedings, the Maryland U.S. attorney's office said.

  • Dean and Donaldson are scheduled for sentencing in January. The maximum punishment is 20 years in prison and a $250,000 fine.(1)

Source: Broker, loan officer plead guilty in mortgage-fraud case (Mary Anne Dean pleads guilty to conspiracy to commit wire fraud).

For the U.S. Attorney press release, see Mortgage Broker and Loan Officer Plead Guilty in Fraudulent Mortgage Rescue Scheme Resulting in Losses of over $1.2 Million to Homeowners in Financial Distress.

(1) See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals for other prosecutions of the lowlifes that perpetrate this type of racket.

See generally, DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams.

Sunday, October 09, 2011

Feds' Ongoing Crackdown On Upfront Fee Loan Modification Ripoffs Leads To Shutdown Of Two More Rackets

From the Federal Trade Commission:
  • At the Federal Trade Commission’s request, a U.S. district court has shut down two related operations as a result of settlements with defendants who allegedly failed to provide promised debt relief services and jeopardized their clients’ privacy by tossing their personal information into unsecured dumpsters. In addition, one of the operations allegedly charged consumers a $1,495 up-front fee based on phony promises that they would get mortgage relief assistance.

  • The settlements with Residential Relief Foundation, LLC; Silver Lining Services, LLC; Mitigation America, LLC; and their principal owners are part of the FTC’s ongoing crackdown on scams that target consumers in financial distress. The settlements ban the defendants from working in the mortgage assistance and debt relief business, prohibit them from the alleged privacy violations, and impose judgments totaling more than $11 million – the amount of consumer harm they caused.

For the FTC press release, see At FTC’s Request, Court Shuts Down Deceptive Mortgage and Debt Relief Operation (One Firm Charged $1,495 for Loan Modification Program, but Provided No Services).

See Federal Trade Commission v. Residential Relief Foundation, Inc., et al. for links to the lawsuit and the Stipulated Final Orders for Permanent Injunction and Settlement of Claims.

Indiana AG Tags Two More Out-Of-State Loan Modification Outfits With Civil Suits Alleging Upfront Fee Ripoffs, Failure To Register, File Bonds

In Lake County, Indiana, the Northwest Indiana Times reports:
  • Indiana Attorney General Greg Zoeller alleges two out-of-state firms targeting Hoosiers with mortgage foreclosure or credit problems are operating illegally in Indiana.

  • Zoeller personally filed court papers in the Lake County clerk's office here Tuesday morning naming the Florida-based Marucci Law Firm and Illinois-based EAC Financial in lawsuits alleging their "rescue" businesses violated several state laws including the Indiana's Deceptive Consumer Sales Act.

  • He is seeking injunctions to stop the firms from collecting upfront fees while failing to provide services. He wants court orders forcing them to pay restitution to their Hoosier customers as well as civil penalties and attorney fees. Zoeller said both firms failed to register with the Indiana Secretary of State or file a bond with the state.

  • He alleges a Lake County resident contacted Marucci through an online service and paid the law firm $2,600. He said EAC Financial contacted another local resident by telephone who paid them $750.

For more, see AG sues to stop 'rescue' firms from targeting locals.

Oregon AG Targets Outfit With Civil Suit In Alleged Upfront Fee Loan Modification Ripoffs That Pocketed About $90K From 30+ Homeowners

In Salem, Oregon, KTVZ reports:
  • Attorney General John Kroger announced a lawsuit Friday accusing California-based loan modification company NOD Consultants, LLC of illegally collecting about $90,000 in fees from nearly three dozen Oregon homeowners and then refusing to provide refunds after the company failed to obtain promised loan modifications. It was one of two actions he announced Friday involving loan modification scams.


  • The lawsuit was filed Sept. 29 in Clackamas County Circuit Court against NOD Consultants and the company’s two principals, Nicolas R. Godbout and Grant A. Gerhart. [...] According to the complaint, although most of the defendants' Oregon clients were current on their mortgage payments, the defendants encouraged them to skip at least one payment, claiming it would encourage their lender to re-negotiate.

  • Notwithstanding promises to obtain loan modifications, NOD Consultants allegedly failed to obtain a loan modification for 33 of its 34 Oregon clients. The complaint states that, despite the defendants' repeated failure to obtain loan modifications, they have generally refused to refund the fees paid by their clients.


  • Earlier Friday, Kroger announced an agreement that will provide restitution for more than two dozen Oregon homeowners who were promised loan modifications that were never delivered.

  • The agreement bans American Team Mortgage, Inc., dba American Mortgage Relief, and Steve Hufstedler from foreclosure counseling, credit/debt counseling, loan modification or mortgage origination in Oregon. Under the agreement, 28 homeowners will receive $67,000 in restitution. Oregon will receive an additional $65,000 for its consumer protection efforts.

  • The Department of Justice and the Department of Consumer and Business Services conducted a joint investigation into allegations that the companies took illegal upfront fees to provide loan modifications. The investigation determined that 28 Oregon homeowners received neither the loan modification they paid for nor a refund.

For the story, see Oregon AG Targets Loan Modification Scams (Sues One Firm, Shuts Another Down).

Ex-Non Profit Employee Cops Plea To Pocketing Cash From Financially Strapped Homeowners Seeking Loan Mods To Prevent Foreclosure

In Dunkirk, New York, WIVB-TV Channel 4 reports:
  • DUNKIRK, N.Y. (RELEASE) - U.S. Attorney William J. Hochul, Jr. announced [] that Lori J. Macakanja, 35, of Dunkirk, New York, pleaded guilty to mail fraud and theft of government money [...].

  • Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that Macakanja, in her capacity as a housing counselor employed by HomeFront, Inc., inappropriately requested money from clients. The defendant told HomeFront clients that the money would be used toward loan modifications to prevent foreclosure on their homes.

  • However, after receiving the funds, Macakanja used the money for her own personal use, including gambling, and failed to obtain the loan modifications for the victims. A total of 136 HomeFront clients were defrauded with losses totaling $300,000.

  • In addition, Macakanja also obtained federal grant monies from the Buffalo Urban Renewal Agency (BURA) for HomeFront clients. On two occasions, she diverted $2,000 worth of BURA money to pay her own personal mortgage.

For more, see Housing counselor defrauded clients.

Freddie Slams Brakes On Foreclosure Of Home Allegedly Ripped Off By Victims' Grandson With Forged Deed, POA, Leaving Elderly Couple Facing The Boot

In Ramsey County, Minnesota, the Pioneer Press reports:
  • Stella and Joseph Hernandez dodged an eviction bullet Friday. On Thursday, the Ramsey County sheriff's office delivered the elderly St. Paul couple an eviction notice that gave them until 3 p.m. Friday to vacate their home of nearly 35 years.

  • The couple, whose plight was detailed in this column Sunday, say a grandson had them sign a quitclaim deed without their knowledge. In addition, they say, he forged their signatures on power-of-attorney forms to obtain more than $300,000 in mortgage loans that were never repaid.

  • The grandson denied the allegations, but meanwhile, the 91-year-old Tudor home near the Cathedral of St. Paul underwent foreclosure and was sold this year to the Federal Home Loan Mortgage Corp. However, U.S. Sen. Amy Klobuchar, who read about the couple's housing woes, contacted Freddie Mac officials and persuaded them to put the eviction on hold. "They feel for the couple and think it's tragic," Klobuchar told me Friday. "Right now, the eviction is temporarily on hold until we come up with a permanent solution."

  • Stella Hernandez, 83, said she received the sheriff notice shortly after she returned from cancer treatment at a clinic near her home. She cares for her 93-year-old husband, a decorated World War II veteran who suffers from dementia and underwent a quintuple bypass surgery six years ago.

For more, see Aging St. Paul couple's eviction put off after Klobuchar intervenes.