Saturday, January 28, 2012

Arizona AG: BofA Stymies State Probe Into Loan Modification Practices By Silencing Homeowner-Victims With Settlement Agreements

Bloomberg reports:
  • Bank of America Corp. is impeding an investigation of its loan modification practices by negotiating settlements with borrowers who must agree to keep them secret and not criticize the bank in exchange for cash payments and loan relief, Arizona officials say.

  • The Arizona Attorney General’s office is asking a court to block those aspects of the settlements and require the bank to turn over all the agreements. The bank denies any wrongdoing.


  • The settlement agreements came to light as state investigators followed up on borrower complaints filed with the attorney general’s office. The office learned of 12 settlements while examining 1,900 complaints and when it attempted to contact the borrowers, Assistant Attorney General Carolyn Matthews said in Jan. 11 court filing.

  • Only four returned phone calls and none would provide a copy of the settlement, Matthews said. Some who signed the settlements had previously been in frequent contact with the attorney general’s office, according to court records.

  • Matthews contends that under the terms of the settlements, even if subpoenaed, borrowers can’t reveal any unflattering information about the bank. They couldn’t talk about misrepresentations the bank made about loan modifications, which is what the state is investigating, she said.

  • These agreements have completely silenced even the most communicative consumers,” Matthews said in the filing. “The settlement agreement purposefully makes it impossible, legally and practically, for a consumer signing it to come forward, voluntarily and promptly, to provide evidence in this case.”

  • She asked a state judge to order Bank of America to notify borrowers who signed the agreements that they don’t have to adhere to the confidentiality and non-disparagement provisions.

For more, see Bank of America Settlements Impede Fraud Probe, Arizona Says.

Law Firm Faces Bar Probe For Allegedly Using Trust Funds To Advance Anticipated Proceeds From Check That Subsequently Bounced; Left Holding $285K+ Bag

In Orlando, Florida, the Orlando Sentinel reports:
  • The Florida Bar is investigating practices by the KEL law firm that may have played a role in it being bilked out of more than $285,000 in a high-tech flim-flam, the Bar confirmed this week.

  • Staff investigators are looking at whether the Orlando law firm violated the Bar's rules of financial conduct when it moved funds in and out of a trust account while becoming ensnared in the international scam, a spokeswoman said.


  • In the latest incident, KEL finds itself both the victim of wrongdoing and the target of the complaint that accuses it of flouting Florida Bar rules. U.S. Attorney Robert E. O'Neill for the Middle District of Florida announced last week that KEL had been defrauded and that federal authorities have taken action to recover $285,833 stolen from the firm. The U.S. has filed a civil-forfeit lawsuit against JPMorgan Chase Bank as part of that effort, O'Neill said.


  • According to a Secret Service investigator's affidavit, KEL was contacted by phone last summer by a prospective client named "David Benson," who claimed to be a business consultant. He wanted to sue a former boss, identified as "Fred Sanders," for wrongful termination. The sum in dispute: $90,000.

  • After receiving a $500 retainer check, KEL took the case, contacted Sanders and obtained a settlement, the affidavit states. The firm later received a check in the mail for $285,833. It deposited the check in its business account and wired the money to Benson before the check cleared, apparently feeling "obligated" to get the money to him as soon as possible, according to the investigator.

  • But KEL didn't have enough money in the business account to wire the full amount, so it transferred funds from its title-work subsidiary account, the federal affadavit states. When it wired the money to Benson at an account in Shinsei Bank in Japan, someone withdrew the entire amount.

  • Later, both the retainer check and the settlement check were found to be counterfeit; and everything else about the people involved had been fabricated, according to the affadavit. KEL's money was gone, and the law firm had never met its client face-to-face.

For more, see Bilked by scam, KEL law firm draws Florida Bar scrutiny.

Property Insurer Seeks Court Guidance On To Whom To Pay Policy Proceeds Where Multiple Claims Made On Same 'Ike-Destroyed' Home

In Galveston, Texas, The Southeast Texas Record reports:
  • American Modern Lloyds Insurance Co. is embroiled in a dispute over Hurricane Ike-related claims with three East Texas residents. The insurer filed suit against Orange resident Melvin Cook and Lumberton locals Stephen and Debora Dzenowski on Jan. 13 in Galveston County District Court, stating the respondents may expose it to "multiple liability" because of their alleged "rival claims."

  • The suit shows American Modern provides property damage coverage with a total limit of $43,000 to a Crystal Beach house which was completely destroyed by Hurricane Ike in 2008.

  • According to the original petition, American Modern "has indicated its willingness to pay the proceeds of the policy, but conflicting claims have arisen from the plaintiffs." "The defendant is unable to determine which, if any, of the defendants are entitled to the policy proceeds," the suit says.

  • "There is an issue between the named insureds regarding insurable interest and ownership of the insured property."

  • American Modern insists it claims "no interest in the proceeds of the policy, which the plaintiff has at all times been willing to pay to the person or persons entitled to payment."

Source: Insurance proceeds for destroyed beach house delayed by rival claims.

Florida AG Stands Behind Crappy Nationwide Foreclosure Fraud Settlement She Helped Negotiate

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Florida Attorney General Pam Bondi stood by the 50-state attorneys general settlement with the nation's biggest banks on Thursday as California and Delaware formally rejected the proposal she helped negotiate.

  • Bondi said Floridians can't wait for foreclosure relief and that the draft proposal sent to states on Monday addresses California's concerns.

  • "The settlement under discussion contains all the elements California purports to be looking for; transparency, substantial relief for distressed homeowners, and strict enforcement," Bondi said Thursday.

  • "Florida's homeowners need relief now, and protracted and uncertain litigation would be contrary to their best interests." Bondi is on a core team working with the nation's five biggest banks to settle an investigation into mortgage servicing and foreclosure wrongdoing.

For more, see Florida Attorney General bashes states that rejected nationwide foreclosure settlement.

Wisconsin High Court Nixes Request From Advocates For Poor To Create Right To Free Counsel In Civil Cases Involving Housing, Other Basic Needs

In Madison, Wisconsin, The Capital Times reports:
  • Courts in Wisconsin will not have to provide lawyers for poor people embroiled in cases that involve basic human needs, the state Supreme Court ruled last week. But the court gave its blessing to starting a pilot project in one or more counties that would provide attorneys in certain cases.

  • The court's decision at Thursday's administrative conference was in response to a petition by Legal Action of Wisconsin(1) asking the court to adopt "civil Gideon," which takes its name from the landmark 1963 case Gideon vs. Wainright, which established the right to counsel for criminal defendants.

  • Civil Gideon advocates sought to establish a similar right in civil court for low-income people litigating matters involving basic needs like shelter, food, clothing, heat, medical care, child custody and safety.

  • Legal Action filed the petition, with 1,320 supporting signatures, in September 2010. John Ebbot, executive director for Legal Action, says he was "deeply disappointed" by the court's decision. "I'm concerned that this pilot project is going to be an excuse to wait for that to be concluded before courts start to appoint counsel," he says.

  • No state has enacted a comprehensive civil Gideon policy, but a few states have done pilot projects. Last year California embarked on an $11 million project.

For more, see Crime and Courts: Supreme Court rejects court-appointed lawyers for poor in civil cases.

(1) Legal Action of Wisconsin is a non-profit law firm that provides free legal services for low-income people in Wisconsin, having offices in six cities serving 39 southern counties.

Friday, January 27, 2012

Sloppy Loan Servicers Continue Victimizing Homeowners With Crappy Recordkeeping

Reuters reports:
  • In July 2009, Roy and Sheila Bowers refinanced the mortgage on their suburban ranch home in Topeka, Kansas. The couple wanted to take advantage of the low interest rates that were all the rage at the time.

  • Roy, a truck driver, and Sheila, a former hotel housekeeping supervisor, knew their new loan from Wells Fargo would enable them to save $198.86 a month - a nice chunk to help with gas and groceries.

  • But what the Bowers never imagined was that their old loan, the one Wells Fargo told them was paid off, would resurrect itself, trashing their credit report, scotching their son's student loans and throwing the whole family into foreclosure. All, they say, even though they didn't miss a single mortgage payment. The Bowers aren't alone.

  • More and more, homeowners say that mortgages they thought were dead and buried are springing back to life, sometimes haunting them all the way into foreclosure. "It's the most egregious manifestation of an industry that's seriously broken," said Ira Rheingold, a lawyer who is the executive director of the National Association of Consumer Advocate.

  • Diane Thompson, an attorney with the National Consumer Law Center, says she has defended hundreds of foreclosure cases, and in nearly all of them, the homeowner was not in default. "The record-keeping on the part of the mortgage servicers is not to be trusted."

  • The problems grew from a lot of sloppy recordkeeping that began during the housing boom, when Wall Street built a quick-and-dirty back-office operation to process mortgages quickly so lenders could sell as many loans as possible. As the loans were later sold to investors, and then resold around the world, the back office system sidestepped crucial legal procedures. Now it's becoming clear just how dysfunctional and, according to several state attorneys general, how fraudulent the whole system was.

  • Depositions from "affidavit slaves" depict a surreal, assembly-line world in which the banks and their partner firms hired hair stylists, fast-food kids and Wal-Mart floor workers, paying them $10 a day, to pose as bank vice presidents, assistant secretaries and corporate attorneys.

  • These "robosigners" became a national sensation in the fall of 2010 when it was revealed that they faked titles, forged documents and backdated affidavits so they could make up for the bypassed procedures and foreclose on properties.

  • They passed around notary stamps as if they were salt. They did all of this, they testified, without verifying a single word in any of the documents - as is required by law. And it was all done, they say, to foreclose on as many homeowners as fast as possible.

For more, see Old mortgages rise from the dead, haunt homeowners.

Oregon Foreclosure Trustee Accused Of Secret Markups For Published Legal Ads, Passing Jacked-Up Costs To Homeowners, Others

In Portland, Oregon, The Oregonian reports:
  • A lawyer representing The Bulletin of Bend and the Redmond Spokesman newspapers has filed an ethics complaint with the Oregon State Bar against an executive of the Northwest's largest foreclosure trustee, accusing the company of secretly marking up the cost of foreclosure legal ads to its lender clients.

  • Michael Dillard, of the Karnopp Petersen law firm in Bend, filed the complaint last week against David Fennell, a lawyer and a principal owner of Northwest Trustee Services, which by its own account has handled more than 250,000 foreclosures.

  • Dillard alleges that Northwest Trustee and its advertising operation, FEI, charged its clients an undisclosed 18 percent premium over the actual price. These "deceptive and dishonest" tactics, Dillard said, allowed FEI to collect from its clients about $360,000 more than it actually paid for the foreclosure notices published in the Redmond newspaper just since 2009. Those costs were then presumably passed on by banks to homeowners and others, Dillard said.

  • Stephen Routh, CEO of Northwest Trustee Services, denied that FEI was charging a secret premium. "The markup was fully disclosed to it customers," Routh said. "It's how they make a profit."

  • The complaint is intriguing on several levels.

For more, see Portland foreclosure attorney hit with ethics complaint due to premiums.

Calif. AG Gives Thumbs Down To Latest Version Of Nationwide F'closure Fraud Settlement; Says New Deal Still Falls Short For Golden State Homeowners

In Sacramento, California, The Sacramento Bee reports:
  • Calling it "inadequate for California," the state is rejecting the latest settlement proposal between states and major U.S. banks over lending abuses that fueled the foreclosure crisis.

  • California Attorney General Kamala Harris pulled out of nationwide talks with the banks in October, saying the proposed $25 billion deal gave too much immunity to lenders and didn't provide enough relief for homeowners in a state hard hit by the mortgage meltdown.

  • On Wednesday, Harris' office said a new version of the settlement plan still falls short of those goals. "At this point, this deal does not suffice for California," said spokesman Shum Preston.

For more, see California attorney general rejects foreclosure settlement.

Thursday, January 26, 2012

Elderly Couple Says Misapplied House Payments, Force Placed Insurance Racket Victimized Them Into F'closure; Compelled To Hire Attorney To Stall Sale

In Baird, Texas, the Abilene Reporter News reports:
  • It's been enough to make Virginia Tollett sick with worry. "If we hadn't went and got an attorney, they would have auctioned our house on the courthouse lawn," said Tollett, 72, her voice rising. "They would have sold our house."

  • Tollett and her husband, Jim, 74, have turned to the courts in an effort to prevent lender JP Morgan Chase from foreclosing on the Baird home they bought for $300,000 in 2006 with the help of a $200,000 loan. The banking giant did not respond to a request for comment.

  • Tom Watson, the Abilene attorney representing the Tolletts, said a judge stepped in to prevent a sale of the home, scheduled for January. The status of the house remains uncertain, however, as a lawsuit remains pending in federal court that claims JP Morgan Chase wrongfully foreclosed on the home.

  • "What we are alleging is they took money that we submitted for payment to the principal and interest and instead applied it toward insurance," Watson said.

  • But the couple claim that they already had insurance, so the lender was wrong to take out the home insurance policy.

  • "My husband and I truly believe that we were paying our payments," said Tollett, 72, explaining that the couple paid roughly $1,500 monthly. Chase wants about $10,000 to bring the account up to date, Watson said. "I don't know how they arrived at that amount," Watson said.

  • He added: "We don't know how the payments were applied. Their records don't disclose that to us, at least in what I would call an intelligible, understandable form." The claim also seeks recovery of the couple's $100,000 down payment.

  • Tollett said she has cried and even been sick to her stomach since first receiving a foreclosure notice last fall. [...] The experience has caused her to "hate this beautiful home." She said she's been embarrassed by the courthouse foreclosure postings and doesn't know how she wants things to end, recalling her initial enthusiasm for the house.

For the story, see Baird couple facing foreclosure claims house payments wrongly uncredited to mortage loan.

Recent Nevada High Court Rulings Add Teeth To Earlier Precedent On Banksters' Obligations To Cough Up Loan Documents During Mediation

In Las Vegas, Nevada, KTVN-TV Channel 2 reports:
  • Officials say a pair of Nevada Supreme Court rulings requiring mortgage lenders to produce all required foreclosure documents before repossessing a house don't establish a new legal standard, but rely on state high court opinions issued last July.

  • In unanimous rulings Friday,(1) the court ruled there was insufficient documentation for separate foreclosure cases in Las Vegas and in Reno.

  • The court sent the cases in Clark County and Washoe County back to district court judges who had determined lenders produced enough documentation to foreclose.

  • The rulings rely on two cases setting a strict standard for lenders to produce the original note and deed of trust plus subsequent ownership records. The foreclosure mediation program was created in 2009 to give lenders, homeowners and an arbiter a chance to rework defaulted loans.

Source: Supreme Court Ruling Strengthens Foreclosure Mediation.

See also, Las Vegas Review Journal: Papers in foreclosure cases ruled insufficient.

(1) Piazza v. Citimortgage, Inc., No. 57026 (Nev. January 20, 2012); Karl v. HSBC Bank, USA, N.A., No. 57561 (Nev. January 20, 2012).

White House To Create Mortgage Crisis Unit To Probe Bankster Wrongdoing; Names Foe Of Current State AG Investigation To Co-Chair Operation

Bloomberg reports:
  • President Barack Obama said he will create a mortgage crisis unit that includes federal and state officials to investigate wrongdoing by banks related to real estate lending.

  • The president announced the unit in his State of the Union speech yesterday after protests by the Campaign for a Fair Settlement, a coalition of labor unions, consumer advocates and political activists including The group is calling for a full investigation into bank home lending and the creation and sale of mortgage-backed securities.

  • This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama said in the speech.

  • New York Attorney General Eric Schneiderman will co-chair the unit along with officials from the Department of Justice, Securities and Exchange Commission and Internal Revenue Service.


  • Representatives of Democratic attorney general offices met at a Chicago hotel Jan. 23 to discuss the negotiated terms and ask questions, said Iowa Attorney General Tom Miller. Miller, who is helping to lead talks, said an agreement with the banks is getting closer.

  • Schneiderman and California Attorney General Kamala Harris have said any settlement shouldn’t protect banks from claims that haven’t been fully investigated, such as claims stemming from the packaging of mortgages into securities sold to investors.


  • Schneiderman has been participating in the nationwide probe of foreclosure practices. His office also has been conducting a broader investigation into the mortgage operations of major banks.

  • In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the economic crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again,” Schneiderman said in his statement.

For the story, see Obama Creates Unit With States to Investigate Mortgage Misconduct by Banks.

See also, Firedoglake: The Schneiderman Gambit: Financial Fraud Unit Appears Designed to Fail, and Grease Skids for Foreclosure Fraud Settlement:

  • I’ll pepper in my thoughts on the State of the Union Address throughout the day, but I would be remiss if I didn’t start with the announcement of a Unit on Mortgage Origination and Securitization Abuses (UMOSA) to investigate bank practices during the financial crisis.

    The unit will be co-chaired by Eric Schneiderman, the New York Attorney General who bravely waged an often lonely battle to stop a misguided settlement on foreclosure fraud.

    But “co-chair” is the operative word here, and it suggests that the entire maneuver was created to grease the wheels for the pre-arranged settlement, while turning this investigatory arm into nothing so much as regulatory theater.

Wednesday, January 25, 2012

Register Of Deeds Calls For Criminal Probe Into Foreclosure Fraud; Makes Major Document Dump Of 31K+ Robosigned Land Instruments On Bay State AG, Feds

From the Office of the Southern Essex (Massachusetts) District Register of Deeds John O’Brien:
  • Saying that the time has come for a full scale criminal investigation, Southern Essex District Register of Deeds John O’Brien, [] has sent some 31,897 of what he says are fraudulent documents that have been recorded in the Salem Registry to Massachusetts Attorney General Martha Coakley, U.S. Attorney General Eric Holder and U.S. Attorney Carmen Ortiz.

  • O’Brien said that he is asking these officials to impanel a Grand Jury to look into the evidence that he has presented.

  • I am confident that these documents will show a pattern of fraud, uttering and forgery. These documents are signed by known robo or surrogate signers, whose signatures were supposedly witnessed by notary publics. In addition, these documents may contain fraudulent information in the body of the documents. I believe that a criminal investigation is the next step to hold the perpetrators responsible.”

For more, see O’Brien calls for criminal action against the Big Banks, Says they acted like “criminal enterprise”.

Note: If you are a victim of robosigning, contact the Southern Essex District Register of Deeds customer service department to ask about receiving an affidavit as proof that a document being used to take your home contains a fraudulent or surrogate signed document.

Go here for a list of active robosigners identified by McDonnell Property Analytics in the Southern Essex District Deed Registry.

Thanks to Deontos for the heads-up on the press release.

Illinois AG Hits Debt Collector With Suit Alleging Variety Of Intimidation Tactics To Illegally Squeeze Cash From Consumers

From the Office of the Illinois Attorney General:
  • [T]he Attorney General took action against a Skokie-based debt collector, PN Financial Inc., filing suit in Cook County Circuit Court. Madigan said PN Financial emerged last year as one of the most egregious cases of illegal debt collection during her tenure as Attorney General.


  • Madigan’s lawsuit against PN Financial and owner, Nelson Macwan, of Skokie, alleges numerous violations of state and federal laws that protect Illinois consumers from off-limits debt collection tactics. Madigan alleged PN Financial acted illegally by:

    Revealing information about debts to people other than the consumer, including employers or family members;

    Fronting as a law firm and intimidating consumers with fake court case numbers on letters sent to consumers to falsely represent they had been sued for failure to pay a debt;

    Debiting more money from consumers’ bank accounts than consumers authorized, causing some to incur overdraft fees; and

    Accessing consumers’ credit reports without authorization to intimidate them to pay alleged debts

  • Additionally, Madigan said in some instances PN Financial attempted to collect debts it was not authorized to collect. As a result, some consumers paid PN Financial, without realizing they didn’t owe any outstanding balances to the collection company, and reported losing at least $9,000. PN Financial also contacted other consumers over debts that had already been paid off.

  • Fifty-two consumers have filed complaints with Madigan’s office against PN Financial. The Chicago Better Business Bureau has received 82 complaints against the company.

For the Illinois AG press release, see Madigan: 2011 Consumer Complaints Show Debt Collectors Using Illegal Abusive Tactics.

For the lawsuit, see The People of the State of Illinois v. P.N. Financial Inc.

Suit: Foreclosure Rescue Outfit Ran Loan Modification Racket Targeting Elderly Woman Seeking Help With House Payments

In Kansas City, Missouri, the Kansas City Business Journal reports:
  • Legal Aid of Western Missouri(1) has filed a lawsuit on behalf of victims of an alleged foreclosure rescue scam operating out of Mission. According to the suit filed Friday in U.S. District Court in Kansas City, Death Productions LP promised to help elderly women lower their mortgage payments by negotiating with lenders in exchange for a monthly fee.

  • Then they do nothing, and you end up losing your home,” said Jim Jenkins, a Legal Aid lawyer representing Marilyn Bowman of Raytown and Doris Linningham of Kansas City. Jenkins said he has received several other complaints from Kansas City-area residents who allegedly lost money to the husband and wife behind Death Productions, John Lee Norris and Julie Tina Hatcher.

  • They previously ran the company in Nevada as Reaper Investment Partners LLC, Jenkins said, adding that they tend to target single black women older than 60 who hear of the company through trusted friends. “It wouldn’t surprise me if there are quite a few more” victims, he said.

  • The suit seeks more than $75,000 for Bowman, who filed bankruptcy, and more than $100,000 for Linningham, whose house was sold out of foreclosure for $28,000 on Jan. 9.

Source: Suit: Mission company bilked elderly women in foreclosure rescue scam.

(1) Legal Aid of Western Missouri provides legal services to low-income citizens living below the poverty level in a 40 county area in western Missouri.

Tuesday, January 24, 2012

Novice Homebuyer Pockets $8K 1st Time Buyer Tax Credit, Uses Funds To Fix House Only To Learn He Purchased Worthless Land Contract From Slick Operator

In Dearborn Heights, Michigan, WXYZ-TV Channel 7 reports:
  • The complaints keep coming about Leonard Bale. 7 Action News Investigator Bill Proctor broke the story about the man who has been selling foreclosed homes to families who say they have lost their lifesavings on these deals. Now one city is taking on Bale, who may be facing major fines.

  • Leonard Bale will go before a Dearborn Heights board where he already faces $42,000 in fines for failing to maintain rental properties.(1)
  • But those who say they are victims of Bale continues to grow.

  • We were making our payments on schedule,” says Clayton Waldroup a father of five. He says he had hoped that the Dearborn Heights home he thought he was buying from Leonard Bale on a land contract would be the ideal place for his family for years to come.

  • Like so many of Bale’s customers, Waldroup took advantage of the federal first-time home buyers program, and received a substantial check to fix up the house.

  • We moved in. We took the $8,000 we got from the federal government, replaced the furnace. We rewired the home, repaired the plumbing, put new cabinetry in it, refinished the floors, repaired walls, put windows in it,” says Waldroup. “We spent that money, plus all our cash reserves because this was going to be our home.”

  • But like these families, and so many others who say they are victims Bale, the Waldroups would find out months after buying and renovating, and putting heart and soul into the place that Bale was no longer the owner. They learned their land contract was no good.

  • There were foreclosure notices,” says Waldroup, which is how he found out his land contract was no good.(2)

For the story, see More families comes forward to accuse Leonard Bale.

(1) See Controversial landlord now facing thousands in fines.

(2) Inasmuch as the so-called tax 'credit' is nothing more than a 15-year, interest free loan, this scam victim may now find himself on the hook for immediate repayment to the IRS of the entire amount of the credit (less any amount he may have already paid back). See Internal Revenue Service Information Release: IR-2008-106, Sept. 16, 2008: Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years:

  • The first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.


  • However, some exceptions apply to the repayment rule. They include: [...]

    If you stop using the home as your main home, all remaining annual installments become due on the return for the year that happens. [...] If you sell your home, all remaining annual installments become due on the return for the year of sale.

Fire Drives Unwitting Recent Homebuyer From Residence Shortly After Learning His Property Purchase Was Worthless Land Contract Fleecing Him Of $48K

In Vacaville, California, KTXL-TV Channel 40 reports:
  • The home Johnnie Carabajal was living in went up in smoke [earlier this month], but the fire was the last in a long list of bad things that happened to him and his four kids.

  • Earlier in the month, he had been told to get out of the house he was trying to buy. "It went into foreclosure I lost it for hiring a bad realtor he's in court for embezzlement for 1.5 million dollars," said Carabajal.

  • FOX40 backed up his claim on the FBI’s website. Alonzo Brown III was indicted on mortgage fraud charges this past summer. The nine-count indictment states Brown took out loans in the names of friends and used the money to buy property without their knowledge. Carabajal was not named in the case, but he says he used Brown to help him through the short sale.

  • "I've given him almost 48 thousand dollars cash throughout the whole time," said Carabajal. That cash never made it to the bank. "The bank doesn't even know who I am on this house they look at me as a squatter on this house and I've been squatting in this house for two years," said Carabajal.

  • FOX40 tried to contact Brown today, he did not answer the phone. Wells Fargo is looking into the situation. For now Carabajal is living in a motel and is trying to find a rental in the school district his kids attend.

Source: Fire Uncovers Possible Real-Estate Fraud.

Unwitting Family Who Recently Lost Home In Tax F'closure Clipped For $5500 From Alleged Scammer Claiming To Be New Owner Offering To Sell Back House

In Southfield, Michigan, WJBK-TV Channel 2 reports:
  • A family loses their home to foreclosure. A man claiming to be the new owner of the house tells them to pay up or pack up. They gave him more than $5,000. Where did the money go?

For more, see Ex-Convict Accused of a Dirty 'Deed'.

Monday, January 23, 2012

More On Borrower Squeeze By Banksters' Force-Placed Homeowners' Insurance Racket

The New York Times reports:
  • New York State financial services agency is investigating several large banks to see whether they fraudulently steered homeowners into overpriced insurance policies. The investigation centers on so-called force-placed insurance that has become increasingly common since the downturn of the housing market began and homeowners had trouble keeping up with payments on their home insurance.

  • JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are among the major companies involved in the inquiry by the office of Benjamin M. Lawsky, the superintendent of New York State’s Department of Financial Services, according to a person briefed on the investigation who asked to remain unidentified because the matter was private.


  • In general, mortgage servicers are allowed to take out insurance policies on homes after a homeowner allows existing coverage to lapse. Though homeowners have little choice and sometimes little notice about the new plans, they often end up shouldering the costs of the insurance through their mortgage payments.

  • The increased cost is to be expected to some degree because homeowners who missed insurance payments on old policies are risky customers. However, Mr. Lawsky’s office views some of the increases as exorbitant. For instance, in one case his office is examining, a homeowner who paid $2,000 a year to State Farm ended up paying $6,000 a year to a new insurer.

  • Potential wrongdoing may occur when both mortgage servicing and insurance units are within the same company or affiliated in some way. That introduces a potential conflict because companies may have an incentive to place homeowners in policies offered by their affiliates rather than looking for the best rates on the open market.

For the story, see Big Banks Face Inquiry Over Home Insurance.

Homeowner/Couple Claims Russian Mob Electronically Stole Refinance Proceeds; Title Insurer To Victims: 'Get Lost - We Ain't Payin' Your Claim!'

In Parker, Colorado, KMGH-TV Channel 7 reports:
  • A simple refinance more than two years ago has a Parker family fighting for their home after the Russian mafia allegedly stole money during a wire transfer. Now the family’s home faces foreclosure again, with a hearing scheduled for Jan. 25.


  • In September of 2009, [Kim & Tim Canning] refinanced their home with Ryan Rodenbeck of Classic Title. At some point when the funds were being transferred online to Chase Bank, $900,000 disappeared. Rodenbeck said nine $100,000 transfers were stolen -- $277,000 of that was part of the Cannings refinancing.

  • In 2010, Rodenbeck said he did nothing wrong and that the money was intercepted by the Russian mafia. Classic Title has since gone out of business.

  • Tuesday, a representative from Chase Bank said they determined Rodenbeck transferred the money without using a secure site with encryption.


  • Bank of America held the Cannings first mortgage. It was supposed to be paid off during the transfer. Since the money never made it to them, the Cannings basically have two mortgages on their home. Bank of America wants its money back so it’s foreclosing on their home.


  • But trying to get the foreclosure to stop is only half of the problem according to the Cannings.

  • Rodenbeck was working as an agent for Attorneys’ Title Guaranty, a title insurance company. “They could make the whole thing go away today and they chose not to,” said Kim Canning.

  • She said Attorneys’ Title refuses to pay their claim. Cedars asked isn’t that what insurance is for? “Correct,” said Tim Canning. “And that is the question every attorney that has looked at this (case) and every person who has any experience in this industry has asked -- why is the title company not stepped up on this?” “I want them to tell me to my face, why they are doing this, because this is a choice, they are choosing to do this to us,” said Kim Canning. No one from Attorneys’ Title would return phone calls from 7NEWS [].

  • The Cannings went to the state Department of Regulatory Agency, known as DORA for help. “We've been told that is what DORA is there for," said Kim Canning. She said DORA should be able to force them to pay the claim.

  • In a statement to 7NEWS, DORA said, “We continue to monitor the situation to ensure the title company is fulfilling its obligation.”

For the story, see Stolen Wire Transfer Leaves Family In Foreclosure (Russian Mob Allegedly Stole Refinance Money).

Media Intervention Saves Another Homeowner From Sloppy Servicer's Handiwork; Bankster Ran Up Late Charges, Threatened F'closure Over Bookkeeping Gaffe

In Caldwell County, North Carolina, WSOC-TV Channel 9 reports:
  • A Caldwell County woman was threatened with foreclosure over a missing payment she said she made to her loan company. Sherry Story is a hard-working single mother and does not have money to waste. For the last two months she has been trying to chase down the $400 payment she made on her second mortgage to Litton Loan Servicing just as her loan was being sold to Ocwen Loan.


  • Story said she sent Ocwen a copy of the payment that came through her bank and has called Ocwen 15 times, but still cannot get credit for the payment. Now the company has tacked on additional charges totaling nearly $1,200. “I’m fearful they’re going to get away with what they’re doing and they will foreclose. I have been threatened with foreclosure,” Story said.

  • That’s when Story went online and discovered the company has an ‘F’ rating with the Better Business Bureau and more than 900 complaints. Some of the complaints are similar to hers.

  • So Action 9 called Ocwen Loan, was put in contact with someone in their overseas research department and asked them to investigate. Action 9 waited on the line for 45 minutes.

  • Finally, Ocwen said they credited the $400 payment and removed the additional fees. Story demanded they send proof. Story said she will be able to sleep at night when she gets proof her mortgage payment was properly credited.

  • I don’t think I could have done it if you hadn’t helped me with it. I just wasn’t getting anywhere with them,” she said.

For the story, see Woman's home loan sold, payment lost.

Sunday, January 22, 2012

Illinois AG Tags Two With Criminal Charges For Allegedly Promising To Save Homeowners From Foreclosure By Peddling Sale Leaseback Schemes

From the Office of the Illinois Attorney General:
  • Attorney General Lisa Madigan announced the arrest of a Chicago man who stole more than $350,000 in a wide-reaching mortgage fraud scheme in which they promised to help desperate homeowners avoid foreclosure.

  • Madigan said defendant Warren Jackson, 41, of Chicago, was arrested late Thursday and is being held in Cook County jail. Yolanda King, 46, of Chicago, who was also charged in the scheme, was arrested on Jan. 10. Both were formally indicted earlier this month.

  • Jackson was charged with one count of organizing a continuing financial crimes enterprise, four counts of financial institution fraud and three counts of theft by deception, one count of criminal mortgage rescue fraud, one count of forgery by delivery, and one count of false impersonation of an attorney. King was charged with two counts of financial institution fraud and one count of forgery by delivery.
  • Jackson and King are facing six to 30 years and four to 15 years in the Illinois Department of Corrections, respectively.

  • Madigan alleges that Jackson orchestrated two mortgage-related schemes involving Chicago homeowners. King was charged for her role in helping Jackson perpetuate these schemes. The first scam targeted homeowners at risk of foreclosure, promising to save their homes by negotiating lower mortgage payments. Madigan alleges that after collecting upfront fees, Jackson failed to negotiate or perform any services on behalf of the homeowners, placing their victims at even greater risk of foreclosure.

  • In the second scheme, called a sale-leasebackto purportedly save the homeowner’s home,(1) Jackson used straw buyers to purchase homes from distressed homeowners, sometimes falsely promising them that they could pay rent for a year and then could potentially buy back the property. Jackson also tricked homeowners into unknowingly selling their homes to straw buyers by leading them to believe that they were signing paperwork for a new loan to help them avoid foreclosure.

  • Madigan alleges that Jackson used the sale-leaseback scheme to transfer title from homeowners to straw buyers for the purpose of stripping the remaining equity from the home. Individual homeowners lost from $70,000 to $150,000 of equity in their homes as a result of the schemes.(2)
For the Illinois AG press release, see Madigan: Two Chicago Con Artists Arrested In Criminal Mortgage Scheme.
(1) For more on this type of foreclosure rescue ripoff, see:
(2) At one time, many in state and local law enforcement (particularly those with untrained eyes and who were otherwise clueless in handling 'semi-sophisticated' white collar crimes - for some, anything more complex than investigating a 'rubber check' case is 'semi-sophisticated') once passed on prosecuting these sale leaseback equity stripping ripoffs that under the flimsy pretense that these cases were merely 'civil matters.'

Over the last couple of years, it's been primarily the Feds (U.S. Attorneys, FBI, Secret Service, etc.) that have been bringing prosecutions in these equity stripping ripoffs. However, as this story reflects, more and more state court prosecutors now appear to be stepping up to the plate and showing some guts by bringing criminal charges against these scammers. See, for example:

Disgraced Ex-Lawyer Gets 15 Years For Role In At Least 102 Chicago-Area Sale Leaseback-Peddling, Equity Stripping Ripoffs

From the Office of the U.S. Attorney (Chicago, Illinois):
  • A former Chicago lawyer was sentenced to 15 years in federal prison for engaging in mortgage and bankruptcy fraud schemes involving a so-called “mortgage bailout” program that purported to “rescue” financially distressed homeowners but instead tricked victims into relinquishing title to their homes and declaring bankruptcy.

  • The defendant, Norton Helton, participated in at least 102 fraudulent mortgage bailout transactions and more than a dozen fraudulent bankruptcies in 2004 and 2005. He was ordered to pay more than $3.2 million in mandatory restitution to various lenders and financial institutions that were not repaid by the borrowers or fully recovered through subsequent foreclosure sales, federal law enforcement officials announced [].

  • Helton, 50, of Atlanta and formerly of Chicago, was sentenced Wednesday by U.S. District Judge Samuel Der-Yeghiayan in federal court in Chicago. He was ordered to begin serving his sentence in June.

  • Helton and two co-defendants, Charles White and Felicia Ford, were convicted of multiple fraud counts following a five-week trial in June and July 2010. White, 43, of Chicago, was sentenced late last year to more than 22 years in prison, while Ford, 39, of Chicago, is awaiting sentencing next month.

  • White owned and operated Eyes Have Not Seen (EHNS), which purported to offer insolvent homeowners mortgage bailout services that would prevent them from losing their homes in foreclosure by selling their property to third-party investors for whom the defendants fraudulently obtained mortgage financing.

  • The victim-clients were assured they could continue living in their homes rent and mortgage-free for a year while they attempted to eliminate their debt and repair their credit.

  • EHNS misled clients concerning the operation of the purported program. In particular, victim-clients were not told that their homes were, in fact, being sold to third parties and that ENHS would strip their homes of any available equity at the time of sale, which EHNS did.

  • Instead, ENHS clients were told that they were only temporarily transferring their homes and would preserve their ownership rights.

  • Helton was recruited by White to represent ENHS participants at the real estate transactions it orchestrated. The victim-clients typically met Helton for the first time at the closings at which they sold their homes. Helton worked to placate individuals who questioned the program and to dissuade them from retaining independent legal advice.

  • He received above-market legal fees for appearing at closings at which he did little more than guide victim-clients through the paperwork that sold their homes with EHNS receiving all of the profits from the sale. Helton further used the ENHS real estate closings to recruit prospective bankruptcy clients, informing them that bankruptcy would serve as a component of the bailout program. Helton subsequently filed more than a dozen bankruptcy petitions for victim-clients that omitted any reference to their recent EHNS property sales.

  • In addition to participating in ENHS’s bailout program, Helton attempted to implement his own mortgage bailout program through Diamond Management of Chicago, Inc., a foreclosure avoidance company comparable to EHNS. Helton marketed Diamond’s bailout program and his bankruptcy services as part of a “credit repair” system.(1)

For the U.S. Attorney press release, see Former Chicago Lawyer Sentenced to 15 Years in Prison for Mortgage Fraud Involving At Least 102 Fraudulent “Bailouts.”

(1) For more on this type of foreclosure rescue ripoff, see:

Feds Continue 'Pinch' On F'closure Rescue, Sale Leaseback Peddlers As Pair Get Tagged w/ Indictment In Equity Stripping Racket That Fleeced Homeowners

In Norfolk, Virginia, The Virginian Pilot reports:
  • Two Chesapeake men have been indicted by a Norfolk federal grand jury on nine charges related to an alleged foreclosure rescue scheme, federal officials announced Thursday. The charges against Philip Villasis, 41, and Ray D. Gata, 56, include conspiracy to commit wire fraud, wire fraud and money laundering.


  • From November 2006 until February 2011, “Villasis and Gata engaged in a foreclosure rescue scheme that defrauded homeowners and mortgage lenders,” according to the indictment as cited in the government announcement.

  • Villasis allegedly “promised homeowners that he could save them from foreclosure by arranging a sale of their homes to Gata and other straw borrowers.”

  • Homeowners were promised that they could stay in their homes after the sale and pay rent, and Villasis would resell their homes back to them once they weremore financially secure,” according to the government’s announcement.

  • Villasis and Gata profited from this scheme by taking all of the proceeds from the home sales,” it states.

  • The pair are alleged to have “executed false closing documents that showed the proceeds of the sale going back to the homeowners when, in fact, the proceeds were going to Villasis, Gata and the other straw borrowers.”

  • Homeowners, according to the government, “received nothing from the sale of their homes while Villasis, Gata and others received in excess of $170,000.”

  • In almost every case, Villasis required the homeowners to pay more in rent to cover a larger mortgage, and he ultimately evicted these homeowners from their homes,” the government’s release states.(1)

For the story, see Two Chesapeake men indicted in alleged foreclosure scam.

For the U.S. Attorney (Norfolk, Virginia) press release, see Chesapeake Men Indicted for Foreclosure Rescue Scheme.

(1) For more on this type of foreclosure rescue ripoff, see:

F'closure Sale Bid-Rigging Outfit Gets Break On Paying Fines After Guilty Plea For Sherman Act Violations; Aid To Feds Helps Bag 2 Add'l Confederates

In Mobile, Alabama, the Press Register reports:
  • A local company will pay a $250,000 fine plus restitution for rigging real estate foreclosure auctions, a federal judge ruled this afternoon. U.S. District Judge Ginny Granade endorsed the deal worked out between prosecutors and attorneys for M&B Builders. Company co-owner Harold H. Buchman, who appeared on behalf of the corporation [], faces 6 months in jail and a $21,141 fine at his sentencing hearing in April.

  • Defense attorney Donald Briskman said in an interview that M&B Builders will take a hit. “It’s not a positive effect, but it’s something they are going to work towards satisfying,” he said.

  • Buchman, along with his firm and Allen K. French pleaded guilty in October to violating the Sherman Anti-Trust Act in a scheme dating to May 2001.


  • The company’s fine could have been worse under advisory sentencing guidelines, which laid out a range of more than $300,000 to more than $500,000.

  • But attorneys from the U.S. Department of Justice recommended the lower amount because of the company’s cooperation, which officials indicated led to the prosecution of 2 other real estate investors or participated in the fixed auctions.(1)

  • In addition to French, Bobby Threlkeld Jr., pleaded guilty in December.

For more, see Mobile company fined $250,000, ordered to pay restitution for fixing foreclosure auctions.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions, generally.

(1) The more confederates a 'squealing' defendant can 'throw under the bus', the better the break on the plea deal he can expect a prosecutor to cut (and a judge might approve).

  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon phenomenon some refer to as the 'race to the courthouse' (or 'race to the prosecutor's office') that breaks out among participants in an 'about-to-collapse' criminal conspiracy).