Saturday, March 10, 2012

Some Defaulting Homeowners Make The Best Out Of Tough Situation As Banksters Choke On Their Own Foreclosures

The New York Times reports:
  • Forced by the harsh realities of the real estate market, lenders are increasingly likely to allow defaulting owners to remain in their homes — a change in attitude and strategy that is helping to buoy some neighborhoods while further slowing the nation’s foreclosure process.

  • Some lenders are now willing to make deals with owners to let them stay after defaulting, offering to pay home insurance, for example, while the resident pays for utilities. Other lenders simply look the other way, quietly putting off foreclosure sale dates, knowing that the costs of the ordeal probably exceed the diminishing value of the properties.


  • As a result, the relationship between many borrowers and lenders is softening from outright animosity to something that more resembles a détente.

  • Michelle Murray-Clark is one of the beneficiaries — or so she calls herself on a good day. A grocery clerk who found work last month after three years of unemployment, Ms. Murray-Clark has not made a mortgage payment in 40 months. American Home Mortgage Servicing, the loan processor, has not taken steps to evict her and is working on a third attempt at a loan modification.

  • The company is also paying insurance on her little house with the blue aluminum siding near downtown Orlando. They talk every week.

For more, see When Living in Limbo Avoids Living on the Street.

State AG Foreclosure Settlement: An Epic Failure Of Law

Barry Ritholtz, chief executive of FusionIQ, a quantitative research firm, writes:
  • After many months of wrangling, a foreclosure settlement has been reached between 49 state attorneys general and a consortium of banks. It is an epic failure of law and a triumph for bank attorneys. It will accomplish little of value, as I’ll explain. First, let’s recall what the “robosigning” foreclosure scandal was all about.

For more, see Foreclosure settlement a failure of law, a triumph for bank attorneys.

Civil Rights Feds Continue Stepping Up In Fighting Housing Discrimination Against Those With Documented Need For Service Animal

From the Office of the U.S. Attorney (Brooklyn, New York):
  • Loretta E. Lynch, United States Attorney for the Eastern District of New York, [] announced the filing of a federal civil rights complaint against the Woodbury Gardens Redevelopment Company Owners Corporation (“Woodbury Gardens”) for violations of the Fair Housing Act. Woodbury Gardens is a 214-unit cooperative residential complex for senior citizens located in Woodbury, New York.

  • The Fair Housing Act prohibits discrimination against people with disabilities and requires residential property owners to make reasonable accommodation to allow people with disabilities and their families to use and enjoy their homes.

  • According to the government’s complaint, Woodbury Gardens discriminated against Sandra Biegel, a now-deceased disabled senior citizen, by refusing to make reasonable accommodation for her multiple disabling conditions, including severe respiratory problems, depression, anxiety, cirrhosis, diabetes and decreased vision and hearing.

  • In particular, the complaint alleges that Woodbury Gardens refused to waive its no pet policy to allow Ms. Biegel to keep her pet comfort animal, a miniature schnauzer, despite medical documentation from four of Ms. Biegel’s health care providers attesting to her need for the animal in coping with her disabilities.

  • Woodbury Gardens is alleged to have threatened Ms. Biegel and her husband with eviction and fines, which forced her to give up the animal. Ms. Biegel died a few weeks later. The complaint alleges that even after the death of Ms. Biegel, Woodbury Gardens pursued Mr. Biegel for legal fees and fines, which he paid.

  • The lawsuit seeks injunctive relief requiring Woodbury Gardens to bring its practices into compliance with the Fair Housing Act, as well as damages to compensate Ms. Biegel’s estate and her husband for the harm caused by defendant’s discriminatory practices.

  • Our seniors with disabilities want what all seniors want -- to live with dignity, maintain mobility, and retain their connections to the world. Comfort animals play an essential role in helping disabled seniors do just that. Sadly, Mrs. Biegel’s final days were bereft of this vital assistance, due to the actions, as alleged, of the defendant. Under the Fair Housing Act, individuals with disabilities are entitled to reasonable accommodation, and this includes the right, where appropriate, to have a comfort animal reside with them,” stated United States Attorney Lynch. “Building owners or co-op boards that fail to respect the rights of individuals with disabilities will be held to account for their failure to comply with the law.”

For the U.S. Attorney press release, see United States Files Civil Suit Against Long Island Co-Op For Violating Fair Housing Act.

For the lawsuit, see U.S. v. Woodbury Gardens Redevelopment Company Owners Corporation.

Oregon AG, Landlord, Agent Settle Housing Discrimination Charges Involving Renters w/ Kids; 6 Families Pocket $35K, Non-Profit Law Firm $10K

From the Office of the Oregon Attorney General:
  • Attorney General John Kroger [] announced an agreement that resolves housing discrimination allegations against the owners and managers of a Southeast Portland apartment complex.


  • The Department of Justice received several complaints about housing discrimination from current and former tenants with families at Wah Mai Terrace Apartments on Southeast Stark Street. Tenants alleged that Wah Mai Terrace Inc. and property manager, Norris & Stevens, engaged in a pattern or practice of discrimination against families with children.

  • Once made aware of the allegations, Norris & Stevens and Wah Mai Terrace Apartment stepped forward to cooperatively resolve fair housing claims. Under the agreement [...], Wah Mai and Norris & Stevens have agreed to remove policies from tenant rules and regulations that prohibit, among other things, children from riding bicycles, tricycles, "Big Wheels," skateboards or roller skates on the property, policies that prohibit children from having toys on private patios, or enforcement of policies that restrict where children can play on the property.

  • These policy changes will apply to approximately 8300 units managed by Norris and Stevens. Wah Mai and Norris & Stevens will participate in fair housing trainings and purchase a playground structure for the center courtyard area at Wah Mai Terrace Apartments. Wah Mai and Norris and Stevens further agreed to refrain from collecting on fines and other tenant debts that accrued as a result of enforcement of potentially unlawful policies.

  • The agreement also requires Wah Mai and Norris & Stevens to pay a total of $35,000 to 6 current and former tenants. The companies will pay attorney fees and costs of $20,000 to the Department of Justice and $9,816.36 to Legal Aid Services of Oregon.(1)

  • "I want to thank Legal Aid Services of Oregon for its help in resolving claims of unlawful housing practices," said Attorney General Kroger. "Discrimination against families is unacceptable."

For the Oregon AG press release, see Civil Rights Agreement Requires Portland Apartment Complex Owners To Cease Discriminatory Practices And Pay $55,000 (Wah Mai Terrace Apartments agrees to eliminate policies that discriminate against children).

(1) Legal Aid Services of Oregon is a non-profit law firm that provides representation on civil cases to low-income clients throughout Oregon.

Hollywood To Unleash Annoying 'Robo-Call' Program In Effort To Combat Roadside Bandit Signs Peddling Foreclosure Scams, Real Estate, Junk Cars, Etc.

In Hollywood, Florida, The Miami Herald reports:
  • You see them everywhere — those unsightly and illegal signs advertising companies looking to buy homes or rescue someone from foreclosure that clutter public right-of-ways. Most of them give phone numbers, telling people to call.

  • And Now Hollywood Mayor Peter Bober is on a mission to give them what they want — calls, lots of ’em. This week, the city started using a robo-call system to plug in the numbers advertised on signs. The robo-calls will dial the number over and over again, until the company pays a fine for putting the signs up.

  • The first offense is $75, the second is $150, the third is $250 and then if there are additional offenses the business must appear in front of a magistrate. “I think this is an opportunity to beat these entrepreneurs at their own game,” Bober said, saying offenders can receive as many as 20 calls a day. “They wanted calls, now they are going to get them.”

  • Bober began his mission two years ago with a contest meant to remove the signs. He promised the person who removed the most illegal signs and brought them into City Hall would receive $500. Now, he’s urging residents to participate in the calling campaign.

  • When you see snipe-signs littering the city, I want you to call the number and tell the nice person who answers to stop littering public rights-of-way and remove their ridiculous, plastic, snipe signs,” he wrote in the city newsletter New Horizons.

  • Snipe signs are any type of makeshift sign advertising anything from junk cars to real estate to education courses. Although they pop up everywhere, there is a forest of them in the medians and along the sidewalks of main thoroughfares such as Dixie Highway and State Road 441.

  • Hollywood Police Maj. Joseph Healey said the signs — which are prohibited by city code — have been a drain on the code enforcement department, with the nearly dozen officers starting everyday with removing the eyesores.

For the story, see ‘Robo-calls’ are Hollywood’s weapon against illegal signs (Companies that advertise with signs stuck in the median may soon be getting more calls than they can handle).

Evicting Landlords That Refused To Be Denied

The New York Post reports:
  • There’s a reason they call it a mobile home. When a man who lived in a camper at a Titusville, Fla., trailer park tried to stave off eviction by locking himself inside, the park owner got rid of him by towing the trailer away — with the man inside — all the way to the next county.


  • In an even weirder eviction, an Idaho landowner got tenants out of a house by tearing it down with them inside. The owner allegedly used a tractor to rip apart the house. Oh, and the tenants refused to testify at the landlord’s trial — because they don’t recognize the legitimacy of the government.

Source: Weird But True (2nd & 3rd blurbs from the top).

Friday, March 09, 2012

7th Circuit: HAMP Violations May Be Actionable By Homeowners Under State Laws Prohibiting Consumer Fraud, Deceptive & Unfair Practices

From a recent ruling from the U.S. Court of Appeals for the 7th Circuit:
  • We are asked in this appeal to determine whether Lori Wigod has stated claims under Illinois law against her home mortgage servicer for refusing to modify her loan pursuant to the federal Home Affordable Mortgage Program (HAMP). The U.S. Department of the Treasury implemented HAMP to help homeowners avoid foreclosure amidst the sharp decline in the nation’s housing market in 2008. In 2009, Wells Fargo issued Wigod a four-month “trial” loan modification, under which it agreed to permanently modify the loan if she qualified under HAMP guidelines.

  • Wigod alleges that she did qualify and that Wells Fargo refused to grant her a permanent modification. She brought this putative class action alleging violations of Illinois law under common-law contract and tort theories and under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA).

  • The district court dismissed the complaint in its entirety under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Wigod v. Wells Fargo Bank, N.A., No. 10 CV 2348, 2011 WL 250501 (N.D. Ill. Jan. 25, 2011).

  • The court reasoned that Wigod’s claims were premised on Wells Fargo’s obligations under HAMP, which does not confer a private federal right of action on borrowers to enforce its requirements.

  • This appeal followed, and it presents two sets of issues. The first set of issues concerns whether Wigod has stated viable claims under Illinois common law and the ICFA. We conclude that she has on four counts.

  • Wigod alleges that Wells Fargo agreed to permanently modify her home loan, deliberately misled her into believing it would do so, and then refused to make good on its promise. These allegations support garden-variety claims for breach of contract or promissory estoppel.

  • She has also plausibly alleged that Wells Fargo committed fraud under Illinois common law and engaged in unfair or deceptive business practices in violation of the ICFA.


  • The second set of issues concerns whether these state-law claims are preempted or otherwise barred by federal law. We hold that they are not. HAMP and its enabling statute do not contain a federal right of action, but neither do they preempt otherwise viable state law claims.

  • We accordingly reverse the judgment of the district court on the contract, promissory estoppel, fraudulent misrepresentation, and ICFA claims, and affirm its judgment on the negligence claims and fraudulent concealment claim.(1)

For the entire ruling, and the court's reasoning, see Wigod v. Wells Fargo Bank, N.A., No. 11-1423 (7th Cir. March 7, 2012). (If link expires, TRY HERE).

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

(1) Unless ultimately reversed by the U.S. Supreme Court, this ruling supports the proposition that bankster violations of HAMP and its enabling statute, while not actionable by homeowners under Federal law, may be actionable under an applicable state consumer fraud, or unfair/deceptive trade practices statute.

See National Consumer Law Center: CONSUMER PROTECTION IN THE STATES: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes for an overview of state consumer fraud, unfair/deceptive trade practices statutes throughout the states.

Whistleblower Suit: BofA Routinely Pretended To Lose Homeowners' Docs, Failed To Credit Payments During Trial Mods, Etc.

In Brooklyn, New York, Reuters reports:
  • Bank of America NA prevented homeowners from receiving mortgage-loan modifications under a federal program in order to avoid millions of dollars in losses while benefitting from financial incentives for participating in the program, according to a complaint unsealed in federal court Wednesday.

  • The suit is the second whistleblower complaint unsealed so far with apparent ties to the $1 billion False Claims Act settlement announced by Bank of America and the U.S. Attorney's Office for the Eastern District of New York on February 9.


  • The complaint unsealed Wednesday was filed by whistleblower Gregory Mackler, a Colorado resident who said he worked alongside Bank of America executives while an employee at Urban Lending Solutions, a company to which Bank of America contracted some of its HAMP work.

  • While working at Urban Lending, Mackler said he saw BofA and its loan servicing subsidiary, BAC Homes Loans Servicing LP, implement "business practices designed to intentionally prevent scores of eligible homeowners from becoming eligible or staying eligible for permanent HAMP modification."

  • The bank and its agents routinely pretended to have lost homeowners' documents, failed to credit payments during trial modifications and intentionally misled homeowners about their eligibility for the program, the complaint alleged.

  • BoA let through just enough HAMP modifications to avert suspicion and allay congressional critics, while not enough to incur any substantial losses to its own bottom line, according to the complaint.

  • "In other words, BoA has had it both ways. BoA has continued to maximize the value of its mortgage portfolio with anti-HAMP modification practices and managed to make money by committing fraud on homeowner," the lawsuit said.


  • In February, a whistleblower complaint was unsealed from Kyle Lagow, a former employee in a Countrywide appraisal unit which detailed allegations of Countrywide's "corrupt underwriting and appraisal process." Bank of America purchased Countywide in June 2008.

  • Under the False Claims Act, successful whistleblower complaints can earn that whistleblower up to 25 percent of the settlement amount.

  • According to the docket, the U.S. Department of Justice has until March 16 to decide whether to intervene in both the Mackler and Lagow case. The case is United States of America v. Bank of America NA et al., in the U.S. District Court for the Eastern District of New York, no. 11-3270.

For the story, see Whistleblower says BofA defrauded HAMP.

Ex-Home Flipping King Describes Massive C. Fla. Mortgage Fraud In Effort To Belly Up To Feds, Throw Dozens Under The Bus, Cut Himself Sweet Plea Deal

In Tampa, Florida, the Sarasota Herald Tribune reports:
  • At the height of the real estate boom, Craig Adams was a wealthy man. [...] But Adams' wealth was all built on illegal real estate flips and millions upon millions of borrowed money. When banks stopped lending with a precipitous drop in real estate during late 2006 and early 2007, everything Adams had once viewed as an asset soon became a liability.

  • Desperate to come up with cash to make interest payments of more than $100,000 per month, he turned from cheating banks out of money to cheating his friends and longtime business associates.

  • "The time had come when it was every man for himself," Adams testified this week in U.S. District Court, where he has been recounting his role as the mastermind of one of the largest and longest-lasting flipping fraud cases in Florida history. "I had to protect my mother and my aunt. I had to protect my interests."

  • Adams began borrowing heavily from a long list of financial backers and business associates, [...]. At the same time, he refused to distribute about $200,000 to his protégé and chief co-conspirator, Rich Bobka, and he drafted bogus investment documents to defraud a friend of 20 years — David Oriente — out of nearly $500,000. While the cash he raised allowed him to delay the inevitable for a few months, the consequences of his actions are still being felt today in Southwest Florida.

  • If he had not cheated Oriente, there is at least the possibility that Adams would not have been indicted. There also is the possibility that the extent of his crimes and the involvement of at least 90 of his friends and business associates might have remained at least partially hidden.

  • But when Oriente threatened to go to police, Adams turned himself in and began to help the government round up the participants in his 11-year crime spree.(1)

  • So far, 15 have been indicted and pleaded guilty, while three others [...] have opted to go to trial. This week, during their trial, there also were strong indications that the government is not done with the case, and that other co-conspirators may yet be indicted.

  • During his three days on the stand, Adams has named 70 people who he said were involved in the scheme — a number that includes 14 loan officers, four title agents, four attorneys and a smattering of other key real estate, investment and accounting professionals. Adams explained how he and these dozens of others inflated real estate prices by flipping properties to one another. He recounted how that allowed them to get larger loans than they could have otherwise by lying about their income and assets on loan applications.(2)

For more, see Adams describes turning on co-conspirators in flip fraud.

(1) "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 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy).

(2) Another example of a squealing schemer abandoning a conspiracy, not unlike a filthy rat jumping off a sinking ship, winning the race to the prosecutor's office and taking down fellow co-conspirators by 'throwing them under the bus' to score a better break on a plea deal. Vrooooom!!!

Scam Targets Distressed Homeowners By Peddling Applications For Loan Help From Unwitting, Legitimate Non-Profit For As Much As $900 A Pop

In Sacramento, California, the Sacramento Business Journal reports:
  • Another scam is making the rounds, this one targeting distressed homeowners. Scammers call homeowners, offering help to save their homes with an application for help from Keep Your Home California, bilking the victims for as much as $900.

  • But applying for help from Keep Your Home California is always free, from phone calls to getting mortgage help, according to a news release from the organization.

  • To avoid potential scams, the organization’s officials ask homeowners to call directly to get information about assistance with mortgages, at 888-954-5337.

  • Keep Your Home California, which is federally funded, has helped about 12,000 homeowners in the state keep their homes.

For the story, see Scam targets distressed homeowners.

Thursday, March 08, 2012

Brooklyn Trial Judge Indefinitely Suspends F'closure After Bankster Puts Two Separate Notes & Assignments Into Evidence To Support Same Action

In a recent ruling by Brooklyn, New York trial court Justice Herbert Kramer, a foreclosure action was suspended indefinitely when two separate notes with attendant assignments were put into evidence by the foreclosing bankster in support of said foreclosure action.

Judge Kramer was apparently pissed off enough by the apparent fraud that he announced in his ruling that he reporting the matter to the District Attorney, Kings County, the Attorney General of the State of New York and the U.S. Attorney for the Eastern District of New York, presumably for possible criminal prosecution.(1)

The attorneys representing the bankster in this case who will undoubtedly have a few questions to answer when criminal investigators hunt them down (presumably after they wipe the egg off their faces) are Alissa L. Wilson, Esq., and the law firm Shapiro, DiCaro & Barak, LLC, 250 Mile Crossing Blvd., Rochester, NY 14624.

For Justice Kramer ruling, see HSBC Bank USA, N.A, v. Sene, 2012 NY Slip Op 50352 (NY Sup. Ct. Kings County, February 28, 2012).

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

(1) The following excerpt provides an insight into Justice Kramer's feelings with regard to the foreclosure fraud problem and the rampant littering taking place in courtrooms committed by the banksters with their phony document filings:

  • This Court emphatically now joins the judicial chorus who have been wary of the paperwork supplied by plaintiffs and their representatives. There is ample reason for Chief Judge's requirement for an attorney affirmation in residential foreclosure cases. As stated by Chief Judge Jonathan Lippman,"we cannot allow the courts in New York State to stand idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs-such as a family home-during this period of economic crisis."

S. Fla Realtors Make 'Bank-Owned' Status Mandatory Disclosure To Buyers, Other Agents In Response To Banksters' Practice Of Withholding Ownership Info

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Starting [this week], a service used by real estate agents to list homes for sale will require that agents disclose whether a bank owns the property. The change comes two days after The Palm Beach Post reported that some banks, including Wells Fargo, tell real estate agents not to disclose the bank's ownership on the Multiple Listing Service.

  • Until now, the MLS in this region did not require agents to describe a home as being "bank owned," but in other parts of the country, the information is required. Some agents who sell bank-owned property privately said they feared losing business if they went against the wishes of the banks.

  • Last week, Tyler Smith, vice president of REO Community Development for Premier Asset services, a Wells Fargo division that sells bank-owned property, said the directive to agents was done so buyers would not avoid bank-owned real estate. Smith said Wells Fargo has been improving the condition of its properties.

  • Even though a home's ownership can be obtained through public records, some agents say they would prefer to have the information disclosed on the MLS before they take a client to a home.

For more, see Starting today, MLS real estate holdings must disclose bank ownership.

See also, Agents advised to keep 'bank-owned' quiet.

Florida Federal Judge 'Green-Lights' Force Placed Insurance Class Action Suit Against Wells Fargo, QBE

American Banker reports:
  • A class action just approved in federal court involving force-placed insurance(1) increases the likely cost to banks in terms of reputational damage and cash settlements.

For more, see Wells Fargo's Force-Placed Suit Raises Financial, Regulatory Threats.

For an earlier post on this story, see South Florida Homeowners Seek Class Action Status In Lawsuit Tagging Loan Servicer Over Dubious, Force-Placed Insurance 'Gravy Train'.

(1) For more on the banksters' force placed insurance racket, see:

Wednesday, March 07, 2012

3 Church Members, Pastor Face Charges In Alleged Vacant Home Hijacking Racket As Criminal Prosecutions Of Adverse Possession-Claiming Scams Gain Steam

In Jacksonville, Florida, WJXT-TV Channel 4 reports:
  • Four people -- one of them a recent Jacksonville mayoral candidate -- were charged over the weekend with taking over vacant homes, either to live in themselves or to rent them out to others. "They were living in them, or presented them as their own," Sheriff John Rutherford said Monday. "They squatted there."

  • Warren Lee, 46, who ran for mayor last spring, was charged with grand theft, scheme to defraud and acting as a real estate agent without a license. Police called Lee the mastermind of the scheme to take over homes and rent them to others.

  • Marcellous Dunbar, 31, who was previously charged with grand theft after being found living in a $500,000 Oakleaf Plantation home in Clay County, also faces grand theft and other charges in the five Jacksonville cases announced Monday.

  • State Attorney Angela Corey said Dunbar threatened Channel 4 reporter Tarik Minor, claiming the reporter was trespassing the rightful owner of the Oakleaf house to get off the property, and the homeowner sought the help of Clay County deputies for protection when moving in. In Channel 4's coverage of Dunbar and Lee last year, they claimed they were doing this to help homeless people or veterans.

  • Also arrested in the Jacksonville cases were Cleveland Stephens and Rhonda Johnson.

  • "These people simply moved into these vacant residences and claimed them as their own, and then became the landlord of these residences," Rutherford said. "The phenomenon of literally stealing someone's house and either living there or renting it out is pretty rare."

  • The sheriff said the investigation began five months ago when neighbors of the homes involved became suspicious and contacted authorities. "It is unfair that people who have lost their homes in foreclosure, who are fighting, literally, to keep themselves afloat, are having now to deal with someone cutting the locks and moving into their homes," Corey said. "It's offensive, and beyond that, it's a criminal act."

  • Dunbar claimed to Channel 4 last year that he legally took over the property through the controversial Florida statute of adverse possession, which allows change of ownership to an abandoned home. Authorities said he was not in legal possession of the home, which had just been sold to a Navy family. Authorities said Dunbar left the home trashed.

  • Police said all four were members of the Fishers of Men World Harvest Church, of which Dunbar was pastor. One of those arrested told a detective that God "wanted them to have the property."

For the story, see 4 'squatters' charged with grand theft (1 of 4 charged Monday was candidate for mayor of Jacksonville last year).

Takedowns Of Scammers Peddling Sale Leaseback Foreclosure Rescue Deals Continue As Sacramento Feds, Local DA Score Another Guilty Plea

In Fresno, California, the Central Valley Business Times reports:
  • John Marcus Desenberg of Westlake Village preyed on families in crisis, sucking away what little money they had after gulling them into thinking he was rescuing them from foreclosure. Instead, they lost thousands of dollars each – and their homes.

  • Monday, following a lengthy investigation by the Federal Bureau of Investigation and the Merced County District Attorney’s Office, Mr. Desenberg pleaded guilty to two counts of mail fraud in U.S. District Court in Fresno. He also agreed to the forfeiture of all property and proceeds obtained as a result of his crimes, including but not limited to a personal money judgment in the amount of $300,000.

  • Mr. Desenberg, doing business as Creative Lending Solutions, devised a scheme targeted at distressed homeowners. It was part of the scheme that Desenberg would get referrals from individuals who marketed a “Fresh Start” program via the Internet, radio, and by advertisements sent through the U.S. mail to California homeowners nearing foreclosure, explains U.S. Attorney Benjamin Wagner.

  • He would then contact other individuals with whom he did business in order for them to find an investor to purchase the home from the distressed homeowner. Once this investor was found and the home was sold to the investor, the homeowner would be allowed to stay in their home and would purportedly work on repairing their credit during the specified time period.

  • At the end of the period, the distressed homeowner would be given the option of purchasing their home back from the investor.

  • But what looked like a rescue turned out to be a trap. Mr. Wagner says investigators found that it was part of the scheme that Mr. Desenberg fraudulently induced homeowners to sign an approval form authorizing some of the sale proceeds to be given to Creative Lending Solutions as payment for fees, including but not limited to a finder’s fee and a consultation fee in an amount typically ranging from $15,000 to $20,000. He also held back money from the distressed homeowner for the purported payment of the mortgage for a specified time period, which was typically twelve months.

  • Mr. Desenberg promised the homeowners that he would monitor their situation for the twelve month time period, and that either he would make the mortgage payments out of the hold-back reserve money or that he would ensure that the investor made the mortgage payments, the government says. But the promises were hollow. He did not monitor their situation and did not ensure the mortgage payments were made. Most homes ended up in foreclosure and victims lost more than $300,000, says Mr. Wagner.

For the story, see Guilty plea in Central Valley foreclosure ‘rescue’ scam (His Creative Lending Solutions was more creative than victims realized; Could get decades in prison).

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

Five S. California Suspects Get Taken Down, Face Multiple Felony Grand Theft Charges For Allegedly Running Loan Modification Ripoffs

In Santa Ana, California, KABC-TV Channel 7 reports:
  • Five Orange County men have been charged with scamming Southern California homeowners seeking help to save their homes from foreclosure. Prosecutors say the five took upfront fees from homeowners promising to deliver loan modifications. They allegedly kept the money and disappeared.

  • The men are charged with at least seven felony counts of grand theft, plus other charges. Jacob John Cunningham, 24, of Irvine; Justin Dennis Koelle, 23, of Costa Mesa; Andrew Michael Phalen, 25, of Mission Viejo; Dominic Adam Nolan, 30, of Irvine; and John D. Silva, 27, of Irvine, were all arrested and charged.

Source: 5 OC men charged in SoCal foreclosure scam.

Phoenix Man Gets Five Years For Peddling Bogus Foreclosure Assistance In Racket That Raked In $3M From 1,800 Victimized Homeowners In Ten Months

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • A Phoenix man has been sentenced to 5 years in prison Monday for defrauding at least 1,800 distressed Valley homeowners in 2009 and 2010 in a mortgage scheme that made his company almost $3 million.

  • Luis Belevan pleaded guilty in October to conspiring with Brian Prehoda to target Hispanic homeowners during the mortgage crisis, convincing them to pay an up-front fee of $1,595 to their company with the false promise of mortgage assistance.

  • According to the Department of Justice, Belevan told homeowners and mortgage lenders that his company, The Guardian Group, LLC, has the financial backing of a $40 billion hedge fund. An investigation by the FBI found that the company had no financial backing at all.

  • In just 10 months of operation, the company managed to defraud at least 1800 distressed homeowners and make nearly $3 million – an amount he has been ordered to repay as restitution to the victims.

  • The mortgage crisis in the greater Phoenix Metropolitan area has been devastating to homeowners and the economy," said FBI Special Agent in Charge James L. Turgal Jr. with the Phoenix Division. "Belevan preyed on distressed Hispanic homeowners who were trying to avoid foreclosure on their homes.” The scheme, he said, “resulted in financial losses to homeowners with no resolution of their mortgage concerns.”

  • Belevan was also sentenced to 3 years of supervised release following his prison sentence. His associate, Prehoda, is scheduled to be sentenced on March 12, 2012.

Source: Phoenix man sentenced to 5 years in prison for defrauding Hispanic homeowners.

NC AG Scores Consent Judgment Putting Loan Modification Outfit Out Of Business In State

From the Office of the North Carolina Attorney General:
  • A Winston-Salem foreclosure assistance outfit that promised to save struggling homeowners from foreclosure is permanently banned from offering foreclosure assistance or credit repair services in North Carolina, Attorney General Roy Cooper announced [].


  • Late Monday, Wake County Superior Court Judge Michael R. Morgan signed a consent judgment between Cooper and Edward “Eddie” Phillip Long, Jr., doing business as Credit Enhancement Services, banning Long from offering foreclosure and loan modification services in North Carolina. Long will also pay $5,600 for consumer restitution.

  • Cooper’s office filed suit against Long in May 2011 and since then Credit Enhancement Services has ceased operating. As alleged in the complaint, Long charged upfront fees of between $300-$500 and promised to obtain favorable loan modifications to save customers’ homes from foreclosure. Despite Long’s assurances, many homeowners were unable to obtain loan modifications, and some lost their homes to foreclosure.

For the North Carolina AG press release, see Winston-Salem foreclosure assistance operation banned from NC (Cooper urges homeowners to seek free help from qualified housing counselors instead).

Idaho AG Lets Law Firm Using Potentially Deceptive Mail Solicitations To Peddle Purported Participations In Mass Joinder Lawsuits Off With Hand Slap

From the Office of the Idaho Attorney General:
  • A Utah law firm that files multi-plaintiff lawsuits against mortgage servicers has agreed to change how it solicits clients in Idaho, Attorney General Lawrence Wasden said []. Wasden’s office reached a settlement agreement with Corvus Law Group, LLC, which maintains an office in Post Falls, Idaho. Pursuant to the agreement, the firm has modified its direct mail ads to comply with the Idaho Consumer Protection Act and to better inform potential clients about the law firm’s services.

  • The Attorney General’s Office began investigating Corvus Law Group after receiving complaints from consumers about the law firm’s direct mail solicitations. Labeled a “Form CLG 0127 Litigation Settlement Notification,” the form also claimed the consumer was eligible to participate in a pending multi-plaintiff lawsuit against the consumer’s purported mortgage servicer. According to consumers, it was not until they called the toll-free number on the form and spoke to a Corvus Law Group representative that they learned a lawsuit had not been filed and that to participate in a potential lawsuit, the consumer first had to pay Corvus Law Group a $5,000 retainer fee.

  • The settlement agreement prohibits Corvus Law Group from using deceptive advertising methods, such as envelopes that appear to originate from the government, and from claiming that the recipient of the solicitation is a party to a lawsuit or a settlement.

  • In its legal services solicitations to Idaho consumers, the firm also must disclose the name and Idaho State Bar number of at least one Idaho licensed attorney who will represent the consumer. Corvus Law Group also must pay the Attorney General $3,000 to reimburse him for the cost of the investigation.

For the Idaho AG press release, see Law Firm Agrees to Change Direct Mail Ads.

Tuesday, March 06, 2012

No Red Carpet Treatment For MERS In NYS

Lexology reports:
  • New York government officials are continuing their assault against foreclosure actions where Mortgage Electronic Registration Systems, Inc. (“MERS”) was the assignee of the mortgage, and challenges to foreclosures involving MERS are increasingly gaining traction in New York courts.

  • Recently, the New York State Attorney General filed a complaint against MERS and several banks alleging fraud and deception in foreclosure proceedings. People v. JPMorgan Chase Bank N.A., No. 2012/2768 (N.Y. Sup. Ct. Feb. 3, 2012).

  • In addition, three New York trial courts have decided motions involving standing and other issues in such actions. CIT Group/Consumer Fin., Inc. v. Platt, 33 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2011); U.S. Bank N.A. v. Bressler, 33 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2011); Bank of New York Mellon v. Martinez, 33 Misc. 3d 1215(A) (N.Y. Sup. Ct. 2011).

  • Two courts ruled against the foreclosing banks, finding they did not have standing to foreclose where MERS assigned a mortgage without express authority to do so or sufficient documentation evidencing that the note was also transferred. Although the third court dismissed a lack of standing defense, it did so solely for procedural reasons.

For more, including a summary of the three above-referenced New York trial court rulings, see New York continues assault on MERS (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

Loan Modification Racket Operator/Church Pastor Gets Four Years In Foreclosure Rescue Ripoff; Congregation Members Among Those Targeted In Scam

In Sacramento, California, The Sacramento Bee reports:
  • An Elk Grove man has been sentenced to four years in state prison for illegal conduct in loan modifications. Rodney Andrews, 57, pleaded no contest last month to embezzlement, theft by false pretenses, diversion of construction funds and unlawful use of personal identifying information. He was sentenced [] by Sacramento Superior Court Judge John Winn.

  • At the time he committed the offenses, Andrews operated a company known as Andrews Investment Group, which offered loan modification services. He was also a pastor at the Comeback Christian Church, where he solicited members of the congregation and low-income property owners to refinance their homes, lower their mortgages or stall out their foreclosures, according to a Sacramento County District Attorney's Office news release.

  • Authorities said he collected upfront fees in violation of a statues passed by the California Legislature to prevent individuals from preying on vulnerable home owners facing foreclosure or unaffordable mortgage payments. He also failed to provide proper notification as required by law, did not provide the services he promised and did not use the funds he obtained for the represented purposes.

  • The case was investigated and prosecuted by the Sacramento County District Attorney's Office Real Estate Fraud Unit.

Source: Elk Grove man headed to prison for loan modification activities.

Suspected NYS Loan Mod Racket Finds Itself On State AG's Radar After Media Gets Hold Of Deceptive Solicitation Peddling Foreclosure Rescue Services

In Spring Valley, New York, The Journal News reports:
  • Rosemarie Jean Baptist thought a letter offering to help modify her mortgage was a godsend, until she grew concerned about requests for money. “I was looking for a modification for a long time,” said the Spring Valley woman, who estimated that she is about $22,000 behind in her mortgage payments. “When they told me not to pay my mortgage for three years and give them my bank account number, all this stuff made me suspicious.”


  • [State Sen. David Carlucci, D-Clarkstown] said a state law effective Dec. 19, 2010, requires property consultants to provide information about the availability of free state-funded services in their advertisements. The Green Law Group’s letter to Jean Baptist dated Jan. 12 did not contain such information. Additionally, state law prohibits loan-modification consultants from taking upfront fees.

  • On Thursday a firm representative denied inappropriate conduct. “We’re not preying on anybody at all,” said Randy, who hung up the call after he was asked for his full name. “We don’t charge to do a modification. We charge for foreclosure prevention.”


  • Jean Baptist said one of the reasons she called the Green Law Group is because she had unsuccessfully sought a loan modification from her lender. Peter Spino, manager of foreclosure services at Community Housing Innovations, which also offers free loan modification services, read the Green Law Group’s solicitation and called it misleading.

  • The Journal News sent a copy of the Green Law Group’s solicitation to the state Attorney General’s Office [...]. Spokeswoman Jennifer Givner declined to comment on the letter but noted that her office is aware of concerns raised about the Green Law Group.

For the story, see Mortgage loan-modification offer called 'suspicious'.

Monday, March 05, 2012

Federal Judge: Mtg. Assignments Must Be Recorded Upon Each Transfer; MERS F'closure Losses Continue In Oregon; Issue Begs State High Court Ruling

In Portland, Oregon, The Oregonian reports:
  • A federal judge has yet again issued a ruling that effectively questions the validity of scores of foreclosures in Oregon, a crisis the Legislature could resolve in the mortgage industry's favor this week if bank lobbyists and House Republican leaders have their way.

  • In an opinion issued Wednesday, U.S. District Court Judge Michael Simon rejected a magistrate judge's finding and rulings by two of his colleagues that big banks could avoid recording notices in local land records each time a loan is sold to other lenders or investors.

  • Simon sided with two other federal judges in Oregon in ruling that lenders have violated state recording law. They've done this, they say, by logging sales within its nationwide Mortgage Electronic Registration Systems Inc. and declaring MERS a “beneficiary” of the loan.


  • Simon ruled that under state law, lenders must file a notice in county records each time they sell or transfer a note, or a promise from a borrower to pay. MERS, he ruled, can file those notices on the lenders' behalf, if a lender has authorized it to do so. MERS cannot, however, simply log those notices within its own database without also recording it publicly, he found. In millions of loans nationwide, it has.

  • In acting as he did, Simon overruled lower Magistrate Janice Stewart's previous findings and recommendations in the case. His ruling also conflicts with opinions in other cases issued by his equals in Oregon -- Judge Michael Mosman and Judge Marco A. Hernandez.

  • But it aligns with rulings in other cases by Judge Owen Panner and U.S. Bankruptcy Judge Frank Alley. Panner's ruling, which also came last year as lawmakers debated the MERS issue, is on appeal to the U.S. Ninth District Court of Appeals.


  • The differences of opinion in these courts underscore how crucial an Oregon Supreme Court ruling will be, unless the legislature changes state law entirely this week.(1) A ruling by the state's highest court is still likely months away.


  • Simon said Oregon courts “reaching back more than a century” have found that the note and its security instrument may not be passed on to separate parties. In these cases, the security instrument is the trust deed.

  • Simon wrote that Bank of America and MERS wanted him to interpret Oregon law in a way that makes Oregon deed of trust law “virtually meaningless.” If he did, lenders could designate anyone to act in their interests, “no matter how remote, disinterested or obscure,” he wrote. “The Oregon Supreme Court would be unlikely to endorse such a broad interpretation.” Such an interpretation, he said, could open borrowers to unauthorized foreclosure and wrongful sale of their property.


  • Kelly Harpster, a Lake Oswego attorney who represents homeowners, called Simon's ruling "the most thorough and thoughtful analysis of the MERS issue that has yet been published ... However, the opinion is not binding on any judge in state or federal court. They are free to adopt Judge Simon's reasoning or reject it."

  • If the stalemate in Salem holds, Oregon's High Court will have to resolve this disagreement. In the meantime, foreclosures in the state will likely take longer, slowing any recovery in the housing market.

For more, see Federal court ruling against MERS foreclosure in Oregon comes (again) as Republican lawmakers try to validate it.

For the ruling, see James v. Recontrust Company, Case 3:11-cv-00324-ST (D. Ore. February 29, 2012).

(1) Even if the state law is changed, an Orgeon Supreme Court ruling is still crucial in order to straighten out the mess already created by MERS for those foreclosures that have taken place prior to the effective date of any possible change in the law that might be passed by the state Republican lawmakers (and their filthy henchman-lobbyists).

U.S. Appeals Court Boots Nevada AG Foreclosure Suit Back To State Court; Rejects BofA's Attempt To Shop For Friendlier Federal Forum

Reuters reports:
  • A federal appeals court on Friday granted Nevada's request to send its lawsuit alleging mortgage modification and foreclosure abuses against Bank of America Corp back to Nevada state court. The 9th U.S. Circuit Court of Appeals reversed a decision by a lower court, which had concluded that the lawsuit belonged in federal court.(1)

  • Nevada's complaint, filed in Clark County, Nevada, in January 2011, alleges that Bank of America misled consumers about the terms of its home mortgage modification and foreclosure processes. Nevada also accused the bank of violating terms of a consent judgment it and several of its subsidiaries had entered into with the state in February 2009. After Bank of America removed the lawsuit to federal court, Nevada's request to send it back to state court was denied.

  • Chief Judge Robert Clive Jones of the District of Nevada ruled that the lawsuit belonged in his court because the lawsuit was a class action, which gives federal courts jurisdiction. But the three-judge panel for appeals court disagreed, finding that a case filed by a state's attorney general did not qualify as a class action. It also ruled that Nevada had an interest in keeping the lawsuit in its own state.

  • "Nevada's strong sovereign interest in enforcing its state laws -- and its state-law-created Consent Judgment -- in the courts of its own state weighs in favor of remand to state," the panel wrote. Bank of America did not immediately respond to a request for comment.(2)

Source: Court sides with Nevada in BoA foreclosure case (9th Circuit sends case back to Nevada state court; Lawsuit alleges mortgage abuses against Bank of America).

For the court ruling, see State of Nevada v. Bank of America Corp., No. 12-15005 (March 2. 2012) (for publication).

For an earlier post, see Desperate BofA Resorting To Forum Shopping In Search Of Better Outcome From Federal Court In Response To Nevada AG's Recent Misconduct Allegations?

(1) A September, 2011 article in the Reno Gazette-Journal (article no longer available on their website, but a copy can be found here) on this story contained the following excerpt on Bank of America's blatant attempt to forum-shop this case into federal court so the case can be heard by 'friendlier judicial ears'):

  • But with Bank of America successfully kicking up the original case to federal court earlier this year -- and potentially skipping the state courts -- Nevada's amended complaint against the bank faces a more uncertain outcome, if past federal judgments are any indication.

  • "This is such a big deal because 99-plus percent of these cases in federal court are disposed of without evidence ... and in summary fashion," said Geoffrey Giles, a Reno lawyer. "Banks are actually winning these cases hands down and they will do anything to get their case removed to federal court because they know they can get a better deal. It's the most rank example of forum shopping."

  • Forum shopping is the practice of trying to get a case heard in a court that is more likely to render a favorable verdict. The case's removal from state court to the U.S. Ninth Circuit was opposed by Nevada Attorney General Catherine Cortez Masto. Bank of America violated state law -- not federal law -- so the case should be decided by Nevada courts, Masto said.


  • At the heart of Giles' appeal and Masto's argument to have the Bank of America case remanded is a long-standing debate on whether federal courts should be allowed to remove cases directly related to state law from state courts. The debate is at the center of an ongoing case, "Chapman vs, Deutsche Bank," which is being heard at the Nevada Supreme Court.

  • The case could potentially put the brakes on state court cases being snatched by federal courts, with the exception of class-action lawsuits. "The issue is, should federal judges be making rulings on Nevada state law?" Giles said. "You basically have federal courts telling Nevada how its foreclosure statutes work and that's wrong. That should be up to the Nevada Supreme Court, but federal courts have consistently refused to buy those arguments."

(2) An ABA Journal article (see Judge Says Firm Must Explain ‘Fraudulent’ Removals or Pony Up $25K) offers this observation on the legal maneuver used by BofA to find a friendlier forum to defend against a lawsuit, one commonly used in civil cases by big-time corporate defendants and their white-shoe law firms in lawsuits brought by (possibly under-financed) individuals and other plaintiffs on behalf of individuals, of moving a case from a state to a federal court:

  • [I]t is widely believed that plaintiffs, particularly individuals rather than corporations, fare better in state courts where they have greater likelihood of getting to a jury and often benefit from more favorable interpretations of law. Defendants in turn tend to prefer the federal courts. Thus removals can become a cat-and-mouse game in which a plaintiff names a party having nothing to do with the matter as one of the defendants to prevent the other side from removing the matter to federal court. That court can find fraudulent joinder and keep the case or remand it.

  • But studies have shown a greater increase in recent years of defendants removing cases to federal court, only for them to be dispatched back to state court for erroneous removal. One researcher, a third-year student at New York University School of Law, found that most often in such situations, the plaintiffs are individuals. And the rate of their cases being remanded back to state court is higher, too, wrote Christopher Terranova in last summer’s edition of the Willamette Law Review (PDF).

  • He adds that “the delays and costs of that extra procedural step to federal court are more costly and burdensome for most individual plaintiffs than they are for bigger defendants with more assets."

For the above-referenced Willamette Law Review article, see Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder (article also available at

For an example of one Federal judge excoriating a lawyer and law firm for, according to the judge, their history of fraudulent removal requests of cases from state court to Federal court, see Hollier v. Willstaff Worldwide, Case 6:08-cv-01382-TLM-CMH (W.D. La. 2009):

  • Sadly, the Court is not surprised by G.W. Premier’s counsels’ tactics in this proceeding as Ungarino & Eckert, L.L.C.’s reputation proceeds it. This case is but one in a long line of fraudulent and improper removals that Ungarino & Eckert, and more specifically Matthew Ungarino, have filed in this and other districts. [...] [For more, see Hollier v. Willstaff Worldwide (pp. 4-9).]

Feds Score 2nd Guilty Plea In Memphis-Area Foreclosure Sale Surplus-Snatching Ripoff

In Memphis, Tennessee, The Commercial Appeal reports:
  • A restaurant employee accused of conspiring to steal more than $1 million in surplus tax funds from Chancery Court pleaded guilty Friday in federal court. Correy Isom, 36, pleaded guilty as charged to three felony counts involving conspiracy, theft and money laundering in a hearing before U.S. Dist. Court Judge Jon McCalla. Isom, who was represented by attorney Coleman Garrett, will be sentenced later.

  • Last month former Chancery Court bookkeeper Brandon Gunn, 47, who also pleaded guilty, was sentenced to four years in federal prison and was ordered to make restitution of more than $1 million in tax foreclosure funds he embezzled from the office between 2008 and 2011.

  • Gunn was involved in an office function in which delinquent property taxes are paid by selling a homeowner's property, with the remainder or surplus to be placed in an escrow account the homeowner can claim.

  • The embezzlement scheme came to light when one homeowner seeking to claim a surplus discovered that it had been paid to a company set up by Gunn. Gunn admitted to writing 38 checks, ranging in amounts from $5,761 to $72,241, and sending them to his company or to other entities linked to him between May 2008 and March 2011.

  • Like Gunn, Isom likely will be ordered to make payments toward restitution. In response to the systematic theft, the county is implementing new financial software and other office accounting measures.

Source: Second man pleads guilty in Memphis Chancery Court theft case.

Fort Worth DA: Adverse Possession Vacant Home Hijackings "A Goofy Scam To Excuse Criminal Behavior" After Grand Jury Indicts 8; One Faces Life In Jail

In Fort Worth, Texas, the Star Telegram reports:
  • Eight people have been indicted by a Tarrant County grand jury for illegally taking possession of other people's vacant or abandoned homes, the Tarrant County District Attorney has announced.

  • "A burglary by any other name is still a burglary,'' District Attorney Joe Shannon said in a written statement. "Any invasion of a person's home is a serious matter."

  • The eight so-called squatters filed affidavits with the county to try to claim the properties. A state law allows persons to claim abandoned properties as long as they pay property taxes, provide maintenance for the homes and meet other requirements. After a while, if no owner contests the claim, the squatter may get to keep the property.

  • But Shannon chalked such actions up to "a goofy scam to excuse criminal behavior." In early November, he instructed the county clerk's office, which is responsible for accepting the affidavits, to deny them because he said they were fraudulent. He said such behaviors "will be dealt with by this office, our courts and juries."

  • One of the squatters - Anthony L. Brown, 62 -- is facing up to life in prison because of his prior criminal history. He and seven others are also facing one count of burglary of a habitation and one count of theft ranging from $100,000 to $200,000. The bulk of the indictments carry a penalty of up to 20 years to life in prison.

  • Among the indicted are Jasmine Williams, 22, and David Cooper, 25, who are accused of illegally taking possession of a $400,000 Arlington home. Others include relatives Andrew James LaTour II, 31, and Alicia Renee LaTour II, 30; and Sandra Selena LaTour, 51, Selena Kareen Brown, 29 and Andre Brown, 30.

  • A ninth squatter, Billie V. Henderson, 64, has been charged with criminal mischief for changing the locks on a Grapevine house in an effort to try and take possessions. His case was not presented to the grand jury because it is a misdemeanor charge.

  • Homes the squatters claimed were in Mansfield, Arlington and Grapevine. Shannon and other officials at the district attorney's office are also making presentations to various neighborhood associations to educate the public about the abuses, a spokeswoman said []. No further information was provided regarding the indictments because the cases are pending.

Source: Tarrant grand jury indicts eight squatters.

Sunday, March 04, 2012

Foreclosure Rescue Operator Gets 33 Months For Peddling Predatory Sale Leaseback Deals That Stripped Home Equity From Financially Strapped Homeowners

From the Office of the U.S. Attorney (Newark, New Jersey):
  • A Scotch Plains, N.J., man was sentenced [] to 33 months in prison for his role in a mortgage fraud scheme he organized through Elite Financial Solutions, a purported home foreclosure rescue company he owned and operated, U.S. Attorney Paul J. Fishman announced. Stephen French, 53, previously pleaded guilty [...] to one count of wire fraud conspiracy, admitting he caused more than $1 million in losses through the scheme.


  • According to documents filed in this and related cases and statements made in court:

    Beginning in February 2005, French devised a scheme to use Elite to fraudulently induce financial institutions to provide mortgage loans to unqualified borrowers, enabling French and his co-conspirators to earn consulting fees from the sales of properties financed by the loans.

    Michael Martino, 47, of Bloomfield, N.J., who as an employee of Elite was responsible for recruiting straw buyers for properties in foreclosure, was sentenced on March 15, 2011, [...] to a year and a day in prison. Martino previously pleaded guilty to one count of wire fraud conspiracy [...].

    French, Martino, and others at Elite targeted New Jersey homeowners who could not make mortgage payments and were facing foreclosure. They would promise the homeowners that Elite would help them keep their homes and repair their damaged credit.

    The homeowners would be instructed to permit title to their homes to be put in the names of straw buyers for one or two years. French promised to improve their credit ratings during that time, help them obtain more favorable mortgages, and ultimately return title to their homes.

    French, Martino, and others at Elite told the homeowners that equity withdrawn from their homes would be kept in escrow and used to pay the mortgages and expenses and to repair their credit. Instead, Elite took a “consulting fee” of $25,000 per property, and the remaining equity was deposited into bank accounts French controlled.

    French, Martino, and others at Elite paid the straw buyers $10,000 for use of their names and credit histories in the transactions, and submitted fraudulent loan applications to mortgage lenders in the straw buyers’ names in order to ensure the loans would be approved. In addition to the prison term, Judge [William J.] Martini sentenced French to five years of supervised release and ordered to pay restitution of $1,957,525.

For the U.S. Attorney press release, see Former owner and operator of phony mortgage rescue company sentenced to prison for role in fraud scheme.

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

Feds Squeeze Guilty Plea From Another Scammer Peddling Bogus Equity Stripping Sale Leaseback Deals To High Equity, No-Cash Homeowners In Foreclosure

From the Office of the U.S. Attorney (Norfolk, Virginia):
  • Ray D. Gata, 56, of Chesapeake, Va., pleaded guilty [] in Norfolk federal court to conspiracy to commit wire fraud in connection with a fraudulent foreclosure rescue scheme.


  • According to court documents, from November 2006 until February 2011, Gata and a conspirator engaged in a foreclosure rescue scheme that defrauded homeowners and mortgage lenders.

  • The conspirator promised homeowners that he could save them from foreclosure by arranging a sale of their homes to Gata and other straw borrowers. To further entice the homeowners, the conspirator promised that they could remain in their homes after the sale, pay rent, and he would resell the homes back to them once they were more financially secure.

  • The conspirator and Gata profited from this scheme by taking all of the proceeds from the home sales. To complete the scheme, the conspirator and Gata executed false closing documents that showed the proceeds of the sale going back to the homeowners when, in fact, the proceeds were going to Gata, the conspirator, and the other straw borrowers.

  • The homeowners received nothing from the sale of their homes while the conspirator, Gata and others received in excess of $170,000. In almost every case, the conspirator required the homeowners to pay more in rent to cover a larger mortgage, and ultimately evicted these homeowners from their homes.

For the U.S. Attorney press release, see Chesapeake Man Pleads Guilty to Mortgage Fraud Scheme.

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

Mortgage Broker Gets One Year For Role In DC-Area Sale Leaseback Equity Stripping Foreclosure Rescue Scam

From the Office of the U.S. Attorney (District of Columbia):
  • Rasheeda M. Canty, a former mortgage broker, has been sentenced to a one-year prison term for her role in an extensive mortgage fraud scheme involving properties in the District of Columbia and Maryland, [...].


  • The judge also ordered her to pay $339,643 in restitution. Canty also must forfeit $342,572, which represents the amounts of commissions she received from lenders on the fraudulent transactions. As part of her plea agreement, Canty agreed that the scheme led to losses of at least $1 million.

  • According to the Statement of Offense filed by the government, to which Canty agreed, Canty was a mortgage broker with an office in Lanham, Maryland. As part of her job duties, Canty completed and filed, often by mail or interstate wire transactions, loan applications to financial institutions on behalf of individuals involved in real estate transactions.

  • Over a two-year period starting in about April of 2005, Canty and others conspired to defraud financial institutions whose deposits were insured by the FDIC for the purpose of influencing the financial institutions to approve mortgage loans. She and others perpetrated this scheme by identifying distressed homeowners whose properties in Washington, D.C., and Maryland were facing imminent foreclosure and offering to purchase their properties.

  • The conspirators told some of the homeowners that they could repurchase their properties within one year. Canty prepared fraudulent letters to have derogatory information deleted from the sellers’ credit reports so that their credit scores would be increased, thus allowing the sellers to qualify for the re-purchase of their properties.

  • The conspirators then sought unsophisticated individuals, with good credit scores or credit scores that could be fraudulently raised, to act as “straw purchasers,” also known as “credit partners,” for these transactions, often in exchange for a $5,000 to $10,000 fee to the straw purchaser for the use of his or her personal information to purchase the respective property.

  • The straw purchasers understood that one of the conspirators would make the monthly mortgage payments, and the straw purchaser would not be otherwise financially responsible for the property or required to live there. On some occasions, the conspirators used the identification of innocent, unknowing victims to make these purchases.

For the U.S. Attorney press release, see Maryland Woman Sentenced to One Year in Prison For Her Role in Extensive Mortgage Fraud Scheme (Defendant Submitted Fraudulent Information to Obtain Loans).

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

Miniature Horse Ranch Operators Who Sold, Then Leased Back Property To Dodge F'closure Now Face Eviction; New Owner Says He Needs To Unload Premises

In Penngrove, Caliifornia, The Press Democrat reports:
  • The owners of the Penngrove miniature horse ranch called Lovepatch Farms face a daunting deadline — come up with $500,000 or vacate the 2 1/4-acre property.

  • The Mill Valley family that only two years ago helped Lee Romero and Cory Vandergeld avoid foreclosure by purchasing the ranch and leasing it back to them must now sell the property for business reasons.

  • After 30 years of living on the Palm Avenue ranch, moving all their belongings, 41 horses, numerous indoor and outdoor stalls, paddocks and fencing seems inconceivable to the aging couple.


  • [A]fter refinancing their property three times Romero and Vandergeld, like so many others, found themselves under water and unable to pay their bills.


  • Ray Kaliski, a member of the Mill Valley family that bought the property in 2009 so that the ranch could survive, said his family paid $412,000 in cash for the property to give Romero and Vandergeld time to get their finances in order.

  • Romero and Vandergeld were friends of Kaliski's sister, Barbara Norman, who with her father used to own and run Winners' Circle Ranch on Lakeville Highway. Several of the horses now at Lovepatch were purchased from Winners Circle.

  • After buying the Penngrove property, Kaliski said his family began an expensive remodel of the house, putting in new flooring, a new outdoor bathroom for visitors, new heating, remodeling the kitchen and replacing the siding on the house, among other things.

  • The family asked for $2,000 a month in rent, but Romero said that all the remodeling work affected their ability to schedule tours and they quickly fell behind in their rent payments. And the horses, which cost roughtly $1,200 a month to feed, have increased the couple's financial burden.

  • Last year, Romero and Vandergeld worked out an agreement that would allow them to pay $1,500 a month in rent, with $500 going to cover some of the back rent owed. The two, who have been paying that amount since last September, have been trying to cover their expenses with revenue from several other on-site businesses.

  • Romero and Vandergeld run an online distribution business for building supplies. She also does Web page design and sews and sells halter identification tags. “We've been trying to do everything to make money,” Romero said. “What they're going to do is make us destitute,” said Vandergeld.

  • But Kalaski said his family has been more than generous, remodeling the ranch home and giving them a break on the rent, which he said should be around $2,500 a month. “I never offered to give them the place for free,” he said. “We talked about the fact that we would offer it to them before we would offer it to anyone else.”

  • In an email to the couple sent Jan. 30, the family said it would take $500,000, which is $35,000 less than “comparables.” A 60-day notice asking Romero and Vandergeld to vacate the property expired last week. Kaliski said his family needs to sell the property.

  • We had the money available at the time,” he said. “But since that time, we've made some significant investments with other properties here that's drained our liquidity ... Now we need to convert that property into cash. “It's strictly a business decision,” he said.

  • Romero said the family has given her a “drop-dead deadline.” “They said that if we agree to pay rent February, March and April, they will extend the time we have to leave until April 30,” she said. “We're going to try and get financing. We're going to give ourselves X amount of time to get financing.”

For the story, see Four-legged tenants facing eviction.