Saturday, September 01, 2012

Illinois Congressional Candidate Bagged For Improper R/E Tax Exemption Claims On Two Homesteads; Says It Was Inadvertent, Coughs Up Unpaid Cash

In Chicago, Illinois, The Daily Herald reports:
  • A suburban congressional candidate improperly claimed two homeowner exemptions at once over a period of several years, a Daily Herald investigation has found. But after the Daily Herald pointed out the error, Tammy Duckworth says she paid $1,928 in taxes she saved because of the extra exemption, plus an added $612 in penalties.

    They didn't think about it,” Duckworth spokesman Kaitlin Fahey said of the issue. “Taxes were paid out of escrow. This wasn't like beating the system.”

    County records show Duckworth claimed homestead exemptions in both DeKalb and Cook counties from 2007 to 2010. The Hoffman Estates Democrat is running against Republican Congressman Joe Walsh, of McHenry, in the 8th Congressional District.

    By law, Illinois residents can only claim the exemption on the property that is their primary residence. The exemption reduces the amount of property taxes owed by lowering a property's assessed value.

    The DeKalb exemption was filed first, after Duckworth and her husband Bryan Bowlsbey purchased the property in 1997. In DeKalb County, Chief County Assessment Officer Robin Brunschon said, exemptions are automatically renewed each year unless residents notify the assessor's office that they have changed their primary address.

    Duckworth and Bowlsbey purchased a Hoffman Estates home in 2002. They now rent out the DeKalb property, receiving between $5,000 and $15,000 annually in income from it, according to the Financial Disclosure Statement that candidates, office holders, and high-level government employees are required to submit to the United States House of Representatives.
  • The four years of claiming the benefit in DeKalb County saved Duckworth $1,928, Brunschon said. Duckworth has sent a check to DeKalb County to cover what she would have paid without the exemption, plus an added $612 in late fees, Sullivan said.
For more, see Duckworth claimed two homeowner exemptions (Duckworth to pay more than $2,000 after Daily Herald investigation).

LA City Attorney Tags Bankster With Suit Saying It Illegally Booted Hundreds Of Low-Income Tenants From Their Homes, Failed To Maintain Properties

In Los Angeles, California, United Press International reports:
  • The Los Angeles city attorney said Wednesday prosecutors have filed a civil enforcement action against US Bank for alleged foreclosure violations.

    The complaint by City Attorney Carmen A. Trutanich alleges US Bank, the fifth-largest commercial bank in the United States, allowed hundreds of foreclosed properties to fall into disrepair and facilitated the illegal eviction of hundreds of low-income tenants.

    If found liable, the bank faces tens of millions of dollars in damages, the city attorney's office said.

    The office said during the past four years, US Bank acquired more than 1,500 properties in Los Angeles through foreclosure. In some instances, the properties were vacant at the time of foreclosure, and US Bank either failed to make the necessary repairs to remedy nuisance conditions, or caused or permitted nuisance conditions to develop, the office said.

    Using real estate agents and attorneys, "US Bank engaged in numerous deceptive and dishonest tactics to evict tenants, including serving notices requiring unreasonable demands, demanding occupants leave in an extremely short time in exchange for small amounts of money, causing or allowing utilities to be shut off, charging excessive rent in excess of the amounts under the Rent Stabilization Ordinance, and threatening legal action," a statement from the city attorney's office alleged.
Source: US Bank foreclosure tactics targeted.

For the Los Angeles City Attorney press release, see City Attorney's Office Files Law Enforcement Action Against U.S. Bank For Failure To Maintain Foreclosed Properties And For Illegal Evictions (National Bank Faces Hundreds of Millions of Dollars in Potential Liability and Injunction to Clean Up Foreclosed Properties and Stop Illegal Evictions).

Good News For California Tenants Impacted By Landlords In Foreclosure & Related Problems With Unscrupulous Banksters, Investors, Real Estate Agents

In Sacramento, California, Beyond Chron reports:
  • [D]espite realtor and landlord campaign contributions and the undue influence they bring, a number of good renters’ rights bills have made it through the minefield of the California State Legislature and are now on the Governor’s desk. Governor Jerry Brown has 30 days to sign or veto the bills.

    AB 1953Protecting Tenants from Unfair Evictions after Ownership Changes

    Authored by Assemblymember Tom Ammiano (D-San Francisco), AB 1953 plugs a loophole in California law which has allowed successor landlords, especially after foreclosure, to wait months before notifying tenants of an ownership change and where to send rent. AB 1953 passed the Legislature this week and is now in the Governor’s hands.

    Existing California law in theory requires new owners to notify tenants within 15 days of an ownership change, where to pay rent, and whom to contact for repairs, but does not say what happens when the new owner fails to comply.

    Under AB 1953, a new owner who delays in notifying a tenant where to pay rent would not be permitted later to evict the tenant for nonpayment of rent that accrued during the period of the owner’s noncompliance. By creating a consequence for failing to properly notify tenants of ownership changes, the bill seeks to increase compliance with existing notification requirements and protect tenants from unnecessary confusion and evictions.
Reportedly, three other bills protecting tenants in foreclosure situations that await the governor's signature:
  • place the burden of disputing leases on the post-foreclosure owner,

  • amend “pre-judgment claim” rules to plug a loophole banks and investors have used to evict tenants without ever naming them in eviction proceedings,

  • prohibit a landlord from requiring online payment as the exclusive form of rent payment. The bill responds to “online only” rent schemes that are designed to force out long-term, rent-controlled tenants,

  • create a statutory duty to disclose notices of default to prospective renters, an effort to safeguard unwitting tenants from learning of an upcoming foreclosure after they have shelled out money for rent, deposits, and moving costs, and moved into their new home. This bill specifies remedies in the event of nondisclosure by the landlord. Specifically, the bill would provide tenants the option to void lease and sue for damages (twice rent or twice actual damages), or elect to stay in possession and deduct one month’s rent. The bill is limited to 1-4 unit buildings.

Lawsuit: 'Co-Op Board Booted My Application To Buy Apartment, Saying My Yet-To-Be-Born Baby Might Be Too Noisy For Neighbors!'

In New York City, the New York Post reports:
  • They don’t mean maybe when they say: “No babies!” A Manhattan woman trying to buy a Staten Island co-op claims she was booted as a buyer because she’s with child.

    Elena Slukina, who is “visibly pregnant,” says she put in the winning bid for apartment 5N at 36 Hamilton Ave. in July. Still facing board approval, the current Murray Hill resident went to an interview with the co-op board earlier this month — and allegedly got a grilling on her family planning.

    Board President Maria Civille and other members “expressed their concern that a child growing up in the building might affect other tenants’ peace and quiet,” according to Manhattan Supreme Court papers filed by Slukina last week.

    Although there are a few families with kids already living there, Civille claimed that thin walls and floors mean noise travels easily and that she was reluctant to approve an application “that would bring a potentially noisy child in [an] otherwise quiet co-op,” according to Slukina’s complaint.

    The next day, the board rejected Slukina’s application. It has since tried to find another buyer for the co-op shares that Slukina won at auction.

    A judge has approved Slukina’s request for a temporary restraining order. Civille did not return a message seeking comment.

Tax Shelter Blows Up In Investor's Face As Penn. Court OKs $160K+ Income Tax Bill Despite Fact He Lost Entire Investment In U.S. Steel Tower F'closure

CPA Peter J. Reilly writes in Forbes magazine:
  • Mr. Marshall, a Texas resident, invested [$148,889, on or about January 24, 1985] in a Connecticut partnership that purchased [for approximately $360 million] the U.S. Steel Tower, an iconic building in Pittsburgh. The building was financed with a note [for $308 million] that required interest of over 14%, which could be added to principal.

    Over about 20 years Mr. Marshall received a few thousand dollars [$6,184] in distributions on his investment of around $150,000. The building did not provide enough cash to cover the interest payments causing the mortgage balance to balloon from roughly 300 million to over $2 billion [the liability grew to more than $2.6 billion, of which only $308 million represented principal and approximately $2.32 billion represented accrued but unpaid interest].

    The building was foreclosed [on June 30, 2005]. Mr. Marshall’s foray into Pennsylvania was rather unrewarding, he lost about $143,000, so it is understandable the he is perturbed that Pennsylvania wants him to pay a tax of over $160,000 on hisgain”.

    How is there a gain? Well when that big mortgage balance, including all that unpaid interest is deemed to be proceeds of the foreclosure sale, so you can see how there would be a gain.

    But Mr. Marshall didn’t get any benefit in Pennsylvania from all the deductions that built up that balance. Well if he had had other Pennsylvania income he would have gotten a benefit from the deduction, it is not Pennsylvania’s fault he put all his Pennsylvania eggs into a single steel basket.

  • Mr. Marshall would probably not have had this particular problem in most other states. Pennsylvania is peculiar in that it does not allow any carryovers and it divides income into five classes. A loss in one class cannot offset income in a different class. So even if the deduction for all that unpaid interest were allowed in the same year as the disposition of the building, Mr. Marshall would still have the tax to pay even though he got nothing.

    Judge Patricia McCullough, who dissented, noted the absurdity of the outcome:

    The rationale for the Majority’s decision, which is reiterated in its denial of all of Marshall’s exceptions, is that, by virtue of the foreclosure of the property, “Marshall is in the same position he would have been had the Partnership sold the property in 2006 for $2,628,497,551.” The fact of the matter is that the property was not sold and Marshall is not in the same position as he would be if it had been – he has completely lost his investment. Had the property sold for this amount, Marshall would have received a return of about $4 million on his investment and, hence, he would have ample funds to pay the PIT [Pennsylvania personal income tax], the imposition of which, under those circumstances, would be without dispute.
For the story, see Pennsylvania Court Gives No Relief To Investor In Tax Shelter From Hell.

For the court ruling, see Marshall v. Commonwealth, No. 933 F.R. 2008 (Pa. Cmwlth. August 16, 2012) (en banc) (Marshall II).

Financial Planner/Attorney Who Beat Insurance Companies At Their Own Game Now Faces 66-Count Indictment

A recent story in ProPublica tells the tale of Rhode Island financial planner Joseph Caramadre, a trained lawyer and certified public accountant who was resourceful enough to find loopholes in variable annuity contracts peddled by insurance companies and employed an approach in purchasing these contracts that enabled him to beat the insurance companies' brains in at their own game.

He has been the target of civil lawsuits by the bully insurance companies a number of times and keeps on prevailing against them in court, as this excerpt reflects:
  • There have been at least eight lawsuits filed in Rhode Island's federal district court relating to Caramadre's scheme. Insurance companies Nationwide, Transamerica and Western Reserve have all sued. The companies have not fared well in civil court.

    United States District Court Judge William Smith keeps knocking out claims. The companies then re-file new ones. As of this writing, Western Reserve has filed five successive complaints against Caramadre in the same case. When he dismissed Nationwide's complaint, Judge Smith questioned whether the company ignored its own contracts.

    In the Western Reserve case, Judge Smith wrote, "It is a bit ironic for Plaintiffs [the insurance companies] to suggest that they did not know the true nature of contracts that they themselves drafted."(1)
Despite their absymal results in bringing these suits, the sore loser insurance companies apparently succeeded in bellyaching to the right people because the Rhode Island Feds saw fit to present the case to a federal grand jury. According to the story, in November 2011, after almost two years of work, a Rhode Island grand jury issued a 66-count indictment against Caramadre and another. Their criminal trial is scheduled to begin in November.

After reading the story, one can easily conclude that the only thing Caramadre may be guilty of is being a little greedy.

For the story, see
Death Takes a Policy: How a Lawyer Exploited the Fine Print and Found Himself Facing Federal Charges.

(1) Western Reserve Life Assurance Co. of Ohio v. Caramadre, Case Nos. 09-470 S, etc. (D. R.I. February 7, 2012).

Friday, August 31, 2012

Ex-NH Insurance Agent Dodges Prison For Preparing Two Sets Of Policies Used To Dupe Banks Into Financing Sale Leaseback Equity Stripping Ripoffs

In Concord, New Hampshire, The Associated Press reports:
  • A former insurance agent who said he believed he was helping financially distressed homeowners remain in their homes but who lied to federal investigators about insurance policies was placed on probation and fined $5,000 in federal court on Tuesday.

    Robert Hayden operated the State Farm Insurance Agency in Goffstown when he was recruited at a business networking meeting by the organization’s president, Michael Prieto, to assist him in a new venture in 2005.

    Prosecutors in their indictment of Prieto, formerly of Nashua, say his venture, which he touted as a “rescue plan” for financially distressed homeowners, was fraudulent. They say Prieto, who’s scheduled to stand trial in November, persuaded homeowners to sell their homes to his associates for below-market prices in exchange for low rent payments and the promise they could repurchase their homes later for reasonable prices.

    Prosecutors say Prieto then stripped whatever equity there was in the homes and refinanced them for much larger sums to pull more money out of the deals.

    Hayden, of Lyndeborough, pleaded guilty to initially lying to federal agents when he was questioned about two sets of insurance policies he drew up for each of Prieto’s acquisitions – the rental insurance policy that he filed with his agency and the owner’s policy that enabled Prieto to secure the inflated mortgages.

    I thought I was helping people stay in their homes, their lives and their dreams, and it wasn’t the case,” Hayden, 54, told U.S. District Judge Joseph Laplante in Concord.

    Prosecutors say Prieto ultimately defaulted on the mortgages he had orchestrated, with the principle amount exceeding $13 million.

    Assistant U.S. Attorney William Morse told the judge he has no evidence Hayden knew about the extent of the scheme or benefited beyond the small commissions he received for writing the policies.

    Attorney Michael Connelly, who represents Hayden, emphasized in court and in briefs filed in the case that Prieto pitched his venture at a meeting of the Business Networking International group meeting in Nashua.

    The openness with which Mr. Prieto announced the program, among a group of reputable professionals, and the benevolent stated purpose behind the program made it seem to Mr. Hayden like a legitimate arrangement,” Connelly said.

    Hayden has agreed to testify against Prieto.

As Bay State Homeowner Watches Auctioneer Sell Her Home In Foreclosure, She Vows To Fight On With Suit; Says Bank Can't Prove It Had Proper Paperwork

In South Orleans, Massachusetts, the Cape Cod Times reports:
  • The best intentions and the vocal support of the local Occupy movement couldn’t stop Sandy Schaefer-Ung’s home from being auctioned on Wednesday – but the South Orleans woman still holds out hope that a lawsuit will let her keep her home.
  • Schaefer-Ung’s lawyer, Jamie Ranney of Nantucket, filed a lawsuit in Land Court earlier in the day, arguing that U.S. Bank couldn’t prove it was the proper mortgagee.

    In the filing, Schaefer-Ung “denies that U.S. Bank or any other respondent possesses or can establish a lawful and valid chain of title to any mortgage, note, or any other interests in the premises that may have been originally granted” by her. Ranney said the promissory note he received was a photocopy which, he said, the line sayingpay to the order ofis blank.

    According to a recent decision by the Massachusetts Supreme Judicial Court, the lender trying to foreclose must hold both the mortgage and promissory note, which is proof of the debt.

Unwitting Landlords Left To Deal With Wreckage As Raid On Extensive Indoor Grow House Operation Bags Two Dozen Vietnamese Nationals, 14,000 Pot Plants

In Spring, Texas, the Houston Chronicle reports:
  • Large holes cut into the ceiling of almost every room of the 3,200-square-foot house on Mandarin Glen Circle in Spring were the first clue. Blowers were installed to push suspiciously pungent air into the attic.

    Then there was the potting soil covering floors, the makeshift electrical panels powering hundreds of 600-watt lights, the bathrooms converted into watering stations.

    They were all signs of a suburban dream home turned into a nightmare for its owners, a house in a quiet neighborhood transformed into a sophisticated grow house for a major Houston-area marijuana trafficking operation taken down by agents last week.

    Owners Court Riddle and his wife, Candace, could not believe the damage the marijuana cultivators wreaked on their two-story rental. "This is like a bad movie," said Candace, 32, as she and her two sons pulled down wire racks used to dry the marijuana.

    It was a heart-breaking scene being repeated for property owners at 40 rental homes targeted in raids in Harris, Montgomery and Fort Bend counties. Two dozen Vietnamese nationals were arrested, and nearly 14,000 marijuana plants confiscated in the raid.
  • The ring stole electricity from local utilities by digging trenches and tapping directly into underground power lines running to the home. This not only saves large amounts of money, but made it harder to detect their 24/7 power use because they wired around the house meter.
  • The raids last week targeted 60 locations, including two commercial sites where the organization was storing and packaging the marijuana. Of the 60 addresses, they found active cultivation in 40. Earlier seizures of 14 other grow houses the Vietnamese organization operated turned up 5,000 more plants, although details of those operations were not disclosed.
  • The Riddles learned that the young Vietnamese woman with two children - who in January signed a two-year lease and were paying $1,850 a month - never lived in their home. Court Riddle, a 35-year-old minister, figures the cleanup to his property will cost $15,000.

    The brick home-turned-marijuana greenhouse suffered through 120-degree temperatures that softened the walls. Mold also was starting to grow.

    "Now we're left with trying to get it ready to lease it out or sell, and you know what the market is like," he said. "We may have to go into foreclosure."
  • From the outside, they look like upscale homes in the suburbs, but inside criminals were hard at work. Now the people who own the rental houses in Harris, Montgomery and Fort Bend Counties are learning the real details about who signed the lease.

Thursday, August 30, 2012

Logjam Over Title Issue Coming To Georgia For Banksters Unloading Foreclosed Homes?

In Atlanta, Georgia, The Atlanta Journal Constitution reports:
  • A company providing services to lenders and home buyers says a recent Georgia court case that tightened the enforcement of foreclosure laws will raise questions about the ownership of thousands of homes, create uncertainty in the housing market and result in many lawsuits.

    The July court ruling says foreclosure documents and public foreclosure notices need clear identification of the loan owner or those legally able to negotiate for the owner, which many recent documents lacked because of the complex ways in which loans were created and sold to investors.

    "...the Court of Appeals' decision will cause great uncertainty in Georgia foreclosures as to the validity of a foreclosure, particularly those foreclosures that have occurred since 2008..." said attorney William Brown in a brief filed to encourage the Georgia Supreme Court to review the ruling.

    He filed it on behalf of Old Republic National Title Insurance Company which was not involved in the case but could be affected because it insures home titles. The brief gives the latest hint at the broad impact a July state Court of Appeals ruling could have. Georgia has one of the highest foreclosure rates in the nation. Ball park guesses at how many homes could be affected by the ruling range from thousands to tens of thousands.
  • The state Court of Appeals ruled in Reese vs. Provident Funding last July that the Reese family of Cobb County were improperly foreclosed upon because the notice they got was improper.

Scammer Who Pocketed $1,276, Failed To Deliver Promised Debt Management Services Gets 20-60 Months For Felony Embezzlement

In Petoskey, Michigan, the Petoskey News reports:
  • A 53-year-old Traverse City woman who pleaded no contest last year to an embezzlement charge was sentenced to prison Monday in Emmet County's 57th Circuit Court.

    In September, Toni Lavonne Avery pleaded no contest to one count of embezzlement — agent or trustee $1,000 or more but less than $20,000, a felony offense, which carries a maximum penalty of five years in prison and/or a $10,000 fine, or three times the amount embezzled, whichever is greater, Emmet County prosecutor Jim Linderman previously told the News-Review.

    During Monday's delayed sentencing hearing, judge Charles Johnson sentenced Avery to serve not less than one year and eight months and not more than five years with the Michigan Department of Corrections, with credit for one day served. She must also pay at least $1,276 in restitution.

    The Emmet County Sheriff's Office arrested Avery in April 2011 for embezzling money from a Petoskey couple who hired her to work as their financial adviser, according to a sheriff's office news release issued last year. Linderman said the couple hired Avery as a financial adviser in September of 2007. Her company was named BEST Financial Services Inc.

    Linderman explained that Avery was subsequently given two checks, one for $826 and one for $450, for services that ultimately were not rendered. It wasn't until about a year later that the couple was confronted by attorneys and debt collectors for the work Avery had been paid to do, according to the sheriff's office news release.

    On Monday, Avery's attorney, Bob Engel, asked the court to "look at the good in Toni Avery" and to consider probation and tether rather than sentence her to time in prison.

    "My client has helped a number of people over the years, clearing up their debt problems," including the victims in this case, Engel said.

WV Ass't AG: “We’re Having A Border War Here With Virginia!” Issues Arise In Mid-Atlantic States Over Car Title Lending Racket

The Washington Post reports:
  • [V]irginia’s car title-lending business is booming, but consumer advocates say it’s nothing to celebrate. Since a change in Virginia law last year, the commonwealth has become a magnet for people who need cash but live in the District, Maryland or another neighboring jurisdiction where laws capping interest rates have effectively driven such lenders out of business.

    In 2010, Virginia lawmakers — led by Sen. Richard L. Saslaw (D-Fairfax), who received more campaign donations from the consumer finance industry than anyone else in the Virginia General Assembly — imposed new regulations on car-title lenders but allowed them to operate in the commonwealth.

    A year later, legislation sponsored by Saslaw ensured that car-title lenders could extend credit to nonresidents. Since then, the number of licensed car-title lenders has almost doubled in Virginia, along with complaints about high costs and collection tactics.

    But some are pushing back against the industry, including West Virginia’s attorney general and a Roanoke County borrower. After investigating complaints from people who said debt collectors for Fast Auto Loans Inc. pestered them in the hospital or used other aggressive tactics, West Virginia Attorney General Darrell V. McGraw Jr. sought to block the firm from writing new loans to West Virginians or seizing their cars, court documents say.

    Fast Auto Loans and its Atlanta-based parent, Community Loans of America Inc., denied wrongdoing and, in any case, ceased making loans to West Virginians a year ago, court papers say. Norman A. Googel, a West Virginia assistant attorney general handling the case, said his office is investigating additional Virginia car-title lenders.

    It’s really unbelievable,” Googel said. “We’re having a border war here with Virginia.”
  • 250 percent interest

    Consumer advocates view car-title lending as a form of predatory lending. Like short-term payday loans, car-title loans often carry exorbitant interest rates that trap people in a cycle of debt. A typical 12-month car-title loan of $1,000, for example, can come with an effective annual interest rate of 250 percent.

    Car-title loans may even be worse than payday loans, consumer advocates say, because borrowers risk losing their vehicles. That can put them at risk of losing their jobs, especially in rural or suburban areas with limited mass transit.

    Once you get in, it’s very hard to get out,” said Dana Wiggins, director of outreach and financial advocacy at the Virginia Poverty Law Center in Richmond.
  • Consumer advocates [] hammered Saslaw, saying he is too close to the industry. Between 2010 and 2012, Saslaw received nearly $73,000 in campaign donations from payday lenders, car-title lenders and consumer finance firms, according to records collected by the nonpartisan Virginia Public Access Project.

Wednesday, August 29, 2012

Homeowner Makes $69K+ In Loan Payments, Then Finds Out Lawyer Who Handled Closing Never Recorded Deed, Mtge; Title Insurer To Victim: 'Take A Hike!'

In Scranton, Pennsylvania, The Scranton Times-Tribune reports:
  • For more than three years, Shelia M. Layo made $69,594 in mortgage payments on a property she did not own.

    The Scranton woman is living in the house, which she still doesn't own, and is suing Peoples Neighborhood Bank, closing agent Richard Hallock and others in a bizarre case involving the failure to record a deed and a mortgage.

    The Hallstead-based bank didn't tell her about the incomplete closing or remedy the situation. Yet the bank wanted her to continue to make payments, noting that she is still personally liable for the note. Frustrated, she stopped paying. The bank sent her a notice of intention to foreclose in May, even though it couldn't foreclose without a mortgage and without her being the owner.

    An attorney, Mr. Hallock has since pleaded guilty to felony theft in an unrelated matter and was suspended from practicing law for three years. He has moved out of the area - leaving in his wake a flurry of escrow and financial irregularities - and could not be located for comment.

    Ms. Layo is suing the bank for possession of the townhouse and $397,725 which includes her 42 months of mortgage payments, Mr. Hallock's fee, other closing costs and losses, plus her legal fees. She is asking for other damages from Mr. Hallock and the firm he was an agent of, Ohio Bar Title Insurance.
  • Ohio Bar Title [] declined to help, denying her coverage through its errors and omissions insurance, even though Mr. Hallock was acting as its agent.

    There's another cost to Ms. Layo. The condo is in a Keystone Opportunity Zone, so she's supposed to receive tax benefits. Because she has no evidence that she owns the property, she was never able to take advantage of the benefits, which include exemptions from some property and income taxes.

Winning Bidders At Foreclosed Home Auction Invest Time, Money Into Fix-Up Only To Then Find Out They Bought Wrong Property

In Spartanburg, South Carolina, the Spartanburg Herald Journal reports:
  • A local couple hopes their misfortunes with the purchase of a foreclosed property will serve as a cautionary tale for anyone seeking to buy a home cheap.

    Earlier this year, Benjamin and Railynn Spence saw what they thought was an available house in the city at 777 Hayne St. listed with the Spartanburg County Forfeited Land Commission.

    The couple made a bid on the property for $601.64 on March 2. The Spences said they were informed by the county auditor's office on March 28 that they had the winning bid, and they needed to come down and fill out some final paperwork.

    At the signing, the couple said an official told them it would take two to six weeks for them to receive their deed. They said the official also handed them a docket that contained pictures of the house and other documentation that confirmed the home's address, and they walked away with the understanding that the home was theirs.

    By the end of May, the Spences, who had been keeping an eye on the property, said they still had not yet received their deed. But they were anxious to move in, so the couple began working on the house — painting, scraping and re-installing wiring and plumbing that was missing from the structure. On July 14, they moved all of their belongings from their hotel room to the home and continued fixing up the place.

    I had people pull up in the front yard telling me ‘You're doing such a good job,' ” Benjamin Spence said. “They told me that it was such an eyesore before and to keep up the good work.”

    Last Tuesday, the couple was at home when a city inspector and Spartanburg Public Safety Department officers came knocking on their front door. The inspector told them that the property's owner wanted them out of the house, and they had two weeks to vacate.

    We were like ‘what?' ” Railynn Spence said. “We said, ‘We're the owners. We bought it out of an FLC sale.' ”

    The Spences said they went up to the county's Delinquent Tax Office. There, an official showed them that the parcel number for the home at 777 Hayne St. ended in the digits 156.00, and paperwork showed that the Spences had made their bid on a parcel ending in 157.00, which was the empty lot.

    I told them, why would we buy a property with no house?” Benjamin Spence said. “Why would we do all of the work on a house that wasn't ours? Even one of the policemen said that squatters don't fix up houses, so we couldn't be squatters. The paperwork clearly showed the address on the house was 777. How else would we have found the place?

    Frustrated, the Spences decided to pack their bags. The county mailed them a refund for their bid on Aug. 17, and the couple was busy this week moving into a temporary home provided by one of Benjamin's friends.

    We would've still been in the dark about this had (the inspector) not come by to tell us,” Railynn Spence said.

    According to officials, the cause of the confusion over the address was caused by the renumbering of lots along the west side of Hayne Street near the intersection of Williams Street that was conducted in early March.

    The restructuring was done to make sure that the addresses matched up with the parcel numbers on file with the assessor's office. The Spences' lot was given the address of 757 Hayne St. and the house remained at 777 Hayne St.

    A county official said the Spences won their bid while the addresses were in the process of being updated. The photos of the home were included in the information docket likely as a point of reference for the address.

    On the tax records, that (empty) lot was given the same address as the house. A lot of times that happens when the lot is at one point tied to the house,” said Steve Ford, with the auditor's office. “In this case, the property had the correct address when it was sold even though the map numbers were different. By the time they realized it, the address was different.”
  • The Spences estimated that they have put $3,500 to $4,000 of work, including materials and man hours, into the house. [...] Benjamin Spence said he is facing a $350 fine from Spartanburg Water System for turning on the home's water to inspect for leaks in the plumbing prior to moving in.
For more, see Spartanburg couple finds home isn't theirs (Buyers need to be wary).

Feds Pinch Operator Of Alleged Scam That Peddled Mortgage, Consumer Debt Reduction Services On Various Felony Fraud, Money Laundering Charges

In Las Vegas, Nevada, KSNV-TV Channel 3 reports:
  • A former Las Vegas resident who operated two companies in Las Vegas during 2009 and 2010 which claimed they could help persons obtain loans and reduce their credit card, student loan, vehicle and mortgage debts, has pleaded not guilty to numerous felony fraud and money laundering charges.

    Marilyn Stewart, 39, of Philadelphia, was arraigned on Wednesday and pleaded not guilty to one count of conspiracy to commit mail and wire fraud, 15 counts of mail fraud, 12 counts of wire fraud, six counts of money laundering, and one count of making a false statement to the FBI.

    Stewart was released on a personal recognizance bond with supervision and conditions pending trial, currently scheduled for Oct. Stewart was indicted in Las Vegas on July 25 and arrested on Aug. 1 in Philadelphia. She was released on a $25,000 personal recognizance bond by a federal magistrate in Philadelphia, and the indictment remained under seal pending Stewart’s initial appearance yesterday before Magistrate Judge Hoffman.

    According to the court records, Stewart and a co-conspirator, Henry Lee Stuckey, 41, of Las Vegas, owned and operated Pureasset Investment Corporation in 2009 and Reviving American Dreams in 2010. Stewart and Stuckey allegedly told customers that the companies could assist them pay down their credit card, vehicle and mortgage debts, make loans, and reduce the principal balance on their mortgages.

    In exchange for this service, the customers were required to pay an advance fee for each debt program they participated in, and were told that they would receive a refund if the debt reduction was successful. Stewart and Stuckey also paid commissions to customers to refer other individuals to the programs.
  • Stewart and Stuckey received over $200,000 in advance fees from approximately 66 victims who lived in various states, including Nevada, and who were primarily recruited by Stuckey, sales staff and customers who were promised commissions to enroll additional customers.

Tuesday, August 28, 2012

Title Insurance Issue Arising From 2-Year Old Rhode Island Law Leads To Logjam For Banksters Looking To Unload Previously Foreclosed Homes

In Providence, Rhode Island, Providence Business News reports:
  • As lenders across the country struggle to sort out confused, sloppy or abusive foreclosure practices, a 2-year-old state mortgage-counseling law in Rhode Island has turned into a stumbling block for many banks trying to move distressed properties off their books.

    Mortgage bankers and real estate attorneys across the state say pending sales of homes that went through foreclosure are being stopped by concerns that the counseling requirement has not been satisfied and the title to the property might not be good.

    The concerns have prompted title-insurance companies, which investigate land records and write one-time policies guaranteeing clean title, to deny insurance for many previously foreclosed properties.

    It is creating a huge backlog of files of houses that are sitting there in foreclosure status, empty, vacant and not being sold or moved off the inventory of lending institutions,” said attorney James Caruolo, who practices real estate law in Warwick. “This leads to problems with the condition of the homes and unpaid taxes. It ends up hurting the city and neighbors because you are not moving it on to a new buyer.”

    The volume and extent of title issues connected with the Rhode Island foreclosure mortgage-counseling law is difficult to estimate. There is no central clearinghouse for pending foreclosure sales or properties caught in legal limbo because of title problems.

    Caruolo said he has been personally involved with a couple of sales that have been held up over the past two months.

    The statute is a mistake and a disaster. … It has not saved any homeowners from losing their homes,” said Joseph Vitullo, underwriting counsel for Stewart Guaranty Title Company in Warwick, who added that the law had been copied badly from federal foreclosure law. “It is so poorly drafted that title companies are erroneously reading many requirements into the statute that have no basis in the law. The result is that hundreds of titles have been rendered unmarketable.”
For more, see Distressed home sales hit snag (Hundreds of foreclosures have been deemed defective by the title-insurance company) (requires subscription).

Maryland Operation Uses 'Special Weapon' To Offer Free Foreclosure Rescue Help; Leads Banksters To Set Up Special Lines To Field Inquiries

In Timonium, Maryland, The Baltimore Sun reports:
  • Inside a small cubicle in Timonium, Jessica Gatton Facini is saving homes. The 26-year-old sorts through foreclosure and lien documents from Baltimore homeowners, identifies a problem and then navigates the bureaucracy of big banks and government agencies in search of a solution.

    It's a challenging task — some homeowners would say impossible — but Facini wields a weapon most Marylanders do not. When she contacts a bank, her caller I.D. says "U.S. Congress."

    As part of a little-known effort, congressional staffers across the country have been calling banks relentlessly to bargain for help for homeowners. In response, some of the country's biggest financial entities, such as Wells Fargo and Bank of America, have even set up special lines to field the congressional staffer members' calls.
  • Facini works for U.S. Rep. C. A. Dutch Ruppersberger, one of several Maryland congressmen who meet with area residents about preventing foreclosures. Sometimes hundreds of people pack the rooms, looking for advice.

    "With this terrible economy, people that need help, they don't know where to go," Ruppersberger says. "They're calling us because they need help."

    Facini says she has worked on nearly 600 cases personally. Rep. Elijah Cummings' office, which coverages a larger swath of Baltimore, has averaged about 2,000 foreclosure cases a year since 2009.
For more, see Congressional staffers fight banks, City Hall over foreclosures ('They would have took my house,' Baltimore homeowner says).

Suit Claims Granite State Couple Had Fully Paid For Policy When BofA Forced Them Into Default By Misapplying Loan Payments To Force Placed Insurance

In Manchester, New Hampshire, the New Hampshire Union Leader reports:
  • Joel and Roberta Bergquist of Rindge allege it was their mortgage servicer’s failure to credit them with buying their own homeowners’ insurance that unleashed a storm that is still unabated.
  • For nearly two years, the Bergquists say, they’ve been trying to win back control of their lives after Bank of America forced its own property insurance on them, confiscated mortgage payments to cover it, then refused to accept their monthly payments.

    The Bergquists, who are in their 60s, say Bank of America’s actions hurt their quilting business, Quilters Treasure, and ruined their ability to get credit. “They’ve destroyed us both personally as well as financially for our own personal names as well as the business,” Roberta Bergquist said in a telephone interview this month.

    The bank also defamed them, the Bergquists said in a lawsuit originally filed in Cheshire Superior Court.

    Attorney Jason A. Czekalski of Rindge, who represents the Bergquists, said in a telephone interview: “These people did nothing wrong. They were making their payments, they were paying their insurance, they had proof of insurance.”

    The bank, based in North Carolina, had the case moved to U.S. District Court in Concord on July 27. Judge Steven J. McAuliffe on Aug. 13 gave the bank until Oct. 1 to file an answer to the complaint.

    The Bergquists are seeking up to $635,000 from the bank, which includes a payoff of their mortgages, damages and attorneys fees, according to the bank’s attorneys: Jennifer Turco Beaudet and Thomas J. Pappas of Primmer Piper Eggleston & Cramer’s Manchester office. The parties are discussing a possible resolution, according to a court filing submitted by the bank.
  • According to the Bergquists’ suit, Bank of America’s mortgage servicing unit in March 2011 seized two monthly payments the Bergquists made toward principal and interest on their primary mortgage for 47 Monadnock Road and placed its own homeowners insurance on the property retroactively. That action violated the Bergquists’ mortgage with the bank, the suit asserted.
For more, see Rindge couple face off with BOA over mortgage (Like the wrath of nature which can wreak havoc in the form of hurricane, tornado or flood, the mortgage and foreclosure crisis has his American families in many forms).

Monday, August 27, 2012

Minn. Counties: 'Fannie, Freddie Stiffed Us, Too!' Another County Hops On Municipal Bandwagon Of Local Gov'ts Accusing Outfits Of Recording Fee Dodge

In Hennepin County, Minnesota, the Pioneer Press reports:
  • The Hennepin County attorney's office has filed a federal lawsuit against mortgage giants Fannie Mae and Freddie Mac, claiming the companies illegally failed to pay required taxes on home sales.

    The class-action suit, filed on behalf of all 87 Minnesota counties, is the latest in a string of similar lawsuits filed by other states against federal government-sponsored Fannie Mae and Freddie Mac in recent weeks.

    Hennepin County Attorney Michael Freeman said at a news conference Friday, Aug. 24, that there are "tens of thousands" of transactions in question, going back six years, and that the lost tax dollars number in the millions.

    "This is solely a question of law," Freeman said after the conference, regarding the companies' claim of tax exemption. "The question is: 'Are Fannie and Freddie exempt from this law?' We know Fannie and Freddie sold houses and we know they didn't pay the tax."

    Specifically, the lawsuit points to Minnesota's deed transfer tax, a tax of 0.33 percent collected on any property sale of more than $500. About 97 percent of the tax funds go to the state and the rest to counties. Hennepin and Ramsey counties were granted, via special legislation, the right to collect an additional sliver of tax dollars for environmental clean-up funds.

    Freeman estimated that Fannie Mae and Freddie Mac own or guarantee about 40 percent of home mortgages in Hennepin County, a number that has ballooned since the foreclosure crisis began in 2005.
  • But Hennepin County contends that "all taxation" does not include excise taxes, which are not direct taxes on real property. Minnesota's deed transfer tax is an excise tax.

    Freeman said at least eight similar lawsuits have been filed in other states over the last two weeks. He said a recent court decision in Michigan set a precedent for these cases.

    The Michigan lawsuit, filed last year by Oakland County, hinged on the same tax exemption argument. A U.S. District judge ruled in favor of Michigan counties in March, saying the mortgage companies were not exempt and therefore required to repay the money. Fannie Mae and Freddie Mac have indicated they plan to appeal.

Nevada AG Indicts Las Vegas Pair In Alleged Scam Purporting To Save Homeowners From Foreclosure With Mortgage Balance Reduction Refinancing Program

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • A Clark County grand jury has indicted two Las Vegas men in a mortgage-lending fraud case in which victims lost thousands of dollars, Nevada Attorney General Catherine Cortez Masto announced Wednesday.

    The grand jury on Aug. 15 returned an 18-count indictment charging Gary Dimattia, 62, and Lawrence Bateman Jr., 36, with multiple felony charges, including mortgage lending fraud and theft. They operated under the firm Financial Link Services.

    Authorities allege the pair made false claims from April 2009 to August 2010, saying they could rescue homeowners looking to refinance their mortgages by negotiating new loans through a balance reduction program. The program, however, did not exist, officials said.

    Dimattia and Bateman collected an upfront fee — often from $3,495 to $3,895 — from victims for the proposed service that was never performed, officials said.

Indiana AG Extends 'Hoosier Hospitality' To Aggrieved Out-Of-State Consumer w/ Civil Suit Targeting In-State Outfit Allegedly Running Loan Mod Racket

In Indianapolis, Indiana, WISH-TV Channel 8 reports:
  • A local business that took $1,200 from an out-of-state consumer and failed to provide a home-loan modification or refund is now facing a state lawsuit.

    Indiana Attorney General Greg Zoeller said the lawsuit was filed against Statewide Federal Assistance Corporation headquartered in Carmel and its owner Ashley Grant.

    The company collected money upfront from a Washington state resident and then failed to obtain the promised home-loan modification, according to a complaint.

    "This is a unique and rare case because it involves an Indiana company taking advantage of an out-of-state homeowner - the opposite of what we regularly investigate," Zoeller said.

    "I believe that's because Hoosier hospitality is not extended to scammers and illegitimate businesses. This lawsuit highlights our ongoing mission to pursue those operating within the state's borders that intentionally deceive consumers."
For more, see Carmel-based foreclosure consultant faces state lawsuit (Zoeller calls filing a 'unique and rare' case).

Sunday, August 26, 2012

More On Modern Day Debtors' Prison

From a post by Professor Eboni Nelson, University of South Carolina School of Law, appearing in Public Citizen's Consumer Law & Policy Blog:
  • In our country, we generally don’t put people in jail for failing to pay private debt, right? Wrong, according to recent articles published in the ABA Journal and the St. Louis Post-Dispatch.

    The articles discuss some Missouri creditors’ practices of petitioning the court to obtain “body attachments,” whereby a debtor can be arrested and held until he/she posts bond or has a court hearing. While it is unclear how widespread the practice is, the fact that it is being used by some creditors, including payday lenders, to incarcerate consumers is troubling.

Greensboro Cops Investigate Local Minister/Self-Proclaimed Homeless Advocate/Ex-Con For Allegedly Running Rent Scams

In Greensboro, North Carolina, Yes! Weekly reports:
  • A minister and self-professed advocate for the homeless has been accused of defrauding at risk individuals for personal gain, including by two people who said he still owes them money in Greensboro.

    Ronnie Lee Chrisp, 48, allegedly posed as a property manager, collecting security deposits and rent from people who trusted him as an advocate. Greensboro police are actively investigating Chrisp, spokesperson Susan Danielsen said.

    Chrisp once worked at Urban Ministry and has recently filed for bankruptcy twice.

    Roger Fitzgerald, who collects disability, was looking for a new place to live after the house he was living in went into foreclosure. A friend put him in touch with Chrisp, whom he recognized from Urban Ministry. After seeing the apartment Chrisp was offering on Huffman Street, Fitzgerald said he provided proof of income showing how much disability assistance he received monthly, then gave a $200 cash deposit and $675 in rent.

    When it came time to move in June 1, Fitzgerald said he couldn’t reach Chrisp. After several excuses from Chrisp, Fitzgerald said he looked up the property owner and found out Chrisp wasn’t authorized to lease the apartment.

    After contacting the police, Fitzgerald said Chrisp began to pay him in small amounts of anywhere from $10 to $100. Fitzgerald filed fraud charges and continues to periodically meet Chrisp to receive small payments, which he said totaled less than $300 of the $875 he is owed.
  • Jenny Hudson, the office manager at the Interactive Resource Center, a homeless day center, said “quite a few” of the homeless people they serve have had problems with Chrisp.

    Unfortunately he thrived on folks that were at the bottom of the barrel,” Hudson said. “He should be ashamed of himself. It really sickens me to know that there are people out there that will take advantage of somebody so quickly and not even think about the crisis that you’re putting them in.”

    Greensboro police are investigating but there are no warrants for his arrest. Danielsen said Chrisp had a lengthy arrest history but that her records didn’t show if he was convicted and said the charges were unrelated to fraud.

    Chrisp’s most recent bankruptcy filing was dismissed Aug. 13. His standing trustee Anita Troxler recommended his Chapter 13 bankruptcy filing be dismissed after “the debtor failed to appear at the meeting of creditors on July 23, 2012, and has defaulted in required plan payments as of July 23, 2012,” court documents show.

    In 1999, Chrisp was released after a nearly four year prison term for common-law robbery, conspiracy and possession of a firearm by a felon. He had previously served time after being convicted for larceny in 1995.

The Death Of Sunny Sheu

Truthout recently ran a story on the late Sunny Sheu, the now-deceased Flushing, Queens homeowner who had his home stolen out from under him by reason of a forged power of attorney, and, in the battle to get it back, found himself murdered.

In his battle to get it back, and despite that the fact that the forgers were prosecuted and pled guilty, a bankster that had wrestled the property away through a wrongful foreclosure was never legally required to give it back and, in fact, was the beneficiary of the actions of a Queens County, New York judge who, according to Sheu, had consistently ruled against him and in favor of the bank, to wrongfully ensure that he never recovered his property.

According to the Truthout story, it wasn't until six months after his death that Sheu's house was somehow mysteriously returned to his estate with the mortgage fully paid.

For the story, see The Death of Sunny Sheu.

For the earlier 3-part series of reports on this story from Black Star News, see: