Elderly Woman Faces The Boot From Home Of 40+ Years After Unwittingly Signing Over Premises To Convicted R/E Scam Artist Assisted By Then-L.A. Cop

In Los Angeles, California, NBC Los Angeles reports:

• A tangled web of fraud allegedly involving an ex-LAPD officer and a self-proclaimed Bishop has ensnared an 89-year-old woman who is losing to foreclosure the Lynwood home she paid off more than two decades ago, police say.



• Vistula Graham bought the three-bedroom ranch house more than 40 years ago, and owned it free and clear after paying off the mortgage in the late nighties, said her daughter, Keta Davis, who grew up there. Now the house is scheduled to be auctioned off. “I want the foreclosure to stop because we’re not at fault,” Davis said.



• The story begins with Leroy Dowd, a 74-year-old, self-proclaimed, charismatic leader of a now-defunct South LA church called Triumph Church of God. “Bishop Dowd is a con artist," Davis said. "Bishop Dowd preyed on my mom.”



• Dowd conned Graham into giving him money and unknowingly sign over the house, Davis said. “He called himself a bishop he called himself a prophet,” she said. Profit off her mother is more like it, she said.



• Her mother "didn’t know what she was signing,” Davis said. Davis claims the Bishop opened a $150,000 credit line with Bank of America using her mother’s information and the house as collateral. Checks signed with her mother’s name were forged, Davis said.



• Dowd also added his name to a Wells Fargo account. Wells Fargo and BofA both determined it was fraud and canceled those loans. But the last loan Dowd allegedly obtained, through IndyMac Bank, for $410,000 is the one in foreclosure.



• Two years ago, Dowd pleaded guilty to one count of grand theft for forging a grant deed and stealing another church member’s house. That victim was 87.



• “Mr. Dowd is a smooth con artist,” said Claremont Detective David DeMetz who has a thick file on Leroy Dowd, from that case. The victim “had no idea what she was signing or that she gave her house away to Mr. Dowd.”



• Sound familiar? Dowd was sentenced to 3 years in prison on that case, but in the case of Vistula Graham, the Los Angeles District Attorney didn’t press charges because the primary witness, Graham, can no longer talk. Davis has offered to testify on behalf of her mother.



• But the story doesn’t end there. Sheriff’s investigators say Leroy Dowd could not have been working alone. Detectives suspect he was working with Darcy Greenfield, who was an LAPD officer at the time and had a real estate business on the side.



• Deed records on the Lynwood house show that in 2007 the house was put in Greenfield’s company name: Greenfield and McCall. Documents show Greenfield and McCall were named beneficiaries of the IndyMac Bank loan, and a received a payout of more than $261,000.



• Keta Davis says the loan is clearly “fraudulent.”(1) “I’d never heard of them,” she said. Davis was stunned to learn that not only did a stranger own her family house, but that the stranger was an LAPD officer. Greenfield was never charged in Graham’s case, but the former LAPD officer was charged last May in a San Bernardino fraud case.



• Greenfield has been charged with ten felony counts all pertaining to real estate fraud, said San Bernardino deputy district attorney Vance Welch who specializes in real estate fraud. Greenfield has pleaded not guilty, and her attorney Grover Porter has not returned numerous calls to his office.



• Greenfield’s connection to Dowd is the subject of a broader investigation by the LAPD and FBI.

For the story, see Elderly Woman Falls Victim to Con, Loses House to Foreclosure (Elderly woman loses home in tangled web involving an ex-LAPD officer and self-proclaimed Bishop).

(1) Unwinding or undoing a scam like this requires the filing of a civil suit in which, among other things, a determination is sought as to whether the deed signed by the unwitting victim is void, or is merely voidable. See Schiavon v. Arnaudo Bros., 84 Cal. App. 4th 374; Cal.Rptr.2d 801 (Cal. App 6th Dist. 2000), for California case law that references the propositions that:

• A deed is void if the grantor's signature is forged or if the grantor is unaware of the nature of what he or she is signing. (Erickson v. Bohne, supra, "130 Cal.App.2d at pp. 555-556.)
  
  A voidable deed, on the other hand, is one where the grantor is aware of what he or she is executing, but has been induced to do so through fraudulent misrepresentations. (Fallon v. Triangle Management Services, Inc. (1985) 169 Cal.App.3d 1103, 1106 [215 Cal.Rptr. 748].) The same rules apply to the reconveyance of the property interest under a deed of trust as to the conveyance of property by grant deed. (Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 43 [198 Cal.Rptr. 418] (Wutzke).)

If the deed is found to be void, a subsequent bona fide purchaser for value is not protected by the state recording statutes, in which case his/her interest is a nullity. If the deed is found to be voidable, a subsequent conveyance to a bona fide purchaser will be recognized as valid. Fallon v. Triangle Management Services, Inc. (1985) 169 Cal.App.3d 1103 [215 Cal.Rptr. 748]:

• A deed obtained as a result of fraud committed against the grantor or by use of undue influence by the grantee may be rescinded by the grantor. (Rogers v. Warden (1942) 20 Cal.2d 286 [125 P.2d 7].) If a grantor is aware that the instrument he is executing is a deed and that it will convey his title, but is induced to sign and deliver by fraudulent misrepresentations or undue influence, the deed is voidable and can be relied upon and enforced by a bona fide purchaser. (Peterson v. Peterson (1946) 74 Cal.App.2d 312 [168 P.2d 474]; Conklin v. Benson (1911) 159 Cal. 785 [116 P. 34].)

• In Conn. Life Ins. Co. v. McCormick (1873) 45 Cal. 580, the Supreme Court held a deed voidable, not void, if obtained as a result of undue influence or compulsion. Such a deed "stands on the same footing as a deed procured by fraud." The court concluded that a deed or mortgage procured by duress cannot be set aside as against a party purchasing in ignorance of the facts constituting the duress, that is to say as against a purchaser for a valuable consideration and without notice of the duress. Until a voidable deed is declared void it is fully operative. (Frink v. Roe (1886) 70 Cal. 296 [11 P. 820].) Civil Code section 1107 provides: "Every grant of an estate in real property is conclusive against the grantor, also against everyone subsequently claiming under him, except a purchaser or incumbrancer who in good faith and for a valuable consideration acquires a title or lien by an instrument that is first duly recorded."

For more, see Unwinding An Abusive Or Fraudulent Real Estate Transaction? Determining If The Deed Is Void, Or Merely Voidable.

Go here for more on void and voidable deeds.

Sale Leaseback Peddler Squeezed By Norfolk Feds 'Scores' 54 Month Stay In Federal Prison After Copping Plea For Running Home Equity Stripping Racket

From the Office of the U.S. Attorney (Norfolk, Virginia):

• Kathleen Harps, 51, of Chesapeake, VA, was sentenced [] in Norfolk federal court to 54 months in prison for operating a foreclosure rescue mortgage fraud scheme. [...] Harps previously pled guilty on August 23, 2011.



• According to court documents, during 2006 Harps owned and operated the now defunct Hampton Roads businesses, New Beginnings Group, LLC, and IMAK Group, LLC, which specialized in “foreclosure rescue.”



• Through these businesses, Harps and others solicited homeowners in financial distress and facing foreclosure, to agree to sell their homes to Harps or straw buyers working with her.



• Harps promised the homeowners that, during a one year period after the sale, they could remain in their homes without having to pay the mortgage, while simultaneously putting their financial affairs back in order, so that they could buy back their homes at the end of the year.



• This, however, failed to occur. Instead, court records show that Harps and her straw buyers made assorted false statements to fraudulently obtain mortgage loans, upon which they later defaulted.



• As a result, foreclosures soon followed and the homeowners lost both their homes and substantial sums of homeowner equity, which was siphoned out of the closing transactions and paid to Harps’ businesses.

For the U.S. Attorney press release, see Business Owner Sentenced to Prison for Foreclosure Rescue Scheme.

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

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Minneapolis Feds Pinch Two In Alleged Sale Leaseback Rescue Peddling Scheme, Stripping Home Equity From Dozens Of Homeowners Seeking Financial Help

In Minneapolis, Minnesota, the Star Tribune reports:

• Two Bloomington residents were arraigned Thursday in Minneapolis on charges that they ran an $8 million equity-stripping scheme under the guise of a nonprofit that claimed to help troubled homeowners avoid foreclosure.



• Richard Scott Spady, 38, and Michele Denise Sengstock, 48, were each charged Jan. 19 in a sealed indictment with conspiracy, fraud and money laundering involving transactions that took place from 2005 through October 2007.



• Spady owned and operated Unified Home Solutions, which he promoted as a nonprofit but ran as a for-profit entity, the indictment says. He also owned and operated American Mortgage Lenders, a mortgage brokerage that facilitated the transactions. And Sengstock owned and operated a company called MLAA Holdings, which also played a role, the government says.



• According to the indictment, Spady told homeowners facing foreclosure that Unified Home Solutions offered a rescue program backed by investors who would buy their homes and sell them back after they'd regained their financial footing in a year or two.



• The homeowners could live in the homes and pay rent and upkeep in the meantime. Some homeowners only learned that their homes were being sold when they attended the closing.(1)



• The indictment says mortgages were obtained with fraudulent financial information, a common pattern in such schemes. Investors collected a "risk fee," generally 3 percent of the purchase price, but most of the equity in the home went to Unified Home Solutions and American Mortgage Lenders in the form of "undisclosed kickbacks," according to an affidavit filed in the case by IRS criminal investigator Angela Johnson. She said Spady and his companies facilitated the sale of about 79 properties; fewer than five avoided foreclosure.



• Spady closed the two companies in 2008 and opened new firms that he's believed to be operating, Johnson said. They include New Start Homes, Start to Finish Realty, RVenture Inc. and RInvestment I. None of those firms was mentioned in the indictment, however.

For the story, see Bloomington duo accused of mortgage fraud (Indictment says they preyed on homeowners facing foreclosure and stripped away the remaining equity).

For the U.S. Attorney press release, see Two Bloomington residents indicted in mortgage fraud scam.

For the indictment, see U.S. v. Spady, et ano.

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

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

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

In Kansas City, Missouri, the Kansas City Business Journal reports:

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



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



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



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

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

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

Sacramento Feds Squeeze Another Guilty Plea Out Of Real Estate Investors Suspected Of Bid Rigging At Foreclosure Sale Public Auctions

From the Office of the U.S. Attorney (Sacramento, California):

• [K]enneth A. Swanger, 41, of Woodland, pleaded guilty to conspiring with a group of real estate speculators who agreed not to bid against each other at certain public real estate foreclosure auctions in San Joaquin County.(1) The primary purpose of the conspiracy was to suppress and restrain competition and to obtain selected real estate offered at San Joaquin County public foreclosure auctions at noncompetitive prices, the department said in court papers.



• According to the court documents, after the conspirators’ designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay.



• The conspirator who bid the highest amount at the end of the private auction won the property. The difference between the price at the public auction and that at the second auction was the group’s illicit profit. The illicit profit was divided among the conspirators in payoffs. According to his plea agreement, Swanger participated in the scheme beginning in or about June 2009 until in or about October 2009.



• To date, nine individuals, including Swanger, have pleaded guilty in U.S. District Court for the Eastern District of California in connection with the investigation. They are: Anthony B. Ghio; John R. Vanzetti; Theodore B. Hutz; Richard W. Northcutt; Yama Marifat; Gregory L. Jackson; Walter Daniel Olmstead; and Robert Rose. In addition, four other investors, Wiley C. Chandler, Andrew B. Katakis, Donald M. Parker and Anthony B. Joachim, and one auctioneer, W. Theodore Longley, were indicted by a federal grand jury in Sacramento on Dec. 7, 2011.

For the U.S. Attorney press release, see Woodland Man Pleads Guilty To Bid Rigging And Fraud At San Joaquin County Public Auctions.

(1) Swanger pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either of those amounts is greater than the statutory maximum fine. Swanger also pleaded guilty to conspiracy to commit mail fraud, which carries a maximum sentence of 30 years in prison and a $1 million fine.

Lack Of Standing Sinks Effort To Squeeze Cash Out Of Consumer; 'Show Me State' High Court: Collector Failed To Show Proper Evidence Of Debt Assignment

Lexology reports:

• A recent Missouri decision in a credit card collection case illustrates the kind of documentation attacks that are increasingly being lodged against the non-mortgage consumer lending industry.



• In its January 17, 2012, opinion in Cach, LLC v. Askew, the Missouri Supreme Court ruled that a debt collector was not entitled to judgment in its favor because the collector had not properly established that it had been assigned the debt in question. Following the card issuer’s acquisition by another bank, the consumer’s credit card account was assigned to a purchaser that subsequently assigned the account to the debt collector.



• At trial, the collector submitted a document purporting to be a bill of sale transferring the account from the acquirer bank to the purchaser.



• The Missouri Supreme Court held that the trial court erred by admitting the bill of sale into evidence based on testimony of the debt collector’s records custodian. More specifically, the court found that the custodian was not a “qualified witness” to lay the foundation for the document to qualify for the business records exception to the hearsay rule.



• According to the court, the custodian failed to show that she had any personal knowledge of how or when the bill of sale was prepared. Without the bill of sale, the debt collector had no competent evidence of the first assignment and therefore failed to show it had standing to bring the collection action, the court found.

For the story, see Missouri High Court scuttles credit card collection action due to problem documentation (may require subscription; if no subscription, TRY HERE - then click appropriate link for the story).

For the ruling, see Cach, LLC v. Askew, No. SC 91780 (Mo. January 17, 2012) (en banc).

Reluctant Banksters Refuse To Correct Loan Servicing Abuses, Resulting In Continued Harrassment Of Homeowners With Foreclosure Threats

An excerpt from a recent story from The Center for Public Integrity's iWatch News:

• Since 2007, nearly 9 million homes have been lost to foreclosure, according to data from RealtyTrac. About 4 million are currently in default on or in some stage of foreclosure. Some of these homeowners saw their payments skyrocket, some lost their jobs, and some bought a more expensive home than they could afford.



• But many, [...], say that their foreclosures or defaults were triggered by an error made by the mortgage servicing company. Common errors include late fees generated through questionable accounting and imposed without notice, excessive charges for property inspections and maintenance, and inflated or unnecessary attorneys’ fees.



• Many homeowners who have tried to correct what seem to be simple accounting mistakes say that the servicers — often, an arm of a major bank — are unable or unwilling to help them resolve even the most basic problems.



• “Every time I would call I’d get a different person,” said William Allen, a retiree near Baltimore who is fighting a Bank of America foreclosure. “I worked on it nearly a year and it didn’t do me any good.”



• Most banks and independent loan servicers now say that they have cleared the decks on systemic problems that led to the errors and that they now make it much easier for homeowners to easily resolve their problems with bank representatives.

***

• But veterans of the foreclosure wars tell a different story. More than four years after reports of these kinds of errors began bubbling to the surface, homeowners are still fighting to fix servicer mistake that threaten their homes, they say.



• “Almost all loans in default have something wrong with them,” said Tara Twomey, a lawyer at the National Consumer Law Center who recently completed a study of the servicing industry.

***

• So why are things such a mess? Much of the blame can be directed at a foreclosure machine created during the housing boom to deal with the mad rush of mortgage applications. The automated system prizes efficiency over customer service, makes frequent errors in the administration of troubled home loans, and, according to one study, pays servicers more for foreclosures than loan modifications.



• “They don’t want to spend enough money to not make mistakes,” said Kurt Eggert, a law professor at Chapman University, who testified about servicing errors at a Senate hearing in 2010 and has written extensively about the industry.

***

• [R]ather than hire and train enough employees to personally manage troubled loans in a way that minimizes foreclosures and encourages loan modifications, servicers entrusted management of troubled loans to old computer software that legal experts say isn’t up to the task.



• The end result is a system with little accountability and a whole lot of angry homeowners. It is impossible to know how many loans have been subject to wrongful fees and accounting errors, but foreclosure war veterans say the number is high.



• Jay Patterson, a forensic accountant who has examined hundreds of mortgage loans in bankruptcy or foreclosure, said that “95 percent of these loans contain some kind of mistake,” from an unnecessary $15 late fee to thousands of dollars in fees and charges stemming from a single mistake that snowballs into a wrongful foreclosure.

For more, see Raging against the foreclosure machine.

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

Bloomberg reports:

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



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

***

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



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



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



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



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

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

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

From the Office of the Southern Essex (Massachusetts) District Register of Deeds John O’Brien:

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



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



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

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

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

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

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

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

In West Palm Beach, Florida, The Palm Beach Post reports:

• Florida Attorney General Pam Bondi stood by the 50-state attorneys general settlement with the nation's biggest banks on Thursday as California and Delaware formally rejected the proposal she helped negotiate.



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



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



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

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

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

In Sacramento, California, The Sacramento Bee reports:

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



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



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

For more, see California attorney general rejects foreclosure settlement.

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

In Las Vegas, Nevada, KTVN-TV Channel 2 reports:

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



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



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



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

Source: Supreme Court Ruling Strengthens Foreclosure Mediation.

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

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

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

Bloomberg reports:

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



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



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



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

***

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



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

***

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



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

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

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

• I’ll pepper in my thoughts on the State of the Union Address throughout the day, but I would be remiss if I didn’t start with the announcement of a Unit on Mortgage Origination and Securitization Abuses (UMOSA) to investigate bank practices during the financial crisis.
  
  The unit will be co-chaired by Eric Schneiderman, the New York Attorney General who bravely waged an often lonely battle to stop a misguided settlement on foreclosure fraud.
  
  But “co-chair” is the operative word here, and it suggests that the entire maneuver was created to grease the wheels for the pre-arranged settlement, while turning this investigatory arm into nothing so much as regulatory theater.

21 Residents Driven From Homes Into Frigid Cold As Frozen, Bursting Water Pipes, Electricity Short Out Spell Shut Down For Building In Foreclosure

In Cicero, Illinois, NBC Chicago Channel 5 reports:

• The town of Cicero stepped in Friday after 21 residents, including 12 children, were displaced from their home because of bursting water pipes amid a foreclosure battle.



• Ahead of the coldest morning of the year, several frozen pipes burst Thursday night in the building in the 5100 block of 30th Street, causing the electricity to short out. For the past year, the residents have been caught in foreclosure proceedings between the building's owner and the city.



• The owner, who city officials said couldn't be found Friday, is accused of owing thousands in water bills to the city. The town of Cicero paid for hotel rooms for the displaced families. Because of the foreclosure, it's not clear who will pay for repairs in the building.



• One thing's for sure. The residents can't go home right now. A community service car blocked the building, which has been closed by the town.



• The fire department said the building is currently a safety hazard for residents.

Source: 21 Cicero Residents Displaced on Frigid Day (The town stepped in to pay for hotel rooms).

Texas Man Files Suit To Dodge Boot From Home Owned By Another That He's Lived In, Maintained For 35 Years

In Jefferson County, Texas, The Southeast Texas Record reports:

• A Nome man who has lived on a Jefferson County property for 35 years is asking the court to overturn a woman's eviction orders.



• Charles Malveaux filed a lawsuit Jan. 5 in Jefferson County District Court against Mary E. Jackson. In his complaint, Malveaux claims he has lived on and maintained a property in Nome for more than 35 years.



• However, Jackson is now attempting to evict him from the property, claiming she was given 100 percent ownership of it following the death of Sarah Parker, according to the complaint.



• Malveaux maintains that Parker gave him permission to occupy the land and says he should be granted the right to remain on the property because of the work he has performed for the past 35 years.

For the story, see Nome man sues property owner to stop eviction.

L.A. City Tags Scofflaw Landlord For $322K In Relo Funds For Dozens Of Low-Income Tenants To Assist In Forced Move From 3-Unit Health/Safety/Fire Trap

In Los Angeles, California, the Los Angeles Times reports:

• The Los Angeles City Council voted [] to provide up to $322,000 in relocation money to dozens of low-income tenants who must move from a South Los Angeles apartment building deemed unsafe by city inspectors.



• Tenants were given eviction notices last month after housing officials concluded that owner John Callaghan had illegally converted what was supposed to have been a three-unit apartment building [...] into as many as 44 separate living spaces — a warren of narrow hallways; tiny, shared bathrooms; and communal kitchens, much of it laced with unpermitted electrical and plumbing work.

***

• The payments, which will range from $7,300 to $18,300, will come from a fund established by the Housing Department for tenants who must move out because of hazardous conditions. Those who receive the maximum must have lived in the apartment for more than three years and qualify as low income.



• The payments are designed to cover the first month's rent, a rental deposit, moving costs and the likelihood that tenants will be charged a higher rent at their next apartment, said Sonia Pflaster, a lawyer with the Inner City Law Center.(1) Some renters have been paying as little as $350 per month and are finding that similarly sized apartments are now going for $700 to $900, said Pflaster, who represents 35 tenants at the 49th Street property.



• Although the city's action goes a long way toward helping the tenants, council members still want to know why it took inspectors so long to figure out what had happened at the building — and how many other similar properties might exist.

***

• In recent weeks, city officials have required that the owner pay for an around-the-clock security guard on the property to make sure the unpermitted electrical work doesn't spark a fire.

For the story, see Tenants get relocation funds after eviction from illegal units (The l.A. City Council approves up to $322,000 for dozens of people who were living in an illegally remodeled apartment building. Lawmakers are still trying to determine what went wrong with inspections).

(1) Headquartered on Skid Row, Inner City Law Center provides free legal representation and social service advocacy in Los Angeles County to over 2,000 homeless and working poor clients each year.

F'closures Also Affect Dearly Departed; Loved Ones' Final Resting Place Anything But Peaceful As Pending Sale Of Troubled Cemetary Worries Families

In Madison, Indiana, WDRB-TV Channel 41 reports:

• Grandview Memorial Gardens Cemetery gained attention for water-logged graves and will now go to the highest bidder. The auction is just the latest problem for Grandview, that has many folks wondering what will happen to all of their loved ones.



• Pictures are all Hazel Wilkerson has of her late husband Fred who died October 22nd. "It will be three months Sunday," says Wilkerson, a secretary at the Madison Airport. She worked alongside her husband, a pilot, for many years. "We'd been married 45 years when he passed away."



• He is buried next to his mother at Grandview. Hazel already has her plot next to Fred. But their final resting place is anything put peaceful. "I just wonder what's going to happen," wonders Wilkerson.



• She's wondering because next month the cemetery is going on the auctioning block. Grandview's history is bogged down in controversy. Bodies were exhumed several years ago to fix problems with water logged graves. The actual owner is still in dispute with lawsuits dating back to 2006.



• "I just don't know. That's up to a judge to decide," says Jim Holt. He thought he sold the cemetery years ago to Keith Mefford and wants nothing to do with it now as it goes up for auction. "When Mefford stopped making his payments to me, then I stopped making the payments to the bank."



• The bank then filed foreclosure against the cemetery. Holt says he knows of two interested parties.



• Hazel Wilkerson just hopes the highest bidder holds this sacred ground in high regard. "Somebody's going have to take it over that's going to take care of it cause it's not really been taken care of like it should be." "The sheriff plans to auction off the cemetery on February 23rd.

Source: Troubled Madison cemetery will go to the highest bidder.

Suit: Judgment Debtor Played 'Keep-Away' With Creditor By Fraudulently Transferring Real Estate Ownership To Complicit Mom To Avoid Collection Efforts

In Galveston, Texas, The Southeast Texas Record reports:

• Claiming fellow Galvestonians Daniel and Rita Higgins committed a fraudulent property transfer, Leslie and Sandra Bartosh have a filed a lawsuit. The lawsuit, filed Dec. 30 in Galveston County District Court, accuses Daniel P. Higgins of turning two pieces of real property on the farther West End of Galveston over to his mother "with the intent to hinder, delay or defraud the plaintiffs."



• Recent court documents explain that the Bartoshes pursued legal action against the younger Higgins in 2009 and eventually won a settlement in the amount of $67,704 on June 14. "The plaintiffs allege that the foregoing judgment was a valid and subsisting judgment and that the plaintiffs obtained an abstract of judgment," the original petition says.



• The suit shows the properties in question had a fair market value that was in excess of $67,704 when Danny P. Higgins transferred them by way of quitclaim deed to Rita Higgins on Oct. 25.



• According to the complainants, said transfer occurred to prevent the defendant transferor's creditors and the plaintiffs from obtaining collection of the claim.



• They additionally claim Rita Higgins had notice of her son's alleged actions and was aware he was experiencing "serious financial difficulty" at the time of the transfer in question. "The defendant Rita Higgins did not pay adequate or any consideration for the properties," the suit says.

Source: Suit claims property transfer was fraudulent.

Property Owner Sues Sibling/Co-Owner Over Alleged Failure To Cough Up Her Share Of Real Estate Tax Bill; Asks Judge To Order Forced Sale Of Land

In Jefferson County, Texas, The Southeast Texas Record reports:

• A woman claims her sister failed to pay her half of the property taxes on a piece of Jefferson County real estate the siblings jointly owned. As a result, the property has settled into disrepair, according to recently filed court documents.



• Susan Manuel filed a lawsuit Dec. 30 in Jefferson County District Court against Gwendolyn Lejunie. In her complaint, Manuel alleges she and Lejunie owned the property at 2010 Seventh St. in Port Neches. They inherited the land from their mother, Bonita Manuel, on Aug. 1, 2005, according to the complaint.



• Despite her 50 percent share of the property, however, Lejunie has refused to pay property taxes on it, the suit states. She has also failed to keep the property in a "liveable and marketable" condition, the complaint says.



• Manuel wants the court to order sale of the property. She wants to receive 60 percent of the proceeds as compensation for the loss of market value of the property.

Source: Siblings in dispute over property taxes.

Federal Judge 'Green-Lights' Embattled Foreclosure Sweatshop Operator's Lawsuit Alleging BofA Stiffed Him Out Of $11M In Legal Fees

In Miami, Florida, Courthouse News Service reports:

• A Plantation, Fla., law firm can seek $11 million in unpaid legal fees for its work on Bank of America foreclosure cases, a federal judge ruled.



• The Law Offices of David J. Stern says it was the legal counsel for Bank of America's Florida residential foreclosure cases across the state, employing some 1,200 attorneys and support staff at its peak. [...] Stern's 11-count complaint claims that Bank of America and its corporate parent owe more than $1.9 million, while BAC Home Loans Servicing owes more than $8.7 million.

For more, see Bank of America May Owe Lawyers $11 Million.

For the order denying BofA's Motion to Dismiss, see The Law Offices of David J. Stern, P.A. v. Bank of America Corp. et al.

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

In Caldwell County, North Carolina, WSOC-TV Channel 9 reports:

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

***

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



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



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



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



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

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

Insurance Squeeze Continues For Florida Homeowners; 'Backdoor' Rate Increases, Industry Campaign Cash To Business-Friendly Governor Pinch Pocketbooks

In West Palm Beach, Florida, The Palm Beach Post reports:

• Linda Sapp's reaction to her insurance bill was sticker shock: The annual premium doubled to $4,800, adding hundreds to her monthly mortgage payment. Her first thought: "There's no way I can afford my house."

***

• In Boynton Beach, retiree Thomas Spatafora is on a fixed income and said he has never filed a property claim. But annual premium increases just keep on coming from the state's insurer of last resort, Citizens. "How the hell much is enough?" Spatafora said. "They keep increasing the cotton-picking premiums. Are they going to price us out of existence so we can't afford it?"



• Affordability is not as popular a word as it once was in Tallahassee, where the emphasis these days is on encouraging insurance rates to rise. That is particularly true with Citizens [Florida's property/casualty insurer of last resort], the state's biggest carrier with 1.5 million policyholders.



• "The true cost of living close to the coast, where hurricanes are most destructive, is much higher than Citizens policyholders have been paying," said Lane Wright, spokesman for Gov. Rick Scott. "That's because the rates have been held artificially low by politicians who've postponed the inevitable and kicked this can down the road. [...]"



• Insurance interests gave more than $94,000 to Scott's campaign in the 2010 cycle, among the four industries most generous to him, according to online data compiled by the National Institute on Money in State Politics.



• Private insurers stand to benefit as Citizens' bills climb, influencing the market as a whole. Scott wants legislators to consider letting Citizens raise rates beyond the 10 percent a year currently allowed.



• For many customers, bigger hikes are already coming through what consumer advocates characterize as backdoor rate increases.



• One way to boost premiums is to raise the projected cost of rebuilding homes, though existing home prices in many parts of Florida continue to fall and the construction industry has struggled. Software that Citizens uses to determine replacement costs is under review in South Florida and Tampa this month following consumer complaints.



• Then there are reinspections that overwhelmingly tend to find homeowners no longer qualify for storm-resistant features that bring discounts, despite protests from homeowners they followed the rules the state set and later repeatedly changed. Reinspections raised Citizens premiums an average of 24 percent, or $718 a year, for 63 percent of 78,000 homes visited through Nov. 30. In 2012, reinspections are scheduled for 209,000 homes - adding $94 million to premiums at 130,000 homes statewide if trends hold.

For more, see Wind-less storm brews over skyrocketing premiums.

NM Homeowner Seeks State High Court Review Of Subprime Refinance Involving No Appriasal, Income Check That Left Couple With Unaffordable Payments

In Santa Fe, New Mexico, NewsOK reports:

• A Chimayo, N.M., couple remain in their home into the new year as their 2007 default on their refinanced mortgage wends its way to the New Mexico Supreme Court.



• Their attorney, Joshua Simms of Albuquerque, N.M., said Joseph and Mary Romero continue to make minimal payments to the Bank of New York to stay in their family home until the legal fight is concluded.



• They haven't had much success so far in the court system with their case, which has gotten the support of such groups as the Santa Fe Neighborhood Law Center, Somos Un Pueblo Unido and the Roman Catholic Archdiocese of Santa Fe.



• The law center, in a court brief, called the Romeros' loan “a wild home mortgage refinancing loan based on no appraisal and no income verification.” The groups supporting the Romeros hope the case can lead to more support from the court system for those enticed into risky home mortgages.

For more, see New Mexico Supreme Court will rule on foreclosure case (A Chimayo, N.M., couple remain in their home into the new year as their 2007 default on their refinanced mortgage wends its way to the New Mexico Supreme Court).

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

The New York Times reports:

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



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

***

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



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



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

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

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

In Parker, Colorado, KMGH-TV Channel 7 reports:

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

***

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


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



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

***

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

***

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



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



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



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



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

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

Bay State Regulator Strips Sticky-Fingered Broker Of Real Estate License; Writing Rubber Check, Failure To Return Buyer's Deposit Among Dirty Deeds

In Marblehead, Massachusetts, The Salem News reports:

• The state board that oversees real estate brokers has revoked the license of a Marblehead man who allegedly failed to turn over deposits to a seller and a buyer, as well as a commission owed to another broker, in real estate transactions he handled in 2010.



• Barry A. Rosenberg's license was revoked effective Oct. 8, the Board of Registration of Real Estate Brokers and Salespersons announced in a press release yesterday, after Rosenberg failed to respond to requests for information or documentation concerning the complaints.



• According to findings issued by the board, Rosenberg handled the sale of a property on Sayward Street in Gloucester, as well as two properties in Chelsea, during the summer and fall of 2010.



• The board found that in the first Chelsea transaction, Rosenberg sent the seller's attorney a check for $9,665 that later bounced.



• He then allegedly handled the sale of the Gloucester property but failed to pay a commission to another broker that was spelled out under the Multiple Listing Service agreement.



• In October 2010, he was given a deposit to put in escrow by the buyer of another Chelsea property, but when the seller backed out of the deal and took the property off the market, Rosenberg failed to return the $10,600 deposit to the potential buyer.

For more, see Marblehead real estate broker loses license.

Pair Cop Guilty Pleas in Scams Involving Use Of Forged Mortgage Satisfactions, Rent Skimming To Screw Over Banks, Landlords

From the Office of the U.S. Attorney (District of Columbia):

• The owners of a property management company, Bryan W. Talbott, 48, and Chester D. Ransom, Jr., 44, have pleaded guilty to defrauding their clients, mortgage lenders, and the government out of more than $2.8 million.

***

• According to the government’s evidence, Talbott was the president and Ransom was the vice president of a property management company located in Washington, D.C., that operated under multiple names, including Esquire LLC, Federal City Mowbray, and Private Properties Inc. (collectively referred to as “Esquire”). The defendants also lived together at a residence on North Portal Drive NW, Washington, D.C.



• From 2004 to the present, the defendants engaged in three separate fraudulent schemes, resulting in more than $2.8 million in losses to the victims.



• As part of [one of] their fraudulent scheme[s], the defendants frequently collected rental payments from tenants but did not pay the bills for the properties, despite falsely representing to the property owners that the bills had been paid. Instead, the defendants used these funds for their own benefit. In addition, the defendants also sent forged bank statements to some of their clients, misstating the balances in their clients’ accounts.



• Through this fraudulent scheme, the defendants defrauded at least 54 clients out of a total of $1,269,278.



• [In another fraudulent scheme,] On June 30, 2004, Ransom purchased the property on North Portal Drive NW for $975,000, financing the purchase, in part, with two loans in the total amount of $731,250 from WMC Mortgage Corp. , a mortgage lender. Ransom executed two deeds of trust on the property, granting WMC a security interest in the property.



• On December 29, 2005, Ransom filed with the District of Columbia Recorder of Deeds two forged Certificates of Satisfaction, purporting to release the WMC liens on the Portal property.



• Then, on January 13, 2006, Ransom sold the Portal property to Talbott for $1,110,000. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan in the amount of $750,000 from Fremont Investment and Loan. Talbott executed a deed of trust on the property, granting Fremont a security interest in the property. Ransom received a check in the amount of $515,034 from the settlement.



• Less than a month later, on February 2, 2006, Ransom again “sold” the Portal property to Talbott, this time for $1,250,000, despite the fact that Talbott was already the legal owner.



• The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan of $890,000 from First National Bank of Arizona. Talbott executed a deed of trust on the property, granting First National Bank of Arizona a security interest in the property. Ransom received a check in the amount of $801,280 from the settlement.

For the U.S. Attorney press release, see Owners of Property Management Company Plead Guilty To Defrauding Clients, Mortgage Lenders and Government (Scheme Involved More Than $2.8 Million).

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

From the Office of the Illinois Attorney General:

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



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



• Jackson was charged with one count of organizing a continuing financial crimes enterprise, four counts of financial institution fraud and three counts of theft by deception, one count of criminal mortgage rescue fraud, one count of forgery by delivery, and one count of false impersonation of an attorney. King was charged with two counts of financial institution fraud and one count of forgery by delivery.

***

• Jackson and King are facing six to 30 years and four to 15 years in the Illinois Department of Corrections, respectively.



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



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



• Madigan alleges that Jackson used the sale-leaseback scheme to transfer title from homeowners to straw buyers for the purpose of stripping the remaining equity from the home. Individual homeowners lost from $70,000 to $150,000 of equity in their homes as a result of the schemes.(2)

For the Illinois AG press release, see Madigan: Two Chicago Con Artists Arrested In Criminal Mortgage Scheme.

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

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

(2) At one time, many in state and local law enforcement (particularly those with untrained eyes and who were otherwise clueless in handling 'semi-sophisticated' white collar crimes - for some, anything more complex than investigating a 'rubber check' case is 'semi-sophisticated') once passed on prosecuting these sale leaseback equity stripping ripoffs that under the flimsy pretense that these cases were merely 'civil matters.'

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

• Sale Leaseback Equity Stripping Peddler 'Scores' Guilty Verdict In Equity Stripping Ripoff; Grand Larceny, Scheme To Defraud, Conspiracy, Says Jury (Prosecuted by the Westchester County, NY District Attorney, a scammer who swindled four local families out of their homes was convicted after a jury trial of four felony counts of second-degree grand larceny and one each of first-degree scheme to defraud and fourth-degree conspiracy),



• Convicted Foreclosure Rescue Scammer Could Face Life Sentence On New Charges In Alleged Sale Leaseback, Equity Stripping Ripoff That Fleeced 5 Victims (Los Angeles District Attorney charged alleged scammer with 23 felonies — including theft from the elderly, identity theft and real estate fraud — for allegedly tricking five people into unknowingly granting him title to their homes, and charged him under California's 'three-strikes' law),



• Foreclosure Rescue Scam Mastermind Found Guilty Of Dozens Of Felonies; Ran Upfront Fee Land Grant Scheme, Sale Leaseback Rent Skimming Racket (After an eight-week trial, and through the efforts of the San Diego District Attorney, a scammer was found guilty of 160 counts of conspiracy to commit grand theft, grand theft, rent skimming and deceitful practices by a foreclosure consultant),



• Delaware AG Levels 21-Count Indictment Against Alleged Foreclosure Rescue Racket Using "Divine" Cover In Sale Leaseback, Equity Stripping Ripoff (The Delaware Attorney General obtained an indictment alleging that the scammer ran a criminal enterprise involving theft, money laundering, and forgery in which he preyed on vulnerable homeowners who faced imminent foreclosure),



• Central Florida Sale Leaseback Peddler Linked To 50 Ripoff Deals Gets 10 Years On Racketeering Charge; Targeted Cash-Strapped, High-Equity Homeowners (A joint prosecution by the Orange County, Florida and the state attorney general (under former AG Bill McCollum) led to the scammer copping a plea to a single count of felony racketeering after initially being charged with 12 first-degree felony counts, including racketeering, conspiracy to commit racketeering and numerous counts of grand theft),



• NY AG Squeezes Guilty Pleas From 4 For Roles In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket; 1 Awaits Trial On 23 Felony Counts (After a New York Attorney General prosecution, four employees of a sale leaseback racket pleaded guilty in Albany County to felony charges that included grand larceny, scheme to defraud and falsifying business records, after the Attorney General's Office filed criminal complaints),



• Queens DA Bags Seventeen Suspects In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket (Queens County, NY DA (joined in the probe by the office of the New York State Banking Department and the New York State Police) variously charged the defendants with first- and second-degree grand larceny, first degree criminal possession of stolen property, first-degree money laundering, first-degree identity theft, second-degree forgery, second-degree criminal possession of a forged instrument, first-degree falsifying business records, first-degree offering a false instrument for filing, first-degree scheme to defraud and fourth-degree criminal facilitation.).

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

From the Office of the U.S. Attorney (Chicago, Illinois):

• A former Chicago lawyer was sentenced to 15 years in federal prison for engaging in mortgage and bankruptcy fraud schemes involving a so-called “mortgage bailout” program that purported to “rescue” financially distressed homeowners but instead tricked victims into relinquishing title to their homes and declaring bankruptcy.



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



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



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



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



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



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



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



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



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



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

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

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

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

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

In Norfolk, Virginia, The Virginian Pilot reports:

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

***

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



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



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



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



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



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



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

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

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

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

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

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

In Mobile, Alabama, the Press Register reports:

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



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



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

***

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



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



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

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

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

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

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

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

Brooklyn Judge Voids Foreclosure Forbearance Agreement; Sneaky Bankster Slicked Unrepresented Homeowner Into Signing One-Sided Deal

In Brooklyn, New York, Reuters reports:

• A Brooklyn judge has voided what she deemed an "unconscionable" forbearance agreement that required a mortgage holder to drop his legal defense against foreclosure proceedings in exchange for reduced payments that the judge said provided him "little, if any benefit."



• In a ruling dated January 6, Kings County Supreme Court Justice Marsha Steinhardt slammed the forbearance agreement struck between Brooklyn homeowner Jaime Arroyo and the company that bought his mortgage, Rossrock Fund II LP, saying the company and its counsel took advantage of the unrepresented homeowner to draft a one-sided deal.

***

• "An examination of the terms of the agreement and the circumstances of its execution reveal a transaction which is ostensibly designed to ease the foreclosure process in favor of the plaintiff while affording virtually no benefit to Arroyo," Steinhardt wrote. "Under these circumstances, the court finds that the subject agreement is unconscionable and employs its equitable powers to rescind the agreement."



• Sara Manaugh, a staff attorney in the Foreclosure Prevention Project at South Brooklyn Legal Services,(1) said she had rarely encountered an agreement "so plainly calculated to divest the homeowner or his or her home."

For more, see Brooklyn judge rescinds unfair forebearance deal.

For the court ruling, see Rossrock Fund II LP v Arroyo, 2012 NY Slip Op 50048(U) (NY Sup. Ct. Kings Cty., January 9, 2012).

(1) South Brooklyn Legal Services is a non-profit law firm that provides a range of legal advocacy and information for low-income people in Brooklyn. SBLS is a program of Legal Services NYC.

Mich. Woman Gets Up To 12 Months, Ordered To Pay $36K+ Restitution For Running Loan Mod Racket; Employee Gets 45 Days To Be Served Three Days/Week

In Allegan County, Michigan, The Allegan County News reports:

• A former Fennville woman will spend up to one year in jail after defrauding several dozen homeowners through her foreclosure rescue company. Tonya Raisbeck, 36, stood before Allegan Circuit Court Judge Margaret Zuzich Bakker on Friday, Jan. 13, and said she knew people questioned her intentions.

***

• Through her business, Mobile Modification Inc., Raisbeck accepted payments from homeowners in exchange for what they were told would be help in adjusting the terms of their mortgages; many faced foreclosure and were hoping to keep ownership of their homes. Raisbeck has been self-employed since 1999 and had been a real estate agent.



• Representing the state attorney general’s office was Scott Teter, who said 43 victims contacted his office; he said 35 lost their homes. The attorney general’s office announced the charges against Raisbeck and her company and eight others in July 2010.

***

• Bakker sentenced Raisbeck to one year in Allegan County Jail with credit for one day served for false pretenses, $1,000 to $20,000. Raisbeck will be on probation for five years and, in addition to court costs and fees, will also have to pay $36,417 in restitution.



• She received similar, concurrent sentences for one other count of false pretenses and one count of conspiracy to commit false pretenses.



• Bakker also sentenced Raisbeck to concurrent sentences of 90 days jail with credit for one day served for each of five violations of the Credit Services Act.



• Bakker said Raisbeck economically destroyed her victims. “The extensive, ongoing victimization that occurred...it’s phenomenal,” Bakker said. She said property crimes like this can trigger a chain of events that can ruin families. “To take away a family’s funds...results in so many ongoing effects; they can lose their mortgage, their home, their job, sometimes their spouse—sometimes their lives (through suicide).”

***

• Also on Jan. 13, Bakker sentenced Raisbeck’s one employee at Mobile Modification to 45 days jail to be served Tuesday through Thursday at Allegan County Jail. Jessica Sheldon, 32, pleaded no contest to one count of false pretenses in exchange for the prosecution dropping the remaining charges. Sheldon was also sentenced to three years probation and must pay court costs and fees along with $6,559 in restitution, joint and several with Raisbeck.

For the story, see ‘One-woman crime wave’ sentenced.

Lawsuit: Bankster Played "Hide & Seek" With Debtors, Judges, Others In Battling Tens Of Thousands Of Bankrupt Homeowners; Action Seeks Class Status

In Los Angeles, California, Courthouse News Service reports:

• JPMorgan Chase routinely fabricated documents to deceive bankruptcy judges, going so far as to Photoshop documents to "create the illusion" of standing "in tens of thousands of bankruptcy cases," according to a federal class action.



• Lead plaintiff Ernest Michael Bakenie claims that Chase's "pattern and practice of playing 'hide-and-seek' with debtors, judges and other bankruptcy players" bore rich fruit: that Chase secured motions for relief of stay and proofs of claim in 95 percent of its cases.



• "Through the use of fabricated assignments, endorsements and affidavits that purport to transfer deeds of trust, notes and the rights to all monies due under the terms of tens of thousands of non-negotiable promissory notes (the 'MLNs'); Chase has demonstrated a pattern and practice of playing 'hide-and-seek' with debtors, judges and other bankruptcy players," the complaint states.

For more, see Chase Accused of Brazen Bankruptcy Fraud.

For the lawsuit, see Bakenie v. JPMorgan Chase Bank, et al.

Recent Michigan Appeals Court Foreclosure Ruling Expected To Affect Similar Suits Impacting On Lenders' Failure To Record Mortgage Assignments

In Shelby Township, Michigan, The Oakland Press reports:

• A Shelby Township couple won a state Court of Appeals precedent-setting ruling that stops a foreclosure and allows them for now to keep their home that was once worth $650,000.



• Husband-and-wife Eui H. and In Sook Kim gained a reversal of a Macomb County judge’s dismissal of their lawsuit against JP Morgan Chase Bank. The couple won because the bank failed to publicly record its interest in the mortgage after buying it from another bank, and before the sheriff’s sale.



• The Kims’ attorney, Flint-based Bernhardt “Chris” Christenson, said the “for publication” decision likely will affect the outcome of other similar lawsuits and force banks to reveal it owns a mortgage before it can foreclose on a property. “Somebody will know who’s foreclosing on their house,” Christenson said. “Things (mortgages) change hands so frequently nowadays. You could be talking to one bank and they aren’t even the ones that have the mortgage.”



• JP Morgan’s acquiring and interest in the property should have been recorded with the Macomb County Register of the Deeds, Christenson said. He said the bank likely avoided recording its interest to save filing costs, which could add up to a large sum of money if done on thousands of foreclosures.

For more, see Precedent-setting ruling that stops foreclosure could help other homeowners.

For the court ruling, see Kim v. JP Morgan Chase Bank, No. 302528 (Mich. Ct. of App., January 12, 2012).