"Fractional Interest Deed Transfer" Foreclosure Rescue Bankruptcy Scam Alleged As Two Face Multiple Felony Charges In Southern California

In Southern California, the Los Angeles Times reports:

• Michael D. Henschel of Van Nuys, who has had a long history of legal run-ins, was arrested Thursday by Los Angeles County authorities, who accused him of operating foreclosure scams that took in hundreds of homeowners, costing some their houses. Henschel, 59, faces 71 [state] charges, including forgery and conspiracy counts, in an alleged scheme to defraud homeowners from 2000 to 2004. Canoga Park resident Alan Mitchell, 70, also was arrested and faces 32 charges.

***

• Henschel and Mitchell are accused of offering to save homeowners from foreclosure if they paid a monthly consulting fee and transferred part-ownership of the properties -- often to a fictitious entity. While pretending to renegotiate loans, the pair charged rent to homeowners, Christopher said. The two men would file for bankruptcy protection using phony debt and made-up names to hold off the banks and extend the "rental" period for several months, he said. After a protracted, expensive process, the banks would reclaim the properties and evict the homeowners anyway, Christopher said. Although only seven victims are mentioned in the complaint, the scheme extended to hundreds of homeowners, he said. [...] Bail was set at $800,000 for Henschel and $400,000 for Mitchell.

• In the past, Henschel has faced a slew of misdemeanor and felony charges and has been convicted at least five times, but he has always managed to dodge prison time. In 1995, he was charged and acquitted in Los Angeles of stealing nearly $90,000 from family friends by filing phony bankruptcies and deed transfers against two properties. In an Arizona case that mirrors the current one, Henschel pleaded guilty in federal court in 2004 to filing more than 200 fraudulent bankruptcies and pocketing more than $50,000 in rental income and fees from homeowners with shaky mortgages. He was sentenced to probation, community service and restitution.

For more, see 2 arrested in alleged foreclosure fraud (The men are accused of operating a scam that took in hundreds of homeowners).

For a 1998 report issued by a California Federal Bankruptcy Court task force that details the types of foreclosure scams involving the abuse of the bankruptcy court system, see Final Report Of The Bankruptcy Foreclosure Scam Task Force (available online courtesy of the Loyola of Los Angeles Law Review).

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

Fighting Foreclosure? Make 'Em Produce The Note!

For video aficionados, there is a short video called Fight Foreclosure: Make ‘Em Produce The Note! that is floating around in cyberspace. Nothing technical; pretty straightforward message, don't know who made the video; but I got a kick out of it. It's a "must see" video, in my judgment, for anybody currently facing foreclosure, or who may be in the future. I stumbled into it from a link on the home page of the website of Tampa, Florida law firm, James, Hoyer, Newcomer & Smiljanich, PA.

For other posts that reference the failure some mortgage lenders and their attorneys of filing mandatory loan documents when starting foreclosures, Go Here , Go Here and Go Here.

Lifting Restrictions On Legal Aid Attorneys May Help Poor Homeowners Caught In Foreclosure Crisis

An Op-Ed article in The New York Times opines:

• Legal aid lawyers are among the few allies of poor homeowners caught in the subprime-mortgage meltdown. But these lawyers are hamstrung by federal regulations that limit homeowners’ access to speedy, low-cost legal relief.

Among the restrictions is an inability by legal aid lawyers, unlike their colleagues in private practice, to collect attorneys fees from companies who violate their clients' rights when those rights are vindicated in court:

• One restriction prohibits legal aid lawyers, unlike their corporate counterparts, from collecting attorney fees on behalf of vindicated clients. Fee awards are an incentive for both parties to negotiate quickly because legal costs increase as litigation drags on. Recalcitrant lenders can stall as long as they like, knowing it will cost them nothing.

For more on how federal rules are arguably impeding the work of legal aid lawyers, see Unleash Legal Aid.

Violations Of Minnesota's New Anti-Predatory Lending Law Alleged In Suit By Elderly Couple

In St. Paul, Minnesota, Minnesota Public Radio reports:

• Last year, state lawmakers passed a new consumer protection law designed to prevent mortgage lenders from overcharging borrowers. Now an elderly couple from Red Wing has filed what appears to be the first lawsuit under Minnesota's Anti-Predatory Lending law. It could be the first of many such suits under the law, which is meant to protect homeowners from unscrupulous lending practices.

***

• [The state's Anti-Predatory Lending law] makes it illegal for mortgage companies to charge excessive fees. It requires brokers and lenders to act in the best interest of the borrower. And it requires verification of a borrower's income and ability to pay. [...] As in other states, foreclosures are continuing at record levels in Minnesota. The state's predatory lending law is meant to stem the tide of homeowners losing their homes.

For more, see Elderly couple files first lawsuit under new anti-predatory lending law.

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here and Go Here.

Countrywide Class Action Alleges Abuse Of Disaster Victims Regarding Home Mortgage Payments

According to a press release from the James, Hoyer, Newcomer & Smiljanich, PA Law Firm:

• In response to Countrywide Home Loans refusal to fulfill promises made to Gulf Coast hurricane victims, the James Hoyer Law Firm announced [last month] the filing of a new class action lawsuit against the mortgage company. The suit was filed in the United States District Court in the Southern District of Mississippi. The suit alleges Countrywide took advantage of these disaster victims by offering them mortgage deferrals with no penalties attached and then reneging on that promise.

***

• After Hurricanes Rita & Katrina, Countrywide offered 90-day mortgage payment deferrals to homeowners affected by the devastation and in many cases 6-month deferrals. Countrywide represented this as a good deed to help people in their time of suffering and even issued a press release to promote its actions. Homeowners were told by agents over the phone their deferred payments could be tacked onto the end of their mortgages. They were assured they would not face penalties like late fees, interest and reports to the credit bureaus. Countrywide went so far as to tell homeowners who wanted to pay, not to do it. In some cases, they even returned checks. Struggling hurricane victims accepted the offer of help, some reluctantly, when assured they would not be economically penalized by late fees, penalties or credit reporting.

• When homeowners followed up later to resume payments, they discovered Countrywide was reneging on its promise. The company said it could not add the payments to the end of the loan, without penalty, after all. Instead, Countrywide told homeowners they would either have to pay the lump sum owed immediately or face a loan restructuring which would cause them to pay thousands of dollars more over the life of their loan.

• The suit, filed on behalf of victims in Mississippi, is in addition to two suits already pending in Louisiana and Texas.

For the press release, see Countrywide Class Action Suit: Hurricane Victims Feel Betrayed.

To view the lawsuit, drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail it to you (be sure to put "Brumfield v. Countrywide Home Loans" in the "Subject" line).

Go here for more on recent Countrywide problems with consumers.