Ventura DA Issues Advisory On Fractional Deed Transfers In Foreclosure Rescue Scams

In Ventura County, California, District Attorney Gregory D. Totten has issued an advisory warning county homeowners facing foreclosure to look out for and avoid fractional interest deed transfers promoted by foreclosure rescue scam artists as a way to avoid foreclosure.

Among other things, the advisory warns that, while the County Clerk Recorder's Office may be legally required to accept properly prepared documents for recording, it doesn't necessarily mean that the act of recording a fractional deed is lawful. Among the potential unlawful acts that may be committed in connection with a fraudulent scam involving a fractional interest deed transfer in California (which can be found in the California Penal Code and the California Civil Code), according to the advisory, are:

1. recording a false or forged document (Penal Code Sec. 115),
2. foreclosure consultant fraud (Civil Code Sec. 2945.4),
3. grand theft by false pretenses (Penal Code Sec. 487), and
4. fraudulent conveyance of land with intent to delay creditors (Penal Code Sec. 531),

For more, including an explanation of the fraudulent deed transfer scam, see "Fractional" Deed Advisory (English version) (Spanish version).

Go here for a brochure on the Ventura County DA's Real Estate Fraud Prosecution Program (English) (Spanish); and go here for the DA's Real Estate Fraud Unit webpage.

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

Grand Rapids Couple In Foreclosure Accuse Equity Stripper Of Pocketing Home Equity, Defaulting On Mortgage; Cops Investigate

In Grand Rapids, Michigan, WOOD-TV Channel 8 reports:

• Jason and Tricia Wise were losing their home on Grand Rapids' northwest side when they got a mailer from a company called Canal Street Financial. "It was one of the first letters we got that actually said, 'we're interested in saving your home,'" Jason Wise said. But it didn't turn out that way. "Basically they got a mortgage and robbed all the equity out of our home and then never made those payments and then waited for the bank to foreclose and kick us out of our house," Wise laments.

***

• The Wises deeded their house for $1 to a company called Wells Financial, operated by an employee of Canal Street. Then Wells Financial deeded the house to Canal Street's boss, Norman Long. Long, using another corporate identity, NTW Investments, sold the house back to the Wises on a land contract which had them making monthly payments of $719 until the total amount was paid off, at which time they would get back the deed to the house.

• But Norman Long had a secret. He had his own deal to make money off the house, unknown to the Wise family. He got a new mortgage on the house for $119,000, paid off their old mortgage of $86,000, and pocketed the $33,000 difference. In addition, Long was receiving the Wises faithful monthly payments on their land contract.

• "For the next two years we make all of our payments and we think everything is fine, that we're rebuilding our credit," Jason Wise said. But what he didn't know is that, despite all that income, Long didn't make the payments on his mortgage. That lender foreclosed and the Wises were back where they started with an even bigger payoff needed to save their home.

***

• A Grand Rapids police detective and a US Postal Inspector are investigating to see if they can charge Long with a crime.(1)

For more, see Secret deal leaves family facing foreclosure - again (go here for video).

Editor's Note:

Arguably, the transaction described in this report could constitute an equitable mortgage. In that case, the homeowners who were screwed out of their home title would still be considered the owners of the property.

Further, because the Wises remained in possession of the home throughout the entire relevant period, and were in possession when the bank made the mortgage loan to Long, it is arguable that the mortgage lender making the $119,000 mortgage was on notice of any property rights the Wise's could establish, and consequently, would not be entitled to bonafide purchaser status - thereby making their mortgagee's interest in the home inferior to the Wise's (at least to the extent that the $119,000 loan exceeded the $86,000 balance on the existing mortgage that was paid off). Essentially, a case could be made that it's the bank that loaned the $119,000 that would be screwed out of $33,000 - not the Wises.

For examples of what a lawsuit against a foreclosure rescue operator looks like, one that asserts equitable mortgage and usury, see:

• Moore v. Cycon Enterprises, Inc. (a Michigan foreclosure rescue case),
• Commonwealth of Massachusetts vs. Sohmer (a Massachusetts foreclosure rescue case).

Go here for information on equitable mortgages in Michigan. Go here for information on bonafide purchaser case law in Michigan.

Go here for a recent post in which this scenario was played out.

(1) Go here for Criminal Prosecutions Of Foreclosure Rescue Operators, Refinancing & Other Deed & Equity Scams.

Ohio AG Files Civil Charges Against Company Promoting Accelerated Mortgage Payoff Program

In a June, 2008 press release, the Ohio Attorney General announced:

• A Greene County company offering mortgage payment plans is facing legal action for continuing to mislead consumers, despite a 2005 agreement to clean up its act. The Ohio Attorney General’s Office [...] charged Nationwide Biweekly Administration, Inc., (Nationwide Biweekly) with violating the Ohio Consumer Sales Practices Act and the Home Solicitation Sales Act. The lawsuit was filed in the Greene County Court of Common Pleas.

• According to the lawsuit, Nationwide Biweekly advertised weekly and biweekly mortgage payment plans that could build home equity “twice as fast” as monthly payment plans. Consumers paid the company a non-refundable fee of $75 or more to set up the service. Every one or two weeks, Nationwide Biweekly deducted money from consumers’ bank accounts, so consumers believed they were making weekly or biweekly payments to their mortgage companies. In reality, however, Nationwide Biweekly collected the payments and paid consumers’ mortgage companies only every month.

For the rest of the press release, and to view the lawsuit, see Mortgage Payment Company Sued for Misleading Consumers.

NY AG Hits Lender For $1M To Resolve Charges Of Alleged Discriminatory Lending Practices

The New York Attorney General's Office announced last week:

• Attorney General Andrew M. Cuomo [...] announced that his office has issued more than $900,000 in restitution to approximately 270 African-American and Latino borrowers who experienced discriminatory lending practices by GreenPoint Mortgage. Further, the office is proceeding with its investigation into potential discriminatory pricing by various mortgage brokers that did substantial business with GreenPoint. Greenpoint is a subsidiary of Capital One Financial Corporation. The restitution comes from a groundbreaking fair lending agreement reached between the Attorney General’s office and GreenPoint totaling approximately $1 million.

***

• The Attorney General’s office initiated an inquiry into GreenPoint after reviewing Home Mortgage Disclosure Act (HMDA) data showing that GreenPoint’s African-American and Latino customers were more likely than white customers to receive high-priced loans in New York.

For more, see NY AG Press Release: AG Cuomo Obtains Approximately $1 Million For Victims Of Greenpoint's Discriminatory Lending Practices.

Go here and go here for other posts on alleged race bias in real estate transactions. PredatoryLendingRaceBias

California AG Settles Suit With Firm Accused Of Knowingly Using Unaffordable "Lease To Own" Agreements As Device For Pocketing Renters' Downpayments

In a July 18, 2008 press release:

• California Attorney General Edmund G. Brown Jr. [...] announced a $150,000 settlement for aspiring homeowners who had their entire down payments unlawfully seized by Lease2OwnHomes for missing rent on a lease-to-own agreement. "We have obtained restitution for renters who were ripped off by an unscrupulous landlord who illegally seized down payments that were part of a lease-to-own home scam," Attorney General Brown said.

• Under California law, if a renter misses a monthly payment in a lease-to-own program, the landlord may only seek eviction and unpaid rent. In this case, the landlord unlawfully seized the entire down payment for the purchase of the home in addition to seeking the eviction and unpaid rent.

According to his press release, among the activities Attorney General Brown accused Lease2OwnHomes of was providing a lease and option to purchase agreement when the company knew that consumers were not financially capable of meeting monthly payments required to successfully purchase a home.

For more, see Brown Obtains Restitution For Lease2OwnHomes Renter Rip-Off.

Illinois AG Files Civil Charges Against Upfront Fee Foreclosure Rescue Operator

The Illinois Attorney General announced:

• Illinois Attorney General Lisa Madigan today continued her aggressive battle against those taking advantage of homeowners in crisis by filing a lawsuit against an Ohio-based company(1) allegedly engaged in a mortgage rescue fraud scheme. The lawsuit claims the company violated the [Illinois] Mortgage Rescue Fraud Act and the [Illinois] Consumer Fraud and Deceptive Business Practices Act by preying on vulnerable homeowners on the verge of foreclosure. This is the 13th lawsuit Attorney General Madigan has brought against mortgage rescue fraud companies.

For more, see Illinois AG Sues Ohio Company For Mortgage Rescue Fraud (Madigan Alleges Company Takes Advantage of Homeowners on the Verge of Losing their Homes to Foreclosure).

(1) According to her press release, Madigan filed suit against Foreclosure Solutions, LLC and company president Timothy Buckley of Maineville, Ohio, based on allegations that the defendants falsely promised to help consumers save their homes after falling behind on their mortgage payments. The defendants charged consumers $1,250 and promised to provide mortgage foreclosure rescue services, which either were never performed or proved to be ineffective, according to the complaint.

Missouri AG Launches "Operation Stealing Home" - Targets Foreclosure Rescue Scams, Predatory Lenders; Seeks To Void Deeds, Obtain Victim Restitution

From the Missouri Attorney General's Office:

• Attorney General Jay Nixon is taking legal action to stop those who are preying on Missouri homeowners left vulnerable to mortgage fraud because they are facing foreclosure or other financial difficulties. Nixon today launched Operation Stealing Home by filing seven lawsuits [...] aimed at individuals and businesses Nixon said had defrauded consumers through refinancing, advance fee and foreclosure consulting scams.

***

• Four of the defendants(1) operate what Nixon termed "foreclosure rescue scams." [...] The companies [...] convince the homeowners to deed their property over and rent it back from the company so they can still live in the home, on the premise that the rent goes to make the mortgage payment, plus a modest profit for the company. Unfortunately, the homeowners discover that the companies are not using their rent payments to make mortgage payments, causing the lenders to initiate foreclosure proceedings.

***

• Nixon is asking the courts to void the deeds the companies illegally obtained; to award restitution to consumers who suffered losses; to impose appropriate penalties; and to issue injunctions to prohibit the defendants from future violations of Missouri consumer protection laws.

For more, see Operation Stealing Home: Nixon goes after mortgage fraud targeting those facing foreclosure or other financial woes.

(1) According to the Missouri AG press release, four of the lawsuits targeted foreclosure rescue firms and were filed against: (I) St. Anthony Avenue LC, based in St. Louis County; (II) Private Funding Solutions, based in St. Charles, and its president, Mike C. Rothweiler; (III) Brian J. Thompson, of Springfield, who does business as "All Decked Out"; and (IV) Access Mortgage and Financial Corp., of Lansing, Mich., and its agents, David Snyder and Josh Nowell. This lawsuit was filed in Henry County.