Saturday, November 15, 2008

Ohio Legislature Attempting To Slither Proposed Industry-Friendly Debt Settlement Statute Into Law?

In Columbus, Ohio, a column in The Cleveland Plain Dealer describes "a House-passed bill, pending in the Senate Finance and Financial Institutions Committee, to let "debt settlement" companies charge Ohioans fees of up to 20 cents per $1 of debt." Reportedly, the Governor and the current state treasurer (and now attorney general-elect) have serious reservations about this proposed law, passed in the state house of representatives by a 93-0 vote, and is opposed by the current state attorney general.

The columnist warns:(1)

  • The bill is pending at a dangerous time of year - for consumers - at the Statehouse. Legislators soon begin a post-election "lame-duck" session. Hot-button bills slither through lame-duck sessions because retiring or defeated ("lame duck") legislators, who can pass laws through Dec. 31, won't face voters again.

For more, see Debt 'rescue' bill would charge Ohioans for something they can do themselves.

(1) According to the Plain Dealer columnist, Thomas Suddes:

  • The Ohio General Assembly may prove again what a judge ruled long ago: "No man's life, liberty or property are safe while the Legislature is in session."

Hazard Reporting Co., Real Estate Firm Settle RESPA Charges; Allegedly Used Sham Entities To Hide Kickbacks, Cheat Consumers; Will Pay Up To $35M

From the Department of Housing and Urban Development ("HUD"):

  • The U.S. Department of Housing and Urban Development [recently] announced that it has settled its federal lawsuit under the Real Estate Settlement Procedures Act (RESPA) against Property I.D. Corporation, a large hazard reporting company in California, Realogy Corporation, Cendant Corporation (now known as Avis Budget Group, Inc.) and Coldwell Banker Residential Brokerage Corporation.(1)


  • HUD alleged that Property I.D. Corporation of Los Angeles made improper payments to large real estate brokers in California based on the referral of consumers to Property I.D. Such referral-based payments are kickbacks and prohibited under Section 8 of RESPA.


  • In return for these referrals, the brokers were paid through quarterly payments, $25 per report, or one-quarter of the total report's cost. The sham affiliated businesses did not provide hazard disclosure reports to non-referred customers and shared in profits based solely on the number of referrals made to Property I.D.

For more, see HUD Settles Lawsuit With California Hazard Reporting Company And Real Estate Brokerage (HUD also wins ruling giving it authority to recover illegal profits).

Go here for other HUD Settlement Agreements With Alleged RESPAViolators.

(1) A settlement in a related federal class action lawsuit requires the companies to pay up to a combined $35 million dollars, much of it to California consumers who purchased hazard disclosure reports as far back as 1996.

Friday, November 14, 2008

Queens DA: I.D. Theft Leads To Sale Of Home Out From Under Unwitting Elderly Stroke Victim; Suspects Allegedly Pocketed $95K

From the Queens County, New York District Attorney's office:

  • Queens District Attorney Richard A. Brown [last week] announced that a brother and sister are charged with stealing the identity of a 68-year-old Jamaica, Queens, man who had been disabled as a result of a stroke and then secretly selling his house out from under him and pocketing the profits.


  • The District Attorney identified the defendants as Shawn Corcas, 38, of [...] St. Albans and Patricia Corcas, 55, of Rosedale. The siblings were arraigned [last week] on an indictment [...]. They are charged with second-degree grand larceny, third-degree grand larceny, second-degree criminal possession of stolen property, third-degree criminal possession of stolen property, first-degree falsifying business records, second-degree falsifying business records, first-degree identity theft and second-degree identity theft.

For more, see Brother And Sister Charged With Fraudulent Sale Of Disabled 68-Year Old Queens Man's Home.

Go here, go here, go here, and go here for other posts related to deed or refinancing scams by forgery, swindle, etc. DeedTheftAlpha

San Antonio Homeowner Alleges Scam As She Pays $10K In Failed Attempt To Save Home From Foreclosure

In San Antonio, Texas, WOIA-TV Channel 4 reports on a local homeowner facing foreclosure who allegedly was scammed out of $10,000 by a woman with a history of approaching cash strapped individuals with offers to save their homes.

  • [Homeowner Janie] Anderson had gotten a letter from Rosie Divins saying she could help them keep their home. The letter said the Anderson family didn't have to go into foreclosure. Divins claimed she had a way to save their home. Janie Anderson and her husband owed the mortgage company $3,600 dollars.

  • But, in the end, they wound up giving Divins $10,000. [...] Eventually, the bank foreclosed and Anderson and her husband had to get out.

  • The News 4 Trouble Shooters found out Janie Anderson is not alone. According to bankruptcy court records at the federal courthouse, at least two other families say Divins did the same thing to them. They claim she charged them thousands of dollars, but they still lost their homes.

  • This, despite the fact, that a judge told her in 2000 to stop offering people help. [...] The judge said Divins was charging an excessive fee and providing legal services without a law license.

For more, see Family Loses Home and Blames Local Businesswoman.

Thursday, November 13, 2008

NYC Senior Clipped Out $3K After Loan Modification Firm Fails To Renegotiate Home Mortgage

In Mill Basin, Brooklyn, WABC-TV Channel 7 reports:

  • Evadne is a senior citizen and living on a fixed income. She was worried she would lose her home, so she paid RSR Asset Management nearly three thousand dollars to contact her lender, Washington Mutual, to try to lower her mortgage.


  • "But then once he got the money," [Evadne's grandson Andre Henry] says, "I feel nothing was done." Despite paying three grand for help, her mortgage stayed the same. And that fee? It was non-refundable. And Andre says, RSR Asset Management gave him no answers. "You leave a message, no one calls back. So what are we to do? This is $3000 here we're talking about," said Andre.


  • So, [7 On Your Side] went to the Garden City offices of RSR Asset Management to find out what happened with Evadne's case. But, we never got past the receptionist and numerous calls went unanswered. [...] And as for Evadne's mortgage? After [7 On Your Side] contacted her lender they worked out a fixed rate mortgage at a rock bottom interest rate, saving her hundreds each month.

For more, see Senior saved from foreclosure. New York City

More On Florida AG's Lawsuit Against Loan Modification Firm

In Fort Lauderdale, Florida, WSVN-TV Channel 7 reports on the recent state Attorney General's lawsuit against Outreach Housing, a locally-based loan modification company accused of using unfair and deceptive practices to clip homeowners out of thousands of dollars in upfront fees to renegotiate mortgage terms with their lenders. According to the report, the firm claimed that most mortgages in South Florida were made in violation of some Federal laws and can be undone,(1) and blames its current problems on a couple of attorneys it retained to help its customers.(2) Some of the unsatisfied alleged victims are interviewed, as well as a company representative.

For the WSVN Channel 7 story transcript & link to its video report, see Home Heartache.

(1) According to their website, "Through the efforts of Outreach Housing, a dedicated network of professionals will pursue restitution for thousands of homeowners faced with foreclosure by outlining the TILA and RESPA violations that occurred at the lenders level—bottom-line this effort will allow the homeowner to stay in their home."
(2) According to another local media report, the lawsuit also accuses Outreach Housing of engaging in the unauthorized practice of law.

Wednesday, November 12, 2008

Investigative Report Uncovers Unhappy Customers Of Central Florida "Sale Leaseback" Foreclosure Rescue Operator

In Central Florida, the St. Petersburg Times recently ran an investigative report on a local foreclosure rescue operator promoting sale leaseback arrangements to homeowners facing foreclosure in which title and all rights to the home would be transferred to a so-called "family trust'' with an unrelated trustee.

  • [O]f the 106 people who signed up for [owner of Foreclosure Prevention Corp. Gideon] Rechnitz's "foreclosure prevention program,'' nearly half lost their homes anyway. Many were confused by the legal documents he asked them to sign and were unable to meet the stringent rental and buyback conditions.(1)


  • The most complex — and confusing — part of the program was the transfer of ownership. Instead of simply selling to Rechnitz, the homeowner signed a warranty deed that gave title and all rights to a "family trust,'' with Rechnitz or his Garco Inc., listed as trustee. That meant Rechnitz could sell the property or do anything else he wanted with it.

  • Keeping the seller's name on the trust also was a major benefit to Rechnitz. The bank might not realize the property had been sold, and thus Rechnitz could make payments without triggering a due-on-sale clause, requiring the mortgage to be immediately paid in full.(2)

For more, see Homeowners' safety net really wasn't.

(1) According to the story, closing statements obtained by the Times show that the homeowners received no money from the sale, partly because they were assessed extra fees that included several thousand dollars for "preforeclosure administration'' that went to Profitmax — a company of which Rechnitz, 61, is the sole officer and director. Reportedly, sellers were also assessed a fee of as much as $3,000 that went to Recnitz' associate Thomas S. Cook for "foreclosure intervention.'' Cook sometimes notarized the legal documents himself even though state law forbids notary publics from notarizing transactions in which they have a financial interest, the story states. At least one homeowner's closing statement shows he was assessed $31,415 for "reinstatement'' and $6,100 in fees to Cook and Rechnitz, according to the report.

(2) Based on the details in the story describing the sale leaseback deals with some of the homeowners facing foreclosure, the deals described therein could be ripe for recharacterization as equitable mortgages (and, possibly in some cases, usurious equitable mortgages), even if no fraud on the part of the foreclosure rescue operator is proved. (Go here for posts on some of the case law on equitable mortgage and usury in Florida).

Further, as of October 1, 2008, the recently passed Florida Foreclosure Fraud Protection Act (HB 643) creates a rebuttable presumption that any foreclosure rescue transaction in Florida involving a lease option or other type of repurchase agreement is an equitable mortgage (see Florida Statute Sec. 501.1377(6)).

3rd Defendant In "Money Store" Foreclosure Rescue Scam Pleads Guilty; Seven Remain

In Greenbelt, Maryland, WTOP Radio reports:

  • Federal prosecutors say a Hyattsville woman has pleaded guilty to conspiring to defraud homeowners facing foreclosure. Thirty-one-year-old Carlisha Dixon leaded guilty on Thursday to conspiracy in a scheme that falsely promised to help homeowners keep their homes and repair their credit. Dixon is the third defendant to plead guilty and one of 10 people charged in the scheme.

  • Dixon worked for a company that helped Lanham-based Metropolitan Money Store offer foreclosure consultation and credit services to homeowners with financial problems. Prosecutors say she acted as a straw buyer and fraudulently signed loan documents. Prosecutors attribute $200,000 to $400,000 in losses in the conspiracy to Dixon.

Source: Woman pleads guilty in foreclosure fraud scheme.

See also, U.S. Attorney (Maryland) press release: Third Defendant Pleads Guilty in Metropolitan Money Store Mortgage Fraud Scheme (Ten Defendants Now Charged in Scheme to Take Title of Homes from Financially Distressed Homeowners and Secretly Use Home Equity for Personal Benefit).

Go here and go here for other posts on the alleged Metropolitan Money Store foreclosure rescue scam.

Go here for criminal prosecutions of foreclosure rescue operators. joyjackson

Tuesday, November 11, 2008

Consumers Take It On The Chin With Recent Federal Appeals Court "Truth In Lending" Rulings

1) reports:

  • A provision in the Truth in Lending Act that excuses minor inaccuracies on the part of lenders is not an "affirmative defense" that must be specifically raised by the defendant, but instead is a "general defense" that cannot be waived, the 3rd U.S. Circuit Court of Appeals has ruled.

  • The ruling in Sterten v. Option One Mortgage Corp. could prove to be a significant boon to banks by relaxing the rules for reaping the benefits of a TILA amendment that was designed to prevent creditors from being subject to "extraordinary liability" for small disclosure discrepancies.

For more, see 3rd Circuit: Truth in Lending Act Provides Unwaivable Defense (Panel rules 'tolerances for accuracy' provision is not an affirmative defense).

For the court ruling, see Sterten v. Option One Mortgage Corp. (3rd Cir., 11-4-08).


2) Jurist's Paper Chase (University of Pittsburgh School of Law) reports:

  • The US Court of Appeals for the Ninth Circuit [recently] ruled that the federal Truth in Lending Act does not provide for statutory relief for a lender's failure to conspicuously disclose certain information about a loan to the borrower and to give the borrower certain information before offering the loan.

For more, see Ninth Circuit rules subprime borrower due no damages for lender disclosure failures.

For the court ruling, see McDonald v. Checks-N-Advance, Inc. (in re Ferrell) (9th Cir., 8-22-08).


3) In a story posted here in October, the National Law Journal reported:

  • In a boon for the mortgage lending industry, a federal appeals court has said the Truth in Lending Act does not allow for rescission of mortgages on a class action basis. The 7th U.S. Circuit Court of Appeals, in a 2-1 decision [...], averts the potential of significant damages for creditors accused of violating disclosure requirements in some of the exotic mortgage vehicles that exacerbated the mortgage market meltdown and has Congress contemplating ways to restore credit market confidence.

  • The Circuit decision joins an earlier ruling by the 1st and 5th Circuits and one California state appellate court that have held that the Truth in Lending Act (TILA) does not allow claims for rescission in a class action format.

For more, see Mortgage Lenders Fight Off Rescission Class Action in 7th Circuit.

For the court ruling, see Andrews v. Chevy Chase Bank (7th Cir., 9-24-08). UndoMortgageLoans TILAdelta

Slicing & Dicing Left Building Loan Compromised, Says Trump In Suit Seeking $3B Damages From Lenders After Refusal To Extend Debt On Chicago 'Scraper

The Wall Street Journal reports:

  • Donald Trump filed suit against the lenders on his unfinished Chicago skyscraper, plunging the project into legal turmoil and highlighting the credit crunch's pervasive effects on real estate. Mr. Trump is suing to extend a $640 million senior construction loan on the 92-story Trump International Hotel & Tower from a group of lenders led by Deutsche Bank AG. [...] Mr. Trump asked for $3 billion in damages.(1)


  • Deutsche Bank originated the construction loan in 2005 and sold off most of it to others, retaining less than $10 million of exposure on that loan. The suit alleges [among other things] that Deutsche Bank compromised the senior construction loan by selling pieces off to "so many institutions, banks, junk bond firms, and virtually anybody that seemed to come along," that the lending group is unable to come to a consensus on how to deal with the matter.(2)

For more, see Trump Files Suit Against Lenders (Developer Seeks to Extend $640 Million Loan on a Chicago Skyscraper).

Editor's Note:

If anyone has a digitized copy of this lawsuit, please don't hesitate to e-mail me a copy of it, if it's not too much trouble. The lawsuit's index number is 026841/2008, filed in NYS Supreme Court - Queens County last Thursday (November 8).

(1) Possibly seeking a "home court" advantage in the litigation, Trump filed the lawsuit, not in Chicago where the skyscraper is being built, but in New York State supreme court in Queens County, NYC.

(2) This appears to have left Trump similarly situated with the thousands of average homeowners facing foreclosure who, arguably, have had their home loans equally compromised by similar "slicing and dicing" that has left bits and pieces of their loans in the hands of a myriad of investors scattered around all over the place.

Lehman Maintained Squeaky Clean Image In Subprime Mess By Hiding Behind Sleazy Sub?

In New York City, The Village Voice published an investigative report on how Lehman Brothers, the so-called "white shoe" Wall Street investment banking firm maintained its squeaky clean image as it made huge profits in the filth and the sludge of the subprime sewer.

  • [I]t was a sweet proposition while it lasted. But like any racket, the subprime business had its seamier side. And for that, Lehman kept its squeaky-clean image by turning to a less holy subsidiary. Call her Aurora.

  • When the mortgage market collapsed and the huge investment bank failed last month, it dragged other financial markets down with it. Lehman's executives walked away with buckets of cash.

  • But buried beneath the bank, way down at the bottom of the pile, are people like Brooklyn lawyer Philip Grant and Bart Christofferson, an excavator in Utah. They live 2,000 miles apart, but they have one thing in common: They were both worked over by a Lehman Brothers subsidiary called Aurora Loan Services.

For more, see Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary (Lehman Brothers maintained its squeaky-clean image by relying on its seamier subsidiary. Just call her Aurora).

Go here for the entire story on one web page.

Bronx Tenant "Caught Stealing" Stiffing Landlord? Agrees To Cough Up $11M In Back Rent

In New York City, the New York Post reports:

  • The New York Yankees have agreed to fork over $11 million to the city in back rent - money the team probably would have preferred to spend on an ace starting pitcher for next season. The team underpaid the city the equivalent of Mike Mussina's salary between 2003 and 2006, according to an audit by City Comptroller William Thompson.

For more, see $11M Ballpark Figure (Yankees Can't Slide On The Rent).

Monday, November 10, 2008

Fraud, Forgery Account For About 20% Of Its Losses, Says Title Insurer

Reuters reports:

  • The shares of major U.S. title insurers tumbled on signs the nation's housing crisis will lead both to higher claims and to reduced demand for insurance that homeowners need to protect themselves and their lenders.


  • [Fidelity National Financial Inc.] said fraud and forgery cases have grown more numerous, and now account for about 20 percent of claims.

Source: Title insurers tumble on housing woes.

Ontario Cops Catch Up With Forgery Suspect; Charge Man With Pocketing $105K+ In Alleged Refinance Scam

In Ontario, California, the Contra Costa Times reports:

  • A Riverside man has been arrested on suspicion of grand theft and forgery in the conning of an Ontario woman in May out of more than $105,000 in a home-mortgage fraud. Arthur Lee Harris, 35, was arrested Oct. 15 after evading Ontario police for more than five months. [...] Nestor Miguel Reyes, 33, of Covina - who is accused of aiding Harris in the scam - was arrested in August on suspicion of perjury, theft and forgery.


  • Earlier this year, Harris posed as a finance broker. He would befriend people, gain their trust and assist in refinancing houses, Ontario police Detective Al Parra said in August. Customers would later discover their house had been refinanced, but for thousands of dollars more than they originally signed.

  • Reyes would pose as an escrow officer who processed the loans and recorded forged loan documents, authorities said. Virtually every document that was filed was forged, Parra said.

Source: Man accused of bilking Ontario woman out of home.

For an earlier report on this story, see The San Bernardino Sun: Woman loses $105,000; 2 suspected in fraud case.

Go here, go here, go here, and go here for other posts related to deed theft or refinancing scams by forgery, swindle, etc. DeedTheftAlpha

Staten Island Senior Charged With Forging Eviction Notices In Attempt To Illegally Give Tenants The Boot

In New York City, the Staten Island Advance reports:

  • His wife had been hit with $5,300 in fines for illegally converting a house in Port Richmond into several smaller apartments, and it was time for the tenants to leave. But rather than go through the legal eviction process, authorities say 76-year-old Paul Ciliento took matters into his own hands in June -- by forging his own eviction notices, and signing a city marshal's name to them.

  • Ciliento was arrested [this week] on charges of forgery and criminal impersonation -- offenses that could land the septuagenarian in prison for up to seven years if he's convicted at trial.

For more, see Port Richmond landlord accused of forging eviction notices (Ruse reportedly was exposed when a tenant called marshal's office to ask for more time).

Sunday, November 9, 2008

FBI Seizes Records Of Pa. Man Accused In Alleged Scam Involving The Forging & Filing Of Phony Mortgage Satisfactions That Bilked Investors Of Millions

In Pittsburgh, Pennsylvania, the Pittsburgh Tribune Review reports:

  • The FBI has seized the financial records of a defunct Monroeville investment firm owned by a missing man who allegedly bilked investors out of millions of dollars. Frank Guzik Jr., 39, a Derry resident who operated East Haven Development until he disappeared this year, "apparently has fled the country," according to court filings in Allegheny County.(1)


  • Federal agents apparently are centering their investigation on mortgage transactions that may have been forged by Guzik. [...] "There is some legitimate concern that any number of mortgage satisfactions may have been fraudulently filed," [certified fraud examiner Joseph] Labriola wrote.


  • [Three area couples have] filed separate lawsuits in Allegheny County this year against Guzik and East Haven. The Westmoreland couples allege that forged documents had been filed in court to falsely indicate that their East Haven investments -- totaling more than $300,000 -- had been repaid.

For more, see Monroeville business owner from Derry allegedly flees.

(1) According to the story, Guzik has not been seen since March, when he boarded an airplane at Pittsburgh International Airport and disappeared. Guzik told family and friends he was going on a cruise. Before he left, Guzik cleaned out his office, burned his files and destroyed his computers, said Sean Kerrigan of Trafford, a business associate, the article reports.

Nevada AG Charges Three In Alleged Refinance Scam; 69 Year Old Victim Faces Possible Foreclosure

From the office of the Nevada Atttorney General:

  • Attorney General Catherine Cortez Masto, announced today the arrests of Roxanne Lynette McCoy and Shanease Renee Bauman, employees of Proserve Mortgage. The arrests were made in connection with an alleged scheme involving the submission of forged loan application documents to a bank for a mortgage loan, after being informed by the victim, Jeri Cooper, age 69, that she could not afford the loan and did not want to complete the loan application process. A third suspect, Laticia Renee Carter, also a Proserve Mortgage employee, remains at large.


  • The State alleges that, as a result, the elderly victim is being held responsible for payment of the loan and now faces possible foreclosure.

According to the Nevada AG's press release, the Defendants are each charged with multiple felonies including:

  1. one count of Forgery,
  2. one count of Obtaining Signature by False Pretenses,
  3. one count of Theft, and
  4. one count of Mortgage Lending Fraud.

For more, see Attorney General Announces Arrests In Mortgage Loan Scam Against Senior Citizen.

Go here, go here, go here, and go here for other posts related to deed or refinancing scams by forgery, swindle, etc. DeedTheftAlpha

Michigan Man Cops Plea In Alleged Home Theft From Elderly Couple

In Wayne County, Michigan the Detroit Free Press reports:

  • A Grosse Pointe Woods man accused of defrauding an elderly couple in a real estate scheme pleaded no contest in Wayne County Circuit Court on Wednesday. [...] According to the Wayne County Prosecutor's Office, in February 2004, [John] Matouk, who owned half a property [...] in Dearborn with the couple, forged a quitclaim deed from the couple that transferred the entire property to his company, LM Investments of Dearborn LLC.

  • Matouk then allegedly obtained a $650,000 mortgage on behalf of LM Investments and spent the money on himself. In September 2007, the couple discovered the scheme and reported it to authorities.

Source: Man takes plea in real estate case.

For earlier story on this case, see Man charged in Dearborn land swindle case.

Go here, go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc. DeedTheftAlpha

Forgery Charged In Case Involving 94 Year Old Woman Allegedly Cheated Out Of Home By Son, Daughter-In-Law, Lawyer

The Belfast Telegraph reports:

  • A Northern Ireland solicitor has denied involvement in a £100,000 fraud in which a 94-year-old woman was allegedly cheated out of her home by her son and daughter-in-law. Co Down solicitor Ann Ervine is accused of falsely claiming to have witnessed pensioner Annie Martin sign over her Saintfield home to her son George Ignatius Martin and daughter-in-law Mary Martin.(1)

For more, see Lawyer accused of cheating woman (94) out of her home.

Go here, here, here, here, here, and here for other posts on elder financial abuse.

(1) During an arraignment at Belfast Crown Court last week, Ervine (51) pleaded not guilty to forgery and using false Land Registry forms with intent; and was joined in the dock by husband and wife George Ignatius Martin and Mary Martin, who both pleaded not guilty to obtaining property by deception, forgery and using false land registry forms with intent, according to the story. DeedTheftAlpha FinancialAbuseOfElderlyAlpha