State AG Probe Focuses On Central Florida Man With Involvement In Dubious Sale Leaseback, Foreclosure Rescue Deals

In Central Florida, the St. Petersburg Times reports:

• For scores of desperate Tampa Bay homeowners, it seemed like a lifeline — Gideon Rechnitz would help bring their mortgage payments up to date and save their homes from foreclosure. But now the Florida Attorney General's Office is investigating whether Rechnitz misrepresented himself and his St. Petersburg-based companies in a foreclosure rescue scheme that enabled him to acquire dozens of houses at below-market value.(1)(2)

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• As the St. Petersburg Times reported last year, Rechnitz, 62, told homeowners that investors would buy their houses, make the payments and stop the foreclosure proceedings. The sellers could then rent back their homes with an option to repurchase them in two years. In an interview for that story, Rechnitz said that he explained all facets of the "program" and even videotaped closings to make sure the sellers understood. But many homeowners were confused by the documents he asked them to sign and could not meet the stringent rental and buyback conditions.

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• Rechnitz said in the fall that his foreclosure rescue business had slowed considerably in 2008 because it was harder to find people [...] with substantial [home] equity. But as home­owners who got 100 percent financing now struggle to renegotiate their mortgage terms, state records show he recently started a new company — Loan Modification Enterprises.

For more, see Attorney general investigating fraud in foreclosure 'rescue' operation.

(1) According to the story, the current investigation is not the first involving Rechnitz. The Florida Bar conducted a probe involving conduct that could constitute the unauthorized practice of law in connection with an alleged "rescue" of a Bradenton home. Rechnitz admitted no wrongdoing, but later signed a cease-and-desist affidavit. In the 1980s, the Federal Trade Commission sued Rechnitz for deceptive trade practices in connection with timeshare marketing program. He admitted no wrongdoing, but agreed to refund $1.25 million to customers. He reportedly also lost his Florida real estate license. He also reportedly faces two lawsuits in Sarasota County, including one by 71-year-old Yolanda Rodriguez, who claims that in 2006 Rechnitz improperly evicted her and her deaf brother from their home, which he acknowledged in a deposition was worth far more than the $150,000 Rodriguez owed on her mortgage, according to the report.

(2) In May, a Washington State jury hammered a foreclosure rescue operator similarly suspected of ripping off the home equity of financially strapped homeowners in a civil lawsuit brought by the Washington Attorney General's office (see Pay time for notorious foreclosure rescue scammer - Attorney General announces major victory in state’s case with Washington man who promised help but took homes). The jury found that the business practices engaged in by the operator violated the state Consumer Protection Act. See Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M.