Saturday, January 24, 2009

Connecticut Man Faces Charges Of Fleecing Elderly Woman Out Of $125K+, Leaving Home In Foreclosure With $15K+ In Back Taxes

In New London, Connecticut, the Norwich Bulletin reports:

  • [R]ichard K. Wallace, 55, faces the charge of first-degree larceny for conning Dorothy Dinallo out of at least $125,000, police said. Wallace claims he is a longtime family friend and was taking care of the family and managing their finances after the death of Dinallo’s husband.


  • At the time, Wallace had power of attorney and lived with Dinallo and her two daughters. Police said Dinallo owes more than $15,000 in back taxes and the home was in the process of foreclosure.

For the story, see Accused con man has motion denied (Police say 55-year-old defrauded elderly woman).

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

Attorney On Trial For Forgery, Criminal Breach Of Trust For Allegedly Duping 85-Year Old Man Out Of $160K In Bogus Mortgage Investment Deal

In Barrie, Ontario, the Toronto Sun reports:

  • An 85-year-old investor stood up in the witness box yesterday and told the court that a lawyer is a "criminal" who duped him out of $160,000 in a fake mortgage scheme. "All that he told me was a bunch of lies," said Sam Klaiman, after a full day of questioning in the witness box.

  • On trial is Barrie-area lawyer Myles McLellan, 55, who is facing eight criminal charges including forgery and criminal breach of trust. Klaiman, a wealthy investor who started up his Toronto based business, Homark Real Estate Ltd., in 1936 at the age of 13, testified that he trusted McLellan because he is a lawyer. [...] The trial is expected to continue for two weeks.

For more, see 'Criminal' lawyer in dock on fraud charges.

For those in Canada, if a Canadian attorney, in the course of representing you, screws you out of money or property through dishonest conduct, click on your province on the Canada Client Protection Funds Map to contact the appropriate Law Society Client Compensation Fund about filing a claim to seek some reimbursement for your losses.

For those in the United States, see:

Friday, January 23, 2009

Lease-Option Tenants In New Townhouse Development Caught Between Conflicting Demands For Rent From Builder In Foreclosure & Stiffed Mortgage Lender

In Bakersfield, California, KBAK-TV Channel 29 reports:

  • Creekside Townhomes is a row of 32 units at 500 White Lane. Tenants can lease to own, but the project is facing financial troubles.


  • On Dec. 22, tenants' received a letter from a law firm representing First Regional Bank. The letter tells tenants' to make all future rent payments directly to First Regional Bank instead of to the landlord, Project Manager Robert Hernandez.


  • But four days after tenants' received the letter from the bank, Hernandez issued his own notice. In it, Hernandez writes that the bank acted "prematurely" in issuing the notice and says the bank letter is "not applicable". Hernandez tells tenants' to "please disregard this (the bank's) notice."

  • Tenants' are left wondering who, if anybody they should hand over their rent. If the property goes into foreclosure, some wonder if they'll lose their deposit or other lease payments.

For the story, see Foreclosure worries loom for Creekside Townhomes tenants.

Unwitting Straw Buyer Sues Bakersfield Broker For Unauthorized Use Of His Name In Flipping Deal, Ruining Credit, Leaving Him Holding The Bag

In Bakersfield, California, KGET-TV Channel 17 reports:

  • An Oakland man is suing former Realtor David Crisp, saying Crisp used the man's name in a house flipping scheme that ultimately defrauded lenders. Jorge Ochoa says David Crisp destroyed his good credit. Ochoa wants $75,000 in damages. "He was just a victim, one of many, of the scams of David Crisp," Ochoa's attorney Harvey W. Stein said.

  • The state stripped Crisp of his real estate license following a hearing in July 2008, and he and his former business partner Carl Cole are the subjects of an ongoing FBI mortgage fraud investigation.


  • Stein filed a lawsuit on Ochoa's behalf for $75,000, saying Ochoa's credit card interest rates have gone through the roof. But Crisp has not responded to the lawsuit, and Stein is moving for a judge decide in his client's favor by default.

For more, see Suit: Man was victim of David Crisp scheme.

For the lawsuit, see Ochoa v. Crisp.

Thursday, January 22, 2009

Struggling Developer Turns Tables On Uncooperative Lenders; Uses "Asset Assignment" To Force Mortgage Holders To Negotiating Table

In Sarasota, Florida, the Sarasota Herald Tribune reports:

  • Unable to get bankers to renegotiate nearly $22 million in debt, Southwest Florida home builder Lee Wetherington has filed a legal action akin to a bankruptcy proceeding. Wetherington said that the filing, known as an "assignment for the benefit of creditors," affects only the development side of his business, and that he is using it as tactic to bring bankers to the negotiating table.(1)

  • "This forces them to come back and look at the properties and also gives us more time to negotiate better terms," Wetherington said.


  • "When banks are taking a position to force your hand, you have to take a stand and make them negotiate," Wetherington said. "It's crazy, but the only way to get them to talk is to stop making interest payments and to file an assignment for the benefit of creditors."

For more, see Loan renewals pose threat; one builder acts to force negotiation.

(1) Reportedly, Wetherington's bankers want him to fork over millions of dollars in return for renewing loans on land that has lost value in the real estate meltdown.

Financially Strapped Builder Charged With Stripping Appliances From Unsold Homes Encumbered By Bank Lien

In Gloucester, Virginia, the Daily Press reports:

  • Embattled Gloucester developer George Woodhouse was arrested on charges of grand larceny Tuesday, less than a month before he is due in court to answer to 10 felony counts of forgery.(1)

  • Woodhouse, 39, of Hayes, was charged with grand larceny in connection with a Dec. 22 incident at Dunston Hall, one of several unfinished housing subdivisions planned by Woodhouse in Gloucester. Several items, including microwaves and ceiling fans, were removed from two unoccupied houses, said Commonwealth's Attorney Robert Hicks.

  • The items, as well as 17 lots at Dunston Hall, are subject to a lien filed by EVB bank against Dunwood Holdings, a company formed by Woodhouse and his wife, Abigail. The bank won a $7 million judgment in September against Dunwood and since has been foreclosing on company assets. S. Miles Dumville, a Richmond attorney representing EVB, said the bank has yet to foreclose on Dunston Hall properties. Dumville contends that no one is allowed to remove items from the houses because of the lien.

For more, see Embattled developer charged with larceny (George Woodhouse is accused of taking items subject to a lien from two unoccupied houses).

Go here for other posts on pre-foreclosure homeowner fixture stripping.

(1) A special grand jury in July charged him with forging five certificates of occupancy, actions that resulted in 10 felonies. The documents allowed Woodhouse to close on the sales of houses and receive money from his lender, EVB Mortgage, before the county would have issued real certificates. See Forgery trial for Gloucester developer scheduled for Feb. foreclosure fixture stripping apple

Listing Agent Photos May Be Key In Prosecution Of Foreclosed Homeowner Accused Of Trashing Home Before Walking Away

In Oregon City, Oregon, KPTV Channel 12 reports:

  • Investigators said a Damascus couple whose house went into foreclosure trashed the place, stole every appliance and fixture inside and are now facing criminal charges. Grigoriy and Inna Bogoslavets have been indicted by a grand jury on charges of theft, trespassing and criminal mischief.


  • According to court documents, between August and November 2008, they stripped and damaged their old house, causing more than $50,000 in damages.


  • The previous owners, Grigoriy and Inna Bogoslavets denied any wrongdoing and claimed they'd been living like that for some time. But [real estate agent Carl] Iams said his firm posted pictures for their sales listing, with the house in excellent condition, right before the family moved out.

For more, see Couple Indicted After Foreclosed Home Stripped (Former Homeowners Took Everything, Investigators Say) (read story) (watch KPTV video report).

Go here for other posts on pre-foreclosure homeowner fixture stripping. foreclosure fixture stripping apple

Wednesday, January 21, 2009

Countrywide Faces Civil RICO, RESPA Charges In Washington Class Action Suit; Accused Of Using Do-Nothing Subsidiary To Inflate, Pocket Appraisal Fees

In Seattle, Washington, the law firm Hagens Berman Sobol Shapiro LLP announced last week:

  • A group of Washington homeowners this week filed a lawsuit against Countrywide, a wholly owned subsidiary of Bank of America (NYSE: BAC) and the nation's largest mortgage company, claiming the mortgage giant illegally rigged the appraisal process in a scheme to boost profits at the expense of homeowners and independent appraisers.

  • Filed under the Racketeering Influenced and Corrupt Practices Act (RICO), the suit claims that Countrywide forces homeowners to use its wholly owned subsidiary LandSafe, for appraisals. The company then turns around and subcontracts the work to independent appraisers while charging homeowners as much as 200 percent of the actual cost of the appraisal.


  • The lawsuit, filed in U.S. District Court in Seattle, seeks to represent all homeowners who purchased or refinanced their home through Countrywide and LandSafe, and asks the court to award plaintiffs damages. [...] The lawsuit cites violations of federal law under RICO and RESPA. Other counts include unjust enrichment, breach of fiduciary duty and violation of California unfair competition law. You can learn more about this case by visiting

For the press release, see Hagens Berman Files Class Action Against Lending Giant Countrywide.

For the lawsuit, see Clark v. Countrywide Home Loans, Inc., et al.

Thanks to Mike Dillon at for the heads-up on the story.

Toxic Chinese Drywall Suspected Source Of Health Problems For C. Florida Homeowners, Pets; May Also Be Cause Of Home Equipment, Electronics Failures

In Manatee County, Florida, the Sarasota Herald Tribune reports:

  • As the investigation into toxic Chinese drywall continues, a single street in Manatee County appears to be ground zero for the largest cluster of problem homes. Within the Lighthouse Cove subdivision of Lennar's Heritage Harbour development, sits a quaint street of two-story homes called Montauk Point Crossing. Today, it is a virtual ghost town.

  • At least six families have already moved out of their homes, either at Lennar's expense or their own. At least two more are planning their exits as soon as possible. The residents, many with small children, are experiencing an outbreak of the same chronic symptoms -- respiratory problems, painful sore throats, headaches and nosebleeds -- which they attribute directly to the drywall chemicals filling their homes.

  • Residents of Montauk Point have seen their air-conditioners fail on a regular basis -- so often that the presence of a white HVAC repair truck became a running joke in the neighborhood. Metal within their homes corroded and turned black: piping, electrical wiring, even silver jewelry. Electronics also began to fail and short-circuit. Residents say they have gone through multiple televisions, computers and cable boxes. Light switches stopped working altogether, or only intermittently. "I'm on my third TV," said homeowner Dan Tibbetts. "Everything just dies."

Reportedly, one family had their two dogs euthanized after they began acting erratically; one became oddly aggressive and the other would not drink water.

For more, see Ground zero in drywall dispute.

Tuesday, January 20, 2009

Contoversial Nationwide Service To Facilitate Loan Modifications In Bankruptcy Leaves Debtor Attorneys Divided reports:

  • Aiming to keep overextended borrowers in their homes, judges and trustees in the federal bankruptcy court system have helped a small Kentucky firm set up a nationwide service intended to speed the modification of troubled mortgages.

  • But the court system’s unusual support for the private project, which some supporters believe could also help stem a surge in bankruptcies, has divided debtor attorneys, some of whom believe their colleagues have gotten in bed with the enemy and others who say it is just one potential tool to clean up a giant mess. It could, however, make millions for its creator.

  • The idea behind the “Debtors Counsel Loss Mitigation Web Portal” is simple, owner Joseph C. Smith II told in an interview. Attorneys representing troubled borrowers can use a single Web site to communicate with many mortgage servicers and lenders about changing the terms of loans. The servicers and lenders, in turn, can consolidate their work on such requests.


  • [D]avid Baker, a bankruptcy attorney from Boston, told that he is using the site and “I’m certainly going to put as many of my clients through it as I can in hopes that we accomplish something.”


  • But [April] Charney, the Florida legal aid attorney, said her work has proven that, because of securitization issues, the true ownership of many currently troubled mortgages cannot be determined, which means that deals with lenders cannot be made. “Maybe they’re using this data to access a workout, but if you’re in my world you know there’s no workouts to be had,” she said. “I don’t want my client giving out financial information to the other side, and that’s what you’re doing with this portal.”

For more, see Bankruptcy system takes on the mortgage mess (Federal trustees help private entity land role as delinquent-loan middleman) (go here for entire story on one web page).

L.A. County To Aggressively Attack Real Estate Fraud As Complaints On Loan Modification, Foreclosure Consultants Flood County Consumer Affairs Office

In Los Angeles, California, the Los Angeles Daily News reports:

  • At a time when home foreclosures in Los Angeles County have increased elevenfold in the past three years, the Board of Supervisors launched a new effort Tuesday to attack predatory lending practices and aggressively prosecute real estate fraud.


  • Pastor Herrera Jr., director of the county Consumer Affairs Department, said his office is receiving a flood of telephone calls from people victimized by the deceptive practices of home loan modification facilitators and foreclosure consultants.

  • "The most common thing we're seeing are people who tell the homeowners if they give them some upfront money that they can guarantee they will get them a loan modification with a fixed interest rate and there is no problem because of their past credit history," Herrera said.

  • If the homeowners are already in foreclosure, Herrera said, foreclosure consultants represent themselves as the "saviors," promising to get them out of foreclosure and sometimes pressuring homeowners to sign documents transferring ownership of the home to the consultants.

For more, see It's war on real estate fraud.

Monday, January 19, 2009

Fannie, Freddie Accused Of Requiring Financially Strapped Homeowners To Waive Legal Rights As Condition To Getting Loan Modifications

The Washington Independent reports:

  • When the government announced in November that it would use mortgage giants Fannie Mae and Freddie Mac to streamline loan modifications for possibly hundreds of thousands of borrowers, officials billed the idea as a fast-track program to fight foreclosures. What no one mentioned is that homeowners would have to sign away their rights to sue, if they wanted to get those loans modified.(1)


  • [I]ncluded in the Fannie agreement is a provision stating that “borrower has no right of set off or counterclaim or any defense to the obligations of the Note or Security Instrument.”

  • The waiver is part of the borrower requirements that must be signed for the loan modification. Fannie Mae’s sample version is available on one of its websites; the Freddie Mac agreement, which has similar language, can be accessed only by servicers. The agreements were designed by Fannie and Freddie.

  • In plain English, the waivers mean a borrower can’t sue the lender who originated the mortgage if the loan modification goes bad, or for any other lending abuses concerning their loan, [senior policy counsel for the Center for Responsible Lending Julia] Gordon said.(2)

For more, see Freddie, Fannie Force Borrowers to Waive Legal Rights (Housing Advocates, Congressional Leaders Call Practice Abusive).

(1) Requiring borrowers to waive their legal rights in order to get loans modified has become an increasingly popular tactic as the housing crisis has worsened, said Ira Rheingold, executive director of the National Association of Consumer Advocates. He said consumer attorneys regularly advise clients not to sign modification agreements with waivers, or to cross out the waivers first. “It wasn’t invented by Fannie and Freddie,” Rheingold said. “I’m not surprised it’s in there, but I’m disappointed. It’s a real issue. The government shouldn’t be asking people to waive their rights to claims.”

(2) Gordon said that a House Financial Services Committee hearing in July featured a dramatic confrontation, in which Countrywide representatives denied requiring the waivers - until she produced a copy of one from her briefcase. The lenders said they would put the waivers under review. Committee Chairman Barney Frank told them to put the waivers “six feet under” review, and to end the practice.

Attorneys For Major Lender In New Hampshire Lawsuit Admit Company's Loan Modification Assurances Are "Mere Commercial BS"

In Merrimack County, New Hampshire, reports:

  • In marketing, advertising and testimony before Congress, Countrywide Home Loans has said repeatedly that it is working hard to modify the mortgages of financially strapped borrowers caught up in the subprime meltdown.

  • But in a New Hampshire court, attorneys for the lending giant are singing a different tune, describing such assurances as “mere commercial puffery.”

  • Saying the modification offers are “only Countrywide’s vague advertisements,” attorneys for the lender are asking the court to throw out a lawsuit alleging breach of good faith, fraud, negligence and misrepresentation, which was filed on behalf of a family that was refused a loan modification by the California-based company.

  • It’s breathtaking,” attorney Mary Frances Stewart of Concord, N.H., said of Countrywide’s response to the lawsuit she and co-counsel Krista Atwater filed in Merrimack County Superior Court. In its response, “Countrywide is saying, ‘We don’t have any obligation or even necessarily the intention of actually modifying these loans,’ and yet they’re representing that they do.”

For more, see In court, Countrywide calls its ads ‘puffery’ (Defending lawsuit, mortgage company mocks loan modification assurances) (go here for entire story on one web page).

Authorities Have Their Hands Full As Real Estate Operators Shift From Equity Stripping Scams To Upfront Fee Loan Modifications

The New York Times reports:

  • As home values across the country continue to plummet, the authorities say a new breed of swindler is preying on the tens of thousands of homeowners desperate to avoid foreclosure.

  • Until recently, defrauders tried to bilk homeowners out of the equity in their homes. Now, with that equity often dried up, they are presenting themselves as “foreclosure rescue companies” that charge upfront fees to modify loans(1) but often do nothing to stave off foreclosure.

  • The Federal Trade Commission brought lawsuits last year against five companies representing 20,000 customers, and state and local prosecutors have brought dozens more.


  • There’s no way for the consumer to sort out the legitimate companies,” said [Florida Attorney General Bill] McCollum, who added that he had limited resources to fight what he called “a sheer volume question.” [...] “That’s all I’ve been doing for the last year,” said Angela Rosenau, a deputy attorney general in California, citing more than 300 complaints about fraudulent companies last year, not counting those made to local prosecutors. [...] In Colorado, the attorney general’s office has closed 15 mortgage rescue companies that charged fees up front. [...] The [Illinois] attorney general’s office has received “thousands” of complaints about such companies, said Michelle Garcia, an assistant attorney general [...].

For more, see Swindlers Find Growing Market in Foreclosures.

(1) According to the story, there are 21 states that prohibit charging upfront fees for negotiating loan modifications.

JP Morgan To Modify Troubled Securitized Mortgage Loans; Doesn't Believe Actions Will Violate Investor Agreements

In New York City, Reuters reports:

  • JPMorgan Chase & Co., the second-largest U.S. bank by assets, on Friday said it will boost home foreclosure prevention efforts by modifying loans tied up in securitizations, in addition to the loans it owns.


  • "Chase believes it can legally modify the vast majority of its mortgages owned by investors consistent with the relevant investor agreements and the best interests of investors," the retail arm of JPMorgan said in a statement. It will seek approvals from a "small number" of situations where contracts may limit modifications, it added.

  • An investor group led by Greenwich Financial Services is suing to force Bank of America-owned Countrywide Financial to repurchase thousands of loans that the lender intends to modify under a predatory lending settlement. The lender would be liable to pay hundreds of trusts about $80 billion for loans it modifies, according to lawyers of the plaintiffs.

For more, see Chase to tackle modifying investor-owned mortgage.

For Greenwich lawsuit, see Greenwich Financial Services v. Countrywide Financial Corporation.

Sunday, January 18, 2009

Twice-Jailed "Priest" Accused Of "Preying" On Builders, Leaving Them "On Their Knees" After Clipping Them For Upfront Fee$ On Sour Loan Promises

Much like financially strapped homeowners trying to save their homes, it appears that some builders and developers whose financing sources have dried up can be equally vulnerable to upfront fee finance-related deals that somehow seem to go sour. In this light, the St. Petersburg Times recently reported the story of THIS MAN:

  • [T]he Very Rev. Father Barney Canada, who ran Providence Funding, a self-proclaimed faith-based commercial lender headquartered near the University of Notre Dame. In his black clerical garb and white collar, Canada claimed to be a priest from a shadowy 19th-century offshoot of the Roman Catholic Church.


  • "He comes across as legitimate and knowledgeable with the correct connections. We played the game,'' [one Miami developer who claims Canada clipped him for $300,000] says. "I've been burned by four or five other people, too. But not anywhere near that amount.''

  • Canada used his priestly routine to take developers across Florida and beyond for upward of a million dollars in fees the past year, records show. Not a single loan has closed, and none of the applicants knew that Canada had been incarcerated twice in the 1990s for running "advance fee" lending scams that defrauded businessmen just like themselves.

For more, see Father Barney takes fees, leaves a "host" of developers behind.

Fannie Unveils Its "No Boot" Policy For Eligible Tenants In Foreclosed Homes; Renters To Choose Either Month-To-Month Lease Or "Cash For Keys"

In Washington, D.C.:

  • Fannie Mae [Tuesday] announced the establishment of a new National Real Estate Owned (REO) Rental Policy that will allow qualified renters in Fannie Mae-owned foreclosed properties to stay in their homes.


  • The new policy applies to renters occupying foreclosed properties at the time Fannie Mae acquires the property. Renters occupying any type of single-family property will be eligible including residents of two- to four-unit properties, condos, co-ops, single-family detached homes and manufactured housing. Eligible renters will be offered a new month-to-month lease with Fannie Mae or financial assistance for their transition to new housing should they choose to vacate the property. The properties must meet state laws and local code requirements for a rental property.

For the Fannie Mae press release, see Fannie Mae Announces National REO Rental Policy (Renters in Fannie Mae-Owned Foreclosed PropertiesEligible to Stay in Their Homes).

Go here for Fannie's National Real Estate Owned Rental Policy Frequently Asked Questions.

New Jersey Sets Aside $12M To Train, Pay For Attorneys, Counselors In Statewide Foreclosure Mediation Program

In Trenton, New Jersey, Legal Newsline reports:

  • Eligible New Jersey homeowners will be able to use a new state-supported mortgage foreclosure mediation program(1) aimed at helping homeowners remain in their homes.


  • The program is supported by $12.5 million in state funds, $12 million of which will be used to train and pay for housing counselors and lawyers through the New Jersey Housing and Mortgage Finance Agency. The other $500,000 will be used to provide foreclosure mediator services to homeowners.

  • Eligible homeowners will be provided lawyers to consult with housing counselors in proposing ways to resolve mortgage delinquencies. Homeowners and lenders who are unable to resolve their disputes out-of-court will [ap]pear before a neutral court-appointed mediator. To be eligible for the mediation program, homeowners must not be in bankruptcy, the homeowner's primary residence must be the property facing foreclosure, and the residence must be a one to three-family residence.

For the story, see N.J. homeowners to receive state supported foreclosure media.

(1) Reportedly, the program is a joint effort of the Judiciary, the Office of the Attorney General, the Housing Mortgage Finance Agency in the Department of Community Affairs, the Public Advocate, the Department of Banking and Insurance, and Legal Services of New Jersey.