Saturday, May 2, 2009

More On Loan Modifications Gone Bad

The following links are to stories on financially strapped homeowners reporting problems with loan modification companies they hired to help resolve their mortgage problems:

  • Chicago, Illinois: Scams about foreclosures, jobs, IRS feed on desperation. Last September, Esmeralda Carmona only had enough money to pay a fraction of her mortgage. Her husband, laid off nearly a year earlier, had not worked in nine months. Debt was mounting, and the mother of four was prepared to give up. But while driving to her job as a health care clinic coordinator in Chicago, Carmona heard a radio advertisement promising protection from foreclosure. She breathed a sigh of relief. She scraped together $1,500 to pay Centurion Loss Mitigation upfront for its help but found out four months later her house had been foreclosed upon. She says she considers herself a victim, like hundreds of thousands of others, whose tough times have been made worse by too-good-to-be-true quick fixes. The Illinois Attorney General's office filed a complaint against Centurion in early April. A temporary restraining order restricts the company from accepting any upfront fees, and a court date is set for next month. Centurion officials declined to comment for this story.

  • Weslaco, Texas: Woman Facing Foreclosure Takes Desperate Measures. She was in trouble. Months behind on her house payments, she says she took desperate measures to try to save her house from foreclosure. In the process, she lost $1,500. The woman asked us to protect her identity because relatives don't know about her financial situation. She showed us copies of checks she sent to Houston-based company called Excel Loss Mitigation: a cashier's check from November 26th, 2008 for $749 and a personal check for $749 sent December 26, 2008. The homeowner says she tried negotiating with her bank, but when that didn't work, she turned to the company. Now, she says Excel Loss Mitigation won't answer her calls.

  • Boise, Idaho: State: Mortgage company running business without license. The Idaho Department of Finance has issued a warning to Idaho consumers facing foreclosure: Don't do business with National Foreclosure Relief. IDOF says National Foreclosure has been running its business in Idaho without a license. The state department says the company has never been licensed in Idaho to engage in the offer or sale of mortgage loan modification services as required by state law. The state says it became aware of the company when an Idaho couple complained that it withdrew three payments of $1,200 from their bank account. The money never went toward their mortgage payments, the state says. Instead it went straight to the company. The couple lost their home to foreclosure. See also: Mortgage scam snags couple (A Nevada company took the Mounts' money, and the bank took their home).

California Duo Sentenced For Tricking 94-Year Old Homeowner Into Signing Over Title To House; Court Orders Ownership To Be Restored In Victim's Name

The San Bernardino, California District Attorney's Office announced:

  • A Victorville couple was sentenced to county jail on felony charges connected to real estate fraud and financial elder abuse. Joe Warf, 51, and Tracy Warf, 41, appeared in Victorville Superior Court on Friday, April 10, 2009. The pair was sentenced to 250 days and 365 days county jail, respectively, for financial elder abuse. Both will be placed on formal supervised probation for five years at the conclusion of their sentences.

  • In June 2008, Joe and Tracy Warf deceived the 94-year-old victim into signing over his San Bernardino home to them. The San Bernardino County District Attorney's Real Estate Fraud Unit conducted an investigation and arrested Joe and Tracy Warf on November 24, 2009. The court has already ordered that title to the San Bernardino house be transferred back into the victim's name.

For the DA's press release, see Victorville Couple Sentenced in Real Estate Fraud/Elder Abuse Case.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Pennsylvania AG Warns State Homeowners Of Defunct Escrow Company, Possible Unpaid Property Tax & Insurance Bills

From the Office of the Pennsylvania Attorney General:

  • Attorney General Tom Corbett [...] announced that the Attorney General's Bureau of Consumer Protection has launched an investigation into the business practices of American Escrow LLC, an Illinois-based escrow company that suddenly halted operations in March 2009.

  • Corbett said that homeowners across Pennsylvania, along with consumers from several other states, used American Escrow to handle the payment of their property taxes and/or homeowners insurance. "Based on our preliminary investigation, it is possible that property tax and insurance bills for more than 100 Pennsylvania consumers were not paid by American Escrow," Corbett said. "It is essential that consumers who used American Escrow contact their local taxing authorities and homeowner's insurance companies as soon as possible to notify them of the problem, verify what payments have been made and make arrangements to directly pay any balances that are due." [...] American Escrow customers in Pennsylvania who do not receive a letter [from the pennsylvania Attorney General], or those who misplace the complaint form, can download a copy of the form.

For the entire press release, see Attorney General Corbett cautions homeowners about closed escrow company; encourages check of tax & insurance records. EscrowRipOffAlpha

Friday, May 1, 2009

Atlanta Homeowner Gets Legal Aid Help In Fighting Off Wachovia Predatory Loan Foreclosure

In Atlanta, Georgia, WGCL-TV Channel 46 reports:

  • [A]vonia Carson will never forget the day she and her husband made their last payment on the house they bought in 1971. [...] But a few years ago, after adding on a new den and accumulating some other debt after the death of her husband, Carson answered an advertisement from Wachovia bank to try to get her debt payments down. She borrowed against her home and even though she brings in just $1,200 a month through social security, Wachovia gave her a loan with a payment of $900 a month, which amounts to 75 percent of her income. She's now on the verge of losing her home.


  • Carson feels guilty for not knowing what she was signing. "We people need to be educated a little bit more about the practices of banks,” said Carson. Bill Brennan's group at the Atlanta Legal Aid Society has now taken on Carson's case free of charge. "Ms. Carson has nothing to feel guilty about," said Brennan. "That loan should have never been made by Wachovia. Wachovia knew exactly what it was doing." Carson's lawyers are in negotiations with Wachovia, but so far, no settlement has been made on the loan.

For the story, see Demonstrators Protest Predatory Lending (Protestors Say Banks Knowingly Made Loans They Knew Couldn't be Paid).

Virginia Man Charged With Using Stolen IDs To Steal Title To, Fraudulently Borrow Against, Two Homes

In San Bernardino, California, the Office of the San Bernardino District Attorney announced:

  • [S]an Bernardino County District Attorney Investigators assigned to the Real Estate Fraud Unit traveled to suburban Washington D.C. and escorted wanted suspect, Duk Sung Jin, 30, of McLean Virginia, back to San Bernardino County to face felony fraud charges.


  • Jin is facing felony charges of conspiracy and grand theft with an estimated total loss of over 1.2 million dollars. The victim’s identity was used to steal (2) two homes and (2) two vehicles. The homes went into foreclosure after the equity was drawn out of the homes in the form of 2nd mortgages in the victims' names.

For more, see Additional Suspect Arrested on Mortgage Fraud Charges.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Miami Man Convicted Of Using Stolen IDs To Rip Off Unwitting Homeowners' HELOC Accounts

From the U.S. Attorney's Office (Eastern District of Virginia):

  • A jury convicted Henry “Uche” Obilo, age 29, of Miami, Fl., today of conspiracy to commit bank fraud involving a home equity line of credit fraud scheme that has been linked to $8 million in actual losses.(1)


  • According to court documents and evidence adduced at trial, the defendant and other co-conspirators used fee-based web databases to search for potential victim account holders with large balances in home equity line of credit (HELOC) accounts. This information included name, address, date of birth, and social security number. Once the conspirators identified a victim, they used other online databases to obtain information commonly used in security questions, such as the victim’s mother’s maiden name. The conspirators then obtained credit reports on the victims in order to verify personal information and account balances.

  • Armed with a victim’s personal information, the conspirators called the victim’s financial institution, impersonated the victim, and transferred the majority of the available money from the HELOC account into an account from which a wire transfer could be sent.

For more, see Jury Finds Miami Man Guilty in $8 Million Bank-Fraud Conspiracy.

(1) Obilo is the seventh individual convicted in this case, and the first to be convicted following a jury trial. The other six, who all pled guilty, include: Abel Nnabue, age 33, of Dallas, who was sentenced to 54 months on Jan. 30, 2009; Precious Matthews, age 27, of Miami, who was sentenced 51 months on Feb. 13, 2009; Ezenwa Onyedebelu, age 20, of Dallas, who was sentenced to 37 months on Feb. 27, 2009; Daniel Orjinta, age 42, of Nigeria, who was sentenced to 42 months on March 6, 2009; Brandy Anderson, age 30, of Dallas, who was sentenced to 2 years of supervised probation and 40 days of community confinement on Feb. 20, 2009; and Paula Gipson, age 33, of Dallas, who pled guilty on Feb. 26, 2009 and is scheduled to be sentenced on May 22, 2009. DeedZetaTheft

Wisconsin Man Charged With Stealing From Dementia-Stricken Homeowner; Victim's House Ultimately Lost In Foreclosure

In Chippewa Falls, Wisconsin, WQOW-TV Channel 18 reports:

  • A Chippewa Falls man is charged with stealing thousands of dollars from a woman who was in the early stages of Dementia. Todd Evenson is charged with theft. Investigators say he made a deal with a woman in 2004 that he would do chores in exchange for a room. Over three years, investigators say Evenson used the woman's debt consolidation loan to buy power tools, a motorcycle, and even pay some of his child support payments. Nearly $17,000 was taken and the woman's home was eventually foreclosed on. The criminal complaint says Evenson has a history of forgery, credit card fraud and identity theft. He'll be in court in July.

Source: Man Charged With Stealing From Woman With Dementia. FinancialAbuseOfElderlyAlpha

Thursday, April 30, 2009

Maryland Lawmaker Accused In Equity Stripping Foreclosure Rescue Scam Tells Jury He Was "Doing The Lord's Work"

In Anne Arundel County, Maryland, The Baltimore Sun reports:

  • A state delegate from Anne Arundel County, who is being sued for damages by a Pasadena woman who claims he tricked her into signing over her home, told a jury Wednesday that he was "doing the Lord's work." In his closing arguments, Del. Tony McConkey, a Severna Park Republican and real estate agent who is a law school graduate and represented himself in court, said that he was trying to help the woman save her home from foreclosure and that he never "knowingly and willfully broke the law."

  • Attorneys for Teresa Milligan asked the jury to award her $1.5 million for damages for the loss of her condominium and pain and suffering. "This is the American Dream we're talking about," Peter A. Holland said in his closing arguments. "She is always going to feel the humility, the indignity and the shame of this."

  • Holland is representing Milligan with Michael Morin. Milligan, a mother of three, has been living with a brother since losing her home, according to court testimony. Anne Arundel County Circuit Judge D. William Simpson ruled in September that McConkey had acted wrongly in transfering ownership of the condominium to himself.(1) The jury began deliberations Wednesday evening and is expected to reach a verdict Thursday morning.

Source: Delegate denies tricking woman out of home (McConkey says home transfer was 'doing the Lord's work').

See also, WBAL-TV Channel 11: Delegate Defends Self In Mortgage Trial (McConkey Accused In Foreclosure Rescue Scheme).

(1) Another recent Baltimore Sun story reports that Milligan's civil suit against McConkey alleges "foreclosure rescue fraud," a violation of a homeowner protection law that he voted for in 2005. In January 2006, Milligan said, McConkey offered to help her save her condo from foreclosure and to help her obtain a loan to make payments, according to court testimony. Milligan signed ownership of her condominium over to McConkey, but then called him within the allotted three days to say that she had changed her mind, according to her testimony in Anne Arundel County Circuit Judge D. William Simpson's courtroom Tuesday. Eight months later, McConkey filed the original contract that Milligan had signed and began the paperwork to have her removed from the home, according to court documents.

Cape Cod Time Share Developer Pocketed $1.5M Of Customers' Cash, Then Failed To Deliver Units, Says Mass AG

In Boston, Massachusetts, Cape Cod Times reports:

  • The former owner of the Navigator Beach Club in Dennisport collected more than $1.5 million from consumers, but never delivered the timeshare units promised in exchange, Attorney General Martha Coakley alleges in a lawsuit filed [last week] in Boston. Hingham resident Robert Reposa and LSC Associates, his development and management company, are accused of taking money from more than 100 buyers and later abandoning the project without providing any compensation to consumers. The resort property was sold in a foreclosure auction in October. [...] The complaint also accuses Reposa of using deceptive marketing practices and failing to properly file deeds for many of the timeshare units that were sold.

  • In additional to the attorney general's complaint, another lawsuit will soon be filed on behalf of 25 plaintiffs who paid Reposa close to $600,000 for units that were never completed, Falmouth attorney Richard Reilly said. "They bought it, then it was foreclosed on before they knew what was going on," Reilly said. "None of them ever got to use them."

For more, see Attorney general sues Cape timeshare developer.

For the Massachusetts Attorney General press release, see AG Coakley Obtains Temporary Restraining Order Against Former Owner of Cape Cod Time-Share Who Allegedly Scammed Consumer Out of Millions.

Philadelphia Homeowner Loses Home To Title Fraud; Cost To Hire Lawyer To Unwind Scam Unaffordable For Victim

A recent story by The Associated Press on the apparent need for strengthening notary laws to protect unwitting homeowners from having their homes stolen out from underneath them by deed/title fraud scammers contained these excerpts on one victim who lost her home and, because retaining an attorney to file a civil lawsuit to undo the theft was unaffordable, was never able to get it back:

  • The small row house had been unoccupied for months, but it was still a home. And if she had really wanted to sell it, Virginia Coontz says, she certainly would have spelled her name right on the title transfer. Even with her name wrongly spelled "Coonzt," the sale went through and she ultimately lost the house. Prosecutors said she was a victim of a title fraud ring that collected about $400,000 by selling off more than 80 properties — unbeknownst to the true owners — through the help of corrupt notaries.


  • In 2004, Coontz and her teenage daughter left their home temporarily unoccupied when they moved in with her son. Then, in October 2005, relatives saw people coming and going from the property; Coontz arrived to find her valuables gone and bags full of her other belongings on the sidewalk. A confrontation and several phone calls led to a police report and discovery of the forged deed.

  • Behind on her taxes and unable to afford a lawyer, Coontz gave up.(1) The house was sold at a sheriff's auction in 2007 for $15,600. Coontz, 49, now says she is unable to work due to depression. She and her teenage daughter continue to live with her son. She sleeps in the basement, and her daughter, on a living room couch.

Source: Tougher notary laws sought to curb house thefts.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

(1) Unlike auto theft (or any other theft of personal property) where the police will return the stolen property to its rightful owner (if they're lucky enough to physically recover it), no similar parallel exists when property owners have their homes stolen from them, even though the house itself has not been physically ripped out of the ground and absconded with. It is up to the victimized homeowner to retain a lawyer to file a civil lawsuit to legally unwind the mess created by the scammers by:

  • voiding the forged deed, and
  • where the scammers duped a mortgage lender into giving them a loan secured by the house, voiding the mortgage.

During this time, victimized homeowners must be sure to keep current on the real estate taxes, lest they risk losing the home in a county tax foreclosure. DeedZetaTheft

NYC Man Charged With Swiping Co-Owner's 75% Interest In Bronx Building; Also Accused Of Duping Notary Into Signing Off On Mortgage Satisfactions

In The Bronx, New York, the New York Daily News reports:

  • A Manhattan businessman struck out in his fraudulent bid to sell a building across from Yankee Stadium, Manhattan federal prosecutors said Monday. Mark Benun, 35, hid several mortgages on the commercial property at 67-79 E. 161st St. by faking notarized documents, prosecutors said. Benun and an unidentified party had bought the building for $9.5 million in 2006 with borrowed money.

  • Benun sold the property to an unidentified buyer in February for $6 million by claiming to be its sole owner. That deal called for Benun to get $4 million in cash and a note for $1.96 million, Manhattan federal prosecutors said.

  • To dupe the buyer, prosecutors said, Benun created three bogus satisfactions of mortgages that were notarized. He conned a notary into signing off on the documents by claiming the individuals whose signatures were on them got stuck in traffic, prosecutors said. The feds traced money from the sale to a company controlled by Benun and to out-of-state accounts. Benun faces up to 10 years in prison.

Source: Businessman strikes out in fraudulent bid to sell building across from Yankee Stadium.

For the U.S. Attorney Attorney's press release, see Manhattan Property Owner Charged In Fraudulent Sale Of Jointly-Owned Building.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

NYC Attorney: Deed, Home Equity Scammers "Continue To Have Better Chance Of Being Kidnapped By Somali Pirates Than Of Being Prosecuted By Brooklyn DA"

In Brooklyn, New York, one local legal services attorney expressed his views on the apparent slow-footedness of Brooklyn District Attorney Charles Hynes' office in prosecuting scammers perpetrating mortgage, deed, and home equity ripoffs in a recent New York Times story :

  • Most of the con artists perpetrating frauds at this moment continue to have a better chance of being kidnapped by Somali pirates than of being prosecuted by Charles Hynes’s office,” said Rick Wagner, director of litigation at Legal Services Corporation A in East New York, referring to the Brooklyn district attorney’s office. “When they arrest someone, then I’ll get excited.”

Source: Schumer Seeks Grants to Battle Mortgage Fraud.

Wednesday, April 29, 2009

Florida Appeals Court Reinstates Lawsuit By Miami Widow Alleging Conspiracy To Defraud, Fraud, Negligence In Foreclosure Rescue, Home Equity Ripoff

A Florida appellate court reversed a lower court ruling that dismissed a case with prejudice brought by a 72-year old widow facing foreclosure who complained that she was tricked into signing away the title to her home by an alleged equity stripping, foreclosure rescue operator, Florida Foreclosure Placement Center ("FFPC").

According to the complaint, she was approached by an agent of the company who assured her that it was not a mortgage broker or realtor and that FFPC could help her save her home without losing ownership. After agreeing to FFPC’s help, the agent accompanied her to a Notary Public located near her Liberty City home where she signed a power of attorney in favor of FFPC. Two months later, she executed documents that purportedly would save her home from foreclosure without jeopardizing her ownership. The documents did not, however, preserve her ownership interest, but instead closed the sale of, and transferred title to, her home to a strwa buyer who she had never heard of or met and who was not present at the closing of this sale. This "sale" was financed with the proceeds of two loans in the total amount of $165,000 brokered by two of the alleged conspirators - Envision Funding, LLC and Cesar Jose.

In reinstating the lawsuit, the appeals court ruled that the widow's complaint sufficiently stated claims regarding the sale of her home against a title agent, a mortgage broker, and the broker's principal for negligence, fraud, and conspiracy to defraud, and that to the extent there wer pleading defects in the complaint, the homeowner should have been allowed to amend her claims.(1)

For the case, see Charles v. Florida Foreclosure Placement Center, 988 So. 2d 1157 (Fla. 3d DCA 2008).

(1) While this case is not precent-setting in any legal sense, it does, nevertheless, support the proposition that there are still lower court judges who are either intellectually lazy, or who operate with their head in the clouds when it comes to issues of home equity theft. Whether the 72 year old widow is able to prove in court that she had her house stolen remains to be seen. But the appellate court made it clear, in a unanimous decision, that the complaint should not have been dismissed without her having the opportunity to prove her allegations. Credit goes to her appellate attorney, James Jean-Francois, who took on the appeal on her behalf, and without whom she would have lost any chance to recover the title to her home.

Foreclosure Auction Buyer: "Object Is To Get Cheapest Price We Can, Not To Bid Each Other Up" As Intimidation Accusations Flare Up At Courthouse Sales

In Lee County, Florida, The News Press reports:

  • [T]om Bruzzesi, an animated reality show hopeful, met with John Carney, a short, dark-haired slave to the Bluetooth in his left ear. Bruzzesi, Carney and a third man, Mike Kopyta, are the most prolific foreclosure auction buyers in Lee County, nabbing more than half of the approximately 500 properties not taken back by the banks since Jan. 1, 2008, according to county figures obtained through a public-records request. During auctions in March, veterans Carney and Bruzzesi, along with other regulars, would share hand signals, laughs and fist bumps with obvious familiarity as the auction progressed.


  • Carney has attended auctions for 11 years and has come to know the main bidders. "The object is to get the cheapest price we can, and not to bid each other up," Carney said before an auction in March. Fort Myers resident Bruzzesi, 44, and Cape Coral residents Carney, 42, and Kopyta, 37, rarely challenge one another, according to bid sheets on file with the Lee Clerk of Court's office.

  • Through mid-March, Bruzzesi had not bid against Kopyta on a property Kopyta won since January. Kopyta has not seriously challenged a property Bruzzesi landed since December, though there were a few bidding wars prior to then. In all, Kopyta has bid against Carney or Bruzzesi on five occasions since January 2008. Carney has never bid against Bruzzesi on a property Bruzzesi landed, while Bruzzesi has logged only one bid on a property Carney eventually won.


  • About two months ago, Clerk of Court [Charlie] Green said a verbal complaint about possible intimidation by Bruzzesi came to his attention. Green said he doesn't remember who made the complaint, but that it prompted him to make an informal announcement warning all bidders he has the authority to remove them permanently.

  • "We had people doing intimidation," Green said from his office, a short walk down the hall from the auction spot. "All I want is open and honest bidding." Bruzzesi's proposed reality show persona is abrasive and in your face. Bruzzesi said that in the past he would intimidate other bidders, but Green's warning led to change.

For more, see Moguls buy up Lee County's foreclosures (go here for entire story on one web page).

Go here for posts and links to stories involving collusive bidding / bid-rigging charges in connection with real estate and foreclosure-related auctions.

Delinquent Homeowner's Bank Account Wiped Out By Mortgage Lender Before Foreclosure; No Court Judgment Needed, Says Bank

In Phoenix, Arizona, KTVK-TV Channel 3 reports:

  • [U]nable to keep up with his mortgage payments, [Joel] Contreras is giving his condo back to the bank. He says that's depressing enough, but he certainly wasn't prepared for what happened next. "When I looked at my bank account and saw that it was all wiped out, it took me a good day to rebound from that," he said. "I was panicking. I was freaking out."

  • Why? Well, Contreras discovered someone raided his bank account and withdrew nearly $2,100, leaving him penniless. Just who would do such a thing? Wells Fargo, that's who. Contreras has a second mortgage with Wells Fargo and says even though they knew he was giving his condo back, he says they took what they could from his account.

  • "If your lender is the same bank that your checking account is with then they don't need a judgment," Contreras said. "They can just wipe out your whole account." He's right. In an e-mail to 3 On Your Side, Wells Fargo says, "... State and federal law gives financial institutions the right to claim unpaid and past due amounts owed to them ..." They go on to say, "This is a common industry practice."

For the story, see Mortgage lender can raid your bank account during foreclosure.

Tough Economy Triggers Sleazy Collection Practices As Threatening, Humiliating MySpace Messages, Profanity Alleged In Civil Suits

In Chicago, Illinois, WLS-TV Channel 7 reports:

  • A Chicago man is suing a collection agency and JP Morgan Chase Bank for posting threatening messages on his daughter's MySpace account. James Ricobene claims Universal Tracing Services threatened his daughter with felony charges and possible imprisonment if he didn't pay back his car loan.

  • When he contacted Chase, Ricobene claims, he was told the bank employs Universal because the company uses social networking sites and that it's an "effective collection practice." The suit accuses Universal and Chase of libel, invasion of privacy and violation of the Consumer Fraud Act, and asks for more than $150,000 in damages.

Source: Man sues bank over threatening MySpace messages.

For the lawsuit, see Ricobene v. JP Morgan Chase Bank, Universal Tracing Services.


In Martinsburg, West Virginia, The West Virginia Record reports:

  • A Berkeley County couple is suing a Pennsylvania law firm, two of its employees and a Florida company over alleged illegal phone calls the law firm made to the couple's house in an attempt to collect a debt from them. Linc and Eileen Beers filed suit March 10 in federal court against the Law Office of Thomas Landis, Thomas Lanis, Paul Kenwood and Oliphant Financial.

  • The Beers say Kenwood, who works for the Law Office of Thomas Landis, called them repeatedly throughout May and June on behalf of Oliphant in an attempt to collect debt the Beers owed to Oliphant.During the phone calls, Kenwood accused Eileen Beers of being a "foreigner" and "stealing company money," the suit states. In some of his calls, Kenwood would use profane language, calling the Beers "[*]ucking liars" and "thieves," according to the complaint.


  • In the five-count suit, the Beers are seeking $4,392.96 in statutory damages, $10,000 in actual damages for each incident, unspecified punitive damages, a correction of their credit report, a cancellation of their debt, attorney's fees and other relief the court deems just.

For the story, see Couple sues law firm, others over collection calls.

Tuesday, April 28, 2009

MERS: "A Corporate Cloak" To Obscure Identity Of Predatory Lenders, Cushioning Them From Fallout From Their Reckless Practices?

The New York Times reports:

  • [A]lthough the average person has never heard of it, MERS — short for Mortgage Electronic Registration Systems — holds 60 million mortgages on American homes, through a legal maneuver that has saved banks more than $1 billion over the last decade but made life maddeningly difficult for some troubled homeowners.

  • Created by lenders seeking to save millions of dollars on paperwork and public recording fees every time a loan changes hands, MERS is a confidential computer registry for trading mortgage loans.


  • If MERS began as a convenience, it has, in effect, become a corporate cloak: no matter how many times a mortgage is bundled, sliced up or resold, the public record often begins and ends with MERS. In the last few years, banks have initiated tens of thousands of foreclosures in the name of MERS [...] confounding homeowners seeking relief directly from lenders and judges trying to help borrowers untangle loan ownership.(1) What is more, the way MERS obscures loan ownership makes it difficult for communities to identify predatory lenders whose practices led to the high foreclosure rates that have blighted some neighborhoods.


  • To a number of critics, MERS has served to cushion banks from the fallout of their reckless lending practices. “I’m convinced that part of the scheme here is to exhaust the resources of consumers and their advocates,” said Marie McDonnell, a mortgage analyst in Orleans, Mass., who is a consultant for lawyers suing lenders. “This system removes transparency over what’s happening to these mortgage obligations and sows confusion, which can only benefit the banks.”

For more, see Tracking Loans Through a Firm That Holds Millions.

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) According to the story, the potential for confusion is multiplied when the high-tech MERS system collides with the paper-driven foreclosure process. Banks using MERS to consummate mortgage trades with “electronic handshakes” must later prove their legal standing to foreclose. But without the chain of title that MERS removed from the public record, banks sometimes recreate paper assignments long after the fact or try to replace mortgage notes lost in the securitization process. This maneuvering has been attacked by judges, who say it reflects a cavalier attitude toward legal safeguards for property owners, and exploited by borrowers hoping to delay foreclosure. Last February, a State Supreme Court justice in Brooklyn, Arthur M. Schack, rejected a foreclosure based on a document in which a Bank of New York executive identified herself as a vice president of MERS. Calling her “a milliner’s delight by virtue of the number of hats she wears,” Judge Schack wondered if the banker was “engaged in a subterfuge.” See Bank of NY v Myers, 2009 NY Slip Op 50159(U) [22 Misc 3d 1117(A)] (February 3, 2009). EpsilonMissingDocsMtg

Idaho AG Files Suit Against Local Loan Modification Firm

In Kootenai County, Idaho, The Spokesman Review reports:

  • Idaho Attorney General Lawrence Wasden wants to shut down Apply 2 Save Inc., the Coeur d’Alene-based mortgage modification company. His office Tuesday filed suit against the company in Kootenai County District Court, alleging violations of state consumer protection laws. The complaint, which also names Apply 2 Save President Derek Oberholtzer, says Wasden’s office has received 176 complaints from consumers all over the United States who say they got little or no service in return for up-front payments of as much as $1,500. Some ended up in foreclosure despite company claims their homes could be saved.


  • The complaint includes summaries of 18 case histories involving consumers from Connecticut to California, Michigan to Texas. Often they were told not to make any payments while Apply 2 Save was working with their lender. They had to repeatedly send documents the company said it had not received. A few said their credit card accounts were tapped without their authorization.


  • Former Apply 2 Save employees said they were directed to misrepresent company relationships with lenders and the federal government, its ability to modify loans, even the company’s name. The complaint asks the court for an injunction blocking further Apply 2 Save operations, a revocation of the company’s business license, penalties of $880,000 – $5,000 for each of the 176 alleged violations – plus attorney fees. [...] Apply 2 Save employs more than 100 at a business park on North Meadowlark Way [in Coeur d’Alene].

Source: Idaho wants Apply 2 Save shut down (Mortgage modifiers preyed on clients, AG alleges).

New Name, Same Operation For San Diego-Area Loan Modification Firm

In San Diego, California, ABC News reports:

  • People's First Financial, an aggressive loan modification company that was the subject of a "20/20" story last month, has begun doing business under a different name. A related loan modification company, Sunrise Financial, has just started doing business out of the same San Diego office. Their Web site features testimonials from happy customers identical to the ones on the People's First Web site. When "20/20" called Sunrise Financial's new phone number, we reached an employee of People's First. Insiders confirmed that Sunrise Financial is just a new name being used by People's First.

For more, see Foreclosure Rescue Gone Wrong: New Name, Same Company (Company Featured on '20/20' Is Operating Under a New Name Out of the Same Office).

Miami-Area Court System To Implement Mandatory Foreclosure Mediation Program For Owner-Occupied Homes

In Miami, Florida, the Daily Business Review reports:

  • Overwhelmed by foreclosures, the Miami-Dade Circuit Court plans to announce today a mandatory mediation program for cases involving owner-occupied homes. The program is set to begin May 1. Chief Circuit Judge Joseph Farina signed an administrative order April 9 creating the program, which mandates lenders to pay an additional $750 fee for the mediation services of the Collins Center for Public Policy, a nonprofit Tallahassee think tank specializing in dispute resolution.

For more, see Foreclosures: Court to force lenders, borrowers to mediate.

See also, WFOR-TV Channel 4: Foreclosure Mediation May Keep You Out Of Court.

Go here for the Circuit Homestead Access To Mediation Program ("CHAMP").

Monday, April 27, 2009

Hawaii Feds Bag Five Suspects In Another Alleged Sale Leaseback, Foreclosure Rescue Scam

In Hawaii, the Honolulu Advertiser reports:

  • Five people(1) were arrested by the FBI yesterday in connection with an alleged foreclosure bailout scheme that took hundreds of thousands of dollars from local lenders and residents and cost some their homes.


  • According to court documents, those arrested promised to help struggling homeowners stave off foreclosure if the homeowners agreed to a "sham" sale. They allegedly told the owners they could remain in their homes and that their title would be returned to them after a set period of time. The scheme involved offering "straw purchasers" $12,000 to $15,000 per transaction to act as new title holders. But the proceeds were allegedly funneled into fake escrow accounts and the new loan would go into default. The amount of the new loan was more than the old loan and the properties went into foreclosure, according to court documents.

For more, see FBI arrests 5 in alleged mortgage fraud scheme (All plead not guilty in skimming of loan funds).

For the indictment, see U.S. v. Kalani, et al.

(1) Bobby W. Wood, owner of Asian Pacific Funding; Stephen Balino, owner of New Horizons Financial; Welton Kalani, owner of Accel Mortgage LLC; Carlton Yim, co-owner of Walter P. Yim and Associates; and Audra Palomares, a processor with Accel Mortgage LLC, are accused of multiple counts of mail fraud, wire fraud, money laundering, and making false statements on a loan application. All five pleaded not guilty.

Foreclosure Halted As Questions Surround Court Filings; Brooklyn Judge Calls Multiple Corporate Hat-Wearing Bank Exec "A Milliner's Delight"

In a February, 2009 ruling, Brooklyn Supreme Court Justice Arthur M. Schack refused to allow a foreclosure action to continue, raising questions as to the propriety of a certain bank executive, one Keri Selman, signing mortgage assignments and affidavits in a number of his cases in which she identified herself as an Assistant Vice President for Mortgage Electronic Registration Systems (MERS), Bank of New York, and Countrywide Home Loans.

Troubled by the apparent incestuous relationships among the mortgage companies (commenting that "Ms. Selman is a milliner's delight by virtue of the number of hats she wears") and expressing concern "that Ms. Selman might be engaged in a subterfuge, wearing various corporate hats," Justice Schack refused to allow the foreclosure action to continue until:

  1. an affidavit from Keri Selman is filed, explaining her employment history for the past three years and why Ms. Selman didn't have a conflict of interest as the assignor of the instant mortgage and note from MERS, as nominee for the original mortgagee, Homebridge Mortgage Bankers Corp., to plaintiff The Bank of New York, as Trustee;
  2. an affidavit from an officer of the original mortgagee, Homebridge Mortgage Bankers Corp., explaining whether Homebridge Mortgage Bankers Corp. was aware of Ms. Selman's conflict of interest, and if Ms. Selman, in her dual roles, as Assistant Vice President of MERS, the nominee for Homebridge, and as Assistant Vice President of The Bank of New York, fully disclosed to Homebridge Mortgage Bankers Corp. the implications of her simultaneous representation and the advantages and risks involved; and
  3. an affidavit or affirmation identifying whether the instant mortgage loan, pursuant to L2008, ch 472, § 3-a is a subprime home loan as defined in Real Property and Actions Proceedings Law § 1304 or is a high-cost home loan as defined in Banking Law § 6-l.

For Justice Schack's ruling, see Bank of NY v Myers, 2009 NY Slip Op 50159(U) [22 Misc 3d 1117(A)], February 3, 2009.

For other cases in which Justice Schack wrestled with the employment status of multiple corporate hat-wearing bank executives in foreclosure actions before him, see:

  • HSBC Bank USA, N.A. v Charlevagne, 2008 NY Slip Op 51652(U) [20 Misc 3d 1128(A)]; Decided on August 4, 2008 (comments that with all the corporate hats one bank exec has worn, she might become the contemporary millinery rival to the late gossip columnist Hedda Hopper and the late United States Representative Bella Abzug, both of whom notorious for wearing many colorful hats);

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here. ThetaMissingDocsMtg

Wikipedia Entry Invalid As Proof In Establishing Creditor's Standing To Sue In Credit Card Collection Litigation, Says New Jersey Appeals Court

The New Jersey Law Journal reports:

  • A New Jersey judge who allowed a lawyer to plug an evidentiary gap with a Wikipedia page has been reversed on the ground that the online encyclopedia that "anyone can edit" is not a reliable source of information. "[I]t is entirely possible for a party in litigation to alter a Wikipedia article, print the article and thereafter offer it in support of any given position," an appeals court held. "Such a malleable source of information is inherently unreliable and clearly not one 'whose accuracy cannot reasonably be questioned,'" such as would support judicial notice under New Jersey Evidence Rule 201(b)(3).

  • The ruling tossed out a judgment in a collection case, Palisades Collection v. Graubard, A-1338-07, in which the plaintiff relied on a Wikipedia entry to help trace ownership of a credit-card debt to establish standing to sue.(1)


  • [Defendant-debtor's attorney Ronald] Groseibl says he is disappointed the appeals court did not take the opportunity to set standards for proving chain of title in credit-card cases like those adopted by some courts in mortgage matters. Last year, the New Jersey judiciary's Office of Foreclosure announced it would no longer process cases where the complaint did not allege the plaintiff owned the mortgage at the time of filing.

  • There are thousands of credit-card cases raising a similar issue regarding standing, [...] but a dearth of court opinions, because "people who don't pay credit cards don't have money to pay lawyers either," says Groseibl.

For more, see Wikipedia Too Malleable to Be Reliable Evidence.

For the court ruling, see Palisades Collection LLC v. Graubard, Docket No. A-1338-07 (NJ Super. App. Div., April 17, 2009).

In a related story on courts relying on information floating around on the Internet, see The Legal Intelligencer: Questioning Courts' Trust of Web Sources.

(1) According to the story, during a bench trial in Bergen County, New Jersey, the Defendant-debtor contended that the Plaintiff-creditor lacked standing to sue. The challenge for the creditor was to show how the obligation wound up in the company's hands, providing proof for each step of the way. ThetaMissingDocsMtg

Pennsylvania Regulators Order Four Loan Modification Firms To Cease Unlicensed Activity Within State

In Harrisburg, Pennsylvania, the Pennsylvania Department of Banking reports:

  • The Department of Banking recently ordered four out-of-state mortgage modification companies to stop engaging in unlicensed activity in Pennsylvania. The department issued cease and desist orders against Consumer Loan Modification of Arizona and U.S. Settlement Services of Florida on April 10 and Federal Loan Modification Law Center LLC of California on April 14. All three companies advertise on their Web sites to refinance mortgage loans in Pennsylvania when they are not licensed to do so. The companies must comply with the orders or file appeals by the end of April.

  • The department also entered into a consent agreement and order with Nationwide Foreclosure Prevention Center, LLC of New Jersey and its owner, Robert P. Valentin, to stop doing business in Pennsylvania. The company was fined $2,000. Valentin is prohibited from engaging in the mortgage business in Pennsylvania for five years and must refund fees that he collected from Pennsylvania consumers within 90 days. The department also cited Valentin for unlicensed activity in 2008 under the name Justice Mortgage.

For the entire press release, see Banking Department Takes Action Against Mortgage Modification Companies (Companies ordered to stop unlicensed activity in Pennsylvania).

For the above referenced Consent Agreement and Order, see Commonwealth of Pennsylvania v. Valentin, Nationwide Foreclosure Prevention Center, LLC.

Go here for the Cease & Desist Orders Against:

Hawaii Feds Ring Up 2 More Guilty Pleas In Sale Leaseback Foreclosure Rescue Scam; Civil Case Continues As One Victim Seeks To Recover Property Title

The Honolulu Star Bulletin reports:

  • The owners of a Honolulu mortgage brokerage firm pleaded guilty to fraud and money laundering yesterday in a scheme that used phony buyers to obtain loans to buy homes that were in foreclosure proceedings. Federal Magistrate Judge Barry Kurren set a Sept. 17 sentencing date for John Michael Dimitrion, 33, who pleaded guilty to three felony counts, and a Sept. 24 court appearance for his wife, Julie Ann Baldueza Dimitrion, 37, who pleaded guilty to two counts. Two employees of their company, Mortgage Alliance LLD, pleaded guilty previously. Assistant U.S. Attorney Clare Connors told Kurren that the fraud involving three homes occurred in July 2005. The defendants arranged for "straw buyers" who lied on applications that they intended to live in the houses.


  • Debbie Aurelio and her family, who signed over title of their home thinking they were refinancing, were in the courtroom to watch the Dimitrions plead guilty. "I feel better now that it came to a point where they know they cheated us," said Aurelio. "We want our house back." The family of seven continues to live in their Ewa Beach home of 10 years.

  • The Aurelios filed a lawsuit against the Dimitrions, and "their suit thwarted their eviction," said Legal Aid Society [of Hawaii] attorney Russ Awakuni. "This family was smart enough to seek legal help," but the other two families had to leave their homes.

  • But the title to the Aurelio home is still held by the straw buyer, and "there's not much the federal government can do about that. They will continue with the civil case because the title needs to be restored," Awakuni said.

For the story, see Husband and wife plead guilty to mortgage fraud.

For the indictment in this case, see U.S. v. Dimitrion.

See also: Beware Local Mortgage, Foreclosure Scams (Family Faced Eviction After Company Took Ownership Of Home).

Sunday, April 26, 2009

Schumer Seeks To Authorize $100M To Unleash Real Estate, Mortgage Scam Cops Throughout Country

From the Office Of U.S. Senator Charles E. Schumer:

  • United States Senator Charles E. Schumer, joined by [the five New York City District Attorneys], announced he is introducing new legislation to better protect homeowners from the recent wave of housing scams that are plaguing New Yorkers and homeowners across the country. The Fighting Real Estate Fraud Act of 2009 establishes a competitive grant program in the Department of Justice for local District Attorney’s offices to battle real estate fraud. The bill authorizes $100 million in grants for hiring specialized staff, such as investigators, forensic accountants, and attorneys, to offices demonstrating need for increased resources to combat mortgage scams.


  • Across the country, district attorneys, homeowner advocacy groups, state agencies and homeowners have had trouble investigating and prosecuting mortgage fraud cases due lack of staff and funding. The creation of Real Estate Fraud Units will resolve these issues by employing staffers who will be able to focus exclusively on real estate crimes that plague homeowners and prosecute scammers for their crimes.

For the entire press release, see Schumer, All Five NYC District Attorneys Unveil new Legislation To Crackdown On Flood Of New Mortgage Scams By Creating Elite mortgage Fraud Units In DA's Offices Across the Country (DA's Don't Have the Resources or Manpower to Fight New Wave of Mortgage Scams Amid Foreclosure Crisis).

Strengthen Notary Laws To Curb Deed/Title Fraud, Say Prosecutors; Requiring Seller Thumbprints On Deed Transfers May Offer Partial Solution

The Associated Press reports:

  • [W]ith a notary seal, criminals can steal the title to a house, take out a mortgage, drain the equity in the property and even give themselves power of attorney to access a victim's bank accounts. "Notaries really are the gatekeepers for fraud in real estate transactions, yet we don't put in the type of mechanism that would help law enforcement track down the crooks," said Dave Fleck, a former Los Angeles County prosecutor specializing in real estate cases.

  • States have widely varying rules for becoming a notary public, many not requiring a background check. About 20 states don't mandate that notaries keep journals of their transactions, and even fewer require a thumbprint from home sellers when notarizing property transfers — a regulation recently enacted to help combat title fraud in the Chicago area.

  • Philadelphia District Attorney Lynne Abraham said stricter regulations in Pennsylvania may have prevented [...] and the heartache of dozens of [...] victims [of a recent deed theft scheme], including owners who lost title to their homes and unwitting buyers who spent thousands of dollars on properties they never really owned.(1) Abraham said a thumbprint requirement might have deterred criminals posing as home sellers because they likely would not have wanted to leave behind evidence of their identities.(2)


  • A thumbprint requirement has been the law in California since 1996, providing an invaluable tool for tracking down forgers and also helping protect notaries from being victimized, Fleck said.

For more, see Tougher notary laws sought to curb house thefts.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

(1) In the scheme, ring members scouted for abandoned homes — the owners were dead or living elsewhere — looked up the property records and began the forgery process with the help of four notaries, prosecutors said. They then sold the homes, usually for a few thousand dollars, to unsuspecting families, many of them immigrants with little understanding of real estate procedures.

(2) Reportedly, the district attorney tried to add that mandate to legislation in Pennsylvania in 2000, along with a requirement to photocopy the ID cards of those seeking notary services. Her effort failed, partly because the Pennsylvania Association of Notaries said the proposals would be too onerous. Association president Marc Aronson said he believes such provisions would get more backing today. DeedZetaTheft

Data Management Firm, Assembly Line Law Firm Scorched By Scathing Court Ruling That Shines Light On Filing Screw-Ups In Consumer Foreclosure Cases

In Philadelphia, Pennsylvania, Bloomberg News reports:

  • Lender Processing Services Inc.(1) fell 29 percent after Dow Jones News Service reported that the company was the subject of an inquiry by the U.S. Trustees Office, an arm of the Justice Department that monitors bankruptcy courts.

  • A ruling by Judge Diane Weiss Sigmund in U.S. Bankruptcy Court in Philadelphia questioned inaccurate court filings made by HSBC Mortgage Corp. in a personal bankruptcy case. HSBC relied on electronic information from an LPS system that manages foreclosure data. “At issue in these cases are the homes of poor and unfortunate debtors, more and more of whom are threatened with foreclosure due to the historic job loss and housing crisis,” Sigmund wrote in a 58-page opinion released [Wednesday].(2)

  • Lender Processing, based in Jacksonville, Florida, runs an automated system to track mortgage payments and defaults and as recently as 2007 was used by 39 of the country’s 50 largest banks, according Sigmund’s ruling.

For more, see Lender Processing Falls 29% on Report of Inquiry.

For Judge Sigmund's opinion, see In re Niles C. & Angela J. Taylor (Case No. 07-15385DWS, Bankr. E.D. Pa., April 15, 2009).

Go here, go here, go here, and go here for posts on questionable mortgage servicing practices.

Go here for other posts on sloppy foreclosures and assembly line lawyering.

(1) Formerly known as Fidelity National Information Services, Inc., according to the court ruling.

(2) Judge Sigmund diplomatically expresses her "disappointment" over the errors generated by the company's foreclosure data processing system, and the assembly line attorneys (ie. Udren Law Office and Moss Codilis LLP) who are roped in by their clients into allowing themselves to be manipulated by said system yielding sloppy, careless results in the interest of profits, by concluding her ruling with the following statement:

  • My research has disclosed no other published opinion that explains the NewTrak process that is utilized by so many consumer mortgage lenders seeking relief in bankruptcy cases. I have attempted to share my education in this Opinion. Finally, it is my hope that by bringing the NewTrak process to the light of day in a published opinion, systemic changes will be made by the attorneys and lenders who employ the system or at least help courts formulate the right questions when they have not. While NewTrak has many features that make a volume business process more efficient, the users may not abandon their responsibility for fairness and accuracy to the seduction of electronic communication. The escalation procedures in place at HSBC and the Udren Firm existed on paper only. When an attorney appears in a matter, it is assumed he or she brings not only substantive knowledge of the law but judgment. The competition for business cannot be an impediment to the use of these capabilities. The attorney, as opposed to a processor, knows when a contest does not fit the cookie cutter forms employed by paralegals. At that juncture, the use of technology and automated queries must yield to hand-carried justice. The client must be advised, questioned and consulted. Young lawyers must be trained to make those judgments as opposed to merely following the form manual. Until they are capable of doing so, they should be supported and not left to sink or swim alone in an effort for the firm to be more profitable by leveraging the cheapest labor.

  • At issue in these cases are the homes of poor and unfortunate debtors, more and more of whom are threatened with foreclosure due to the historic job loss and housing crisis in this country. Congress, in its wisdom, has fashioned a bankruptcy law which balances the rights and duties of debtors and creditors. Chapter 13 is a rehabilitative process with a goal of saving the family home. The thoughtless mechanical employment of computer·driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of our American bankruptcy system. It is for those involved in the process to step back and assess how they can fulfill their professional obligations and responsibly reap the benefits of technology. Nothing less should be tolerated. QuestionableServicingTacticsSigma SloppyForeclosuresAlpha

Arizona Man Cops Guilty Plea In Loan Modification Scam

The Arizona Daily Star reports:

  • A Glendale man has pleaded guilty to fraud charges in connection with a mortgage loan scam that bilked 47 homeowners, the Attorney General's Office said. Bobby John Herrera, 33, will be sentenced May 13 and he faces five years in prison as well as $73,000 in restitution payments to victims.(1)

  • According to investigators, Herrera told struggling homeowners he could modify mortgage terms or provide other assistance to help them prevent foreclosure, often charging an upfront fee of $1,245. Investigators said he didn't provide any loan modification or foreclosure relief assistance and instead used the money himself. Herrera was arrested in December by Surprise and Peoria police.

Source: AZ man guilty in mortgage-help scam.

For the indictment in this case, see State of Arizona v. Herrera.

(1) According to the indictment, Herrera faced charges of:

  • one count of fraudulent schemes and artifices (ie. knowingly obtaining any benefit by means of false or fraudulent pretenses, representations, promises or material omissions, pursuant to a scheme or artifice to defraud, in violation of § 13-2310, of the Arizona Revised Statutes),
  • one count of money laundering (A.R.S. § 13-2317),
  • one count of illegal control of an enterprise (A.R.S. § 13-2312(A)), and
  • five counts of theft (A.R.S. § 13-1802(A)(1)).

Loan Modification Firms Begin Using Perceived "Attorney Defense" Loophole To Pocket Upfront Fees From Homeowners Facing Foreclosure

In Central Florida, The Tampa Tribune reports:

  • [I]t's against the law in Florida to charge up-front fees for foreclosure help. [...] Federal and state authorities are investigating, prosecuting and shutting down companies that violate the law. But some have found what they think is a loophole in the law: Florida attorneys are exempt from the ban on charging up-front fees.

  • When [homeowner Sandi] Stewart questioned the fees, she said she was told it was legal because she was hiring an attorney. However, she had no correspondence with the attorney and spoke only to the "loan modification department." Plus, the attorney, Christian M. Dillon, is not licensed in Florida. Repeated phone calls to representatives for the company, uFirst Direct, and for Dillon himself, were not returned.

  • The attorney defense for charging up-front fees is not an isolated case. Another reader called recently about a Chicago company, American Homeowners Alliance. It asked for $1,500 up front. When reached by phone, the company president, Jim Hamilton, told me he was well aware of Florida's law but that it doesn't apply to him because his company is based in Illinois. Furthermore, he said, his company is exempt from Illinois' law against up-front fees because he has an attorney on staff.


  • The attorney general has not received complaints about Hamilton's company. However, the attorney defense for charging up-front fees just doesn't hold up, according to regulators. Offices for the Attorney General in both Florida and Illinois say companies operating in Florida must obey local laws, no matter where their home office is.

  • "Merely having an attorney on staff, even assuming he is licensed to practice in Florida, is not enough to qualify for the exemption, said Sandi Copes, communications director for the attorney general. "There must be an attorney-client relationship established before the exemption applies."(1)

For the story, see Home sweet home: Beware of foreclosure rescue scams, fees.

(1) Florida homeowners who think they've been victimized by foreclosure rescue fraud, call the Florida Attorney General's hot line at 1-866-966-7226 or go to the office's new Web site,, which provides complaint forms, information on current investigations and tips to identify and avoid foreclosure rescue fraud.

It might not hurt to file a complaint with the State Bar alleging the unauthorized practice of law against the loan modification company if they purport to review legal documents to find errors in the paperwork or who claim to perform other services associated with the work of an attorney. An out-of-state attorney who is not licensed to practice law in the state where the homeowner is located might also make for a good target for an unlicensed practice of law complaint. Florida homeowners looking to file such a complaint can go here for Filing an Unlicensed Practice of Law Complaint with The Florida Bar. UnauthPractOfLawTheta