Saturday, May 9, 2009

Undercover Cops Bag Arizona Man Facing Foreclosure In Alleged Attempt To Strip Home Of Fixtures, Appliances & Unload Them Using Craigslist Ad

In Maricopa County, Arizona, The Arizona Republic reports:

  • A Maricopa County grand jury indicted Kailash Bhatt, a local real estate agent, in connection with stealing various housing fixtures from a foreclosed house and reselling them. He was charged April 21 with theft and defrauding secured creditors.

  • According to the legal report, Bhatt took fixtures — including kitchen cabinets, a granite counter top, a double oven, microwave and dishwasher — from a foreclosed Anthem home that he owns and attempted to sell them on Craigslist.

  • Bhatt was arrested after accepting $2,000 of a deal totaling $9,000 from an undercover FBI Mortgage Task Force agent posing as a buyer, the report said. He intended to sell the fixtures from his home, violating a contract he signed with the mortgage company in control of the foreclosed property.

Another report on this story points out that the indictment represents the first of its kind involving a crime that local real estate professionals say is rampant. Disgruntled homeowners forced into foreclosure strip their properties before vacating them.

For more, see Real estate agent accused of stealing, selling home fixtures.

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

Denver Man With Unaffordable Mortgage Strips House, Sells Fixtures On Craigslist, Walks Away, Then Apologizes After Bank Obtains Restraining Order

In Denver, Colorado, KUSA-TV Channel 9 reports:

  • The man 9Wants to Know caught stripping fixtures in his home ahead of foreclosure and then yelled at our team from his front doorway, now says he's sorry. "Our intentions were never to strip the house, but after the treatment of the bank towards us it was a decision made out of hurt, anger and stress not knowing it was an illegal act," wrote Jesse Adams in an e-mail to 9Wants to Know.

  • Adams and his wife, Heidi Hayes, put an ad on Craigslist offering the kitchen sink, countertops, cabinets and toilets for sale. Hayes is the registered owner of the home. The two say they were married earlier this month after leaving the house and moving to the Las Vegas area.

***

  • Oklahoma based MidFirst Bank, which loaned Hayes the money for the home, got a judge to issue a restraining order keeping Adams and Hayes out of the house after 9Wants to Know told MidFirst Bank of our investigation. MidFirst Bank says it is considering its legal options.

For more, see Man who stripped home's fixtures apologizes,

See also, Everything must go: Sales cost taxpayers thousands:

  • It is not your typical "everything must go" garage sale. A new trend called pre-foreclosure or foreclosure sales offer deals for some, but often costs taxpayers thousands of dollars, according to mortgage experts and real estate agents interviewed by 9Wants to Know. The sales offer everything from the kitchen sink to countertops, cabinets, toilets, the hot water heater and the furnace from a home. Homeowners hold the sales ahead of foreclosure in an attempt to make money before they leave the house.

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

Friday, May 8, 2009

Arizona Feds Being Flooded With Thousands Of Complaints On Loan Modification Scams

In Phoenix, Arizona, KNXV-TV Channel 15 reports:

  • At a time when families are losing their homes to foreclosure, others are seeing a way to prey on their desperation. And right now the FBI is inundated with loan modification fraud schemes.

***

  • "I've never seen these levels of fraud in the 12 years I've been in Arizona," said Julie Hafferty, Special Agent in charge of Arizona's mortgage and fraud division with the FBI. Hafferty says they're getting thousands of complaints to investigate. Homeowners have paid out $500 to $5,000 dollars hoping to save their homes with more affordable payments, but in return were robbed.

For more, see Valley FBI office swamped with loan modification scams.

Another Prospective Tenant Falls Victim To Phony Landlord Scam

In Dale City, Virginia, Newschannel 8 reports:

  • A local family who thought they had found the perfect home ended up losing more than $1,000 to an accused scam artist. The five-bedroom house on a quiet Dale City street was everything Patricia Keith had always wanted. "Well, it was a dream," she said. But despite putting down more than $1,000 in a security deposit and first month's rent, Keith never had the chance the call the house home.

  • Sources say 24-year-old Armeca Wright is now facing fraud charges for trying to rent a house that didn't belong to her. "It took us awhile to actually scrape our money together," said Keith. "We've been homeless since 2007." [...] This is yet another negative by-product of the foreclosure crisis. Con artists break into and try to pawn off vacant and abandoned homes to unsuspecting people.

For the story, see Virginia Woman Scammed While Trying to Rent Home.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

Ohio AG Targets Loan Modification Firm Accused Of Pocketing Upfront Fees In Exchange For Empty Promises

In Conneaut, Ohio, WKYC-TV Channel 3 reports:

  • The companies promise to rescue you from losing your home. Instead, they take your money and do nothing. Just ask Carol Jenkins of Conneaut. She and and her late son, Robert Curtis, trusted James Van Putten and his local company, Please Save My Home, to rescue them from foreclosure. "He was in town here, so I trusted him," Jenkins said. But she and her son soon discovered Van Putten's promises were empty ones. "I never got any phone calls back from him whatsoever,'' Jenkins told Channel 3 News. "By this time, we had already paid him the $650 (fee), so we didn't have any money to send to our mortgage company."

***

  • [Ohio Attorney General] Richard Cordray has filed suit against Van Putten and his Conneaut company on behalf of dozens of customers in nine counties who say they were swindled.

For more, see Foreclosure rescue scams target most vulnerable.

For the Ohio Attorney General press release on this case, the accompanying lawsuit, and copies of the correspondence and contract used by the foreclosure rescue operator (Exhibits A thru D), see Mortgage Rescue Company Sued for Consumer Fraud.

Thursday, May 7, 2009

Woman Cops Guilty Plea In California Loan Modification Fraud That Scammed 100+ People

From the Office of the California Attorney General:

  • Continuing his crackdown on mortgage fraud, Attorney General Edmund G. Brown Jr. late Thursday won a guilty plea from 22-year old Anna Santos, who conned thousands of dollars from homeowners in a "cruel and sophisticated" loan scam. Santos will be formally sentenced on May 20 in Los Angeles Superior Court. She is expected to receive 2 years in prison. "Santos conned thousands of dollars from homeowners trying to save their homes through a cruel and sophisticated scam," Brown said. "She held out hope, but in reality did not provide an ounce of loan modification, leaving her victims unprotected and in far worse straits." Santos was arrested on March 12, 2009 after she used forged documents to convince victims to hand over thousands of dollars for non-existent loan modification services.(1)

For the entire press release, see Brown Obtains Guilty Plea from Woman Who Operated Sophisticated Loan Scam.

For more from the California AG on its criminal action against Santos, see:

(1) According to AG Brown, Santos obtained a fictitious business permit through the City of Los Angeles for "Payment Processing Department." She opened several bank accounts and two post office boxes under that name. She mailed flyers to vulnerable homeowners that appeared to be from victims' lenders or a government agency. The flyer used a large, bold header that read "Final Notice" and advised homeowners that they qualified for a special program to save their home from foreclosure. After signing up for "loan modification services," homeowners then received what appeared to be "confirmation" that their lender had been notified. Many victims also received loan modification documents that appeared to be from their lender. These documents were all forgeries. The victims were informed they had been placed in a "probationary" program and their mortgage payments should be submitted to "Payment Processing Department" and sent to a given post office box address. None of the payments were credited to the victims' home loans.

Massachusetts Community Organizer Uses "Sword & Shield" Approach To Stop Foreclosure Evictions

In Jamaica Plain, Massachusetts, PBS' Bill Moyers Journal reports:

  • [C]ommunity organizer Steve Meacham of City Life/Vida Urbana is fighting on the frontlines of the foreclosure crisis. Meacham and his colleagues at City Life employ a community organizing strategy they call the ["sword & shield".]

  • The "shield" is a strategy of legal defense: teaching City Life members about their rights under the law, plus providing access to volunteer legal assistance. The "sword" is a public relations strategy, where City Life organizes protests in front of banks, and eviction blockades in front of people's homes.

  • For these protests, City Life tries to attract as much media attention as possible, trying to draw public scrutiny towards what they argue are unfair banking and eviction practices in their community. "We find that the two [strategies] work extremely well in combination," says Meacham. He says that a strong legal defense often isn't enough to avoid eviction. "A legal defense is not enough because in Massachusetts the banks can evict you for no reason. And so for many people the strongest legal defense will simply slow the bank down. Slowing the bank down, however, can be very, very important because it gives us a chance to use the public protest to good benefit. If the bank is facing the prospect of a long, drawn-out legal procedure, even one that they might ultimately win.. and at the same time they're going through that, they're being regularly protested by City Life.. that is a public relations battle the bank loses every time. So faced with that combination of long, drawn-out legal defense and public protest, the banks are very often choosing to negotiate and settle with us." According to City Life, they've been able to prevent evictions for 95% of the people who've come to their door by employing the "sword and shield" strategy.

For more, see Steve Meacham: Fighting Foreclosure.

Go here for the accompanying video of the Bill Moyers' Journal program (approz. 23 minutes).

Mass AG Gets Injunction Against Loan Modification Firm Accused Of Violating State Consumer Protection Act, Foreclosure Rescue Regs

From the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office has entered into a stipulated preliminary injunction with three defendants for their alleged inappropriate business practices in offering loan modification assistance. Under the terms of the order, [...] Loan Modification Group Corporation, Mitigation LLC, and the companies’ principal, Daniel H. Fox must place $50,000 into an escrow account to be used to satisfy any judgment that the Attorney General may receive against them. Additionally, the defendants must cease collecting up-front fees and must contact all existing Massachusetts customers within 10 days to let them know about the court’s order.

***

  • The complaint [...] alleges that the defendants’ business practices were unfair and deceptive, in violation of the Massachusetts Consumer Protection Act, because they solicited fees in advance of services, failed to disclose the precise details of the services offered and how they would assist homeowners in avoiding foreclosure, and guaranteed a loan modification that would improve the homeowner’s financial situation dramatically and save the home from foreclosure. Through the defendants' solicitations and advertisements by telephone, emails and various websites, they claimed to be attorney-based, loan modification experts who could guarantee drastically reduced interest rates.

For the entire Massachusetts AG press release, see AG Coakley Obtains Preliminary Injunction Against Company Accused of Violating Foreclosure Rescue Regulations.

Texas Couple Sues Mortgage Servicer For Alleged Refusal To Fork Over Insurance Proceeds To Repair Hurricane Damage

In Jefferson County, Texas, The Southeast Texas Record reports:

  • A Jefferson County couple is suing their mortgage company for allegedly failing to endorse insurance proceeds for hurricane damage. Paul and Anitra Henson filed a lawsuit April 17 in Jefferson County District Court against Homeq Servicing, a loan services company. They say they forwarded insurance proceeds of $32,518.88 to Homeq and asked the company to endorse the checks so the Hensons could repair their home, which was damaged after Hurricane Ike.

  • Homeq contacted the Hensons and asked them to sign documents in order to have the insurance proceeds released, the complaint says. However, the Hensons allege the packet of information asked them to do things that were unacceptable, such as to find a contractor who would sign a waiver of all current and future liens. "Plaintiffs informed Defendant that this was unacceptable and they will not be able to find someone to sign this in order to complete the work," the suit states. The Hensons say they cannot begin repairs on their home until Homeq releases the insurance proceeds. However, Homeq has yet to release any proceeds. The couple alleges Homeq is guilty of breach of contract and conversion and violated the Texas Deceptive Trade Practices Act.

For the story, see Local couple sues loan company for withholding insurance payments.

New Jersey Man Charged With Illegally Pocketing Proceeds From $400K Loan Using Wife's Grandmother's Home As Collateral

In Hoboken, New Jersey, The Jersey Journal reports:

  • A Rutherford man has been charged taking out a $400,000 loan against the home of his wife's grandmother -- and the 83-year-old only learned of the scam when foreclosure notices began arriving, officials said. A two-month investigation led to yesterday's arrest of John Airey, 37, on the charges of forgery, identity theft and theft by deception related to the Willow Terrace property, Hudson County Prosecutor Edward DeFazio said yesterday. [...] Airey took out the loan in his own name, DeFazio said, and apparently had no intention of repaying the loan.

  • The victim's lawyer filed a civil action seeking to set aside the fraudulent mortgage and Superior Court Civil Division Judge Thomas Olivieri forwarded the matter to the Prosecutor's Office in February, triggering the criminal investigation, DeFazio said.

For more, see Hoboken 83-year-old scammed out of home; granddaughter's husband charged (John Airey is accused of using the Hoboken home of his wife's grandmother as collateral for a $400,000 loan he never repaid) (if link expires, try here).

Wednesday, May 6, 2009

More On Lenders, Mortgage Servicers Using Short Sale Contracts, Promissory Notes To Squeeze Homeowners Looking To Unload "Underwater" Homes

The Wall Street Journal reports:

  • Financially troubled borrowers may think that foreclosure or a short sale of their home means their mortgage woes are over. Not necessarily.

  • Some homeowners are finding that when they sell their homes for less than the outstanding mortgages -- a so-called short sale -- their mortgage companies are going after them for some or all of the difference. Mortgage companies are also sometimes taking legal action to recover unpaid amounts after a foreclosure is completed.

  • In a growing number of cases, holders of mortgages or home-equity loans are requiring borrowers in short sales to sign a promissory note, which is a written promise to pay back a loan or debt. Real-estate agents and attorneys say they have seen an increase in requests for promissory notes as mortgage companies look to short sales as an alternative to foreclosure.(1)

For more, see A Short Sale May Not Mean You're Home Free.

(1) According to the story, the number of short-sale agreements that are made with strings attached is increasing. In the past month and a half, "every short sale I have has had a promissory note or gives the lender the right to collect a deficiency," says Pamela Simmons, an attorney in Soquel, Calif., who represents financially troubled homeowners. Often, the terms are buried in the sale contract, she says. Regina Rivard, a real-estate consultant in Apollo Beach, Fla., has completed 22 short sales in the past six months. In half of them, the holder of the first or second mortgage required that the borrower sign a promissory note or retained the right to pursue the deficiency. The amounts borrowers were obliged to pay ranged from a few thousand dollars to as much as $100,000, she says.

California Police Chief To Slap Cuffs On Negligent Bank Officials Over Blighted Foreclosed Homes?

In Indio, California, The Wall Street Journal reports:

  • Officials at a Citigroup Inc. office in St. Louis placed a call to this desert town recently. The bank had caught word that Indio was coming after the lending giant with fines and threats of criminal charges. The offense: an algae-infested swimming pool at 79760 Eagle Bend Court.

  • Citigroup wound up in charge of the foreclosed home, one of thousands of such properties it was managing across the country. But last year, Indio passed a law that allowed it to charge banks with a criminal misdemeanor if they allowed a home to fall into disrepair.

  • "If I need to do it, I'll say, 'Mr. Bank President, if you don't come and take care of your property, we're going to come arrest you and take you to court in California,'" says Brad Ramos, Indio's long-serving police chief.(1) The hard-line approach is part of this town's attempt to gain leverage over some of the nation's largest lenders.

***

  • Mr. Ramos has organized his department to focus on this new type of crime. Uniformed officers make weekly sweeps through subdivisions, casting about for infractions like dead landscaping.

For more, see Banker: 'What'd I Do Wrong, Officer?' Cop: 'You've Got Algae in the Pool, Sir' (Fearing Blight, a California Town Makes It a Crime to Neglect Foreclosed Homes).

(1) According to the story, the City of Indio clipped Citigroup for a $3,450 fine. The bank also promptly sent a cleaning crew to remove the algae and otherwise clean the pool. BetaVacantForeclosure

Sleazy Tactics Alleged By Washington State AG In Civil Suit Against Debt Collector

From the Office of the Washington State Attorney General:

  • The Attorney General’s Office is suing an Everett-based collection agency accused of harassing, threatening and cussing at consumers. Representatives of Topco Financial Services, Inc., allegedly called debtors names such as “loser,” scum,” “plight on society,” “no good,” “lowlife,” “deadbeat,” “worthless,” or “terrible parents,” as well as profane names not suitable for print. That kind of language isn’t just abusive – it’s illegal. It’s also the type of unfair business practice that can make it harder for legitimate collectors who play by the rules to do their job.

***

  • The state’s complaint(1) submitted [...] to Snohomish County Superior Court accuses the company, president Tracey Austell, of Mill Creek, and secretary/treasurer Harry Packer, of Desert Hot Springs, Calif., of violating the state’s Consumer Protection Act.

For the entire press release, see Debt collector to consumer: “&#$%*!” (Attorney General sues Everett collection agency for harassment, threats).

For the lawsuit, see State of Washington v. Topco Financial Services, Inc., et al.

In a related post, see Tough Economy Triggers Sleazy Collection Practices As Threatening, Humiliating MySpace Messages, Profanity Alleged In Civil Suits.

(1) The complaint states, among other things, that while attempting to collect on debt, Topco or its representatives frequently have used harassing, threatening, intimidating, embarrassing and offensive language, including (see Complaint - paragraph 7.2(a) thru (e)):

  • Disparaged debtors with comments including, “You got yourself into this [profanity] situation,” and “What kind of mother is she to raise a daughter like you?
  • Threatening to “bi*ch slap” a debtor.
  • After having been informed by a debtor that she was undergoing tests for possible cancer, representatives allegedly replied, “Aren’t you dead yet? I’m going to collect the money from you dead or alive,” and “Why don’t you just die from cancer because you are a low-life deadbeat?
  • Using offensive language by calling debtors names, including, but not limited to: "worthless f**king loser, "piece of sh*t," "bi*ch," and "dumb a**."

Washington State AG Brings Civil Rent Skimming Charges Against Previously Convicted Operator

From the Office of the Washington State Attorney General:

  • The Washington Attorney General’s Office is suing a convicted equity skimmer a second time, claiming the Colfax man and his wife ran a real estate investment business that misled distressed homeowners and property investors. Attorney General Rob McKenna and Assistant Attorney General Jack Zurlini filed new documents [...] in Spokane County Superior Court that accuse Anthony and Alicia Napier of skimming equity from distressed homeowners in Eastern Washington and misleading investors. It’s alleged their dirty deals left a trail of victims – families who lost their homes, renters who never recouped security deposits and investors who never saw profits.

***

  • The state’s civil complaint lays out a pattern of deceptive practices involving the Napiers starting around 1995, when Anthony Napier was involved in a criminal equity-skimming scheme. He was convicted of equity skimming, first-degree theft and third-degree theft in September 1998 in Spokane County Superior Court. He was released from jail after serving part of a 12-month sentence.

***

  • We’re now alleging that only a short time after he was criminally convicted of equity skimming and had a civil judgment entered against him, Anthony Napier formed a new company, Principle Direct Investments, LLC,” Zurlini said, “and along with his wife started a new business venture in which they once again engaged in illegal activities that are also in violation of the judgment.”

For the entire Washington State AG press release, see Attorney General sues Colfax couple for equity skimming (Eastern Washington families lost their homes to felon and his wife).

For the lawsuit, see State of Washington v. Napier, et al. RentSigmaSkimming

Florida Attorney & Loan Modification Firm Join Forces To Provide Services To Financially Distressed Homeowners

In Naples, Florida, the Naples Daily News reports:

  • Marc L. Shapiro, P.A., Attorney at Law, announced his firm’s expansion of distressed real property consumer services with an affiliation with Asset Resolution Services Inc. The combination of services is intended to streamline the loan modification, asset protection, foreclosure defense and short-sale negotiation services of the two entities.

  • Asset Resolution staff members will now act as legal representatives of the law firm for matters of mortgage loan modifications, deed-in-lieu services and real property short-sale negotiations. Clients of Asset Resolution will also have direct referral access to the attorney’s legal staff for financial protection planning, foreclosure defense, bankruptcy and related legal representation.(1)

For more, see Law firm expands distressed real property consumer services.

Go here and Go here for other posts on the potential perils relating to attorneys and non-attorney loan modification firms joining forces to provide foreclosure-related rescue services.

(1) The Florida Bar recently issued this Ethics Alert in which it responded to numerous calls from lawyers regarding the formation of joint business endeavors with nonlawyers to provide loan modifications, short sales, and other foreclosure-related rescue services on behalf of distressed homeowners. The State Bar of California's Committee on Professional Responsibility and Conduct has also issued their own Ethics Alert regarding the interaction between attorneys and non-attorneys in joint business endeavors when providing loan modifications and other foreclosure-related rescue services. UnauthPractOfLawTheta

Tuesday, May 5, 2009

84 Year Old New Jersey Woman Among Those Targeted In Alleged Equity Stripping, Sale Leaseback Scam

In Bayonne, New Jersey, The Jersey Journal reports:

  • An 84-year-old Bayonne woman is among the victims of two Union City companies that promised to help homeowners facing foreclosure save their homes, officials say. But instead of saving people's homes, the companies purchased the houses at deep discounts, saddled the owners-turned-tenants with even bigger monthly payments, and in a number of cases, including that of the Bayonne woman, evicted the previous owners, officials say.(1)

  • "The unifying thread among these cases is that the defendants not only stole people's money, they stole their hope," said state Attorney General Ann Milgram last week in announcing the lawsuit, filed in Hudson County Superior Court, that details at least four cases.

For more, see STATE A.G. SAYS LOAN CREEPS STOLE HOMES (Lawsuit targets alleged mortgage swindle).

For the lawsuit, see Milgram v. Property Solutions of NJ Inc., et al.

(1) According to the lawsuit, the defendants offered to help save the victim's home by paying the balance of the homeowner's delinquent mortgage and then entering into a sale leaseback agreement with the victim, officials said. But the monthly lease payments were often far higher than the mortgage payments the homeowner couldn't make in the first place and they were typically required to buy the home back within 90 days at a far higher price than the defendants' paid, officials said. Named as defendants in the lawsuit are Property Solutions of N.J, Inc. and PSRE Holding Company, LLC, both of Union City. Also named are individual defendants Edward Toledo, the president of Property Solutions and a member of PSRE, Leon Toledo, the vice-president of Property Solutions, and Raymond Vega, the company treasurer and a member of PSRE. foreclosure rescue

Loan Modification Employees Reveal Inner Workings Of One California Outfit Accused Of Ignoring State Cease & Refrain Order From State Regulators

In Fair Oaks, California, The Huffington Post reports:

  • [S]uperior Properties, formerly 2nd Chance Negotiations, operates by soliciting an upfront fee from homeowners facing foreclosure in return for legal counsel, a lower principal on their mortgage, and a "100% money back guarantee."

***

  • 2nd Chance Negotiations attracted over 1,000 customers before the California Departments of Corporations (DOC) and Real Estate (DRE) issued separate desist and refrain orders on March 24. The joint investigation that led to the desist orders stated that the business was "not licensed and/or legally authorized" to perform its promised services, nor to collect fees in advance -- fees that ran as high as $6,000.

  • Former employees say 2nd Chance co-founders Christopher Mesunas and Michael Garcia were largely undeterred by the legal orders to cease operations. According to Deborah O'Campo, who served as one of five negotiators at 2nd Chance from February 10 to April 1 of 2009, the company only ceased operations for 48 hours before reopening under a new name, Superior Properties.

***

  • [Michael] Buckalew was one of 22 salespeople in the Northern California office. There were only five caseworkers who negotiated new loans. Buckalew claimed he didn't notice the disparity until later, when he saw that cases were coming in "by the truckload." "[2nd Chance] had affiliates that would bring us cases every week," Buckalew told The Huffington Post. "They would come in and unload a hundred cases at a time. They had three to five hundred new files per month and they never expanded their negotiating capacity the whole time I was there."

  • Deborah O'Campo said the five caseworkers were overwhelmed, which made it difficult to get results. "I cannot recall even one success story," O'Campo said. "When I left, there might have been only two [mortgage negotiations] that were headed in the right direction as far as almost getting approved."

***

  • Buckalew said the company's sales practices aroused his suspicious from the beginning. He said that he and the entire 22-person sales staff were allowed to charge whatever price they could convince their client to pay. "Did you ever see Boiler Room? Working in the sales room kind of felt like that," said Buckalew.

  • According to Buckalew and O'Campo, it was company policy for sales people to receive a 100 percent commission on charges over $1,500. Buckalew said he closed cases at an average of $2,500, but he knew salesmen who charged potential clients twice as much.

For more, see Mortgage Vultures Dupe Cash-Strapped Homeowners.

Mass AG Reaches Settlement With Loan Modification Firm Accused Of Violating State Consumer Protection Act, Illegally Pocketing Upfront Fees

From the Office of the Massachusetts Attorney General:

  • [Last week], Attorney General Martha Coakley’s Office entered into a settlement with Express Modifications, Inc., d/b/a “Loan Mods By Lawyers, Inc.,” and its owner David J. Gotterup, who ran prominent advertisements in a local newspaper earlier this year offering to help homeowners avoid foreclosure. The settlement resolves allegations that the advertisements were unfair and deceptive, in violation of the Massachusetts Consumer Protection Act, because they gave the false impression that Express Modifications would provide the homeowner with the services of an attorney, guarantee a loan modification and improve the homeowner’s financial situation dramatically and save the home from foreclosure.

***

  • The Attorney General’s investigation of the company and its operations also revealed that the company demands a $1,500 up-front fee before providing services to help homeowners avoid foreclosure. Such advance fees are illegal under regulations issued by the Attorney General’s Office in 2007 to combat various unfair business practices that target homeowners facing foreclosure.

For the entire Massachusetts AG press release, see AG Coakley Enters into Settlement with Company Accused of Deceptively Advertising Foreclosure Relief Services and Soliciting Illegal Advance Fees.

Elderly Woman Faces Loss Of Mortgage-Free Home As Zombie Debt Scavenger Gets Lien On Premises; Failure To Update State Homestead Exemption The Problem

In New Orleans, Louisiana, WWL-TV Channel 4 reports:

  • Imagine someone who has paid off their house and owns it outright, losing that home because of an old credit card debt. Unfortunately for Shirley Simmons, she doesn't have to imagine. It's a real fear she's been living with since the sheriff seized her home two months ago so it could be advertised and sold.

***

  • Simmons, a 78-year-old retired Jefferson Parish teacher, owes $15,000 on an old credit card bill. Now, a firm that bought that debt for pennies on the dollar (ie. "zombie debt") from the bank has gone to court to take away her home. “They’re having the sheriff sell her house on May 27 so that they can get their $15 thousand and put her out on the street, if need be,” said Simmons’ attorney, William Cherbonnier.

***

  • Attorney Cherbonnier said what makes this possible is Louisiana's homestead exemption from seizure and sale. [...] Right now Louisiana's homestead exemption from seizure and sale only protects $25,000 of a home's value. [...] Cherbonnier said people shouldn't lose their homes over debts like these, and they don't in a number of other states, including Florida and Texas. Both of those states protect the full value of a person's home.

For more, see Lawmakers want to stop credit card companies from seizing homes.

Go here for other posts on zombie debt. zeta

More On Property Owners Being Tricked Or Deceived By Scammers Into Signing Documents

The following California cases appear to support the proposition that criminal prosecutions for forgery can be properly brought against those (ie. equity stripping, foreclosure rescue operators and others) who trick or deceive financially strapped homeowners into unwittingly signing over interests in their homes through grant and trust deeds (cases available online courtesy of Findlaw.com; free registration may be required):

People v. Martinez, (2008) 161 Cal. App. 4th 754; 74 Cal. Rptr. 3d 409:

  • Nevertheless, a forgery conviction can be based on a document with a genuine signature. "[F]orgery is committed when a defendant, by fraud or trickery, causes another to execute a . . . document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature." (People v. Parker (1967) 255 Cal.App.2d 664, 672.)

  • Defendant argues that this rule applies only where the "fraud or trickery" consists of an affirmative misrepresentation regarding the nature of the document. He concedes that Michiel may have "signed the . . . trust deed without understanding what she was signing," but he argues that he "did not make any material affirmative misrepresentations to her."

  • Preliminarily, even assuming defendant is correct about the law, there was sufficient evidence that he did, in fact, affirmatively misrepresent the nature of the trust deed. Michiel testified that defendant "provided [her] with a number of documents to sign to try and help [her] with [her] financial problems . . . ." (Italics added.)

***

  • In sum, there was evidence that defendant presented Michiel with a stack of documents to be signed and that he affirmatively misrepresented to her that their purpose was to help her with her financial problems and/or help her file a bankruptcy.

  • Separately and alternatively, however, even assuming there was no evidence that defendant affirmatively misrepresented the nature of the trust deed, he could still be found guilty of forgery. People v. Parker, supra, 255 Cal.App.2d 664 involved strikingly similar facts. There, the defendants (Parker and Ex) sold aluminum siding to a number of homeowners. They gave each purchaser a stack of papers, including a trust deed, and they indicated where the purchaser should sign. Occasionally, they affirmatively misrepresented the nature of the trust deed; for example, they told two couples that the papers consisted of a "purchase order," plus several "copies" thereof. (Id. at p. 668 [Edwards and Helland transactions].) Most of the time, however, they simply failed to disclose that the papers included a trust deed. (Id. at pp. 667 [Kinsfather transaction], 668-669 [Buss transaction], 669 [Dick transaction], 669-670 [Longoria transaction], 670 [Kincaid transaction].) The appellate court held that there was sufficient evidence of forgery in connection with each and every sale (see id. at pp. 665-666): "The crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature." (Id. at p. 672.) "Clearly, from the evidence in this case appellants are guilty of the forgeries as charged . . . . [Citations.]" (Ibid.)

(For a related post, see California Appeals Court Says Genuine Homeowner Signature On Instruments In Foreclosure Rescue Scheme Not A Bar To Scammer's Forgery Conviction.)

People v. Parker, (1967) 255 Cal.App. 2d 664:

  • The crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature. In Buck v. Superior Court, supra, (an aluminum siding case) 232 Cal.App.2d 153, it is stated at page 162: "Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. [Citations.] ... The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. [Citations.] Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent." (See also Buck v. Superior Court, supra, 245 Cal.App.2d 431, 436-437 [54 Cal.Rptr. 282]; People v. Carson, 240 Cal.App.2d 477, 480 [49 Cal.Rptr. 653].)

  • Clearly, from the evidence in this case appellants are guilty of the forgeries as charged and of the grand theft as charged. (See Buck v. Superior Court, supra; People v. Bresin, 245 Cal.App.2d 232, 237-238 [53 Cal.Rptr. 687]; Buck v. Superior Court, supra, 232 Cal.App.2d 153, 162.) [255 Cal.App.2d 673].

Buck v. Superior Court, (1966) 245 Cal.App.2d 431, 436-437; 54 Cal.Rptr. 282:

  • That the crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document, where the signer is unaware, by reason of such trickery, that he is executing a document of that nature, is now settled by Buck v. Superior Court, supra, (1965) 232 Cal.App.2d 153.

People v. Carson, (1966) 240 Cal.App.2d 477, 480; 49 Cal.Rptr. 653:

  • The issue is settled in Buck v. Superior Court, supra, 232 Cal.App.2d 153, 161- 162, where the court said: "Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. [Citations.] An encumbrance may be the subject of forgery. [Citation.] The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. [Citations.] Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent."

Buck v. Superior Court, (1965) 232 Cal.App.2d 153:

  • Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. (Conklin v. Benson, 159 Cal. 785, 791 [116 P. 34, 36 L.R.A. N.S. 537]; Wright v. Rogers, 172 Cal.App.2d 349, 362 [342 P.2d 447].) An encumbrance may be the subject of forgery. (Conklin v. Benson, supra, page 792.) The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. (People v. McAffery, 182 Cal.App.2d 486, 493 [6 Cal.Rptr. 333]; People v. Morgan, 140 Cal.App.2d 796, 800 [296 P.2d 75].) Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent."

People v. McAffery, (1960) 182 Cal.App.2d 486, 493, 6 Cal.Rptr. 333:

  • The crime of forgery (Counts I, II and III) is committed when one makes or passes a false instrument with intent to defraud, the element of loss or detriment being immaterial (People v. Morgan, 140 Cal.App.2d 796, 800; 296 P.2d 75).

Wright v. Rogers, (1959) 172 Cal.App.2d 349, 342 P.2d 447:

  • "Where a person who has no intention of selling his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is a forgery." (People v. Nesseth, 127 Cal.App.2d 712, 718-720, 274 P.2d 479.

People v. Morgan, (1956) 140 Cal.App.2d 796, 800; 296 P.2d 75:

  • That crime is committed when one makes or passes a false instrument with intent to defraud. "The crime of forgery consists either in the false making or alteration of a document without authority or the uttering (making use) of such a document with the intent to defraud. (Pen. Code, § 470.) Whether the forged instrument is one of a particular [140 Cal.App.2d 801] name or character or, if genuine, would create legal liability, is immaterial; the test is whether upon its face it will have the effect of defrauding one who acts upon it as genuine." (People v. McKenna, 11 Cal.2d 327, 332 [79 P.2d 1065].) "In the case of a forgery of an instrument it is not necessary that the forged writing create a valid and legally enforcible obligation in order to constitute the making of it a forgery. It is sufficient that it may possibly deceive another and was prepared with intent to deceive and defraud another. Where the writing alleged to have been forged shows on its face that it might be the means of fraud, no averments of extrinsic facts to show how this could be are necessary." (People v. Brown, 101 Cal.App.2d 740, 742 [226 P.2d 647].) Failure to consummate the intended fraud is not of the essence. (People v. Horowitz, 70 Cal.App.2d 675, 688 [161 P.2d 833].)

People v. Nesseth, (1954) 127 Cal.App.2d 712, 718-720; 274 P.2d 479:

  • Mr. Justice Fox' statement in People v. Frankfort, 114 Cal.App.2d 680, 700; 251 P.2d 401, is here appropriate: "... The fact that the documents were read would not make it inherently improbable that other, different and additional representations were made by the salesmen.

  • "Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that 'The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction.' ... The practical wisdom of the rule is illustrated in this case. Upon at least three occasions prospective purchasers complained to defendant Nudelman that the written agreement did not seem to conform to what they had been told, whereupon he assured each party, in effect, that everything would be taken care of and he need not worry."

***

  • That the foregoing facts constitute forgery is evident. Section 470 of the Penal Code provides in part as follows: "Every person who, with intent to defraud, ... falsely makes, alters, forges, or counterfeits, any ... writing obligatory, ... contract ... is guilty of forgery."

  • That the correct rule is that the procuring of a genuine signature to an instrument by fraudulent representations constitutes forgery is supported by these well reasoned authorities: State v. Shurtliff, 18 Me. 368; Commission v. Foster, 114 Mass. 311 [19 Am.Rep. 353]; Gregory v. State, 26 Ohio St. 510 [20 Am.Rep. 774]; State v. Farrell, 82 Iowa 553 [48 N.W. 940]; Williams v. State, 213 Ala. 1 [104 So. 40]; Williams v. State, 20 Ala.App. 337 [104 So. 38]; Horvath v. National Mortg. Co., 238 Mich. 354 [213 N.W. 202, 56 A.L.R. 578]; Turner v. Nicholson, 115 Okla. 56 [241 P. 750]; Julia Oil & Gas Co. v. Cobb, 128 Okla. 260 [262 P. 650].

  • This rule appears to be supported by Conklin v. Benson, 159 Cal. 785, where the court says, at page 791 [116 P. 34, 36 L.R.A.N.S. 537]: "There is no foundation in the facts above set forth for the conclusion that the papers signed by plaintiff were forgeries, and absolutely ineffectual even to serve as a basis for the application of the doctrine of estoppel. The theory of the learned judge of the trial court appears to have been that all of these papers, including the deeds of the Monache lands to the United States, were in effect forgeries and absolutely void. The idea underlying this apparently was that plaintiff was so deceived in the matter of executing these instruments as to bring her within the doctrine of certain cases which substantially hold that where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forced. These decisions are not such as to sustain plaintiff's claim in this regard. The distinguishing feature between all such cases and the case at bar is that here plaintiff fully understood and believed that she was signing papers which, when delivered, would convey all her interest in the Monache lands. She intended to execute papers having this effect. The difference between the papers she thought she was signing, according to the evidence, and the papers she actually signed, was merely one of detail and in no degree material, one set of papers having precisely the ultimate effect of the other, the conveyance of her interest in this land. Her real and only complaint upon her own testimony was her failure to personally receive full payment for her land claimed to have been occasioned by reason of the failure of her agent to place the papers in escrow, to be taken up as payments were made, and the delivery thereof to Benson without payment first having been made. ..."

People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

  • The fact that the documents were read would not make it inherently improbable that other, different and additional representations were made by the salesmen. Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.) The practical wisdom of the rule is illustrated in this case. Upon at least three occasions prospective purchasers complained to defendant Nudelman that the written agreement did not seem to conform to what they had been told, whereupon he assured each party, in effect, that everything would be taken care of and he need not worry.

People v. Brown, (1951) 101 Cal.App.2d 740, 742; 226 P.2d 647:

  • In the case of a forgery of an instrument it is not necessary that the forged writing create a valid and legally enforcible obligation in order to constitute the making of it a forgery. It is sufficient that it may possibly deceive another and was prepared with intent to deceive and defraud another. Where the writing alleged to have been forged shows on its face that it might be the means of fraud, no averments of extrinsic facts to show how this could be are necessary.

People v. McKenna, (1936) 11 Cal.2d 327, 332; 79 P.2d 1065:

  • The crime of forgery consists either in the false making or alteration of a document without authority or the uttering (making use) of such a document with the intent to defraud. (Sec. 470, Pen. Code.) Whether the forged instrument is one of a particular name or character or, if genuine, would create legal liability, is immaterial; the test is whether upon its face it will have the effect of defrauding one who acts upon it as genuine. (People v. Gayle, 202 Cal. [11 Cal.2d 333] 159 [259 P. 750]; People v. Thorn, 138 Cal.App. 714 [33 PaCal.2d 5]; People v. Munroe, 100 Cal. 664 [35 P. 326, 38 Am.St.Rep. 323, 24 L.R.A. 33].) A deed which conveys no title may be the subject of forgery. (People v. Baender, 68 Cal.App. 49 [228 P. 536].)

Go here for other posts on forgery & forged documents involving genuine signatures. ForgeryGenuineSignatureKappa

Monday, May 4, 2009

Media Report Shines Light On Use Of Multiple Corporate Hat-Wearing Dummy "Vice Presidents" By Lenders To Sign Court Documents In Foreclosure Actions

In Central Florida, an investigative report by the St. Petersburg Times shines light on, what appears to be, a bogus arrangement being utilized by foreclosing mortgage lenders in which they authorize employees of a local firm to sign as "vice president'' in assigning loans from one company to another in an attempt to expedite foreclosure actions (and, presumably, with the hope that judges hearing the actions won't catch on to what they are doing).

  • Despite the turmoil in the lending industry, Bryan Bly seems to have no trouble finding a job. On Aug. 3, 2007, Bly signed a document as vice president of Option One Mortgage. On Feb. 13, 2009, Bly signed a document as vice president of Deutsche Bank. And on Feb. 18, 2009, Bly initialed dozens of documents — this time as vice president of Citi Residential Lending.

  • In fact, Bly never worked for any of those. His real employer is Nationwide Title Clearing, a Pinellas County company that helps lenders clean up problems that can complicate efforts to foreclose.

  • Bly, who lives in a Clearwater trailer park, is one of several Nationwide employees authorized by lenders to sign as "vice president'' in assigning loans from one company to another. Assignments are key in determining who actually owns the loan, an issue that has become all-important as banks foreclose on millions of loans that were bundled into securities and sold to investors.

***

  • Critics, though, say that Bryan Bly and "vice presidents'' like him at similar companies are part of an assembly-line process designed to resolve a big problem: In the rush to "flip'' loans as fast as possible in order to make more money, the new loan holders often failed to get the proper paperwork showing they owned the loan and had the right to foreclose.

***

  • To expedite transactions, Nationwide gets resolutions from lenders that authorize Bly, [...] and other employees of "proven reliability'' to sign as their vice presidents, said [Jeremy] Pomerantz, the Nationwide spokesman. On a big project like the Citi-to-Deutsche loan assignments, "they may sit there all day for a week and sign.''

***

  • But it is exactly that assembly-line process that makes critics wonder if "vice presidents'' can be certain that what they are signing is accurate and legal.(1) "Papering over a hole doesn't make the hole disappear,'' [Tampa attorney Chris] Hoyer said. "Using this device to present an air of legitimacy is an affront to the judicial system and a stain on society.''

For more, see Tampa Bay companies help lenders transfer home loans, foreclose.

For other posts on lenders using multiple corporate hat-wearing vice presidents to sign off on court documents in foreclosure actions, see:

(1) The St. Pete Times' story highlights two examples where judges refused to roll over and permit these slick and sloppy lender tactics.

In one example in New York, Brooklyn Supreme Court Justice Arthur Schack dismissed Deutsche Bank's motion to foreclose on a $408,000 loan last year because it had started foreclosure proceedings while the loan was still owned by IndyMac Bank. The judge said he wouldn't reconsider the case unless Deutsche explained why one woman — Erica Johnson-Seck — had signed as vice president of two different companies. The justice also said he was "perplexed'' as to why both Deutsche and IndyMac had the same address, and why an affidavit by Johnson-Seck, who supposedly worked in California, was notarized in Texas (see Deutsche Bank National Trust Company v. Harris, 2008 NYSlipOp 30308(U), February 5, 2008).

(In other cases where Justice Schack had problems with the same Erica Johnson-Seck with respect to her apparent wearing of multiple corporate hats when signing court documents for a number of lenders in different foreclosure actions, see Deutsche Bank Natl. Trust Co. v Maraj, 2008 NY Slip Op 50176(U) [18 Misc 3d 1123(A)], Decided on January 31, 2008; and IndyMac Bank, FSB v Bethley, 2009 NY Slip Op 50186(U) [22 Misc 3d 1119(A)], Decided on February 6, 2009.)

In a second example in a New Jersey case, another foreclosure case was reportedly thrown out after the "vice president'' for Deutsche Bank acknowledged she was only an assistant secretary. "She said she was told to fill out the paperwork however it needed to be done in order to make the document look valid,'' a New Jersey mortgage expert said. EpsilonMissingDocsMtg

Maryland Lawmaker Accused Of Scamming Homeowner In Foreclosure Dodges Bullet As Unfavorable Jury Verdict Limits Liability To $11K

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

  • An Anne Arundel County jury ruled Thursday that a state delegate will have to pay $11,000 to a woman who signed her home over to him, but that he did not intentionally defraud her. Del. Tony McConkey, a Severna Park Republican, said that the ruling was "a complete vindication." "It couldn't have turned out any better," he said.

  • In September, Anne Arundel Circuit Judge D. William Simpson found that McConkey, a real estate agent, violated a state law intended to protect homeowners in foreclosure in his dealings with Theresa Milligan over her Pasadena condominium. The jury found that McConkey should pay Milligan $28,000 for the loss of her home and $6,000 in other damages. But they also ruled that Milligan should pay $23,000 to McConkey for breaking her contract with him. Milligan's attorneys, Peter A. Holland and Michael Morin, had asked the jury to grant her as much as $1.5 million for the loss of the home and emotional distress. The single mother of three, who has been staying with her brother since losing the condominium, is "devastated" by the ruling, Morin said.(1)

Source: $11,000 awarded in McConkey case.

See also, WBAL-TV Channel 11: Jury Decides Against Delegate In Mortgage Case.

(1) According to this story, the case remains open as the homeowner's attorneys said they plan to ask the court to make McConkey pay their attorney fees. Attorney Michael Morin said they also plan to argue Milligan should not have to pay McConkey back the $23,200 because it was part of an illegal contract.

Foreclosure Rescue Operator Gets 60 Days In Jail Amid Ongoing SC AG Suit Alleging UTP Act Violation & Criminal Probe Into Unauthorized Practice Of Law

In Horry County, South Carolina, The Horry Independent reports:

  • A Lexington, N.C., man, who is listed as a defendant in more than 40 mortgage foreclosures in Horry County court, was sent to jail recently on contempt of court charges. Horry County jail logs show Robert Steve Jolly, 59, was still in jail [Wednesday] morning, two weeks into his 60-day sentence. Jolly was in Horry County court for a hearing recently that covered several topics.

  • The S.C. Attorney General’s Office has filed a civil suit against Jolly,(1) asking a circuit judge to stop him from preying on people who have fallen behind on their mortgage payments. Also, according to Horry County court documents, Circuit Judge Michael Baxley summoned Jolly to court at the same time on a Notice of Hearing and Rule to Show Cause. According to the document, the purpose of that hearing was to take testimony and hear argument on whether Jolly or anyone acting on behalf of Robert Jolly & Associates should be dismissed from all presently pending cases before the court as a result of allegations of the unauthorized practice of law and/or taking of action to undermine the administration and interest of justice.

***

  • Mark Plowden, spokesperson for the Attorney General’s Office, said the investigation began on the civil side, not the criminal side. “Now this office has a two-pronged attack against Jolly. There are these civil proceedings that you see before you, but there’s also a parallel criminal investigation ... The criminal investigation will be into unauthorized practice of law,” Plowden said, adding that the criminal investigation is not as far along as the civil one.

For more, see State Attorney General mounts fight for distressed borrowers.

Go here and Go here for other posts on issues relating to foreclosure rescue activities and the unlicensed/unauthorized practice of law.

(1) The story reports that the Attorney General’s Office claims Jolly has violated the South Carolina Unfair Trade Practices Act, and that, according to the lawsuit, Jolly began seeking out financially distressed South Carolina homeowners and titleholders to real property in March of 2007, offering to help them avoid foreclosure of their homes. Jolly encouraged homeowners to give his company a quitclaim deed, or a similar document, giving him rights to their property, according to the lawsuit. In exchange, he promised to pay off their mortgages and, in turn, they agreed to make monthly payments to Jolly & Associates to pay down their debt, according to the lawsuit. The idea was to keep homeowners from facing foreclosure. The lawsuit claims that Jolly is neither a real estate agent nor a lawyer licensed in the state of South Carolina; and that Jolly received payments from the homeowners, but didn’t pay their rightful mortgage companies, which actually put the homeowners farther behind in their payments than they already were.

In a case with a similar fact pattern (see Ohio Man Guilty Of 26 Counts In Foreclosure Rescue, Rent Skimming Scam; Allegedly Conned 14 Homeowners Into Belief He Would Renegotiate Home Loans), Licking County, Ohio prosecutors obtained guilty verdicts last November against a foreclosure rescue operator who allegedly deceived homeowners into signing over deeds to their homes on the premise that he would negotiate with their mortgage companies to avoid defaulting on their home debts while collecting rent thereon. He allegedly failed to make the mortgage payments while pocketing the collected rent, allowing homes to go into foreclosure. He was reportedly convicted of nine counts of grand theft, 13 counts of securing writings by deception and four counts of theft. UnauthPractOfLawTheta

California Mortgage Lenders Using Short Sales To Seek Deficiency Judgments On "Non-Recourse" Purchase Money Home Loans?

In San Diego County, California, North County Times reports:

  • [B]orrowers can face deficiency judgments at any point on certain types of loans. But California law allows special privileges for what is known as "purchase money" loans, or the original loan used to purchase the home. On such mortgages, a bank cannot legally sue the borrower for nonpayment. The bank's only means of recouping the loan is to foreclose on the house. Therefore, a homeowner late on payments on a purchase money loan cannot face a lawsuit ---- even if the owner put no money down.

  • But all bets are off if the borrower refinanced the mortgage. Especially on home equity lines of credit, lenders can sue the borrower for the unpaid amounts following either foreclosure or short sale.

  • However, lawyers said, if the borrower negotiates a short sale, the bank might issue a contract that says it will agree to sell the house and release the borrower from the "trust deed," the contract saying the borrower must pay back the loan in full. Lenders might include a clause in a short sale contract that releases the lien but creates the possibility for a lawsuit to collect debts at a later date, said John Brady, a San Diego attorney.

  • Effectively, lenders will try to transform a purchase-money loan into one in which the bank can sue to collect, Brady said."They're being sneaky," he said. "They're trying to keep the door open to be able to collect on any deficiency."

For the story, see Lawyers say lenders set stage to collect on 'short sales' (Foreclosure may be better option for some struggling homeowners).

Foreclosure Rescue Operator Violated State Consumer Fraud Act By Using Bogus Sale Leasebacks To Strip Equity From Homeowners, Says NJ AG In Civil Suit

From the Office of the New Jersey Attorney General:

  • Attorney General Anne Milgram announced [...] the filing of a lawsuit charging three individuals and two corporate defendants(1) with mortgage fraud. The defendants are charged with promising to help distressed homeowners keep their homes but, instead, acquiring their properties at exorbitant discounts, binding the victims to predatory “sale-leaseback” agreements and, typically, evicting them before selling their homes to other buyers. [...] Filed last Thursday in Superior Court in Hudson County, the state’s two-count lawsuit charges each defendant with violating the Consumer Fraud Act through unconscionable commercial practices, deception, false promises and misrepresentations.(2)

***

  • According to the state’s lawsuit, the [defendants] typically operated by contacting homeowners in foreclosure either shortly before, or shortly after, their homes were auctioned at sheriff’s sale. The defendants would promise to save consumers’ homes by paying off the balance of their delinquent mortgages either before the sheriff’s sale, or within the redemption period following the sale.

  • Using this approach, the defendants bypassed the typical sheriff’s sale process and acquired homes for the “pay-off amount” of the foreclosed mortgages – an amount that was usually far lower than what the properties would have sold for at sheriff’s sale. As part of the ostensible “solution” offered to victims, the defendants would enter into a sale-leaseback agreement with them that provided a chance to repurchase the home, but on grossly unfavorable terms. For example, the contracts typically required consumers to repurchase their homes within 90 days, and at prices significantly higher than what the defendants had paid to acquire the properties.

For the entire New Jersey AG press release, see Attorney General Sues Foreclosure Rescue Company (Defendants Accused of Making False Promises to Gain Houses at Discounts).

For the lawsuit, see Milgram v. Property Solutions of NJ Inc., et al.

(1) Named as defendants in the lawsuit are Property Solutions of N.J, Inc. and PSRE Holding Company, LLC, both of Union City. Also named are individual defendants Edward Toledo, the president of Property Solutions and a member of PSRE, Leon Toledo, the vice-president of Property Solutions, and Raymond Vega, the company treasurer and a member of PSRE. In addition to the appropriate penalties and consumer restitution, the state’s lawsuit seeks to permanently enjoin the Toledos, Vega, Property Solutions and PSRE from engaging in future foreclosure-related real estate acquisition or foreclosure rescue services.

(2) The Arizona Attorney General's Office has also recently targeted a foreclosure rescue operator with a civil suit alleging the use of bogus sale leasebacks to strip the home equity from financially strapped homeowners. For more on the Arizona case, see:

Sunday, May 3, 2009

City Of Los Angeles Votes To Ban All Upfront Fees Charged By Loan Modification Firms

In Los Angeles, California, the Los Angeles Times reports:

  • The Los Angeles City Council voted Tuesday to make it illegal for so-called mortgage consultants to charge an upfront fee for services when helping distressed homeowners try to modify their payments. Mayor Antonio Villaraigosa touted the law as the first of its kind in the nation and said it was a tool to "help residents keep a roof over their heads."

  • State law already prohibits mortgage consultants from demanding upfront fees from homeowners who are in default, the first stage of foreclosure. The new Los Angeles law, which the council approved unanimously, will apply those protections to all homeowners.

For more, see L.A. council votes to tighten rules on mortgage consultants (A new city ordinance will bar the consultants from demanding upfront fees from any homeowner -- not just those in default, who are protected under state law).

Crafty Mortgage Lenders Sneaking "Deficiency" Clauses Into Short Sale Contracts?

In San Diego, California, North County Times reports:

  • A "short sale" might not be the end of a homeowner's problems. The practice, which has exploded in popularity as homeowners struggle to pay their mortgages, is supposed to allow a borrower to sell a home for less than the mortgage amount, walk away, and avoid a credit-killing foreclosure.

  • Not so fast, say local real estate attorneys. Lenders appear to be inserting language into short sale contracts that allow them to sue for any "deficiency," or the amount lost by a bank by selling a home for less than the mortgage ---- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars for some North County homeowners.(1)

***

  • Attorneys say such clauses mean that a borrower's troubles might not end with the short sale ---- the lender could sue the borrower for a deficiency at a later date or turn over the unpaid debt to collectors after the short sale closes. Indeed, under some conditions borrowers may face fewer troubles by letting their properties fall into foreclosure.

For more, see Lawyers say lenders set stage to collect on 'short sales' (Foreclosure may be better option for some struggling homeowners).

(1) Reportedly, one real estate agent who specializes in short sales said about 50 percent of the short sale contracts he has seen include the language before he requests its removal. The North County Times reports that it obtained a short sale contract issued by Countrywide Financial Corp., which together with parent company Bank of America services roughly 20 percent of the mortgages in the nation. The contract warned the homeowner, who owned a house in El Cajon, that Countrywide "may pursue a deficiency judgment for the difference in the payment received and the total balance due ... " The owner, who is still negotiating with the lender, declined through a lawyer to comment.

Southern California Priest Joins Forces With Community Group To Keep Flock From Losing Homes To Foreclosure

In Pacoima, California, CNN reports:

  • Father John Lasseigne has never owned a home, but he's become one of the key saviors for those who face losing their house. As banks move in to take over homes in foreclosure, this priest is stepping in to stop them. [...] Lasseigne is the priest of Mary Immaculate Catholic Church in the Southern California community of Pacoima, where one in every nine homes is in some stage of foreclosure. He says the people in this community were targeted by predatory lenders and given loans they never should have qualified for.

***

  • Lasseigne began to preach to his congregation about the power of community organization. He teamed up with the One LA community group, and together they started teaching Foreclosure 101 to his flock. "There are hundreds, if not thousands, of families in my immediate neighborhood at risk of losing their homes," he said.

***

  • Many of the home owners here, with the help of Lasseigne and One LA, will receive finance preparation to better understand the fine print on loans. Lasseigne says that sometimes, people here didn't know what they were signing onto when they got loans. [...] He's met with more than 300 residents in recent months and brought them together with banks to modify their loans.

For the story, see Priest becomes savior in foreclosure crisis.

Woman Cops Plea To $30K Theft From Elderly Uncle; Also Suspected Of Pocketing Cash Intended To Pay Mortgage, Allowing Uncle's Home To Be Foreclosed On

In West Chester, Pennsylvania, The Phoenix reports:

  • A Phoenixville woman pleaded guilty [last week] to stealing the $30,000 death benefit paid to her uncle following the death of his wife. While friends and co-workers of the victim have suspicions that much more money was stolen by the niece over the years, police say they were only able to prove she took the $30,000. Detective Sgt. Thomas Goggin of the Phoenixville Police Department who investigated the case called it "one of the most morally outrageous crimes he had ever investigated."

***

  • But this wasn't the first time that Goggin had investigated a complaint regarding Lisa Viola. [...] In August 2003, Alfred [Viola] and his wife, Nancy, lost their house [...] to foreclosure. During the investigation, Alfred Viola told Goggin that they would give Lisa Viola cash to make the mortgage payment. Lisa Viola, however, didn't make the payment. No charges were pressed against Lisa Viola at the time because "Al didn't want anything to happen to Lisa," said Goggin.

For the story, see Woman admits to stealing $30,000. FinancialAbuseOfElderlyAlpha

Premature Foreclosure Eviction Leaves Family's Belongings Missing, Out On Street Before Lender Obtained Title To Home

In Waldron Acres, Illinois, The Daily Journal reports:

  • Richard Ball is among hundreds of thousands of Americans who have been caught in the current foreclosure crisis. However, his situation has drawn individual attention, and he called The Daily Journal to tell his side of the story.

***

  • Ball said the family, which also includes the couple's 14-month-old son and his mother, moved out on Jan. 13, anticipating the foreclosure. The family had fallen six months behind on house payments after the interest rate rose.

***

  • On Jan. 29, Ball said he tried to retrieve the remainder of his belongings from the garage -- a baby swing, bassinet, stereo and several cans of paint and primer. But Countrywide had padlocks placed on the garage's overhead door and on a door that leads into the house, he said.

  • All this took place, Ball said, before he received documents showing that the foreclosure of his home was official. He said those papers weren't stamped by a circuit clerk until March 13 and shortly after that, he was served a notice stating that they had to be out of the home by April 13.

For more, see Foreclosure — Family tried to claim belongings.

Go here for other posts on lender screw ups. ForeclosureLockOuts