Saturday, June 13, 2009

Judge Throws Alleged Foreclosure Rescue Scammer In Jail; Accused Of Engaging In Real Estate Business While Awaiting Criminal Trial, Violating Bond

In Orange County, Florida, WFTV Channel 9 reports:

  • The accused ringleader in a major mortgage fraud case is back in jail because of an Eyewitness News investigation that found he was already back in business even though he was out on bond. Friday, a judge revoked it. It's become a familiar feeling for John Pavao of Windermere. Bailiffs slapped cuffs on him again and took him back to jail less than three months after he got out on bond.

  • Prosecutors said Pavao just couldn't help himself. Eyewitness News first discovered signs he was getting back into real estate, even before he goes on trial for $6 million in mortgage fraud. Investigators say he offered to help people in financial trouble, but then took their homes. [... T]he judge said that testimony proved Pavao was trying to buy real estate, a clear violation of his bond. [...] John Pavao could remain locked up until he goes to trial later this year. His wife and daughter are also accused in the mortgage fraud, but they're still out on bond.

For more, see Accused Mortgage Fraud Ringleader Back In Jail.

For an earlier post on the pending charges, see Central Florida Foreclosure Rescue Operators With Massachusetts Connections Charged With Grand Theft, Racketeering In Alleged Equity Stripping Scam.

Straw Buyer Scheme Coupled With Subsequent Sale Using Contract For Deed Constitutes Sale Of Unregistered Security, Says Arkansas Securities Regulator

In Little Rock, Arkansas, Arkansas Business reports:

  • The Arkansas Securities Department announced Wednesday that it had ordered Greenleaf Cos. LLC of Springfield, Mo., and two of its officers, Eric C. Gagnepain and Misty Perkins, to stop peddling an unregistered scheme in which investors' good credit is used to buy houses that were then turned over to Greenleaf.

  • "Greenleaf would then manage the property and find a potential purchaser to lease the residential house until the purchaser/renter could purchase the residential house from the investor," according to a press release from ASD. "The investor was promised a $10,000.00 payment from Greenleaf for participating in the scheme."

  • The securities offered by Greenleaf, Gagnepain and Perkins were not registered with the ASD, according to the order, and the sales literature distributed to potential investors fraudulently stated that Greenleaf and its process all but nullified the risk of loss for investors.

Source: Missouri-based Greenleaf Cos. Ordered to Stop Selling Investments in Arkansas.

For more from the Arkansas Securities Department, see:

Go here for other posts involving Greenleaf Companies.

Las Vegas Landowner Prohibited From Developing Property Due To Airspace Restrictions Imposed By County To Pocket $15M In Lawsuit Settlement

In Clark County, Nevada, the Las Vegas Review Journal reports:

  • A Las Vegas family that missed out on a chance to develop land near McCarran International Airport and blamed airspace restrictions will receive nearly $15 million from Clark County, an attorney for the family said Tuesday. The money represents the outcome of a lawsuit filed 16 years ago by the Heers family, former owners of Vacation Village.

  • The family lost the property to foreclosure -- and their dream to redevelop it with three seven-story hotel towers -- after airspace restrictions were imposed on the land to accommodate jet traffic on a proposed runway at McCarran. The lawsuit asserted that the airspace restrictions amounted to a taking of the property, which would require the county to pay compensation.

For more, see Family awarded $15 million after bitter airspace fight.

See also, the Las Vegas Sun: Family settles over taking of airspace by McCarran.

Friday, June 12, 2009

FTC Targets Loan Modification Outfit With Civil Contempt Action; Accuses Firm Of Ripping Off Homeowners Facing Foreclosure With Upfront Fees

From the Federal Trade Commission:

  • The Federal Trade Commission has filed a civil contempt action charging a deceptive mortgage foreclosure rescue and loan modification operation with violating a 2001 court order.(1) Many homeowners paid the defendants up to $5,500 in advance and ultimately lost their homes to foreclosure. The FTC has asked the court to halt the unlawful practices, freeze the defendants’ assets, and seek compensation for victims.

  • According to papers the FTC filed with the court, the defendants told consumers that they would stop foreclosures. They claimed they were “100% successful and had never lost a customer’s home to foreclosure” and advised consumers to pay them instead of making mortgage payments. They also claimed that they would negotiate modified mortgages with lower interest rates, monthly payments, and principal balances. The FTC charged that, in fact, they obtained few, if any, loan modifications for customers.

  • The defendants also claimed that their selectivity in choosing customers helped them succeed, but they took on nearly every consumer willing to pay, according to the FTC. In addition, the defendants falsely claimed that they would provide experienced real estate attorneys who would represent customers nationwide, and would review consumers’ loan documents to look for fraud and other lending violations.

For the entire press release, see FTC Charges Foreclosure Prevention and Loan Modification Marketers with Contempt.

Go here for the FTC's Temporary Restraining Order With Asset Freeze, Appointment of a Temporary Receiver and Other Equitable Relief.

Go here for links to other court documents available in connection with this case.

(1) According to the FTC, Bryan D’Antonio and three companies he controls, The Rodis Law Group Inc., America’s Law Group Inc., and The Financial Group Inc., doing business as Tax Relief ASAP, violated a 2001 order that banned D’Antonio from telemarketing and misrepresenting material facts about goods or services. The FTC obtained the order against D’Antonio and his former company, Data Medical Capital Inc., for operating a work-at-home medical billing opportunity scheme. D’Antonio pleaded guilty to mail fraud for his involvement in the scam and served almost three years in prison.

Alleged Scammer Leaves Friends Homeless; Becomes Fugitive, Forcing Federal Judge To Order Forfeiture Of Real Estate Posted To Secure Bail Bond

In Brooklyn, New York, the New York Post reports:

  • A former Credit Suisse broker who became a fugitive to escape trial for fraud now has two more victims -- the friends who put their homes on the line to back his $3 million bail. Brooklyn Federal Judge Jack Weinstein angrily ordered prosecutors to seize $3 million in assets that were posted as bail for Julian Tzolov, 36, including a friend's Manhattan apartment and a Miami Beach home belonging to his girlfriend's brother. The feds launched a massive manhunt for Tzolov on May 9 after he vanished from his posh Fifth Avenue condo, where he'd been under house arrest for eight months, complete with an electronic monitoring device around his ankle.


  • "Everything should be forfeited," Weinstein said [Monday] in reference to the friends who signed Tzolov's bail bond. "They're going to lose everything."


Massachusetts AG Settles Subprime Suit; Fremont To Cough Up $10M

In Boston, Massachusetts, The Associated Press reports:

  • A bankrupt California-based subprime mortgage lender has agreed to pay $10 million to settle allegations of unfair practices that contributed to the current spike in Massachusetts home foreclosures. Massachusetts Attorney General Martha Coakley said Tuesday that Fremont Investment & Loan and its parent company, Fremont General Corp., will pay $8 million in consumer relief, $1 million in civil penalties and $1 million in costs, including attorney fees.


  • The settlement also makes permanent a preliminary injunction issued by the Superior Court last year, barring the company from pursuing foreclosure of "presumptively unfair" mortgage loans without court approval.

Source: Massachusetts settles with mortgage lender.

For more from the Massachusetts Attorney General's Office, see:

For the Massachusetts Supreme Judicial Court decision ruling that subprime loans that lenders knew or should have known were unsustainable are illegal (ie. as unfair and deceptive business practices in violation of M.G.L. c. 93A, § 4 of the Massachusetts statutes), see Commonwealth of Massachusetts v. Fremont Investment & Loan, 452 Mass. 733; 897 N.E.2d 548; 2008 Mass. LEXIS 797 (Ma. 2008) (for a possibly easier to read version with all the footnotes appearing at the end of the case, try here). UndoMortgageLoans TILAdelta

Racial Steering, Bonuses For Referring Prime Borrowers To Subprime Loans Among Accusations By Ex-Wells Fargo Employees In Discriminatory Lending Suit

The New York Times reports:

  • As she describes it, Beth Jacobson and her fellow loan officers at Wells Fargo Bank “rode the stagecoach from hell” for a decade, systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages. These loans, Baltimore officials have claimed in a federal lawsuit against Wells Fargo, tipped hundreds of homeowners into foreclosure and cost the city tens of millions of dollars in taxes and city services.


  • Ms. Jacobson’s account and that of the other loan officer who gave an affidavit, Tony Paschal, both of whom have left Wells Fargo, provide the first detailed accusations of deliberate racial steering into subprimes by one of the nation’s top banks.


  • The affidavits of the two loan officers seem to bolster Baltimore’s lawsuit. Mr. Paschal, who is black and worked as a loan officer in Wells Fargo’s office in Annandale, Va., from 1997 to 2007, offers a sort of primer on Wells Fargo’s subprime marketing strategy by race. [...] “They referred to subprime loans made in minority communities as ghetto loans and minority customers as ‘those people have bad credit’, ‘those people don’t pay their bills’ and ‘mud people,’ ” Mr. Paschal said in his affidavit. [...] “The company put ‘bounties’ on minority borrowers,” Mr. Paschal said. “By this I mean that loan officers received cash incentives to aggressively market subprime loans in minority communities.” Both loan officers said the bank had given bonuses to loan officers who referred borrowers who should have qualified for a prime loan to the subprime division.

For more, see Bank Accused of Pushing Subprime Deals on Blacks.

Go here, Go here, and Go here for other posts on alleged discrimination in real estate transactions. DiscriminationPredatoryLendingAlpha

NC AG Obtains Court Order Temporarily Shutting Down Loan Modification Firm Taking Upfront Fees; Seeks Permanent Ban, Penalties, Homeowner Refunds

In Raleigh, North Carolina, WRAL-TV Channel 5 reports:

  • A Superior Court judge has ordered a Raleigh company that advertised on local gospel radio that it could save homes from foreclosure to stop doing business in North Carolina, Attorney General Roy Cooper said Thursday. Judge Howard Manning agreed Wednesday with Cooper’s request to stop Mortgage Help Services Inc. and Chief Executive Nathaniel Livingston from advertising, performing or taking money for loan modification and foreclosure assistance services. Cooper is asking the court to ban the company permanently and order it to pay refunds to consumers and civil penalties.


  • Mortgage Help Services and Livingston claimed in ads to be experts in modifying mortgage loans and rescuing homes from foreclosure. A lawsuit filed by the Attorney General's Office alleges that consumers who paid Mortgage Help Services between $500 and $1,500 upfront got little or no help modifying their loans to lower their interest rates or monthly payments.

  • A North Carolina law that Cooper lobbied for makes it illegal to charge an upfront fee for foreclosure assistance or mortgage loan modification services. The company often encouraged homeowners to stop making their mortgage payments and cease communicating with their lender, which put them deeper in debt and closer to foreclosure, Cooper said.

For more, see Judge shuts down foreclosure scheme.

For the North Carolina AG press release, see AG Cooper shuts down Raleigh foreclosure fraudster (Mortgage Help Services took struggling homeowners’ money but failed to help them).

Thursday, June 11, 2009

Massachusetts Court Ruling Gums Up Resales Of Foreclosed Homes Across State; Title Insurance Unavailable For Clouded Ownership Due To Faulty Paperwork

In Springfield, Massachusetts, the Boston Herald reports:

  • A Springfield judge’s ruling has thrown the entire Massachusetts foreclosure market into disarray by bolstering claims that lenders improperly seized thousands of Bay State homes. Experts say Land Court Judge Richard Long’s recent decision to void two Springfield-area foreclosures over procedural flaws has gummed up resale of foreclosed homes across the state. “It’s just stopped everything,” said North Andover broker Linda Kody, who specializes in reselling foreclosed properties for banks.

  • Kody said Long’s ruling, first reported yesterday by industry publication Banker & Tradesman, has halted at least 12 of her resale deals. Would-be buyers can’t get title insurance on homes with “clouded” ownership, Kody said, and banks, in turn, generally won’t OK mortgages without title coverage. Long ruled that due to faulty paperwork, U.S. Bank and Wells Fargo Bank don’t really own the Greater Springfield homes that each foreclosed upon separately in 2007.

  • The judge found that the banks held foreclosure auctions even though both lacked documents at the time proving that they really owned the homeowners’ mortgages. That “clouded” each property’s title, discouraging any third party from bidding on the homes, Long ruled.


  • Lawyer Gary Klein, who’s filed a federal class-action lawsuit aimed at undoing some 2,000 Bay State foreclosures on such grounds, said Long’s ruling strengthens his case.(1)Lenders simply stopped following the law for their own convenience,” Klein said.

For the story, see Court puts legal cloud over foreclosure sales.

Go here for the consolidated court ruling (U.S. Bank v. Ibanez; LaSalle Bank v. Rosario; and Wells Fargo v. Larace), available online courtesy of attorney Glenn Russell, Jr., of the Law Office of Glenn F. Russell, Jr., Fall River, Massachusetts.

See also:

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) For more on this point, see:

"Entire Industry Is A Scam," Says NY AG As Subpoenas Go Out To 14 Loan Modification Firms; "Intent To Sue" Sent To Another

Bloomberg News reports:

  • New York Attorney General Andrew Cuomo subpoenaed 14 loan-modification companies and plans to sue [another] as part of a probe of the “foreclosure rescue” industry.(1) [...] "Many of these companies charge upfront fees which are specifically prohibited by law,” Cuomo said in a conference call. “Sometimes homeowners even end up paying a higher cost after one of these companies gets involved.” Cuomo said that in many ways the “entire industry is a scam” because the U.S. Department of Housing and Urban Development provides assistance to struggling homeowners for free.

For the story, see Cuomo Subpoenas 14 Loan Modifiers, Plans Lawsuit.

See also: New York AG press release, see Cuomo Announces Intent To Sue ‘Amerimod’ Loan Modification Company In Investigation Of Foreclosure Rescue Scams Targeting Homeowners Nationwide (Long Island-Based American Modification Agency Charged Illegal Up-Front Fees and Used Deceptive Marketing to Target Homeowners Facing Foreclosure; Cuomo Also Issues Subpoenas to Fourteen Other Loan Modification Companies Across the Country in Nationwide Investigation).

(1) According to the NY AG's office, it has served a notice of intent to sue on American Modification Agency, Inc. (“Amerimod”) and its owner and President Salvatore Pane, Jr., accusing the company of charging illegal upfront fees and using false advertising to reel in struggling homeowners. Amerimod is headquartered in Uniondale, NY and claims to operate in all 50 states, servicing thousands of consumers nationwide.

Cuomo has also issued subpoenas to fourteen loan modification companies: American Home Recovery Corporation; CloseMore Financial Corporation; Elite Results Group, Inc.; FLM Law Center LLP, a/k/a Federal Loan Modification Law Center and Federal Loan Modification; Hometown U.S.A., Inc.; Global Modifications, Inc. a/k/a The Law Office of Brett Margolin, P.C.; Loan Modification Affiliate Exchange, Ltd, a/k/a LoanMAE; Nationwide Modification Agency, Inc.; NMA Legal Services, P.C.; Northeast Mortgage Services; People’s First Financial, Inc.; Raymond Lewis & Fitch, Inc.; Settled For Less, Inc.; and the Law Depot, Inc. a/k/a the Loss Mitigation Legal Network.

Conn AG Probe Into Foreclosure Lawyers, Homeowner Complaints About Not Receiving Proper Notice Focuses On Lender Processing Services, Fannie, Freddie

In Hartford, Connecticut, The Wall Street Journal reports:

  • Connecticut's attorney general is seeking information from mortgage lenders Fannie Mae and Freddie Mac and mortgage-processing services company Lender Processing Services Inc. on how they select law firms for foreclosure services.

  • In a statement Monday, Connecticut Attorney General Richard Blumenthal said his office is probing complaints that the majority of the state's foreclosures are assigned to a select group of law firms and complaints from consumers that they didn't receive proper foreclosure notices from marshals.

  • "Dominance over foreclosure service by a few select law firms and marshals has spurred complaints about improper or illegal practices - wrongfully allocating work to non-marshals, forging papers, failing to serve papers, and making kickbacks," Blumenthal said in a statement. "Concentrating this work in a few hands can be severely problematic - causing unconscionable costs and failed notice delivery."

  • Blumenthal's office initially said he was seeking information from banking technology company Fidelity National Information Services Inc. (FIS), but later clarified Blumenthal was seeking information from LPS. LPS was spun off from Fidelity National last year.

  • Blumenthal said he is seeking the identity of all Connecticut law firms employed for foreclosure actions from 2007 to the present, details on the criteria used in selecting those firms, information on fees paid to those law firms and any fees paid by the law firms to the lenders and any complaints by Connecticut consumers regarding failures to provide proper notice.(1)

For the story, see Conn AG Seeks Information On Foreclosure Law Firms (requires subscription; if no subscription, try here, then click link for the story).

For the Connecticut Attorney general press release, see Attorney General Investigates Selection Process For Law Firms, Marshals Handling Foreclosures.

(1) Go here for Connecticut AG Blumenthal's letters to LPS , Fannie, Freddie requesting the information. SloppyForeclosuresAlpha SewerServiceAlpha

Sue First & Ask Questions Later!

A Pew Mortgage Investigations report by primary author, Nye Lavalle, describes the practice of using fraudulent affidavits and methods to assign promissory notes and conceal wrongdoing that some mortgage servicers and lenders are being suspected of. Among other things, this report shines light on the conduct of a certain Ocwen Loan Servicing employee, one Scott Anderson, who has received mention on at least seven occasions(1) by a certain Brooklyn, New York trial judge presiding over foreclosure actions in which Anderson appears to have acted as a multiple corporate hat wearing vice president when signing legal documents on behalf of more than one company having some involvement in various lawsuits.

For the report, see SUE FIRST & ASK QUESTIONS LATER!

Go here for more on multiple corporate hat wearing "vice presidents."

(1) HSBC Bank USA, N.A. v Betts, 04/23/2008, 2008 NYSlipOp 31170(U), Schack, J.;
HSBC Bank USA, N.A. v Cherry, 12/17/2007, 18 Misc 3d 1102(A), 2007 NYSlipOp 52378(U), Schack, J.;
Deutsche Bank Natl. Trust Co. v Castellanos, 01/14/2008, 18 Misc 3d 1115(A), 2008 NYSlipOp 50033(U), Schack, J.;
HSBC Bank USA, N.A. v Valentin ("Valentin I"), 01/30/2008, 18 Misc 3d 1123(A), 2008 NYSlipOp 50164(U), Schack, J.;
HSBC Bank USA v Antrobus, 07/31/2008, 20 Misc 3d 1127(A), 2008 NYSlipOp 51639(U), Schack, J.;
HSBC Bank USA, N.A. v Charlevagne, 08/04/2008, 20 Misc 3d 1128(A), 2008 NYSlipOp 51652(U), Schack, J.;
HSBC Bank USA, N.A. v Valentin ("Valentin II"), 11/03/2008, 21 Misc 3d 1124(A), 2008 NYSlipOp 52167(U), Schack, J. Arthur M. Schack

Suit Charges City Of St. Pete With Targeting, Harassing Homeless

In Central Florida, The Tampa Tribune reports:

  • St. Petersburg officials and police are using local ordinances to target and harass the homeless, depriving them of their constitutional rights, according to a federal lawsuit. A Gainesville public advocacy law firm and the National Law Center on Homelessness & Poverty in Washington filed the 63-page complaint [...] on behalf of six named defendants. The lawsuit is seeking class-action status.

For more, see Lawsuit: St. Pete police, officials targeting homeless (About 30 percent of new residents are ''economic homeless,'' people who recently have lost jobs and homes and have nowhere else to go).

For the lawsuit, see Catron v. City Of St. Petersburg.

Wednesday, June 10, 2009

Florida Woman Charged In Alleged Foreclosure Surplus Scam; Accused Of Using Forged Documents To Swipe Excess Proceeds From Tax Deed Sales

In Pasco County, Florida, the Charlotte Sun reports:

  • A Zephyrhills, Fla., woman is accused of conning local officials out of $93,104 in excess taxes from foreclosure sales, a reported scheme state investigators say spans three counties. Michelle Boyett, 33, was arrested [last week] and charged with first-degree grand theft of more than $100,000.

  • According to the Florida Department of Law Enforcement, Boyett forged documents to collect money left over from the sale of foreclosed properties in Charlotte, Bay and Volusia counties. In all, the claims exceeded $113,000.

  • Investigators say Boyett would submit paperwork to each of the county clerk offices identifying herself and her company, Central Florida Asset Recovery, as the representative of the original property owners. Normally, once taxes become delinquent on a particular property, county officials will sell the parcels at a public auction. In most cases, these sales generate more money than actually is owed to the county in taxes. As a result, the excess funds are returned to the previous property owner, an FDLE report said.

  • Boyett attempted to act as an intermediary to the collection process, authorities say, as she would file documents claiming to work on behalf of the property owners. The documents also would include the forged signatures of the owners, giving Boyett consent to distribute the money, according to the report.

For more, see Report, Woman stole thousands in tax deed sales.

Unwitting Home Seller Conned By Alleged Mortgage Scammers Into Holding Subordinate Carry Back Note Now Faces Having Equity Wiped Out

In Seattle, Washington, The Seattle Times reports:

  • Tom Backman says the deal to sell his house in Pacific two years ago seemed fishy from the get-go. The real-estate agent was hard to reach and demanded a specific escrow closer. The actual buyer was never around. Still Backman, who had already moved to rural Idaho, wanted to get the deal closed. He even agreed personally to loan the buyer $53,500 to seal the sale. But the loan payments quit coming. The house fell into foreclosure. Then one day, federal agents told him he might have been the victim of an elaborate mortgage-fraud scheme.(1) Now Backman worries that if he doesn't get his money back, he'll lose his current home.


  • [I]n this case, the defendants in some instances got unwitting home sellers to extend their own private loans — called "carry-back notes" — to the phony buyers, the prosecutors say. The sellers lost it all when no one paid on the primary bank loans and the homes were foreclosed.

  • Backman said that's exactly what happened to him. He had been counting on it to fulfill a short-term loan he took for the down payment on his current home. Now he has to come up with $50,000, or he's in real trouble.

For more, see Five nabbed in alleged mortgage-fraud scheme in Pierce, King counties.

For the U.S. Attorney (Washington State - Western District) press release, see FIVE ACCUSED IN MORTGAGE FRAUD SCHEME THAT CHEATED BANKS AND PROPERTY SELLERS (Real Estate Agents, Mortgage Loan Originators, and Escrow Company Employee Conspire in $18 Million Fraud):

  • [I]n this scheme, the conspirators did not just damage banks and financial institutions. Innocent sellers were harmed when they agreed to loan the buyer a portion of the purchase price, to be paid back over time. The sellers did not know that the conspirators had already obtained 100 percent financing from commercial lenders. When payments were not made and properties fell into foreclosure, and then were sold for less than the total of all loans secured by the property, the sellers holding private notes were left with nothing.

(1) The prosecution documents allege the conspiracy involved dozens of falsified real-estate sales used to scam banks and innocent sellers all over King and Pierce counties out of at least $18 million in at least 80 loans. Indicted were real-estate agent Humberto A. Reyes-Rodriguez, 42, of Federal Way — known to Backman and others as Tony Reyes; real-estate agent Alexis Ikilikyan, 29, of Auburn; Ikilikyan's ex-husband, William S. Poff, 37, of Michigan; Micki S. Thompson, 54, an escrow agent from Tacoma; and Mario A. Marroquin, 38, of Kent.

Ex-Cop Charged With Recording Bogus Deeds Putting Homes In Foreclosure Into His Name, Then Renting Them Out To Unsupecting Tenants

In West Palm Beach, Florida, WPBF-TV Channel 25 reports:

  • The Palm Beach County Sheriff's Office announced the arrest of a former West Palm Beach police officer Thursday. Carl Heflin is accused of stealing more than two dozen properties that were about to go into foreclosure.

  • Detectives said Heflin forged names on the property deeds and would then rent those properties to people, take their deposit money and refuse to let them move in. "All of these properties are in some sort of foreclosure," said Palm Beach County sheriff's detective Michael Antinoro. "People are either trying to work it out or they are just walking away from the property," he said.

  • Heflin allegedly made money off the scheme by duping renters. "He'll take money from tenants," explained Antinoro. "Sometimes he'll kick the tenants out; sometimes he'll take the money from the tenants and have no thought about moving them in to begin with."

  • Heflin was arrested on charges of scheme to defraud. Antinoro said he'll also be facing charges of burglary and grand theft.

Source: Ex-Cop Charged In Home Foreclosure Scheme (Former W. Palm Beach Officer Accused Of Stealing Properties Near Foreclosure, Duping Renters).

Go here, 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.

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

Tuesday, June 9, 2009

Federal Jury Awards Forklift Operator $500K In Suit Against Out-Of-Control Bill Collector

In San Jose, California, the San Jose Mercury News reports:

  • With a straight back, short haircut and stern face, Manuel Faustos looks more like an Army sergeant than a farmworker, and he certainly doesn't sound like a happy man who stands to collect a lot of money from a bill-collection agency that hounded his family without mercy.

  • "I don't care about the money,'' Faustos said in the kitchen of a modest tract home in Gonzales, a farming town an hour's drive south of Silicon Valley. A naturalized U.S. citizen, he and his wife, Luz, speak mostly Spanish. "It was never about the money. It was about protecting my family, providing for my wife and children. These people threatened to take it all away from me.''

  • Sorry, he said, but he won't be laughing on his way to the bank to deposit a $500,000 check. That's how much money a federal jury recently granted the couple after a short trial in San Jose.


  • According to court records, [Georgia-based Credigy Services Corp.'s] callers threatened to take their home and savings, garnish Manuel's wages as a forklift operator and ruin their credit. Desperate for help again, the couple turned to the Watsonville Law Center, a nonprofit agency that represents the rural poor. The law center hooked them up with attorney Balam Letona, a Santa Clara law school graduate who seemed to be heaven sent. [...] After nine days in court, the jurors [...] awarded the couple $100,000 in damages and $400,000 in punitive damages.(1)

For the rest of the story, see Farmworker couple wins $500,000 verdict against bill collector.

(1) As collection activities rise, more people will seek relief under the Fair Debt Collection Practices Act, the Federal law that regulates the conduct of debt collectors.

New York AG Obtains Court Order Shutting Down Two Debt Collection Agencies For Illegal Business Practices

From the Office of the New York Attorney General:

  • Attorney General Andrew M. Cuomo [...] announced that his office has launched a statewide inquiry into debt collection companies. As part of the inquiry, the Attorney General’s Office obtained a court order against Lamont Cooper and his two debt collection companies, Emanee Development, Inc. and Dial Tech LLC,(1) under which the companies will shut down and Cooper will be forced to pay restitution to consumers statewide.

  • According to Cuomo’s Office, Cooper’s companies unlawfully lied to consumers, threatened to arrest them, and intimidated them into paying debts that they sometimes did not even owe. They would often call third parties like neighbors or employers to further embarrass and harass consumers. The Attorney General also announced that his Office has subpoenaed nearly 20 other debt collectors across the state in his ongoing investigation into various facets of the debt industry.

For more, see Attorney General Cuomo Launches Inquiry Into Debt Collectors Across New York State (Cuomo Shuts Down NY Collection Agencies That Threatened and Intimidated Consumers Into Paying Debts They Didn’t Owe; Sends Subpoenas to Nearly 20 Debt Collectors Statewide).

(1) According to the Attorney General's Office, Cooper operated Emanee and Dial Tech, which did business under the names of various shell companies and fictitious law firms across the state, including: Claims Process Services, Claims America, CMC Recovery Services, Lomax & Barnes and Murray, Bradshaw & Associates.

After Paying Firm $5,600 For Failed Loan Modification Of Unaffordable Mortgage, Brooklyn Homeowner Gets Needed Changes To Terms On Her Own

In Brooklyn, New York, Newsday reports:

  • After months of trying to get mortgage relief using American Modification Agency, Brooklyn resident Rolett Brown is now working with South Brooklyn Legal Services to try to get back the $5,600 she paid AMA, based in Hauppauge and founded by executive Salvatore Pane. He also owns Amerimod, a separate Uniondale company that's Long Island's largest modification firm.

  • Brown, who needed help after the monthly payment for her adjustable rate mortgage rose to $3,700 last July, said she paid AMA last summer, using two credit cards and a loan from her retirement fund. Her loan modification application was denied - twice. AMA wanted to try a third time. Brown said no. Then, she said, she connected with city officials and her bank's representatives and was able to get the changes she needed on her own. AMA hasn't refunded her money, she said. "I feel betrayed," Brown added.

For the story, see Foreclosure rescue firms under scrutiny (Federal and NY regulators moving to weed out scam operations with tighter rules).

Cost For Homeowners To Countersue Lenders When Contesting Florida Foreclosure Actions In State Court Skyrockets

The South Florida Sun Sentinel reports:

  • Starting [June 1], the cost to file a notice of foreclosure in Florida jumps dramatically. State lawmakers approved the hike from $301 to between $401 and $1,906, depending on the value of the property. Few people will shed any tears for the lenders and homeowners associations that have to fork over the extra cash.

  • But get this: homeowners and lien holders who want to contest a foreclosure in some way will have to pay plenty more as well. Those filing a foreclosure cross-claim, counterclaim, counterpetition or third-party complaint used to pay $295. Now the fee is $395 to $1,900, depending on the property value.


  • For the old foreclosure fees, click here. For the new foreclosure fees, click here.

Source: Filing a foreclosure notice in Florida? Prepare to pony up.

Monday, June 8, 2009

Almost Half Of All Mortgages Are Serviced Using One Firm's Data Processing System

The following is an excerpt from a recent press release from Lender Processing Services, Inc.:

  • Lender Processing Services, Inc. (LPS)(1) is a leading provider of integrated technology and services to the mortgage industry. [...] Approximately 50 percent of all U.S. mortgages are serviced using LPS's Mortgage Servicing Package (MSP). In fact, many of the nation's top servicers rely on MSP, including eight of the top 10 and 14 of the top 20. LPS also offers proprietary mortgage and real estate data and analytics for the mortgage and capital markets industries.

Go here for the Lender Processing Services press release.

For more on Lender Processing Services, Inc., see:

  • Bloomberg News: Lender Processing Falls 29% on Report of Inquiry (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),

  • The Wall Street Journal: DOJ Probing Mortgage Data Processing Firms (The Department of Justice is conducting a nationwide probe of the company whose automated systems handle half the mortgages in the U.S., looking for evidence Lender Processing Services Inc. (LPS) has "improperly directed" the actions of lawyers in bankruptcy court) (may require subscription; if no subscription, try here, then click link for the story).


The use of these types of data processing systems in the context of filing foreclosure actions was the target of a scathing ruling (at page 58) in a recent Federal bankruptcy case in which the judge made this observation (among others):

  • 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(2) 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.

For the court ruling, see In re Niles C. & Angela J. Taylor (Case No. 07-15385-DWS, Bankr. E.D. Pa., April 15, 2009).


The use of company employees to act as "multiple corporate hat-wearing dummy vice presidents" for the various lenders and loan servicing companies using these data processing systems when initiating foreclosure actions has also been the focus of some controversy. Go here for more on multiple corporate hat wearing dummy vice presidents.

(1) On July 2, 2008, LPS was spun-off from Fidelity National Information Services, Inc. through a tax free distribution of all of its shares to Fidelity shareholders. Form 10-Q for Lender Processing Services, Inc. http:/

(2) This footnote is not from the court ruling. Reference here is being made to the assembly line, foreclosure mill law firms and their employees who, in my view, willfully blind themselves to the practices of the foreclosing lenders that they represent, and otherwise allow themselves to be roped in and used by their clients as mere lackeys in the foreclosure process. SloppyForeclosuresAlpha

Feds Hammer Countrywide's Mozilo, Two Top Deputies In Securities Fraud Civil Suit; Allegedly Hid Firm's Crumbling Finances During Subprime Meltdown

In Los Angeles, California, Bloomberg News reports:

  • Former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo and two of his top deputies were sued by regulators for allegedly hiding the home lender’s deteriorating finances as the subprime mortgage crisis unfolded.

  • While publicly reassuring investors about the quality of his loans, Mozilo issued “dire” internal warnings and engaged in insider trading accelerating stock sales to reap about $140 million, the agency said in the suit at Los Angeles federal court.

  • In one e-mail, he described a “particularly profitable subprime product as ‘toxic.’” He also wrote that Countrywide was “flying blind” and had “no way” to determine the risks of some adjustable-rate mortgages, the SEC said.

  • Each of the defendants was aware, but failed to disclose, that Countrywide’s current business model was unsustainable,” the agency wrote in the suit, which also named former Chief Operating Officer David Sambol, 49, and former Chief Financial Officer Eric Sieracki, 52. All three defendants denied the agency’s claims.

For more, see Countrywide’s Mozilo Saw Loans as ‘Toxic,’ SEC Claims.

For more from the U.S. Securities & Exchange Commission on this story:

"Produce The Note" Approach Now Required Of Lenders In Nevada Foreclosures Where Homeowner Requests Mandatory Mediation

The Las Vegas Sun reports:

  • Homeowners facing foreclosure may have a new friend on their side, if they’re willing to pay for it — a judge. A new state law, signed by Gov. Jim Gibbons and which takes effect in July, allows homeowner-occupants facing foreclosure to demand a sit-down mediation with lenders, overseen by a retired judge or an attorney. It’ll cost homeowners up to $200, but it might help them save their homes.


  • [A]t best for homeowners, the process might stave off foreclosure altogether because of a major technicality. One of the more dramatic components of the foreclosure mediation law compels lenders to produce promissory notes, showing that money is owed, and deeds of trust, showing the banks’ security on the loans. If they can’t, then mediators could reduce the loans significantly, allowing struggling homeowners to stay put. “It’s a basic consumer protection that most states are looking at,” says Assembly Speaker Barbara Buckley, who wrote the bill. “We don’t want people paying mortgages to people who don’t own the mortgage.”(1)


  • Previous to the passage of the Nevada law, lenders here had to file three documents in the foreclosure process: a 90-day notice-of-default and election to sell, a 21-day notice-of-sale and a three-day eviction notice, [...]. Upon receiving the 90-day default notice under the new law, homeowners have 30 days to seek mediation.

For more, see Foreclosure help could hinge on who holds the note.

For a graphic illustration of how promissory notes get "chopped up" in the securitization process, see Why Your Lender May Not Have Your Mortgage Papers.

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) This new law comes on the heels of a recent Nevada bankruptcy court ruling encompassing 27 cases in which Mortgage Electronic Registration Systems, Inc. was prohibited from representing lenders seeking to foreclose on delinquent homeowners already in bankruptcy unless it could produce the actual loan note.

Ex-Mortgage Broker Gets 9+ Years In Subprime, Straw Buyer Mortgage & Foreclosure Rescue Scams Involving $200M+ In Fraudulently Obtained Loans

In New York City, The Wall Street Journal reports:

  • A one-time mortgage broker was sentenced to more than nine years in prison Thursday after pleading guilty last year in a home-foreclosure rescue scheme and in a separate scheme to defraud subprime lenders. Aleksander Lipkin was sentenced to 110 months in prison, to be followed by five years supervised release at a hearing [...] in Manhattan. He also was ordered to forfeit $7 million and to pay $11.6 million in restitution.


  • Prosecutors had alleged that Lipkin, from 2004 to 2007, was a leader of a scheme to defraud subprime and other lenders by using so-called "straw buyers" and submitting false information to lenders on loan applications. The scheme involved at least $200 million in loans, prosecutors said. Twenty-six people have pleaded guilty or been convicted of criminal charges in the subprime scheme.

  • The government also had alleged Lipkin participated in a separate home foreclosure rescue scheme involving more than $20 million in loans. The scam allegedly targeted homeowners facing foreclosure - primarily in Brooklyn and the Bronx - between November 2003 and April 2005, prosecutors said.

For more, see Ex-Mortgage Broker Sentenced To 110 Mos In Subprime Scam (may require subscription; if no subscription, try here, then click link for the story).


In a related, February 9, 2009 New York Law Journal story on one of the attorneys that was embroiled in this scam, see N.Y. Attorney Convicted of Mortgage Fraud (Alexander M. Kaplan, 34, of Lerner & Kaplan, sat stoically at the defense table while a jury of 10 women and two men pronounced him guilty on all 18 counts in an indictment charging him with conspiracy and bank, mail and wire fraud).

Wells Whistleblowers Call Lending Practices "Riding The Stagecoach To Hell" In Testimony Claiming Blacks Were Targeted In Baltimore City Subprime Suit

In Baltimore, Maryland, The Daily Record reports:

  • The city of Baltimore has beefed up its groundbreaking racial discrimination lawsuit against Wells Fargo with sometimes shocking testimony from a pair of the megabank’s former subprime-loan officers. The two whistleblowers claim their co-workers targeted black ZIP codes and churches, used software to “translate” marketing materials into African-American vernacular, and referred to subprime loans in minority communities as “ghetto loans” and to borrowers as “mud people.”

  • Their declarations were attached to an amended complaint filed Monday in U.S. District Court in Baltimore. The loan officers, who worked for Wells Fargo in the Baltimore-Washington area from the late 1990s until 2007, also alleged bank employees deceptively steered prime borrowers into subprime loans for their own financial benefit and joked that they were “riding the stagecoach to Hell.”

  • The city also filed declarations from four city residents who live near Wells Fargo’s foreclosed properties. They complained of squatters, rats and burst pipes, all of which have required attention from some city department. It cites 10 studies, including one specific to Baltimore, which studied reverse-redlining in black neighborhoods; and updated the foreclosure data to include the first part of 2009.

For more, see Ex-workers allege race-based loan approach at Wells Fargo (if link expires, try here).

Go here, Go here, and Go here for other posts on alleged discrimination in real estate transactions. DiscriminationPredatoryLendingAlpha

Sunday, June 7, 2009

New York AG Files Suit Against Two Out-Of-State Debt Settlement Businesses; Accused Of Pocketing Fees, Failing To Fulfill Promises

From the Office of the New York Attorney General:

  • Attorney General Andrew M. Cuomo [...] announced a new development in his nationwide investigation into the debt settlement industry, filing suit against two debt settlement companies for fraudulent business practices and false advertising. Cuomo filed suit against CSA-Credit Solutions of America, Inc. (“CSA”),(1) based in Richardson, Texas, which is one of the largest debt settlement companies in the country. He has also filed suit against Nationwide Asset Services, Inc. (“NAS”),(2) based in Phoenix, Arizona, along with its affiliates - ServiceStar LLP and Universal Debt Reduction, LLC - and its marketer, FGL Clearwater, Inc. d/b/a American Debt Arbitration, based in Florida.

For more, see Attorney General Cuomo Sues Debt Settlement Companies For Deceiving And Harming Consumers (Cuomo Files Suit against Credit Solutions of America, One of the Nation’s Largest Debt Settlement Companies, and Nationwide Asset Services for Fraud and Deceptive Advertising; Launches Website - - that Explains Consumer Rights and Outlines the Attorney General’s Investigation).

(1) According to the NY AG, approximately 18,000 New Yorkers signed up as customers of Credit Solutions of America between its inception in January 2003 and September 2008. CSA promised a sixty percent reduction in its consumers’ outstanding debt, but an average of one percent of consumers received that savings. Many consumers have faced continued harassment and lawsuits by their creditors, despite CSA’s promise to intervene on their behalf. CSA has collected approximately $17 million in fees from New York-based consumers, AG Cuomo said.

(2) According to the NY AG, approximately 2,000 New Yorkers became customers of Nationwide Asset Services, Inc. between January 2005 and May 2008. NAS promised a twenty-five to forty percent reduction in its consumers’ outstanding debt, but only one-third of one percent of consumers received that savings. Customers suffered continued harassment and lawsuits by creditors and had their credit ratings destroyed, AG Cuomo said.

California Foreclosure Consultants Now Required To Register With State AG, Post $100K Bond

From the Office of the California Attorney General:

  • Continuing his fight against scam artists who "prey on" vulnerable Californians, Attorney General Edmund G. Brown Jr. [Monday] issued a directive forcing foreclosure consultants to register with his office and post a $100,000 bond by July 1, 2009.(1) Those who fail to do so will be in violation of state law, subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. "California is awash with con artists who prey on vulnerable families facing foreclosure," Brown said. "By forcing foreclosure consultants to submit detailed information to my office and post a $100,000 bond, this registry will help bring long-overdue transparency to this shadowy world."


  • If the company violates the law, a court may order restitution to victims out of proceeds from the $100,000 bond. In order to obtain a Certificate of Registration by July 1, 2009, foreclosure consultants should send in their registration application and materials as soon as possible so they can be reviewed prior to July 1.

Go here for a copy of the registration forms.

For the entire press release, see Brown Directs Foreclosure Consultants to Register with his Office and Post $100,000.

(1) All foreclosure consultants operating in California must post a $100,000 bond and register with Brown's office by July 1, 2009 and submit the following information:

  • Name, address, and telephone number;
  • All names, addresses, telephone numbers, websites, and e-mail addresses used or proposed to be used in connection with their business;
  • Copies of all advertising;
  • Copies of each different contract the consultant will use with consumers; and
  • A copy of its $100,000 bond. loan modification

Alabama Family Settles With Feds Over Mold Infestation Caused By Roof Leak In Adjoining Foreclosed Townhome Owned By HUD

In Trussville, Alabama, WVTM-TV Channel 13 reports:

  • A Trussville family ousted from their home because of a mold problem has resolved their case with the Federal Government. Leslieanne Johannsen, her husband and two young children had to move out of their townhome on New Year’s Day when they discovered a roof leak in the adjoining unit had caused mold to spread like wildfire into their walls, floors as well as the heating and cooling vents.

  • That adjoining unit had become the property of the Federal Department of Housing and Urban Development after the home went into foreclosure in the fall of 2008. Local contractors had been handling the situation for HUD. But the Johannsens were not able to get a satisfactory response. Once NBC13HD became involved, officials from the Birmingham HUD office took made their first visit to the home to get a first-hand look at the damage. The Johannsens have now settled with the government.

For more, see Trussville family settles with HUD over mold infestation.