Las Vegas Couple Facing Foreclosure Swindled By One Scammer, "Hijacked" By Another

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

• When people face foreclosure they can become desperate and look for help in all the wrong places. One Las Vegas family was scammed -- not once -- but twice. Evelina King and her husband ran into financial trouble when she was laid of from her job. The couple owns three investment properties and turned to Jason Wilhite and Associates when a friend handed them a flier. "We paid a fee. $1500 per property to get the mortgages wiped away," said Evelina King. The payment was made at the end of 2008. King soon learned that the Nevada Secretary of State website showed Wilhite's company in default and Wilhite was gone.

• Two months later, Ron Quilang from American Resource called the Kings saying he wanted to sue Jason Wilhite and Associates. Quilang also told the couple that he could rent their properties and save the homes from foreclosure. King claims she passed up on the offer but only to get a big surprise. "Ron has put tenants in the property -- not to our knowledge -- and he is collecting rent. There's a utility bill still in our name. We got the past due bill," King said. She says, just last weekend, she took a potential renter out to their house in North Las Vegas and discovered the locks were changed and someone had moved in.

• She says she can't get a satisfying answer from Quilang. "First, he says he knew nothing about the guy. Then he says 'I thought you were walking away from that property anyway.'"

Source: Financially Strapped Family Falls Victim Twice. KappaPhonyLandlordScam

Battle For Bankuptcy Cramdown Legislation - Round 2 Begins In U.S. Senate

The Washington Independent reports:

• Roughly three months after Senate lawmakers killed legislation empowering homeowners to escape foreclosure through bankruptcy, some upper-chamber Democrats are looking to revive the corpse. They hope to pressure the White House into spending valuable political capital on a cause fallen by the wayside. Up to now, policymakers have relied on programs that subsidize lenders and mortgage servicers who volunteer to alter loans to keep homeowners afloat. Yet those voluntary modifications lag far behind the rising tide of foreclosures. Indeed, only 160,000 homes have been propped up this year under the largest such program — a figure dwarfed by the more than 1.5 million foreclosure filings since January.

For more, see Band of Senate Dems Pressures Obama on Cramdown (Durbin Hearing Makes Case for Addressing Foreclosure Crisis in Bankruptcy Court).

See also:

• Rethinking Cramdowns as Foreclosures Roll On,
• Mortgage Cramdown Redux (Among other things, this story reminds us that judges already hold this "cramdown" power for pretty much any type of secured debt, like auto loans or vacation homes, but not for most borrowers’ primary residences),
• One Is the Loneliest Number (A Senate Judiciary subcommittee hearing on a proposal to allow bankruptcy judges to modify the mortgages of troubled borrowers kicked off Thursday with just one senator in attendance - the subcommittee chairman, Sen. Sheldon Whitehouse, D-R.I., who was leading the hearing).

Sleazy, Shifty Appraisers Booted From Industry Now Shifting Into Real Estate Sales?

The Tampa Tribune reports:

• Some appraisers who lost their licenses after unethical behavior during the housing boom are staying in the real estate business. They're becoming real estate agents, according to a report by the national Center for Public Integrity. Instead of appraising homes for sale, some just obtained a license to sell homes for a living. The center's report found that in Florida and California, among the states hardest-hit by the foreclosure crisis, hundreds of individuals whose appraisal licenses were revoked have received other licenses that allow them to continue to represent the public in real estate sales.

For more, see Unethical appraisers now becoming real estate agents.

For the report from The Center For Public Integrity, see Rebuked Appraisers Reborn as Real Estate Agents (Appraisers with Revoked Licenses Still Profit in Real Estate Industry).

Judge Orders Shutdown Of Loan Mod Firm Accused In $8M Ripoff; Garbage Bag Full Of Shredded Docs Given As Proof Outfit Is Destroying Evidence In Probe

In West Palm Beach, Florida, WPEC-TV Channel 12 reports:

• Late Friday a judge in West Palm Beach granted the state Attorney General's request for a temporary injunction, shutting down FHA All Day and three other mortgage modification companies.(1) Jason Vitulano and his four companies are accused of ripping off customers to the tune of $8 million dollars. Friday lawyers with the state Attorney General's office came to court with a garbage bag full of shredded documents. The state says it's proof the companies tried to destroy evidence.

For more, see Judge shuts down mortgage modification companies temporarily.

For a story of one of FHA All Day's alleged victims, see Mortgage Fraud Victim Speaks Out, A Warning to All Homeowners.

(1) The three affiliated companies are: Safety Financial Services, Inc., Housing Assistance Law Center, and Housing Assistance Now. For the Florida AG's lawsuit, see State of Florida v. FHA All Day.com Inc., et al. Go here to file a complaint against FHA ALL Day.com and its affiliates.

Feds, State AGs Go On Attack Against Debt Settlement & Collection Firms Engaged In Allegedly Fraudulent Activities

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [last week] announced that a settlement has been reached in a case brought by Chase Card Services against affiliated Hess Kennedy companies which engaged in fraudulent debt settlement activities. Under the settlement approved earlier this week, Chase will release the credit card debt of approximately 13,000 consumers nationwide, including over 900 Florida residents, who contracted with the Hess Kennedy companies for the fraudulent services. Laura Hess and the Hess Kennedy Companies are currently in Receivership as a result of a lawsuit filed by the Attorney General’s Office in February 2008.

For the entire Florida AG press release, see Third Agreement Reached in Hess Kennedy Debt Settlement Case.

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From the Office of the Texas Attorney General:

• Texas Attorney General Greg Abbott [earlier this month] charged a Houston-based credit repair firm with violating the Texas Deceptive Trade Practices Act. The state’s enforcement action names Jubilee Financial Solutions LP, also known as The Credit Card Solution (TCCS) - a self-proclaimed “debt invalidation” business - its parent company, Jubilee Financial Management LLC, and the companies’ owner, Robert Mitchell Lindsey. [...] Marketing materials obtained by state investigators shows the defendants claimed their “debt invalidation” program can eliminate customers’ debt in as little as 12 to 18 months by relying upon federal consumer protection laws. In videos on the defendants’ Web site, Lindsey claims that TCCS has “gotten rid of $150 million of credit card debt.”

For the entire Texas AG press release, see Texas Attorney General Abbott Charges Houston “Debt Invalidation” Firm with Unlawful Conduct.

For the Texas AG's lawsuit, see State of Texas v. Jubilee Financial Solutions LP, dba The Credit Card Solution, et al.

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From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray [last week] filed a lawsuit against Solon-based National Enterprise Systems, Inc. (NES) for harassing Ohioans. The collection agency is accused of using egregious methods in attempts to collect alleged debt from Ohio consumers. "Everyone has the right to be treated fairly under Ohio law, regardless of possible debt owed," Attorney General Cordray said. "More than 200 consumers filed complaints with my office saying NES used threats, harassment and deception to collect debts. These practices are unacceptable and will not be tolerated." [...] The [Ohio AG's] investigation revealed a pattern of illegal practices, such as calling and harassing consumers' coworkers and family members, calling before 8 a.m. and after 9 p.m., using a busive language, attempting to collect debts consumers did not owe, failing to verify debts and making unauthorized withdrawals from consumers' bank accounts.

For the entire Ohio AG press release, see Cordray Takes on Ohio Debt Collector for Harassment.

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From the Office of the West Virginia Attorney General:

• A Braxton County woman authorized an Ohio collection agency to charge $5,000.00 to her credit card because the company was threatening to have her daughter arrested at work. The same collection agency told the father of a Kanawha County woman that his daughter would be "arrested for fraud of the federal government" unless she made an immediate payment of $5,000.00 toward a student loan. Such strong-arm collection tactics are effective, but much like holding a gun to someone’s head, they are illegal. It is precisely this type of conduct that Attorney General McGraw seeks to stop by filing a lawsuit today against the company that allegedly made these threats to several West Virginians, National Enterprise Systems, Inc. ("NES") of Solon, Ohio. McGraw’s complaint alleged a wide range of other unlawful conduct, including adding unlawful collection fees to tuition owed by students to West Virginia colleges and universities.

For the West Virginia AG press release, see Attorney General McGraw Sues Ohio Collection Agency, National Enterprise Systems; Asks Court to Stop Firm from Making Unlawful Threats.

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From the Office of the Washington State Attorney General:

• Attorney General Rob McKenna [...] praised the Federal Trade Commission for tackling a Tacoma company that preyed on financially strapped consumers. He urged consumers to take advantage of low-cost credit counseling services. “When you’re drowning in debt, you’re desperate,” McKenna said. “But if you’re not careful, your chosen rescuer may toss you an anvil instead of a life preserver.” [...] Mutual Consolidated Savings in Tacoma was sued by the FTC for allegedly using robo-calls to aggressively target consumers then charging fees of $690 to $899 while providing little help. The FTC froze the assets of the company’s owners. “Mutual Consolidated Savings has been the source of numerous consumer complaints,” McKenna said. “The Federal Trade Commission’s move to shut down its Tacoma call center means that fewer consumers will be misled by the company’s promises to bail them out of debt.”

For the entire Washington State AG press release, see McKenna warns consumers about debt-relief scams (Attorney General praises FTC for shutting down Tacoma company).

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(1) According to the Florida AG, the lawsuit against Laura Hess was filed by the Attorney General’s Economic Crimes Division and named Hess’s Broward County law firm and several other Florida-based companies she controlled. The lawsuit accused Hess of signing thousands of credit card debtors up for debt management services and claiming the law firm would provide legal services to cancel debts for pennies on the dollar. Representatives of Hess allegedly told consumers that the companies had audited the consumers’ accounts and found numerous violations under the Fair Credit Billing Act, then sent notices to creditors disputing all charges. Consumers were falsely told that once these notices were issued, the consumers did not have to pay creditors and creditors could not sue or otherwise take action against them. This deception led to lawsuits and other actions against several debtors.

Long Island Attorney Swipes $73K+ Of Client's Money Given As Deposit In Real Estate Transaction, Says Nassau DA

From the Office of the Nassau County, New York District Attorney:

• Nassau County District Attorney Kathleen Rice announced [...] the arrest of a Plainview attorney who has been charged with stealing more than $73,000 from a couple he was representing in the sale of a piece of property. [...] The Plainview attorney, Stuart Gorman, 55, has been charged with Grand Larceny in the Second Degree. [...] Rice said that on or around October 1, 2008, Gorman was hired by a Brooklyn couple to represent them in the sale of a piece of property in Dyker Heights. Gorman was given a check by the buyer for $73,500 as a down payment on the purchase price. Instead of giving the check to the sellers of the property, Gorman deposited the check into his escrow account and then used the money for personal and business expenses.(1)

For the Nassau County DA press release, see DA Charges Two Men in Separate Cases of Lawyer Misconduct (Theft of real estate proceeds leads to felony charges for Plainview lawyer; Merrick man falsely claims to be attorney, costs ‘client’ $200K).

(1) If the charges prove true that attorney Gorman screwed his clients out of their money, The Lawyers’ Fund For Client Protection Of the State of New York may find itself on the hook for the loss, provided the clients who got screwed apply for reimbursement from the fund within two years after they discover their loss.

For those clients screwed out of their money and property by reason of the dishonest conduct of their attorneys in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map. EscrowRipOffKappa

Builder Pocketed Customer Deposits, Failed To Build Homes Or Provide Refunds While Stiffing Subs, Says Maryland AG In Civil Suit

From the Office of the Maryland Attorney General:

• Attorney General Douglas F. Gansler announced [...] that the Home Builder Registration Unit of the Consumer Protection Division has filed charges against Altieri Enterprises, Inc. t/a Altieri Homes, Athlone, LLC of Columbia, Altieri Homes at Castle in the Woods, LLC, R & L Livezey, LLC, and Milltown, LLC of Columbia for failing to comply with Maryland’s Home Builder Registration Act, New Home Deposits Act, Consumer Protection Act, and Custom Home Protection Act.

• The Home Builder Registration Unit suspended the registration of Athlone, LLC and charged each company and their principals, Greig Altieri, Daren Altieri, Frank Altieri, Todd Altieri, and Wendy Altieri with accepting payments from consumers in Howard and Harford counties and then failing to construct the homes, pay subcontractors, or refund payments made by consumers. The companies also failed to disclose to the Home Builder Registration Unit lawsuits filed by consumers and subcontractors concerning the companies’ building activities.

For the Maryland AG press release, see Attorney General Gansler Files Charges Against Altieri Homes and Associated Companies (Homebuilder Allegedly Accepted Deposits and Failed to Build Homes).

Orange County DA Raids Homes Of Foreclosure Rescue Operators Currently Facing Civil Suits By State AG Alleging Bogus Loan Modifications, Short Sales

In Southern California, the Orange County Register reports:

• Investigators with the Orange County district attorney early Thursday morning searched three Ladera Ranch homes believed tied to a foreclosure rescue scam. Agents served search warrants on two homes on Roshelle Lane and one on Merrill Hill. The homes are connected to Terence Green Sr. and Stefano Marrero of Home Relief Services and Christopher Diener of the Diener Law Firm.(1)

***

• The District Attorney’s Office declined to comment. [...] Alan Gordon, assistant chief trial counsel of the California State Bar, confirmed that the Orange County district attorney and some other agencies served search warrants today. He said the bar has been “working closely with several agencies” investigating potential loan mod scams.

For the story, see D.A. raids Ladera homes in loan-aid scam probe.

(1) California Attorney General Jerry Brown last week filed a civil lawsuit against these same men (go here for California AG press release),alleging that they charged homeowners $4,000 in upfront fees and then failed to get them cheaper payments on their home loans. Brown also charged that the companies sometimes promised to arrange a short sale — when a lender agrees to accept less than the debt owed on a property — but instead attempted to use customers’ personal information for the companies’ own benefit.

NYC Woman Busted For Clipping $50K In Upfront Rent Deposits From Low Income Residents Seeking Help In Obtaining Affordable Section 8 Rentals, Say Cops

In New York City, the New York Post reports:

• A slick-talking woman posing as a real-estate agent conned about $50,000 from low-income residents looking for affordable housing in Manhattan and The Bronx, cops said [Wednesday]. Josie Almonte, 32, a blond-haired beauty with a sophisticated look, would approach her victims promising to help them expedite their applications for Section 8 housing, sources said. She would ask them for a rent deposit up front to put down on an apartment, then never file their application and keep the money, the sources said. She was busted Monday.

Source: 50G SCAM IS UN-REALTOR.

Last Minute Closing Delays Hit Foreclosed Home Buyers As Some Lenders Drag Their Feet When Recording Legal Title To Repossessed Collateral

In Central Ohio, The Columbus Dispatch reports:

• Stacee Maurer thought she'd found her perfect first home: a three-bedroom Cape Cod off High Street north of Graceland Shopping Center. On May 22, she signed a contract to pay $93,000 for the foreclosed property -- almost $30,000 less than it had sold for in 2006. Then she landed where a growing number of central Ohio homebuyers are landing: in foreclosure limbo.

• Shortly before she was scheduled to close on the home, Maurer, 24, learned the deal was delayed because the deed transferring the property to the bank hadn't been recorded. In late June, she moved into her parents' home, where she has been waiting -- and is now hoping to close today.

• Real-estate agents, title companies and others who deal with foreclosed properties say Maurer's situation is increasingly common. Eighteen months or more can pass between the time a foreclosure notice is filed and a home is resold, they say. But now, delays are occurring even after the bank repossesses the property, holding up or crushing deals that would put homes in new buyers' hands.(1)

For more, see Growing number of buyers stuck in limbo.

(1) One local Realtor reportedly observed: "What used to take two weeks is taking 12 to 15 weeks," said Bob Pritchard, a Coldwell Banker King Thompson agent who deals in foreclosed properties in central Ohio. "We have been getting extensions on the close-by dates left and right," he said. "You get buyers who are financing and get a rate locked in, they can't close for 30 days and then it may be at a higher rate. It's costing the buyers more to buy the property, and some are just walking away."

Homeowner Invokes TILA, State Lending Law In Attempt To Void Home Improvement Loan Gone Bad

In St. Clair County, Illinois, The St. Clair Record reports:

• A woman with learning disabilities claims she should not have to repay a loan for more than $45,000 she took out more than two and a half years ago because she was not fully explained the terms of the loan. In a complaint she filed on July 10 in St. Clair County Circuit Court, Anita Oglesby also claims the neighbors who promised to make necessary repairs to her home with the loan money failed to complete the work.

The story recites, in detail, the allegations contained in the lawsuit. Assuming the allegations are true, this story illustrates how the seemingly benign process of getting a simple loan to finance some needed home improvements can go haywire when bad actors get involved, ultimately leaving the homeowner behind the eight-ball (saddled with a high-interest, adjustable rate loan and a shoddy, incomplete home improvement job, while leaving the home in jeopardy of foreclosure). In this suit, Ms. Oglesby is reportedly asserting violations of the Federal Truth In Lending Act, and the Illinois High Risk Home Loan Act in her attempt to void the transaction.(1)

The non-profit law firm Land of Lincoln Legal Assistance Foundation in East St. Louis will be representing her.

For the story, see Woman sues to rescind ARM home loan.

(1) In the 10-count suit, Oglesby is reportedly asking the court to rescind her loan transaction; to order the defendants to terminate any security interest in her home and to declare any security interests void; to award her statutory damages of twice the financial charge, not to exceed $4,000, for their failure to rescind the loan; to order the right to retain proceeds vested in Oglesby; to enjoin the defendants from instituting foreclosure proceedings on Oglesby's property; and to enjoin the defendant who arranged the allegedly toxic financing from arranging any more loans in Illinois without an Illinois mortgage broker license. In addition, Oglesby is seeking actual damages and other relief the court deems just. UndoMortgageLoans TILAdelta

California Regulator To Consumers Saddled With Unaffordable Mortgages: Stay Away From Loan Modification Outfits Engaged In "Lawyer Renting"

A recent New York Times' story featuring the loan modification operation Federal Loan Modification Law Center(1) contains this excerpt describing an arrangement that some might refer to as "lawyer renting," in which a company, attempting to circumvent laws prohibiting the collection of upfront fees for its services, enters into a deal with an attorney that allows the outfit to conduct its activities as a law firm (attorneys are generally not prohibited from pocketing upfront fees for their services):

• The three original [Federal Loan Modification Law Center] partners brought in Mr. [Nabile "Bill"] Anz to gain a crucial asset: his law license. Having a lawyer in charge enabled them to market their venture as a law firm and thus collect upfront payments under California rules. “Jeff [partner Jeffrey Broughton] asked me how I could, for lack of a better word, legitimize it,” Mr. Anz said.

• The California Department of Real Estate warns consumers that many dubious loan modification companies have organized themselves as law firms solely to allow them to collect upfront fees, even though the lawyers have little, if anything, to do with the services provided. The department cautions consumers against hiring such companies.(2)

For the story, see Subprime Brokers Back as Dubious Loan Fixers.

(1) Federal Loan Modification Law Center (aka FedMod) has been tagged by the Federal Trade Commission with a lawsuit alleging violations of Federal law in offering loan modification services to the general public. Go here for links to links to the FTC press release and some of the relevant court documents filed against FedMod.

(2) For those attorneys who have yet to "receive the memo", see ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications, an advisory of the Committee on Professional Responsibility and Conduct of the State Bar of California setting forth prohibited activities by attorneys when associating with loan modification firms.

Memphis-Area Sheriff, Legal Services Firm Join To Spread Word Of New Federal Rights For Renters Facing Foreclosure Eviction

In Shelby County, Tennessee, the Memphis Buisiness Journal reports:

• As a result of the rise in foreclosures and evictions in the city, the Shelby County Sheriff’s Office and Memphis Area Legal Services are working to educate citizens on the subject. As part of the partnership, sheriff’s deputies and civil process servers are delivering pamphlets about the process to property owners and renters summoned to court. [...] The partnership was created as part of the [Federal] Helping Families Save Their Homes Act signed into law [by President Obama] in May. The law requires 90 days before tenants can be forced out.(1)

• Webb Brewer, director of advocacy for Memphis Area Legal Services, said the most important part of the process is that renters or homeowners open and read all letters about the properties they inhabit. Legal services will offer assistance to anyone who asks. The goal of the partnership, said Shelby County Sheriff Mark Lutrell, is to tell renters about their rights. “Some renters have not been told by landlords about a pending eviction,” Lutrell said in a statement. “Our goal is to ensure property owners, especially tenants, understand their legal options before they’re evicted.”

Source: Shelby County Sheriff, Memphis Area Legal Services partner to educate renters on foreclosure, eviction.

See also Memphis Commercial Appeal: Sheriff's initiative aims to protect renters from foreclosure eviction.

For Shelby County tenants facing foreclosure evictions, see Brochure: What You Need To Know About Foreclosures and Evictions.

(1) In addition, except where the purchaser will occupy the property as a primary residence, the terms of any bona fide lease also remains in effect. See Helping Families Save Their Homes Act of 2009, Title VII - Sections 701 through 704 (Title VII of the new law is known as the Protecting Tenants At Foreclosure Act of 2009).

See also: HUD Notice PIH 2009-17, Protecting Tenants At Foreclosure: Notice Of Responsibilities Placed On Immediate Successors In Interest Pursuant To Foreclosure Of Residential Property, in which HUD emphasizes that the responsibility for meeting the new tenant protection requirements applies to all successors in interest of residential property, regardless of whether a federally related mortgage is present. The immediate successors in interest of a residential property, which is being foreclosed, bear direct responsibility for meeting the requirements of the law.

Unwitting Prospective Buyer Gets Caught Up In Controversial Short Sale Flipping Attempt Involving Vacant Home In Foreclosure

In DeWitt, Michigan, columnist John Schneider of the Lansing State Journal recounts the story of a local woman who got screwed over in an attempt to buy a vacant home in foreclosure from a local real estate operator, himself attempting to acquire the property through a short sale, to be followed by an immediate "flip" of the home at a higher price to the woman (all without the apparent knowledge of the lender that was being asked to approve the short sale).

• Reeling from a traumatic divorce-in-progress, Christina Thelen moved, with her three children, into her aunt's basement. That was in February. In March, things started looking up for Thelen when she made an offer on a three-bedroom ranch in foreclosure on Rambler Road in DeWitt. The vacant house had been on the market since August. The price had dropped, in increments, from $159,000 to $128,900 - with no takers. Thelen offered $118,000, or so she thought.

• Responding to my inquiry Wednesday, Bank of America's Jumana Bauwens said bank records indicate the offer was only $74,000 - and was rejected. When I told Thelen that Wednesday, she was shocked. "I can understand why they would reject that," she said.

***

• Working through a company that specializes in short sales - EZ Home Ownership Realty of Grand Ledge - the agent representing the seller, Steve Osmar of the RE/MAX office in Delta Township, was informed that Countrywide, the mortgage holder at the time (later acquired by Bank of America) had verbally accepted the deal. Jerry Ballard of EZ Home Ownership told me Wednesday that Countrywide had, indeed, OK'd his offer verbally. However, Bauwens said a verbal acceptance would run contrary to standard practice.

• As for the difference between the $118,000 Thelen was willing to pay and the $74,000 EZ Home Ownership offered, when I asked Ballard about it, he didn't have immediate access to his records, so he couldn't confirm the $74,000 figure. He did say, however, that the difference between what a buyer is willing to pay [him] and the offer his company gets a bank to accept represents various fees and expenses, plus his profit. Listing the various agents involved, Ballard said, "None of us is a charity."

• Based on the belief there was a verbal acceptance - plus the fact that Thelen was, as Osmar put it, in a "housing crisis" (her and her three kids living in a basement) - Osmar drew up a lease agreement that allowed Thelen and her kids to move into the Rambler Road home the final week of May. "This home meant so much to us," she said. Thelen expected to close on the house in June, and began fixing it up. She painted, repaired the air conditioning, rehung kitchen cabinet doors, spread mulch ... About $1,200 worth, she figured.

• On Father's Day, Thelen got the bad news: The deal had fallen through. She and her children would have to vacate the house.

For the story, see Short sale stumble gives would-be homeowner 'short end'.

For other posts involving similar types of short sale flipping deals as the one described above, see:

• Shaky Loan Modifications That Turn Into Questionable Short Sales?
• ATIF Refuses To Issue Title Insurance On Controversial Short Sale Deals Involving Simultaneous Investor "Flips",
• NY Feds Indict Four In Alleged Short Sale, Flipping Fraud Targeting Homeowners In Foreclosure; Unwitting Straw Buyers Left Holding The Bag,
• Detroit Feds Indict Five In Alleged Straw Buyer Scam Involving Fraudulent Short Sales Of Luxury Condos.

Aussie Legal Non-Profit Helps Vulnerable Senior Beat Bank In Foreclosure; Son's Manipulation Resulted In Improper Mortgaging Of Family Home For $200K

In Sydney, New South Wales, The Sydney Morning Herald reports:

• AN INTELLECTUALLY disabled pensioner has won a court battle to stave off foreclosure in a case said to have broad implications for consumers who offer their home as security for a business loan. The lawsuit concerns Wollongong man Patrick Ford, whose son - identified as "Scott" - manipulated him to put a $200,000 mortgage on the family home to buy a cleaning business. When the business collapsed and the son absconded, the lender pursued Mr Ford, who cannot read or write. The NSW Court of Appeal agreed this month that Mr Ford did not have to repay the loan, other than about $25,000.

• "[The decision] reinforces that lenders can't get around consumer protection laws by the use of business-purpose declarations and that lenders have obligations to inquire into the circumstances of people to whom they're lending," said Alan Kirkland, the chief executive of Legal Aid NSW, which represented Mr Ford.

***

• Katherine Lane, the principal solicitor at the Consumer Credit Legal Centre, said the various institutions were "recklessly indifferent" to Mr Ford's ability to repay the loan. "They're all interested in their own commission."

• Mr Ford's sister, Ann Watkinson, said the ordeal had been exhausting. "We had sheriffs coming all the time," she said, recounting one visit at 4am. "We'd get a couple of hours sleep, then be awake, crying." [...] Despite the victory, she said the family would have to sell Mr Ford's home to pay expenses. The family hopes there will be enough money to move Mr Ford, 64, to a retirement village.

For the story, see Pensioner fends off lenders in court win.

For the appellate court ruling, which reversed an unfavorable lower court decision, see Patrick John Ford by his Tutor Beatrice Ann Watkinson v. Perpetual Trustees Victoria Limited [2009] NSWCA 186 (8 July 2009).

For more on real estate conveyances that are void if the grantor's signature is forged or if the grantor is unaware of the nature of what he or she is signing, see Unwinding An Abusive Or Fraudulent Real Estate Transaction? Determining If The Deed Is Void, Or Merely Voidable.

(1) According to the story, an unusual aspect of the case is the number of financial institutions - a mortgage broker, a loan wholesaler, a mortgage aggregator, an insurer and a trustee - that did not investigate whether the illiterate pensioner understood what he was signing or if he was capable of running a business. FinancialAbuseOfElderlyAlpha DeedContraTheft

“We Want To Send People To Jail!” Says Prosecutor Referring To Loan Modification Scams; Cites "Lawyer Renting" As Attempt By Some To Avoid State Law

In Southern California, the Orange County Register reports:

• The Orange County District Attorney has expanded efforts to combat foreclosure rescue scams and other real estate fraud cases, as the worst housing downturn in decades results in thousands of potential victims. Elizabeth Henderson, assistant DA, said 30% of the cases handled by the office’s major fraud unit are tied to real estate, up from an average 10% in past years. The DA has two prosecutors, two investigators and a paralegal focused just on real estate fraud, she said.

***

• “We want to send people to jail,” she said. The issue is not just that someone might lose $2,000 or more [for a purported loan modification], but that his or her house proceeds to foreclosure while waiting for help that never comes, Henderson said. Defrauding just one person could translate to a maximum penalty of three years in prison for grand theft, she said. Subsequent victims could add eight months to a sentence per person. Loan mod scammers could be committing other crimes, such as fraud, practicing without a license, and breaking rules tied to call centers.

• Henderson said former subprime salespeople are now selling loan modifications — or promises to help a homeowner avoid foreclosure by getting a bank to lower his monthly payments. Such companies sometimes have no intention of helping anyone, she said.

***

• To avoid having to get a real estate license to do loan mods, some companies are “renting” lawyers, she said. Attorneys can negotiate loan mods without a real estate license or a pre-approval from the Department of Real Estate. But the lawyer may just be a front who never touches a loan file, she said.(1)

For more, see District Attorney steps up real-estate fraud investigations.

(1) For those attorneys who have yet to "receive the memo", see ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications, an advisory of the Committee on Professional Responsibility and Conduct of the State Bar of California setting forth prohibited activities by attorneys when associating with loan modification firms.

Canadian Cops Nab Fugitive California Couple Accused Of Running Loan Mod Scam; Now Await Extradition In Toronto After Fleeing San Jose Police

In Toronto, Canada, the San Jose Mercury News reports:

• A San Jose couple suspected of operating a fraudulent real estate home loan modification business have been arrested in Toronto following a six-month investigation. San Jose police say Amir Rashidifar, 25, and Mary Delvecchio, 28, opened their business, Legal Support Services, in September and offered to modify real estate loans for homeowners facing default and foreclosure. Police say the pair ran an elaborate operation and charged victims $3,000 to $4,000 to modify a loan, but the loans were not modified. So far, San Jose police have identified 129 victims.

• The investigation started in late January after employees of Legal Support Services and 15 victims told police that Rashidifar and Delvecchio had been operating a fraudulent home loan business. Rashidifar and Delvecchio convinced victims that Legal Support Services was working in tandem with knowledgeable and experienced real estate attorneys in the loan modification business, according to officer Jermaine Thomas, a police spokesman. A police investigation into Legal Support Services, [...] revealed that Rashidifar and Delvecchio were not working with licensed attorneys, Thomas said.

• In February, Rashidifar and Delvecchio fled the South Bay after learning of the police investigation, according to Thomas. Police determined that Rashidifar and Delvecchio went to Canada on May 26 and opened a new, fraudulent real estate loan modification business using false identities. San Jose police coordinated its investigation with the Royal Canadian Mounted Police (RCMP), the RCMP Immigration Task Force and Canadian Border Services, who located and arrested Rashidifar and Delvecchio on July 10 at their residence in Toronto. Rashidifar and Delvecchio are awaiting extradition proceedings in Canada and will be returned to the United States to face criminal charges in Santa Clara County.

Source: San Jose couple suspected of real estate loan fraud arrested in Canada.

See also KPIX-TV Channel 5: SJ: Couple Suspected Of Running Fraudulent Loan Modification Company Arrested in Canada.

Sarasota Title Agent Dodges Hot Water; Remains In Good Standing Despite Admitting To Screwing Around With Escrow Funds Resulting In Six-Figure Losses

In Central Florida, the Sarasota Herald Tribune reports:

• As the closing agent on the [real estate] deal, it was Sarasota title agent Lisa Rotolo's job to make sure the [existing mortgage] loan got repaid. Instead, in 2004 Rotolo partially paid off the old loan and handed her clients $100,000, according to a 2008 foreclosure case filed in Sarasota County's circuit court. During testimony in the case, Rotolo conceded that she directed money to her clients and then filed documents incorrectly stating the old mortgage had been repaid. Bank officials did not realize what she had done until early 2008, when her clients, Jonathan Glucker and his wife, Heather Kabobel, stopped making payments and another lender foreclosed on the property, claiming it had first rights to sell the house and recoup its losses.

***

• Last year, Rotolo was named in a suit filed by David Oriente in Sarasota County's circuit court. Oriente alleged that Rotolo allowed [real estate agent Craig] Adams [see The king of the Sarasota flip] to take $400,000 out of an escrow fund that was supposed to be used for buying properties. Adams used the money to pay off an old debt and kept $50,000, the lawsuit states. [...] Circuit Court Judge Bob McDonald awarded Oriente's company more than $471,000 in damages in December 2008 after Adams failed to respond to the lawsuit.

***

• Today, Rotolo's company, Diamond Title, has closed. But Rotolo still has her Florida license to operate as a title agent. No one, including the bank officials suing her, has filed a complaint against her, according to a spokeswoman for the Department of Revenue, the state agency that oversees Rotolo's profession. Rotolo remains a committee chair for the Sarasota Association of Realtors, a trade group that promotes itself as a watchdog over local real estate agents.

For the story, see Title agent closed 100 Adams deals. EscrowRipOffKappa

Florida AG Continues Loan Modification Scam Sweep w/ Civil Suits Against Group Accused Of Making Automated Robo-Calls Using President "O's" Voice

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [Tuesday] announced that his office has filed a lawsuit against four related South Florida companies that allegedly charge up-front fees for loan modification services to homeowners facing foreclosure. FHA All Day.Com and owner Jason Vitulano, as well as three other affiliated companies,(1) purportedly collect up to $1 million in up-front fees on a monthly basis. The companies were allegedly soliciting hundreds of consumers nationwide via the internet and though telemarketing robo-calls which illegally used President Obama’s voice.
  
  An investigation conducted by members of the Attorney General’s Economic Crimes Division, working as part of the Attorney General’s Mortgage Fraud Task Force, indicated that Vitulano and his companies were charging up-front fees as high as $5,000 for foreclosure-related loan modification services. Vitulano also allegedly claimed to have an attorney on staff available to assist homeowners, but investigators believe no attorneys are currently working on any of the loan modification files. Consumers who complained to the Attorney General’s Office also reported that the companies have not performed the promised services and that they were unable to contact the companies or get refunds. The Attorney General’s Office has received over 300 complaints about Vitulano and his related companies.

For the entire Florida AG press release, see McCollum Files Lawsuit Against 4 South Florida Companies for Foreclosure Rescue Fraud (Company director allegedly ran boiler-room telemarketing operation using the President’s voice to target victims).

For the Florda AG's lawsuit, see State of Florida v. FHA All Day.com Inc., et al.

Go here to file a complaint against FHA ALL Day.com and its affiliates.

(1) The three affiliated companies are: Safety Financial Services, Inc., Housing Assistance Law Center, and Housing Assistance Now.

Michigan AG Files Criminal Charges Against Loan Modification Firms As Part Of "Operation Loan Lies"

Unlike most of the other participants in the the joint Federal/state law enforcement effort to eliminate loan modification scams who have brought civil lawsuits or initiated administrative proceedings (and issued cease and desist orders), the Office of the Michigan Attorney General has taken a different route by bringing criminal charges against the alleged scammers.(1) According to the Michigan AG's office:

• Attorney General Mike Cox [...] announced that his office has filed 18 charges against four companies and one individual for committing foreclosure rescue fraud.(2) Cox also issued warnings to 17 companies regarding complaints from residents about their practices.(3) Michigan law prohibits "foreclosure rescue" companies, which provide foreclosure advice, from making misleading or false statements, or charging service fees before any service is completed.

***

• The charges resulted from the Attorney General's office conducting undercover operations based on complaints from homeowners and include one count of unauthorized use of the Great Seal of the State of Michigan and 17 counts of violating Michigan's Credit Services Act (CSA). The CSA prohibits charging fees before completing services when seeking to negotiate a loan on behalf of a homeowner. The Credit Services Act carries a maximum penalty of 90 days in jail and/or $1,000 fine, and allows the Attorney General's office to seek restitution for affected consumers.

For the Michigan AG press release, see Cox Charges Five for Foreclosure Rescue Fraud.

Go here for a summary of the Federal and state actions by those participating agencies in "Operation Loan Lies."

(1) The U.S. Attorney's Office in Los Angeles is the only other government agency bringing criminal charges in the "Operation Loan Lies" effort (U.S. v. Gilfert Jackson, Case No. 2:09-cr-00538-SVW (C.D. Cal.); U.S. v. Jeff McGrue, Gerald Guidry; Case No. 2:08-cr-01318-ODW (C.D. Cal.)).

(2) Those charged include:

• Save My Home USA of Madison Heights (Charged victims between $595 and $2,000 before completion of services and advised consumers not to communicate with their mortgage company),
• Help4homeowners of Birmingham (Falsely claimed a 97% success rate, charged before completion of services, and its employee admitted they had no loan training),
• Payment Doctors of Livonia (Made false claims and charged before completion of services),
• Michigan Economic Reinstatement Program (MERP) of Livonia and owner Mark Alan Aloe of Farmington Hills (Charged victims between $360 and $3,000 before completion of services, made false claims, and used business cards with state seal but did not work for the State of Michigan. Aloe faces 90 days in jail and/or a $1,000 fine).

(3) Attorney General Cox has requested more information from the following 17 companies about their business activities:

• AFS Loan Modification Corp, Redondo Beach, CA; Apply 2 Save, Inc./Apply2Save, Coeur D'Alene, ID; Elect Group LLC, Deerfield Beach, FL; Equity Recovery Services, Towsen, MD; Federal Home Savers, Comniack, NY; Financial Solution Center, Corona, CA; Fresh Start Home Modification, Woodbury Heights, NJ; Fresh Start Program/Fresh Start Mortgage Assistance, Fresh Start Mortgage Solutions, Mortgage Assistance Solutions, Clearwater, FL; Hope Now Modifications, LLC, Cherry Hill Twp., NJ; IMC Financial, Clearwater, FL; Kirkland Young LLC, Miami Beach, FL; National Home Loan Assistance Program, San Diego, CA; New Hope Loan Modification, Bellmawr, NJ;. Oceanview Investments, Oceanview Investment Services Corp., Fort Lauderdale, FL; Peoples First Financial, San Diego, CA; Pope & Associates Mortgage, Ontario, CA; Savemtg.com, Galthersburg, MD.

Ex-Subprime Toxic Mortgage Peddlers Now Coming To The Rescue As Loan Modification Specialists???

The New York Times recently published a story reporting on how many of the operators of so-called loan modification firms are the same people who, only a couple of years ago, peddled the risky subprime mortgages that has gotten the now-financially distressed homowners in trouble in the first place. One of the loan modification operators featured in the article is Federal Loan Modification Law Center (aka FedMod).

• FedMod is but one example of how many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications. Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers,(1) more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company.(2)

For more, see Subprime Brokers Resurface as Dubious Loan Fixers.

(1) Two of the individuals who spoke to The Times for the story commented:

• “We just changed the script and changed the product we were selling,” said Jack Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.”

• “Our job was to get the money in and then we’re done,” said Paul Pejman, a former sales agent who worked out of FedMod’s two-story headquarters in Irvine, Calif. He recounted his experience, he said, because “I really feel bad.” “I had people calling me crying, and we were telling them, ‘You can pay me or you can lose your house,’ ” Mr. Pejman said. “People were giving me every dime they had, opening credit cards. But I never saw one client come out of it with a successful loan modification.” [...] “They basically told us, ‘Do whatever you need to do,’ ” he said. “ ‘It’s a sales floor. You’re here to sell.’ People would quote success rates and just pull them out of thin air. People would say 60 percent, 80 percent, 90 percent. To the average Joe in Kansas, that sounded great. But the reality is that 50 percent were immediately declined by the lender.” What shocked Mr. Pejman was how readily customers handed over their credit card numbers. Sales agents tapped into a deep vein of anxiety.

(2) Go here for links to links to the FTC press release and the relevant court documents filed against Federal Loan Modification Law Center.

"Loan Modification Industry Is Teeming With Confidence Men & Charlatans!" Says California AG In Announcing Suits Against Five Operators

From the Office of the California Attorney General:

• As part of a massive federal-state crackdown on loan modification scams, Attorney General Edmund G. Brown Jr. at a press conference [last week] announced the filing of legal action against 21 individuals and 14 companies who ripped off thousands of homeowners desperately seeking mortgage relief. Brown is demanding millions in civil penalties, restitution for victims and permanent injunctions to keep the companies and defendants from offering mortgage-relief services.

• "The loan modification industry is teeming with confidence men and charlatans, who rip off desperate homeowners facing foreclosure," Brown said. "Despite firm promises and money-back guarantees, these scam artists pocketed thousands of dollars from each victim and didn't provide an ounce of relief." Brown filed five lawsuits(1) as part of "Operation Loan Lies," a nationwide sweep of sham loan modification consultants, [...].

For the California AG press release, see Brown Sues 21 Individuals and 14 Companies Who Ripped Off Homeowners Desperate for Mortgage Relief.

(1) The California AG's Office filed five civil lawsuits against the following operators:

• Home Relief Services LLC (other defendants: THE DIENER LAW FIRM, GOLDEN STATE FUNDING, INC., PAYMENT RELIEF SERVICES, INC., CHRISTOPHER L. DIENER, KATHLEEN MARRERO-DAVIS, TERENCE GREEN SR., STEFANO MARRERO, MAYA BURRELL MARRERO, RONALD C. SPECTER, KENNETH BUHLER. AG Brown seeks $10 million in civil penalties, full restitution for victims, and a permanent injunction),

• RMR Group Loss Mitigation LLC (other defendants: LIVING WATER LENDING, INC., SHIPPEY & ASSOCIATES, P.C., MICHAEL SCOTT ARMENDARIZ, RUBEN CURIEL, RICARDO HAAG, KARLA C. SHIPPEY, ARTHUR S. ALDRIDGE. AG Brown sekks $7.5 million in civil penalties, full restitution for victims, and a permanent injunction),

• United First Inc. (other defendants: MW ROTH, PLC; PAUL NOE, MITCHELL ROTH),

• U.S. Foreclosure Relief Corp. (other defendants: GEORGE ESCALANTE, CESAR LOPEZ, trading and doing business as H.E. Service Company, and ADRIAN POMERY, ESQ., trading and doing business as Pomery & Associates),

• Statewide Financial Group Inc. (doing business as US HOMEOWNERS ASSISTANCE, US HOMEOWNERS PRESERVATION CENTER, INC., HAKIMULLAH SARPAS, ZULMAI NAZARZAI, SHARON FASELA, RASHA YEHIA MELEK).

Two Foreclosure Rescue Operators Get Five Years Each In Scam That Stripped Homeowners Of Their Equity & Left Lenders, Straw Buyers Holding The Bag

In New York City, Courthouse News Service reports:

• Two foreclosure profiteers in Brooklyn and the Bronx were sentenced to 5 years in federal prison for conspiracy, wire and bank fraud. Andrea Moore and Michael Irving, who ran the scam before the nationwide economic crisis hit, also must pay $1.5 million in restitution. From September 2004 to April 2005 they told homeowners facing foreclosure that they could "refinance" their debt through new and larger mortgages. They said the distressed homeowners should sell their homes to third-party straw buyers, who would pay off the old debt let the victims return in a year. But it didn't work out that way, a jury said.

• "In some instances, Moore and Irving forged the homeowners' signatures on various documents that transferred the homes to straw buyers without the homeowners' knowledge," prosecutors said. They also submitted false financial information on the straw buyers' loan applications. The scheme netted $10 million in loans and mortgages. But "in some instances, the defendants failed to make even one payment on the loans, causing the loans to default immediately," prosecutors said. "In nearly every other case, they eventually failed to make the payments and defaulted on the loans, thereby cashing out on the properties."

• In the end, the distressed homeowners faced eviction; the straw buyers owed hundreds of thousands of dollars to the new owners and the lenders lost money on loan defaults.

Source: Foreclosure Swindlers Get 5 Years.

For the U.S. Attorney (Manhattan) press release, see Two Members Of Foreclosure Rescue Scheme Each Sentenced To 5 Years In Prison For Engaging In Multimillion-Dollar Mortgage Fraud.

"Equity Is No Longer The Game" - Loan Modification Scams Proliferate As Home-Snatching Equity Stripping Scams Subside

A recent report by the National Consumer Law Center makes this observation on the current state of foreclosure rescue scams:

• Homeowners facing foreclosure have always been vulnerable to scammers, con-artists, and thieves. Whether desperate for options or frustrated by uncooperative mortgage servicers, many homeowners are attracted to slick advertisements with bold promises to rescue them from foreclosure. When property values were appreciating rapidly, foreclosure rescue scams primarily focused on obtaining title to the home and robbing homeowners of their equity.(1)

• Today with property prices depreciating and many homes already "underwater," equity is no longer the game. Instead, rescuers have become high-volume, "loan modification specialists." The pitch by this new breed of predators is that, for a fee, which can reach several thousand dollars, they will negotiate a loan modification for a financially distressed borrower. The hitch is that the "work" performed, if any, leads nowhere, with the homeowner out money and time and closer than ever to foreclosure.

• These loan modification companies are flourishing because mortgage loan servicers cannot or will not provide borrowers with timely and consistent information regarding their requests for loan modifications. Frustrated by the lack of responsiveness on the part of the servicers, borrowers across the country are giving loan modification companies their precious dollars with disastrous consequences.

For the NCLC report, see Desperate Homeowners: Loan Mod Scammers Step In When Loan Servicers Refuse To Provide Help (July 2009).

(1) See Dreams Foreclosed: The Rampant Theft of Americans’ Homes Through Equity Stripping Foreclosure ‘Rescue’ Scams (June 2005).

Loan Modification Firm Targeted By Florida AG Coughs Up $500K In Partial Restitution Payments; Says It's Now Tapped Out

From the Office of the Florida Attorney General:

• To date, [now-defunct loan modification firm] Lincoln Lending [LLC] has distributed approximately $500,000 in restitution payments. They are currently claiming that funds available for restitution have been exhausted. The OAG is in the process of investigating whether additional funds exist for a continuation of the restitution process. In the event that additional funds are discovered and secured, we will seek a court order requiring the continuation of these payments. Consumers who have filed complaints with the Office of the Attorney General concerning Lincoln Lending, and consumers who have filed affidavits concerning their transactions with Lincoln Lending are not required to take any additional actions at this time.

For more, see Status update concerning Lincoln Lending.

Court Voids Delinquent Mortgage & Subsequent Forced Sale Of Property Earlier Conveyed By Forged Deed; Lender Called A "Mortgagee/Buyer In Bad Faith"

In Quezon City, The Philippines, the Manila Buletin reported that a Court of Appeals affirmed a lower court ruling voiding a foreclosure sale where the property owner who lost the title to a 5-unit building by forced sale originally acquired her interest by forging the true owner's name on a deed, and who then subsequently used the property as collateral for a loan from the private lender who ultimately initiated the foreclosure action.

The court found that the foreclosing mortgagee, being an associate of the alleged forger, had some reason to suspect the defect in the title of the alleged forger, and accordingly, declared the lender a “mortgagee and buyer in bad faith,” which made both the mortgage and the subsequent foreclosure sale void.(1)

The court also ruled that, because the property that was mortgaged by the alleged forger was acquired by her through the execution of a forged deed, the deed was null and void, thereby making the subsequent mortgage and foreclosure sale also null and void.(2)(3)

For the story, see Man loses right to property.

(1) In denying the foreclosing lender's appeal, the Seventh (7th) Division of the Philippine Court of Appeals said:

• “where a purchaser [Editor's Note: or, in this case, the mortgage lender] neglects to make the necessary inquiries and closes his eyes to facts which should put a reasonable man on his guard as to the possibility of the existence of a defect on his vendor’s title and relying on the belief that there was no defect in the title of the vendor, purchases [or, in this case, loans money secured by] the property without making any further investigation, he cannot claim that he is a purchaser in good faith for value.”

The same rule is generally applied to real estate purchasers in the U.S. (as well as in other jurisdictions that draw on the English common law on this issue - see The Bona Fide Purchaser for Value of a Legal Estate Without Notice) who invoke the doctrine of bona fide purchaser when attempting to establish that their later-acquired, recorded interest in property is superior to someone else's earlier acquired, unrecorded interest in the same property. Go here for more on the bona fide purchaser doctrine .

(2) The Court of Appeals also reportedly said that since the deed purportedly conveying title was nullified by the lower court for being a forgery:

• “it cannot convey any right that could ripen into a valid title. Necessarily, the subsequent real estate mortgage between Suiza and Santiago was also null and void because the former is not the owner thereof and Santiago cannot be considered a mortgagee in good faith.” “In real estate mortgage contract, it is essential that the mortgagor must be the absolute owner of the property to be mortgaged; otherwise, the mortgage is void,” the Court added.

Since there is no valid real estate mortgage, there could also be no valid foreclosure or valid auction sale of the property.

(3) The bona fide purchaser doctrine typically has no application in the context of a forged deed. A purchaser who takes title to property that was earlier conveyed by a forged deed acquires no title, even if the purchaser could have otherwise established him/herself as a bona fide purchaser. However, assuming it can apply, it seems to me that either of the two legal theories invoked by the court, standing alone, would have been enough to support the voiding of the lender's mortgage and the subsequent foreclosure sale. By applying both legal theories to the same set of facts, it appears that the appeals court took a "belt & suspenders approach" to upholding the lower court decision, arguably making it more difficult for the end result to be reversed should the ruling be appealed further.

NY Senator To Fannie: Stop Online Horse Trading In Delinquent Bronx Building Mortgages As Deteriorating Conditions May Force 500+ Families Onto Street

In The Bronx, New York, Crain's New York Business reports:

• Sen. Charles Schumer will join Bronx tenants Monday to demand that Fannie Mae abandon its effort to sell distressed mortgages on a portfolio of 19 Bronx buildings via an online auction and instead work with the city to find a buyer who will fix up the rundown properties and keep them affordable. The government-sponsored entity bought the $29 million mortgage portfolio from Deutsche Bank Berkshire Mortgage in 2007 and has proposed auctioning it off through a website called DebtX—an eBay-like site that deals exclusively in the sale of distressed mortgages.

• Many of the buildings, located in the Crotona section of the Bronx, are in states of disrepair, including 10 which have made the city’s list of worst-maintained buildings. The buildings are home to 520 families. “Allowing these buildings to be horse-traded on the open market is a sure fire way to guarantee that another speculator gobbles them up, and either continues to let the buildings rot or kicks the current tenants out on to the street” said Mr. Schumer. “We simply cannot allow that to happen.”

For more, see Fannie Mae urged to abandon Bronx mortgage auction (Sen. Schumer, housing advocates demand that Fannie Mae halt an online auction of mortgages on 19 foreclosed Bronx buildings).

(1) According to the story, a portfolio of 19 apartment buildings in 2007 was purchased for $36 million, $29 million of which was debt issued by Deutsche Bank and immediately sold to Fannie Mae. Fannie discovered the loans didn't meet their underwriting standards after they were delivered by Deutsche Bank. The buildings were subsequently abandoned by the owners when they could no longer afford to pay the overvalued mortgage. The loans went into foreclosure in March.

First Wave In Nationwide Loan Modification Scam Eradication Effort Results In 189 Legal Actions In Coordinated Federal, State Sweep

Last week, the coordinated nationwide sweep, called "Operation Loan Lies," began with prosecutors filed 189 legal actions against loan modification firms accused of cheating homeowners desperate to adjust the terms of their currently unaffordable home loans. This sweep involves 25 government agencies, including the Federal Trade Commission, the U.S. attorney's office for the Central District of California, and 23 other agencies in 19 states. Go here for a summary of the Federal and state actions.

The following press releases were issued by some of those agencies involved in this nationwide scam eradication effort:

1) U.S. Federal Trade Commission:

• Federal and State Agencies Target Mortgage Foreclosure Rescue and Loan Modification Scams (FTC Leads “Operation Loan Lies” to Stop Fraud and Help Distressed Homeowners).

2) Arizona Attorney General's Office:

• Terry Goddard Announces National Crackdown on Mortgage Fraud.

3) California Department of Justice:

• Brown Sues 21 Individuals and 14 Companies Who Ripped Off Homeowners Desperate for Mortgage Relief.

3) Colorado Attorney General's Office:

• Attorney General Announces Actions Against Seven Loan-Modification Companies As Part Of Multistate Sweep.

4) Idaho Attorney General's Office:

• Wasden Recovers Money for Loan Modification Victims.

5) Illinois Attorney General's Office:

• Madigan Continues Pursuit Of Mortgage Rescue Fraud (Illinois Attorney General Files Four New Lawsuits, Joins Federal Trade Commission, U.S. Department of Justice in Move to Protect At-Risk Homeowners Nationwide).

6) Iowa Department of Justice:

• A.G. Shuts down “Foreclosure Rescue” Company (Miller: “Beware of foreclosure rescue scams. If you need help, call the free Iowa Mortgage Help Hotline at 877-622-4866”).

7) Kansas Attorney General's Office:

• Attorney General Six Joins ‘Operation Loan Lies' to Stop Fraud and Help Distressed Homeowners (Federal and State Agencies Target Foreclosure Rescue and Mortgage Modification Scams).

8) Maine Department of Professional and Financial Regulation, Bureau of Consumer Protection:

• State Regulators Order Foreclosure Rescue Companies to Cease Doing Business in Maine.

9) Maryland Department of Labor, Licensing, and Regulation, Office of the Commissioner of Financial Regulation:

• Maryland moves against loan consultants (from The Maryland Daily Record).

10) Michigan Attorney General's Office:

• Cox Charges Five for Foreclosure Rescue Fraud (Warns 17 other companies on consumer practices).

11) Missouri Attorney General's Office:

• Attorney General Koster joins FTC, California in suit against foreclosure consultant (obtains restraining orders against two fraudulent businesses).

12) New Jersey Attorney General's Office:

• Attorney General Announces Mortgage Fraud Lawsuits - 10 Defendants Charged in Two Separate Loan Modification Cases.

13) North Carolina Department of Justice:

• AG Cooper targets California schemes that prey on NC homeowners (NC cases part of national Operation Loan Lies).

14) Ohio Attorney General's Office:

• Cordray Sues California Foreclosure Rescue Operation for Fraud (Joins National Crackdown on Mortgage-Related Scams and Urges Federal Regulation ),
• Cordray Issues Statewide Foreclosure Rescue Scam Sweep (Seeks to shut down operations throughout Ohio).

15) Washington Attorney General's Office:

• State, federal sweep slams loan-mod scams (Firms operating in Washington state in government crosshairs for taking advantage of homeowners facing foreclosure).