Virginia Couple Facing Foreclosure Discover Their Home Listed For Rent On Craigslist By Nigerian Scammer

In Lake Jackson, Virginia, InsideNova.com reports:

• A Lake Jackson couple was shocked to see their house for rent on Craiglist this week. [... T]hey are losing it to foreclosure, and now it appears a scam artist is trying to make a buck by fraudulently listing it for rent. [Ashley] Pollard bought the home when “the market was crazy” in 2006. Now, because of hard times, they’ve been forced to put it back on the market for “short sale,” meaning the bank will sell it for the best price they can get.

***

• [L]ike so many who have been hit by the economic recession, the family is forced to leave. So they turned to the internet to look for a new place to live. On Sunday night, Pollard was shocked to see her house listed on the popular Web site, Craigslist. [... B]efore she [called police], Pollard curiously e-mailed the person who listed her home on Craigslist, stating that she was interested in the house and asked when she could move in. In a reply, she said a man — who claimed to live in Nigeria — told her that she could move in within a few days if she sent him an $800 deposit. Once he received the money he would then send her the house keys. The man went on to write that he and his wife went to Nigeria to do missionary work for a church, but “fell in love with it so much that they decided to stay” and live there, said Pollard.

For the story, see Scammer posts Lake Jackson family’s home for rent on Craigslist.

Ex-Florida Appeals Court Judge Cops Plea To Falsifying Mortgage Application In Alleged Attempt To Help Stripper Cover Up Her Assets

In Tampa, Florida, the Palm Beach Post reports:

• A former Florida appeals court judge who resigned amid controversy over his financial and personal relationship with a stripper has pleaded guilty to bank fraud. Thomas E. Stringer appeared in Tampa federal court Thursday morning. He is expected to be sentenced in two to three months. It's unlikely he'll get jail time. Prosecutors say Stringer falsified his mortgage application for a home in Hawaii.

• Stringer resigned from the 2nd District Court of Appeal in February, months after a stripper came forward claiming he helped her hide from creditors by letting her put money into his bank accounts. The Judicial Qualifications Commission also found probable cause that Stringer listed himself as the sole owner of a home in Hawaii for the woman. The panel dropped its ethics complaint after Stringer resigned.

Source: Former Fla. judge linked to stripper pleads guilty.

NY AG Files Criminal Charges Against Judge For Allegedly Swiping Bail Money, Fees From Court Bank Account To Save Home From Foreclosure

From the Office of the New York Attorney General:

• Attorney General Andrew M. Cuomo [Tuesday] announced criminal charges against a former town judge for using $27,000 in fees and bail money from a court bank account for personal use. According to the complaint, James Funk, 47, of Hudson, while sitting as a judge of the Stockport Town Court in Columbia County, withdrew funds from the court’s bank account on four occasions in order to pay the taxes and utility bill on the Diamond Street Diner, his Hudson restaurant, and to stave off the foreclosure of his personal residence.

***

• An audit conducted by the Unified Court System’s Internal Audit Unit found that the money withdrawn by Funk was mostly attributable to bail money held by the Court for pending cases. As judge, Funk was the sole authorized signatory for the court bank account, and was also responsible for collecting, recording, depositing, and distributing fines and fees that are paid to the court.

For the entire press release, see Attorney General Cuomo Announces Arrest Of Former Town Judge For Charges Including Grand Larceny And Official Misconduct.

Outfit Accused Of Online "Astroturfing" As Part Of Facelift Peddling Program To Cough Up $300K Settlement In Lawsuit Brought By NY AG

From the Office of the New York Attorney General:

• Attorney General Andrew M. Cuomo [...] announced a settlement with cosmetic surgery outfit Lifestyle Lift over the publishing of fake consumer reviews on the Internet. Under the settlement, Lifestyle Lift will stop publishing anonymous positive reviews about the company to Internet message boards and other Web sites, and will pay $300,000 in penalties and costs to the State of New York. The case is believed to be the first in the nation aimed at combating "astroturfing," a growing problem on the Internet.

• Lifestyle Lift employees published positive reviews and comments about the company to trick Web-browsing consumers into believing that satisfied customers were posting their own stories. These tactics constitute deceptive commercial practices, false advertising, and fraudulent and illegal conduct under New York and federal consumer protection law. The settlement marks a strike against the growing practice of “astroturfing,” in which employees pose as independent consumers to post positive reviews and commentary to Web sites and Internet message boards about their own company.(1)

For the NY AG press release, see Attorney General Cuomo Secures Settlement With Plastic Surgery Franchise That Flooded Internet With False Positive Reviews.

(1) I wonder how common "astroturfing" is among those running the myriad of online loan modification rackets?

El Paso Woman Facing Foreclosure Allegedly Tricked Into Signing Away Home; Investor Rented Out Premises After Taking Possession

In El Paso, Texas, KFOX-TV Channel 14 reports:

• A former El Paso woman says people are living in her Lower Valley home that she never sold. Tammy Diaz asked a real estate investor to help her sell this home more than two years ago. Diaz moved to Corpus Christi, and almost never heard from him again. Diaz in 2007 faced a separation from her husband and impending foreclosure on her home. So she reached out for help. "He made it seem like everything was real perfect, he was going to be able to sell our house for us," said Diaz.

• Diaz is talking about Lorenzo Trujillo. Diaz was under the impression that Trujillo was going to sell her home in 45 days, but two years later, she said she had gotten no news from Trujillo. "About a month ago my daughter went to El Paso and she told me, 'Somebody is living in the house mom.' And I was like, 'What?'" she said.

For more, see Woman Shocked To Find People Living In Her El Paso Home.

Boston Homeowner Dodges Possible Loan Modification Scam As Ex-Employee Warns That Firm Was "Just Flat Out Stealing"

In Boston, Massachusetts, WCVB-TV Channel 5 reports:

• On the verge of foreclosure, Nancy Coxall of Boston was ecstatic when she received a flier from Nation's Housing Modification Center, promising to lower her interest rate and erase bad credit. [...] All she had to do was make a one-time payment of less than $3,000. "I'm saying, 'Wow, I can't do any better than that.' I'm thinking this is wonderful," said Coxall.

• But Coxall was lucky. She canceled her deal after a call from former Nations Housing employee Tom Fatica. He realized what was going on and called potential clients to say there were actually no calls to lenders, and no loan modifications. "We are talking about a lot of money that they are just flat out stealing," said Fatica, "and they are stealing it from people can least afford to lose it."

***

• Our sister station, KGTV in San Diego, tried to speak with Nation's Housing president Mike Trap at his office in San Marcos, Calif. An investigation shows he has a criminal record. In 2003, he admitted to lying to a federal grand jury in connection with a $100 million real estate scheme. But Nation's Housing is still taking calls and people's money. [...] Nation's Housing Modification Center is under investigation by the San Diego District Attorney's office [...].

For the story, see Home Loan Co. Accused Of Fraud ('Nation's Housing Modification Center' Accused Of Fraud).

Feds Move In On South Florida Loan Modification Peddler; Seize Luxury Cars, Boat In Criminal Probe As State Court Judge Upholds Temporary Injunction

In West Palm Beach, Florida, the Palm Beach Post reports:

• Jason Vitulano reached out to troubled homeowners with the promise that he could save them for foreclosure, an investigator for the Florida Attorney General said in Palm Beach County Circuit Court [Wednesday]. But when Vitulano of Boca Raton received their checks for up to $5,000, he cashed them at a check cashing store, investigator Arnold Sherman said. He paid his telemarketers in cash.

• Nearly 500 people have complained to the Attorney General that Vitulano's companies took their fees up front but did nothing in return, Sherman said, and the Boca Raton man has had his luxury cars and boat seized as part of a federal criminal investigation into his businesses. At [Wednesday's] hearing, Palm Beach County Circuit Judge Jack Cox decided to uphold a temporary injunction that prohibits Vitulano and his companies - FHAAllDay.com, Safety Financial Services Inc., Housing Assistance Law Center and Housing Assistance Now - from doing business. He also appointed a receiver to take over whatever is left of the business.

For more, see Judge continues block on Boca Raton man's foreclosure rescue operations.

Victims Accuse Colorado Man Of Tricking Owner Into Signing Over Home, Then Pocketing Rent From Unwitting Tenant While Allowing House To Be Foreclosed

In Colorado Springs, Colorado, KKTV reports:

• Imagine you and your children being kicked to the curb with all your belongings left in the front yard in an undignified, but very legal way. That's the situation facing this tenant who decided to rent a property in foreclosure. Now Tara Proctor who's 8 months pregnant is trying to find a place to live. Tara says, "It was horrible. My kids... they just... they threw everything in bags, they wouldn't even let me pack. It was just... It's horrible, it's embarrassing." Tara moved into this northeast Colorado Springs neighborhood in March after signing a lease with this man known as Chevy or Dwayne Zehnder. She says she knew the home was in foreclosure, but never understood her rights. She found out the hard way that Zehnder whose arrest record shows he was accused of forgery and filing false documents ... was the ultimate winner ... collecting rent from her for months even though his only tie to the home was a document called a Quit Claim Deed.

• Cynthia Glen owned the home. She says Zehnder told her he would sell the house. Instead ... she says he put out a "for rent" sign and started collecting rent from Tara. Cynthia says, "I didn't realize I was signing over the property to him at all. It makes me sick to my stomach to find out that you know... he's getting all of this money off of this property when it should be going to the mortgage lender." Now the house is owned by U.S. Bank which will try to sell it.

Source: Foreclosure Follow-Up. RentSigmaSkimming

The Loan Servicing Horror Stories Continue For Homeowners

A recent story by The Associated Press gives an "honorable mention" on the fine work of mortgage servicers Bayview Loan Servicing, Select Portfolio Servicing, and Ocwen Financial Corp. in their dealings with the average consumer homeowner. With respect to Bayview:

• In February 2005, Janet Simmons was more than $30,000 behind on her mortgage. Bayview Loan Servicing began foreclosure proceedings on her home, located on 3.1 acres in rural Rockingham County, Va., between Washington and Charlottesville. But Bayview — which stands to receive up to $44.3 million from Treasury's loan-modification program — foreclosed without providing required written notice, the Virginia State Supreme Court found. Bayview never sent Simmons a letter by certified mail, as required under her loan. Unbeknownst to Simmons, the home was sold at auction in July 2005. She didn't find out she had lost the house until the new buyer asked why she was doing yard work on a home she no longer owned, said her lawyer, Kevin Rose. The courts awarded Simmons $156,809 — the difference between what her home was worth and what it had received in a foreclosure sale.

In connection with Select Portfolio (formerly known as Fairbanks Capital Corporation):

• For six years, Jerry Turner made payments to Select Portfolio for a Charleston, W.Va., house he no longer owned. In 2000, Turner was promised a loan modification in a court settlement. His mortgage belonged to a bank-owned pool of loans eventually serviced by Select Portfolio. Instead of lowering Turner's payments as the court had ordered, the bank foreclosed on Turner's home, court documents show. The bank then bought the house at auction.

• Select Portfolio never told Turner his house had been sold. Instead, it continued sending him monthly invoices and cashing his checks. He didn't find out he had lost the house until it was sold a second time, at auction — because Select Portfolio hadn't paid property taxes on the home. "I had excellent credit at one time," Turner said. "Now, I can't borrow money on the house, I can't leave it, and it's been tied up so much I don't know what to do." Turner's case against Select Portfolio is pending in West Virginia state court.

Ocwen, which was reportedly found in 2004 by government regulators to be engaged in illegal, unsafe and unsound collection practices in the course of their mortgage servicing activities, hasn't fared much better:

• Ocwen, which is in line to receive up to $553.4 million from the Treasury, faces a federal class-action complaint for harassing homeowners with excessive phone calls, charging illegal fees and adding unnecessary insurance premiums to borrowers' bills. Ocwen engaged in "a nationwide scheme of illegal, unfair, unlawful, and deceptive business practices," the complaint contends.(1)

For the AP story, see Gov't mortgage partners sued for abuses (if link expires, try here).

(1) For a story on a Texas woman who reportedly alleges in a recent lawsuit that Ocwen foreclosed her residence even though she was on time with her payments, see The Southeast Texas Record: Kemah woman says mortgage company foreclosed despite payments. QuestionableServicingTacticsSigma

Florida AG Probes Central Florida "Charity" For Allegedly Clipping Homeowners For Upfront "Donations" For Loan Modifications

In Oviedo, Florida, WFTV-TV Channel 9 reports:

• An Action 9 investigation has exposed a local charity that collects thousands in donations to help people avoid foreclosure. Some clients and a former employee claim it's really charging advance fees for loan modifications many homeowners never get.

***

• The Helpful Hands Foundation says it's "helping" people get back on their feet. Christine McGinley, a former employee, claims the charity really charges homeowners nearly $2,000 to avoid foreclosure. She says that "donation" is really an upfront fee for a loan modification that most of the clients she saw never got. "Taking money from people already in a bad way---you might as well kick them when their down." According to Christine clients told her the charity's manager guaranteed them lower mortgage payments. [...] The state attorney general is now investigating several complaints against the Oviedo based charity and it it's president George Raisler.

For the story, see Action 9 Exposes Charity Offering Loan Modifications.

The link to the Florida Attorney General's webpage for information on the The Helpful Hands Foundation civil investigation is: Case #L09-3-1104.

Judge Orders Wells To Turn Over Evidence, Execs To Appear At Depositions In City Of Baltimore "Ghetto Loans" Case

In Baltimore, Maryland, WJZ-TV Channel 13 reports:

• Baltimore has won an early battle in its lawsuit against Wells Fargo. A federal judge ruled Thursday that the lender must turn over data on its Baltimore loans and make company officials available for depositions. The city sued Wells Fargo early last year, arguing that it targeted minorities for bad loans that led to widespread foreclosures and cost the city millions of dollars. Wells Fargo denies that race was a factor in its loan rates. The case moved into the discovery phase only recently. Wells Fargo attorneys sought to narrow discovery at Thursday's hearing, but U.S. District Judge J. Frederick Motz went along with the plaintiffs' request. Motz replaced U.S. District Chief Judge Benson Everett Legg, who recused himself after discovering what he called "a potential conflict of interest."

Source: City Wins Round In Wells Fargo Lawsuit.

Go here for other posts on Baltimore City's "ghetto loans" case.

Feds Sought 400 Years, Get 100 In Sentencing Of Owner Of 1031 Exchange Intermediary Accused Of Using Clients' Escrow Cash As "Personal Piggy Bank"

In Richmond, Virginia, Bloomberg News reports:

• Edward Okun, the Miami businessman convicted of stealing from customers of his tax-deferral firm, 1031 Tax Group LLC, was sentenced to 100 years in prison for running a $126 million fraud scheme. U.S. District Judge Robert Payne handed down the sentence [Tuseday] in Richmond, Virginia, where Okun’s company was based. Prosecutors sought a sentence of 400 years, or a similar term amounting to life in prison. Jurors in March found Okun, 58, guilty of conspiracy, wire fraud, money laundering, smuggling and perjury following a three-week trial.

***

• Assistant U.S. Attorney Michael Dry argued Okun’s fraud was worse than others, because his victims thought they were using a risk-free service, as opposed to investing. The tax-deferral industry temporarily holds real-estate sale proceeds for a fee under section 1031 of the U.S. tax code, allowing customers to defer taxes when similar properties are bought within 180 days. Instead of holding the money in banks, Okun used it as a “personal piggy bank” for expenses that included financing a divorce and buying jewelry for his new wife, prosecutors said. [...] Okun expanded the company in 2006 and 2007 by buying competitors and gaining access to their customers’ real-estate sale deposits.

For more, see Con Man Edward Okun Gets 100 Years for Fraud Scheme.

Go here for more on Edward Okun. EscrowRipOffKappa 1031 exchange

NJ Feds Bag Brooklyn-Based "Home Savers" Equity Stripping Foreclosure Rescue Racket; High Equity Homeowners Allegedly Conned w/ Bogus Sale Leasebacks

From the Newark, New Jersey Office of the FBI:

• It’s the type of story that is becoming increasingly more common: FBI Special Agent In Charge Weysan Dun announced [Wednesday] the arrests of GARTH CELESTINE, age 44, of [...] Brooklyn, New York; and PHIL A. SIMON, age, 34, of Brooklyn – both better known collectively as “Home Savers Consulting Corporation”. Both were arrested this morning at their residences without incident and charged with attempt and conspiracy to commit wire fraud in connection with a home foreclosure scheme.

• Celestine and Simon owned and operated Home Savers, which held itself out as a foreclosure rescue company, [...]. The company conducted business in both New York and New Jersey. According to the complaint, Celestine and Simon allegedly conspired with each other to defraud both homeowners facing foreclosure and mortgage lenders by making materially false representations and promises and causing wire transfers to perpetuate the scheme. A key aspect of the scheme was the targeted victims: homeowners with substantial equity in their homes who were facing foreclosure because of an inability to make the monthly payments.

***

• [Another] victim-group consisted of the straw-buyers. Celestine and Simon allegedly recruited individuals with good credit scores to act as “buyers” of the homes facing foreclosure. This was accomplished by misrepresenting to the straw-buyers that they were helping the true owners to “save” their homes. [...] Celestine and Simon also allegedly applied to different lenders for multiple mortgages on the same properties at the same time to extract the maximum available equity from each property.

***

• [T]he complaint charges that Celestine and Simon eventually failed to make the mortgage payments in nearly every case and caused the loans to default. In the end, Celestine and Simon caused lenders to fund more than $10 million worth of fraudulent loans and stole $1.5 million worth of equity from the properties.

For the entire FBI press release, see “Home Savers” and Misbehaviors! FBI Arrests Two in Foreclosure Scheme.

Go here for more on Brooklyn-based Hone Savers Consulting Corp. shotgunning

Two Lenders Targeted In Mass. Class Actions Over Toxic "Payment Option, Pick-A-Payment" Loans; Could Slam Brakes On In-State Wells, BofA Foreclosures

In Boston, Massachusetts, The Boston Globe reports:

• A Boston attorney has filed lawsuits against two major lenders claiming they knew - or should have known - their mortgage loans that can grow bigger over time were unaffordable to borrowers.(1) The suits are being watched locally and nationally because, if successful, they would provide strength to advocates and litigators struggling to make lenders accountable for “toxic’’ mortgage loans that have pushed millions of Americans into foreclosure. “If this case goes forward, it will be a model throughout the country,’’ said Suffolk University law professor Kathleen C. Engel.

• Gary Klein,(2) of the law firm Roddy, Klein and Ryan, sought class-action status for his suits this summer against Bank of America Home Mortgage and Wells Fargo Home Mortgage, saying that hundreds of Massachusetts borrowers ultimately will be unable to afford their mortgages. A decision on class- action status is pending. “The lending community created these toxic products and masked their effect with complicated loan provisions that borrowers had no chance of understanding,’’ Klein said. “I find that appalling.’’ Bank of America officials said in a statement that “the lawsuit is without merit.’’

***

• The suits are grounded in a landmark 2008 state Supreme Judicial Court decision(3) that lenders were violating state law by writing loans that were almost certain to lead to default and foreclosure. The decision, Engel said, was the first in the country to hold lenders accountable for unfair practices, even when the terms of a mortgage are considered legal. The court decision upheld arguments by Attorney General Martha Coakley that the California-based lender Fremont Investment & Loan was selling risky products it knew would fail. In June, Coakley settled with the lender for $10 million to help struggling homeowners and cover legal costs [go here for Fremont Consent Judgment].

For more, see Attorney sues lenders, says they created ‘toxic’ products.

For the lawsuits, see:

• Hart v. Bank of America Home Loans Inc, et al.,
• Bettinelli v. Wells Fargo Home Mortgage, Inc.

(1) According to the story, Klein filed the lawsuits in US District Court in June and July focusing on so-called “payment option’’ mortgages, which allow borrowers to make minimum monthly payments on home loans. From the day the paperwork is signed, any unpaid interest is added to the balance. Eventually, the day of reckoning comes - usually after five years - and a borrower is required to make payments that cover the full mortgage interest and swelling principal. “Pick-a-payment’’ loans became popular in 2005 and 2006 as borrowers strained to afford skyrocketing home prices, or sought money to make investments or home improvements.

(2) Last year, Klein filed a class action lawsuit that could stop hundreds of foreclosures and reverse thousands of others where it challenged lenders' right to foreclose where they couldn't prove ownership of the promissory notes. See Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership.

(3) 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, §2 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, try here). UndoMortgageLoans TILAdelta

Recession Drives Increase In Those Representing Themselves In Court; Trend Alarms Observers

In Chicago, Illinois, the Chicago Tribune reports:

• Legal service has never come cheap, but lawyers, judges and other experts say that for many people the recession has made it a nearly impossible expense. That has created a surge of litigants who must navigate the often-bewildering justice system by themselves. Advocates and court officials have responded with expanded advice desks, instructional Web sites, even plans to connect litigants with law students by computer. But the trend still alarms many observers, who say courtrooms weren't made for amateurs. "In a complex domestic relations dispute or commercial dispute, it's kind of like trying to do surgery on yourself," said Bob Glaves of the Chicago Bar Foundation, which funds numerous legal assistance programs. "If you're not trained in these things, you have no chance."

***

• Cook County Associate Judge Thomas More Donnelly, who until recently ran a courtroom for those fighting wage garnishments and frozen bank accounts, said such contests are often glaring mismatches. He recalled cases in which defendants didn't know about a state law that allows debtors to keep up to $4,000 safe from creditors. He would tell them about it, but if they didn't understand what he was saying, he would have to drop the matter lest he cross the line separating impartial judge from advocate. "It would be so distressing to me," he said. "There are things that are known to everyone in the courtroom except the debtor."

For more, see Recession forces more to act as own lawyer (Observers warn that courtrooms aren't made for amateurs).

---------------------

On a related point, a recent story involving an unrepresented Texas homeowner fighting lender U.S. Bank and loan servicer Select Portfolio Servicing, Inc. (formerly known as Fairbanks Capital Corp.) in a post-foreclosure eviction matter serves as a reminder that judges have an obligation to cut the litigant acting without the benefit of legal counsel some slack when appearing in court proceedings, and a recent court ruling by a Texas appeals court also says as much.(1) For more, see:

• The Southeast Texas Record: Appeals court cuts pro se plaintiff a little slack,
• Thomas v. Select Portfolio Servicing, Inc., et al., NO. 09-08-00030-CV, (Tex. App.--Beaumont; July 16, 2009).

(1) In this regard, the Federal courts have also expressed their view on the liberal construction of court filings of pro se litigants. For example, see Bivings v. Wakefield, 316 Fed. Appx. 177 (3rd Cir. 2009):

• We construe pro se filings liberally, and hold them "to less stringent standards than formal pleadings drafted by lawyers," Haines v. Kerner, 404 U.S. 519, 520, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972). See also United States v. Miller, 197 F.3d 644 (3d Cir. 1999) (discussing the "time-honored practice of construing pro se plaintiffs' pleadings liberally.")

and Zilich v. Lucht, 981 F.2d 694 (3d Cir. 1992):

• When, as in this case, the plaintiff is a pro se litigant, we have a special obligation to construe his complaint liberally. Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 595, 30 L.Ed.2d 652 (1972).

Queens Homeowner Fights To Hold Onto Home Stolen In Deed Theft Scheme; May Lose House Anyway Despite Successful Forgery Prosecution Against Scammers

In Queens County, New York, The Black Star News reports on the story of Sun-Ming Sheu, a local resident and immigrant from Taiwan who had his home ripped off from out from under by scammers in 2001 in a straw buyer scam which utilized a forged power of attorney to complete a fraudulent trandfer of the title to the house. The scammers then obtained a mortgage against the home, failed to make the mortage payments, and Sheu has been fighting off a foreclosure ever since.

To add insult to injury, the scammers were actually busted by the New York City police, and they ultimately copped pleas to forgery. However, the mortgage lender that was duped into financing the fraudulent sale and the title insurer that issued the lender's title insurance policy have ignored the successful criminal prosecution and all the evidence produced demonstrating that the signatures on the documents in the fraudulent sale were forged, and have continued to move forward on the foreclosure of Sheu's home, acting as if the fraudulent closing was authentic. A reportedly accomodating judge, Queens Supreme Court Justice Joseph Golia, has allowed the foreclosure to proceed.

Most recently, Sheu reportedly met twice with a criminal investigator at the U.S. Attorney’s Office in Manhattan in June, 2009 for a total of about four hours and discussed his case and submitted documentation. “We cannot confirm or deny that we are investigating this case,” the investigator told The Black Star News, when contacted by phone.

For the story (which is part one of a series), see Alleges: "Junk Justice" System And Mortgage Fraud.

For the follow-up stories, see:

• Part 2,
• Part 3. DeedContraTheft

Use Of "Deadbeat Lists" Gaining In Popularity With Florida Condo Associations Seeking To Boost Unpaid Maintenance Collections From Delinquent Owners?

In South Florida, the South Florida Sun Sentinel reports:

• In defiance of state laws, some condo associations are seeking to use all means at their disposal to get condo owners who are behind on fees to pay up, including public humiliation. A few years ago, not many boards would have asked to see a list of condo owners who were behind on association fees, because not many were delinquent. But in the midst of South Florida's foreclosure crisis, some associations have posted "deadbeat lists" in common areas in hope of turning up the heat on slow-to-pay owners — a move many say is illegal, unfair and unethical.(1)

***

• Tempers are heating up in South Florida as threats are being made against both the association members who try to collect debts and those who feel victimized by the harsh tactics. Board members' cars have been keyed, and amenities such as gyms and pools have been declared off-limits, assistant condo ombudsman Bill Raphan said. "Give me one good reason for putting these lists up. You put their name up, but it can be dangerous," Raphan said. "Boards want to keep [delinquents] out of the pool ... but you just can't do that in a condo."(2)

• Recently, courts have given better options to associations, particularly in the case of nonpaying landlords who lease out their units. One legal answer includes seeking a court-appointed receiver, or unbiased intermediary, who can bypass the foreclosed or delinquent owner and collect rent directly from the tenant, in place of having the tenant pay rent to the owner.(3) The funds are deposited into a receivership account, where they are then divided up between those to whom the owner owes money. [...] Receiverships are popping up in areas hit hard by the foreclosure crisis, said local receiver Seth Heller of Heller and Company.

For more, see Condo deadbeat lists may be effective, but also illegal.

(1) F.S. 559.72(14) of the Florida Consumer Collection Practices Act specifically prohibits the use of deadbeat lists within the state of Florida when collecting what it defines as a "consumer debt" (see F.S. 559.55(1)), but does not apply to the collection of any debt not falling within the "consumer debt" definition, including debts owed on units owned by business entities (ie. corporations, partnerships, joint ventures, etc. - see F.S. 559.55(2)). Unpaid maintenance fees owed by an owner-occupant (ie. a natural person using the apartment either as a principal residence, or as a part-time second home) appear to fall within the definition of "consumer debt." It is arguable, however, whether or not such unpaid maintenance fees owed by a rent-skimming, non owner-occupant (ie. a natural person owning the unit as an investment or business) leasing the premises out for profit as a landlord would fall within the statutory definition of "consumer debt."

The Florida Commercial Collection Practices Act (F.S. 559.541 et seq.), which regulates the business of collecting "non-consumer debts" within the state of Florida does not contain any specific prohibition against the use of "deadbeat lists" in the debt collection process.

The Federal law regulating debt collection practices throughout the U.S., the Fair Debt Collection Practices Act, applies only to "consumer debt" (which is defined in the same way as in Florida law), which is an obligation to pay money by a natural person (as opposed to a corporation, partnership, joint venture, etc.) arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes. (15 USC 1692a(3), 1692a(5)).

(2) If some condo associations are so intent on spreading the word about delinquent unit owners with "deadbeat lists," simply mailing out copies of the information to all the unit owners (but not tenants), without publicly posting the information on the premises, is a preferable method of doing so. This information, along with copies of any other business record of the association, is something the unit owners are legally entitled to obtain by written request anyway, so mailing the information (preferably after receiving a written request from a unit owner) without an actual public posting of it should dodge the prohibitions of the debt collection statutes.

(3) See South Florida Business Journal: 3rd DCA upholds use of condo receivers.

Builder's Unpaid Bill From Stiffed Sub Leaves New Home Buyer Stuck With Unrecorded $42K Mechanics Lien & Unprotected By Title Insurance

In Fayetteville, Arkansas, the Northwest Arkansas Times reports:

• Banks aren't the only ones losing money thanks to the developer who built the mostly empty luxury condo development near Dickson Street known as the Legacy Building. A Fayetteville couple faces possible foreclosure of their home because one of troubled developer Brandon Barber's companies did not pay for the materials to build it.(1) Scott and Donna Powers have made more than $15,000 of improvements to their 2,850-square-foot home they purchased in February 2008 in phase two of Deer Path Estate subdivision.

***

• The Powers moved into the house in December 2007, soon after it was completed. Before closing, they went to National Home Centers to pick out the carpet, some mirrors and a ceiling fan, never knowing Barber's account was past due there, he said. Soon after closing, Powers said that he found out about the materialman's lien. He was surprised to learn that his owner's title insurance policy did not protect him.

• "We all think we bought a house and we're safe, but the dirty little secret is that title insurance does not protect you from materialman's liens," he said. Powers said no one ever explained to him that you had to pay extra to get coverage against outstanding bills that might not be paid at the time of closing.(2)

***

• Powers said that he plans to file a criminal complaint and ask authorities to file felony charges against Barber for signing an affidavit saying that all of the bills had been paid.

For more, see Couple could lose house over Barber's unpaid bill (Buyers not protected at closing from unrecorded liens).

(1) They reportedly face a materialman's lien involving more than $42,000 in past due bills owed by the builder.

(2) According to the story, Ed Young, an attorney for Elite Title Company, which handled the closing, explained that a general owner's policy will not protect a buyer against unrecorded liens. He said that subcontractors and suppliers can file a lien against a property within 120 days. That's why title companies and banks always insist on a bills-paid affidavit from the builder at closing. He said that home buyers can get "affirmative lien coverage" for an additional 10 percent fee, but that the two title underwriters that Elite buys coverage through no longer offer this type of coverage on new homes. Young said that he does not believe that the companies were offering this enhanced coverage when Powers closed on the home. The title underwriters are getting away from it because of the added risk. "They all took some big hits last year," he said. title insurance legal issues

California Man Charged With Using Forged Docs To Swipe Estranged Wife's Share Of Home; Notary Stripped Of Commission, Faces Felony For Role In Scam

From the Office of the San Bernardino County, California District Attorney:

• Investigators from the San Bernardino County District Attorney's Real Estate Fraud Prosecution Unit arrested Omar Paz, 52, of San Bernardino [...]. Co-defendant, Christi Fry, 56, of West Covina was also arrested [...]. The pair was arrested for real estate fraud-related criminal charges.(1)

• Paz and his former wife had owned a home in the city of Rancho Cucamonga. Paz decided to sell their home after a domestic dispute and filed for divorce. During the real estate transaction, Paz forged his former wife’s signature on the disclosure forms, escrow instructions and grant deed.

• Fry, also formerly known as Christi Martin, was the escrow officer and public notary for the fraudulent transaction. The property sold for approximately $470,000. The excess proceeds, in the amount of $83,538.66, was wired into the joint account of Paz and his former wife. Approximately 10 days later, Paz transferred $77,054 into his personal money market advantage account for which his former wife did not have access. She discovered her name had been forged on the disclosure forms, escrow instructions, and grant deed during her divorce proceedings.

• The California Secretary of State's Notary Division conducted a separate administrative investigation and revoked Fry's notary commission due to this fraudulent transaction.

For the San Bernardino DA press release, see Pair Arrested for Real Estate Fraud.

(1) According to the DA's press release, Paz was charged with Conspiracy, Forgery, Grand Theft, Money Laundering and Offering a forged document to be recorded. Fry was charged with (1) Count of Conspiracy. Paz' bail was set at $850,000.00 and Fry's bail was set at $450,000.00. DeedContraTheft

Florida Appeals Court OKs "Blanket Receivership" In Condo Association Battle Against Rent Skimming Unit Owners, Deadbeat Investors

In Miami, Florida, the South Florida Business Journal reports:

• Condominium associations faced with increasing delinquencies now have an appellate court ruling that backs their right to appoint receivers to collect rent on delinquent condo units. Florida’s 3rd District Court of Appeal recently validated the use of "blanket receivership," which has been used by at least 18 condo associations in Miami-Dade and Broward counties. Blanket receivership allows a court-appointed receiver to collect rent directly from tenants when their units are in foreclosure.

• The appellate court denied an appeal from a condo unit owner at the Village at Dadeland, who protested the appointment of a receiver because he said he was not given proper notice. According to motions filed by the condo association, the [targeted] unit owner owns 17 condos at the Village and was delinquent on his association fees, even though he allegedly received rental income from the units. The condo association had filed foreclosure actions against the 17 units.(1)

• “The court decided unanimously to deny the unit owner’s petition. This will put an end to him collecting rent while being under foreclosure,” said Ben Solomon, a member of the Association Law Group of North Bay Village, which has handled several receivership appointments for condo associations.

For more, see 3rd DCA upholds use of condo receivers.

(1) According to the association’s court responses, it was facing extreme financial hardship because 267 of the 410 condominium units were 60 days or more delinquent in the payment of maintenance assessments, the story reports. The delinquency reportedly totaled $863,063, preventing maintenance of the common property.

Calif. State Bar Gets Serious About Loan Modification Scams; Forms 10-Person Task Force To Work With Law Enforcement In Statewide Eradication Effort

The August 2009 issue of the California Bar Journal reports:

• The State Bar has taken action to lift the law licenses of three California attorneys(1) allegedly engaged in loan modification fraud and is investigating nearly 140 more. One of the three resigned with charges pending, another faces involuntary inactive status and the third has been formally charged with seven counts of professional misconduct.

• A 10-person task force, consisting of four lawyers and six investigators, also is working with federal, state and local law enforcement as part of a statewide crackdown on foreclosure fraud. Attorney General Edmund G. (Jerry) Brown Jr. sued four more lawyers, as well as 14 companies and their executives, last month for bilking homeowners seeking mortgage relief. The lawsuits were part of “Operation Loan Lies,” a nationwide sweep of sham loan modification consultants.

***

• Suzan Anderson, who oversees the State Bar task force, said her office receives between 15 and 40 new complaints each week. As of late July, it was investigating 391 complaints against 140 attorneys, compared to a total of nine investigations relating to loan modifications 2008. [...] The State Bar issued an ethics alert in February, offering guidance to lawyers thinking of signing on with a foreclosure consultant. It can be found at calbar.ca.gov/calbar/pdfs/ethics/Ethics-Alert-Foreclosure.pdf. The alert warns of seven violations in particular that can land a lawyer in hot water, including splitting fees and partnering with non-lawyers, aiding someone in the unauthorized practice of law and accepting fees but doing little or no work. “We’ve got lots and lots and lots of (ethical violations),” Anderson said.

For more, see Foreclosure attorneys face discipline charges.

(1) According to the story, the bar obtained the resignation of Mitchell Roth in May, after shutting down his Sherman Oaks, Riverside and San Diego offices in February.

Also, the bar reportedly moved to place Irvine lawyer Nabile Anz on involuntary inactive status last month after receiving 39 complaints. Anz has a hearing before the State Bar Court Aug. 18. The Bar's Suzan Anderson said that in late 2008 Anz set up the Federal Loan Modification Law Center (FLM), operating out of several offices, complete with telemarketers, and signed up 8,300 clients in six months. The bar accuses Anz of more than a half-dozen ethical violations. According to bar prosecutors:

• FLM was set up to preclude the involvement of lawyers in determining whether to accept a client,
• Case evaluators were trained to accept virtually every client,
• There was no legal analysis of clients’ cases,
• Anz’s system of paying case evaluators guaranteed they would lie to potential clients in order to receive their commissions.

In the case of the third attorney, the bar charged Irvine attorney Sean Rutledge with seven counts of misconduct in handling a loan modification for Michael Robinson, who paid an advance $3,500 fee. Rutledge never took any action to negotiate with Robinson’s mortgage lender, the bar charges. Robinson eventually fired Rutledge, who agreed to refund his fee only if Robinson signed a release of professional liability. Rutledge did not refund the fee for several months. The bar is seeking Rutledge’s disbarment; he has a hearing before the State Bar Court Aug. 11. UnauthPractOfLawTheta

Alleged Florida Fraudster Nabbed In Costa Rica; Accused Of Running Lease To Own, Rent Skimming Scam That Left Would-Be Homeowners Out On The Street

In Lee County, Florida, WINK News reports:

• One of the alleged ring leaders of a major mortgage fraud scheme in Southwest Florida has been tracked down in Costa Rica. Erich Heckler allegedly fled Ft. Myers leaving behind 61 felony charges and a host of victims homeless and broke. Heckler is one of several suspects accused in a scheme that netted 3.8 million dollars in two years.

• Here's how it allegedly worked: Hopeful homeowners were leased properties to repair their credit scores and then offered the option to buy the properties at the end of a twelve month period. The only problem - the leasing company kept the rent for themselves, did not make the mortgage payments, sending the homes into foreclosure leaving victims without roofs over their heads. Heckler, the alleged ring leader, was arrested in the fall of 2007 in Lee County on 61 charges. He bonded out in December, and then vanished - failing to appear at a May 2008 court hearing. That's when he's believed to have moved to Costa Rica. Local authorities are working with law enforcement in Costa Rica where's Heckler is now in custody. He is awaiting extradition to the Lee County Jail.

Source: Lee County Fugitive Found.

For follow-up story, see Private investigator who caught Lee County fugitive talks to WINK News (Eric Heckler was on the run for over one year).

For original post on this story, see Florida Cops Arrest Alleged Ringleader In Mortgage Scam That Duped "Rent To Own" Tenants, Straw Buyers, Lenders. rent to own lease purchase option scams yellowstone

State High Court Slams Ohio Lawyer With "6-Month Time Out" For Bad Acts Committed While Associated With Loan Modification Foreclosure Rescue Operator

The Ohio Supreme Court announced last week:

• The Supreme Court of Ohio [Thursday] suspended the law license of Hamilton attorney John T. Willard for one year, with the final six months of that term stayed, for professional misconduct arising from Willard’s participation in a “foreclosure rescue” business in which he accepted client referrals and shared legal fees with non-attorneys who engaged in the unlicensed practice of law.

• The Court adopted findings by the Board of Commissioners on Grievances & Discipline that Willard violated multiple provisions of the Rules of Professional Conduct by partnering with the non-attorney owners of a company called Foreclosure Alternatives. The company identified homeowners against whom mortgage foreclosure actions had been filed and contacted them offering to negotiate a settlement with the lender that would halt the foreclosure process. Under Willard’s arrangement with Foreclosure Alternatives, when a homeowner responded to the company’s solicitation, the company would forward a power of attorney signed by the client and information about the foreclosure action to Willard, who would prepare and file an answer to the lender’s foreclosure complaint without meeting or speaking with the homeowner for a flat fee of $150 that he received from Foreclosure Alternatives.(1) All negotiations with the lender and virtually all subsequent information and advice provided to homeowners about their cases was provided by the company’s non-attorney employees.

In at least 28 cases in collaborating with the non-attorney owners of Foreclosure Alternatives, Willard was found to have violated the Ohio Code of Professional Responsibility rules that prohibit:

• requesting a third party to promote or recommend an attorney’s professional services, DR 2-103(C);
• aiding a non-lawyer in the unauthorized practice of law, DR 3-101(A);
• forming a partnership with a non-attorney, DR 3-103(A), and sharing legal fees with a non-attorney, DR 3-102(A);
• handling a legal matter without adequate preparation, DR 6-101(A)(2); and
• failing to pursue the lawful objectives of a client, DR 7-101(A)(1).

For the Ohio Supreme Court announcement, see Supreme Court Suspends Hamilton Attorney.

For the court's ruling, see Disciplinary Counsel v. Willard, Slip Opinion No. 2009-Ohio-3629 (July 30, 2009).

For other cases of Ohio attorneys getting slammed for associating with loan modification firms, see:

• Cincinnati Bar, Ohio Supreme Court Slam Attorneys Teaming Up With Upfront Fee Loan Modification, Foreclosure Rescue Operators,
• Attorneys Incur License Suspensions For Fee Sharing, Other Violations In Arrangement With Loan Modification, Foreclosure Rescue Operator.

(1) According to the Ohio Supreme Court ruling (see Disciplinary Counsel v. Willard, paragraphs 7-8):

• Under [Willard's] usual protocol for these cases, he would receive a copy of the foreclosure complaint filed against the client and the limited power of attorney from Foreclosure Alternatives. He would then file an answer to the complaint or a motion to strike and send a copy to the client along with a letter stating: “This is a response I filed on your behalf. I had a referral from Foreclosure Alternatives. If there are any other defenses you can think of, feel free to call me.” This letter was the first communication with the client, and, in fact, usually the first occasion for the client to learn the name of his attorney. Out of the 28 or more Foreclosure Alternatives clients, [Willard] discussed cases with only three or four of them. Negotiations with the lender were conducted by Foreclosure Alternatives; [Willard] was not even informed of their progress. The next action [Willard] would take was to notify the company when he received a motion for summary judgment filed by the lender. If the client had no defense, [Willard] sent a letter to the client stating: “A motion for summary judgment was filed. I suggest that you consider a Chapter 13 bankruptcy or a bankruptcy.” [Willard] did not otherwise personally communicate with the client. UnauthPractOfLawTheta

Connecticut Feds To Form Mortgage Fraud Task Force; Focus To Be On Fraudulent Foreclosure Rescue Deals, Short Sale Scams

In New Haven, Connecticut, The Associated Press reports:

• Federal authorities are creating a mortgage fraud task force in Connecticut to investigate schemes that contributed to the economic crisis and emerging crime trends associated with the growing tide of foreclosures. Prosecutors in the past year have brought charges or secured convictions in several major mortgage fraud cases with the help of federal and state law enforcement agencies. Authorities said the task force will help coordinate those efforts. [...] The task force will focus on "foreclosure rescue" schemes and "short sale" schemes.

• Foreclosure rescue schemes prey on desperate homeowners by persuading them to sign over the deeds to their homes to a "specialist" who promises homeowners that they can stay in their homes, make "rent" payments and eventually repurchase the homes. Instead of passing along the rent payments to a mortgage company, however, the "specialist" illegally retains the payments along with extra fees and the homes continue into foreclosure and the homeowners suffer additional losses.

• In a short sale scheme, a buyer purchases a home with no intention of making payments and often keeps additional money included in the purchase loan that was supposed to go for improvements. After a few months, the buyer informs the lender that the house will foreclose and presents the lender a possible pre-foreclosure buyer who, unknown to the lender, is part of the fraud scheme and offers to purchase the home at a price below the current loan amount.

For the story, see Federal authorities create mortgage fraud team (if link expires, try here).

Arkansas Regulator Sues California Outfit For Illegally Targeting State Homeowners For Loan Modifications

In Little Rock, Arkansas, ArkansasBusiness.com reports:

• Avoid doing business with 21st Century Legal Services Inc., Arkansas Securities Commissioner A. Heath Abshure warned Thursday, after taking the company to court.
  The Rancho Cucamonga, Calif., company promises mortgage loan modification services to people in foreclosure or in danger of foreclosure. The Securities Department issued a cease-and-desist order against the company and two of its agents, Sandy Ayala and Michael Herried, on June 24.

• A continuing investigation on whether the company was still defrauding Arkansas consumers found it was soliciting money after the cease-and-desist order. On Wednesday, Abshure filed a complaint in Pulaski County Circuit Court seeking temporary and permanent injunctions against 21st Century Legal Services as well as monetary fines. On Thursday, the court issued a temporary injunction prohibiting the company from engaging in any mortgage loan activity.

For more, see Securities Chief Files Complaint Against 21st Century Legal Services.

For more on this case from the Arkansas Securities Commissioner, see:

• Temporary Injunction,
• Press Release.

Illinois Charges Wells Fargo Of Race Bias In Home Loan Originations; Minority Neighborhoods Became "Ground Zero For Subprime Lending" Says State AG

In Chicago, Illinois, the Chicago Sun Times reports:

• Illinois filed a lawsuit on Friday against Wells Fargo & Co. accusing it of discriminating against black and Latino homeowners by employing racially biased lending practices.(1) San Francisco-based Wells Fargo & Co. allegedly sold high-cost subprime mortgage loans to minorities while white borrowers with similar incomes received lower-cost loans, according to the lawsuit, filed in Cook County Circuit Court by Illinois Attorney General Lisa Madigan. “As a result of its discriminatory and illegal mortgage-lending practices, Wells Fargo transformed our cities’ predominantly African-American and Latino neighborhoods into ground zero for subprime lending,” Madigan said.

***

• Madigan said the lawsuit was the first in the nation filed by an attorney general against Walls Fargo — though Baltimore and the NAACP have filed a similar suits.

For more, see State sues Wells Fargo for alleged loan bias.

For the Illinois Attorney General press release, see Madigan Sues Wells Fargo For Discriminatory And Deceptive Mortgage Lending Practices (Illinois Attorney General Alleges Lender Steered African-Americans, Latinos Into Subprime Loans).

For the lawsuit, see People v. Wells Fargo And Company, et al.

(1) The complaint alleges violations of the Illinois Human Rights Act, the Illinois Fairness in Lending Act, the Illinois Uniform Deceptive Trade Practices Act, and the Illinois Consumer Fraud and Deceptive Business Practices Act, and asks the court to rescind all contracts entered into between Wells Fargo and Illinois consumers by the use of methods and practices declared unlawful and to grant full restitution to the consumers. DiscriminationPredatoryLendingAlpha

Ohio AG Tags Loan Servicer With Suit For Failure To Work Out Delinquent Mortgages; Follows Thru On Promise To Sue Foot-Dragging Lenders On Loan Mods

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray [Friday] filed a joint lawsuit with the Ohio Department of Commerce against Carrington Mortgage Services, LLC. The lawsuit alleges that Carrington breached its agreement with the state to offer reasonable loan modifications to eligible borrowers. The lawsuit also alleges that Carrington violated Ohio's Consumer Sales Practices Act by providing incompetent, inadequate and inefficient customer service in connection with its servicing of Ohio mortgage loans.

• Cordray is the first Attorney General in the nation to file suit against a mortgage servicer in the wake of the foreclosure crisis. "This lawsuit makes it clear that we have reached zero tolerance for this kind of behavior from loan servicers," said Cordray. "We've tried to work with them, but now we must take action. I am determined to see that mortgage servicers step up, take responsibility and start making it right with Ohioans. No more excuses."

For the entire Ohio AG press release, see Cordray & Ohio Department of Commerce First in Nation to Sue Mortgage Servicer for Unfair Practices.

For the Ohio AG lawsuit, see State of Ohio v. Carrington Mortgage Services LLC.

For a related post, see Foreclosing Lenders To Face Lawsuits For Failing To Deliver On Promises Of Loan Modification Help, Says Ohio AG.

Report: Loan Modification Firm Used Craigslist To Round Up "Lawyer Renting" Prospects; "Rents" Ranged Between $125-$300 Per File

A recent lawsuit was filed jointly by the Federal Trade Commission and the Attorneys General for the states of California and Missouri against a group accused of clipping homeowners for upfront fees while purportedly peddling loan modifications through the use of an alleged boiler room operation, and the use of a relationship with a pair of attorneys to create the impression that lawyers were intimately involved in the loan modification process. As part of the lawsuit, a preliminary report was issued by the temporary receiver appointed by the court to take over the business and determine whether it can be operated lawfully as a going concern.

According to the temporary receiver, the loan modification firm's "relationship with two different lawyers was nominal at best and served primarily as a cover to dignify the business and invoke the attorney exception to advance fee prohibitions." (see Preliminary Report Of Temporary Receiver, page 2 - line28 thru page 3 - line 2).

In the following excerpt from the report, the temporary receiver describes how the loan modification operation allegedly went about activities that can be described as "lawyer renting"(1) in conducting its business (see Preliminary Report Of Temporary Receiver, pages 7-8):

• The current structure of the business evolved from previous businesses of Defendant George Escalante. After contact from the Orange County District Attorney in October, 2008, Escalante began the process of dissolving USFR [U.S. Foreclosure Relief Corp.] (and its various dbas). Shortly afterwards, however, he placed an advertisement on Craigslist for an attorney. That search led to Defendant Adrian Pomery, a relatively recent law school graduate, who formed Pomery & Associates as the nominal law firm linked to the business. The servicing arm adopted a new dba - HE Servicing Company. Consumers paid their $2,500 fee to Pomery who remitted $2,375 to HE and kept $125. Pomery did visit the HE office - twice a day in general - and was involved in communication with at least some consumers. But, he had no employees involved in the business.

• In April, 2009, Escalante set out to find a new attorney when Pomery expressed a desire to withdraw from the business as he saw it as high risk.(2) Escalante ran another Craigslist ad and this time found Brandon Moreno, Stanford Law class of 2004, and they together came up with a new name - Homeowners Legal Assistance ("HOLA," a dba of Cresidis Legal, Moreno's Professional Corporation) and Escalante formed a new service entity - H.E. Servicing, Inc. Moreno cut a better deal than Pomery - under his arrangement, he retained $250 for each file. As with Pomery, all payments were made to HOLA and placed in the Cresidis Trust Account; Moreno then disbursed $2,250 to HE. Credit card payments were processed through Escalante's merchant account and from there disbursed to the lawyer's trust accounts. At the time of my appointment, Moreno and Escalante had agreed to increase the consumer fee to $2,950, prohibit any further refunds, and increase the Moreno/HOLA share to $300 per client. As best we can tell, Moreno was an infrequent visitor to the office. Moreno had no employees on site at the Katella operation. The Negotiations Manager - Suki Arcebido - reported to us that she had only seen Moreno once. To a person, the other seven negotiators working with us this week have reported that they have had no contact with Mr. Moreno, and some cannot recall actually ever having seen him. Despite Defendants' limited efforts to create the illusion, this was not a law firm owned or operated by Pomery or Moreno/HOLA. It was Escalante's business. He paid the rent, hired the employees, outfitted the offices, ran the finances, and ultimately controlled the operations.

Source: Preliminary Report Of Temporary Receiver.

For the lawsuit, see FTC, et al. v. U.S. Foreclosure Relief Corp., et al. (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).

(1) A loan modification firm's use of an attorney or law firm as a "front" for its activities where the attorney does little or no work, and has little or no contact with the financially distressed client desiring a loan modification, typically used to avoid prohibitions against clipping homeowners for upfront fees.
.
(2) Pomery's sudden "cold feet" may have been attributable to the "hot water" he possibly realized he might be facing after the issuance of a February, 2009 advisory by a committee of The State Bar of California informing its members what arrangements between attorneys and loan modification firms could violate the Bar's rules of professional responsibility and conduct. See ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications. UnauthPractOfLawTheta

Supreme Court Justice Faced Attack By Some Over Non-Issue Involving Homestead Tax Exemptions For Florida Property

In Broward County, Florida, the South Florida Sun Sentinel reports:

• Political bloggers are demanding an investigation of property tax exemptions that U.S. Supreme Court nominee Sonia Sotomayor’s family receives on a condo in Margate. But local officials say there is no problem. At issue is whether Sotomayor’s mother and step-father are entitled to a homestead exemption after deeding their home to her eight years ago. Property Appraiser Lori Parrish is maintaining that state property tax law allows residents to create life estates and keep their tax breaks for the rest of their life.

• Parrish and the web site, webofdeception.com, have traded e-mails over the propriety of the tax breaks and access to the family’s tax records for two weeks. The site’s operator, private investigator Joseph Culligan, is now threatening to ask a judge to demand a review,(1) and his reports have been picked up on a couple of other blogs.

***

• Debra Boje, a law partner in Ruden McClosky’s estate planning division, and Jennifer Drake, a lawyer who heads up the real estate division at the Becker & Poliakoff law firm, said the Sotomayor family used an extremely common estate planning technique in Florida. Such a life estate guarantees seniors keep their tax breaks while also simplifying the inheritance process, they said. “Really and truly, Judge Sotomayor is entitled to the property only upon the death of the life estate owners,” Drake said.

For the story, see Sotomayor family tax breaks in Broward face questions.

(1) Rather than demanding a judge to review this matter, Mr. Culligan would be well advised to first familiarize himself with Section 196.041 of the Florida Statutes. Subsection (2) of the statute provides:

• "A person who otherwise qualifies by the required residence for the homestead tax exemption provided in s. 196.031 shall be entitled to such exemption where the person's possessory right in such real property is based upon an instrument granting to him or her a beneficial interest for life, such interest being hereby declared to be "equitable title to real estate," as that term is employed in s. 6, Art. VII of the State Constitution; and such person shall be entitled to the homestead tax exemption irrespective of whether such interest was created prior or subsequent to the effective date of this act."

See also Rule 12D-7.009(1), Florida Administrative Code, stating that a life estate will support a claim for homestead exemption.

The Florida law on homesteads has acquired some notoriety over the years as a result of a myriad of stories about those seeking to abuse it (whether it be those seeking to dodge payment of real estate taxes, or wealthy people in financial trouble seeking to protect their cash assets by purchasing a homestead within the state, thereby putting said assets out of the reach of their hotly-pursuing, frustrated creditors). This is not one such story.

Anaheim Woman Fights To Recover Home Lost To Scammers; Forged Documents Used In Refinancing Racket

In Anaheim, California, Southern California Public Radio (KPCC 89.3 FM) reports:

• Swindlers have been bilking homeowners in trouble since the housing market meltdown began. But some scam artist are getting bolder. They figured out a way to “steal” houses through forged signatures and phony appraisals. And once they win the title to a property, they squeeze out the equity. Then they vanish.

For more about an Anaheim woman who’s trying to recover her “stolen” home, see Swindlers steal houses in foreclosure scam. DeedContraTheft

Abrupt Shutdown For Purported Non-Profit, “Christ-Centered Foundation” Peddling Loan Modifications After Feeling Heat From Florida AG Probe

In Fort Myers, Florida, The News Press reports:

• A Fort Myers foreclosure-relief business is a target in the state attorney general’s investigation of 81 mortgage help companies statewide. Foreclosure Help Center Inc., a nonprofit organization [...] faces allegations of collecting fees before completing services, according to the Office of the Attorney General. The Foreclosure Help office was closed and vacated Tuesday.

***

• The Florida Department of State Division of Corporations lists the business’ principal as Manny Romero. Romero could not be reached for comment Tuesday, and the business number was no longer in service. According to the business’ Web site, Foreclosure Help Center was aimed at providing information and counseling to people facing foreclosure. The site describes the organization as a “Christ-centered foundation.”

For more, see Fort Myers foreclosure-relief firm investigated for fraud.

Error In Condo Docs Could Leave "White Shoe" Law Firm Holding The Bag As Disgruntled Buyers Demand Deposit Refunds; Tab For Typo Could Run $100M

In New York City, the New York Post reports:

• The law firm that drew up a contract now at the center of a dispute between the residents and developers of a new apartment tower finds itself in hot water after a typo may cost the developers as much as $100 million.

• Stroock & Stroock & Lavan, a 125-year-old law firm, could find itself having to write a big check to Extell Development Co. and The Carlyle Group after a 732-page offering plan for the Rushmore, a new building at 80 Riverside Blvd., stated buyers could get their money back if the building wasn't ready by Sept. 1, 2008, instead of Sept. 1, 2009, as Extell and Carlyle say they intended. At least 25 people so far have filed applications with the Attorney General's office to get back more than $10.3 million in downpayments on purchases totaling $71 million. At press time, at least four more people were also considering following suit, sources told The Post.

• While Extell and Carlyle argue the typo caused the mix-up, a lawyer representing 24 of the buyers who want their deposits back said the offering plan amounts to a document that should be enforced. "We don't see this as a typographical error. It is a contract that needs to be enforced," said Richard Cohen, the lawyer. The gaffe exposes Stroock to the real possibility of having to pay back Extell and Carlyle out of its own pocket because sources said that if the developers sue Stroock, it's unlikely its insurer will pick up the tab.

For the story, see WRONG NUMBER (Contract Typo Could Cost Firm $100M).

Milwaukee Mortgage Scam Probe Triggered By Torched Home In Foreclosure; Owner Suspected In Attempt To Force Insurer To Pick Up Tab For Loan Payoff

In Milwaukee, Wisconsin, WISN-TV Channel 12 reports:

• Milwaukee Police are trying to unravel a mortgage fraud scam involving rundown homes on the city's north side. The investigation started after a house fire investigators ultimately determined was arson. The house [...] went up in flames last April. According to court records, police started looking into the home's history after the fire was declared arson. Neighbors and police were shocked to learn the owner bought the home for $94,000, nearly $40,000 more than its assessed value. It was also in foreclosure.

• Police suspect the woman burned the house down so the insurance company would have to pay off her mortgage and find her a new place to live.(1) In fact, the owner bought a second house the same day she bought the one that burned. [...] The woman's court record reveals a history of unpaid bills, which should have disqualified her from any legitimate mortgage. Police are now subpoenaing all her financial records to determine who might have stood to profit by approving her mortgages.

***

• Police are also trying to determine if this is part of larger scheme of others who got mortgages they weren't entitled to or brokers who took fees for selling risky mortgages.

Source: Police Investigate Loan Fraud (April Fire May Have Been Mortgage Scheme).

(1) Some insurance companies cannot be relied on to freely dole out the cash to mortgage lenders when paying out on fire damage claims involving homes in foreclosure without first trying to find a loophole to get out of paying. For an example, see Court OKs Stiffing Of Lender On Fire Loss Claim; Servicer's Failure To Notify Insurer Of Commencement Of Foreclosure Action Voids Coverage.