Saturday, August 22, 2009

Florida Man Charged With Conning "Fiance" Into Selling Her Home, Then Bilking Her Of $300K In Sale Proceeds

In Broward County, Florida, The Miami Herald reports:

  • Rose Marie Anglade thought she was building a life with the man of her dreams. After meeting him during a visit to Florida, she sold her home in Queens, moved her family to Miramar and began planning a wedding. She had no idea he was making the same plans with another woman -- at the same time. Now, the 49-year-old mother of two has an empty bank account, letters from collection agencies, no husband and lives in a home she knows could be taken from her tomorrow. "Any day now I could be chased from my house,'' Anglade said Wednesday.

  • Anglade's hopes for redemption now lie with the Broward Circuit Court. Her former fiancée, alleged "Gentleman Bandit'' Paul Francois, was arrested Wednesday and charged with two counts of grand theft and running an organized scheme to defraud. Francois, according to his arrest warrant, swindled Anglade and at least one other New York woman, Sheila Brissault, out of nearly $400,000 during the last two years. He promised to marry each woman if she sold her home and moved in with him in South Florida. Investigators say Francois charmed both women into either giving him checks or creating joint bank accounts with him. Then he took off with all the money. When they told him to return it, he threatened their lives and their families, according to his arrest affidavit.

  • For Brissault, the relationship resulted in a loss of more than $100,000. She never sold her home and did move to South Florida, but she did give Francois the money to use to buy a home for them, according to the affidavit. For Anglade, Francois' alleged scam stole not just the nearly $300,000 she made when she sold her Astoria[, Queens] home, but her pride, freedom and possibly her shelter. Now she buys her groceries with borrowed money or cash made from pawned jewelry and television sets.

For more, see `Gentleman Bandit' from Davie may have stolen more than hearts (A `Gentleman Bandit' is accused of convincing two women to sell their New York homes and move in with him -- only to leave them empty-handed).

See also, Fiancée Fraudster Bilked Would-Be Brides (Scoundrel duped two South Florida women out of hundreds of thousands).

Friday, August 21, 2009

Cops Seek Ohio Foreclosure Rescue Operator For Allegedly Screwing Homeowners In Foreclosure; Charges Of Theft, Securing Writings By Deception Pending

In Columbus, Ohio, WBNS-TV Channel 10 reports:

  • The alleged ringleader of an organization devoted to defrauding homeowners threatened by foreclosure was named to Crime Stoppers' most wanted list on Wednesday. Paul Hairston Jr. is being charged with theft, tampering and securing writings by deceptions, according to Crime Stoppers.

Source: Man Accused Of Defrauding Homeowners Threatened By Foreclosure.

Arrest Warrant Issued For Colorado Foreclosure Rescue Operator Accused Of Selling Houses Out From Under Financially Distressed Homeowners

In Denver, Colorado, the Denver Daily News reports:

  • A 31-year-old mortgage broker has been charged with multiple felonies after he was accused of scamming thousands of dollars from borrowers, investors and financial institutions. Kedrick McDuffie is accused of promising homeowners he could save their homes from foreclosure by having their original loans refinanced or taken over by another person. McDuffie allegedly sold the borrowers’ homes without their knowledge to private investors he worked with, collected brokerage fees from the sales, and stopped making payments on the loans, thereby allowing the properties to go into foreclosure. An arrest warrant has been issued for McDuffie, who is currently at large. His bond is set at $100,000.

Source: Man Charged In Brokerage Scam (2nd blurb from the top). DeedContraTheft

Housing Discrimination Rampant on Internet?

From a press release from the National Fair Housing Alliance:

  • In a report released [Tuesday], the National Fair Housing Alliance (NFHA) documents how thousands of illegal housing advertisements appear with impunity on the Internet every day. "FOR RENT: NO KIDS! How Internet Advertisements Perpetuate Discrimination" calls upon Congress to stop the flood of discriminatory housing advertisements on the Internet by amending the Communications Decency Act of 1996.


  • Although newspapers have been held liable under the Fair Housing Act for publishing discriminatory housing advertisements with statements such as "no kids," or "couples only," the publishers of similar ads on the Internet have not. A loophole in the Communications Decency Act of 1996 has allowed Internet advertising providers to escape liability under the Fair Housing Act by holding them to a different standard than print media.


  • [Tuesday's] report follows a lawsuit NFHA filed last month [press release, lawsuit] against American Classifieds, LLC, the nation's largest classified advertisement publisher, for publishing housing ads in 17 states saying that children are not allowed.

For the entire press release, see Housing Discrimination Rampant on Internet (National Fair Housing Alliance Report Urges Congress to Stop Online Discrimination).

For the report, see FOR RENT: NO KIDS! (How Internet Housing Advertisements Perpetuate Discrimination).

Thursday, August 20, 2009

California Bar Obtains Attorney Resignations From Two, Files Charges Against Another In Connection With Alleged Loan Modification Scams

From The State Bar of California:

  • Continuing its aggressive pursuit of lawyers who commit professional misconduct by taking advantage of vulnerable homeowners, The State Bar of California announced [Thursday] that it has obtained the resignations of two lawyers and filed charges against a third for their loan modification activities. The State Bar's special team on loan modification complaints coninues to investigate more than four hundred active complaints from consumers about lawyers' roles in loan modification scams.


Among the State Bar's recent results:

  • On August 3, State Bar prosecutors obtained attorney Christian Dillon's (Bar No. 89376) resignation with charges pending. At that time, Dillon was under investigation for consumer complaints received by the bar regarding his affiliation with USMAC Law Group.

  • On August 4, State Bar prosecutors obtained attorney Nabile Anz's (Bar No. 183324) resignation with charges pending. Anz ran the Federal Loan Modification Law Center in Irvine.(1)

  • On August 5, State Bar prosecutors filed an application against attorney Christopher Diener (Bar No. 187890) who was affiliated with Home Relief Services, to have Diener enrolled involuntarily inactive. Bar prosecutors allege that Diener misrepresented the scope of his services to clients, collected advanced fees from clients under false pretenses, and failed to perform any services to obtain a loan modification on behalf of his clients. A hearing on that application is scheduled for August 28 in State Bar Court.(2)

The State Bar's Interim Chief Trial Counsel Russell Weiner issued this statement:

  • "The State Bar of California is firmly committed to its mission of protecting the public. As long as the need exists, this office will continue to devote substantial resources to the investigation and prosecution of attorneys who lose sight of their ethical responsibilities and take undue advantage of desperate homeowners under the pretense of helping them with mortgage loan modifications."(3)

For The State Bar of California press release, see State Bar Continues Pursuit Of Attorney Loan Modification Fraud.

(1) The Federal Trade Commission recently filed suit against this outfit. See FTC v. Federal Loan Modification Law Center LLP, et al. Go here for links to the FTC press release and some of the relevant court documents filed against this operation.

(2) California Attorney General Jerry Brown recently filed suit against this outfit. See People v. Home Relief Services, et al. (go here for California AG press release). Go here for Orange County Register story on the local D.A. raid of homes tied to this outfit's operators.

(3) Attorneys involved in the for-profit, loan modification racket may want to read over ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications, a California State Bar advisory addressing the relationship between attorneys and non-attorney loan modification operators. UnauthPractOfLawTheta

NY AG Sues Loan Modification Firm; Outfit Runs Illegal Upfront Fee Racket Engaging In Deceptive Practices That Fails To Deliver On Promises, Says Suit

From the Office of the New York Attorney General:

  • Attorney General Andrew M. Cuomo [Thursday] announced that his office has filed a lawsuit against New York-based American Modification Agency, Inc. (“Amerimod”), one of the largest foreclosure rescue companies in the country, and its owner Salvatore Pane, Jr. for engaging in a wide variety of deceptive business practices and false advertising to induce beleaguered homeowners on the brink of foreclosure to sign up for their services.(1) [Thursday's] lawsuit is part of Cuomo’s ongoing investigation into foreclosure rescue scams that target New York homeowners.

For the entire press release, see Cuomo Announces Lawsuit Against “Amerimod” Loan Modification Company To Protect Distressed Homeowners Facing Foreclosure (Long Island-Based Company Charged Illegal Up Front Fees and Failed To Obtain Promised Help for Homeowners; Suit Seeks Refunds for Thousands of Customers and Court Order Shutting Down Company).

(1) The lawsuit asserts that Amerimod:

  • Fails to obtain loan modifications for the vast majority of its customers, many of whom end up in foreclosure or negotiate loan modifications on their own;

  • Illegally charges thousands of dollars in up-front fees, and fails to refund these fees as promised when loan modifications are not obtained;

  • Engages in deceptive and misleading practices by grossly exaggerating its success rate, making false promises about its ability to save customers’ homes, underestimating the amount of time it takes to achieve a loan modification, and misrepresenting that the company is a law office and that lawyers will work on customers’ files;

  • Makes false guarantees of 100% customer service when, in fact, once Amerimod has collected its up-front fees, its representatives often fail to return calls of customers facing imminent foreclosure who are desperately seeking a status update on their files;

  • Makes false and misleading statements on its website, in newspaper advertisements, and in radio advertisements;

  • Fails to include legally required disclosures and notices in its customer contracts, including notice of a customer’s right to cancel a contract within five business days;

  • Provides detrimental advice to customers, such as recommending that they stop making monthly mortgage payments, ignore communications from their lenders and avoid consulting with non-profit housing counseling agencies;

  • Targets Spanish-speaking consumers who are signed up by Spanish-speaking representatives, and then fails to provide the consumers Spanish-language contracts as required by law.

California AG Orders 386 Loan Modification Outfits To Immediately Register & Post $100K Bond Or Face Prosecution

From the Office of the California Attorney General:

  • Threatening possible criminal and civil prosecution, Attorney General Edmund G. Brown Jr. [Wednesday] ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office. He also ordered more than two dozen companies to justify suspicious loan modification claims made in "slick advertising," online and through the mail. "Hoping to lower their mortgage payments, thousands of homeowners were instead duped by slick advertising and money-back guarantees," Brown said. "The time for accountability is at hand, and this rogue industry must clean itself up or face legal action," Brown added. Brown also unveiled a new website ( that provides homeowners tips to avoid loan modification fraud, allows them to determine if a company is registered with his office and makes it easier to file complaints.

  • Brown [Wednesday] joined with the California Department of Real Estate and the State Bar of California in a new partnership to combat loan modification and foreclosure fraud. Brown has sent letters directing 386 mortgage foreclosure consultants to register with his office within 10 days and post $100,000 bond, or demonstrate why they are not required to. If the consultants are required to register and have failed to do so, they are subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. [...] Additionally, Brown sent letters [Wednesday] demanding that 27 loan consultants substantiate suspect claims made on the internet and in direct mail advertising.

For the entire press release, see Brown Orders Mortgage Foreclosure Consultants to Post $100,000 Bond or Face Prosecution.

For copies of the seemingly idiotic claims that 27 of these loan modification rackets are making in their advertising to the general public in marketing their services, along with the California AG's formal written demand under Section 17508 of the California Business and Professions Code (relating to prohibitions against false advertising) to each of these outfits to substantiate their claims within 20 days, see California AG's August 12, 2009 "Prove It" Letters.

For more from the California Attorney General on this matter:

Maryland Co-Conspirator Gets 54 Months For Role In Bogus Sale Leaseback, Foreclosure Rescue Scam; To Forfeit $2.25M In Proceeds From Criminal Acts

From the Office of the U.S. Attorney (Maryland):

  • U.S. District Judge Deborah K. Chasanow sentenced Earnest Lewis, age 52, of Takoma Park, Maryland, [Wednesday] to 54 months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud arising from a scheme in which the conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.(1) Lewis previously agreed to forfeit $2,228,878, generated as proceeds of the criminal activity [...].


  • According to Earnest Lewis’ plea agreement, from at least 2004 until May 2008, Michael Lewis aired television advertisements that targeted financially vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. [...] Together with Michael Lewis, Earnest Lewis and Winston Thomas specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The co-conspirators fraudulently represented to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes.

For the entire press release, see Conspirator Sentenced to over 4 Years in Jail in Mortgage Fraud Scheme.

See also, WBAL-TV Channel 11: Man Gets 4 Years In Jail For Mortgage Fraud (Earnest Lewis, Brother Convicted Of Conning Homeowners).

Go here for earlier posts on this prosecution.

(1) Cheryl Brooke, age 52, of Upper Marlboro, Maryland, and Winston Thomas, age 43, of New Carrollton, Maryland pleaded guilty to their participation in the scheme; sentencing is scheduled for Brooke and Thomas on September 11, 2009 and September 21, 2009, respectively. Michael K. Lewis, age 57, of Takoma Park, Maryland pleaded guilty to conspiracy and bankruptcy fraud in connection with the scheme and is scheduled to be sentenced on September 3, 2009. financial diet

D.C. Resident Victimized By Bogus Sale Leaseback Foreclosure Rescue; Family Home For Over A Century Lost In Scam

In Washington, D.C., Washington City Paper reports:

  • There’s long been an O’Brien on Acker Place, and Anita O’Brien wants to keep it that way. Her great-grandfather, Lewis, purchased the redbrick rowhouse at 660 Acker—a one-block street with narrow brick sidewalks and thin trees—in 1902. The Capitol Hill property drifted among relatives until her grandfather bought it during the Great Depression. Her father grew up there, traveling up its well-worn wooden staircase to the three small bedrooms above. And nearly 25 years ago, Anita O’Brien moved in herself with her three children. Unfortunately, right now, she’s not sure who owns it—but she knows it’s not her. O’Brien is the target of a foreclosure “rescue.”

  • In 2004, she defaulted on a refinancing loan. After the bank began foreclosure proceedings on her house, the 59-year-old was approached by a woman who said she would take the title of the house, pay O’Brien’s mortgage, then sell the home back to her later. In the meantime, she could keep living there and pay a more reasonable rent. O’Brien agreed. But four years later the home went into foreclosure again—and this time, she had no legal rights to it.(1)


  • These kinds of cases have been around a long time,” says Wendy Weinberg, a lawyer with the Legal Aid Society of the District of Columbia. “They’ve just gotten a lot worse.” "The profile is mixed,” says Weinberg. The schemes range from highly organized operations involving hundreds of properties, many individuals, and millions in equity, to one-time, opportunistic deals. “On the smaller scale, you sometimes see family members doing it to each other,” says Weinberg. “Particularly you sometimes have grandchildren or children stealing title of the home from an olderperson, either from getting power of attorney or misrepresenting what the documents are.”(2)(3)

For more, see Title Wave: Where Not to Turn for Foreclosure Assistance.

(1) According to the story, when the transfer occurred on October 18, 2004, O'Brien had an outstanding loan of $149,001, according to foreclosure filings. For the next few years, O’Brien paid rent to India Rogers and Taofik Gbadomosi, up to $1,500 a month. They, in turn, were supposed to be paying her mortgage. But in September of last year, yet another foreclosure notice on the property was filed, saying that $416,075 was owed. O’Brien was stunned—there was nearly $267,000 more tacked onto her outstanding loan. It appeared Gbadomosi and Rogers had borrowed against the value of her house.

(2) In similar Washington, D.C. home equity ripoffs, see:

In addition, a 1988 ruling of the District of Columbia Court of Appeals supports the proposition that a home equity ripoff involving a sale of real estate with a contemporaneous leaseback of the premises to the seller, coupled with a right to buy back the property is nothing more than an usurious equitable mortgage. In Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988), the D.C. high court made the following observation on the foreclosure rescue, equity stripping sale leaseback arrangements it considered:

  • Moreover, if the transactions were in fact sales, as [the foreclosure rescue operators] contend, they were surely most extraordinary ones. When a homeowner sells his home, which is usually his most valuable possession, one would expect at least some measure of bargaining over the sales price. Here, there was none. In each instance, what the [foreclosure rescue operators] characterize as the "sales" price bore no relation whatever to the value of the equity. It is absurd to suggest that Mrs. Carroll would knowingly sell her home, in which she had an equity of more than $36,500.00, for $8,100.00. None of the "sellers" had placed his or her home on the market or expressed the slightest interest in selling it. Each "seller" remained in possession after the purported sale, and [the foreclosure rescue operators] were indeed depicting their service as one that would enable their clients to "save" their homes from foreclosure. Although the transaction also lacked one of the common characteristics of a loan -- an evaluation of the borrower's credit -- no such investigation was needed because the home itself, which in each case was worth far more than the amount expended by the [foreclosure rescue operators], served as their security. It was therefore altogether reasonable for the trial judge to find that the depiction of each of these transactions as a sale and lease back was a transparent sham which masked an unlawful loan.

See also, Sale Leaseback Recharacterization As Loan Results In Criminal Conviction.

(3) Inasmuch as Ms. O'Brien never relinquished and continues to maintain possession of her home, it may be that a successful attempt on her part to establish either that:

  • she was defrauded out of her home, or
  • the sale leaseback was nothing more than an equitable mortgage

could result in defeating the rights of any subsequent purchaser and mortgage lender on the basis that neither qualify for status as bona fide purchasers. Generally, when property is either sold or mortgaged subject to the occupancy and possession by another, the purchaser/lender is charged with a duty to inquire of the occupants as to the nature of their possession. Where such an inquiry would have uncovered the fraud by a foreclosure rescue operator, the purchaser's (or lender's) failure to make such an inquiry legally places it on notice of the fraud, thereby disqualifying it from the protection of the recording statutes as a bona fide purchaser. The bottom line in such an event would be that, after an adjudication in court that the transaction constituted a fraud or equitable mortgage, the ownership in Ms. O'Brien's home could likely be reinstated in her name, and the subsequent conveyances, and any subsequent mortgages, would be voided.

See, for example, Martinez v. Affordable Hous. Network, Inc., Case No. 04SC421, 123 P.3d 1201; 2005 Colo. LEXIS 1075 (Colo. 2005) (may require free regestration to

For case law addressing the effect of possession of real estate by an occupant other than the vendor and a real estate purchaser's duty to investigate when seeking the protection of the recording statutes as a bona fide purchaser, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

See also, Ownership Interest Under Equitable Mortgage Defeats Interest Of Subsequent Buyer; Lack Of Knowledge Not Enough To Sustain Bona Fide Purchaser Status.

Wednesday, August 19, 2009

Foreclosure Rescue Operators Using New Tenant Protection Law, Bogus Sale Leaseback Arrangements To Gum Up Foreclosure Process???

The Florida Asset Protection Blog reports:

  • To better protect tenants victimized by foreclosures against their landlords Congress passed a law which required the non-occupant purchasers at foreclosure sales (such as banks) to honor existing leases on the foreclosed property provided that the lease was bona fide and the tenants were not in default.(1) Some "foreclosure defense" companies are using this new law to delay foreclosure lawsuits. These homeowners are creating bogus lease arrangements to prevent the lenders takeover of property and gain negotiating leverage for the homeowner.

  • Here’s how a typical defense scheme could work- I am omitting some details and issues for sake of the example. Assume Joe Homeowner has ceased making mortgage payments and the bank is threatening foreclosure. Joe creates a revocable trust which he calls "the Save My Home Trust"; Joe is the sole beneficiary of the trust, and Joe names a friend or business associate as trustee. Joe sells his home to the trust for nominal consideration over the mortgage balance. The trust leases the property to Joe for a below-market rent for a five year term - a sale and leaseback arrangement. When the bank sues for foreclosure the trust asserts typical foreclosure defenses, and Joe intervenes as the tenant arguing that the bank must honor his five year lease.

  • Obviously, a court will eventually rule that the lease is not bona fide and is not a valid defense. However, the additional defense frustrates the bank’s foreclosure suit and gives Joe more power to either live in his house for free or negotiate a favorable settlement. I have never defended a homeowner in a foreclosure suit. However, based on conversations with asset protection clients I have learned that mortgage defense attorneys and non-lawyer companies are using varieties of this lease defense which was designed to protect bona fide tenants in foreclosed properties.

Source: Mortgage Foreclosure Defenses Using New Tenant Protection Laws.

(1) The new federal law (see Protecting Tenants at Foreclosure Act of 2009, which is found at Title VII of the Helping Families Save Their Homes Act of 2009) requires banks or other buyers in foreclosure situations to allow tenants in the properties at least 90 days from the date of the foreclosure auction to move, if the tenants had month-to-month rental terms; and tenants with a bona fide lease (as opposed to a "sham" lease) can stay until the lease expires — six months or a year or longer — with a single exception. If the purchaser of the property intends to use the property as a primary residence, the renter must go after 90 days.

Ex-Michigan Resident Charged With Five Felonies In Alleged Foreclosure Rescue Racket Nabbed In Texas

In Lansing, Michigan, WLAJ-TV Channel 3 reports:

  • A former Lansing resident faced fraud charges Monday. State police and Attorney General Mike Cox said he's part of a half million dollar mortgage scheme. Officials say Jeffrey Barry was arrested today in Texas, where he's now living. They say Barry offers to buy homes in danger of foreclosure, and offers to sell the home back to the owners under a land contract. Officials say he would give the homeowner a check for the down payment, and then make up an excuse and demand it back. He would then use that down payment as proof to get a mortgage. Barry is facing five counts, each worth a ten year felony.

Source: Former Lansing Resident Facing Fraud Charges.

Las Vegas Man Charged With Forging Quit Claim Deed To Home Into His Own Name; Transfer Dated Nine Months After Owner's Death

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

  • [Calvin] Wynn proclaims he is innocent of six felony charges relating to a real estate transaction in 2006. According to records, Morris Rozet, the 30-year resident of a southeast Las Vegas home, quit claimed his property to Wynn. Trouble is, Rozet's signature is dated a full nine months after his death.

For more, see I-Team: Alleged Scammer Back in Court. DeedContraTheft

Tuesday, August 18, 2009

Schizophrenic Employee Says In Suit Town Stiffed Him On Five Years Back Pay, Then Seized His $200K Property For $11K In Delinquent Real Estate Taxes

In Lewisboro, New York, the Lewisboro Ledger reports:

  • Depending on which side you believe, Richard Egloff is either a tax scofflaw whose problems are his own fault or a schizophrenic persecuted by town officials and forced to turn over a $200,000 property to pay for $11,000 in back taxes. Earlier this summer, Mr. Egloff sued the town, Deputy Supervisor Joann Vasi, and the town’s former lawyers for their actions in foreclosing on his lakefront home.

  • According to the complaint,(1) Mr. Egloff is a resident and a former employee of the town. In 2005, the town allegedly foreclosed on his property, and in 2008, seized the land because Mr. Egloff had not paid about $11,000 in back taxes. However, Mr. Egloff alleges that he would have paid back taxes except that the town had not paid him for five years. He was given his back pay earlier this year.


  • Lewisboro is wasting the taxpayers’ money,” said Mr. Egloff’s attorney, Thomas Decea of Danzig, Fishman & Decea. “[Mr. Egloff] has got the money in escrow to pay all of the alleged past due amounts plus interest, yet the town persists in going after his property.”

  • Town Supervisor Edward Brancati told The Ledger that the town would have paid Mr. Egloff, except that he had never submitted time sheets until recently. “The town followed the law the way it’s laid out,” Mr. Brancati said. “I don’t think anybody can expect the town to pay somebody when there’s no time sheets.”

For more, see Resident sues town over property seizure.

For the lawsuit, see Egloff v. Town of Lewisboro, et al.

(1) In his lawsuit, the property owner:

  • alleges the premises was transferred to the Town in violation of lawful procedure, was affected by an error of law, was arbitrary and capricious and was an abuse of discretion on defendants’ part, and accordingly, seeks to void the property transfer;

  • seeks a declaratory judgment adjudicating that the Town and its law firm each had both actual and constructive knowledge of Egloff’s mental incompetence and took steps to foreclose on his Premises without the procedural safeguards required by law;

  • alleges the Town, under the color of state law, willfully and without justification deprived property owner of his rights, privileges and immunities secured by Federal law under 42 U.S.C. § 1983 by their conduct, including, among other alleged actions, commencement of the Action while simultaneously withholding the very wages that would have paid for Egloff’s tax liability;

  • alleges the Town willfully and without justification deprived Egloff of his rights, privileges and immunities secured the Fifth and Fourteenth Amendments of the United States Constitution, by their conduct, including, among other alleged actions, commencement of the Action while simultaneously withholding the very wages that would have paid for Egloff’s tax liability.

Damage To Credit Rating A Consideration For High-Score, Non-Delinquent Homeowners When Seeking Loan Modifications

Homeowners who are current on their mortgage loan but nevertheless are seeking to modify their loans to lower their house payments may wish to consider the prospect of how badly their credit scores will be creamed if they go through with a loan modification, based on a recent story on

  • A recent Bloomberg article [...] addresses a topic that deserves serious follow up. The article accurately identifies that loan modifications could damage your FICO credit scores, if they are reported to the credit bureaus using the new reporting guidelines set up by the credit bureaus and their trade organization, the Consumer Data Industry Association (CDIA).


  • The issue at hand is how very large mortgage lenders, namely Citigroup, Chase, and Bank of America, may report mortgage loan modifications to the credit reporting agencies and, secondly, how that credit reporting impacts the consumers’ FICO® credit scores. According to the Consumer Data Industry Association, the credit bureaus have agreed to guidelines that loan modifications will be reported as a “Partial Payment Plan.”

  • The problem with this decision is that FICO credit scores interpret the notation of a “Partial Payment Plan” as negative. [...] How much [consumers] scores decrease will depend on from where their scores started. A score of 550 isn’t going to plummet the same number of points as a score of 750. [...] This Partial Payment Plan classification appears to box in tens of millions of consumers who are stuck in upside-down mortgages.

For more, see Credit Reporting Industry's Decision on Loan Modifications Boxes in Consumers.

For the Bloomberg News article, see Cheaper Mortgages Trigger Lower FICO Scores for On-Time Payers.

Seller's Failure To Resolve Foreclosure Spells Disaster For Would-Be Rent To Own Homebuyer; Family Booted Despite Making Repairs, Prompt Rent Payments

In Syracuse, New York, The Post Standard reports:

  • When they moved in last fall, April and Boliver Marshall thought their family had found the American Dream. "Everyone had been saying, no, you'll never be a homeowner -- and then, finally, I was," April Marshall recalled. "Just that one time, finally, a piece of the pie." So it seemed. Though they didn't know it, the Marshalls were chasing an illusion, seeking to buy a property fated for foreclosure. After spending nearly $6,800 in rent and investments, they were evicted last month, feeling angry and betrayed.


  • In some ways, they stand as victims of the national home mortgage crisis, the one economists say generally missed Central New York. But the Marshalls represent a secondary wave, one likely to grow if the recession lingers. Hard times will increase the number of people who cannot qualify for home loans, sending those buyers into the arms of real estate dealers with unconventional offers that involve more risks and fewer protections.

  • "This is how you make lots of money in real estate with no money down, like they teach on late night TV," said Gary Pieples, a Syracuse University law professor who is representing the Marshalls. "You get somebody else to move into a house and buy it for you."

For more, see A rent-to-buy disaster: How the American Dream turned into a nightmare for a Syracuse family. rent to own lease purchase option scams yellowstone

Foreclosure Eviction Forces Couple, Four Kids, Two Elderly Foster Care Clients From Rented Home; Out $2.5K Security Deposit, Cost Of Home Improvements

In Eugene, Oregon, The Register Guard reports:

  • Three months into a year long lease, renters Al and Rene Ako had to pack up their children and two elderly foster care clients and move. They had to move out of a house in the Ferry Street Bridge area of Eugene even through they had paid their rent on schedule and otherwise held up their end of the landlord-tenant bargain.

  • Additionally, they paid for a fence around the backyard pool and a new window on a downstairs bedroom so the house could meet state foster care license requirements. They had planned to stay at least five years, Rene Ako said. But, instead, they were out in a matter of months. “I have four children, so it’s a big deal to me,” Ako said. “It was extremely stressful. I was crying and just really upset and nervous about it.”


  • Rene Ako said the family still needs the return of the [$2,500 security deposit] money to cover the deposits on the family’s new rental house and for moving expenses. “I had to call Senior Services and explain to them what had happened, and I had to call all the family members [of the two elderly foster care clients] and explain and tell them we had to move again.(1)

For the story, see Foreclosures Hit Renters, Too (Some lose their homes when landlords default on mortgages; new laws aim to protect tenants’ rights) (if link expires, try here).

(1) Both Congress and the Oregon Legislature passed laws this spring to protect renters during foreclosure of the house they occupy. The new federal law (see Protecting Tenants at Foreclosure Act of 2009, which is found at Title VII of the Helping Families Save Their Homes Act of 2009) requires banks or other buyers in foreclosure situations to allow tenants in the properties at least 90 days from the date of the foreclosure auction to move, if the tenants had month-to-month rental terms; and tenants with a lease can stay until the lease expires — six months or a year or longer — with a single exception. If the purchaser of the property intends to use the property as a primary residence, the renter must go after 90 days.

The new Oregon law, effective August 23, 2009, allows tenants to choose to apply their deposit and other prepaid rental sums to their final months in the house, after they formally notify the landlord of their intention to do so. The new Oregon law requires the bank, investor group or other foreclosing entity to notify the tenant as well as the landlord when it begins foreclosure proceedings. Tenants are required to give the bank or other foreclosing entity a copy of their rental agreement at least 30 days before the scheduled foreclosure auction to secure the protections. RentSigmaSkimming assisted living

Mortgage Servicer Forecloses On Home Despite On-Time Payments On Loan Mod Agreement, Says Texas Woman In Suit

In Galveston, Texas, The Southeast Texas Record reports:

  • A Kemah woman alleges a mortgage processing and servicing company foreclosed her residence even though she was on time with her payments, recent court documents say. Christina Melinder accuses Ocwen Loan Servicing of breaching a loan modification agreement she entered with the Florida-based business back in February. Melinder explains in her lawsuit that Ocwen neglected to properly apply and account for her loan payments [...] and assessed improper charges and default-related fees which were not authorized by the loan's terms prior to formalizing the deal in question.


  • [The suit] insists that Melinder strictly complied with the terms of acceptance set forth in the Ocwen's offer, but the defendant - through the Brown & Shapiro law firm in Pasadena - improperly and illegally initiated legal proceedings for foreclosure because of alleged non-payment. [...] Ocwen is ultimately faulted for violating state law while Brown & Shapiro was named a co-defendant.

For the story, see Kemah woman says mortgage company foreclosed despite payments. QuestionableServicingTacticsSigma

Monday, August 17, 2009

Connecticut AG Accuses Two Outfits Of "Lawyer Renting" While Peddling Loan Modifications; Group May Also Have Operations In Florida, Six Other States

From the Office of the Connecticut Attorney General:

  • Attorney General Richard Blumenthal [Monday] issued an urgent warning to consumers about two foreclosure rescue companies allegedly masquerading as a law firm in Connecticut. Blumenthal's office is investigating and preparing action against the companies and coordinating with the Office of the Chief Disciplinary Counsel (OCDC),(1) which has filed a lawsuit seeking a temporary restraining order and other legal remedies against the firms and associated individuals, including Kent Gross, Hazen Sturtevant and Nicola L. Zagarolo.

  • The OCDC alleges that these individuals -- doing business as First Legal Group, P.A., and Nationwide Home Relief Law Group, P.A. -- operated a law office in East Berlin without a Connecticut law license. The operators allegedly hired Connecticut lawyers who did virtually no work for consumers. They appear to have been operating in Florida, Connecticut and six or more other states. Blumenthal said, "These legal imposters may have taken $750,000 or more from at least 200 Connecticut homeowners in distress -- providing virtually no legal help. Our message about these fakes: forewarned is forearmed."(2)

For the entire press release, see Attorney General Warns Consumers About Foreclosure Rescue Company Masquerading As Law Firm.

(1) The State of Connecticut Office of Chief Disciplinary Counsel is a part of the state's judicial branch of government and was created with the mission of pursuing grievance complaints relating to violations of the rules governing lawyer conduct within the state.

(2) AG Blumenthal added: "This bogus law firm operating nationwide took money from Connecticut consumers to do foreclosure mediation -- a service already provided free of charge by the [Connecticut] courts. Mediation can be critically important in saving homeowners from foreclosure, but no one should be charged for it under the false guise of legal services by non-lawyers." UnauthPractOfLawTheta

Maryland Homeowner Accuses Wells Of "Unclean Hands" In Federal Suit Seeking To Undo Toxic Mortgage Loan

In Greenbelt, Maryland, The Business Gazette reports:

  • A Bowie couple is suing Wells Fargo bank, alleging the bank should have known they could not afford the second mortgage they agreed to for their home. [...] According to court documents, the Bahs have asked for "legal and equitable relief as may be appropriate," though lawyers hope that will include a chance to renegotiate with the lender. The lawsuit is the latest of hundreds in the region that homeowners have filed in the past year to put off losing their homes, legal aid lawyers said.


  • In court papers, the couple's lawyer, Mary Goulet, argues that Wells Fargo knowingly approved the second loan knowing it would push them over their ability to pay and lead them to foreclosure. "It's clear to me and it would be clear to any bank that's underwriting a loan that the Bahs did not win the lottery in 2000. They didn't suddenly have this extra money to take out a second mortgage."

  • The argument is known in legal circles as the "unclean hands" doctrine. Under Maryland law, contracts can be changed or nullified if one group negotiated a deal in bad faith, which Goulet is alleging. "If you, as a bank, create a situation where you have pushed their finances into foreclosure, then you have unclean hands," said Goulet, who is representing the couple for free. Goulet said her office took on the pro bono case at the request of state officials, who have been urging lawyers to take on clients facing foreclosure for the last two years.

  • The argument has been used frequently by pro-bono attorneys in the region since foreclosures began to increase in 2006. The lawsuits generally are filed in local district courts, but in the case of the Bahs, the lawsuit was filed in federal court because Wells Fargo's headquarters is not located in Maryland. In most cases, it has led banks to renegotiate with homeowners, said Vicki Taitano, a lawyer for the Riverdale office of the Maryland Legal Aid Bureau in Prince George's County. "We've filed several in Prince George's County, but they've never gotten before a judge," said Taitano, who said banks usually choose to renegotiate with owners before a case goes to court and avoid foreclosure.

  • Legal experts said the lawsuits are being used to get people to the table because often homeowners and banks cannot seem to get together. [...] In papers filed July 16, Wells Fargo attorney Elizabeth Finberg said the complaint by Goulet "lack[s] factual and legal support and was filed in bad faith for the purpose of harassment." Finberg asked the court to fine Goulet $5,000.

For the story, see Struggling homeowners take banks to court (Residents facing foreclosure allege lenders have ‘unclean hands').

For the lawsuit, see Bah v. Wells Fargo Bank, N.A., et al. UndoMortgageLoans TILAdelta

Florida Suit Claiming Homeowner Facing Foreclosure Paid Inflated Fees To Reinstate Mortgage Certified As Class Action

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

  • Circuit Judge Thomas Barkdull [Thursday] certified as a class action a lawsuit against an attorney, along with his law firm, who collected foreclosure-related fees from Wells Fargo mortgage holders. The suit was filed by Loren Banner, an electrician from Palm Springs, who claims Plantation attorney David J. Stern charged fees for services he did not perform or that were excessive after Wells Fargo foreclosed on his property and Banner sought to pay what he owed the bank and get his mortgage reinstated.

  • With the case certified as a class action, potentially 2,500 Wells Fargo mortgage holders around Florida who received mortgage reinstatement letters between Jan. 18, 2003 and February 19, 2009, could qualify to be part of the class. Those letters set forth money due to Wells Fargo, including various fees. The ruling was a victory for West Palm Beach attorney Louis Silber, who launched the effort on behalf of Banner in 2007. Silber's lawsuit claims that Banner paid too much to get his mortgage reinstated. [...] Banner paid a host of fees to be able to reinstate his mortgage, which ultimately was reinstated. Those fees included charges for title searches, property inspections, filing fees and Stern's attorney fees.

For more, see Lawsuit against Wells Fargo and Broward attorney certified as class action.

Failure To Establish Chain Of Title, Prove Debt Sinks Creditor As Consumer Challenges Credit Card Claim In Collection Lawsuit

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:

  • Jenny Vo of South Philadelphia ekes by as a manicurist and single mother raising two sons. So when a debt collector told her in February 2008 she owed $14,237.38 on her credit card, she was stunned. he knew she had charged purchases of food, clothing, and household supplies, and she knew she was behind in payments. But Vo, 37, thought she owed just a "couple of thousand dollars" on the card.

  • So she got a lawyer to challenge Unifund CCR Partners' claim in Philadelphia's Court of Common Pleas - and the company could not provide credit card bills itemizing her purchases. The most it was able to document was $5,738.33.

  • Frustrated with a lack of evidence presented by Unifund, Judge Idee Fox dismissed the case Feb. 17, which stripped Unifund of the right to demand payment from Vo. Vo's case reflects a problem in the credit card industry as defaults rise during hard economic times. The increasing complexity of lending in recent years has made it more difficult for creditors to document what they say they are owed.


  • Citigroup Inc. and Unifund did not respond to requests for comment. Philadelphia lawyer Frederic Weinberg, representing Unifund, said he had provided 34 pages of documents. But Judge Fox ruled that Unifund failed to establish the chain of ownership, as well as the amount owed. If Vo had not asked for proof, Unifund might have automatically won the right to take a lien against her house. [... W]hen borrowers [...] get legal help, the collectors typically withdraw cases, said Vo's attorney, Peter Schneider of Community Legal Services, adding, "They don't have the proof."(1)

For the story, see Creditors face documentation woes.

(1) According to the story, the Municipal Court of Philadelphia in late February tightened the procedure for filing credit cards claims against consumers. For example, a collection firm can no longer win its claim just because a cardholder fails to show up for a hearing. It still must have adequate proof to support its claim. And in Western Pennsylvania, Blair County formed a Credit Card Court in January that encourages conferences before trial, similar to Philadelphia's mortgage-foreclosure program, created last year during the housing crisis. In the seven months since then, 75 percent of the cases in which the borrowers showed up have been resolved in conference. EpsilonMissingDocsMtg

Minnesota Suit Seeks To Slam Brakes On Foreclosures Until Feds Implement Better Procedures In Program Borrowers Claim Violates Due Process Rights

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:

  • Across the state and the nation, struggling homeowners [...] are growing frustrated with a $75 billion federal program that was supposed to ease the housing crisis by preventing so-called "avoidable foreclosures" by cutting borrowers' monthly mortgage payments. But, according to a U.S. Treasury report released Tuesday, only a very small percentage of people who qualify for relief under the program are actually getting it. In many cases, borrowers have been strung along for months, only to be told in the end that they don't qualify. And when borrowers are denied, they often are not told why.


  • Last week, the Foreclosure Relief Law Project, a nonprofit law firm in St. Paul, filed a lawsuit on behalf of [Brooklyn Park homeowner Nichole] Williams and Johnson Sendolo, a Woodbury homeowner, who both claim they qualify for federal relief but were turned down by lenders without being given a reason. The lawsuit, which seeks to stop the lenders from foreclosing on more homes until better procedures are put in place, accuses the U.S. Treasury of violating borrowers' due process rights by denying them access to a federal program without proper notice or explanation.

  • "The smart thing to do for everyone is to press the pause button, to stop the foreclosure factory, and figure out what's wrong," said Mark Ireland, supervising attorney for the Foreclosure Relief Law Project.

For the story, see Federal mortgage program defaulting on a pledge? (A federal program that promised relief to millions of struggling homeowners has fallen far short of expectations).

See also, Homeowners File Lawsuit To Stop Foreclosures In Minnesota (Alleges Federal Modification Program Violates Constitutional Protections).

For the lawsuit, see Williams, et al. v. Geithner, et al.

For more information on this lawsuit or to read the filed documents, click here.

Sunday, August 16, 2009

Plea-Copping Suspect Agrees To Testify Against Confederates In Criminal Fraud Prosecution Of Alleged Loan Modification Scammers

In Monterey County, California, The Monterey Herald reports:

  • A preliminary hearing began Friday for a Gonzales woman and her nephew who are charged with fraud. They were arrested in August 2008 on suspicion of taking money from 55 people with empty promises of renegotiating their mortgages to avoid foreclosure.

  • Defense attorneys for Maria de Lourdes Ponce, 51, and Fabian Olivarez Casillas, age unknown, said prosecutors are basing their case on the word of the real culprit in the case, a cocaine-addicted co-defendant who pleaded guilty and agreed to testify against her alleged co-conspirators.

  • Melissa Dawn Garcia, 28, of Watsonville is serving a four-year prison sentence for similar offenses in Santa Cruz County. Her sentencing in the Monterey County case has been delayed until after she testifies against Ponce and Casillas.

For more, see Investigator testifies in fraud case (Two accused in mortgage renegotiation scheme).

Go here for other posts on this alleged scam.

California Men Sentenced For Using Others' I.D. To Obtain Loans, Cars; Victimized Owners Had Home Of 30+ Years Sold Out From Under Them

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

  • Howard Edwards and John Foster were sentenced to prison for real estate fraud related crimes. Howard Edwards was sentenced to 20 years, four months and John Foster was sentenced to 10 years, four months. The two defendants were found guilty on felony counts ranging from forgery, grand theft, filing of false instruments, identity theft, conspiracy, and money laundering.

  • In 2005/06, the two defendants, formerly of Rancho Cucamonga, befriended unsuspecting victims on an Internet chat line. Their personal information was used to obtain loans on luxury cars and real estate in Fontana. The victims were then liable for these loans. The loan proceeds were transferred to a phony escrow company. The defendants falsified several real estate deeds and forged the signatures and stamps of several notary publics. The false deeds were later recorded at the San Bernardino County Recorder's Office.

  • In July 2007, the defendants sold a house in the city of Gardena, Ca. for an additional $560,000. The house was sold without the owner's permission and knowledge. The victims first found out about it when a lending institution attempted to foreclose on the property. The rightful owners had been living at the residence since 1971. The defendants utilized the personal information of a man living in Massachusetts to obtain the loans. $538,000 was transferred to the phony escrow company and later dispersed to the defendants other bank accounts.

For the DA's press release, see Two Men Sentenced for Real Estate Fraud. DeedContraTheft

Attorney Suspended For Taking, Failing To Return $308K In Client Trust Funds After Failed Foreclosure Sale Bid

In Tampa, Florida, The Tampa Tribune reports on some of the local attorneys recently sanctioned by the Florida Supreme Court for their bad behavior, including:

  • Andrew Stuart Forman of Tampa was suspended until further order. An emergency suspension order states that Forman took $308,000 in trust to be used to bid at a foreclosure sale. The client was not the successful bidder, but Forman removed the money from the trust account and failed to return the funds.

For more, see 4 Bay area lawyers disciplined by high court (Four Tampa Bay area lawyers were among the 47 attorneys disciplined recently by the Florida Supreme Court).

For the most recent issue of The Florida Bar's "gossip sheet," see Supreme Court Disciplines 47 Attorneys (a significant number of whom were hammered for screwing around with trust/escrow funds belonging to their clients). EscrowRipOffKappa

Major Bay Area Landlord Hit w/ Numerous Foreclosure Actions Now Accused Of Stiffing Former Tenants On Security Deposit Refunds, Lease Buy-Out Payments

In San Francisco, California, the San Francisco Examiner reports:

  • Rental security deposits held by one of The City’s largest residential landlords were funneled into an array of bank accounts and plundered, potentially affecting thousands of tenants, according to lawsuits. Several lawsuits, including a class action, have been filed in recent weeks against CitiApartments or associated companies by former tenants who claim security deposits were not returned. “What we suspect is that the money has made it into somebody’s pocket,” said attorney Brian Devine, who is representing former tenants in the class-action lawsuit.(1)

  • CitiApartments is already the target of a city-backed lawsuit that alleges the firm harassed tenants to persuade them to move out of rent-controlled units so prices could be increased to market rate. In court, they have denied those charges. CitiApartments and associated companies, including the Lembi Group, Skyline Realty, Trophy Properties and Ritz Apartments, amassed a portfolio of properties in San Francisco that was estimated as of last year to include 307 buildings.

  • The company appears to have overborrowed from banks by overestimating or overstating the number of tenants it could convince to vacate rent-controlled units, according to Scott Weaver, an attorney representing a group of tenants who allege CitiApartments companies withheld payments offered to vacate their units. Of the properties owned by CitiApartments and associated companies, 51 were foreclosed upon by the international bank UBS and more than 60 additional buildings are currently in foreclosure proceedings, San Francisco Superior Court filings show.

For more, see Lawsuit alleges CitiApartments drained tenant deposit accounts.

(1) In addition, the story states that roughly 5,500 units remain in the control of CitiApartments companies, according to attorneys, and the average security deposit appears to be between $2,000 and $2,500. That means more than $10 million in deposits belonging to San Francisco tenants could be in jeopardy.

Lenders Begin Bypassing Foreclosure On Large Projects, Using Receiverships To Unload Collateral Securing Bad Loans While Avoiding Builder Liability

The Wall Street Journal reports:

  • Some banks are starting to bypass foreclosure on large, troubled real-estate developments and instead are throwing the properties into receivership, a move intended to reduce some of the headaches associated with taking over problem assets. When banks foreclose on delinquent borrowers, they often plan to sell the property to new owners. But while holding the properties, banks are required to maintain them and pay all fees and taxes associated with the real estate. In some towns, banks that hold foreclosed residential property may be fined as much as $1,000 a day for code violations or even be subject to arrest.

  • To avoid those hassles, some banks are asking courts to appoint receivers for large projects, especially residential developments in California, Arizona, Colorado and other Western states. The aim is to have the receiver, not the bank, eventually sell the property. By keeping the bank's name off the title of the property, the bank hopes to stay out of trouble with the law. "The fact is we are seeing a number of banks that don't want to get in the chain of title," says Douglas Wilson, a receiver in San Diego. [... B]y taking the title on the building, [a lender] could be liable for any construction defects for a decade in California or for any injuries on unsecured construction sites.


  • Some [of a receiver's] tasks are mundane, like making sure fire alarms and security systems have power connected. Otherwise, [says one receiver], "on Friday they strip the copper, and Monday it's a meth lab."

For more, see Receivers' Catch: Foreclosures (Banks Pass Wind-Down Work to Court-Appointed Pros) (requires subscription; if no subscription, try here, then click link for the story).