Saturday, November 7, 2009

Texas AG Files Civil Suit Against Real Estate Broker Accused Of Creating Rent To Own Deals For Customers Falsely Promised Legal Title To Homes

From the Office of the Texas Attorney General:

  • Texas Attorney General Greg Abbott [...] charged Fern Hernandez Realty, Inc., with defrauding Hispanic home buyers. The state’s enforcement action names the corporation; its owner, real estate broker Jose Fernando “Fern” Hernandez and his wife, Odessa S. Hernandez. According to court documents filed [...] in Travis County, the defendants falsely promised their customers home ownership when, in fact, the customers’ homes were actually owned by the defendants.(1)


  • When Spanish-speaking clients did not qualify for traditional financing, Mr. Hernandez would offer them financing through a group of “investors.” He promised them if they made monthly payments to this group for a year, the house would be transferred to the home buyer. Investigators discovered there were no outside “investors.” Mr. Hernandez would close on the houses, with either he or his wife acting as the official buyer and taking title to what the home buyers thought was their property.


  • According to state investigators, at least six properties in the defendants’ names were leased to individuals who thought they owned the home in which they resided.

For the entire Texas AG press release, see Attorney General Abbott Takes Legal Action Against Housing Scam That Targeted Austin-Area Hispanic Home Buyers (Fraudulent real estate scheme promised customers homeownership but never gave purchasers title to their homes).

For the Texas AG lawsuit, see State of Texas v. Hernandez, et al.

(1) The Office of the Attorney General is seeking restitution for affected home buyers and a civil penalty of up to $20,000 for each of the defendants’ violations of the Deceptive Trade Practices Act. rent to own lease purchase option scams yellowstone

Nevada AG Indicts Las Vegas Man In Alleged Refinancing Scam Targeting Strapped Homeowners; Accused Of Illegally Pocketing Proceeds From Mortgage Loans

From the Office of the Nevada Attorney General:

  • Nevada Attorney General Catherine Cortez Masto announced [...] that Wayne Goldenbaum, also known as Robert King, of Las Vegas, Nevada, has been indicted on multiple charges of theft, including theft from an individual over the age of 60. The charges stem from instances where King fraudulently obtained the proceeds from his victims’ mortgage loans or obtained money for the lease of property which he did not own. The case is being prosecuted by the Attorney General’s Mortgage Fraud Task Force.


  • The indictment alleges that King, through his company, King Highway Estates, promised to obtain refinancing for local homeowners who wished to use the proceeds to clear up outstanding debts or make improvements on their homes. After arranging the loans with hard money lenders, King would withhold most of the proceeds under the pretense of using them to pay off the homeowner’s bills or authorizing the home improvement projects.

For the entire press release, see Attorney General Masto Announces Indictments In Connection With Mortgage Scam.

Tenant Cops Plea To Forgery After Befriending Elderly Landlord, Then Looting Her Bank Account, Leaving Homes In Foreclosure

In Vista, California, San Diego News Network reports:

  • A woman who forged her landlord’s checks and temporarily forced the victim’s two homes into foreclosure pleaded guilty [...] to four counts of passing forged checks. Jacqueline Mastrodimos, 38, agreed to a four-year prison term when she is sentenced on March 1 by Superior Court Judge Daniel Goldstein, Deputy District Attorney Anna Winn said.

  • Authorities said Mastrodimos rented a room in 2005 in the Carlsbad home of Julie Johansen, who is in her 60s, and soon became involved in the victim’s finances.(1) The mortgage on the Dehesa Court home went unpaid from January to August 2008, and Johansen didn’t realize there was a problem until she saw a notice on her front gate that the property would be sold at auction in three weeks, police said. A Carmel Valley condominium was in foreclosure for the same reason. Johansen was able to avoid losing the properties but had to pay substantial penalties. [...] Meanwhile, Johansen still has “a horrible financial condition” because of Mastrodimos’ actions, Winn said. She is unable to open a new bank account and has seen her credit score plunge, according to the prosecutor.

For the story, see Plea deal reached in Carlsbad rental forgery.

(1) Reportedly, Mastrodimos wrote checks to herself from the victim’s account, took out credit cards in Johansen’s name and used the woman’s automated teller machine card at casinos, detectives said.

Friday, November 6, 2009

Florida AG Tags Five Debt Settlement Firms In Two Separate Lawsuits Alleging Deceptive Practices, Upfront Fee Ripoffs

From the Office of the Florida Attorney General:

  • Attorney General Bill McCollum [...] announced his office has filed two lawsuits on behalf of Florida consumers against five debt settlement-related companies.(1) According to the Attorney General’s lawsuits, the businesses promised consumers they could pay off their debts for a fraction of the amount owed, but instead collected large up-front fees and left customers with little or no money to pay creditors. “These victims were hit with a one-two punch: they paid substantial up-front fees for services not provided as promised, then ended up with increased debt, ruined credit, lawsuits, bankruptcy and more,” said Attorney General McCollum. [...] Both lawsuits petition the court for full victim restitution, injunctive relief, and civil penalties for each violation of Florida’s Deceptive and Unfair Trade Practices Act.

For the entire press release, see Attorney General McCollum Targets Debt Relief Industry Abuses (Two lawsuits filed alleging excessive fees and conduct defrauding consumers and damaging credit).

(1) One of the lawsuits was filed against Texas-based CSA-Credit Solutions of America, Inc., a self-proclaimed debt settlement industry leader. The lawsuit alleges that CSA unlawfully charges significant advance fees before completing or, in many instances, commencing performance of its debt settlement services. For the lawsuit, see State of Florida v. CSA-Credit Solutions of America, Inc.

The second lawsuit filed names Clearwater-based ADA of Tampa Bay, Inc., which does business as American Debt Arbitration. The lawsuit also names the company’s principal Glenn P. Stewart, as well as Arizona-based entities Nationwide Asset Services, Inc., Service Star, LLC, and Universal Debt Reduction, LLC. The lawsuit alleges the defendants promise to help consumers pay off their debts at significant savings, but fail to adequately disclose the true cost of their services. Also allegedly withheld from consumers is the fact that the companies collect at least the first three months’ of payments as fees, in violation of Florida law, before the consumer can start accumulating any funds for settlement and before any services begin. For the lawsuit, see State of Florida v. Nationwide Asset Services, Inc., et al.

Suspected Colorado Home Hijacker May Be Federal Fugitive Accused Of Rent Skimming In Utah

In Parker, Colorado, KUSA-TV Channel 9 reports on an alleged rental scam involving a man who approaches homeowners facing foreclosure and allegedly cons them, under color of an official having some connection with the foreclosure action, into moving out and turning over possession of their homes to him. He then allegedly rents the home to unsuspecting tenants and milks the rent out of the home.

  • On Craigslist, 9NEWS discovered [Greg] Castle listed at least 21 homes from the metro area and several in Florida, Nevada, Arizona and Kansas. New homes continue to appear each month. Homeowner after homeowner told 9NEWS Castle convinced them to sign an "Assignment of Surrender and Possession" document they thought was the final paperwork from their banks. [...] In fine print at the bottom it says Associated Home Inspection, Castle's supposed company, has the right to take possession of the house and move new people in to "house sit" the property. Castle collects the rent, homeowners don't get a cent.


  • [O]ne of Castle's renters forwarded 9NEWS a letter from Castle with a return address for a home in Ogden, Utah. The address traced back to Gordon Miller - a man charged in 2005 with equity skimming, mail fraud and wire fraud after prosecutors say he ran a scheme very similar to what victims claim he runs now. When it came time for Miller to face a jury, he never showed up for court. U.S. Marshals now consider him a fugitive.

  • After 9Wants to Know showed United States Marshal deputies in Utah the evidence it uncovered linking Castle to Miller, deputies tell us they believe Castle and Miller are the same person. "It appears from your investigation, and what you guys have in Colorado, that he's up to his new tricks. Same thing, just different state," Supervisor Deputy U.S. Marshal Mike Wingert said. 9Wants to Know has learned when Miller was charged in 2005, the first name of one of the attorneys involved in the case was Greg and the last name of a prosecutor was Castle.

For more, see Who is Greg Castle?

For follow-up stores, see:

  • More victims of Castle rental scheme come forward: 9Wants to Know has also learned that officials in Gillette, Wyoming have joined the Parker Police Department, Arapahoe County District Attorney's office and the Colorado Attorney General's office investigating Castle. [...] 9NEWS viewers in Milliken, Greeley and Castle Rock say they too were victims of Castle's scheme. 9Wants to Know has identified homes listed by Castle in Colorado, Kansas, Florida, Arizona, Nevada and now possibly Wyoming.

  • Man accused of foreclosure scheme responds: The man 9Wants to Know exposed for running a sophisticated rental scheme won't turn himself over to authorities, but responded to our story in the comment section on KappaPhonyLandlordScam

Suspected Home Hijacking Case Once Considered "Civil Matter" Will Now Be Treated As Criminal Trespass, Say Cops

In Boise, Idaho, the Idaho Statesman reports:

  • Caroline Werner may finally get some help in getting a stranger out of her mother-in-law's house. A Boise man named David Foldesi claims he owns the house, even though Ada County officials have repeatedly told Werner and the Idaho Statesman he does not.(1) Marcella Boylan, Werner's mother-in-law, owns the Sunset Avenue home, county records and officials say. But she lives in a nursing home and suffers from Alzheimer's. She cannot sell the house because the equity is being used to pay for her health care. Werner has sole power of attorney and is Boylan's last remaining relative.

  • Initially, Boise police said it was a property dispute and therefore a civil matter. But an attorney contacted by Werner said it looked like criminal trespass, and therefore a police matter. On Wednesday, Boise police confirmed Boylan is the rightful owner and they consider it a criminal matter.(2)
For more, see Dispute over ownership of home in Boise's North End may be resolved (Boise police now agree the man who claims to own it — and has been renting it out, does not, so they can pursue criminal charges if he returns to the house).

For the initial report in this story, see Stranger rents out Boise woman's home without her permission (A Boise house belongs to a nursing-home resident, officials say, but a man profits from renting it out).

(1) According to the story, for almost two years, Foldesi has been renting out the house, which he says he owns since paying unpaid property taxes on it in 2007. He has not made any property tax payments for the property since then.

(2) Regrettably, a victim of this type of scam may sometimes need to retain an attorney to "communicate with" (ie. light a fire under) the local cops, such as in this story. I suspect that the ideal attorney to retain to communicate with police in this type of case would be an ex-prosecutor who is now in private practice - one who is experienced in the criminal justice process, well-versed in the "language of law enforcement," and one who won't allow local cops to dismiss cases like this as "civil matters." hijack

Thursday, November 5, 2009

BofA Revokes Loan Modification Agreements Despite Having Collected Timely Payments On Reworked Terms, Complaining Homeowners Tell Florida AG

In South Florida, the South Florida Sun Sentinel reports:

  • Hundreds of struggling Florida homeowners have filed complaints with Florida Attorney General Bill McCollum in the past year about failed or stalled home mortgage loan modifications with Bank of America. Angry borrowers, desperate to hold on to their homes, say they've made dozens of calls to their lender and spent months asking for a change in their loan terms, only to be denied or to learn that Bank of America revoked their loan modifications a few months after they reached a deal.

  • "I wrote letters to the governor, I called the bank every single month," said Yvonne McBride, a disabled former state worker who received a loan modification for the Sunrise home she shares with husband Herman Acosta. But the bank retracted the deal after, she said, she'd paid more than $9,200 to cover mortgage payments through next January.

For more, see Hundreds of loan modification complaints filed against Bank of America (Hundreds of complaints about Bank of America have been filed with the Florida attorney general over mortgages and stalled loan modifications. Other major lenders have few complaints).

In a related post, see South Florida Couple Files Suit Against Lender, Saying B of A Welched On Loan Modification Agreement.

Arizona Woman Dodges BofA's Foreclosure Sale Of Home Out From Under Her; Servicer Failed To Cancel Auction Despite Granting Loan Modification Deal

In Scottsdale, Arizona, KPHO-TV Channel 5 reports:

  • Debbie Obroc nearly lost her home to foreclosure, despite being granted a government loan modification. “I just can’t believe that your home could be sold out from under you,” Obrock said. Obrock said Bank of America failed to stop the foreclosure process, even after signing her up for modified payments in July. She learned her house was up for auction last week by coincidence when a neighbor saw Debbie’s home on a list of foreclosure sales and called to let her know she was about to lose her home. “I was shocked,” Obrock said. “I thought it was a mistake.”

  • Last minute calls complaining to Bank of America stopped the sale, but Obrock fears she could lose her home. “I ended up going to the trustee sale just to make sure I could see for myself my home wasn’t being sold,” she said. “I’m still extremely nervous. I can’t believe that this is the system.”(1)

For the story, see House Accidentally Put Up For Auction.

(1) One attorney called banks “blind octopus.” He said they have many tentacles that are unaware of what is going on with each other. “They don’t know what one hand is doing with another and they don’t communicate very clearly,” he said “They don’t say, ‘Oh I see you’re working on a modification so I won’t go forward with the trustee sale.’ You have to specifically request that. You have to be diligent with that.” He said homeowners should be aware that even as they continue to negotiate for a modification with their bank, the foreclosure process is moving forward. ForeclosureLockOuts

Another Foreclosure Misidentification Screw-Up Results In Pair "Cleaning Out" Wrong Home; DA Declines Prosecution - Says It's A Civil Matter

In Statesville, North Carolina, the Statesville Record & Landmark:

  • A case in which two men took items from a house and encouraged neighbors to do the same is the result of a mistaken address. That's what Statesville Police Chief Tom Anderson said happened at the home of Gene and Linda Medlin [...] in August. Two men came to the Medlin's home, which is not their primary residence, and told neighbors that they were with the IRS and were seizing the house. The two men told neighbors they were going to take some of the items, and the neighbors could have the rest. During the next several hours, on a Sunday afternoon, neighbors cleaned out the house.


  • Anderson said during the subsequent investigation it was learned that the two actually said they were working for a bank that was seizing the house. [...] Investigators questioned the man and found he was working for Citizens South Bank in Monroe and was hired to clean out a house in foreclosure. The only problem was, the house was at 532 Davis St., not East Front Street, Anderson said.

  • The man said he relied on his GPS unit, which indicated he was at the right address on both Aug. 2 and Oct. 17, and did not look at the street signs. Anderson said investigators spoke with the bank, and learned the two men were hired contractors, and the custom was to seize whatever was of value and to put anything else out to be picked up as garbage. That's the reason the two invited neighbors to take what was left. Anderson said most of Medlin's stolen property — including a John Deere lawn mower and trailer — were recovered. Some items, including a handgun, some restaurant chafing dishes, a weed trimmer and chain saw — are still missing.

  • Anderson said the case was reviewed by the district attorney's office and the decision was made not to press charges. He said the man lacked criminal intent and therefore the case is a civil matter. Any action on the case will have to be taken by the Medlins in civil court.(1)

For the story, see Wrong address: Home seizure case solved.

(1) In a 2008 story, the Nevada Supreme Court approved a damages award of over $1 million (including a punitive damages award of $968,000 - reduced from an original award of $2.5 million) to a homeowner couple who were subjected to a similar indignity resulting from a lender/mortgage servicer screw-up involving the misidentification of a home in foreclosure. See Nevada High Court OKs Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure.

For the Nevada Supreme Court ruling, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008). ForeclosureLockOuts

Cops Identify Pair As Home Robbery Suspects; Sent By Fannie Mae To Winterize House In Foreclosure Despite Earlier Approved & Consummated Short Sale

In Novi, Michigan, reports:

  • The Novi Police Department has identified two suspects believed to be responsible for the theft of nearly $4,000 worth of jewelry and other items from a home in the Dunbarton Pines subdivision. Novi Police Chief David Molloy said the men work for Moniya Inc, a company that conducts home winterization work.(1) [...] All the property reported stolen was recovered, including the couple's 18-karat gold wedding rings.

  • The theft occurred on Sept. 9, just days before the [homeowner] couple were to be married. The woman said she left her home between 1-5 p.m. on that day, and when she returned she found a note on the door saying the home had been winterized as part of the foreclosure process and the gifts for her bridesmaids, the wedding rings and other items were gone.

  • According to the bride's mother, the foreclosure notice was a mix-up. The couple had bought the home on a short sale on Aug. 21, which was approved by GMAC, but the company failed to notify Fannie Mae that it was a fully satisfied sale. Fannie Mae was under the impression the house was still in foreclosure and subcontracted Safeguard to manage the property and winterize it. Molloy said Safeguard then contracted Moniya to winterize the home and that is when the theft occurred.(2)

Source: Police have suspects in connection with robbery of newlyweds' home.

(1) Reportedly, the suspects are both Detroit men, one 23 years old and the other 51 years old. The 23-year-old has no previous criminal history, while the other man has a history of auto theft. The Novi Police Department is in the process of forwarding its case to the Oakland County Prosecutor's Office for review, the story states.

(2) In a 2008 story, the Nevada Supreme Court approved a damages award of over $1 million (including a punitive damages award of $968,000 - reduced from an original award of $2.5 million) to a homeowner couple who were subjected to a similar indignity resulting from a lender/mortgage servicer screw-up involving the misidentification of a home in foreclosure. See Nevada High Court OKs Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure.

For the Nevada Supreme Court ruling, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008). ForeclosureLockOuts

Mortgage Servicers' Loan Modification Screw-Ups Drive Homeowners To Court Seeking Redress

The Wall Street Journal reports:

  • Some struggling homeowners are turning to the courts in a bid to force mortgage servicers to consider them for the Obama administration's foreclosure-rescue program, arguing they are eligible for help but haven't received it. The suits are the latest sign of difficulties some borrowers are having with the program, which has helped more than 500,000 people begin trial loan modifications since it was announced in February.

  • The program requires mortgage servicers to screen borrowers for eligibility for modifications before completing a foreclosure. But a growing number of borrowers say this isn't happening, or that their requests for help are improperly rejected by the servicers, which collect loan payments and work with delinquent borrowers.

  • "People are unbelievably frustrated with the way [the modification program] is working because it is so nontransparent, and because there is such a basic distrust of servicers," said Ira Rheingold, executive director of the National Association of Consumer Advocates, a group of attorneys and consumer advocates who work with homeowners facing foreclosure.

For more, see Strapped Borrowers Head to Court (Homeowners Press Mortgage Servicers to Rule They Are Eligible for Loan Modifications) (paid Wall Street Journal subscription required; if no subscription, try here, then click link for the story).

(1) Acording to the story, statistics aren't available, but attorneys say legal action tied to the rescue program is being taken in states including California, Florida, Ohio and Pennsylvania. A lawsuit seeking class-action status in U.S. District Court in Minnesota (go here for press release) wants to halt foreclosures on homeowners eligible for the rescue program until the administration puts in place certain procedural safeguards, such as creating a formal appeals process, the story states [see Advocacy Group Files Federal Suit Seeking To Halt Home Foreclosures In Minnesota; Says New Law Lacks Proper Notice & Appeal Provisions]. South Carolina Supreme Court Chief Justice Jean Toal in May reportedly issued an order requiring that all complaints seeking foreclosure state whether the loan is subject to the rescue program and, if so, why the borrower doesn't have a loan modification.

Judge Stalls Foreclosure Sale Approval; Loan Servicer Failed To Stop Legal Action Despite Agreeing To Loan Modification, Says Homeowner

In Port St. Lucie, Florida, TC Palm reports:

  • A Port St. Lucie couple whose home was bought by their mortgage bank for $100 in a foreclosure action Oct. 9 has won at least a temporary reprieve. In a hearing Wednesday, Circuit Judge Burton Connor ordered a postponement of the final sale pending an evidentiary hearing in the case. Frusner Raphael and his wife, Woline, had requested the foreclosure sale be voided, alleging their lender broke the federal government’s rules.

  • The Raphaels aren’t alone in facing a frustrating situation where the lender says they’re willing to work with the homeowner, but while a modification process is going on the lender continues with the foreclosure.(1) [...] The Raphaels contend that the lender, California-based OneWest Bank, told them on July 13 that they were pre-approved for the modification, which would take about 120 days to complete, but proceeded with the foreclosure anyway.

For more, see Lenders continue foreclosures after agreeing to housing loan modifications.

(1) Another homeowner, Jim Maurer, was approved by Countrywide for a modified fixed-rate mortgage that would lower his monthly payments by $300 starting in February. After he had made a few payments, though, he received the check for his May payment back with a letter saying the amount was not enough. After he contacted the lender, they sent him an application for a new modification, which he refused. “I don’t need another modification,” Maurer said. “I already have one. [...] Bank of America is just rolling over people.” Five months later, Maurer said he has had phone conversations and exchanged letters with people in three different Bank of America divisions, including a senior vice president in the home retention department, but still does not have confirmation the modification is in place. Since June, however, Bank of America has been cashing his checks.

Lender Changes Mind About Backing Out Of Loan Modification Promise After Homeowner Facing Foreclosure Tells Media

In Surprise, Arizona, KPHO-TV Channel 5 reports:

  • A Valley mom is thanking CBS 5 News for saving her home after her bank almost backed out of its loan modification agreement. Heather Caldwell's family was in big trouble, with their Surprise home in foreclosure. Caldwell decided to go to the Wells Fargo Home Preservation Workshop [...] hoping to modify her loan and save the family's home. "Within an hour, we were told everything was fine and we had our new payments and our new interest rate," said Caldwell. "Everything was going to be great."

  • But a week later, Caldwell got some unexpected news when she called a Wells Fargo representative to check on their loan modification. "She was pretty blunt," said Caldwell. "She told me there was nothing she can do to help. 'You've been denied. Your income doesn't meet the qualifications. That's it. You're done.'"

  • Caldwell didn't know what to do next, so she called CBS 5 News for help. Immediately, CBS 5 News placed a call to Wells Fargo's corporate office. "Within an hour, we got a call saying there had been a miscommunication and that there had been mistakes made," Caldwell said. "She said we are going to get it taken care of and get it resolved. Without CBS 5 taking the time to call them and get their attention, they never would have done anything." Wells Fargo offered the Caldwells an even better interest rate than what they were promised at the workshop -- instead of saving $325 a month, they were now looking to save close to $450.(1)

For the story, see CBS 5 Steps In To Save Family's Home (Family Gets Loan Modification They Were Promised).

(1) It seems to me that once the local media outlets get their hands on one of these loan modification screw-up stories and decide to run with it, the loan servicers fold like a cheap suit and grant quick relief to the aggrieved homeowner. The media outlets should consider setting up their own loan modification departments, given the loan servicers' apparent fear of negative publicity they get when these stories come to light.

Wednesday, November 4, 2009

Elderly Couple "Snatched" By State Of Texas Celebrate Homecoming After One Year Of Nursing Home "Captivity" - Home Went Into Foreclosure, Car Repo'd

In Richardson, Texas, Fox 4 News reports:

  • It’s an emotional and long awaited homecoming for an elderly Richardson couple whose battle with the state for their freedom triggered a FOX 4 Investigation. Michael and Eugenia Kidd say the State of Texas has held them captive in a nursing home for months. But after a court ruling [...] the Kidds are finally saying “home sweet home.”



  • Community activist Russell Fish jumped on board when he heard about the Kidds’ story. He started a Web site for the Kidds and has organized volunteers to help. He says there is still a lot of work to do because the state has destroyed the Kidds’ finances. “We need to clean that up. Their credit is destroyed. Their house went in to foreclosure. They had their car repossessed. These are people who had done all the right things,” said Fish. “They just made the mistake of getting old.”


  • I’m really infuriated by the way it all came about,” Michael Kidd told FOX 4. “At our age, when we were retired and enjoying our retirement, and suddenly snatch a year out of our lives…for what reason? There are criminals out there that get less time in jail,” Kidd continued.

For more, see Kidds Leave Facility, Return Home.

Country's Largest Builder Used "One Stop Shopping" Model To Construct "House Of Cards" Scheme, Says Homeowner In Class Action Suit

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

  • A California homeowner filed a class-action suit against Pulte Homes on Friday alleging that the nation's largest home builder fraudulently propped up home prices and sales in a "house of cards" scheme that eventually caused values in its developments to plunge. The lawsuit, filed in U.S. District Court in Northern California, alleges that Pulte's "one-stop shopping" business model, in which it controlled sales, financing, settlement services and appraisals, allowed it to sell homes at inflated prices and give buyers mortgages they could not afford. Since Pulte Mortgage, Pulte's financing subsidiary, quickly sold its loans on Wall Street, it was not affected when buyers defaulted, the suit said.


  • Steve Berman, lead attorney in the case and managing partner of Seattle law firm Hagens Berman Sobol Shapiro, said that some of Pulte's developments became "toxic subdivisions with foreclosure signs all over the place, homes not taken care of, and no chance that the prices will go back up." Berman said Pulte lured unqualified buyers - such as the case's named plaintiff, Sodalin Kaing, who earns $21 an hour but bought a house for $518,215 - with the promise of large discounts if they used Pulte Mortgage. Kaing bought a home in the Pulte Aerial of Mossdale development in Lathrop (San Joaquin County).

  • By operating within a closed loop where it controlled all aspects of the transition, Pulte "created an amazing opportunity for itself," Berman said.(1)

For the story, see Suit accuses Pulte Homes of inflating prices.

For the lawsuit, see Kaing v. Pulte Homes, Inc., et al.

(1) According to the story, the suit is on behalf of anyone who purchased a Pulte home in California from Jan. 1, 2005 through March 1, 2007. Homeowners can learn more at Berman said he also expects to expand the case to Pulte developments in Nevada and Arizona. The story states.

Berman's firm also has class-action lawsuits pending against KB Homes and Countrywide Financial, its preferred lender, in Federal courts alleging that they conspired to drive up prices, the story states. The firm filed a lawsuit in California, and a lawsuit in Arizona.

Rain Clouds Hover Over Big NYC Landlords, Tenants, Bondholders, Housing Agency After State High Court Ruling Declaring Stuy Town Rent Hikes Illegal

In New York City, The New York Times reports:

  • Tenants and landlords spent much of [last] Thursday struggling to figure out what the state high court’s ruling on the future of Stuyvesant Town and Peter Cooper Village meant for all types of New Yorkers.(1) Real estate moguls feared the news would cripple their industry, and tenants worried about their rents.

  • Despite the lack of clarity, the ruling by the New York Court of Appeals had an immediate chilling effect on real estate in New York: Landlords questioned whether they could raise rents, and some even went so far as to cancel plans to buy more apartments in buildings with tax subsidies.


  • While tenant groups who had spent the last several years fighting the owners of Stuyvesant Town welcomed the news, they also recognized that the ruling may complicate and extend how long it takes for current or past tenants to receive rent rebates. They also feared that conditions would deteriorate as owners deferred maintenance and repairs.


  • The problem extends beyond Stuyvesant Town to buildings in the Bronx, Brooklyn and Queens. “They’re not the only landlords who did this,” said Daniel Alpert, managing partner of Westwood Capital, a New York investment bank that was part of a tenants’ bid for Stuyvesant Town in 2006.


  • Government agencies scrambled to figure out how they would carry out changes the ruling would require. The state housing agency, the Division of Housing and Community Renewal, could be inundated with petitions from tens of thousands of tenants claiming they had been overcharged by landlords receiving tax breaks, as well as from landlords disputing the claims.

For more, see Stuyvesant Town Ruling Worries Tenants and Landlords Alike.

For the ruling, see Roberts v. Tishman Speyer Properties, L.P.

See also:

(1) Stuyvesant Town and Peter Cooper Village are a combined 56-building, 11,000-unit apartment complex in Manhattan.

Tuesday, November 3, 2009

Loan Modification Outfits Begin Charging For Services In Steps In Attempt To Dodge Upfront Fee Prohibition

In Southern California, the Orange County Register reports:

  • Some companies that advertise help avoiding foreclosure are trying to avoid a ban on advance fees by charging consumers in steps, according to loan brokers and state regulators. That’s illegal, said Tom Pool, a spokesman for the California Department of Real Estate (DRE).

  • The bill, dubbed SB 94, clearly prohibits loan modification companies from collecting any money until all services are performed, Pool said. He said the DRE will investigate any consumer complaints related to companies skirting the advance-fee ban. “We knew folks were going to be looking for ways around the bill, and we are seeing these creative and clever approaches,” Pool said. “We are not buying it.”

For the story, see Loan aid firms skirt ban on advance fees.

Brooklyn Judge Weighs In With State Lawmakers On "Rescue Scams, Straw Men, Fraudulent Loans"

In Brooklyn, New York, the Brooklyn Daily Eagle reports:

  • A local judge and prosecutor who have worked on real estate crime in Kings County told state senators at a special joint committee hearing Wednesday that more legal steps may need to be taken to protect Brooklyn families and homeowners. Brooklyn Supreme Court Justice Arthur M. Schack, who is known for his experience handling a vast number of foreclosure motions, testified before a special joint Senate hearing about “rescue scams, straw men, fraudulent loans.” These are real estate crimes that are typical in Brooklyn, according to Schack. “These are the people who go after people who are in financial trouble, and say, ‘We’ll save your house,’” Justice Schack explained to the Eagle. "We see some bizarre things.”

For the story, see Three Branches of Government Converge in Mortgage Fraud Fight.

Escrow Agent Cops Plea To $470K+ Closing Proceeds Ripoff; Insurance Premiums, Closing Costs Left Unpaid; Title Underwriter Left Picking Up The Tab

In Minneapolis, Minnesota, Minnesota Public Radio reports:

  • A Prior Lake woman pled guilty Friday to stealing more than $470,000 in a mortgage fraud scam. Roseann Wagner admitted operating a scheme to defraud mortgage lenders, borrowers, and a title insurance underwriter in 2007. Wagner, a licensed insurance agent, accepted more than $470,000 from lenders at hundreds of closings, and then pocketed the money.

  • As a result, title insurance premiums, title search costs, and recording fees on hundreds of residential mortgage transactions went unpaid. Wagner owned and operated Tri-Star Title, a title insurance agency. Tri-Star was the insurance agent for Stewart Title Guaranty Co., a Texas-based title insurance underwriting company. When Stewart Title Guaranty discovered that Wagner had stolen the funds, it absorbed the losses of the borrowers, and paid the premiums and other expenses.

  • Wagner also admitted that she failed to file a tax return or pay taxes on more than $270,000 in 2007. She owes the Internal Revenue Service at least $70,000.

For the story, see Woman pleads guilty to $470,000 mortgage fraud scam. EscrowRipOffKappa

Philly DA, Feds Probe "Dream Killer" In Suspected Rent To Own Scam Peddling Shabby Homes To City's Poorest; Victims Paid Thousand$, Now Face The Boot

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:

  • WIND and rain blew through the shell of a house on Monmouth Street. The ceilings and walls had gaping holes; the shower and broken toilet could be seen from the floor below. There was no front door, no kitchen, no heat. But to Isabel Santos, this derelict Kensington house held the promise of her first real home, her slice of the American Dream.

  • In 2002, Santos signed an "installment-sale agreement" with a Philadelphia company owned by Robert N. Coyle Sr., a real-estate mogul and self-made millionaire, widely known for peddling shabby homes to the city's poorest. Under the agreement, Santos would own the house in five years. Santos and her ex-husband sunk at least $20,000 of their own money to create a home out of rubble. But instead of a deed, Santos recently got slapped with a foreclosure notice, and she and her teenage son, Jose, could soon be on the street. That's because Coyle defaulted on a mortgage he took out on the house. Santos felt swindled.

  • So did dozens of others, the city's downtrodden, many living paycheck to paycheck, who put every last dime into fixing up homes they thought they'd own one day. Now they're just one step away from homelessness. They blame one man - Coyle, a man they call a "dream killer," a "slumlord millionaire." The Daily News has learned that Coyle, 64, is at the center of a massive fraud investigation being conducted by the Philadelphia District Attorney's Office and federal authorities.(1)(2)

For more, including a profile of Coyle and his suspected racket, see Slumlord sold them lies, many say (To tenants, he's a slumlord, a swindler, a dream-slayer; now he's the subject of a fraud investigation).

(1) Among the reported allegations hovering over Coyle are that he:

  • Promised people they could rent to own their homes, without being able to deliver on such a promise,
  • Obtained more than $15 million in bank loans on nearly 300 homes he rented out, then stopped making bank payments and padlocked his Allegheny Avenue rowhouse real-estate office in Port Richmond. The houses are now headed for sheriff's sale,
  • Forged hundreds - possibly thousands - of housing-inspection licenses that allowed him to rent the homes. Many of them had no heat or water, seeping sewage and rotted floors - violations that would've prevented Coyle from getting licenses,
  • Failed to pay the city hundreds of thousands of dollars in property and business taxes and water fees, leaving tenants without water.

(2) Reportedly, at least nine attorneys, some of whom work for nonprofit legal agencies, are fighting to stop the sheriff's sales on behalf of clients who live in Coyle's homes. They argue that their clients have ownership rights, though the banks disagree. According to the story, by law, all home-sale agreements must be in writing. But there are three exceptions: If you are in possession of the property; if you've made significant improvements; and if you've paid some or all of the purchase price for a few years and/or paid off any liens, according to Kelly J. Gastley, staff attorney at Philadelphia Volunteers for the Indigent Program (VIP). What's at stake is "enormous," said Stefanie F. Seldin, a managing attorney for VIP. "The man is evil," she said. "He's taken these folks with limited English proficiency, literacy and means, and sold them a dream. Instead, he sold them a lie." rent to own lease purchase option scams yellowstone

"Deficiency Balance Paper" Traders Keep Sour Home Loans Alive; "Dracula Blood Suckers" May Haunt Foreclosed Homeowners, Short Sellers w/ Dormant Debt

In South Florida, the Daily Business Review reports:

  • Jeff Baum is at the forefront of a real estate industry trend that is sure to cause more pain for homeowners who thought they had left their troubles behind. Baum, a principal with Green Circle Capital Group in Boca Raton, brokers the sale of nonperforming residential debt between lenders and investors. Those investors buy the debt with the intention of collecting from the former homeowners.

  • I’ve made quite a bit of my living over the last two, three years selling deficiency balance paper,” said Baum. A deficiency balance is the portion of the mortgage loan that wasn’t covered by the sale of the home. That debt becomes an unsecured note similar to other consumer debt such as credit cards.


  • After winning a foreclosure action, a lender has up to five years to ask a judge to declare a deficiency judgment [in Florida]. The judgment amount is the difference between the loan and the market value of the home on the day it sold at a foreclosure auction. [...] Judgments are good for 20 years [in Florida], and while people may be broke now, their financial situations could improve in the next two decades, said Richard Zaretsky, a West Palm Beach foreclosure defense lawyer. The dormant debt may come back to haunt them, he said.(1) [...] “Can you imagine, as people’s finances are beginning to improve — boom! — they get hit with a collection action for tens if not hundreds of thousands of dollars,” [another attorney] said. “You are going see a lot of people having to declare bankruptcy.”

For more, see Foreclosed homeowners may still have debt to pay.

(1) The practice has its critics within the lending industry, the story states. Miami-based Republic Federal Bank doesn’t sell deficiency debt, said Jim Angleton, the bank’s senior vice president. But Angleton predicts other lenders will seize the opportunity, according to the story. “As the market declines, it is going to be more in vogue: institutions trying to sell the debt and debt collectors trying to create another niche for themselves,” he said. “Those [debt collectors] are not even bottom feeders, they are subterranean feeders. They are in the Dracula mode of blood sucking.” zombie debt

Monday, November 2, 2009

California AG Requests Details Of Home Loan Industry Plans To Defuse Pay Option ARM "Ticking Time Bombs"

From the Office of the California Attorney General:

  • Concerned about a "new wave" of foreclosures, Attorney General Edmund G. Brown Jr. [...] called on ten major banks and loan servicers to detail their plans to assist homeowners facing dramatic monthly payment increases on Pay Option Adjustable Rate Mortgages.(1) "Homeowners with Pay Option ARMs are sitting on ticking time bombs that the lending industry has the power to defuse," Brown said. "Unless these banks and loan servicers act quickly, hundreds of thousands of mortgages will reset across the state, creating a new wave of foreclosures."


  • California homeowners hold almost 60 percent of the nation's exotic Pay Option ARMs originated between 2004 and 2008. Approximately one million of these mortgages will reset nationwide in the next four years, resulting in higher payments and a dramatic increase in foreclosures.

For the California AG press release, see Brown Calls on Banks and Loan Servicers to Detail Plans to Stem New Wave of Foreclosures.

(1) Brown's request was made in a letter sent to: Bank of America Home Loans & Insurance; Wells Fargo & Company; JP Morgan Chase & Co.; Litton Loan Servicing; ResCap, LLC; Ocwen Financial Corporation; OneWest Bank; American Home Mortgage Servicing; Saxon Mortgage Services, Inc.; and Select Portfolio Servicing. Banks and loan servicers are asked to respond by November 23, 2009.

Brooklyn Court Rulings Void Deeds & Subsequent Mortgages Used To Drain Home Equity In Bogus Sale Leaseback Foreclosure Rescue Scams

A pair of 2008 Brooklyn, New York lower court rulings may provide some guidance to those seeking an approach to undoing bogus sale leaseback, foreclosure rescue scams on behalf of financially strapped homeowners who have been screwed over in these equity stripping rackets.

In each case, both the deed that was unwittingly signed over by the victims to the scammers, as well as the subsequent mortgage that was put on the subject home by the operator and used to drain the equity out of it were successfully voided by the attorney for the homeowners, Brooklyn Legal Services Corporation A.(1)(2)

The cases are both fact-heavy, and describe the convoluted fact patterns that are typical of these sale leaseback scams.(3) There's no easy-to-read media report for this post; for those interested in the reading the rulings themselves, see:

(1) However, the lenders left holding the bag with the voided mortgages were entitled to be subrogated to the rights of existing lienholders to the extent the new money they supplied to the scam was applied to satisfy the homeowners' existing mortgages on the homes that were encumbering the properties immediately prior to the ripoff.

(2) Brooklyn A is a non-profit law firm that provides high-quality, neighborhood-based civil legal services to low-income individuals and groups in North and East Brooklyn. For more, see Wagner Casts Shadow over BLS Consolidation.

(3) These cases serve as a reminder that, when attepting to undo a foreclosure rescue scam, it's not enough to simply void the deed used by the foreclosure rescue scammer to swipe the title the home; you have to void the mortgage placed on the property by the scammer to drain out the home equity as well. In one case, this was done by establishing that the deed involved was void ab initio, in which case the lender's mortgage was never a valid mortgage and, therefore, void as well. In the other case, it was established that the deed involved, while not void ab initio, was nevertheless voidable. In that case, it was then necessary to establish that the mortgage lender providing the financing for the equity stripping scam was on notice of the scam, thereby disqualifying it from status as a bona fide purchaser / bona fide encumbrancer and, accordingly, not entitled to the protection of the state recording statutes.

One point in this regard not addressed by these cases but deserves mentioning anyway is the effect, on the mortgage lender providing the financing for the equity stripping transaction, of the scammed homeowner's continued possession of the premises after signing away title to the property. Generally, when ordinary inspection of the premises by a purchaser or mortgage lender, followed by reasonable inquiry, would reveal the existence any right held by persons in possession, the title conveyance and any mortgage given contemporaneous with or subsequent to said conveyance would be subject to those rights (whether recorded or unrecorded). "Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish." Phelan v. Brady, 119 N.Y. 587; 23 N.E. 1109; (NY 1890).

The following excerpt from Phelan v. Brady captures this point:

  • At the time of the execution and delivery of the mortgage to the plaintiff, the defendant Mrs. Brady was in the actual possession of the premises under a perfectly valid but unrecorded deed. Her title must, therefore, prevail as against the plaintiff. It matters not, so far as Mrs. Brady is concerned, that the plaintiff in good faith advanced his money upon an apparently perfect record title of the defendant John E. Murphy. Nor is it of any consequence, so far as this question is concerned, whether the plaintiff was in fact ignorant of any right or claim of Mrs. Brady to the premises. It is enough that she was in possession under her deed and the contract of purchase, as that fact operated in law as notice to the plaintiff of all her rights.

  • It may be true, as has been argued by the plaintiff's counsel, that when a party takes a conveyance of property situated as this was, occupied by numerous tenants, it would be inconvenient and difficult for him to ascertain the rights or interests that are claimed by all or any of them. But this circumstance cannot change the rule. Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish. Governeur v. Lynch, 2 Paige, 300; Bank of Orleans v. Flagg, 3 Barb. 318; Moyer v. Hinman, 14 N. Y. 184; Tuttle v. Jackson, 6 Wend. 213; Trustees of Union College v. Wheeler, 61 N. Y. 88, 98; Cavalli v. Allen, 57 id. 517.)

(It should be obvious that, based on the foregoing, the importance to a real estate purchaser or mortgage lender of determining who, if anyone, is in possession of the subject property on the date of closing (ie. by conducting a so-called "walk-through" on the closing date, whether it be on a purchase transaction or a refinancing transaction, and by obtaining estoppel certificates from anyone in possession of the premises on that date attesting to the nature of their rights, if any) can't be emphasized enough. If on the date of closing, the homeowner being scammed has yet to move his/her belongings out of the premises and is still in possession thereof, this fact would appear to be enough to lead a reasonably prudent purchaser or mortgage lender to make further inquiry as to the true nature of the transaction).

For some relatively recent New York cases referencing the effect of continued possession of an occupant on the status of a buyer or lender as a bona fide purchaser / bona fide encumbrancer, see:

  • Ward v. Ward, 503624,2008 NY Slip Op 4984; 52 A.D.3d 919; 859 N.Y.S.2d 774; 2008 N.Y. App. Div. LEXIS 4816 (App. Div. 3d Dept. 2008;
  • Doyle v. Siddo, 31 A.D.3d 697, 818 N.Y.S.2d 474, 2006 N.Y. App. Div. LEXIS 9569 (N.Y. App. Div. 2d Dep't, 2006).

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

41 State Attorneys General Join To Seek FTC Rules Amendments To Address Upfront Fee Debt Relief Ripoffs

In a recent letter to the Federal Trade Commission, 41 state Attorneys General have expressed their concerns regarding the sale of debt relief services to consumers and the complaints they've received about alleged deceptive trade practices and upfront fee ripoffs engaged in by these operators, and the need for amendments to the FTC's Telemarketing Sales Rule to address these concerns.(1)

For the letter, see Telemarketing Sales Rule - Debt Relief Amendments.

For a related report from the National Consumer Law Center, see An Investigation of Debt Settlement Companies: An Unsettling Business for Consumers.

(1) The AGs describe, in pages 2-4 of their letter to the FTC, the debt relief business models that is the cause for their concern:

  • In contrast to debt management plans in which consumers make monthly payments to creditors, the debt settlement business model generally requires that a consumer stop making regular payments to creditors. Instead, the consumer makes payments directly to the debt settlement company or into a separate account arranged by the settlement company. The consumer continues to pay into the account until the debt settlement company believes there are sufficient funds to attempt to negotiate and settle the consumer’s debts. Debt settlement companies do not disburse regular payments to consumers’ creditors. Presumably, withholding all payments from the creditor increases the company’s bargaining position. Almost all debt settlement companies charge a large portion of their fees in advance before they perform any significant services on behalf of the consumer. It is this business model which has been reported to be growing rapidly and has come under increased scrutiny by the media, regulators, consumer advocates, and federal, state and local enforcement agencies.


  • [Another] type of debt relief business [causing concern] is a relatively new breed: the debt negotiation model. These companies often represent that they can negotiate dramatic and immediate interest rate reductions on behalf of consumers and that the renegotiated credit terms will save the consumers thousands of dollars in a matter of months. Debt negotiation companies further claim that their counselors are specially trained and possess industry-insider knowledge and that consumers will not achieve similar results working directly with their credit card companies. The written agreements between debt negotiation companies and consumers, however, typically disavow the debt negotiation companies’ ability or obligation to secure reduced interest rates and merely promise to “show” consumers savings of thousands of dollars. After the consumer completes a financial profile, debt negotiation companies typically “show” the promised savings in an accelerated payment schedule. The “savings” are usually based on assumed interest rate reductions and increased monthly payments, which the debt negotiation companies’ customers usually cannot afford to pay. Like the debt settlement model, most debt negotiation companies charge all of their fees in advance, before any services are performed on behalf of the consumer.

Lender Backs Off From Attempt To Illegally Bully Tenant Out Of Foreclosed Home After New Jersey Public Advocate's Office Intervenes

In North Bergen, New Jersey, The Jersey Journal reports:

  • When Rosita Crooke learned her North Bergen apartment building was being foreclosed she contacted the bank. Crooke wanted to keep paying her rent, but instead the bank told her she would have to leave and that the anti-eviction law didn’t apply because of the terms of her lease. She contacted the state Public Advocate’s Office and learned she could stay in her apartment. “After the Public Advocate contacted the bank, the bank sent me a note asking me to pay the rent,” she said. “When I told the bank that I know my rights and I have a right to stay, they didn’t listen to me, but when I got the Public Advocate involved, they finally listened. More people need to know that help is available to them.”


  • The state’s anti-eviction law protects tenants whose sole reason for eviction is the building is in foreclosure or there is a new owner.(1)

For more, see Public Advocate helps North Bergen woman (if link expires, try here).


In a related story, see The Star Ledger: Protect N.J. renters from eviction from foreclosed homes:

  • The Department of the Public Advocate says its office has assisted more than 160 tenants in the state who were facing unfair eviction from properties under foreclosure. In some cases, renters were sent notices by banks or their representatives informing them they had to vacate the property. Others had utilities shut off, or were evicted by local sheriffs. [...] Meanwhile, the advocate’s office attributes the rise in eviction abuses to the economy. It says in cases of foreclosure, tenants are protected by the state’s anti-eviction laws, but many don’t realize they can’t be forced to move.


From the New Jersey Department of the Public Advocate:

(1) The New Jersey Supreme Court has ruled that the New Jersey Anti-Eviction Act protects most tenants from eviction even when the property where they live is in foreclosure or has been foreclosed. Chase Manhattan Bank v. Josephson, 135 N.J. 209 (1994). The state high court opinion in Maglies v. Estate of Guy, 193 N.J. 108; 936 A.2d 414; 2007 N.J. LEXIS 1436 (2007) gives a discussion of the breadth of tenant protection provided by the New Jersey anti-eviction law. See also: Legal Services of New Jersey's Amicus Brief filed in Maglies v. Estate of Guy. RentSigmaSkimming

Watch Out For Local Notaries Providing Document-Running, Check Pick-Up Services For Out-Of-State Loan Modification Rackets

A recent lawsuit filed by the Office of the Wisconsin Attorney General decribes how some out-of-state loan modification rackets allegedly use local notaries to get homeowners to sign up for foreclosure help and pocket upfront fees:

  • Defendant [loan modification outfit] initiates transactions with Wisconsin consumers by telephone. It represents it can assist the consumers to modify their mortgage loan. Defendant then arranges a follow-up visit by a company representative to complete the transaction. Defendant's "company representatives" are Wisconsin notaries hired by defendant to act as its agents. Since April 2009, at least four Wisconsin notaries have filed complaints with DATCP [Wisconsin Department of Agriculture, Trade, and Consumer Protection] regarding defendant's activities.

  • The notaries report receiving email solicitations from defendant where defendant offers to pay them to act as its representative by obtaining signatures from potential customers on sales agreements prepared by the defendant. The notaries also report defendant instructs them to engage in illegal activity including, but not limited to, having customers fill out only a portion of the legal documents they sign and having the notaries fail to provide copies of signed documents with the customers.

  • For example, on March 9, 2009, defendant sent Wisconsin notary Dick Brockman an email "LOAN MODIFICATION PAPERWORK - LEE." [...] In the email, defendant instructs Mr. Brockman: "Remember to have the borrowers just sign and date and only fill out their name, address, phone numbers, social security numbers and mortgage info. The rest of the application is filled out later by the processor...." Defendant further instructs the notary [...]: "DO NOT leave the "Loan Modification Application" with the client. ONLY GIVE the client the *Modification Letter & News Releases*." The news releases referred to [...] are copies of news articles regarding federal mortgage relief programs "Bush Signs Measures for Homeowners, Fannie, Freddie" and "Obama throws $75 billion lifeline to homeowners."

Source: Lawsuit: State of Wisconsin v. 21st Century Legal Services Inc., et al. (paragraphs 9-16).

In a related post on 21st Century Legal Services and their use of local notaries, see Loan Modification Outfit Accused Of Failing To Deliver Services For Strapped Homeowners Also Stiffs Its Notaries, Says One Victim.

Sunday, November 1, 2009

Disbarred Attorney Cops Plea In Fraudulent Rescue Scam; Homes Drained Of Equity, Then Fall To Foreclosure; Owners Get Boot; Investors Left Holding Bag

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:

  • Disbarred lawyer Raymond A. Desautels III of Oxford, awaiting sentencing on wire fraud charges in U.S. District Court, pleaded guilty [...] in Worcester Superior Court to charges related to his role in what prosecutors said was an elaborate mortgage fraud scheme. Mr. Desautels, 43, [...] is to be sentenced Dec. 1 [...] after entering guilty pleas [...] to five counts of inducing a mortgage lender to part with property by false pretenses. The former real estate lawyer was one of four people indicted last month in what authorities said was a scheme organized by Allen J. Seymour of Oxford under which Mr. Seymour transformed apparent equity in distressed properties into cash after targeting homes in danger of foreclosure and offering the owners various rescue options.(1)


  • On five occasions [...], Mr. Desautels was an active participant in a plan to obtain mortgage lender funds through fraudulent real estate transactions, Assistant Attorney General Andrew Doherty told Judge [James R.] Lemire [...]. Nearly $3 million in loans were obtained for such purchases and Mr. Desautels conducted the closings for Mr. Seymour, according to Mr. Doherty. The homeowners were not present and their documents were signed using a false power of attorney, the prosecutor said.

For the story, see Disbarred Oxford lawyer pleads guilty in mortgage fraud scheme.

For the Massachusetts Attorney General press release, see AGO Announces Guilty Plea of Former Real Estate Lawyer and Arraignment of Worcester Woman in Complex Mortgage Rescue Scheme.

(1) According to the Massachusetts AG, Seymour allegedly found individuals with good credit who were looking to begin investing in real estate. Many of these “investors” were allegedly told they would be helping homeowners in danger of foreclosure. Seymour allegedly told several investors that the purchase would only be temporary, and the homeowners would purchase the property back from them after Seymour repaired the homeowner’s credit. After the closing, several investors state that Seymour abandoned them to the mortgage payments. Without Seymour’s assistance, the investors were unable to pay the loans, and these mortgages themselves fell into foreclosure. Some homeowners, allegedly promised lifetime leases, have been evicted from their homes by these foreclosures. foreclosure rescue equity stripping

Suspect In Alleged N. Virginia Mortgage Scam Nabbed In Turkey; Lender Losses Estimated At $50M; Racket Used Rent-To-Own "Lure" To Reel In Naive Buyers

In Loudon County, Virginia, the Loudoun Independent reports:

  • Former Ashburn real estate agent Diane Atari was apprehended in Turkey on Oct. 14, ending a global search after she fled the country in July following a 12-count indictment against her. Atari was detained after local officials contacted INTERPOL for assistance. She is in a Turkish prison awaiting extradition. Authorities had previously believed she was in Jordan, where her ex-husband has family.


  • Atari, 42, is accused of fraudulently fixing clients’ credit and inflating their income on financial records – enabling them to be approved for higher credit so these clients could buy homes they could not otherwise afford. She was indicted on ten counts of using false statements to obtain credit, one count of money laundering and one count of racketeering on July 13.


  • The total loss on the fraudulently obtained mortgages is estimated to be more than $50 million, said [public information officer for the Loudoun County Sheriff’s Office Kraig] Troxell. The long-term effect is going to be huge, according to investigators. Atari, owner and operator of ACR Consulting Company and Atari Management Company, both located in Loudoun County, offered “rent-to-own” services for customers looking to become homeowners. These customers were generally unable to qualify for mortgages due to bad credit or low income. Atari allegedly signed agreements with these mortgage victims with the understanding that the company would try to fix the victims’ credit.

For more, see Real Estate Agent Fled Country Following Indictments; Apprehended in Turkey. rent to own lease purchase option scams yellowstone

Sacramento Feds Bust Up Massive Indoor Pot Farm Operation; Group Allegedly Used Mortgage Fraud To Finance 51 Grow Houses; Fifty Went Into Foreclosure

In Northern California, The Sacramento Bee reports:

  • Federal prosecutors announced 18 indictments Thursday in a pot cultivation and mortgage fraud scheme that purchased homes in Elk Grove and Sacramento and converted them into bustling "grow houses" for tens of thousands of marijuana plants. Nine people are in custody. Authorities are searching for other indicted suspects who may have fled from the Bay Area to China. The individuals were charged with orchestrating bogus real estate transactions to buy 51 houses in the Central Valley, then establish indoor pot-growing operations using sophisticated lighting and irrigation and stealing thousands of dollars' worth of electricity.

  • "They came into our cookie-cutter residential neighborhoods and created cookie-cutter marijuana factories," said Gordon Taylor, assistant special agent for the U.S. Drug Enforcement Administration in Sacramento. [...] Ultimately, the growers abandoned the houses. Fifty of the 51 went into foreclosure. "This organization just walked away … leaving the loan companies and the communities holding the bag," Taylor said.(1)

For more, see 18 indicted in Central Valley marijuana, mortgage scheme.

From the Office of the U.S. Attorney:

(1) Since 2006, authorities in the Sacramento region have arrested dozens of suspects in indoor marijuana growing operations. Along the way, they discovered homes totally retrofitted for marijuana production, according to the story. In the latest case, Taylor said, suspects cut into main electrical lines in Sacramento and Elk Grove, "bypassed the electric meter and created their own circuit boxes" to steal some $4,000 in electricity a month, the story states.

California Mayor Accused In Alleged Real Estate Scam That Sunk Church

In Huron, California, The Fresno Bee reports:

  • Huron's longtime mayor allegedly paid less than half the agreed-upon price for a piece of property, then illegally sold the land to a church -- which ended up collapsing as a result of the bad deal, court records say. The details are contained in a search warrant affidavit in the case, which was made public Monday in Fresno County Superior Court. The search warrant was for the residence of Huron Mayor Ramon Dominguez, 62. [...] Dominguez faces charges of grand theft and receiving stolen property.

Dominguez is accused of paying about $8,600 out of a $20,000 purchase price for the property bought on an installment payment basis from a third party - then selling the property, pocketing $29,000 in installment payments from his buyer, the church, out of a $40,000 sale price. He allegedly stiffed his seller on the balance owed on his installment payments, allowing the land to fall into foreclosure.

For more, see Huron mayor illegally sold land, records show (Church reportedly bought lot and folded from losses). DeedTheftContra