Murder Suspect Accused Of Killing Wife Now Charged With Using Forged Docs To Swipe Adjacent Cemetery Plot So He Could Be Buried Beside Her

In Bedford County, Pennsylvania, The Associated Press reports:

• A man accused of murdering his wife has been charged with forging documents to steal a cemetery plot so he could be buried beside her. Bedford County District Attorney William Higgins contends the alleged scam is 39-year-old John Gerholt's latest effort to harass his late wife, Karen, and her relatives. [... ] Gerholt's defense attorney, Thomas Dickey, denied that his client is harassing his late wife's family. "This is just another sign of his true love and devotion to his wife, albeit deceased," Dickey said.(1)

***

• Higgins said Gerholt has placed newspaper ads mourning his wife's passing on her birthday, on Valentine's Day, and on the anniversary of her death. He called the ads an effort to win public sympathy and further harass his wife's relatives. The anniversary ad says, "I won't stop looking for you until I meet up with you again in Heaven." [...] "He's letting her know that he's going to track her down in heaven, and be buried next to her," Higgins said. "That's the way we see this and it's extremely disturbing."

For the story, see DA: Pa. Man Scammed Burial Plot By Wife He Killed (DA: Pa. Murder Suspect Scammed To Get Burial Plot Next To The Wife He's Accused Of Killing).

(1) According to the story, Gerholt is accused of shooting his 24-year-old wife twice with a sawed-off shotgun as she left for a break at the McDonald's where she worked near Everett, about 90 miles east of Pittsburgh. District Attorney Higgins is reportedly pursuing the death penalty because Karen Gerholt had a protection-from-abuse order against her husband, and because John Gerholt allegedly endangered others outside the restaurant. Gerholt, of Mount Union, was already jailed when the forgery and theft charges were filed. DeedContraTheft

Cook County Foreclosure Court Mediation Scores $3M In Funding; Mortgage Workout Effort Based On Philadelphia Pilot Program

In Chicago, Illinois, Nortwestern University's Medill Reports report:

• The Cook County Board passed a $3 million budget amendment Thursday to fund a foreclosure prevention program. The program calls for court mediation in the presence of a judge between borrowers and lenders negotiating to modify housing loans. The measure also would help fund free legal and housing counseling as well as door-to-door outreach.

• The court mediation program is based on a pilot program in Philadelphia that has been lauded by community organizations nationwide. Action Now, Brighton Park Neighborhood Council and other organizations have been lobbying for a similar Chicago program since last year. “It’s a huge victory and a step in the right direction that our members have worked so hard for,” said Aileen Kelleher, Action Now spokesman. [...] Funding for the amendment will come from a recent real estate sale to the Forest Preserve Department and a shift of funds from another County project.

Source: Passage of $3 million foreclosure prevention program hailed as a 'huge victory'.

Connecticut To Clobber Foreclosed Homeowners With Real Estate Conveyance Tax?

In Hartford, Connecticut, the Hartford Courant reports:

• Losing a property to creditors will get more painful next year: Some homeowners in foreclosure will be hit with a new tax. Foreclosures sales have been exempt from Connecticut's real estate conveyance tax for years, but the General Assembly is ending that break Jan. 1. The state is making the change to help close gaps in its budget, and cash-strapped municipalities are eager to get their share of the new revenue, too. But several state lawmakers say they're already dissatisfied with the change."I really believe that this is pouring salt into the wounds," state Rep. William Hamzy, R-Plymouth, told colleagues at a meeting of the banks committee Tuesday.(1)

For more, see Connecticut Plan To Lift Tax Exemption In Foreclosures Stirs Debate.

(1) I suspect that failure to pay the conveyance tax will result in an immediate lien against the foreclosed home, which will make it impossible for the foreclosing lender to transfer clear title to a subsequent purchaser until fully satisfied. So even if the foreclosed homeowner is legally liable for payment of the tax, it will actually be the foreclosing lender who will satisfy the lien when it unloads the property onto the next buyer in the chain of title (the lender will then probably be allowed to tack on the amount paid on account of the lien onto any deficiency balance owed by the foreclosed homeowner - at which point, it will have to wait for the homeowner to "hit the lottery" in order to get paid, assuming he/she hasn't already obtained a debt discharge by filing for bankruptcy).

$55M+ Former "Lions' Den" Sold At Auction For $583K; Judge Wonders Whether Environmental Problems The Reason For NFL Team's Lack Of Success

In Oakland County, Michigan the Detroit Free Press reports:

• An Oakland County Circuit Court judge is to decide by Monday whether this week's sale of the Pontiac Silverdome for $583,000 to a Toronto-based developer will go through. Judge Edward Sosnick heard arguments Wednesday from an attorney representing Silver Stallion Development Corp., which hopes to block the sale to Andreas Apostolopoulos in trust for a corporation to be formed from Toronto.

***

• Attorney David McGruder, representing Silver Stallion, told Sosnick that his clients had spent money on environmental studies and had deposited $100,000 in earnest money. "We've expended money, time and effort," McGruder said. Sosnick, known for his laconic courtroom wit, said: "Was the environmental problems the reason why the Lions could rarely win?" That prompted laughter in the crowded courtroom.

For more, see Judge to decide by Monday on Silverdome (Former bidder fights sale to Toronto trust).

See also, The Christian Science Monitor: New tale of Detroit’s woe: Pontiac Silverdome sold for $583,000 (Pontiac, Mich., sold the 80,300-seat Silverdome for $583,000 Wednesday. The former home of the Detroit Lions cost $55.7 million to build in 1975).

Massachusetts Man Gets 2 To 4 For Again Ripping Off Elderly Stepfather; Earlier Swindle Caused Victim To Lose Home To Foreclosure

In Peabody, Massachusetts, The Salem News reports:

• Confronted by a Peabody police detective with evidence that he'd once again ripped off his elderly stepfather, Steven Fishman, 22, tried to explain himself. "It wasn't drugs or any of that," Fishman told Detective Robert Church. "It's kind of, I kind of get a thrill out of doing it."

• Fishman pleaded guilty [...] to six counts of identity fraud and one count of felony larceny from a person over 60 and was sentenced to two to four years in state prison by Salem Superior Court Judge Timothy Feeley. That's less than half the time sought by prosecutor Marcia Slingerland, who explained to Feeley that it wasn't the first time Fishman had stolen from the 77-year-old man.

• In fact, Fishman was on probation at the time for another series of thefts that emptied his stepfather's bank account — and cost him his home, when he could no longer make the mortgage. Despite the crimes, which forced the elderly man to move to an apartment [...], he took Fishman back in to live with him after Fishman was let out of jail in 2008. Fishman repaid his stepfather by again bleeding the elderly man's bank account dry, stealing nearly $10,000 with a series of electronic transactions that were discovered only after the victim got an overdraft notice from his bank.

For more, see Man gets 2-4 years in prison for thefts from his stepfather.

Stiffed Employees Sound Alarm On S. Calif. Upfront Fee Loan Modification Outfit; Offices "A Ghost Town" - Hundreds Of Homeowners May Be Left Hanging

In Mission Viejo, California, NBC Los Angeles reports:

• Hundreds of homeowners who turned to an Orange County mortgage modification company for help may be in jeopardy themselves and don't know it. The company appears to have shut down. Company insiders say they have come forward to warn the public because they're afraid people will lose their homes.

• Greenleaf Legal Services in Mission Viejo may bill itself as "loan modification experts," but during a recent visit, the place was a ghost town. Some offices were empty, others had stacks of client files apparently waiting to be worked on, and telephone message lights were blinking at every desk. Greenleaf clients said they're still waiting for their calls to be returned.

***

• While [...] customers say they aren't getting messages returned, some employees say they're not getting paychecks. Two workers say they haven't been paid in weeks. Both asked to conceal their identities because, they say, they're going to the authorities with their concerns. One employee said, "it's been over a month," since he was last paid. And since people aren't being paid, another insider said, "What is basically happening is files are not being worked at this time." [...] According to an insider, people paid up to $1,500 to $3,500 upfront. Greenleaf clients all over the country, including more than a dozen in California, said they paid as much as $3,500 and haven't seen results.

***

• Greenleaf never registered with [the California Department of Real Estate] to do modifications and never posted a $100,000 bond as required by law, according to the Attorney General's office.

For more, see Hundreds Could Lose Homes as OC Loan Company Goes Dormant (A local loan-modification company is going out of business, potentially leaving hundreds of homeowners in jeopardy of losing their homes).

Feds Bag Fugitive In Malaysia; Man Accused Of Running Utah, Colorado Home Hijacking, Rent Skimming Scams Targeting Properties In Foreclosure

In Denver, Colorado, KUSA-TV Channel 9 reports:

• The man 9Wants to Know exposed for running one of the most sophisticated rental schemes in Colorado is under arrest after U.S. Marshals took him into custody in Malaysia and flew him to Los Angeles [...]. 9Wants to Know has learned FBI agents in Denver are now investigating his rental scheme, and plan on presenting their findings to federal prosecutors in Colorado.

• Gordon Miller has been on the run since 2005 when Utah federal prosecutors charged him with running a very similar scheme that took money from Utah residents. He's lived in Malaysia for at least the past nine months. When 9Wants to Know showed U.S. Marshals in Utah that Miller was still running another operation in Colorado, U.S. Marshals worked with the State Department who revoked Miller's U.S. passport due to his fugitive status stemming from the 2005 case, according to Utah Supervisory Deputy U.S. Marshal Mike Wingert. Without a valid passport, the Malaysian government picked him up on immigration violations, Wingert said. U.S. Marshal Deputies then took him into custody and flew him to Los Angeles. [...] It is likely that Miller will then be brought to Utah to face his charges.

For more, see Man behind alleged rental scheme arrested in Asia.

(1) 9Wants to Know discovered Miller recently targeted Coloradans using the name Greg Castle. 9NEWS exposed how Miller/Castle searched bankruptcy records to find people having trouble paying their mortgage. He then sent letters and left phone messages to convince those homeowners they had to move out of their homes. Several homeowners told 9Wants to Know they believed the letters and voicemail messages were coming from someone working on behalf of their mortgage companies. Once homeowners moved from the homes Miller put rental ads on Craigslist.

Financially Failing Chicago Condo Bldgs. Struggle To Stay Afloat; Unit Owners Begin Invoking State Law To Take Possession Of, Rent Out Delinquent Apts

In Chicago, Illinois, Chicago Public Radio WBEZ 91.5 FM reports on the plight of a 27-unit condo building in Chicago’s Washington Park neighborhood that is almost completely empty and the effort by three determined unit owners to keep the building from being condemned. In view of most of the units being foreclosed or abandoned, and some inhabited by squatters, the three are fighting back, armed with the Illinois Condominium Property Act which allows them to obtain a court order to take possession of the units if the owner stops paying monthly assessments. They aren't alone in fighting battles throughout the city to save their financially failing condo buildings from going under.

• It was [local attorney Ebony] Wilkerson’s idea to file for possession to rent out the units to shore up the building’s finances. And she put them in touch with a wife-and-husband team called Haus Financial Services that helps condo associations manage their books. For this building, they’re cleaning up and finding renters for the units. It’s the first ray of hope for these three owners in a great big empty building that’s suffering the effects of the global banking meltdown.

• And they’re not alone. Angela Maurello of the non-profit Community Investment Corporation has been working on this for years. Her program acts as a receiver on behalf of the city for distressed condo buildings. "Oh there’s hundreds because we already have 200 of the ones we have, so I’d say there’s got to be 400, 500 of these buildings in the city. This is a serious problem," [Maurello said]. And that means lots more condo owners [...] trying to shoulder the expense of a whole building without help from their neighbors. Maurello calls these fractured buildings and says many are clustered in South Side neighborhoods like Washington Park. But they’re also scattered throughout the city.

For more, see Condo Owners Struggle to Salvage an Almost-Empty Building.

In a related story from Chicago Public Radio, see Untangling Mortgage Fraud in Chicago Condo Buildings:

• All over Chicago, but especially in South Side communities like Washington Park and Woodlawn, people are coping with half-empty and sometimes completely vacant condo buildings. How did they get that way? Why did so many units go into foreclosure all at once? In some cases, the reason can be traced to mortgage fraud. But untangling that web of financial transactions and unearthing the reasons behind a building’s collapse are difficult and time-consuming.

Trouble Hits 200+ Would-Be NC Homebuyers As State Investigates Now-Defunct "Rent To Own" Outfit Suspected Of Pocketing Rents, Stiffing Lenders

In Raleigh, North Carolina, WTVD-TV Channel 11 reports:

• [Sherry] Williams moved into the Raleigh home in March. Not only is it her family's home, but it's their livelihood as she runs a licensed day care out of it. She found the home through a company called Saving Carolina. "We don't have perfect credit. This was a program that helped people. We thought it was a great opportunity to own a house," said Williams.

• Williams says it was rent to own with 100 percent owner financing available. She gave Saving Carolina $3,000 down payment and her monthly payments were $1,650 a month, which each month she says she sent to Saving Carolina. "They were handling the mortgage for the homeowner and we would send the money to them and they would send it directly where it needed to go," she explained.

• Saving Carolina acted as the middle man. They found homeowners who wanted to rent out their home. In turn, Saving Carolina would find renters for those homes, and offer them as rent to own. Williams thought all was going well until after 6 months of making her monthly payments to Saving Carolina, she got a shocking letter in the mail from the bank. "The house was in jeopardy of being foreclosed because it was a few months behind and the owner needed to get in touch with the bank," she recalled.

• Williams called the owner of the home. She says he told her he doesn't have the payments as Saving Carolina was supposed to be making them. So she called Saving Carolina, "have no idea where they are. The numbers have been disconnected. We're just kind of locked in - just praying the sheriff doesn't come and say you guys need to get out," said Williams. Williams isn't alone.

• "I think it was 282 families that this has affected. I personally have seen 50 families," a former worker at Saving Carolina told ABC11. She asked not to be identified.(1) [...] Another man who also worked for Saving Carolina and also didn't want to be identified says Saving Carolina made their money by collecting rent to own payments, but didn't always send them into the mortgage company.

For more, see Troubleshooter: Rent to own.

(1) Reportedly, besides ABC11 looking into Saving Carolina, two former workers along with Williams say an investigator with the North Carolina Commissioner of Banks has interviewed them. rent to own lease purchase option scams yellowstone

Unwitting Purchase Of Home Subject To Demolition Order Has Family Pleading With City For Extension Of Time To Correct Violations

In Beaumont, Texas, the Southeast Texas Record reports:

• Three Beaumont residents have filed a request for injunctive relief against the city of Beaumont, alleging they are in danger of losing their home because the city will not grant them an extension to perform repairs. Flor Escamilla, Flor Uribe and Fernando Uribe claim they purchased a property at 2280 Laurel in Beaumont from Bruce Brosnahan on May 6. However, when they bought the house they claim they didn't realize that the city of Beaumont had notified Brosnahan that the home would be condemned because of its substandard and dangerous state, according to the complaint filed Nov. 6 in Jefferson County District Court.

• When they did discover that the property was due to be demolished, the plaintiffs' sister and daughter appeared before Beaumont City Council to request an extension of time to repair the property, the suit states. Granting the extension, the Beaumont City Council allowed the plaintiffs until Nov. 12 to repair the property, the complaint says. Realizing that they probably could not finish the required fixes by Nov. 12, the plaintiffs requested an extension to finish the repairs. However, Beaumont City Council denied their second request because the previous owner had already been granted an extension, they claim.

***

• The plaintiffs say they have already taken steps to repair the property and will continue to fix it up to Beaumont city codes if they are granted an extension. The plaintiffs are seeking a temporary restraining order that immediately orders the defendant to stop any action of demolishing the property and to be prevented from taking any bids on demolition.

For the story, see Beaumont homeowners seek TRO to stop home demolition.

More On Big Hit Taken By California Pension Funds On Investments In "Predatory Equity" Real Estate Deals Designed To Dodge Local Rent Control Laws

In East Palo Alto, California, The Sacramento Bee reports:

• At the top of the real estate bubble, CalPERS [California Public Employees' Retirement System] invested $600 million in two deals that were 3,000 miles apart but linked by a common vision: Buy apartments governed by rent-control laws and turn them into cash cows. The plan failed in a flurry of litigation and bad debt. A project in East Palo Alto is in default. The second deal, in New York, is likely headed that way. CalPERS could lose most or all of its money.

***

• [Advocates for tenants' rights] say the $200 billion investment fund was party to a pair of schemes to jack up rents at the expense of thousands of working-class and middle-class tenants.

***

• In East Palo Alto, where CalPERS invested $100 million in a cluster of rental units, the project was hit with a default notice from Wells Fargo & Co. That's the first step toward foreclosure. In New York, CalPERS poured $500 million into a massive apartment deal that's turning into one of Manhattan's largest real estate debacles ever. [...] In another big setback for investors, the state's highest court recently ruled that the partnership was raising rents illegally.(1)

• The California State Teachers' Retirement System [CalSTRS] has written off the $100 million it invested in the New York deal. CalSTRS and CalPERS lost a combined $100 billion in the fiscal year ending June 30 and say taxpayers might have to put more money into the pension funds.

For more, see CalPERS realty deals and image take a beating.

(1) For the ruling, see Roberts v. Tishman Speyer Properties, L.P., 2009 NY Slip Op 7480; 2009 N.Y. LEXIS 3953 (October 22, 2009).

Western Missouri Feds Flag Title Agency Owners For "Illegal Dip" Into Clients' Escrow Cash; Used Check Kiting Scam To Conceal $2.6M Racket: Grand Jury

From the Office of the U.S. Attorney (Springfield, Missouri):

• Matt J. Whitworth, United States Attorney for the Western District of Missouri, announced [...] that the owners of Guaranty Title, formerly headquartered in Nixa, Mo., have been indicted by a federal grand jury for participating in a $2.6 million conspiracy to commit bank fraud, wire fraud and money laundering. Richard G. “Rick” Burton, 59, of Nixa, and Kathy Cyrena Allen, also known as Kathy Stanton, 66, of Sarcoxie, Mo., were charged in a 19-count indictment returned by a federal grand jury in Springfield [...].(1)

• The federal indictment alleges that Burton and Stanton, through their companies, conspired to defraud financial institutions of more than $2.6 million through a series of illegal financial transfers related to stolen escrow payments. The indictment also alleges that Burton and Stanton attempted to conceal their criminal activities through a substantial check-kiting scheme.

For the rest of the U.S. Attorney press release, see Owners of Guaranty Title indicted for $2.6 million bank fraud, wire fraud, money laundering conspiracies.

(1) According to the press release, Burton and Stanton were the co-owners of Guaranty Title Company of Southwest Missouri, Guaranty Title Company d/b/a Guaranty Title and Closing Company, and Guaranty Properties, Inc. The companies provided real estate title and closing services. Guaranty’s main office was located in Nixa, with at least 10 branch offices located in Aurora, Branson, Mount Vernon, Ozark, Springfield and Republic, Mo. EscrowRipOffKappa

Nevada Law Firm Sues State Over Loan Modification Licensing & Bonding Requirements For Its Non-Attorney Employees

In Clark County, Nevada, the Las Vegas Sun reports:

• A law firm active in Henderson and Las Vegas is suing the state over rules requiring licensing of non-attorney employees working on mortgage loan modifications.
  Cogburn Law Offices LLC filed suit last week in Clark County District Court against the Department of Business and Industry, Division of Mortgage Lending.

***

• The suit says that attorneys were specifically excluded when the Nevada Legislature passed a bill this year regulating loan modification companies and firms assisting with short sales and deeds in lieu of foreclosures. But now, the Mortgage Lending Division has imposed rules requiring staff members associated with or employed by attorneys to be licensed, the suit charges. "Such regulation not only enlarges the scope of (the law), but attempts to govern and regulate the practice of law by forcing employees of an attorney to be licensed and governed by the Nevada Mortgage Lending Division," the lawsuit charges. [...] Cogburn is seeking a court declaration that its legal staff and employees are exempt from licensing, including provisions requiring they be bonded and take continuing education classes.

For more, see Law firm sues state over mortgage modification licensing.

Unwitting Renter In Home Hijacking, Rental Scam Dodges Immediate Boot; Proof Of Occupancy For 30+ Days Entitles Her To Rights As Tenant, Says Advocate

In Riverside, California, KABC-TV Channel 7 reports:

• Rental scams are on the rise in Riverside County. Police in Moreno Valley are investigating a suspected case of felony fraud. One family lost their house and their money even though their rent was paid. It had seemed like the perfect house. Marilyn Elliott and her two children moved in last month. But on Sunday night, it all turned to chaos. "They were like, 'You need to open up the door.' And I'm like, 'What is this?'" recounted fraud victim Marilyn Elliot.

• It was the Moreno Valley police investigating a report of squatters on the property. What a way for Marilyn Elliot to find out that the lease agreement she signed was bogus. The house was entering foreclosure and officers ordered Elliott to be out within 24 hours.

***

• The Fair Housing Council [of Riverside County] (http://www.fairhousing.net/) says that many victims do not know their rights. Under the law Elliott does have temporary protection from eviction. "On a weekly basis we are flooded with calls about the same situation," said Juanita Kodera, Fair Housing Council. "If she has been in the unit over 30 days, that makes her a tenant." It took some time to prove she had been there for a month. The receipt for the $3,500 cash she paid was just a handwritten note. Now the police department says it will be up to the bank to give Elliott more time.

For the story, see Riverside renters warned of cash scams (go here for KABC-TV Channel 7 video). KappaPhonyLandlordScam

N. Miami Beach Loan Modification Outfit Skips Town With Customers' Cash; Homeowners Left Hanging

In Miami, Florida, WTVJ-TV Channel 6 reports:

• A South Florida mortgage rescue company that once promised to save your home is accused of taking clients' cash and vanishing into thin air. Truman Foreclosure Assistance is one of several companies that sprung up in the recent housing crisis, vowing to help cut monthly payments and allow homeowners to stay put. But now customers from across the country claim the company didn't come close to living up to what it promised.

• Customers like Kathy Sussman, from Miami, who paid $2,300 to Truman with no results. [...] Sussman wasn't in danger of losing her home but wanted a lower interest rate and a loan to renovate her home.

***

• The company has seemingly vanished from their N. Miami Beach office building. The sign on their door is gone and workers at the building and customers claim they can't find anyone from Truman. And no one was answering their phones [...].

For the story, see Miami Mortgage Rescue Firm's Vanishing Act (Truman Foreclosure Assistance accused of taking money and skipping town).

L.I. Judge Gives Foreclosing Lender Verbal Horse-Whipping As He Wipes Out Mortgage Debt, Cancels Lien For "Repugnant, Shocking, Repulsive" Conduct

In Riverhead, New York, Suffolk County trial judge Jeffrey Arlen Spinner gave plaintiff IndyMac Mortgage Services, division of OneWest Bank F.S.B., and its Regional Manager of Loss Mitigation, Karen Dickinson, one hell of a beat-down last week in a home foreclosure ruling in which he wiped out the mortgage holder's security interest in the subject home, cancelling the debt and apparently leaving a financially strapped homeowner with a mortgage-free home in the process. In doing so, the judge cited the "harsh, repugnant, shocking and repulsive" conduct of the plaintiff during the course of the foreclosure action.

The court ruling sets forth the judge's descripition of the plaintiff's conduct that got it in hot water; the following excerpt addresses Justice Spinner's legal basis for taking the action he did (citations to legal authority omitted for ease of reading, bold text is my emphasis):

• Since an action claiming foreclosure of a mortgage is one sounding in equity, [...] the very commencement of the action by Plaintiff invokes the Court's equity jurisdiction. While it must be noted that the formal distinctions between an action at law and a suit in equity have long since been abolished in New York [...], the Supreme Court nevertheless has equity jurisdiction and distinct rules regarding equity are still extant, [...] . Speaking generally and broadly, it is settled law that "Stability of contract obligations must not be undermined by judicial sympathy..." [...] . However, it is true with equal force and effect that equity must not and cannot slavishly and blindly follow the law, [...] . Moreover, as succinctly decreed by our Court of Appeals in the matter of Noyes v. Anderson 124 NY 175 (1890) "A party having a legal right shall not be permitted to avail himself of it for the purposes of injustice or oppression..." [...].

• In the matter of Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), Special Term stated that "The maxim of "clean hands" fundamentally was conceived in equity jurisprudence to refuse to lend its aid in any manner to one seeking its active interposition who has been guilty of unlawful, unconscionable or inequitable conduct in the matter with relation to which he seeks relief." [...] .

• In attempting to arrive at a determination as to whether or not equity should properly intervene in this matter so as to permit foreclosure of the mortgage, the Court is required to look at the situattion in toto, giving due and careful consideration as to whether the remedy sought by Plaintiff would be repugnant to the public interest when seen from the point of view of public morality, [...]. Equitable relief will not lie in favor of one who acts in a manner which is shocking to the conscience, [...], neither will equity be available to one who acts in a manner that is oppressive or unjust or whose conduct is sufficiently egregious so as to prohibit the party from asserting its legal rights against a defaulting adversary, [...]. The compass by which the questioned conduct must be measured is a moral one and the acts complained of (those that are sufficient so as to prevent equity's intervention) need not be criminal nor actionable at law but must merely be willful and unconscionable or be of such a nature that honest and fair minded folk would roundly denounce such actions as being morally and ethically wrong, [...]. Thus, where a party acts in a manner that is offensive to good conscience and justice, he will be completely without recourse in a court of equity, regardless of what his legal rights may be, [...].

• An objective and painstaking examination of the totality of the facts and circumstances herein leads this Court to the inescapable conclusion that the affirmative conduct exhibited by Plaintiff at least since since February 24, 2009 (and perhaps earlier) has been and is inequitable, unconscionable, vexatious and opprobrious. The Court is constrained, solely as a result of Plaintiff's affirmative acts, to conclude that Plaintiff's conduct is wholly unsupportable at law or in equity, greatly egregious and so completely devoid of good faith that equity cannot be permitted to intervene on its behalf. Indeed, Plaintiff's actions toward Defendant in this matter have been harsh, repugnant, shocking and repulsive to the extent that it must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against Defendant. The Court cannot be assured that Plaintiff will not repeat this course of conduct if this action is merely dismissed and hence, dismissal standing alone is not a reasonable option. Likewise, the imposition of monetary sanctions [...] is not likely to have a salubrious or remedial effect on these proceedings and certainly would not inure to Defendant's benefit. This Court is of the opinion that cancellation of the indebtedness and discharge of the mortgage, when taken together, constitute the appropriate equitable disposition under the unique facts and circumstances presented herein.

• After careful consideration, it is the determination of this Court that the indebtedness evidenced by the Adjustable Rate Note [...] in the original principal amount of $292,500.00 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. should be cancelled, voided and set aside. In addition, the Mortgage which secures the Adjustable Rate Note, given to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. [...] and recorded with the Clerk of Suffolk County [...] should be cancelled and discharged of record. Further, Plaintiff, its successors and assigns should be forever barred and prohibited from any action to collect upon the Adjustable Rate Note. In addition, the Judgment of Foreclosure & Sale granted on January 12, 2009 and entered on January 23, 2009 should be vacated and set aside and the Notice of Pendency should be cancelled and discharged of record. For this Court to decree anything less than the foregoing would be for the Court to be wholly derelict in the performance of its obligations.

For Justice Spinner's court ruling, see Indymac Bank F.S.B. v Yano-Horoski, 2009 NY Slip Op 52333(U), November 19, 2009.

For media reports on this court ruling, see:

• New York Law Journal: Judge Blasts Bank's Foreclosure Conduct and Cancels Mortgage (A lender's "unconscionable, vexatious and opprobrious" conduct in attempting to foreclose on a Long Island home has prompted a state judge to cancel the mortgage on the property),
• New York Post: Judge blasts bad bank, erases 525G debt (Judge KOs 525G mortgage to slap bank),
• ABC World News Tonight: Judge Rescues Struggling Couple From Foreclosure (New York Judge Cancels Mortgage in Thanksgiving Surprise; Bank Will Appeal).

Thanks to Rob Harrington for the heads-up on this court ruling. EpsilonMissingDocsMtg

Ineffective "Whac-A-Mole" Approach To Battling Loan Modification Scams Leads Housing Non-Profit To Launch National Consumer Education Campaign

The Columbus Dispatch reports:

• Preventing people from getting ripped off by mortgage loan modification scams is like playing Whac-A-Mole. "You knock them down in one place, and they pop up in another," said Ohio Attorney General Richard Cordray of the illegal operations. "They're a nimble and savvy group, and they target vulnerable, desperate people." The best way to put these scammers out of business is to educate homeowners, said Cordray and other local, state and federal officials who gathered [last week] at the Statehouse to roll out the Loan Modification Scam Alert campaign.

***

• "We can't afford to wait any longer," said Kenneth Wade, executive director of NeighborWorks America, a national nonprofit organization created by Congress, and the sponsor of the scam-alert campaign. "Loan-modification scams have reached epidemic proportions. There are thousands of fraudulent companies out there making a mint," he said. Homeowners in distress should avoid every company that asks for a fee in advance, guarantees it can stop a foreclosure or modify a loan, or says to stop paying the mortgage company and start paying it instead, Wade said. "The best defense is information, education," he said. "That stops these scammers in their tracks."(1)

For more, see Scammers prey on at-risk homeowners.

See also, The Waco Tribune Herald: New program shines light on shady mortgage scams:

• Congress asked NeighborWorks America to develop a public education campaign, which was unveiled locally Wednesday with the help of NeighborWorks Waco, the local branch of the national community development organization. The focal point of the campaign is a new Web site, www.LoanScamAlert.com. It contains information about what loan modification scams are, how to spot them and stories from victims. The site also has information about how homeowners can get free assistance if they are facing foreclosure or other mortgage pressures. “We know that knowledge is the best defense,” said Celine Thomasson, a public affairs employee for NeighborWorks America.

See also, NeighborWorks America press release: NeighborWorks Fight Against Loan Modification Scams Kicks Off in Ohio.

For customizable materials to fight loan modification scams in your community (available in 5 languages), see Scam Alert Partner Toolkit.

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

(1) It wouldn't hurt if law enforcement starting bringing criminal prosecutions against these rackets (ie. theft by deception, theft by failing to make required disposition of funds, deceptive business practices, obtaining money/property by false pretenses, securing writings by deception, conspiracy, engaging in a pattern of corrupt activity, organized scheme to defraud, exploitation of the elderly/vulnerable adult, theft from an at-risk adult, mail fraud, wire fraud, etc.).

There appears to be a reluctance to criminally prosecute these loan modification rackets (the preference appears to be to go after them with civil lawsuits brought by government agencies - ie. Federal Trade Commission, state attorneys general, etc.), possibly based on the mistaken belief that the operators insulate themselves from criminal liability by reason of the contractual nature that these arrangements take with the victims. The notion that the scammers can insulate themselves from criminal charges by using legal contracts to disguise their scams as legitimate arms-length business transactions with consumers is not only incorrect, but borders on the ridiculous. Courts have addressed the issue of whether the terms in a business contract between two parties can operate to restrict law enforcement from prosecuting a crime in relation to said contract. See People v. Frankfort, 114 Cal. App.2d 680, 251 P.2d 401 (Cal.App. 2nd Dist., Div. 2; 1952):

• Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra p. 605.)

Followed in People v. Nesseth, 127 Cal.App.2d 712; 274 P.2d 479 (Cal App. 2nd Dist., Div. 2; 1954).

NJ Woman Gets 2 To 5 For Pocketing Upfront Cash In Exchange For Phony Mortgage Help To Avoid Foreclosure

In Monroe County, Pennsylvania, the Pocono Record reports:

• A New Jersey woman will be spending two to five years in state prison after she was sentenced on Tuesday for promising to help homeowners avoid foreclosure and then keeping the money she was given for their mortgages. Shirley Gail Matthews, 53, of Pemberton, N.J., told homeowners that she could negotiate with their mortgage company and help them keep their homes. She was convicted in July of keeping the money she was given and never using it to help pay mortgages. The charges were part of a lengthy history of similar charges, prosecutors said, and Matthews currently faces similar charges in Wyoming County.

***

• She was found guilty by a jury in Monroe County Court of deceptive business practices, theft by deception and theft by failure to make required disposition of funds.

For more, see Woman gets prison time after mortgage scam conviction.

See also, The Allentown Morning Call: Mortgage scam ends with prison:

• ''It's outright theft and thievery,'' Monroe County President Judge Ronald Vican told her. "It's the lowest form of disreputable conduct.'' [...] ''She's made a practice of this,'' Vican said, noting her prior theft record as he rejected her lawyer's request for a lighter sentence. ''And she's picked on people who are really vulnerable.'' foreclosure rescue loan modifcation upfront fees

Feds File Civil Suit In Central Florida Against Alleged Upfront Fee Loan Modification Racket; "Attorney Renting" Among Allegations

In Tampa, Florida, Courthouse News Service reports:

• Mortgage and "foreclosure relief" companies backed by a law firm took thousands of dollars from customers who ended up in worse shape than they started, the FTC says. It sued the Crowder Law Group dba Legal Support Services, 11 individuals, and Washington Data Resources, and Optimum Business Solutions dba Attorney Finance Services.(1) The Federal Trade Commission says the defendants steered their victims away from free programs offered by lenders and suckered them into spending thousands of dollars on programs with cheerful names such as "Fresh Start Program" or "Hope4Homeowners."

***

• The agency says Washington Data Resources and Optimum Business Solutions contracted with attorneys in several states to place calls to consumers to explain the process. Other than the telephone call, the attorneys have little if any involvement with the consumers and are paid for each consumer they agree to accept as a client, the FTC says. The defendants repeatedly fail to obtain the promised loan modifications.

For more, see FTC Says Law Group Helped in Debt Scam.

For the lawsuit, see FTC v. Washington Data Resources, Inc., et al.

(1) Washington Data Resources is a Florida corporation; Optimum Business Solutions is a Nevada LLC dba Attorney Finance Services; Crowder Law Group fka Jackson, Crowder & Associates dba Legal Support Services is a Florida corporation. Also sued, and their affiliations, are Richard A. Bishop (Optimum), Brent McDaniel (Washington Data), Tyna Caldwell (Crowder Law Group), Douglas A. Crowder (Crowder Law Group), Bruce Meltzer (Crowder Law Group), and Kathleen Lewis (Optimum).

Tennessee Judge Wipes Out Half Of Homeowner's $1M+ Wrongful Foreclosure Jury Award Against BofA; Leaves Another $300K In Limbo

In Johnson City, Tennessee, the Johnson City Press reports:

• In late July, Jesse Miltier thought he had achieved justice in a five-year battle with Bank of America, which wrongfully foreclosed on his Watauga home in 2004. He’s found out otherwise since July 31, when a jury in Carter County awarded him $1,050,000 — including punitive damages, a rarity in wrongful foreclosure suits — as BOA has fought certain aspects of the award. Monday in Jonesborough, Judge Thomas Seeley heard motions in which BOA attorneys sought to lower that award to $200,000. By the end of the hearing, $550,000 of what the jury had awarded was wiped out, and the status of another $300,000 in punitive damages was up in the air.

For more, see Plaintiff home sick by decision.

Two Charged In Alleged Rent Skimming Scam; Suspects Took Control Of Property From Desperate Owners & Pocketed Rent While Letting Bills Pile Up

In St. Louis, Missouri, the St. Louis Post Dispatch reports:

• Two men who officials said posed as wealthy real estate investors have been charged with 25 counts of stealing or other felonies. St. Louis prosecutors said that Brian Stoker, 25, and Malcolm Aldrich, 54, stole property and rent money from investors who were looking to sell troubled real estate. Stoker was arrested last week and has posted bond. Aldrich remained at large.

• Beginning in February 2007, Brian Stoker Enterprises agreed to buy rental properties from desperate owners but then never followed through on the sales contracts, according to court documents. Meanwhile, Stoker and Aldrich took control of properties, the charges say, collected rent from tenants but never paid utility or mortgage bills. At least three owners sued Stoker to regain control of their buildings. In some cases, they said rental units were uninhabitable by the time they got the keys back. One, Dr. Abid Nisar, said he lost nearly $200,000. He has had to pay overdue bills and repair damage he blamed on Stoker. "I hope that he is put behind bars and he cannot harm anyone else," Nisar said.

For the story, see St. Louis prosecutors charge two with preying on real estate owners.

Attorney BS Leads Homeowner Seeking Foreclosure Defense To Unwittingly Find Himself In Bankruptcy Court?

In Westchester County, New York, The Journal News reports:

• When the Yonkers home where his parents lived was threatened with foreclosure, Domingo Hernandez went to White Plains lawyer Christopher Cabanillas to fight the proceedings. Cabanillas told him that his firm had a "special program" designed to hold off foreclosure proceedings for up to two years. The "special program" used a legal defense against foreclosure combined with modification of the mortgage loan. Hernandez agreed to a $7,500 retainer for Cabanillas and the special program and on March 9 gave the lawyer $1,250. But instead of a "special program," Cabanillas put Hernandez in bankruptcy, filing a petition for Chapter 7 bankruptcy in White Plains on Oct. 1 — all without Hernandez’s knowledge or permission. Those charges are contained in papers filed by Hernandez in U.S. Bankruptcy Court in White Plains that seek sanctions against Cabanillas.

• "At no time did attorney Christopher Cabanillas or anyone at the law firm Cabanillas and Associates advise, suggest, or otherwise tell me that filing a false petition was part of their ‘special program’ or that filing for bankruptcy would be part of defending me in the foreclosure matter," Hernandez wrote in court papers. He has a new lawyer, and she filed papers asking for the withdrawal of the bankruptcy filing.(1)

For more, see Owner of Yonkers home says lawyer put him in bankruptcy without permission.

(1) Reportedly, the petition was filed by attorney Cabanillas without Hernandez’s required signature. According to the story, the U.S. Trustee’s Office, which oversees compliance with bankruptcy laws, has filed papers in the case recommending that Cabanillas be sanctioned. "The Cabanillas Firm has engaged in egregious conduct that directly impacts on the integrity of the bankruptcy system by filing a Chapter 7 petition without obtaining a signature of its client prior to filing the petition," wrote Greg Zipes, a lawyer for the U.S. Trustee’s Office in Manhattan. Zipes said the filing was "not an isolated case of misconduct by the Cabanillas Firm."

In a letter to Cabanillas, he noted two other cases where bankruptcy petitions "do not appear to meet professional standards." In an e-mail to Zipes filed with the court, Hernandez’s new lawyer, Linda Tirelli, said Hernandez "comes across as a very calm, level-headed person but is clearly upset about having the petition filed unbeknownst to him." The e-mail also says Hernandez never met the lawyer from Cabanillas’ firm, Jan Hudgins-Riley, listed as his attorney on the filing, never saw or signed the petition and never retained Cabanillas’ firm for bankruptcy purposes. Tirelli said in the e-mail that Hernandez would likely need to file a Chapter 13 bankruptcy — which provides for a scheduled repayment of debts — rather than a Chapter 7 filing — which requires liquidation of petitioners’ non-exempt assets.

Consumer Advocate's Effort To Wipe Out Delinquent Mortgage Debt Held By Lenders Unable to Prove Right To Foreclose About To Begin In Florida

In Jacksonville, Florida, the Jacksonville Business Journal reports:

• The house at 12920 Mt. Pleasant Road is a modest ranch-style home. The man in it is John McCampbell, a 61-year-old car mechanic who lives with his two children and fiancée. He took out a $156,000 mortgage from the now-defunct Washington Mutual, which foreclosed on his home in 2004 after he lost his job. But when the lender was unable to produce the deed to prove it had a right to foreclose, McCampbell beat the foreclosure and remains there today.

• Now McCampbell and his Fort Caroline home are poised to make history in foreclosure defense with an experimental legal approach that would wipe out his mortgage debt and hand him a clean deed. It’s called a “quiet title,” where the court establishes a party’s title to the property to remove or “quiet” any challenges or claims to it.

• It sounds like an impossible endeavour. But April Charney, a Jacksonville Area Legal Aid attorney, has spent the past four years teaching lawyers across the country the legal framework of this foreclosure defense.(1) With an average of 3,000 foreclosures filed every month in Jacksonville alone, there’s no shortage of lawyers tapping her expertise.

Source: Lawyer's foreclosure defense of 'quiet title' faces tests.

(1) A January, 2009 post (see Using Statute Of Limitations To Wipe Out Lenders' Right To Foreclose A Mortgage?) referred to a December, 2008 story reported on msnbc.com which alluded to Charney's intent to apply the Florida statute of limitations (see Sec. 95.11(2)(c), 95.281(1)(a), Florida Statutes) to terminate a foreclosing lender's right to foreclose when her clients' cases became ripe for such an attack:

• Charney said that in a number of her cases, once there is no longer an ability for the loan servicer to profit, the foreclosure “just goes to sleep, and unless I’m going to pursue it, nobody’s setting hearings, nobody’s pursuing anything to get it to trial.”

• After five years, which is the statute of limitations to enforce a contract in Florida, she can try to help her clients own their homes mortgage-free, Charney said. The first opportunity for her to help clients do that may arise next year.

• And that legal limbo is where the lion’s share of her cases stand now, Charney said. So far this year, she has achieved two “workouts” and lost two cases. “Many, many, many” of the rest are in sleep mode or getting a single filing each year by plaintiffs’ attorneys just to keep them alive.

For the msnbc.com story, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers) (for the entire story on one web page, try here). EpsilonMissingDocsMtg

Riverside County DA, Feds Announce Bust In Alleged Mortgage Fraud, Securities Scam; Losses Estimated At $140M+ Involving 249 Homes

In Riverside County, California, the Southwest Riverside News Network reports:

• The head of an investment company described by authorities as a “con man” who bilked victims out of millions of dollars, much of it coming from real estate fraud in Murrieta and Temecula, has been charged with nearly 250 criminal counts, prosecutors announced Thursday. James Benjamin Duncan, 38, known in some circles as “James the Cash King,” has been charged with 249 felonies, including conspiracy, elder abuse, grand theft, securities fraud and identity theft, Riverside County District Attorney Rod Pacheco announced at an afternoon news conference Thursday.(1) [...] The defendants are being held in lieu of millions of dollars in bail. Before they can be released, Pacheco said, the defendants must prove their bail money was obtained legally.

***

• According to a news release, the crimes include the selling of fraudulent securities leading to a loss of more than $17 million, as well as mortgage fraud leading to a loss of $124.5 million throughout Riverside County. The defendants carried out similar schemes in other areas of California and Arizona, authorities said. [... Pacheco] estimated there were 249 homes impacted in Riverside County, with the majority in Murrieta (150) and Temecula (47). Those losses cannot be measured, he said.(2)

***

• In plea agreements also filed [...] in United States District Court in Los Angeles, Christopher J. Oetting, 47, of Palm Desert; Linda Brooks, 54, of Murrieta; and Steven Kayden, 51, of Cathedral City; all have agreed to plead guilty to federal charges related to their roles in one or more investment schemes.(3)

For more, see Criminal charges filed in massive Temecula and Murrieta real estate fraud case (James Benjamin Duncan, 38, known in some circles as "James the Cash King," was charged with 249 felonies).

See also, The Press Enterprise: Seven accused of defrauding Inland home investors of millions.

(1) Others reportedly involved in the case have also been charged, including Hendrix Moreno Montecastro, 37; Helen Moreno Pedrino, 47; Maurice McLeod, 37; Charlie Sung Muk Choi, 34; Cindi Gayle Kelly, 33; and Thuan Nhan Du, 33.

(2) I suspect that the criminal probe in this case evolved out of the class action civil lawsuits (and the local Southern California media reports thereon) alleging a racketeering conspiracy filed against this outfit a few years ago by some of the victims who claim to have been screwed over. See:

• The Press Enterprise (2-12-2007): Investors file federal fraud lawsuit (HUNDREDS AFFECTED: Two Rialto residents say they sustained losses of more than $600,000),
• The Californian / North County Times (1-6-2007): Suit alleges massive mortgage scam,
• The Californian / North County Times (1-14-2007): Real-estate investors bought on faith.

(3) Presumably, this trio have been declared the winners of the "race to the prosecutor's office" - whoever gets there first and rats out the other guys gets the best deal when sentences are handed out.

Land Wrestled Away From Screwed Over Homeowners In New London Eminent Domain Fight To Remain Undeveloped As Corp. Giant Announces Plans To Bolt City

From an op-ed column in The Connecticut Post:

• In a country where private property is sacred, the government's right to seize land for its own devices will always be contentious. Done in the service of building a school or a hospital, it can be defensible. Taking people's homes for the nebulous "public good" of economic development is deplorable.

• In a case that went all the way to the U.S. Supreme Court, the residents of New London fought back against such folly. When the drug company Pfizer announced in 2001 it was opening a new research center in that city, officials began the process of acquiring nearby land for an accompanying development project. Homeowners who were to be forced out said "no." The residents lost that case, as the Supreme Court four years later ruled the government had the right to take their homes and turn the land over to a private developer,(1) all because the plan was supposed to, someday, bring jobs and tax dollars to the struggling community. It was a bad decision then and only looks worse in retrospect.

• The news now is that Pfizer is leaving New London, closing its facility and moving its work up the street to Groton. All the grand development plans, which weren't progressing in any event, have now been shelved for good. Where people's homes once stood, only weeds grow.

For more, see Lessons learned on eminent domain.

See also:

• The Associated Press: Pfizer move a new blow to Conn. city in land fight,
• The Boston Globe: Tax breaks: New London gets stiffed,
• The New York Times: Pfizer to Leave City That Won Land-Use Case: (From the edge of the Thames River in New London, Conn., Michael Cristofaro surveyed the empty acres where his parents’ neighborhood had stood, before it became the crux of an epic battle over eminent domain. “Look what they did,” Mr. Cristofaro said on Thursday. "They stole our home for economic development. It was all for Pfizer, and now they get up and walk away”).

(1) Kelo v. City of New London, 545 U.S. 469 (2005).

Short Sale Flipping Fraud: Use Of Inflated Appraisals, Straw Buyers, Sale Terms Undisclosed To Lenders All Indicate That Scammers Are Still At It

In Central Florida, the Sarasota Herald Tribune reports:

• Untold millions of dollars that banks could have recovered from the sale of distressed Florida homes have instead been pocketed as profits by a new breed of property flipper. These flippers target houses on the verge of foreclosure and persuade banks and mortgage companies to accept lowball buyouts, sometimes by using questionable appraisals and not disclosing that a quick sale at a higher price has already been arranged, experts say. No one knows how widespread the scheme has become. But a national glut of short sales -- pre-foreclosure sales in which the lender agrees to let the house sell for less than the mortgage owed -- has spawned a small industry of short-sale flippers, some of whom use these questionable tactics, experts say.(1)

***

• Bankers and some organizations that regulate the real estate industry have taken steps to curb the latest form of flipping.(2) But the measures, including restrictions on writing mortgages for flipped properties, have not halted questionable transactions. Experts warn the number of short sale flips is likely to continue growing nationwide.

***

• [F]raud experts warn that some of the real estate flipping they see today involves the same kind of insider deals and manipulated sale prices that plagued the housing bubble. The FBI recently added short sale flipping, dubbed "flopping" by some mortgage fraud experts, to its list of recognized real estate fraud. In a June 2009 report on mortgage fraud, FBI officials described various forms of short sale flipping fraud.(3) Each type involves misrepresenting the value of a house to a lender.

***

• "These people are doing exactly what they did during the run-up," said Tim Mattingly, who owns an Orlando mortgage brokerage and title agency. "They are getting inflated appraisals. They are selling to straw buyers and they are hiding terms of their deals from lenders. It's amazing that after all we've been through, these people are still at it."

For more, see The new flipping: short sales.

See also, Toronto Sun: Florida's flopping circus (The Florida town made famous by Ringling Brothers' "greatest show on earth" has become a three-ring real estate circus of flippers, floppers and amazing deals).

(1) A Herald-Tribune examination of nearly 18,000 property sales that occurred in Sarasota and Manatee counties in 2009 showed that at least 250 properties have been sold multiple times at escalating prices so far this year, the story states. Reportedly, nearly 50 of those properties were bought then resold within 24 hours, suggesting that banks were underpaid for properties that already had a buyer willing to pay more. Just the most suspicious sales, where properties flipped within a day, have cost banks $1.7 million in Sarasota and Manatee counties so far this year. On houses bought and resold within a month, the bank short sales were $3.2 million less than the houses fetched just a few days or weeks later.

(2) In a June, 2009 story (see Title insurance group's move could stymie short sale flips), The Tampa Tribune reported that the Attorneys' Title Insurance Fund ("The Fund"), an Orlando-based outfit that is a major underwriter for attorneys who write title insurance in Florida, notified its 6,000 member attorneys that it will not insure deals made with a popular – but controversial – method for closing flips of short sales being advertised on the Internet that promises to make investors lots of money with little or no work.

In Sepember, 2009, The Fund announced that it will go ahead and insure short sale flipping deals that meet certain guidelines (see The Fund Underwriting Bulletin: Short Sale Transactions - Guidelines Revised). With all the heat now being applied to these deals by federal investigators, The Fund may want to rethink its most recent announcement. For examples of federal indictments involving alleged fraud in connection with short sales, see the following U.S. Attorney press releases:

• Bridgeport, Connecticut: Two Connecticut Real Estate Agents Charged with Engaging In Short Sale Mortgage Fraud Schemes (Feds indict two in alleged short sale flipping scam using straw buyers to dupe lenders into accepting less than full payment on underwater loans),
• New York City: Manhattan U.S. Attorney Charges 41 Defendants In Coordinated Mortgage Fraud Takedown Across New York State (pages 4-5) (Feds describe short sale flipping deals and sale leaseback foreclosure rescue arrangements in one recent indictment of ten suspects; for the indictment, see U.S. v. Bills, et al.),
• Phoenix, Arizona: Foreclosure-Rescue Schemers Indicted (Feds indict pair in alleged scheme abusing HUD "short sale" program to pocket illegal profits by flipping homes facing foreclosure).

(3) See also, What Else Are They Selling? Loan Mods That Turn Into Questionable Short Sales? (begins at page 17 of the recent National Consumer Law Center report, DESPERATE HOMEOWNERS: Loan Mod Scammers Step In When Loan Servicers Refuse To Provide Help):

• In one version of a short sale scam, the realtor and the buyer collude to conceal the full price of the sale from the lender so that they can pocket the difference, often by using option contracts and back-to-back closings. This version is aimed primarily at defrauding the lender, though the homeowner is also hurt by an artificially low sales price, either by being liable on a deficiency or by paying taxes on a higher forgiven balance.
• In another version of a short sale scam, the buyer takes over the mortgage without satisfying the due-on-sale clause and the sale is concealed from the lender. The owner of a We Buy Houses franchise explained at trial that these deals work when the homeowner is only 10% to 15% upside down, because the home is sold to a buyer who cannot qualify for a regular loan and so is willing to pay a premium above fair market value to avoid a credit check. Depending on how the transaction works, the homeowner may be out cash, lose the home, and still end up with a foreclosure on the credit report.

For a story on a questionable arrangement that combines short sales with sale leaseback deals that give short sellers an option to repurchase their homes in the future (presumably without the knowledge of the lender and/or loan servicer approving the short sale), see Short Sales Coupled With Lease-Buyback Option A Way To Help Those Facing Foreclosure Stay In Their Homes?

Son Gets Six Months For Forging Ill Mom's Signature To Refinance Home; Blows Loan Proceeds In Failed Attempt To Buy Foreign Bride

In Wolverhampton, West Midlands, The Express & Star reports:

• A Wolverhampton man forged his ill mother’s signature in order to re-mortgage the house they jointly owned to pay off debts and buy a foreign bride, a court heard. Stephen Collymore signed his 68-year-old mother’s name on a land registry document in 2004 to obtain £35,000 from Halifax, Wolverhampton Crown Court was told. The 42-year-old, of Tyburn Road in Wednesfield, was said to have used the money to pay off debts and buy a foreign bride, although no-one ever arrived in the UK.

• Collymore, who was reported to the police by his mother Joanna, was yesterday handed a 26-week prison sentence, suspended for a year, and ordered to complete 150 hours of unpaid work. Miss Rhiannon Jones, prosecuting, said: “The defendant and his mother jointly purchased the home in Eastfield Road in 2002 from Wolverhampton Council and they lived together. In October 2004 the defendant forged his mother’s signature on the land registry document and obtained the mortgage from Halifax at £35,000. [...]"

***

• Mrs Collymore, who suffers from diabetes and angina, went to the police in July 2008 to tell them what had happened and her son was arrested months later in September. A statement from Mrs Collymore read out in court said: “This has shocked and upset me. I’m worrying all the time about losing my home.”

For more, see Man forged signature to buy bride.

Wheelchair-Bound Senior Left £27,000 Delinquent On Nursing Home Bills After Con Man Used POA In £200,000 Ripoff

In Bradford, West Yorkshire, the Bradford Telegraph & Argus reports:

• A conman who fleeced a trusting pensioner of her life savings so he could buy luxury goods has been ordered to pay her £76,000 in compensation. Bhupinder Sahota milked nearly £200,000 from the bank accounts of 85-year-old wheelchair-bound Marie Rose Penn after she granted him Power of Attorney over her finances. Sahota was jailed for three years in June after pleading guilty to four charges of theft and two of fraud.

• Bradford Crown Court was told that it had been agreed between the prosecution and defence that the amount of criminal benefit available was £76,000. Prosecutor Paul Nicholson said Mrs Penn’s nursing home fees were mounting and she was now in the region of £27,000 in debt to the nursing home.

For more, see Bradford conman fleeced vulnerable pensioner.

Landlord Accused Of Using Illegal "Self-Help Eviction Procedure" In Failed Attempt To Boot Delinquent Family From Rental Home

In Geneva, Illinois, The Geneva Republican reports:

• Early Monday afternoon, the power at Stacey Schnaitman’s house suddenly shut down. “I ran outside,” she said. “There was a man outside that told me, ‘This house is supposed to be vacant.’” But it’s not vacant. Living at the four-bedroom, two-bathroom house on the 1200 block of Illinois Avenue is the Schnaitman family: Stacey, 37, and James, 39, and their children, Greer, 4; Cheyenne, 3; James Jr., 1; and their unborn daughter, Aslyn.

***

• The family is amid an eviction dispute with the landlord that could leave the Schnaitmans homeless. They say they’ve been paying most of their bills to landlord Ken Voegele, who says he has received no rent or utility payments for months. [...] St. Charles police were dispatched to the Schnaitman house [...], according to department spokesman Paul McCurtain. Police said the landlord was trying to shut off the home’s water and electricity. Stacey Schnaitman said the landlord had sent a letter to the city saying the house was vacant and asking that utilities be turned off.

***

• An e-mail obtained by The Republican sent to the family [...] by Sue Voegele, wife of Ken, warned the family that it would soon be without utilities. “Hi Stacey and Jim,” the e-mail said. “Ken asked me to let you know that the utilities at the house on Illinois Street will be shut off next week.” Robert Surratt, the city’s code enforcement officer, said [...] that he was just on the phone about the situation. “I (told them), ‘Make sure you leave (the utilities) on,’” Surratt said. “People can’t use the city to do their eviction for them. They just can’t. We won’t turn it off to get someone out of a house.”

• Utility bills for the property were in Ken Voegele’s name until Monday, when Stacey Schnaitman said she changed the Nicor Gas and St. Charles bills to her name, on recommendation from the city. According to documents obtained by The Republican, the family had previously been paying the utility bills via checks written to Voegele.

For the story, see Family of five struggles with eviction dispute.

Financial Turmoil, Uncertainty Hovering Over Arizona Senior Independent Living & Retirement Community Forces Elderly To Flee Homes

In Green Valley, Arizona, the Green Valley News & Sun reports:

• The beautiful but nearly empty Retreat at Santa Rita Springs retirement village is facing financial hard times and it is up to the mortgage holder as to whether it continues operating. [...] Meanwhile, many of the dozen elderly residents still there are making arrangements to move after hearing of financial turmoil and seeing their beloved staff fired last Friday on two hours’ notice.

***

• The turmoil has been devastating for residents and former staff. “It’s all very confusing, isn’t it?” said Georgia Ryder, who has lived in Green Valley on and off since 1980. “Since Friday we didn’t know anything. I cried for two days. I’m going to miss all my friends like crazy. I’ve been here (in Green Valley) 30 years.” Ryder has found a place to live in Tucson and other residents are doing the same because they cannot take the uncertainty. "Watermark [the former management company] left the food here that they bought, so we have food until Friday,” Ryder said, underscoring the worries residents have. [Former executive director Debbie] Engen said, “It’s hard, it really is. Between staff and residents, you get very close. It’s like a family. We brought stuff from home and did whatever we could to make a go of it with no funds.”

For the story, see Retirement apartments in financial bind.