Saturday, December 5, 2009

Grand Rapids "Grave Robber" Cops Plea In $4.2M Cemetary Trust Funds Ripoff; Suspected Of Similar Swindle Of $20M In Indiana

From the Office of the Michigan Attorney General:

  • Attorney General Mike Cox [...] announced that Robert Earl Nelms pleaded guilty to two felonies for embezzling more than $4.2 million in cemetery trust funds from Chapel Hill Memorial Gardens in Grand Rapids, and failing to properly administer numerous funeral contracts over a three year period. "Stealing from the dead is a betrayal of the highest order," said Cox. "Families who have laid their loved ones to rest have a rightful expectation that this sacred ground will forever be protected."


  • In total, it is alleged Nelms stole more than $24 million from cemeteries and funeral homes he controlled in Michigan and Indiana. He did this by selling cemetery products and services but failing to deposit the required portion in trust for cemetery upkeep and consumers' use. Approximately $4.2 million dollars were from the Grand Rapids cemetery, with Nelms facing charges in Indiana for the rest.(1)

For the Michigan AG press release, see Cemetery Swindler Convicted of Felony Embezzlement.

(1) According to the press release, this is the second defendant convicted by Attorney General Cox for involvement in a major theft of cemetery trust funds. Carter Green of Nevada was convicted in Wayne County Circuit court in December of 2007 for his role in aiding co-defendant Clayton Smart. Cox alleges that Smart embezzled as much as $70 million in cemetery trust funds from 28 Michigan cemeteries. Clayton Smart is awaiting trial in Tennessee on related charges. Upon completion of that trial, Smart will be transferred to Michigan for arraignment on charges filed by Cox, the press release states. EscrowRipOffKappa

Offer Of "Free Consultation" To Would-Be Client Gets Expensive For Florida Personal Injury Attorney

In a recent column, Texas attorney John G. Browning writes in The Southeast Texas Record on some oddball court cases that affirm the age-old adage that reality is often stranger than fiction. Here's one example:

  • Most people who visit a plaintiff's personal injury attorney expect to find a sympathetic ear and a champion to take up their cause, not a basis for another lawsuit. At least one person arriving at the Palm Beach, Fla., law offices of Fetterman and Associates in response to an ad proclaiming "If you are the victim of injuries... please contact us for a free consultation" didn't have far to go.

  • Robert Friedrich visited the law firm in 2003 to discuss suing someone as a result of a car accident nine days previously. During his consultation, however, he gained a whole new cause of action when the chair he was sitting in collapsed and he struck his head on another piece of furniture in the firm's conference room. Friedrich then sued the law firm as well as the company that sold the allegedly defective chair, claiming serious neck injuries.

  • In May a Palm Beach County [jury] found both defendants liable for the chair collapse, and awarded over $2.2 million in damages. For a "free" consultation, this turned out to be pretty expensive indeed for the Fetterman law firm.

For other examples, see Still Litigating In The Twilight Zone.

Homebuilder's Trade-In Offer To Prospective Buyers Sours, Leaving Them Mired In Mess

In Genesee Township, Michigan, WJRT-TV Channel 12 reports:

  • Some homebuyers are calling it one of the worst mistakes of their lives. A deal that promised the house of their dreams turned sour. [...] The pitch sounded great: Trade in your old home, trade up to a new one. "To tell you the truth, I think it's a great deal," said Carol Eberhardt from Symphony Homes during a 2007 interview. But for Tony Grubish, it was no deal at all. "It's probably one of the biggest regrets I have in my life."


  • Grubish says he and his then-pregnant wife filled out the paperwork and were about to move into a new Symphony home in Genesee Township. But one week before closing, the deal ran into a snag. "At the last second, they said, 'Oh, I have bad news. We can't finance you for two FHA loans," Grubish said.

  • So instead, he says, Symphony convinced him to sign a land contract for that new home. "My first instinct was to get up and walk out. But again, I had a pregnant wife who was pretty torn and distraught about it. We were pretty much led up, up until that point, to believe this was going to happen."

  • He learned Symphony wouldn't lease or buy his old house, either. Eventually, the old home slid into foreclosure, and Grubish couldn't afford the new one. Now, he says he's out roughly $25,000 and 180 points off his credit score. "I probably won't be able to get financed for at least 10 years, probably," he said. "We're throwing the thought around of even just filing for bankruptcy."(1)

For more, see ABC12 Investigates: Symphony Homes.

(1) Reportedly, Symphony Homes' headquarters in Davison is empty. That hasn't changed for months. But what has changed is the growing list of debt collection notices on the front door, according to the story. The company filed for Chapter 11 bankruptcy protection in August 2008 and had been run by two men: realtor Steve Burges and builder Don Mahoney, the story states.

Friday, December 4, 2009

Senior "$CAMS" Detection Project Focuses On Identifying Nursing Home Residents With Past Due Accounts In Effort To Stamp Out Elder Financial Abuse

From the Office of the Michigan Attorney General:

  • Attorney General Mike Cox [...] announced criminal charges against six individuals accused of financially exploiting senior citizens. The charges are a result of Project $CAMS (Stop Crimes Against Michigan Seniors), an initiative to protect nursing home residents from scams, misappropriated resources and embezzlement. Operated by the Attorney General's office, along with the Office of Inspector General for the Social Security Administration, Project $CAMS uncovers potential financial exploitation by identifying nursing home residents with past due accounts. Since the project was announced in May of 2008, 43 criminal cases have been filed.


  • [N]ursing home residents are the most vulnerable and the least likely to be able to detect or report it. It is estimated that only one in 100 instances of victimization is typically reported.

  • Servicing 39 counties when launched in 2008, Project $CAMS currently protects seniors in over 250 nursing homes across 75 counties. The nursing home facilities participate by identifying residents who are behind in their payments and providing the Attorney General's office with relevant documentation. Nursing home arrearages as a result of thefts have been as high as $75,000. In the majority of the cases, the perpetrator was a relative.

For the entire Michigan AG press release, see Cox Charges Six for Scamming Seniors. FinancialAbuseOfElderlyAlpha

Illinois AG Cracks Down On Home Repair Companies In Various Alleged Scams; One Equity Stripping Ripoff Cost Victims Nearly $1.3M, Says Lawsuit

The Office of the Illinois Attorney General Lisa Madigan has recently filed a string of civil lawsuits against home repair companies alleging various acts of misconduct perpetrated against homeowners:

  • Madigan Cracks Down On Chicago Mortgage And Home Repair Fraud Scheme ($1.3 Million Swindled from Elderly, African-American Homeowners in Subprime Loan Scam): Lawsuit filed against a Chicago man and five home repair and mortgage companies for conducting a wide-spread scheme that targets African-American consumers on Chicago’s South and West sides and has stripped nearly $1.3 million in equity from the homes of at least 36 consumers, including several who lost their homes to foreclosure.

FTC Consumer Video Warns Against Loan Modification Rackets

As part of their "consumer enlightment" program on loan modification foreclosure rescue scams, the Federal Trade Commission has put out a video intended to discourage homeowners needing help with their mortgage payments from patronizing outfits seeking upfront fees while making promises they can't keep.

For the video, see Real People, Real Stories (Avoid Foreclosure Rescue Scams) (Vea en espaƱol).

Thursday, December 3, 2009

Long Term Residents In 43-Unit NJ Hotel Facing Foreclosure Claim Foul; Say Management Gave Them The Boot Without Going Thru Proper Eviction Proceeding

In Pitman, New Jersey, The Gloucester County Times reports:

  • Claiming that she and fellow residents at the [43-unit] Hotel Pitman were illegally evicted on Nov. 14, Christy Blair cites the New Jersey statutes for proof. "My husband and I were both residents of the Hotel Pitman and I say residents, not guests, because we lived there for almost 14 months," said Blair. "Many of the people living there were long-term, and according to NJSA 55:13-B-3 (h), if at least 15 percent of the rooms of a hotel are occupied by people who have lived there for more than 90 days, the law considers that property a rooming or boarding house, which means we should have the same rights as boarding house residents, including the right to be legally evicted." Instead, said Blair, residents encountered only a flier hanging in the lobby six weeks before the hotel's closure.


  • Another resident, Jesse Evans, says he has been living in a pick-up truck since he lost his room at the hotel. He was also unable to get back in to retrieve his possessions, he said. "A rumor started in the summer that the hotel would go into foreclosure, but we mentioned it to management and they flatly denied it," said Evans. "All that appeared was that letter mentioning economic circumstances six weeks before it closed, and that was unsigned. Based on the law (specifically, NJSA. 2A: 18-61.2), New Jersey required him to give us 18 months' notice." Evans echoed Blair's complaint about the lack of a signed notice.(1)

  • According to borough officials, the hotel will go to sheriff's sale on Dec. 9.

For more, see Pitman Hotel closing illegal, evicted claim.

For more on tenants' rights in New Jersey, see:

(1) According to the story, New Jersey Department of Community Affairs Public Information Officer Lisa Ryan confirmed the residents' reading of the law. "If at least 15 percent of the dwelling units were, in fact, occupied over 90 days, the building would have been subject to the Rooming and Boarding House Act of 1979 and to the protections accorded under the Residential Eviction Law, NJSA 2A:18-61.1," said Ryan. "The people impacted are free to seek legal representation at their local legal aid office."

"If it was considered a boarding house, those residents should be covered by the anti-eviction act. Even some hotel residents are protected by that act," said Joanne Gottesman, a clinical associate professor at Rutgers University School of Law in Camden. "It sounds like there are some good arguments that the anti-eviction act would apply to them." Gottesman said it seemed like some procedural issues were not followed, and she encouraged the residents to contact South Jersey Legal Services at (800) 496-4570 for help in determining their rights.

Pennsylvania AG Tags Four Loan Modification Outfits For Pocketing Upfront Fees, Failing To Provide Promised Foreclosure Relief

From the Office of the Pennsylvania Attorney General:

  • Consumer protection lawsuits were filed [...] against four loan modification or "mortgage rescue" businesses, along with their officers, who are accused of deceiving Pennsylvania consumers seeking help modifying their mortgage loans. "Consumers struggling with high interest rates or large loan payments were drawn to these businesses by misleading ads, deceptive websites and false promises of 'permanent changes' to their mortgages," Attorney General Tom Corbett said. "Instead, many consumers paid large up-front fees that resulted in little, if any, relief from their mortgage problems - leaving them in even worse financial situations."

For more, including a description of the charges in each lawsuit, see Attorney General Corbett announces lawsuits against four loan modification businesses accused of deceiving consumers about "mortgage rescues".

(1) According to the AG's press release, Corbett said the civil lawsuits were filed by the Attorney General's Bureau of Consumer Protection against the following businesses and individuals:

  • Foreclosure Awareness Inc., of Bensalem and Boca Raton, Florida, along with owner Michael Squillace,
  • Nationwide Foreclosure Prevention Center LLC, of Williamstown, NJ, and owner Robert P. Valentin,
  • Best Interest Rate Mortgage Company LLC, of Huntingdon Valley, PA and Westmont, NJ, as well as company President Michael J. Diplacido,
  • U.S. Mortgage Mod LLC, of Philadelphia, and owner Marc Dambrosio.

Corbett said that in addition to false or misleading claims about the ability to actually modify loans, some of the companies named in these lawsuits also allegedly:

  • used deceptive mailings to consumers designed to appear as if the correspondence came from a government agency or government-related program,
  • did not provide consumers with state-required financial disclosure information,
  • failed to inform consumers about their five-day right to cancel and accepted up-front fees without posting the necessary surety bond or trust account,
  • were not licensed by the Pennsylvania Department of Banking to handle mortgage loans or loan refinancing.

New Mexico Man Faces 13 Counts In Alleged Home Hijacking Scam; Targeted Houses In Foreclosure, Unwitting Tenants Seeking Rentals, Say Investigators

In Albequrque, New Mexico, KRQE-TV Channel 13 reports:

  • A purported landlord who used foreclosed homes to scam unsuspecting tenants will face charges once he is located, according to Albuquerque police. Last summer KRQE News 13 interviewed three women who said they rented houses from Ernest Garcia. But according to police Garcia had broken into foreclosed homes which he then pretended to own while collecting cash from would-be tenants.


  • Now a grand jury has indicted Garcia on 13 counts including fraud, forgery and burglary. "It's a scheme that I don't think any of us have ever seen before and certainly one that is propelled by the economy," Pat Davis, a spokesman for Bernalillo County District Attorney Kari Brandenburg, said. [...] But there's one problem. Investigators don't know where to find Garcia. A warrant is out for his arrest, and he has a court hearing scheduled Thursday in an aggravated DWI case. If he shows, he will be arrested. Garcia has a criminal history dating back to 1989 that includes burglary, forgery and conspiracy.

For the story, see Indictment: Fake landlord duped tenants (Passed off foreclosed homes as his). KappaPhonyLandlordScam

Wednesday, December 2, 2009

Michigan AG Files Criminal Charges In Separate Cases Alleging Loan Modification Firms Clipped Homeowners For Upfront Fees, Then Failing To Help

From the Office of the Michigan Attorney General:

  • Attorney General Mike Cox today announced the filing of three criminal complaints and a total of 10 charges against illegal advanced fee "foreclosure rescue" operations accused of defrauding Michigan families of thousands of dollars. Global Financial Consulting Services of Dearborn Heights, Advanced Mediation Services of Midland and James Klein of Midland are accused of illegally charging homeowners facing foreclosure upfront fees for mortgage modification assistance.(1) The defendants claimed they would help homeowners by working with their lenders in an attempt to modify the borrower's mortgage. After paying the upfront fee, borrowers found that the companies could not secure a modification and were subsequently unable to get their money back.


  • In addition to [the above] charges, Cox announced that he has partnered with the Federal Trade Commission and delivered Notices of Intended Action (NIAs) to 13 out-of-state companies accused of illegally demanding upfront fees from Michigan consumers for loan modification services.(2)

For the entire press release, see Cox Takes Aim at Advanced Fee "Foreclosure Rescue" Scams.

(1) According to the AG's press release, Global Financial Consulting Services faces four criminal counts including two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and two counts of making misleading statements. Advanced Mediation Services and James Klein each face two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and one count of making misleading statements. Each of the charges carries a penalty of up to 90 days in jail and/or a fine of $1,000 in addition to the requirement that the companies make full restitution to each of their victims.

(2) The companies receiving NIA warnings from Cox today include:

  • 1 Global Financial, Inc., of Fort Lauderdale, FL;
  • 21st Century Legal Services and Fidelity National Legal Service, of Rancho Cucamonga, CA;
  • Best Interest Rate Mortgage, of Westmont, NJ;
  • Echo Loans & Financial Solutions, of Foothill Ranch, CA;
  • Elect Group LLC, of Oakland Park, FL;
  • Federal Home Savers, of Commack, NY;
  • Fresh Start Home Modification, of Woodbury Heights, NJ;
  • Hope N Housing, of Norwalk, VA;
  • IMC Financial, of Clearwater, FL;
  • Lifeguard Financial, of Fort Lauderdale, FL;
  • National Modification Corp., of Hauppauge, NY;
  • North American Relief, LLC, of Costa Mesa, CA; and
  • Peoples First Financial Inc., of San Diego, CA.

Connecticut AG Files Suit Against Out-Of-State Company Running Allegedly Bogus Upfront Fee Loan Modification Scam

In Hartford, Connecticut, the Hartford Courant reports:

  • The state is suing a South Florida mortgage rescue company that charged Connecticut homeowners tens of thousands of dollars but failed to help them avoid foreclosure. The company, FHA All, also refused to refund the fees, between $2,500 and $4,500. [...] As of Oct. 1, the state began banning companies from demanding up-front payments for mortgage help.


  • FHA All Day couldn't be reached for comment. FHA All Day's website said it is no longer accepting new applications. A call to a telephone number on the site yielded a recording saying the number was not accepting calls. FHA All Day was sued by the state of Florida in July.

Source: Connecticut Sues Florida Mortgage Rescue Company.

See also, Connecticut AG news release: Attorney General, DCP Sue Florida Mortgage Rescue Company For Allegedly Defrauding CT Homeowners.

New Video To Provide Instruction On Navigating HAMP

PMI Mortgage Insurance Company recently announced:

  • PMI Mortgage Insurance Co. [...] introduced a new video to help homeowners experiencing financial hardship understand the benefits of the Home Affordable Modification Program (HAMP) and how they can take advantage of this important program. HAMP is the national loan modification program offered in the Obama Administration’s Homeowner Affordability and Stability Plan which mortgage servicers are implementing broadly to bring long-term affordability to homeowners struggling to keep their homes. Navigating the Home Affordable Modification Program, one of the first videos available for homeowners, explains the benefits, eligibility requirements and types of adjustments that can be made to mortgage loans. The video also provides a realistic example of a couple’s experience before-and-after receiving a HAMP modification.


  • Navigating the Home Affordable Modification Program is divided into two parts. Part I is a basic orientation for viewers who may not have heard of HAMP, the objectives of the program, how to determine if your loan is owned by Fannie Mae or Freddie Mac, and how to find out if you qualify. Part II discusses the information homeowners need to provide their mortgage servicer, demonstrates how affordability is achieved through a realistic example, and the steps homeowners need to take to ensure success in modifying their loan.

For more, including links to the video, see PMI Introduces New Video To Help Distressed Homeowners (Navigating the U.S. Treasury's Home Affordable Modification Program (HAMP)).

Tuesday, December 1, 2009

California Woman Gets Five Years For Using Forged Documents To Swipe, Mortgage & Sell Widow's Home Out From Under Her

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

  • [J]udge Rod Cortez sentenced Oralia Hidalgo, 46, of Colton to prison for real estate fraud related crimes.(1) [...] In July 2003, Hidalgo forged the victim’s name on a Grant Deed illegally taking title to a residence in Colton. The signature of the victim's husband was also forged on the Grant Deed. The husband had died approximately two years prior to the forgery. The defendant encumbered the property and subsequently sold it for $125,000. The defendant falsified several real estate deeds and forged the signature and stamp of a notary public. The fraudulent deeds were later recorded at the San Bernardino County Recorder's Office. The issue of restitution has been reserved for an upcoming hearing.

For the DA's press release, see Colton Woman Sentenced to Prison for Real Estate Fraud.

(1) According to the DA's press release, Hidalgo was ordered to serve five (5) years in the California state prison system. The defendant was found guilty on nine (9) felony counts ranging from forgery, grand theft, filing of false instruments, and a grand theft enhancement, which were filed by the San Bernardino County District Attorney’s Real Estate Fraud Unit.

Elderly Parents Accuse Daughter Of POA Abuse; Suit Says Woman Pocketed Cash By Mortgaging Family Residence, Moved 90-Year Old Couple Into Nursing Home

In Chicago Illinois, the Chicago Tribune reports:

  • An elderly couple are suing their daughter, accusing her of cheating them out of their South Side home and moving them to a nursing home. Overton and Bernice Williams, both born in 1917, say in their lawsuit that they are "unsophisticated in legal matters." They had lived in the home with their daughter, whom they say they trusted "implicitly as to all their financial affairs." In 2006, the daughter sought and received power of attorney for her parents, the lawsuit states. In 2008, the daughter took out a home equity loan on the house and pocketed the money, it says. The daughter then placed her parents in a nursing home, the suit states. The couple are suing their daughter, Leshia Williams, and EquiFirst Corp. The couple say their son later took them to live with him in Alaska. They want their house back and want their daughter to return the loan money.

Source: Elderly couple sue daughter, say she cheated them out of their Chicago home (Daughter moved couple in their 90s to a nursing home, lawsuit says). DeedContraTheft FinancialAbuseOfElderlyAlpha

Ratings Agency Analyst On MBS Offerings: "We Rate Every Deal - It Could Be Structured By Cows & We Would Rate It" - CEO Admits "Drinking The Kool Aid"

From the Office of the Ohio Attorney General:

  • Ohio Attorney General Richard Cordray [...] filed a lawsuit against Standard & Poor’s, Moody’s and Fitch, three national agencies that are responsible for providing accurate credit ratings of investments. The lawsuit, filed in United States District Court for the Southern District of Ohio on behalf of five Ohio public employee retirement and pension funds, charges the rating agencies with wreaking havoc on U.S. financial markets by providing unjustified and inflated ratings of mortgage-backed securities in exchange for lucrative fees from securities issuers.


  • Public statements and testimony indicate that rating agency executives and analysts knew their ratings of mortgage-backed securities were wrong. Indeed, one rating agency analyst admitted that the market for mortgage-backed securities was “little more than a house of cards” with a much higher risk of devaluation than indicated by the purported investment-grade “AAA” rating. Another rating agency analyst said that “we rate every deal. It could be structured by cows and we would rate it.”

  • Raymond McDaniel, CEO and Chairman of Moody’s, described the ratings frenzy: “What happened in ’04 and ’05 … is that our competition, Fitch and S&P, went nuts. Everything was investment-grade. It really didn’t matter… No one cared because the machine just kept going.” McDaniel added that Moody’s also “[drank] the Kool-Aid.”

  • This misconduct has caused immense harm to Ohio police officers, firefighters, teachers, government workers, investors and retirees,” said Cordray. “Our lawsuit against these rating agencies is another step toward holding Wall Street accountable for its wrongs.”

For the Ohio AG press release, see Cordray Sues National Rating Agencies for False and Misleading Ratings.

For the lawsuit, see Ohio Police & Fire Pension Fund, et al. v. Standard & Poor's Financial Services LLC, et al.

For a summary of securities litigation managed by the Ohio Attorney General’s Office, see Holding Wall Street Accountable (Protecting Investors, Retirees, Workers and Families).

(1) Attorney General Cordray noted his reasons for bringing this lawsuit: “The rating agencies were central players in causing the worst economic crisis in Ohio since the Great Depression. The rating agencies assured our employee pension funds that many of these mortgage-backed securities had the highest credit ratings and the lowest risk. But they sold their professional objectivity and integrity to the highest bidder. The rating agencies’ total disregard for the life’s work of ordinary Ohioans caused the collapse of our housing and credit markets and is at the heart of what’s wrong with Wall Street today.”

More On Class Action Seeking To Void Foreclosure Sales Due To Alleged Sheriff's Office Screw-Up; Some Auctions Didn't Even Taking Place: Plaintiff

In Detroit, Michigan, The Michigan Citizen reports:

  • Over 40 Wayne County homeowners have filed a $10 million class action lawsuit that could invalidate tens of thousands of mortgage foreclosure sales executed while Warren Evans was Sheriff. The lawsuit is a significant step in a long battle led by Yvonne Cross, the owner of several family properties in Detroit. It was filed by Bloomfield Hills attorney Paul J. Nicoletti.


  • In addition to the technicalities listed in the lawsuit, such as the fact that Evans’ subordinates were not authorized to sign deeds of sale, we are contending that sheriff’s auctions were not even held in many cases,” said Cross. “The sales should be null and void, and the original property owners should still own their homes under the law.”

  • Cross herself won back ownership of her home [...], which originally belonged to her grandmother. She obtained an affidavit from Attorney Kate Ben-Ami of the sheriff’s office stating that no sheriff’s auction had been held on the date and time specified in the sheriff’s deed. She has obtained similar affidavits regarding other properties, including one in Macomb County. Cross has also filed actions with the state’s attorney grievance commission against six attorneys from the law firm of Trott and Trott who were involved in the sale of her grandmother’s home.

For the story, see Fight against foreclosures gaining momentum (Michigan, Kansas, Massachusetts cases set precedents).

For an earleir story, see The Detroit News: Lawsuit claims Wayne County foreclosures were illegal. EpsilonMissingDocsMtg

Monday, November 30, 2009

Government Will Attempt To Shame The Shameless Into Increasing Permanent Loan Modifications

The New York Times reports:

  • The Obama administration to[day] plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering. "The banks are not doing a good enough job,’’ Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview. “Some of the firms ought to be embarrassed, and they will be.’’


  • Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments. “They’re not getting a penny from the federal government until they move forward,’’ Barr said.

For more, see US to prod mortgage firms on lowering loan payments (Treasury will link reductions to incentives).

Far More Underwater Homeowners Should Stiff Their Lenders, Pack Their Bags & Take A Hike, Says Study

ABC News reports:

  • Millions of Americans, whose homes are now worth significantly less than their mortgage, could be making an expensive mistake by continuing to try and pay their loan off when they should, instead, be walking away. In fact, owners are willing to keep piling money into a losing investment simply because they're ashamed to foreclose, according to a controversial new study.

  • "Homeowners should be walking away in droves. But they aren't," writes Brent White, an associate professor of law at the University of Arizona. He explains that some owners who bought at the peak of the market now owe more on their mortgage than they can ever recoup in their lifetime. Although it would make financial sense to cut losses and abandon their homes, feelings are getting in the way. "A lot of it has to do with shame, guilt and fear," says White.


For more, see Walk Away: Why More People Should Abandon Their Homes (Study Finds Homeowners Fight Foreclosure Even When It Doesn't Make Sense).

Feds, States Unveil "Operation Stolen Hope" In Effort To Curb Upfront Fee, Foreclosure Rescue Loan Modification Rackets

The Federal Trade Commission recently announced:

  • [FTC] Chairman Jon Leibowitz, joined by [others ... a]nnounced Operation Stolen Hope as part of a continuing federal-state crackdown on mortgage foreclosure rescue and loan modification scams. The operation involves 118 actions by 26 federal and state agencies. The FTC actions were announced in Nevada, where one in every 23 homes is facing foreclosure. [...] The FTC announced six lawsuits, bringing to 28 the number of mortgage relief cases the Commission has brought since the housing crisis began.(1) Twenty-five state attorneys general and other state and local agencies announced 112 similar actions.(2)

For the entire FTC press release, see Federal and State Agencies Target Mortgage Relief Scams (FTC Leads “Operation Stolen Hope” to Stop Fraud and Help Troubled Homeowners).

(1) According to the FTC's recent announcement, the defendants in these lawsuits are alleged to have falsely claimed that they would obtain mortgage modifications that would make consumers’ monthly mortgage payments substantially more affordable. After charging large up-front fees, they often did little or nothing to help homeowners renegotiate their mortgages. Some of the defendants falsely claimed a high success rate and promised to give consumers refunds if they failed to modify their mortgages, and others misrepresented that they were affiliated with the federal government or consumers’ mortgage lenders or servicers. Each of the cases allege violations of the FTC Act. In addition, several cases allege violations of the Telemarketing Sales Rule (TSR) or the Credit Repair Organizations Act (CROA). In each case, the FTC is asking the court to stop the defendants’ deceptive claims and make them forfeit their ill-gotten gains. In five of the cases, the court already issued a temporary restraining order and froze the defendants’ assets.

The alleged rackets targeted in the FTC lawsuits, linked to the relevant lawsuit documents filed in Federal court, are:

(2) The FTC legal actions are all civil lawsuits, not criminal prosecutions. Aside from one criminal prosecution that I know of brought by the Michigan Attorney General, the legal actions brought by the various states in this newly-announced law enforcement effort all appear to be either civil lawsuits brought by state attorneys general, or adminsitrative actions/cease & desist orders brought/issued by state regulatory agencies. Inasmuch as there is no threat of jail time for the individual operators in any of these cases (except for one individual in the Michigan case), some may say that Operation Stolen Hope would be more appropriately named Operation Whac-A-Mole, since, in the view of some, only an operation involving criminal prosecution of these operators, coupled with consumer education will be effective in reducing loan modification rackets. Putting these guys out of business using civil lawsuits might shut them down - but others will just "pop up" elsewhere in the future and will operate until they get caught. See Ineffective "Whac-A-Mole" Approach To Battling Loan Modification Scams Leads Housing Non-Profit To Launch National Consumer Education Campaign.

Straw Buyer Gets 30 Days In Scam To Steal Home Out From Under 93-Year Old, Now-Deceased Alzheimer's Victim

From the Office of the Queens District Attorney:

  • Queens District Attorney Richard A. Brown [...] announced that a 32-year-old Long Island woman who acted as a “straw buyer” to steal the Jamaica, Queens, residence of a 93-year-old Queens man suffering from Alzheimer’s disease has been sentenced to thirty days in jail and five years’ probation, during which she must appear at mortgage fraud forums and educate people on the ramifications of being a “straw buyer” and why being one is a crime. This is believed to be the first prosecution and conviction of a straw buyer in a mortgage fraud scheme in Queens County.


  • District Attorney Brown said that, according to trial testimony, [straw buyer Rebecca] Tharpe assisted Alexandra Gilmore, an acquaintance, in stealing the Jamaica, Queens, residen[ce] of 93-year-old Artee McKoy, a retired barber with diminished mental capacity, between August and September 2005 by acting as a “straw buyer” to purchase the property. McKoy’s signature was forged on a contract of sale – between him as the seller and Tharpe as the buyer – that was then used, along with other false information, to obtain a mortgage on the property. The house was eventually sold for $395,000, of which Tharpe received the benefit of $102,000 (a “seller’s concession” and a seller’s purchase money mortgage – none of which Mr. McKoy had consented to) and Gilmore received more than $200,000 in proceeds, including a $97,000 check that had been made payable to McKoy and an additional $130,000 which she secured by setting up a real estate company and falsely claiming to have been owed the money from a previous mortgage loan on the property.(1)(2)

For the entire Queens DA press release, see “Straw Buyer” Sentenced To Jail In Mortgage Fraud Scheme (Must Give Lectures On Being a Straw Buyer At Mortgage Fraud Forums As Part Of Sentence).

See also, New York Daily News: Con artist turns teacher as punishment.

(1) According to the Queens DA, Gilmore, 37, formerly of 14 East Grove Street in Massapequa and presently of 1550 Clark Street in Pittsburgh, Pennsylvania, pleaded guilty to two counts of second-degree grand larceny as a hate crime earlier this year and was sentenced to two to six years in prison.

(2) Some guidance to those seeking an approach to undoing home equity ripoffs like this one can be found in a couple of 2008 Brooklyn, New York lower court rulings favorable to the scammed homeowners. See Brooklyn Court Rulings Void Deeds & Subsequent Mortgages Used To Drain Home Equity In Bogus Sale Leaseback Foreclosure Rescue Scams. For a couple of other New York cases dealing with voiding/cancelling deeds, see:

(If there is a problem accessing any of these cases, drop me a note at and I'll email them to you.)

Further, any attempt to wipe out the mortgage obtained by the scammers on the stolen home may be met with the lender's assertion that it did not knowingly participate in the scam, and had no knowledge of it, thereby entitling it to the protection of the recording statutes as a bona fide purchaser / bona fide encumbrancer. For considerations in attempting to overcome a claim/defense of bona fide purchaser by the lender by imputing constructive notice on the lender (assuming that the deed conveyance did not involve a forgery; in the case of a forgery, the deed would be considered void ab initio (ie. void from the outset) - and, accordingly, would render a subsequent mortgage granted in reliance on the forged deed void as well), see footnote 2 of an earlier post, Staten Island DA Charges NJ Man w/ Felony Grand Larceny In Alleged Sale Leaseback, Foreclosure Rescue Ripoff That Victimized 86-Year Old Homeowner.

See also, Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

IndyMac Intent On Foreclosing On 89-Year Old Widow, Despite Two Court Orders Telling Them To Stop

In Oakland, California, Courthouse News Service reports:

  • Indymac Bank and its successor, One West Bank, keep trying to foreclose on an elderly widow's house despite two court orders telling them to stop, the 89 year-old woman says in Alameda County Court, Oakland. She says stress from the repeated threats of foreclosure made her husband depressed and may have contributed to his death. Irene Jones says foreclosure proceedings on her Oakland home were halted twice, first by an order restraining Indymac from foreclosing in February 2008, then by a second order invalidating Indymac's foreclosure proceedings in March 2009. Nonetheless, Jones says Indymac and One West notified her they would begin foreclosing again in October.


  • She demands quiet title and damages of $350,000 for elder abuse, negligence, distress and suffering, punitive damages, and an injunction telling the bank to stop trying to take away her house.

For the story, see Bank Won't Quit Demands on Elderly Widow.

For the lawsuit, see Jones v. One West Bank F.S.B., et al.

Sunday, November 29, 2009

County Property Appraiser To Slap $458K Lien On Fla. Mansion For Allegedly Bogus Homestead Tax Exemption Claim; Calls For Criminal Prosecution

In Ft. Myers, Florida, The News Press reports:

  • The Lee County Property Appraiser’s Office will file $458,396 in liens against Charles and Barbara Parsons for back taxes and penalties as the State Attorney investigates the couple for homestead fraud. The liens will be filed Dec. 4 if the couple does not pay back taxes and penalties the county appraisers’s office says the couple owes for renting their homesteaded property for upscale getaways, business trips and weddings since 2002.


  • Valued at $4.5 million by the county appraiser, the property’s homestead exemption allows for the Save Our Homes benefit that caps taxable value increases at 3 percent each year. The riverfront home [...] in south Fort Myers is advertised online as the Villa Aloreon, an upscale private or corporate retreat costing as much as $19,500 per week. It’s also advertised online as the Buena Vista Center, where Barbara Parsons gives business seminars.


  • The state attorney’s office said it is investigating the possible fraud. It would be the most expensive such case in the county’s history. Property Appraiser Ken Wilkinson wants the state attorney to prosecute the couple. Homestead exemption fraud in Florida is a misdemeanor carrying penalties up to one year in prison and a $5,000 fine. “That would send a message,” Wilkinson said.

For more, see South Fort Myers homeowners face $458,396 in liens.

Indiana AG Files Suit To Force Landlord To Remediate Lead Paint Hazard In Rental Home

From the Office of the Indiana Attorney General:

  • [I]ndiana Attorney General Greg Zoeller filed a first-of-its-kind lawsuit against two Evansville landlords who allegedly ignored multiple warnings to correct a lead-paint hazard in a rental house that could endanger the health of any occupants living there, including children. The Indiana Attorney General's Office and the Vanderburgh County Health Department filed suit under environmental laws to halt a public nuisance.

  • "This is the first time the Attorney General's office has brought such a suit on behalf of a county, but the case could be a template for other counties to follow in taking action when landlords refuse to correct lead-paint hazards," Zoeller said.(1) [...] Exposure to lead-paint chips and dust is especially hazardous to the neurological development of young children and can result in brain damage and learning disabilities.


  • The lawsuit, [...] seeks an injunction ordering the landlords to remediate the nuisance. Remediation techniques may include removal of the paint from the house by a licensed contractor or encapsulation of the lead-based paint by properly repainting it with latex paint. The suit also seeks reimbursement of the government's costs, attorneys' fees and other relief.(2)

For the entire Indiana AG press release, see Attorney General Zoeller files suit to correct lead-paint hazard (Landlord ignored county's warnings; now state takes action).

For the Indiana AG's Complaint to Compel Remediation of Lead Hazard, see State of Indiana v. Bryan.

(1) According to the complaint, the landlords own a house, built in 1918, in Evansville that they lease to tenants. During a lead-screening program for children in January 2008, a child of the tenant tested positive for an elevated blood-lead level. The Vanderburgh County Health Department alerted the tenant and also collected samples of paint, soil and dust that tested positive for lead. The county health department sent warnings to the landlords at both addresses on file for them in January and February 2008, instructing them that the lead-based paint in the rental house was a health violation requiring remediation measures. The county received no response and the landlords appear to have made no attempt to remediate the hazard by repainting or removing old paint. The Vanderburgh County Health Department in February 2009 issued a $50 fine the landlords never paid. Due to the lack of cooperation by the landlords, the county health department enlisted the assistance of the Attorney General's office in bringing the lawsuit.

(2) The Indiana AG press release states that because of potential health hazards, lead paint has been banned for use in residential homes since 1978. Lead paint continues to be a problem in the pre-1978 homes usually found in older, low-income neighborhoods, however. Under the federal Residential Lead-Based Paint Hazard Reduction Act of 1992, owners must disclose any lead-paint hazards prior to selling or renting any pre-1978 home, according to the press release.

Landlords Discriminating Against Families w/ Young Kids In Attempt To Skirt State Lead Paint Clean-Up Requirements Continue Feeling Mass. AG Wrath

From the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s office obtained a consent judgment against a Boston-based realty company, and its agent, resolving claims that the company refused to rent an apartment to a tester from the Boston Fair Housing Commission posing as a woman with a three-year old child whose presence would require abatement of lead paint hazards under state law. The consent judgment orders the defendants to pay a total of $5,000 to the Commonwealth of Massachusetts and the Boston-based Lead Action Collaborative and bars the defendants from future acts of discrimination.(1)

According to the AG press release, the Massachusetts Anti-Discrimination Act prohibits real estate companies, agents, landlords and others involved in property rentals, from discriminating against families. In addition, the Massachusetts Lead Paint Statute requires landlords who rent to families with children under the age of six to abate lead hazards in a rental unit in order to prevent lead poisoning. It is illegal to discriminate against families with children in order to avoid compliance with the lead paint law.

For the Massachusetts AG press release, see Coakley Enters into Settlement to Address Alleged Discrimination Against a Woman and Her Young Child by a Boston Real Estate Company.


In a separate case from the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office has obtained a consent judgment in a housing discrimination case against the owner of a three-unit building located in Everett, who is accused of violating state anti-discrimination laws for refusing to de-lead an apartment after learning that a long-time tenant was pregnant. The judgment requires the landlord to pay the victim $10,000 and prohibits her from discriminating against any person because they have a child, whose presence would trigger her obligations under the lead paint laws, or otherwise discriminate against any person in violation of state and federal fair housing laws.(2)

For the Massachusetts AG press release, see Coakley Obtains Consent Judgment Against Everett Landlord for Discriminating And Retaliating Against Family with a Young Child to Avoid Lead Paint Obligations.

(1) According to the complaint, the fair housing tester inquired about an apartment advertised on Craigslist. After the tester informed the agent that she had a three-year old child, the agent refused to show her the apartment unless she agreed to sign a waiver that purported to absolve the owner of the unit from liability due to any lead paint found in the apartment.

(2) According to the complaint, the tenants notified the landlord several months advance that they were having their first child and were worried about possible lead hazards, but she refused to do an inspection or remove any lead hazards before or after the child was born. The tenants then complained to the Everett Board of Health, who ordered her to comply with the lead paint laws. After receiving the order, she allegedly called the tenants and yelled at them and threatened to increase their rent. Days later, the landlord sent them a letter with a 50 percent rent increase as retaliation for reporting her to the city. The rent increase was directed only at the tenants who complained. She failed to abate the lead until one year after first being informed of the impending birth, and only after being ordered to do so by the Board. The tenants were forced to live in fear that their child would get lead poisoning and had to dramatically alter their lives to avoid harm to their child.

Massachusetts AG, Alleged Violators Resolve Charges Of Race/Ethnicity Based Discrimination In Separate Incidents Affecting Housing Rights

From the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office obtained a Final Consent Judgment yesterday against two Holyoke brothers, Jesse and Roman Jedrzejczyk, who are accused of harassing, threatening and intimidating their neighbors, a single mother and her two six year-old daughters. The adult victim is a political asylee to the United States who, in 2001, fled political persecution in Haiti out of fear for her life. The judgment [...] includes a civil rights injunction prohibiting the Jedrzejczyks from threatening, intimidating or coercing the victims, or anyone else in the Commonwealth, because of their actual or perceived race or ethnicity. The order also prohibits the Jedrzejczyks from knowingly coming within 10 feet of the victims. A violation of the order is a criminal offense punishable by a fine of up to $5,000 and two and a half years in a House of Correction, or if bodily injury results from such a violation, a $10,000 fine and up to ten years in State Prison.(1)

For the AG's press release, see Coakley Obtains Final Consent Judgment Against Holyoke Brothers for Harassment and Intimidation of Neighbors.


In a separate case from the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office reached a settlement with a Dorchester property owner resolving allegations that he made racially discriminatory statements to an African American woman seeking to rent an apartment he had advertised to the public. The Assurance of Discontinuance, filed in Suffolk Superior Court, against Robert Gallo, Sr., resolves allegations that the defendant violated state and federal anti-discrimination laws and requires him to pay $25,000 to the victim.(2)

For the AG's press release, see Coakley’s Office Reaches $25,000 Settlement with Dorchester Property Owner for Allegedly Making Racially Discriminatory Statements.


(1) The AG's press release states that, according to the complaint, filed July 8, 2009, the Jedrzejczyks repeatedly and regularly harassed the victims using racial slurs and threats over the course of the past three years. The defendants’ actions caused the victim to become concerned for her personal safety after threats were made to break her windshield. In addition, a “For Sale” sign was placed in front of her house. The intimidation culminated last spring when the victim responded to racial slurs being directed at her by imploring Jesse Jedrzejczyk to leave her alone. In response, Jedrzecjcyk threatened, “I will never leave you alone until you move. If you don’t move, I’ll move you!” The Commonwealth’s lawsuit alleged the Jedrzejczyks’ bias-motivated harassment has seriously interfered with the victims’ ability to live and feel safe at home.

(2) The AG's press release states that, according to the prospective tenant’s complaint, which was filed with the Boston Fair Housing Commission and referred to the Attorney General’s Office, Gallo allegedly told the woman when she attempted to rent his apartment that he was told by neighbors to make sure he rented to the right people and that it was an influential area where only certain people lived. The complaint further alleged that Gallo told the woman that she would have no friends in the area and that he was just looking out for her safety. Testers from the Fair Housing Center of Greater Boston subsequently tested the property and were allegedly subjected to discriminatory statements, including the defendant telling the white tester:

  • "the people around here are all white"
  • "they don't want someone who is yellow or dark-skinned"
  • "I could not in good conscience have someone in here who was not white"
  • "Just don't get too much of a could get too dark and that would not work"
  • "I like you and your manners and your shade, so you are my first choice"