Saturday, August 7, 2010

Colorado AG Shuts Down Loan Modification Racket That Used Obama Video, FDIC Materials To Fake Affiliation With Federal Government

In Denver, Colorado, INDenver Times reports:

  • Colorado Attorney General John Suthers announced [] that his office has obtained a judgment against American Mortgage Consultants, its owner, Oliver Paul Maldonado, 37, and its principal employee, Santiago Fabian Pineda, 32, barring the company and its officers from engaging in mortgage fraud or any aspect of the mortgage business. American Mortgage Consultants, Maldonado and Pineda will be required under the consent judgment to pay a total of at least $75,000 in fines and restitution to the state.

***

  • According to the lawsuit, American Mortgage Consultants used deceptive advertisements to attract approximately 170 consumers to the loan modification company from January 2009 through March 2010. Maldonado also used video of President Barack Obama and materials from the Federal Deposit Insurance Corp. to give consumers the impression that the company was affiliated with the federal government. American Mortgage Consultants did little if anything to help its customers renegotiate or modify their home loans beyond shipping off their applications to an Ohio-based company.

For the story, see Suthers shuts down mortgage scammer.

For the Colorado AG press release, see Attorney General announces judgment against fraudulent loan modification company.

For the court judgment obtained by the AG's office, see State of Colorado v. American Mortgage Consultants, et al.

Northern California DA Has Another Ex-Homeowner In Crosshairs For Allegedly Stripping $100K In Fixtures From Now-Foreclosed Home

In Ripon, California, KXTV-TV Channel 10 reports:

  • For the second time in a week, the San Joaquin County district attorney's office is expected to charge a Ripon couple with "stripping" a house they had to leave. The large and beautiful home had nearly $100,000 worth of fixtures taken, allegedly by the previous owners.

  • "They took everything from doorbells to appliances, even furnaces in the attic," said Ray Davidson, who bought the home at auction after the foreclosure. Although the home is nearly put back together, holes remain where trees were removed, and not all the window coverings have been replaced. The district attorney's office has completed an investigation against the previous owners, and charges were expected by the end of the week.

  • This home is right around the corner from another home in Ripon that was also stripped. The couple who owned that home appeared in court last week after being charged with grand theft and extortion. [... P]rosecutor Stephen Taylor promised last week the district attorney is starting to investigate and prosecute these incidents.

For the story, see Another foreclosed upscale Ripon house stripped.

Indicted NYC Real Estate Agent Identified By Queens Homeowner As Perpetrator Of Home Equity Ripoff

On Staten Island, New York, the Staten Island Advance reports:

  • A New Springville man was part of a scheme that illegally obtained $1.6 million in mortgages for properties in Brooklyn and Queens, prosecutors allege. Nir Zeer, 30, [...] and four others are charged with conspiracy to commit wire fraud, said Manhattan federal prosecutor Preet Bharara. [...] The alleged crimes occurred in 2007 and 2008.

  • Prosecutors said three defendants, Joan Powell, 46; Darlene Ritter, 45, and Orit Tuil, 39,(1) held themselves out as real-estate agents and recruited straw buyers to purchase the properties. [...] The trio allegedly submitted loan applications with inflated incomes on behalf of buyers and were aided by a mortgage broker, now cooperating with authorities. Another defendant, Annette Shereshevsky Fonte, 28, of Westbury, L.I., worked at a bank. She supplied phony deposit verifications in two instances to beef up purchasers' assets, said authorities.

For the story, see Islander charged for role in scam.

For the U.S. Attorney press release, see Manhattan U.S. Attorney Charges 38 Defendants As Part Of Nationwide Mortgage Fraud Sweep (p. 10 - U.S. v. Tuil, et al.)

(1) Orit Tuil was identified through property records, according to a recent New York Daily News story (see Foreclosure scam victim staying put for now), as the individual a Queens homeowner said duped her in an apparent sale leaseback, equity stripping foreclosure rescue scam. Reportedly Tuil came to the homeowner's door in 2006 claiming to be a foreclosure specialist after the homeowner and her stepmother missed payments on a $180,000 mortgage. Reportedly, the homeowner said she had to signed over the deed to her home to Tuil, and that the $180,000 mortgage was paid back in an apparent equity stripping scam when Tuil took out two mortgages totaling $405,000, according to property records.

Friday, August 6, 2010

Michigan Woman Fears Loss Of Business Due To Typo; Foreclosing Lender's Screw-Up With Wrong Property Leads To $35K Loss, Says Victim

In Clio, Michigan, WJRT-TV Channel 12 reports:

  • A well-known master gardener in Mid-Michigan says her business could be headed for closure, all because of a paperwork error. She is speaking out and warning others to beware. After 12 years of doing business as Jenny B's Garden Party on Clio Road near Clio, Jenny Burrows says there's a chance her once-thriving business might not survive past next year because of a typo. "I just wanted a simple address changed, and that snowballed into a catastrophe for my business," she said.

  • Because of the typo in a foreclosure address, her business instead of her neighbor's house was posted for foreclosure, even though she owns the property outright. So in the cold of January when the store was closed, a company hired by a California bank moved in to seize the property and winterize the building.

  • "When they left they didn't lock the doors, the gates were left open in month of January," Burrows said. "They all froze, my seedlings. Right now, just physical property, I've lost $35,000 worth of stuff."

  • Even though the property was never seized, she remains with the massive loss, and if there's no resolution with the bank for reimbursement, Burrows doesn't see how she'll survive. "I've actually started paperwork for discontinuance with the state of Michigan," she said. "It's hard to do."

  • Burrows says she's spent the past seven months fighting with the California bank, hiring a lawyer and trying to let customers know she's still in business. In the meantime, she's still fighting to stay around for another 12 years. But part of her fight is a warning to others to not take what you may think is junk mail from a bank lightly. "If you get information from a bank, open it up," she said. "See if you have been a victim of a typographical error. It can cost you your home. It has almost cost me my business."

  • For the business to stay afloat, Burrows says she'll need someone to reimburse her for damages by December. A spokeswoman for One West Bank in California says, quote: "Unfortunately, things like this happen from time to time. We would like to rectify it."(1)

Source: Typo could cost longstanding local business.

(1) A recent court ruling found a lender liable for $150,000 in exemplary (punitive) damages (in addition to $5,000+ in actual damages) in a trespassing case involving an improper padlocking by a foreclosing lender. In that case, the lender actually padlocked the right property, but was found to be a bit premature in entering the premises since the delinquent borrower was still the legal owner of the property. See Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure.

Iraq War Vet, Wife Get Back $300K+ Home Lost In Lien Foreclosure Sale Over $977 In Unpaid HOA Dues

In Frisco, Texas, The Dallas Morning News reports:

  • The Frisco soldier and his family who lost their home to foreclosure while he was serving in Iraq will get the house back. Army National Guard Capt. Michael Clauer and his wife, May, lost their $315,000 southwest Frisco home in May 2008 after falling behind on Heritage Lakes Homeowners Association dues.(1)

  • The Clauers sued the association and subsequent buyers in federal court. A court-ordered settlement conference led to an agreement this week that gives the house back to the Clauers. A gag order prevents those involved from sharing details. But the bottom line is that the Clauers once again will own the home in the Heritage Lakes subdivision. [...] The Clauers' attorney couldn't say whether the couple had to pay any money to get back the house, which they owned mortgage-free.

For more, see Frisco soldier who lost home to foreclosure while in Iraq gets it back.

(1) Reportedly, the Heritage Lakes Homeowners Association was initially owed $977.55 in dues on the house. The association sent multiple notices by certified mail, demanding payment. All went unanswered. The two-story brick home was auction off for $3,201, and subsequently resold for $135,000.

Oregon Homeowner Gets Clipped Out Of $3K For Bogus Loan Modification By California Outfit Owned By Now-Disbarred Attorney

In White City, Oregon, the Mail Tribune reports:

  • Saul Cervantes thought he was making a smart financial move by accepting the services of a company claiming it would help him negotiate with his bank to lower his monthly mortgage payment. Instead, Cervantes was bilked out of $3,000 in a mortgage scam that has struck a handful of Southern Oregon households, according to Larry Kahn, the executive director of Help Now! Advocacy Center based in Medford. [...] Cervantes received a letter from a California-based company called Ideal Real Estate Solutions promising it would do the leg work required to qualify for government programs meant to help people with troubled mortgages.

***

  • Out of desperation, Cervantes called Help Now! volunteers, who work with attorneys across the state to fight predatory lenders. It is illegal in Oregon to charge an up-front fee for loan modification.

  • Help Now! contacted the California attorney who owned the company. They soon learned that the California Bar Association had word on owner Brian Columbana's practices. He has since been disbarred. Help Now! added Cervantes' name to an Oregon Department of Justice complaint with several other mortgage scam victims allegedly targeted by Columbana.

For the story, see Mortgage-payment scam trips up owner.

Cook County Continues Sitting On $18M Pile Of Unclaimed Surplus Foreclosure Sale Cash Belonging To Ex-Homeowners With Few Takers To Be Found

In Chicago, Illinois, CBS2chicago reports:

  • Nearly $18 million; it's money that belongs to thousands of Chicago-area families who've lost their homes through foreclosure. But CBS 2's Vince Gerasole reports, many of those families haven't seen a cent. One former owner of a condo in Wrigleyville is owed $3,485 after losing a unit to foreclosure. Another former condo owner is owed $45,423 for a unit in a condo tower along North Lake Shore Drive.

  • "When you lose your property to foreclosure you think you lost everything," Cook County Circuit Court Clerk Dorothy Brown said. But sometimes they haven't. If a bank sells a foreclosed property for more than it was owed, the surplus belongs to the original owner. Nearly $18 million from foreclosed properties in Cook County alone is sitting in a fund waiting to be disbursed. "We've collected almost $400,000 this year from surplus sales," Brown said.

***

  • With relatively few people coming forward, the clerk's office has debuted a website where foreclosed-upon families can begin to learn whether they are owed surplus mortgage funds. In spite of the effort and the high number of mortgage filings, only 37 individuals have gone through the process so far this year and the call continues to go out to distressed families who might have thousands of dollars coming their way. "We still have an average of almost 2,000 individuals on this list, so it's very difficult," Brown said. Individuals on the list are owed as little as 13 cents and others are owed as much as $460,000.

For the story, see Some Foreclosure Victims Due Thousands Of Dollars (Clerk's Office Holding Millions Owed To Former Homeowners).

Thursday, August 5, 2010

Failing To Remit Mortgage Payments Collected From Client, Allowing Home To Be Lost To Foreclosure Among Acts That Lead To Disbarment For SC Attorney

In a recent ruling by the South Carolina Supreme Court, an attorney licensed in the state was disbarred over seven separate incidents of misconduct and was ordered to pay full restitution to all clients, banks, and other persons and entities, including the Lawyers' Fund for Client Protection (ie. South Carolina's "attorney ripoff reimbursement fund"),(1) who have incurred losses as a result of her misconduct and reimburse the Commission on Lawyer Conduct and Office of Disciplinary Counsel for costs incurred in this matter.

Among the matters was one incident (designated in the ruling as Matter 1) where the attorney ("Respondent") received checks and money orders from clients for payments to the clients' mortgage lender.

  • Respondent admits she failed to make the mortgage payments for the clients, used the checks and money orders entrusted to her for purposes other than payment of the clients' mortgage, made material misrepresentations to the court at the foreclosure hearing regarding her clients' home, and that her failure to make her clients' mortgage payments resulted in the clients' home being sold at foreclosure.

  • Respondent acknowledges she failed to communicate with her clients regarding the foreclosure action. Respondent's clients only learned that their home was sold at the foreclosure sale when approached by the lender's real estate agent. Due to respondent's misconduct, her clients had to obtain new counsel in an effort to save their home.(2)

  • Respondent admits she failed to safeguard her clients' funds. Further, she admits she wrote checks from her trust accounts for expenses such as employee payroll, her children's school programs, parking tickets, and restaurant charges.(3)

For the full laundry list of escapades that left a slew of other screwed over clients in her wake, see In the Matter of Sherry Bingley Crummey, No. 26840 (S.C. July 26, 2010).

(1) For similar funds established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

(2) The court noted that clients' new counsel was able to persuade the court to set aside the foreclosure sale.

(3) In addition, the Respondent acknowledged that her trust accounts were completely out of whack. She carried a negative balance and she had trust account checks returned for insufficient funds. She admitted she did not reconcile her trust accounts, did not keep individual client ledgers, and did not retain the bank statements for her trust accounts, all of which are required by state bar rules. In addition, she admitted her records were such a disaster that the trust accounts cannot be reconciled. She also acknowledged that she failed to cooperate with Office of Disciplinary Counsel as she failed to respond to the Notice of Full Investigation in this matter.

Relentless, Taunting Phone Calls From Loan Servicer Constitutes Illegal Harassment, Says Delinquent Borrower/Homeowner In Recent Lawsuit

In Jupiter, Florida, The Palm Beach Post reports:

  • A Palm Beach County woman diagnosed with terminal brain cancer is suing her home loan servicer following what she said were relentless harassing phone calls that further harmed her health when she fell behind on payments. The suit, filed by Angela Birster, 45, along with her husband, Paul Birster, 47, accuses American Home Mortgage Servicing Inc. of violating state and federal consumer collection laws, as well as intentionally inflicting emotional distress.

***

  • The Birsters, who live in a Jupiter Farms home they bought in 2002, say employees of American Home Mortgage Servicing lied about foreclosure sales being scheduled for their home, taunted them by saying they would be "living in the streets in 120-degree heat," and sent people to their home who wandered the property and took pictures.

  • On one occasion, the lawsuit says, Angela Birster collapsed in her front yard and had to be hospitalized after a distressing collection call. The calls allegedly persisted even after the Birsters sent a cease-and-desist notice requiring that communication go through their attorney.

  • "The company's conduct is outrageous, beyond all bounds of decency, and cannot be tolerated by a reasonable society," said Henry Hicks, lead attorney for the Birsters. "The thing about debt collectors is they know the actions that get the most results are threats and lies and intimidation, even if it's against the law."

  • Florida law forbids debt collectors from using abusive language, calling "with such frequency as can reasonably be expected to harass the debtor," and communicating with the debtor when he or she is represented by an attorney handling the specific debt case.(2) The Federal Fair Debt Collection Practices Act includes similar language.

For more, see Terminally ill Jupiter Farms woman behind on home loan alleges collector taunted, harassed her.

(1) Reportedly, the Texas-based company requested that the case, originally filed in state court, be moved to federal court.

(2) See the Florida Consumer Collection Practices Act (Florida Statutes Chapter 559 - Part VI - Sections 559.55-559.785).

Foreclosed Homeowner Dodges Boot With Help From Local Media; Servicer Acknowledges Screw-Up In Handling Loan Modification

In Stockton, California, KXTV-TV Channel 10 reports:

  • It has been an uneasy few days for homeowner Teena Blanco ever since she found a notice on her door informing her she had three days to vacate her Stockton home. Despite working for months with her bank to modify her mortgage, the house was sold on July 13 -- and the bank wanted her out.

  • Her first clue, however, occured the week before when she noticed a stranger at her door and asked him what he wanted. "He said, 'I'm here to re-key your house,'" Blanco said. "I said, 'I'm sorry, you must have the wrong house.'" He left, but he didn't have the wrong house. Several days later, Blanco came home to find the three-day notice, just days after making her last mortgage payment.

***

  • After News10 contacted Wells Fargo to inquire about the situation, the bank called back, telling Blanco their subsequent research revealed certain things had slipped through the cracks. They told her they would rescind the sale and continue to work with her on a possible modification.(1)

For the story see, Stockton homeowner crashes into modification mess nightmare.

(1) Reportedly, the bank itself bought the house at auction, so that any legal complications in attempting to rescind the sale involving the "bona fide purchaser" rights of a third party bidder are not present here.

Judge Tacks 3 Years Prison Time Onto Scammer's Sentence For Failure To Pay $25K Upfront Restitution; Man Accused Of Ripping Off $227K From Mom's HELOC

In Norwalk, Connecticut, The Hour reports:

  • A Westport man was sentenced to three years in prison [] at Norwalk Superior Court for stealing hundreds of thousands of dollars from his elderly mother. Charles Gamer, 54, [...] was also given a 10-year suspended prison sentence and five years of probation. He must also pay $234,933.24 in restitution.

***

  • Gamer, who claims to have opened multiple computer technology businesses, was also arrested by Norwalk Police in 2009 for writing a bad check for more than $5,000 to his dentist, Dr. Michael Hodish, police said. Charges relating to that incident were dropped because of the plea deal. He agreed to the plea deal in March in which he would be given a [suspended] 10-year prison sentence and five years of probation in exchange for pleading guilty to one count of first-degree larceny and paying $25,000 toward the restitution by his sentencing date. He received a three-year prison sentence because he did not pay the restitution.

  • Gamer turned himself in to Wilton Police on Jan. 30, 2009, after illegally withdrawing about $227,000 from his mother's Washington Mutual home equity account at the Wilton branch of the bank. He was living with his mother when the crime took place. The manager of the bank, who was later fired, told investigators that Gamer showed him documentation and said he had been authorized to access the account. [...] State's Attorney Donna Krusinski said Gamer's family almost faced foreclosure because of his financial misdeeds.

For the story, see Son who stole from mother to go to prison.

Wednesday, August 4, 2010

Forensic Loan Audit Operation Hit With Class Action Suit; Accused By Others Of Clipping Homeowners Out Of Thousand$ With No Results

In Rancho Cordova, California, cbs13.com reports:

  • U.S. Loan Auditors claims it will review your loan documents to see if you're a victim of predatory lending, and will then help you go after your lender. Several customers have called [CBS 13 investigative reporter] Kurtis Ming saying they invested thousands, but got no results. Customers paid $3,000, sometimes $4,000 or more for their forensic loan audit. They say U.S. Loan Auditors looked thru their loan documents claiming what was found could stop a foreclosure, help them get a better loan, even money back from their lender.

***

  • A class action lawsuit (click here) filed on behalf of other former customers alleges U.S. Loan Auditors and its sister company U.S. Legal engaged in false advertising and intended to deceive customers. The complaint asks the court to stop the company from operating and require restitution to the alleged victims.

For more, see Call Kurtis: U.S. Loan Auditors Sued (Former Customers File Class Action Lawsuit, And Claim False Advertising).

For the class action complaint, see Ma, etal. v. U.S. Loan Auditors, LLC, et al.

Foreclosure Rescue Operator Gets Six Years In Sale Leaseback Scams That Ripped Off $880K From Lenders, Financially Strapped Homeowners

In Honolulu, Hawaii, KITV-TV Channel 4 reports:

  • A man who prosecutors say used religion to lure victims into a mortgage fraud scheme was sentenced to prison Thursday. John Mendoza, 59, was sentenced to six years behind bar. That's not enough says a woman who said she was lured into one of his deals, which he still claims were intended to save homes for people facing foreclosure.

  • "The only thing I can call this person is that he is a monster,” said Laura Cristo, who said Mendoza ingratiated himself by coming to her Waianae restaurant and praying with her and her family.

***

  • Federal prosecutor Clare Connors said Mendoza would talk distressed homeowners into selling their property in paper to his friends, on the promise they’d be able to buy the home back. Instead, Connors said, Mendoza kept hundreds of thousands in profits from refinancing the homes.

***

  • In court Thursday, Mendoza repeatedly mentioned his faith as he proclaimed his innocence and said he was only trying to help people. But U.S. District Judge Michael Seabright said the evidence was clear that Mendoza had used his faith to sucker in his victims, and then suck away the equity in their homes. “Mr. Mendoza operated with a clean intent to defraud, to benefit himself and hurt others.” Seabright said. “He used religion to spot and hood vulnerable victims.”

  • Despite his harsh words, Seabright sentenced Mendoza to the lower-end of federal guidelines. Mendoza will spend six years in prison. There is no parole in the federal system. After prison he will serve five years supervised release and must pay $881,514.98 in restitution to the former homeowners, one of whom recently died of cancer.

***

  • Mendoza told the court he plans to fire his publicly funded attorney and file an appeal. He complained that his attorney didn’t understand the sophisticated real estate transactions involved in the case. The judge replied that while the individual transactions may have been complex, taken as a whole, the jury correctly determined Mendoza’s intent was to steal the equity in the two homes and leave homeowners devastated.

For the story, see Foreclosure Fraud Defendant Gets Six Years (John Mendoza Continues To Deny Wrongdoing).

Michigan AG Files 19 Criminal Complaints Setting Forth 69 Charges Against Individuals, Firms Running Alleged Advanced-Fee Loan Modification Operations

From the Office of the Michigan Attorney General:

  • Attorney General Mike Cox [] announced the filing of 19 criminal complaints and a total of 69 charges against illegal advanced fee "foreclosure rescue" operations accused of defrauding Michigan families of thousands of dollars. Nine Michigan mortgage companies are accused of illegally charging homeowners facing foreclosure upfront fees for mortgage modification assistance.

  • 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 made no real attempt to secure a modification and were subsequently unable to get their money back. Many of the victims lost their homes to foreclosure.

***

  • Several companies and individuals charged are accused of obtaining money through false statements to consumers. This charge is a five year felony. In addition several are accused of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and with 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.

For the list of criminal defendants, and the charges attributable to each, see Cox Files Criminal Charges Against 19 for "Foreclosure Rescue" Scams.

For a story update, see Livingston Daily: Felonies dropped in mortgage-fraud case (A Howell businesswoman admitted Friday to charging customers money upfront for loan-modification services, but she denied failing to perform the services promised and denied pocketing any money).

Arizona Slams Outfit For Allegedly Peddling Home Refi Scam; Firm's Claims That It Would Buy Homeowners' Loans, Then Modify Terms Were Bogus, Says AG

From the Office of the Arizona Attorney General:

  • Arizona Attorney General Terry Goddard [] announced he has filed a lawsuit against The Guardian Group, LLC (“Guardian Group”) for engaging in allegedly deceptive mortgage loan reduction services that have cost more than 2,500 consumers millions of dollars. Goddard also called attention to a new state law taking effect [last week] that prohibits foreclosure consultants and mortgage “rescue” companies from charging upfront fees. The Attorney General supported passage of the law.

***

  • The lawsuit, filed in Maricopa County Superior Court, alleges that the Scottsdale-based Guardian Group fraudulently represented itself as providing loan reduction services to homeowners struggling to make their mortgage payments. The company charged consumers an average advance fee of $1,595 for mortgage loan refinancing services, which it rarely provided. It collected fees from more than 2,500 consumers for enrollment in its Principal Reduction Program since August 2009.

  • The company, which markets nationally, made claims it would negotiate with lenders to purchase a consumer’s note for less than face value and sell the note in an investment package to a third-party investor. Guardian Group then told the consumer that it would modify the rates and terms of the consumer’s mortgage loans and reduce the principal owed to 90 percent of current market value.

  • Guardian Group fraudulently represented to consumers that it had $5 billion allocated for its “Principal Reduction Program” because it had multiple investors prepared to purchase mortgage notes. The Attorney General’s Office learned that not one of the supposed investors actually invested money in the company.

For the Arizona AG press release, see Terry Goddard Accuses Scottsdale Mortgage Company of Deceptive Practices.

For the lawsuit, see State of Arizona v. The Guardian Group, LLC, et al.

Non-Attorney Defendant Clipped Homeowners Out Of Upfront Fees For Bogus Legal Services, Says Colorado AG In Civil Lawsuit

From the Office of the Colorado Attorney General:

  • Colorado Attorney General John Suthers announced [] that his office has filed a lawsuit against a Denver man suspected of defrauding homeowners in foreclosure, including the elderly and disabled, by collecting upfront fees in exchange for fraudulent legal services. According to the complaint, Sherron L. Lewis, Jr., (DOB: 9/26/1956) attracted homeowners facing foreclosure through his Web site, http://www.illegalforeclosures.com/, and mail advertising and informed consumers that they could defeat the foreclosure process and eliminate their mortgages.

  • Lewis, who is not licensed to practice law, is suspected of providing consumers with legal advice on how to combat their foreclosures through the use of frivolous lawsuits. According to the complaint, Lewis’ lawsuits, often leveled against judges, public trustees and even one of his victims, have been routinely dismissed as meritless.

  • As part of his services, Lewis is suspected of requiring his victims to pay upfront fees for his services, which is illegal under the Colorado Foreclosure Protection Act, and he has acquired an interest in his victims’ properties as part of his agreements. In some cases, Lewis has rented out properties he has acquired an interest in while he delays foreclosure through his frivolous lawsuits.

For the Colorado AG press release, see Attorney General announces lawsuit against Denver man suspected of providing fraudulent foreclosure-rescue legal services.

For the lawsuit, see State of Colorado v. Lewis, et al.

(1) According to the AG's press release, Lewis is suspected of advising a quadriplegic victim in Jefferson County to file multiple lawsuits to challenge foreclosures on his home and two other properties in one case. In another, Lewis is suspected of charging the man more than $20,000 in exchange for the “legal work” he performed for the victim. In a third case, Lewis is suspected of occupying an elderly Illinois woman’s home rent-free for more than a year. When the woman attempted to repossess her own home, Lewis filed a lawsuit against her claiming racial discrimination.

Tuesday, August 3, 2010

Ongoing Probe Turns Up The Heat On Two Phoenix Cops Accused Of Ripping Off Homeowners Using Fraudulent Sale Leaseback Scam

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

  • For the past seven years, Tim and Ellie Gray have been forced to live with their parents. They are the latest victims to come forward claiming they were scammed by two Phoenix police lieutenants, Lee Brent Shaw and Mark Tallman. "They took our house, you know? They took our home. They were just lying to us all the way through and it's a big vicious scam. This in particular, because they were able to hide behind their badges," said Tim Gray.

  • The Grays were facing foreclosure, so they signed a "quit claim" deed that they thought would keep them in their home. It's supposed to allow the Grays to repurchase their home over time. But after Better Choice Investments, run by Tallman and Shaw, took control of the Gray's property, the company didn't make the mortgage payments as promised. The Grays said Lt. Shaw even threatened them with eviction and jail time when they complained.

  • They said Shaw said, "Get the (expletive) out of my house. It's my house now, not yours." Without warning, the Grays were suddenly being evicted. They were given only 15 minutes to grab what they could. "I got out with a pair of shoes and a bag of clothes," said Ellie Gray.

  • The Grays showed CBS5 pictures of all of their belongings simply thrown about in the backyard and stacked haphazardly in the carport as Better Choice Investments gutted the home. In three days, they say Better Choice Investments destroyed or stole everything they owned. "Even our car. Our car was in the driveway. We lost everything," said Ellie Gray.

  • Lts. Tallman and Shaw are currently facing civil punishment from the attorney general, and sources close to the investigation told CBS5 News the two will soon face new internal allegations of public corruption fraud and racketeering.

  • "They need to be fired, first of all. They should not be police," said Ellie Gray. "It scares me because people are able to do it behind a badge. That makes me really scared. And I haven't talked about it to anybody until now," said Tim Gray.

  • Lieutenants Tallman and Shaw are not currently facing any criminal charges, but the internal allegations include committing fraud against at least nine other officers who lost thousands as investors. If the allegations stick, the lieutenants will most likely lose their jobs. That investigation will be concluded after the attorney general gets a turn at them. That process should take about a month.

Source: Two Phoenix Cops Accused Of Fraud, Racketeering (Lieutenants Lee Brent Shaw And Mark Tallman Face Multiple Investigations).

See also, The Arizona Republic: Phoenix lieutenants face probe over real-estate business (Two Phoenix police lieutenants are under investigation after residents complained that some of the 120 real-estate purchases conducted by their off-duty business were unethical or illegal).

Feds Settle Civil Suits With Operators Of Loan Modification Rackets In Three Separate Cases

The Federal Trade Commission recently announced:

  • Eight marketers are banned from selling mortgage modification or foreclosure relief services under settlements with the Federal Trade Commission. The FTC alleged that the marketers charged homeowners up-front fees and falsely claimed they could get their mortgage loans modified or prevent foreclosure on their homes. The settlements in three separate actions are part of the FTC’s ongoing efforts against scams that target financially distressed consumers.

The FTC settled with the following defendants:

  • Federal Loan Modification Law Center and Steven Oscherowitz;
  • Loss Mitigation Services, Dean Shafer, Marion Anthony “Tony” Perry, and Bernadette Perry, also known as Bernadette Carr and Bernadette Carr-Perry;
  • Hope Now Modifications LLC, Hope Now Financial Services Corporation, Salvatore Puglia and Nicholas Puglia.

For the details of these cases and links to the relevant court documents, see Deceptive Marketers Banned from Selling Mortgage Relief Services; One Defendant Ordered to Pay $11.5 Million.

Use Of Obama Name & Likeness, Federal Logo Popular With Scammers Running Loan Modification Ripoffs

The New York Daily News reports:

  • Scammers are using President Obama's mortgage relief program - and his photo - to squeeze bogus fees from homeowners trying to avoid foreclosure. Across the country, dubious loan modification firms are claiming affiliation with the Obama administration's $75 billion program to help struggling homeowners trim mortgage payments. Some are running websites with photos and video of Obama and the logos of federal government agencies.

***

  • The hucksters mail solicitations to foreclosed homes in official-looking letters that make reference to the Obama program. For a hefty upfront fee, they offer to negotiate an Obama loan modification, but do virtually nothing to get payments lowered.

For more, see Scams use Obama's picture, federal logos to lure customers into phony loan modification programs.

Vegas Trio Charged With Ripping Off Homeowners Facing Foreclosure While Running Alleged Loan Modification Racket

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

  • Rena Starks was a homeowner advocate who said she wanted to stand up for Nevadans hit hard by our housing crisis. A TV commercial for her company, Homekeepers, said the business "modified all types of home loans." "Do you owe more on your mortgage than your home is currently worth," an announcer asked. "Are you on the verge or in foreclosure? Homekeepers can help." "If you're in trouble, call me," Starks said in the ad.

  • Now, Starks is in trouble with the law. A criminal complaint alleges Rena Starks, her husband Terry, her daughter Tracey, and employee Lourdes Damian stole money from their clients. "There's at least $25,000 to $40,000 involved in this case," said Chief Deputy Attorney General Conrad Hafen. "There may be more."

  • Hafen says the defendants would rip off homeowners who feared foreclosure by taking their money and not contacting the homeowners' lenders as promised. "This is clearly a case of individuals who are preying on the bad luck of other people," Hafen said.

For more, see Las Vegas Mortgage Broker Charged with Theft.

Monday, August 2, 2010

Lenders' Loan Modification Runarounds Physically, Emotionally Overwhelming For Many Homeowners

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

  • Lydia Mojica of Pasadena has been trying to save her home for the past year. “It’s been a nightmare. I can’t talk about it without starting to cry,” she says. She's negotiated with National City Mortgage for her loan. “It’s just been like a hamster in a wheel for the last seven months.”

***

  • I just felt like a toy. They were playing with me. The run around they kept giving us.” She says the lenders told her things like, “'We’ll have answers. Oh, we are going to delay this answer. Oh, we need one more document. Oh, now that’s April, we need your March documents.' It was being strung along to the very last minute.”

  • The ceaseless financial stress began to physically and emotionally overwhelm her and her family. She wasn’t able to sleep or eat for days. Her mother suffered as well. “My mother’s blood pressure is completely out of control. She has had to be medicated recently.”

  • Stories like this are nothing new to lawyer Pat Pinto of Orange Country Legal Aid. Her job is to help families negotiate with banks for mortgages they can afford. “They sit in my office and they cry, they vomit.” She says homeowners start to break down. “They’re so upset because they love their home. They want to stay in their neighborhood. They want their children to stay in their schools.”

  • In fact, she says she moved her trash can from behind her desk to in front, “because people sit in my chair and they are so upset they vomit all over the floor.” She describes the process families go through dealing with the banks to get better terms on their mortgage. “This is an emotional upsetting experience for them. And I tell you because this loan modification process is taking so long, over a year, that we watch homeowners become mentally unstable. And as the process goes on, they sink deeper into depression.”

For more, see Bank runarounds take toll on homeowners' mental health.

NJ An Unfriendly Place For Sale Leaseback Peddlers As Judge Slams Another Operator With $225K In Triple Damages, $50K+ In Homeowners' Legal Fees

In Bergen County, New Jersey, another foreclosure rescue operator who entered into a sale leaseback arrangement with a financially strapped local couple was found to be on the wrong end of a court ruling in a civil suit.(1)

In finding that the foreclosure rescue operator violated the state Consumer Fraud Act ("CFA"), Judge Ellen Koblitz found that the amount of actual damages suffered by the homeowners was $75,347, which she calculated by taking the $120,000 value of the home equity that the homeowner signed over to the operator, and reducing it by $44,653 worth of improvements to the home (after accounting for collected rents) made by the operator subsequent to the title transfer.

By voiding the conveyance, title in the property remained with the homeowner-couple as if no conveyance took place. In making the award of triple damages, Judge Koblitz made the following statement:

  • This Court is bound by the CFA and thus plaintiffs are entitled to treble damages. In granting the equitable relief of returning the property to the plaintiffs, the Court has—in essence—provided the plaintiffs with one third of the treble damages to which they are entitled. The return of the property compensates them for their ascertainable loss and
    makes them whole. The plaintiffs are thus entitled to the remaining two thirds of the treble damage award required by the CFA, in the amount of $150,694, as well as $50,590 in reasonable counsel fees and $1,912 in costs for a total of $203,196.(2)

For the full details of the case, as well as how the court calculated the amount of the homeowners' attorneys fees, the obligation for payment of which was imposed on the operator, see D'Agostino v. Maldonado, Docket No. C-84-09 (N.J. Super. Chancery Div., Bergen County, June 30, 2010) (when link expires, try here).

(1) For past posts on other New Jersey civil court cases involving similarly situated sale leaseback peddlers, see:

Federal criminal prosecutors in New Jersey have also been getting into the act. See:

(2) Interestingly, Judge Koblitz comes off in her ruling as being somewhat sympathetic towards (and possibly even a bit impressed with) the foreclosure rescue operator (a full-time kitchen remodeling salesman for Sears who had a history of working serious overtime hours for his employer, and who did occasional real estate deals on the side), and who completed only the ninth grade ("Although uneducated, his street sophistication and moxie allowed him to profit, while putting some money into the hands of the distressed homeowners that they may not have had the ability to obtain for themselves").

She also made clear that she wasn't all that impressed with the testimony of the homeowner-couple (for example, the husband, a college graduate who worked on Wall Street for ten years, earning as much as $250,000 a year before getting canned from his job, was described by Judge Koblitz as "an extremely non-responsive witness. He seemed totally unable to respond to a direct question, whether it was posed by his counsel, adversary counsel, or the Court. He cried several times during his testimony and generally bewailed his plight and that of his children.").

Notwithstanding, in reaching her decision, she explained (bold text is my emphasis, not in the original text):

  • The CFA mandates, with no discretion permitted, an award of treble damages, as well as reasonable counsel fees, once the claimant has established a CFA violation and an ascertainable loss. Cox v. Sears Roebuck, 138 N.J. 2, 24 (1994).

  • In this case, the requisite result imposed by the finding of a violation under the CFA may be harsh, but it is mandated by law.

  • Thus although it appears to this Court that Maldonado’s actions were motivated by what he viewed as legitimate profit, rather than an intent to defraud, his actions nonetheless constituted a violation of the CFA, and thus the Court is bound by the statute. See Skeer v. EMK Motors, Inc., 187 N.J. Super. 465, 470 (App. Div. 1982) (“The act is broadly designed to protect the public, even when a merchant acts in good faith.”).

  • While Maldonado may have kept up his end of the oral agreement, his written agreements were severely one-sided and unconscionable in that they did not conform to statutory requirements and were contradictory. Additionally, he held out an unlikely prospect of repurchasing the property and thereby obtained an unreasonable profit from the transaction. To hold that Maldonado did not violate the CFA because he was not formally educated, and was seemingly unaware of the legal implications of his behavior, would vitiate the intention of the CFA.

In addition, in finding that the state Consumer Fraud Act applied to the foreclosure rescue operator (even though he was not engaged in the real estate business full time, only doing deals occasionally), Judge Koblitz made this observation (footnotes appearing in original text omitted; bold text is my emphasis, not in the original text):

  • While the plain language of the CFA makes the act applicable to all persons involved in the “sale or advertisement of any merchandise or real estate,” courts have held the CFA applicable to professional and part-time merchants as they can be said to be involved in commercial practices. The CFA is not applicable to the casual seller.

  • Prior to his involvement with the D’Agostinos, Maldonado had been a party to other real estate transactions involving distressed properties. Each one involved a different situation and no proof was presented that he engaged in other fraudulent transactions, or that the other parties did not believe they were well-served by the transaction.

  • Maldonado’s past experience in this area of business, however, is sufficient to bring him under the purview of the CFA. The applicability of the CFA to Maldonado’s business dealings is further supported by the fact that he advertised for his services. It was this advertisement, displayed on the side of his car, which brought Maldonado to the attention of the plaintiffs.

Boston Feds Pinch Mortgage Broker In Fraudulent Sale Leaseback Foreclosure Rescue Scam; Suspect Stripped Home Equity, Leaving Owner With More Debt

In Boston, Massachusetts, The Herald News reports:

  • A North Dartmouth mortgage broker was charged Monday with defrauding mortgage lenders in connection with a mortgage rescue scheme in Wareham and Tiverton. Ryan Lazar, 31, of Tiverton, has been charged in a written allegation, called an “information,” with three counts of wire fraud, according to a press release issued by United States Attorney Carmen Ortiz, Robert Bethel, Inspector in Charge of the United States Postal Service and Jon Rymer, Inspector General of the Federal Deposit Insurance Corporation.

  • The information alleges that in 2005, Lazar schemed with others to defraud mortgage lenders in connection with the purchases and/or refinancing of properties located in Wareham and Tiverton. For each property, Lazar allegedly submitted false mortgage loan applications, which fraudulently concealed his prior indebtedness and falsely represented that he intended to reside in the property.

  • It is alleged that the Wareham transaction involved a mortgage “rescue” scheme, whereby homeowners who were on the brink of foreclosure purported to sell their home to Lazar. According to the information, in the course of the transaction, Lazar pocketed loan proceeds and ultimately caused the homeowners to incur significantly higher mortgage debt.

Source: Police: 'Rescue' scheme defrauded lenders.

Victimized Homeowner "A Piece Of Garbage!", Judge "A Bleeding Heart Liberal!", Court Ruling "A Disgrace!", Says Attorney For Equity Stripping Clients

A recent story in the New Jersey Law Journal reported on how a foreclosure rescue operator group was slammed in a civil lawsuit for screwing a financially strapped Marva Coleman out of the equity in her home while she lay seriously ill in a hospital bed after being initially admitted into the hospital through the emergency room.

The following excerpt, buried at the end of the story, describes the apparent hard feelings of the attorney representing the losing sale leaseback peddlers after Bergen County, New Jersey Chancery Division Judge Ellen Koblitz gave his clients a well-deserved hammering:

  • The lawyer for Kohout, Gentles and Salvation, Verona, N.J., solo practitioner Peter Caplan, calls Coleman "a piece of garbage" and said she "participated in this transaction, she profited from this transaction, she was fully aware of this transaction, and it's a disgrace that the judge found my clients did anything wrong." Caplan says Coleman was coherent when she signed the documents in the hospital.

  • Caplan says of Koblitz, "the judge is a bleeding heart liberal who used to be a public advocate. The judge's mind was made up long before the trial began." He says no decision has been made whether to appeal.

Source: Mortgage Rescue Firm Hit With Punitive Damages, Attorney Fees.

For Judge Koblitz' court ruling, see One West Bank, FSB v. Capo, Docket No. F-5952-09 (N.J. Super. Chancery Div., Bergen County, July 19, 2010) (when link expires, try here).

Sunday, August 1, 2010

Report: Servicers' Claims That Investors Owning Delinquent Mortgages Won't Allow Loan Modifications A Bunch Of BS

ProPublica reports:

  • Arthur and Alberta Bailey are about to lose their home near New Orleans, and their mortgage company says one thing stands in the way of relief: The investors who own their mortgage won’t allow any modifications.

  • It’s a story heard again and again across the country as desperate homeowners try to participate in a federal program created to foster loan modifications and prevent foreclosures. Loan servicers say their hands are tied by Wall Street. Federal officials, bank officers, housing counselors and investors themselves say that excuse is cited far more often than is justified. In fact, they say, few mortgage deals include such restrictions.

  • Consider the case of the Baileys. Litton, a subsidiary of Goldman Sachs, services their loan, and Litton’s contract with investors has no clear language banning modifications. In fact, documents show that over 115 other mortgages from the same investment pool have already been modified.

For more, see When Denying Loan Mods, Loan Servicers Often Wrongly Blame Investors.

In a related ProPublica story, see Resources for Investigating Investor Restrictions on Mortgage Modifications.

Accused Foreclosure Rescue Operator Under Indictment & Free On Bond Continues To Target Financially Strapped Homeowners

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

  • Brooklyn homeowner Angela Neysmith scraped up $1,500 when real estate broker Lavette Bills promised to trim her loan payments via President Obama's foreclosure prevention plan. "She said she could put me into the Obama program," Neysmith said, recalling Bills told her, "I could get a fixed rate and everything would be good for me."
    Everything was not so good. Neysmith, 50, did not get the promised loan modification to bail her out of the foreclosure she was facing on her Midwood St. home, but Bills managed to jack up her fee to $3,000. Neysmith says she was forced to send papers to the bank to process her modification application because Bills failed to do so.

***

  • Authorities say Bills' victims were distressed homeowners who called a radio show Bills hosted on WBLS and WLIB in 2007 in which she held herself out as a "foreclosure specialist." In a brief interview last Thursday, Bills denied scamming Neysmith, but declined to answer questions.

  • A few hours later, Bills showed up at Neysmith's house with a check for $1,500. Neysmith says Bills promised she'd get the rest of her money next month. "She says she wants no publicity," Neysmith said.(1)

For the story, see Homeowner victimized by broker promising to trim loan using Obama's foreclosure prevention plan.

(1) Bills' desire to keep this matter quiet is understandable inasmuch as a simple phone call to the U.S. Attorney's Office could be enough to set in motion the process of revoking her $250K bond and lead to her waiting for her criminal trial sitting in jail.

Parties In Michigan Predatory Lending Lawsuits Wrestle Over Forum Selection; Homeowners Ask Federal Judge To Kick Cases Back To State Court

In Troy, Michigan, the Daily Tribune reports:

  • Officials at an organization representing homeowners battling their mortgage lenders say hundreds more people in the tri-county area will join additional lawsuits. Officials at Michigan Loan Compliance Advisory Group Inc. in Troy said they plan to file lawsuits including up to another 1,000 plaintiffs against financial institutions for deceptive lending, excessive fees and other wrongdoing in granting subprime mortgages. That’s on top of the 88 plaintiffs representing 78 mortgages in Oakland and Macomb counties who through Michigan Loan Compliance sued more than two dozen banks for awarding inflated mortgages to borrowers.

***

  • The pending cases in Oakland, Macomb and a third in Wayne County were filed in state circuit court, but have since been moved to U.S. District Court in Detroit. However, Loan Compliance attorney Ziyad Kased has asked federal Judge Arthur Tarnow to return the Oakland case to Judge Colleen O’Brien in the Oakland court in Pontiac and said he believes federal Judge Nancy Edmunds on her own may return the Macomb case back to circuit Judge John Foster in Mount Clemens. Kased said the Oakland case should remain in state court because all of the defendants and plaintiffs do not have different state residences, which is a requirement to get the case moved.

***

  • Kased urged the federal judges to act soon. “Plaintiffs pray this court remand this case as quickly as possible because certain plaintiffs are facing imminent foreclosures and plaintiffs must file requests for temporary injunctions to prevent irreparable harm,” Kased said.

For more, see Mortgage fraud accusers promise hundreds more cases (Oakland, Macomb cases currently in federal court but may return to local state courts).

Use Of Private Process Servers In Chicago Foreclosure Actions Leading To Increased Incidents Of "Sewer Service"?

Buried in a recent story on the blog Chicago Now is an account of a local homeowner facing foreclosure who may be the victim of "sewer service" when a private process server purportedly served the foreclosure papers upon her when the lawsuit was commenced:

  • [Zabrina] Worthy, who lives on the South Side, came home in the winter of 2008 to find her bungalow boarded up. "I knew I was headed toward foreclosure," she said. After falling behind on her monthly payments, which ballooned from $1,500 to $2,100, she applied for a home loan modification. Her plan B was to sell the home. "I had hired a realtor and we were going back and forth on a modification and the house was boarded up."

  • According to court records, the firm hired to deliver the summons made four attempts. Three were delivered to homes that were thought to be Worthy's relatives. A special process server reported that he delivered another summons to her house, which he noted was vacant with no furniture, according to a court affidavit.

  • Worthy's court file is indeed chock full of evidence that her home was not vacant as the special process server noted. Under a judge's order, she was eventually allowed to go back into the house to retrieve her belongings, many of which were ruined by squatters who broke into the house in the meantime, according to Worthy and court documents.

  • Worthy's attorney Kelli Dudley, who also works with the Fair Housing Legal Support Center at the John Marshall Law School, said she thinks that the mortgage company's "hired guns" submitted "bogus" documents to the court confirming that they delivered the summons.

Source: Foreclosed without notice: How a court order could be violating homeowners' due process.

For a report on the "sewer service" problem in the City of New York, see Justice Disserved: A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York.

Go here for other posts on "sewer service."