Saturday, September 4, 2010

16 Tenants In Dilapidated Apartment House Get The Boot w/ No Prior Notice; Dangerous Conditions Force City To Shut Down Premises On Eve Of F'closure

In Salisbury, Massachusetts, The Daily News of Newburyport reports:

  • The Salisbury Beach apartment building at 14 Ocean St. deemed uninhabitable by town inspectors will be up for sale in a foreclosure auction Sept. 15, as its owners Jack and Marina Kitzis walked away from it, leaving five families homeless.


  • After nearly 30 calls from town inspectors since May concerning the unsafe state of the building's staircase, its electrical and plumbing systems, as well other code violations, Kitzis told Salisbury building inspector David Lovering on Aug. 10 if his insurance company won't pay to fix what's wrong with the building, he was going to forfeit the property to the bank.


  • Town Manager Neil Harrington has since Aug. 16 tried unsuccessfully to make contact with the bank that now has control of the buildings. Harrington and selectmen had hoped the bank would make the needed improvements to the buildings, allowing the 16 displaced tenants to return to their homes. "Right now, I think it's fairly clear that the families who once lived there won't be returning," Harrington said.


  • The electricity was turned off, and firefighters tore down the stairs as a precaution. Although firefighters helped residents out via ladders, tenants left most of their food and belongings behind and were out on the street with no shelter.


  • Kitzis was called to the scene that night [of the eviction], agreeing to put up the tenants for one night at a Salisbury motel, but since then the families -- most with young children -- have had to shift for themselves. Kitzis has not returned security deposits or rents for the month of August, leaving the families cash strapped as well. [...] The foreclosure may let Kitzis wiggle out of his responsibilities to his mortgage holder and his tenants, but Harrington hopes there's a way to move legally -- even criminally -- against him in weeks to come.(1)

For more, see Auction set for 'slumlord' apartments, leaving tenants homeless.

(1) For one thing, he can be charged with theft of entrusted funds for refusing to return the tenants' security deposits that he pocketed (and that he should have kept in a segregated bank account).

"Sovereign Citizen" Bail Set At $100K In Alleged Deed Ripoff Racket; Judge Refuses To Recognize Suspects' Claims Of "Diplomatic Immunity" From Arrest

In Conyers, Georgia, the Rockdale Citizen reports:

  • Rockdale County Superior Court Judge David Irwin ordered a $100,000 bond for charges relating to foreclosure fraud for an Atlanta man who claimed to be a sovereign citizen and apparently “no team player in the World Cup,” the judge said.

  • Akeem Kwame, 48, of Atlanta appeared before Irwin on Monday in connection with a May incident in which Kwame allegedly identified himself as a private banker and offered a Lions Gate Drive homeowner a quit claim deed so he could try to gain ownership of her home. The homeowner told authorities that someone, claiming to be her husband, called her mortgage company and did a loan modification on the foreclosure of the home, according to law enforcement reports. The Realtor selling the home called authorities when all the locks to the house had been changed and Kwame was seen leaving the residence in a Porsche. Kwame told responding deputies that he was buying the house from the bank. Kwame was arrested shortly afterward.


  • Irwin questioned if Kwame needed psychiatric evaluation, based on Kwame’s claims to sovereignty. “Because when they write me letters ... and say ‘I’m sovereign and not governed by anybody’ ... it causes me to wonder about one’s sanity,” Irwin said.


  • As a special condition [to allow for a bail bond], Irwin also ordered Kwame to surrender any passport and any ID card “saying he is a diplomat in his own mind or a diplomat for the country of whatever his country is.” Kwame is charged with first-degree forgery, financial identity fraud, theft by deception, criminal trespass, second-degree forgery and financial identity fraud.

  • Kwame’s case is the second local case involving sovereign citizens that has popped up in Rockdale County. Authorities in DeKalb County arrested Ivan Willis Taylor, 47, and Princess Donya Taylor, 41, of Stone Mountain on Aug. 19 on Rockdale County warrants relating to a July incident in Magistrate Court. Ivan Taylor was accused of making identification cards that claimed he was an ambassador of a sovereign state and had diplomatic immunity from arrest.

For the story, see Bond set in foreclosure fraud case (48-year-old suspect claims he is a sovereign citizen).

Judge Gives Foreclosure Action The Go-Ahead; Refuses To Give Weight To Crackpot-Created Promissory Notes & Deeds In Home Rescue Racket

In Cobb County, Georgia, WSB Radio reports:

  • A Cobb County man says he can save your house from foreclosure. All you have to do is sign it over to him! Joseph Jones III has been busy explaining this procedure to a judge. Somewhat incredibly, 13 homes in four metro counties have been signed into his name.

  • Jones says banks are "stealing" and committing "fraud". So he prints his own promissory notes, posting deeds in the window in his name. He insists he's not breaking any laws and isn't counterfeiting. Nor is he one of the "sovereign citizens" we've heard about recently. Jones simply claims there's no difference between a bank note, and his.

  • "Everything I do is according to law," Jones tells Channel 2 Action News. "And if I'm not doing anything according to law, then call the police and have them come arrest me." A judge late Thursday disagreed, ruling foreclosure proceedings against one of Jones' properties can proceed.

Source: Cobb County Home Buying Scam.

More On "Sovereign Citizens" Racket Using Phony Deeds, Fraudulent Liens To Stake Claims To Real Estate, Harass Enemies Of The Movement

In DeKalb County, Georgia, The Atlanta Journal Constitution reports:

  • When a new family moved into the mansion on South Goddard Road in south DeKalb County, residents just assumed they were “city folks” too busy to meet neighbors. Georgia Power and the water company came out, but 87-year-old Helen Goddard never saw the residents. “We know everyone around here. But they were quiet, no knocking on the door to introduce themselves,” said Goddard, whose husband’s family has lived in the area for centuries and are the namesake for the road.

  • The only time Goddard saw her next-door neighbors was when they were being led off in handcuffs. Prosecutors say the $1 million brick home next to the Goddards’ farmhouse is one of at least 19 properties that have been taken over by a sect of anti-government extremists involved in criminal behavior.(1)

  • They call themselves “sovereign citizens” and believe they are immune to state and federal laws. They assert, among other things, that banks can’t own land and that any home owned by a bank – including the thousands throughout Georgia – is free for the taking. Police and prosecutors take a different view.(2)

For more, see DA: Paper terrorists stealing homes (S. DeKalb home is one of 19 Ga. properties usurped by 'sovereign citizen' group).

(1) According to the story, local investigators have tied the sovereign citizens to at least 19 property thefts in DeKalb, Fulton, Gwinnett, Henry, Spalding, Newton and Richmond counties, including mansions – some still under construction – and a shopping center in Buckhead valued at $13 million. Police have reportedly charged six suspects – including Goddard’s two neighbors Linda and Gregory Ross – with violating the Racketeer Influenced and Corruption Organizations Act, with warrants having been issued for another five suspects.

For a similar racket being alleged in New York, see Feds Indict Trio In Alleged $1.24 Trillion Bogus Lien Extortion Racket Targeting Government Officials, Bank Executives; and for a related civil lawsuit filed in this NY case, see County of Ulster, New York, et al. v. Ulloa, et al.

(2) In a related item, see Anti-Government "Sovereign Citizen" Movement Exploits Economic Climate, Engages In Scams And Criminal Acts:

  • [Among the] troubling developments in the sovereign citizen resurgence include:

    · Exploiting the mortgage/foreclosure crisis. Sovereign citizen adherents are promoting a variety of scams that falsely claim to save people's homes from foreclosure. Other sovereign citizens are even brazenly seizing foreclosed homes for their own use.

    · Engaging in "paper terrorism." At alarming rates, sovereign citizens are placing fraudulent liens on the property of perceived enemies as a highly effective means of harassment and retaliation. Some even do it from prison cells.

Judge Kiboshes "Secession" Defense; Rejects Native American Property Owner's Attempt To Form His Own Indian Reservation To Dodge City "Fix-Up" Order

Attorney/columnist John G. Browning writes in The Southeast Texas Record:

  • Sometimes, I get the feeling that judges are placed in the position of being like a game show host dealing with a particularly dense contestant giving an incorrect answer - "No, so sorry, but thanks for playing and we have some lovely parting gifts for you." When litigants come up with some of the most bizarre theories and defenses imaginable, some judges have to wonder, "Did you really think I was going to buy that?"

  • Take William Bowersock, for example. The Lima, Ohio, man was facing violations of the city's nuisance laws for two run-down houses he owns, and which the Lima property authorities had ordered him to clean up and repair. Bowersock's defense was to contend that he had seceded from the city and, by virtue of his Native American ancestry, had formed his own Indian reservation - making him exempt from the city's property code.

  • But Judge Richard Warren said not so fast, Cochise; he rejected the whole "I am my own reservation" argument and ordered Bowersock to fix up the two homes. It just goes to show you - no man is an island, and no man is an Indian reservation either.

For other bizarre legal theories and defenses from litigants in lawsuits, see "Nice Try, But ... No."

Friday, September 3, 2010

Homeowners Say Chase Pocketed Insurance Payment w/out Promptly Crediting Account; Sue Servicer For Credit Rating Damage, Inflated Fee Clip

In Galveston, Texas, The Southeast Texas Record reports:

  • A Galveston County couple accuses Chase Home Finance LLC of mishandling a house payment made after Hurricane Ike and providing false information to credit bureaus, recent court documents say. According to a lawsuit filed July 20 in Galveston County Court No. 3, Sam and Jennifer Finegan informed the defendant that they will pay off a loan for their Hurricane Ike-damaged residence when they receive their insurance claim.


  • The plaintiffs issued Chase a check for $20,000 in November 2008. They claim the defendant, however, did not properly apply the payment, but submitted negative credit information to various credit reporting agencies instead.

  • Chase continued to hold on to the funds without crediting the account, the suit says. The plaintiffs argue that they tried to address the situation, but were unsuccessful in reaching an authority. Chase's errors and lack of response inflicted damage to the Finegans' credit rating, the suit states.

For more, see Couple claims finance company ruined their credit.

BofA's Failure To Promptly Post $53K Payment Leaves Homeowner Facing Imminent Foreclosure Hanging In The Wind; Media Help Needed To Cancel Sale

In Campbell, California, KGO-TV Channel 7 reports:

  • A homeowner days away from foreclosure thought he had finally dug himself out of trouble, but that's not what happened, at least until he called 7 On Your Side. Nicholas Hatt is enjoying a rare moment of quiet after months of not knowing if he would lose his home.


  • His grandfather offered to loan him $53,000 to get his mortgage current, but giving that money to Bank of America proved difficult. "They told me until they received the money, they would have the foreclosure date set for Monday, and this was a Friday and I'm asking for the money to be transferred from one account to the other. They told me I had to mail it," says Hatt.

  • He showed 7 On Your Side a copy of the cashier's check and a tracking confirmation showing Bank of America received his check, but days went by without the payment being posted - not knowing if he would lose his home. "At that point, I just kept calling. I kept calling every day. They didn't post anything," says Hatt.

  • After two weeks, his anxiety had become unbearable. He turned to 7 On Your Side for help. We called Bank of America and within two days, the funds were posted to his account and Nicholas' home came out of foreclosure.

For the story, see Homeowner avoids foreclosure with last minute payment.

Bank Attempts F'closure After Jacking Up Fees On Loan That Was Fully Paid w/ Satisfaction Recorded 5 Years Earlier; Backs Down After Media Intervenes

In Lawrence County, Pennsylvania, WPXI-TV Channel 11 reports:

  • A Lawrence County man said his bank began foreclosing on his home, even though he paid his mortgage off. Richard Leaghty said in 2004 he sold his business and then paid his mortgage off in full at National City Bank. Three months later, the bank filed a document with Lawrence County that showed the mortgage was paid off.

  • But five years later, after National City was purchased by PNC Bank, Leaghty began receiving bills that said he owed $1,200 on his mortgage that Leaghty and National City said he paid off.


  • Leaghty said the bill was increased from $1,200 to $3,000 to $6,000. After the bill reached its highest, PNC began foreclosing on his home. Leaghty said he turned to Linda Thomas, a housing counselor, for help. Thomas said it looked like an open and shut case. She said all she had to do was show PNC Bank the documents from Lawrence County that showed Leaghty paid his mortgage off, but Thomas said the bank never responded.

  • "According to state records the home has been paid for," said Thomas. "The mortgage was fully satisfied. This is a gentleman who is in ill health. He doesn't need this kind of stress and we can't get a response from the lender."

  • Thomas said she was able to put a temporary stop to the foreclosure, but the bills and the penalties kept coming. Thomas said she got "fed up" and filed a complaint with the Pennsylvania Attorney General's office and contacted Target 11.

  • Target 11 verified the information with Lawrence County and contacted PNC Bank about the situation. A few days later consumer investigator Robin Taylor received an e-mail from PNC that said the situation was resolved. Leaghty said that the same day Target 11 received the e-mail; he received a call from the bank saying that he no longer owed PNC any money. Thomas told Taylor that, "You accomplished in three days what we couldn't do in six months."

For the story, see Target 11 Helps Man Fight Bank's Mortgage Mistake.

Contractor, Attorney Consent To $104K+ Restitution, $550K Civil Penalties In Alleged Mechanics Lien Racket That Threatened Seniors With Foreclosure

From the Office of the Florida Attorney General:

  • Attorney General Bill McCollum [] announced his office has obtained a judgment against a South Florida plumbing company, resolving allegations that Tri-County Plumbing Services sent salesmen posing as plumbers to mislead consumers into paying exorbitant prices for plumbing work. The terms of the judgment provide consumer restitution of more than $104,000.

  • The Attorney General’s Economic Crimes Division began investigating the company after receiving multiple consumer complaints, including some complaints from senior citizens who reported they felt they were targeted because of their age. Not only did consumers complain about dramatically inflated prices, some were threatened with the loss of their homes and liens against their property if they didn’t pay the company. Some consumers complained that salesmen had used sledgehammers to gouge holes in their walls, driving up the cost of repairs.

  • In addition to obtaining restitution for victims, the Attorney General’s Office also obtained a judgment against the company for $550,000 in civil penalties, which if collected will go to the state’s General Revenue fund, to the benefit of Florida taxpayers. The consent judgment names Tri-County Plumbing, along with Randall Gilbert, Leslie Gilbert and Susan Gilbert. Randall Gilbert, a South Florida attorney, is also prohibited from lecturing to members of the construction or plumbing industry.

Source: Attorney General Obtains More Than $104,000 for Consumers From South Florida Plumbing Company.

For the consent judgment, see State of Florida v. All-In-One Enterprises, Inc., et al.

Tenant Who Allegedly Targeted His Landlord In Real Estate Equity Refinancing Ripoff Tracked Down In Canada; Feds Seek Extradition

Buried in a recent story on mortgage fraud in The Wall Street Journal is this excerpt on a recent indictment of a tenant who attempted to rip off the equity in the house he was renting from his landlord:

  • [T]he Federal Bureau of Investigation in June indicted a Phoenix man for mail and wire fraud among other alleged crimes when the agency says he tried to steal a house from his landlord.


  • Fraudsters have adapted to the new restrictions. With banks less apt to lend to borrowers with shaky finances, criminals rely more on falsifying documents, recruiting loan officers and other bank insiders to work for them, and stealing identities to get loans, federal investigators and mortgage industry research reports.

  • In the Phoenix case, prosecutors allege, Jose Victor Buencamino did all three. Some people who knew Mr. Buencamino describe him as a large, friendly man devoted to his children, the life of many a party and a passionate golfer. Gary Weaver, who rented a home to Mr. Buencamino last year, has a different impression. He said the Arizona businessman tried to snare him in an elaborate mortgage scheme.

  • According to a federal indictment unsealed in June, while Mr. Buencamino was renting Mr. Weaver's house on the golf course at Moon Valley Country Club, he intercepted mail intended for Mr. Weaver and obtained his social security number, then applied for a driver's license in Mr. Weaver's name.

  • Then, the indictment alleges, with the help of a friend who worked as a loan officer at a local branch of Compass Bank, a unit of Spanish bank Banco Bilbao Vizcaya Argentaria SA, Mr. Buencamino obtained a $245,000 cash-out mortgage on the property. A homeowner using a cash-out mortgage refinances the home loan for more than the mortgage is currently worth and pockets the difference in cash.

  • A Compass Bank spokesman didn't respond to requests for comment. Mr. Buencamino, who couldn't be located for comment, has not responded to the charges. A federal agent said he had been tracked to Vancouver, where the agent said he is applying for Canadian residency. Prosecutors involved in the case said he didn't have an attorney on whom they could serve court papers. U.S. authorities said they were seeking his extradition.

Source: Mortgage Fraud Is Rising, With a Twist (Adapting to Tighter Rules After Collapse, Scammers Turn to More Complex Plots).

Thursday, September 2, 2010

Cops Probe Squatters' Alleged Attempt To Snatch Three Vacant Seattle-Area Mansions; "Mortgage Note Elimination Program" Peddler Suspected

In Kirkland, Washington, KOMO-TV Channel 4 reports:

  • Detectives believe squatters are attempting to take possession of three separate mansions on the Eastside, each worth more than a million dollars. And detectives say they're investigating ties between these latest squatting cases and a man connected to the squatters, who set up shop in a $3.2 million Kirkland mansion back in June.

  • These latest cases first caught the attention of realtors, who found letters posted on three vacant properties in Kirkland and Bellevue earlier this week. The letters tell occupants "to surrender possession within three days of serving this notice" on August 17. Two of the properties are bank-owned; the third, listed at $2.1 million, is in foreclosure.


  • Realtors say red flags were raised when they saw the name James McClung at the bottom of the letters. McClung, a former Bothell-based realtor, is also listed on state records as the owner of NW Note Elimination, which bills itself as a mortgage elimination company.

For more, see Police investigating man claiming million dollar Eastside mansions.

See also: Kirkland Reporter: Man connected with Kirkland squatter targets more Eastside homes.

Phoenix Jury Finds Man Peddling "Mortgage Elimination" Racket Guilty On Ten Fraud Counts; Scammer Pocketed $250K+, Say Prosecutors

In Phoenix, Arizona, KSWT-TV Channel 13 reports:

  • A Phoenix mortgage broker has been convicted on 10 charges of fraud for scamming some homeowners into filing bogus foreclosure paperwork. Maricopa County prosecutors say 52-year-old Edward L. Carpenter was found guilty by a jury Wednesday after a 6-day trial. He faces an Oct. 7 sentencing.

  • Authorities say Carpenter contacted homeowners and claimed he ran a "mortgage elimination" business that could legally remove their names from their mortgages, giving them free and clear ownership of the properties.

  • They say Carpenter charged upfront fees of $1,000 or more and got the homeowners to file fraudulent foreclosure paperwork with the Maricopa County Recorder's Office. The filings were designed to cloud the title, confuse title companies and cause mortgage companies to fund loans. Prosecutors say Carpenter received more than $257,000 in illegal proceeds from the scheme.

Source: Phoenix man convicted of mortgage fraud.

Homebuying Couple Claim Attorney/Closing Agent Failed To Pay Off Undisclosed Lien; Discover Problem 10+ Years Later When Hit w/ Foreclosure

In Canton, North Carolina, the Smoky Mountain News reports:

  • A Canton couple has sued town Alderman Eric Dills and three attorneys after learning their home was unknowingly being used as collateral by Dills’ for a revolving loan.

  • For more than 10 years, Carol and Joseph Hannah were unaware that their home was tied up in Dills’ equity line of credit — until May when they received a baffling notice of foreclosure from Champion Credit Union after Dills defaulted on his loan. Dills claims innocence in the mixup, however. He argues that lawyers botched delivery of the loan payoff to the bank.

  • Carol and Joseph Hannah had bought the home from Dills in March 2000 for $85,000. They made a down payment of $8,500 and Dills financed the remainder. Asheville lawyer Richard Maita inked the real estate deal on behalf of both parties. A year earlier, Maita had arranged for Dills’ loan, which used the same home as collateral. The couple claims that at no point during the property transfer did Maita inform them of Dills’ prior loan.

  • Maita charged the couple for a title search — which makes sure the property is free and clear of any encumbrances — and for title insurance — which provides protection in case the title search fails to turn up a hidden claim against the property. The couple accuses Maita of never carrying out the title search and failing to take out a title insurance policy despite charging them for both.

For more, see Unsuspecting couple faces foreclosure after chain of events.

Felony Theft Conviction For DE Man Who Pocketed R/E Sale Proceeds w/out Paying Off, Disclosing Existing Liens; Unwitting Buyers Left In Foreclosure

In Bridgeville, Delaware, The Daily Times reports:

  • Sussex County businessman James Tennefoss, [...] has been convicted of felony theft in two property sales cases. Prosecutors charged that Tennefoss used properties near Bridgeville and Georgetown as collateral in loans in 1999 and 2001, totalling $97,500.

  • But in 2005 and 2006, his companies sold the properties, without Tennefoss disclosing that their uses as collateral. Tennefoss eventually stopped paying on the loans, and the lender began foreclosure proceedings against the new owners, which are still pending. Tennefoss' two corporations, Jim Lee Inc., and Southern Delaware Developers Inc., were together paid more than $251,000 for the two properties.(1)

For the story, see Former Sussex restaurateur convicted of felony theft.

(1) The story is silent as to whether:

  • the new buyers possibly paid all cash for the properties and failed to obtain a title search and purchase title insurance protection, or
  • in the event title work was performed on the properties, the title agent either screwed-up or played a role in the fraud, thereby possibly leaving the title insurance underwriter issuing the policy as an additional victim of the scam.

Home Purchaser Loses Life Savings After Seller Pledges Property As Loan Collateral After Pocketing Buyer's Cash & Failing To Give Recorded Title

In Sullivan City, Texas, KRGV-TV Channel 5 reports:

  • A father used his life savings to buy a home for his daughter. He was hoping she would never have to worry about a mortgage. Now, they've learned they don't own the home.

  • Frank Gonzalez made a deal directly with the owner of the house on Alamo Street four years ago. [...] He paid $68,000 cash. It was money he saved over 30 years of working construction jobs. Gonzalez says he signed some papers, got a deed, and a receipt. He thought he was finally a homeowner.

  • A few months ago, Gonzalez became concerned when he never got a property tax bill. He learned through the Hidalgo County Tax Assessor's Office, the house was not in his name. It was still under Hernandez Homes, owned by a man named Frank Hernandez. Hernandez is the same man who Gonzalez made the deal with. The house was thousands of dollars behind in taxes.

  • Soon after, Gonzalez and his daughter got a foreclosure notice. Turns out, Compass Bank now owns the house. The lawyer representing the bank told them Frank Hernandez took out a loan for $78,000 after he made the deal with Gonzalez.(1) He never paid it back and the bank foreclosed on the home.


  • The bank says they must be out of the home by September 15. Gonzalez is back where he started, looking for a place to live. This time, it's a struggle because his entire life savings is gone.

For the story, see Man Loses Home He Spent Life Savings On.

For a similar Texas story, see More Contract For Deed Horror Stories - Texas Homebuyers Lose Home To Foreclosure Despite Making All Payments As Seller Pockets Cash & Stiffs Bank.

(1) A prospective purchaser of, or lender proposing to take a mortgage on, real estate generally has a duty not only to examine defects in the record chain of title but, also, to discover anyone who is in open possession of land.

If, as reported in this story, the seller pledged the home as collateral after the sale to Gonzalez and after the latter took possession of the premises, said possession, if "visible, open, exclusive, and unequivocal possession -- affords notice of title equivalent to the constructive notice deed registration affords" under Texas case law to subsequent purchasers and lenders proposing to take a mortgage as collateral for a loan, even though the occupant's deed is otherwise unrecorded. Madison v. Gordon, 39 S.W.3d 604 (Tex. 2001) (citing Strong v. Strong, 128 Tex. 470, 98 S.W.2d 346, 348 (Tex. 1936).

The Texas Supreme Court, in Madison, made these statements regarding the application of the bona fide purchaser doctrine to subsequent purchasers and lenders in situations like those described in this story (some citations omitted, bold text is my emphasis, not in the original text):

  • Status as a bona fide purchaser is an affirmative defense to a title dispute. A bona fide purchaser is not subject to certain claims or defenses. To receive this special protection, one must acquire property in good faith, for value, and without notice of any third-party claim or interest. Notice may be constructive or actual. Actual notice rests on personal information or knowledge. Constructive notice is notice the law imputes to a person not having personal information or knowledge.

  • One purchasing land may be charged with constructive notice of an occupant's claims. This implied-notice doctrine applies if a court determines that the purchaser has a duty to ascertain the rights of a third-party possessor. See Collum v. Sanger Bros., 98 Tex. 162, 82 S.W. 459, 460 (Tex. 1904); American Surety Co., 82 S.W.2d at 183. When this duty arises, the purchaser is charged with notice of all the occupant's claims the purchaser might have reasonably discovered on proper inquiry. Dixon v. Cargill, 104 S.W.2d 101, 102 (Tex. Civ. App.--Eastland 1937, writ ref'd); see also Flack, 226 S.W.2d at 632. The duty arises, however, only if the possession is visible, open, exclusive, and unequivocal. See Strong v. Strong, 128 Tex. 470, 98 S.W.2d 346, 350 (Tex. 1936).


  • In Strong, we described the kind of possession sufficient to give constructive notice as "consisting of open, visible, and unequivocal acts of occupancy in their nature referable to exclusive dominion over the property, sufficient upon observation to put an intending purchaser on inquiry as to the rights of such possessor." Strong, 98 S.W.2d at 350. Possession that meets these requirements--visible, open, exclusive, and unequivocal possession -- affords notice of title equivalent to the constructive notice deed registration affords. Strong, 98 S.W.2d at 348.

See Bank of Am., N.A. v. Schwartz (In re Hayes), 194 Fed. Appx. 217; 2006 U.S. App. LEXIS 21139 (5th Cir. 2006) (affirming In re Hayes, Case # SA-03-CA-1228, 2004 WL 2926006 (W.D. Tex. San Antonio Div. 2004)) for a relatively recent Federal appeals court case that is substantially on point - where a homebuyer's equitable title to a purchased home in an arrangement where no deed was recorded was found to have priority under Texas law over a mortgage loan subsequently placed on the property by the seller after the sale to the homebuyer (the lower court's 23-page ruling in In re Hayes gives an extensive analysis on the Texas law involving the effect of the bona fide purchaser doctrine to subsequent purchasers and mortgage lenders where one is in possession of land under an unrecorded instrument and how it was applied to the facts in this case).

Based on the reported facts in the KRGV-TV Channel 5 story, above, assuming the foreclosing lender failed in its duty to ascertain the rights of the occupants, and possession was visible, open, exclusive, and unequivocal, the homeowner's rights in the home are superior to those of the lender and, accordingly, has no business being booted out of his home.

Unfortunately, the combination of unaffordable legal representation to some homeowners, and the fact that this area of law (ie. bona fide purchaser doctrine) is regrettably beyond the scope of many attorneys' expertise, this homeowner stands to wrongfully lose his home.

See this post, footnote 2 more on the duty to inquire into the rights of occupants in possession of land when applying the bona fide purchaser doctrine under Texas law.

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

Wednesday, September 1, 2010

California AG Scores $1.1M Judgment Against Attorney In Alleged Foreclosure Rescue Racket That Screwed 2,000 Desperate Homeowners Out Of Thousand$

From the Office of the California Attorney General:

  • Attorney General Edmund G. Brown Jr. [] announced a $1.1 million judgment against longtime Los Angeles attorney Mitchell Roth after he conned 2,000 desperate homeowners into paying him thousands of dollars to file "frivolous and phony" lawsuits that didn't reduce a penny of mortgage debt for a single client.(1)


  • In 2008, Roth, a seasoned Los Angeles attorney, joined with Nevada-based United First, Inc. and the company's owner, Paul Noe, to provide foreclosure relief services to homeowners struggling to pay their mortgages.(2)


  • United First charged homeowners some $1,800 in up-front fees, plus at least $1,250 each month, and 50 percent of the cash value of any settlement. If a homeowner's debt was eliminated altogether, the homeowner was required to pay United First 80 percent of the value of the home.

  • After collecting up-front fees, Roth filed lawsuits on behalf of homeowners, pushing a novel legal argument that a borrower's loan could be deemed invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings. Instead, Roth tried to extend the lawsuits as long as possible to collect additional monthly fees from clients. This approach did not generate a single victory in court and did not lower or eliminate the mortgage debt for a single one of the 2,000 homeowners who hired Roth and United First.
For the entire California AG press release, see Brown Wins $1 Million in Restitution for Victims of Attorney-Backed Foreclosure Rescue Scam.

Go here for the California AG lawsuit against Roth and here for the $1.1 million judgment against Roth.

(1) AG Brown's lawsuit contended that Roth and others:
  • Violated California's credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
  • Inserted unconscionable terms in contracts;
  • Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and company owner Paul Noe, who were not lawyers, to generate business for his law firm violating Section 6150-6156 of the California Business and Professions Code, and
  • Violated Section 17500 of the California Business and Professions Code.

(2) In addition to the hot water they got into in this case, Paul Noe reportedly was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004; and Mitchell Roth resigned from the California State Bar in late May 2009, after the State Bar closed his law firm (see SF Weekly: State Bar Takes Over 'Son of Super Swindler' Law Firm -- 2,000 Con Jobs Too Late).

California Homeowner Finally Gets Loan Modification After Year & A Half Struggle As Media Exposure Apparently Lights Fire Under Mortgage Servicer

ProPublica reports:

  • Wells Fargo finally gave a loan modification to a long frustrated homeowner—after we profiled her last week. After ProPublica first contacted Wells Fargo about her, [Californian Suzanna] Wertheim received a call denying her a modification because of insufficient income. Then, after we published our story and Wertheim appeared on "The Rachel Maddow Show," Wells Fargo called her again. Wertheim feared bad news—that the bank was proceeding with foreclosure. Instead, Wells Fargo offered her a modification, bringing her payment down to an amount she says she can afford. Wertheim says the bank also eliminated over $20,000 in fees.

For more, see Profiled Homeowner Gets a Mortgage Modification.

State Prosecutors Offer Plea Deal, Seek $25K+ From Pair Accused Of Peddling Illegal Loan Modification Services

In Livingston County, Michigan, the Livingston Daily reports:

  • There is a potential plea deal for two women accused of illegally charging customers money upfront for loan-modification services. An assistant prosecutor with the Michigan attorney general's office made the announcement Monday in Livingston County District Court, but he declined afterward to provide details. The defendants, Michelle Rene Garbuschewski and Lisa Marie Joboulian, have until Sept. 13 to ponder the prosecutor's offer. If accepted, they will return to District Court that day to enter the plea.


  • Garbuschewski, of Howell-based business Elite Mortgage Relief, and Joboulian are both charged with violating the Credit Services Protection Act for allegedly illegally charging homeowners facing foreclosure upfront fees for mortgage-modification assistance. The charge carries a penalty of up to 93 days in jail and up to $1,000 fine.


  • Joy Yearout, a spokeswoman with the attorney general's office, earlier confirmed that there are eight complaints against Garbu-schewski, Joboulian and Elite Mortgage. There are two complaints named in the current charges, but Yearout said her office will seek restitution — estimated at more than $25,000 — for all eight complainants.

For the story, see Women in illegal-charging case could get plea deal.

Loan Mod Scammer "Buys Out" Of Jail Time; Gets Suspended Sentence, Probation After Agreeing To Cough Up Half Of Required Restitution Before Sentencing

From the Office of the Nevada Attorney General:

  • Michael Sinclair was sentenced in Las Vegas [] connection with his involvement with a mortgage foreclosure rescue company, Federal Housing Aid, whose operation included a call center in the Philippines.

  • District Court Judge Michael Villani imposed a sentence of 30 to 90 months in the Nevada State Prison, but suspended the sentence and placed Sinclair on probation for a period not to exceed five years. Sinclair entered a plea to one count of Mortgage Lending Fraud and is required to pay half of the restitution owed prior to sentencing. He is required to pay restitution in the amount of $29,853.56 to the victims of his crime as well as another $300 for the cost of his extradition from the Philippines.(1)

For the Nevada AG press release, see Defendant In Mortgage Rescue Scam Operated from The Philippines Sentenced.

(1) According to the Nevada AG press release, Sinclair would contact homeowners facing foreclosure and offer to stop the foreclosure proceeding and save their credit. The victims entered into an agreement to pay an up-front fee ranging from $700.00 to $1,500.00 as compensation for affecting a solution to the foreclosure. Once the victims forwarded these fees to Federal Housing Aid, no further action was taken. The homeowners, some of whom were over the age of 60, were never provided with assistance in resolving their problems and, in fact, ended up losing their homes.

Attorney Gets 8 Months For Pocketing Rent From Dead Client's Condo After Knowingly Failing To Locate Deceased's Heirs

From the Office of the U.S. Attorney (Louisville, Kentucky):

  • David J. Hale, United States Attorney for the Western District of Kentucky, announces that Ronald Snyder, age 71, of Fisherville, Kentucky was sentenced to 8 months imprisonment followed by 3 years of Supervised Release. The defendant was also ordered to pay restitution in the amount of $15,000 and a $5,000 fine.


  • In the Information and Plea Agreement, Snyder admitted that from March 2, 1998 until August 2009 he fraudulently and illegally exercised dominion and control over a condominium [in] Louisville, Kentucky. The condominium was owned by R.C. until his death on March 2, 1998. Following R.C.'s death, Snyder knowingly failed to locate the heirs of R.C. or cede control of the condominium to the state of Kentucky. Instead, Snyder rented out the condominium and kept the rental payments for his own benefit. The value of the condominium as of the 2006 appraisal was $91,060. Snyder received at least $15,000 in rental payments during this period.

Source: Louisville Attorney Sentenced To 8 Months Imprisonment (Ronald Snyder sentenced for stealing condominium of a deceased man).

(1) Because the rental payments were sent by U.S. mail from the tenants to Snyder, the Feds had jursidiction over this case and enabled them to secure a conviction on one count of mail fraud.

Tuesday, August 31, 2010

Closing Attorney Ordered To Pay $2.37M Restitution In Escrow Funds Theft; State's "Lawyer Ripoff Reimbursement Fund" May Be Left Holding The Bag

In Ballston Spa, New York, The Glens Falls Post Star reports:

  • A 47-year-old attorney who practiced law in Saratoga Springs admitted [...] to stealing millions of dollars during real estate transactions he handled for more than a dozen clients. Patrick M. Reidy of [...] Wilton, pleaded guilty in Saratoga County Court to second-degree grand larceny, a felony.

  • Saratoga County District Attorney James Murphy said his office will ask the court to impose a 5-to-15-year jail term when Reidy is sentenced on Oct. 22. Reidy will also be ordered to pay $2.37 million in restitution to the 19 victims and will lose his license to practice law.

  • Reidy, an attorney who specialized in real estate in addition to being a licensed real estate broker and notary public, stole money from real estate closings and used that money for own purposes, rather than paying off mortgages and other loans, Murphy said.


  • "I'm thrilled because it feels like there's finally a light at the end of the tunnel," said [Theresa] Olson-Hoffman, of Lake George, whose dealings with Reidy resulted in the disappearance of a $135,000 check she had given to him and a crash to her credit rating when she refinanced a home loan.


  • Olson-Hoffman has been working with The Lawyers' Fund for Client Protection [of the State of New York], an organization whose mission is to protect consumers from dishonest conduct in the practice of law, by reimbursing client money that is misused.(1) "They said that they needed a conviction and we'll have that in October," she said regarding the Oct. 22 sentencing. "After that, I don't know how long it's going to take to kick in."

For more, see Saratoga Springs lawyer pleads guilty in larceny case.

(1) This recent Albany Times Union story adds:

  • [Criminal defense attorney Michael] Koenig would not discuss any personal assets Reidy still has, but said the victims will be able to turn to the Lawyer's Fund for Client Protection for money, and the fund managers will then pursue Reidy's holdings.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

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

Closing Agent Blames Russian Mob For Stolen Online Wire Transfers Meant For Loan Payoffs; Unwitting Couple Seeking Mtg Refi Now Left Facing F'closure

In Parker, Colorado, KMGH-TV Channel 7 reports:

  • It sounds like it's from a movie, but a Parker family and a title company both say the Russian mafia is stealing money from wire transfers. As a result, a Parker family may lose their home to foreclosure and they did nothing wrong. "I don't get why this can't be cleared up today," said Kim Canning, of Parker.

  • Canning and her husband, Tim, refinanced their home in September 2009. Canning thought it was a simple process -- a few signatures and the deal was done. But a few months later she started receiving letters from Bank of America stating she had not paid her mortgage and they were going to begin foreclosing on her home. That's when she learned the refinancing never went through and she might actually lose her home.


  • Canning refinanced her home with Classic Title Agency. At some point when Classic Title was transferring the funds online to Chase Bank, $900,000 disappeared. President Ryan Rodenbeck of Classic Title said nine $100,000 transfers were stolen -- $277,000 of that was part of the Cannings' refinancing.

  • According to Rodenbeck, the Russian mafia intercepted it and stole the money. Bank of America, which held the Cannings' first mortgage and was supposed to get the money, never did. Bank of America assumed the Cannings had just stopped paying their mortgage so they started the foreclosure process on the family's Parker home.

For more, see Did Russian Mafia Steal Family's Refinancing Money? (Title Company Claimed Russian Mob Stole Money During Wire Transfer).

State Bar Confirms Probe Into South Florida Foreclosure Mill

The South Florida Business Journal reports:

  • David J. Stern, an attorney who is the target of a state civil investigation for mortgage fraud complaints, was previously disciplined by the Florida Bar for deceiving the courts and clients about his web of businesses that do legal support work.(1)

  • The Bar also confirmed Aug. 16 that it is also investigating Stern for numerous allegations of violating attorney regulations, including whether his running of DJSP Enterprises, a publicly traded company, is in compliance.

For more, see Florida Bar previously disciplined Stern.

For more on this outfit, see The Florida Foreclosure Fraud Weblog:

  • Forged foreclosure filings by David J. Stern anger Pasco judge ("[T]he notary’s stamp [on an assignment of mortgage] said Terry Rice’s commission expired on May 19, 2012. That stamp could not have been lawfully issued any time before May 19, 2008. So that assignment document wasn’t really signed on December 5 of 2007 – unless our notary has discovered a way to travel in time.");

(1) Reportedly, Stern received a public reprimand in 2002 for billing practices that made it appear he was paying other companies for work on title insurance, when he was actually using in-house staff.

Mass AG Obtains Civil Judgments Against Five Accused In Equity Stripping, Sale Leaseback, F'closure Rescue Racket; Case Against 9 Others Still Pending

From the Office of the Massachusetts Attorney General:

  • Attorney General Martha Coakley’s Office has obtained consent judgments against five defendants that perpetrated an unlawful foreclosure rescue scheme against multiple homeowners facing foreclosure that stripped and retained hundreds of thousands of dollars of the victims' home equity.

  • The judgments, entered against Primary Mortgage Resource, Leo Desire, Sr., Robert Marks, Pierre Joseph and Daphne Mompoint, provide for payments of restitution to victims and civil penalties to the Commonwealth and prohibit the defendants from engaging in certain activities that facilitated the scheme.(1)

For the entiore Massachusetts AG press release, see AG Martha Coakley Obtains Judgments Against Multiple Defendants in Alleged Foreclosure Rescue Scheme.

(1) In addition to the five recently-announced consent judgments, the Commonwealth obtained consent judgments against five other defendants (closing attorney Valerie Hanserd and straw buyers Marie Betey Mereus, Neville Francis, Jean Roll Joseph and Robens Joseph) within the last year, the press release states. The case remains pending against defendant closing attorney James J. Alberino, defendant real estate salesperson Robin Hayes, and seven other defendants who failed to appear or defend in the action and as to whom the Commonwealth obtained entries of default.

Monday, August 30, 2010

Banks’ Self-Dealing Super-Charged Financial Crisis

ProPublica reports:

  • Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history. Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:

They created fake demand.

  • A ProPublica analysis shows for the first time the extent to which banks -- primarily Merrill Lynch, but also Citigroup, UBS and others -- bought their own products and cranked up an assembly line that otherwise should have flagged.

For more, see Banks’ Self-Dealing Super-Charged Financial Crisis.

Thanks to Mike Dillon at for the heads-up on the story.

Foreclosure Mill Cited In Recent Case By Judge For Fraud Calls State AG Probe Into Allegedly Fabricated Documents Politically Motivated, Overly Broad

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

  • The economic crimes division of the Florida attorney general's office is reviewing three firms following complaints that foreclosure documents were fabricated to rush cases through the court system. Other firms included in the probe are the Law Offices of Marshall C. Watson in Fort Lauderdale and the Plantation-based firm of David J. Stern.

For more, see Boca law firm calls foreclosure probe political.

For more on this outfit, see The Florida Foreclosure Fraud Weblog: Foreclosure lawsuits are built on lies: Shapiro & Fishman admits foreclosure claims cannot be verified (Shapiro & Fishman explained that their lawyers cannot ethically swear to the truth of the papers they file with the court, because they rely on information from others, according to this Motion for Rehearing filed earlier this year with the Florida Supreme Court).

(1) The Shapiro & Fishman law firm was recently cited by Duval County, Florida Circuit Court Judge Jean Johnson in a foreclosure action for "ha[ving] acutal knowledge of the falsity of any averments and representations made [in court] on behalf of the current servicer of the Mortgage" being foreclosed. See Jacksonville Trial Judge Bags Foreclosure Mill, Chase, WAMU For Fraud On The Court In Foreclosure Action; Dismisses Suit With Prejudice.

For Judge Johnson's ruling, see JP Morgan Chase Bank v. Pocopanni, Case # 16-2008-CA-3989 (Fla. Cir. Ct. 4th Dist. Duval County, August 9, 2010).

Alleged Mastermind In Sale Leaseback F'closure Rescue Scam Arraigned On 25 Counts; Investors Left Holding Bag As Homeowners Got Boot, Say Prosecutors

From the Office of the Massaachusetts Attorney General:

  • An Oxford man was arraigned in Worcester Superior Court for his role in a complex scheme in which fraudulent documents were used to defraud homeowners and mortgage lenders in numerous real estate transactions involving distressed properties in the Worcester County area. Allen Seymour, age 42, is charged with Forgery (4 counts), Uttering (8 counts), Inducing a Lender to Part with Property (12 counts) and Larceny by False Pretenses.(1)


  • According to authorities, Seymour targeted properties in danger of foreclosure. He allegedly personally approached the owners of these properties and presented a variety of rescue options. For those homeowners who merely wished to sell their property to avoid foreclosure, Seymour allegedly offered to purchase the property for the amount owed to the foreclosing lenders.


  • Simultaneously, Seymour allegedly found individuals with good credit who were looking to begin investing in real estate. Many of these “investors” were allegedly told they would be helping homeowners in danger of foreclosure. Seymour allegedly told several investors that the purchase would only be temporary, and the homeowners would purchase the property back from them after Seymour repaired the homeowner’s credit.


  • After the closing, several investors state that Seymour abandoned them to the mortgage payments. Without Seymour’s assistance, the investors were unable to pay the loans, and these mortgages themselves fell into foreclosure. Some homeowners, allegedly promised lifetime leases, have been evicted from their homes by these foreclosures.

For the entire Massachusetts AG press release, see Oxford Man Arraigned in Connection with Orchestrating Complex Mortgage Rescue Scheme.

(1) According to the press release, three other co-defendants have been charged in connection with this case. On December 1, 2009, Raymond A. Desautels III, age 43, of Oxford, was sentenced to serve two years in State Prison after pleading guilty to the charges of Inducing a Lender to Part with Property (5 counts) (see Disbarred Attorney Cops Plea In Fraudulent Rescue Scam; Homes Drained Of Equity, Then Fall To Foreclosure; Owners Get Boot; Investors Left Holding Bag).

On January 13, 2010, Judith Piette, age 44, of Worcester, pled guilty to the charge of False Written Report by Public Officer (4 counts). Piette was sentenced to serve two years of probation. The remaining co-defendant, Jason Passell, age 51, of Worcester, is charged with Forgery and Uttering (7 counts). He is due back in court on August 30, 2010, for a status conference.

Foreclosure Mills' Failure To Attach All Records Referred To In Affidavits Filed In Court May (Should) Stall Legal Actions

In West Palm Beach, Florida, the South Florida Daily Business Review reports:

  • When it comes to fighting foreclosures, homeowners and their lawyers may have found a new strategy to score courtroom victories. Defense lawyers across the state are increasingly attacking the validity of affidavits that owners of notes must file with the courts as part of the foreclosure process.

  • Attorneys like Dustin Zacks, of the firm Ice Legal in West Palm Beach, are successfully arguing that plaintiffs — usually a trust that owns the note or the servicer of the note — are violating court rules by filing affidavits with no records attached to support their foreclosure suits. The records include details of the loan, borrower fees and payment history.

  • The Florida Rules of Civil Procedure (Rule 1.510) states that “sworn or certified copies” of all records referred to in the affidavit must be attached as evidence in the foreclosure case. The rule helps ensure that homeowners’s due process rights aren’t violated — namely that the lender has to prove it is entitled to press its claim.(1)


  • A deficient affidavit can be the difference between homeowners losing their properties through a summary judgment or going to trial, Zacks said. “These affidavits are the linchpin of cases when they are trying to win a house at summary judgment,” he said. “A summary judgment cuts short [a homeowner’s] right to a full trial.”

  • Several judges and lawyers say deficient affidavits are rare in most other civil cases, but are rampant in foreclosure cases. “Our entire judicial system is under attack as a result of this foreclosure process,” said St. Petersburg lawyer Matthew Weidner, who blogs about foreclosures. “Judges, just like us, have just sort of overlooked this in the midst of this crisis.”(2)

For more, see New Strategy in Foreclosure Battles Attacks Validity of Affidavits.

(1) In addition to requiring a copy of the records, Rule 1.510(e) also says that the person signing the affidavit must have personal knowledge of the facts of the case, which might be tough for the affiant to have since most loans have been flipped around a number of times subsequent to their origination and have been serviced by different servicers, the story states.

  • Rule 1.510(e): Form of Affidavits; Further Testimony. "Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith. The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or by further affidavits."

(2) According to the story, some judges say they don’t have the resources nor it is their job to make sure every affidavit is proper, but at least two said they are interested in hearing the argument. “It is a genuine question that should be raised,” said Miami-Dade Circuit Judge Jennifer Bailey. “The question is, where should each judge draw the line about the degree of investigation they are going to do on these affidavits? There is no clear answer.” In June, Zacks persuaded Palm Beach Circuit Judge Howard Harrison Jr. to deny a motion for summary judgment because of a flawed affidavit.

Newark Feds Obtain Indictment Of Previously-Charged Brooklyn Man Peddling Sale Leaseback, Equity Stripping Foreclosure Rescue Scams

From the Office of the U.S. Attorney (Newark, New Jersey):

  • A federal grand jury indicted former co-owner of Home Savers Consulting Corporation Phil A. Simon today in connection with an alleged mortgage fraud scheme in which he falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, United States Attorney Paul J. Fishman announced.

  • Simon, 35, of Brooklyn, N.Y., was previously charged by Complaint with conspiracy to commit wire fraud and arrested by special agents of the FBI on August 5, 2009, in Brooklyn. The Indictment charging Simon adds five substantive counts of wire fraud based on five specific fraudulent transactions regarding properties in Bergenfield, Elizabeth, and Paterson, N.J.

  • Former Home Savers co-owner Garth Celestine, who was arrested along with Simon last August, pleaded guilty in March before United States District Judge Dennis M. Cavanaugh to an Information charging him with conspiracy to commit wire fraud. He is scheduled to be sentenced on November 22, 2010.

For the entire press release, see Co-Owner Of Home Savers Consulting Corp. Indicted For Mortgage Foreclosure Rescue Scheme.

For the indictment, see U.S. v. Simon.

Go here for more on the now-defunct Brooklyn-based Home Savers Consulting Corp.

Sunday, August 29, 2010

200 Signs That A False Legal Document Has Been Filed In A Foreclosure Action

Homeowners facing foreclosure who are wondering whether the legal documents filed in their case by the lender and/or foreclosure mill are bogus may find this list of 200 clues to be of some help.

For the list, see Max Gardner's 200 Signs that You have a False Document (made available online courtesy of Matt Weidner's Law Blog).

Foreclosure Rescue Scams Reading List

Anyone new to the area of foreclosure rescue scams may want to avail themselves of the following reading list (materials listed in reverse chronological order of their publishing date) in an effort to get up to speed on how to recognize and prevent these rackets:

  • United States Government Accountability Office, Homeownership Preservation (Federal Efforts to Combat Foreclosure Rescue Schemes Are Under Way, but Improved Planning Elements Could Enhance Progress) (July 2010);

  • National Consumer Law Center, Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005);

Loan Servicer Gets Tagged With Class Action Suit Accusing It Of Pocketing Cash For Bogus Loan Modifications, Then Foreclosing With Little Or No Notice

From a press release from the Seattle, Washington-based law firm Hagens Berman Sobol Shapiro LLP:

  • A group of homeowners [] filed a class-action lawsuit against Aurora Loan Services LLC, claiming the mortgage company duped them into paying tens of thousands of dollars each to have troubled mortgages reviewed by the company with promises of loan modifications, only to have their property foreclosed with little or no notice.(1)

  • The suit states that Aurora reaped more than $100 million in what the court documents call "illicit profits" from the alleged scheme. Filed in the U.S. District Court for the Northern District of California in San Jose, the suit seeks to represent homeowners who paid the Littleton, Colo.-based company money in exchange for the company's help in 'curing' delinquent home mortgages.

  • In exchange for between three and six large monthly payments, Aurora said it would halt the foreclosure process and work with homeowners to restructure, modify or resell the loan, allowing homeowners a chance to keep their homes, the suit states.

For more, see Hagens Berman Files Class-Action Suit Against Aurora Loan Services LLC.

(1) The complaint accuses Aurora of negligent misrepresentation, unjust enrichment, breach of the implied covenant of good faith and fair dealing, violation of the California Unfair Business Practices Act and other violations of California law, the press release states.

Suspected Loan Modification Racket Seeks Return Of $500K Seized By Feds In Raid As Criminal Probe Continues

In Oceanside County, California, North County Times reports:

  • The government seized about a half-million dollars in assets from the bank accounts of two Oceanside businesses dealing in loan modifications for struggling homeowners, according to federal court documents filed this week.

  • Dean Chandler, a lawyer who owns the 1st American Law Center in downtown Oceanside, and Gary Bobel, who owns the Lead Source, a marketing business on El Camino Real that runs a call center and performs other services for 1st American, recently filed a joint motion for the return of the assets, which were seized on June 23 when the FBI raided the offices.

  • Chandler said this week that 1st American has been unable to pay employees, buy new national television ad time or process client paperwork since the raid. Assistant U.S. Attorney Valerie Chu, a prosecutor with the major fraud unit of the U.S. attorney's office in San Diego, said she will oppose the motions. She declined to discuss any accusations against the pair.

  • There have been no indictments, and the federal search warrants in the case remain sealed, but Chandler said the government suspects him of mail fraud, wire fraud, money laundering and conspiracy, crimes he vehemently denies.

For more, see Records show feds seized half-million in assets from loan modification business.

GAO Cautions Against Four Scams Targeting Financially Strapped Homeowners

The Sacramento Business Journal recently ran a story on a General Accountability Office report cautioning financially strapped homeowners against four types of scams targeting them:

  • The GAO said consumers are being confronted with “advance-fee loan modification schemes” -- in which the homeowner will pay a fee up-front, then receive little or no service -- and sales-leaseback schemes, in which a homeowner is convinced to transfer the deed to the scammer with the false promise of being able to remain in the home.

  • The two newer schemes, according to the GAO are:

    • a forensic mortgage loan audit scam, which the report called a “new twist on foreclosure rescue fraud." The homeowner pays a fee in hopes of using audit results to uncover regulatory violations in the mortgage loan origination and thereby reduce the loan principal or even cancel the loan;

    • a variation of the advance-fee scam, in which “a person promises to eliminate a homeowner's mortgage or other debt on the premise that the debts were illegal or the government would assume responsibility,” according to Matsui’s statement.

For more, see GAO report targets new mortgage scams.

For the GAO report (43 pages), see Homeownership Preservation (Federal Efforts to Combat Foreclosure Rescue Schemes Are Under Way, but Improved Planning Elements Could Enhance Progress). Go here for report summary.