Saturday, July 2, 2011

Illinois Regulator Fines Mortgage Servicer Over Altered Foreclosure Affidavits, Robosigned Documents

From the Illinois Department of Financial and Professional Regulation:

  • PHH Mortgage Company has been fined $290,000 for signing foreclosure affidavits that the company knew would later be altered by its attorneys and for signing affidavits using someone else’s name, according to an order released today by the Illinois Department of Financial and Professional Regulation (IDFPR). The violations were found during an ongoing special investigation of 20 Illinois licensed mortgage servicing companies, which was launched last year after learning of foreclosure improprieties across the country.


  • The order, signed by Manuel Flores, Director of IDFPR’s Division of Banking says that in at least 19 files, PHH failed to sign affidavits after they had been altered by the company’s attorneys and that PHH’s knowledge of and complicity with this process is evidenced by the fact that the original affidavits were incomplete and contained notations such as “will add” when they were tendered to the law firm of Fisher and Shapiro. The law firm, in turn, under penalty of perjury and acting on behalf of PHH, then attested to the completeness of the altered affidavits although they had not been reviewed or re-executed by PHH.
  • The Department discovered other evidence of improprieties on the part of PHH employees in 16 of the 19 affidavits. These 16 affidavits were identified as having all been signed and attested to by the same PHH employee in his or her official capacity. Yet, the Department noted no less than five distinctly different signatures attributed to this same PHH employee, leading the Department to conclude that at least four different people used one employee’s name to sign the affidavits. PHH has ten days to request a hearing on the Department’s order.(1)

For the IDFPR press release, see Mortgage Company fined $290,000 for Incomplete and False Foreclosure Documents.

(1) See Chicago Tribune: Company in foreclosure document probe to dispute fine.

Feds Score $18.8M Settlement With Florida Upfront Fee Loan Modification Outfit Accused Of Rampant Ripoffs From Hapless Homeowners

From the Federal Trade Commission:

  • Under a settlement with the Federal Trade Commission, a federal court banned three men and their company from the mortgage modification business and ordered them to pay nearly $19 million for consumer refunds. The defendants allegedly deceived distressed homeowners with phony claims that they would negotiate with lenders to modify their mortgages and make them more affordable.

  • The FTC sued First Universal Lending and its owners in November 2009 as part of Project Stolen Hope, a continuing federal-state crackdown on mortgage foreclosure rescue and loan modification scams. As alleged in the FTC’s complaint, the defendants encouraged homeowners to stop making mortgage payments, saying lenders would not negotiate unless they were at least a few months behind in their payments. After charging consumers up to $7,000 in up-front fees, the defendants often did little or nothing to help them, the agency charged. The court subsequently halted the defendants’ operation, froze their assets, and ordered them to disable their Web sites and computers.

  • In addition to imposing a judgment of more than $18.8 million against the defendants, the settlement order bans them from the mortgage relief services business. It also permanently prohibits the defendants from misrepresenting material facts about any good or service, violating the Telemarketing Sales Rule, selling or using customers’ personal information, failing to properly dispose of customer information, and collecting payments from their customers.

  • The defendants are First Universal Lending LLC, Sean Zausner, David Zausner, and David J. Feingold, an attorney in Palm Beach Gardens, Florida.

For the FTC press release, see FTC Stops Bogus Mortgage Loan Modification Business Defendants Ordered to Pay Almost $19 Million to Settle FTC Charges.

Go here for some available court filings in this case.

Washington State Regulator Tells Out-Of-State Lawyer Allegedly Peddling Loan Modification Services To 'Stop Now!'

From the Washington State Department of Financial Institutions:

  • The Washington State Department of Financial Institutions (DFI) has taken swift action to stop an unlicensed mortgage loan modification company from continuing to harm Washington consumers.

  • DFI issued a Temporary Cease and Desist Order against Home Credit Law Center, its President, attorney Brian R. Linnekens, and an employee, Derek Thomas. The Department ordered the Respondents, all of Los Angeles, to immediately cease and desist unlicensed activity, misrepresenting that Mr. Linnekens was licensed to practice law in Washington, and taking advance fees for loan modification services.


  • As the mortgage crisis continues in Washington, more homeowners are facing the prospect of foreclosure. Some, in a desperate search for relief, cling to any offer of help. Home Credit Law Center employees call Washington homeowners offering that relief for a $3,000 advance fee.

For more, see DFI Orders Unlicensed California Law Firm - Home Credit Law Center - To Stop Offering Unlawful Mortgage Loan Modifications (Brian R. Linnekens and his law firm charged with taking property from Washington residents by fraud or misrepresentation).

Illinois Regulator Tags Unlicensed Outfit With Fines, C&D Order For Alleged Racket That Clipped Homeowners With Upfront Fees For Failed Loan Mods

From the Illinois Department of Financial and Professional Regulation:

  • Governor Pat Quinn’s Mortgage Fraud Task Force (MFTF) [] announced the results of a recent investigation into alleged unlicensed and improper mortgage loan modification activities by Avatar Realty Group, also known as Monroe Realty and Financial Enterprises and Arthur R. Monroe of Oswego.
  • The MFTF learned of possible mortgage fraud when a homeowner called the MFTF hot-line. He had gone to the company for help in saving his home from foreclosure after hearing an ad on Polish language radio about loan services offered by Monroe. The company and Monroe demanded a $150 consulting fee and required an up-front payment of $1,125 for loan modification services. The MFTF learned of the situation after the homeowner lost his home because the loan modification services were not performed and the loan was not modified.


  • The MFTF investigation resulted in multiple disciplinary actions. IDFPR is ordering Avatar Realty to cease and desist its unlicensed loan modification activities and is fining the firm $25,000 for violating the Residential Mortgage License Act of 1987. The Department is also revoking the prior loan origination registration of Arthur Monroe for not having a current license to provide loan services and failing to meet the law’s standards of conduct. Finally, the Department has filed a disciplinary action on Monroe’s real estate broker’s license for exceeding the scope of licensed activities.

For the Illinois IDFPR press release, see Mortgage Fraud Task Force Investigation Leads to Multiple Disciplinary Actions.

Go here for the Cease & Desist Order and here for the Complaint.

Friday, July 1, 2011

5,000 Oregonians Score BofA Apology After Receiving Notice Of Delinquent Taxes From Sloppy Servicer

The Oregonian reports:

  • Bank of America said [] it mistakenly sent nearly 5,000 Oregonians letters claiming they owe property taxes and might be risking foreclosure when they, in fact, don't. Washington County Department of Assessment and Taxation director Rich Hobernicht estimates his office has received 1,000 calls since Monday from homeowners who received letters from BAC Tax Services Corp, an arm of the bank's BAC Home Loan Servicing division.

  • In Multnomah County, the bank said it sent 1,600 letters in error, according to county spokesman Shawn Cunningham. "We sincerely apologize to those who received the letter in error," said Jumana Bauwens, a bank spokeswoman. She said the bank is in the process of notifying affected customers in 14 Oregon counties where the erroneous letters went out.

  • Judy Crawford of Aloha and Sharyn Rowe of Bethany said the letters indicated they were delinquent on their property taxes. Neither of them are. The letter said they had 30 days to pay the bill or the bank might do it for them and impose an escrow account to cover its costs, raising their monthly payment."We have always been in good standing in the 15 years we've owned our home," Crawford said. "My husband and I are truly furious."

For more, see Bank of America apologizes for mistakenly accusing 5,000 Oregonians of being late on property taxes.

Go here for BofA's delinquent tax notice.

Lawsuit: BofA At Center Of Another Illegal Trashout As 82-Year Old Man Away On Extended Trip Returns Home To Find Premises Emptied & Padlocked

In Hillborough County, Florida, the St. Petersburg Times reports:

  • After going out of town, an 82-year-old man returned home to find his house emptied out. Even the trash was gone. He found a padlocked door and a sign for a company that cleans out properties in foreclosure. But Benito Santiago Sr.'s home wasn't in foreclosure, public records show.

  • In a lawsuit filed this month in Hillsborough Circuit Court, Santiago claims that Field Asset Services Inc., took his property and changed his locks in the fall of 2009. He sued the company, along with Countrywide Home Loans, for damages.

  • A Hillsborough County sheriff's deputy estimated in an Oct. 5, 2009, report that the Santiago's possessions were worth $29,100. In an interview, Santiago, a retired antiques dealer, guessed they were worth $100,000. "At least," he said.

  • Pictures of his deceased wife were among the items taken. He lost everything, including his furniture and an antique wagon wheel. The incident upset him enough that he moved in with a friend. "Everything was taken out of the property," he said. "I feel nervous. I'm not going back."

  • Neither Field Asset Services nor Bank of America, which now owns Countrywide, commented on the incident when contacted by the St. Petersburg Times. Field Asset Services said it doesn't discuss client cases. Bank of America requested a copy of the suit.


  • Carlin Phillips is a Massachusetts attorney who specializes in cases of wrongful "lock-outs" and "trash-outs." In the past year, he's had hundreds. Sometimes, the homeowner is delinquent, but the lockout is premature. Sometimes, cleaners go to a "road" instead of a "court." And in some cases, people who just purchased a bank-owned home will return to find it cleaned out, because no one took it off the foreclosure list.

  • Phillips says banks have failed to adopt policies to make sure they have the right house. His experience doesn't bode well for Santiago's possessions. "We have never gotten one piece of property back," he said.(1)

For the story, see Tampa retiree says he lost belongings in foreclosure blunder.

(1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

Georgia Grand Jury Slaps Indictment On Alleged Home Hijacker Over Recorded Bogus Land Documents Used In Do-It-Yourself Mortgage Cancellation Scam

In Cobb County, Georgia, WSB-TV Channel 2 reports:

  • A Cobb County woman who showed how she canceled her own mortgage to avoid foreclosure has now been indicted for racketeering and theft. Channel 2 investigative reporter Jodie Fleischer first interviewed Susan Weidman last fall. "I didn't really set out to think that I could possibly get a free house. I just wanted to stall," Weidman said at the time.
  • She showed how she researched her own mortgage to uncover fraud and filed repeated notices with the Cobb County clerk of court. The trail of documents led to one where she canceled her own mortgage by signing her name, on behalf of World Savings Bank.
  • "You actually signed this as attorney in fact for the CEO of the mortgage company?" Fleischer asked. "That's right, for John Stumpf," Weidman replied proudly. She said she gave the bank CEO fair warning and asked questions his staff couldn't answer. At the time, she hadn't paid her mortgage in more than a year and was still in the house.
  • "She believed if the bank didn't prosecute her that she was going to get away with it, but it's never been legal," says Cobb County Clerk of Court Jay Stephenson. On Thursday morning, he showed the grand jury all of that paperwork. They came back with a nine-count indictment on charges of racketeering, false statements, and theft.


  • In May, Fleischer conducted another investigation that, she said, revealed Weidman filed paperwork taking ownership of a million-dollar foreclosed home in DeKalb County, then rented it to someone else.

For the story, see Woman Indicted On Charges Of Stealing Houses.

For an earlier post on Susan Weidman, see Do-It-Yourself Mortgage Cancellation Racket A New Foreclosure Avoidance Technique?

Washington State Regulator: Watch Out For Upfront Fee Loan Modification Ripoffs Masquerading As Forensic Loan Audits, 'Mass Joinder' Lawsuits

From the Washington State Department of Financial Institutions:

  • Many Washington consumers have reported receiving misleading advertisements such as the ones shown here:

    Sample Advertisement 1,
    Sample Advertisement 2.

  • The Department of Financial Institutions has conducted an investigation of the source of these materials, and ascertained that they are neither from the consumer’s lender or any branch of the government, but from companies affiliated with a California law firm, Kramer & Kaslow, and a professional corporation called "Consolidated Litigation Group."

  • In late 2010, these affiliated companies sent mailings to Washington consumers for loan modification services; in early 2011, the advertisements were for forensic loan audits (mortgage loan compliance review).

  • Fees for loan modification services were reported as $3,000 or more; the "mortgage loan compliance review" was quoted as $2,500, fully refundable if no violations are found. If the modification efforts are unsuccessful, or the forensic loan audit uncovers "predatory lending violations", the consumers are then solicited to become a plaintiff in a mass joinder lawsuit with "Consolidated Litigation Group."

  • Initially this inclusion required no extra fees; however, recent consumer reports indicate that the fees to join the "mass joinder lawsuit" are quoted as $1,500 or more.

For more, see Consumer Alert: Kramer and Kaslow (Unlicensed Loan Modification Services and Advance Fees).

Group Convicted In Scam That Used Forged Documents To Swindle Homeowners In Refinancing Ripoff

In Los Angeles, California, the Daily Breeze reports:

  • The operators of a Van Nuys-based mortgage company have been convicted of refinancing a Harbor Gateway couple's mortgage with forged documents, ripping them off and putting them in jeopardy of foreclosure, prosecutors said Tuesday.

  • Khachatour Galdjian, chief financial officer for Liberty One Financial Group Inc., and company employees Vighen Mkrtoumian and Layne Nocera were convicted of conspiracy and multiple counts of grand theft and forgery. Each was ordered to pay $43,584 in restitution and investigative costs, and received sentences ranging from 90 to 120 days in jail as well as probation terms.

  • John DiBona, a telemarketer for Liberty One, and Wayne Stimson, a company broker, were each convicted of one count of false representation in a real estate transaction. Liberty One's chief executive, Garnik Poghosyan, remains sought on a $350,000 warrant.

  • Prosecutors said DiBona "cold called" Harbor Gateway homeowners and offered to refinance an existing mortgage loan on their home. Along with Nocera, DiBona deceived the victims into obtaining refinancing in excess of the amount, interest and monthly payments they were promised by the lender.

  • The victims later learned their signatures had been forged and their income and assets were fabricated on many of the documents. The discrepancies led to the possibility of foreclosure.

Source: Mortgage employees convicted of stealing from local homeowners.

Thursday, June 30, 2011

Broken Loan Modification Promises Continue To Haunt, Say Now-Booted Ex-Homeowners Who Suffered F'closure While Payment Workout Plan Still Under Review

ProPublica reports:

  • Four years into the foreclosure crisis, banks say they've made major improvements in how they handle struggling homeowners. They've promised, for example, not to foreclose on homeowners who are being considered for mortgage modifications. But that's still happening.
  • Consider the cases of Laurie Pinkerton and Lisa Peterson. The two women, both Californians and Bank of America customers, had been assured by the bank that they wouldn't lose their homes before they'd been evaluated for a possible modification. Both had their homes sold last month. [...] Both Pinkerton and Peterson said their homes were sold after foreclosure for far less than they're worth.
  • Regulators have done little to stop the practice, and the "problem appears to be getting worse," said Kevin Stein, associate director of the nonprofit California Reinvestment Coalition.
  • Last month, the coalition surveyed 55 foreclosure-avoidance counselors throughout the state. Collectively they serve thousands of borrowers every month. Almost all of the counselors, 94 percent, reported having worked with clients who'd lost their homes while under review for a modification. About half of the counselors reported this happened "often." This year's totals, which are due to be publicly released next week, are higher than those in the group's survey last year.

For more, see Bank Errors Continue to Cause Wrongful Foreclosures.

Go here for more from Paul Kiel at ProPublica on the problems surrounding loan modifications that face homeowners seeking to re-work their house payments.

State Law Enabling Legalized 'Inflated Fee' Ripoffs Involving Unpaid R/E Taxes Has Banksters At Odds With Tax Lien Vultures As Homeowners Get Squeezed

In Jefferson County, Kentucky, the Louisville Courier-Journal reports on the process by which the local municipality peddles liens for unpaid real estate taxes to investors, state law that makes it easy for the investors to pull off 'inflated fee' ripoffs when enforcing these liens, and an apparently outraged banking industry, who object to the investors doing to the banks what the banks are notorious for doing to homeowners:

  • Every year, investors [...] provide schools, metro government and fire departments with money in lieu of property owners who fail to pay their taxes. But in exchange, Jefferson County gives up hundreds of thousands, perhaps millions, of dollars a year that go to investors, typically based out of town — money that could be used to combat the problem of vacant and abandoned properties, according to experts on running city land banks.

  • If the homeowner doesn't pay the back taxes, the investor can collect interest on the debt for up to 11 years or foreclose on the property, as in Henry's case. Like banks with mortgages, tax lien buyers gauge when the money they're owed exceeds a property's market value.

  • Housing advocates say lien buyers can charge “excessive” fees, especially legal costs once a case moves to foreclosure, making it nearly impossible for the homeowner to avoid losing the property.

  • A lot of them, it's so far gone that there's not much we can do,” said John Young, an attorney with Legal Aid Society of Louisville,(1) who represents homeowners fending off tax lien companies.


  • In 2004, American Tax Funding, a Jupiter, Fla., company that calls itself “the nation's leading” bulk-buyer of tax liens, hired a lobbyist and convinced the Kentucky General Assembly to let it and other tax lien buyers add attorneys' fees to the liens, said Jim Ballinger, a Louisville attorney who represents American Tax Funding. That made tax lien investing more attractive because legal costs no longer threatened to eat into profits.


  • State Rep. Steve Riggs of Jeffersontown, who sponsored the 2004 legislation that helped make tax lien investing attractive, said it's a way for cash-strapped schools and fire departments to get at least some of the money that would otherwise go uncollected.


  • The tax lien holders get paid first from any proceeds at the foreclosure sale, which has drawn the ire of banks that hold mortgages. After lobbying unsuccessfully this spring to curb the tax lien buyers' business, the Kentucky Bankers Association recently filed suit in Franklin Circuit Court, calling the whole process unconstitutional.

For more, see Tax lien sales cloud Louisville's control over houses.

(1) The Legal Aid Society of Louisville provides free civil legal services to qualified low income Kentucky residents living in the following counties: Jefferson, Oldham, Trimble, Henry, Shelby, Spencer, Washington, Marion, Nelson, Bullitt, Larue, Hardin, Grayson, Breckinridge, and Meade.

Trial Gets Green Light For Pair Facing Charges For Allegedly Hijacking Vacant Homes In Foreclosure; Duo To DA On Plea Offer: 'Take A Hike!'

In Barstow, California, the Desert Dispatch reports:

  • Judge Glenn Yabuno ruled Thursday that there was enough evidence to go to trial for a man and a woman charged with forgery after allegedly renting out several homes going through foreclosure last year.

  • Evelyn Thompson, 51, was charged with six counts of forgery and one count of unauthorized property entry last year after Barstow Police conducted an investigation into suspected housing fraud at six Barstow residences. Police said Thompson would pose as a property manager and offer the homes for rent — even though the homes were going through foreclosure and the owners never gave permission to rent the homes.

  • Edward Tafoya, 54, was also charged with four counts of forgery after police said he helped Thompson prepare the homes for rental.


  • Both refused plea deals at the beginning of the hearing Thursday that would have landed Thompson in state prison for 16 months and would sent Tafoya to county jail for 180 days with probation. Both Thompson and Tafoya would have had to accept the plea deal to get reduced sentences.

  • Thompson remains out of custody on $100,000 bail and Tafoya remains out of custody on his own recognizance. Thompson and Tafoya are scheduled to be arraigned on the updated charges during a hearing June 29.

For more, see Local man, woman accused of housing fraud to stand trial.

Fringe Tucson Mayoral Candidate Goes On 'Home' Hijacking Spree, Staking Claims To Vacant Fannie-Owned REOs Throughout Metro Phoenix

In Phoenix, Arizona, The Arizona Republic reports:

  • A Tucson mayoral candidate from a fringe political party has seized dozens of foreclosed homes in metro Phoenix, changing the locks, kicking out real-estate agents and posting "Do Not Trespass" signs.(1)

  • [The curiously-surnamed] Marshall Home, who claims many foreclosures are illegal, has filed documents in the past two weeks with the Maricopa County Recorder's Office showing he has supposedly taken ownership of at least 21 homes belonging to government-owned mortgage giant Fannie Mae. But none of the documents shows any money has changed hands, and Fannie Mae says it has not sold the houses.

  • Real-estate agents and experts say Home's documents, a type of real-estate form called a special-warranty deed, aren't valid.

For more, see Tucson mayoral candidate on odd spree of house claiming (He seizes, but doesn't own, 21 foreclosures).

(1) Reportedly, two real estate agents got a call from their brokerage telling them Independent Rights Political Party Trust had sent a letter saying it "acquired all rights" to a Fannie Mae REO they had listed for sale. The notice reportedly told the real-estate agents they had 72 hours to remove their signs and lockboxes, but after rushing to the house wondering what was happening, Home's group had already taken their lockboxes, installed new locks and posted signs saying the house was under video surveillance and any trespassers would be "dealt with to the fullest extent of the law." A special-warranty deed, stamped by the Maricopa County Recorder's Office, also was posted on the window of the home, saying Federal National Mortgage Association had conveyed the property to the Independent Rights Party, signed by Home and his notary, but with no signatures from Fannie, the story states.

Attttorney Gets 8 Years For Clipping Clients' Trust Account Out Of $380K; Prosecutors: Lawyer Used Cash To Finance Costa Rican Casino Crapshoot

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

  • A former Fort Lauderdale lawyer who cheated his clients out of more than $380,000 was sentenced on Thursday to eight years in prison, the Broward State Attorney's Office said. Mitchell Olin, 50, made an open plea putting his legal fate in the hands of Broward Circuit Judge Andrew Siegel.

  • He imposed the sentence and ordered Olin to repay the seven families he represented in real estate transactions and insurance settlements starting in 2002.(1) He also sentenced Olin to 15 years probation. And, Olin promised to help three of the families in foreclosure proceedings, the State Attorney's Office said.

  • The money had been placed in trust, but Olin used it to finance a casino venture in Costa Rica, prosecutors said. Olin's bank caught the discrepancies in the trust account and alerted the Florida Bar.

Source: Former Broward lawyer sentenced in fraud case.

(1) The Florida Bar's Clients' Security Fund compensates people who have been victims of of misappropriation or embezzlement of cash or property by a Florida-licensed attorney. For those ripped off by dishonest attorneys in other states and Canada, see:

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

Wednesday, June 29, 2011

Nine Lender Employees Indicted For Roles In Alleged Fraudulent Subprime Loan Peddling Racket 'Greased' By Bankster Securitization Process

In Cleveland, Ohio, The Plain Dealer reports:

  • A Cuyahoga County grand jury on Wednesday indicted nine employees of California-based Argent Mortgage Inc. for their suspected roles in approving fraudulent home loans. It's the first time in Ohio and one of few instances nationwide that a mortgage fraud investigation has led to criminal charges against employees of a subprime lender, Cuyahoga County Prosecutor Bill Mason said.


  • The indictment alleges that Argent employees helped coach mortgage brokers about how to falsify loan documents so that they misstated the source or existence of down payments as well as borrower's income and assets. Employees at an Argent loan processing center in Illinois ultimately approved the loans knowing that the company's own lending rules had not been satisfied.


  • This fraud was facilitated by the practice of subprime lenders that, with the help of Wall Street, pooled mortgages into asset-backed securities and sold them to eager investors. Subprime lenders used their considerable profits to make even more loans while blatantly ignoring long accepted standards used to discern which borrowers could actually afford to pay back the loans they received.

  • "The securitization and selling of these fraudulent, subprime loans to Wall Street typified the rampant greed of the industry that ultimately led to the financial crisis," Mason said in a statement.

For more, see Former employees of subprime mortgage lender indicted by Cuyahoga County grand jury.

See also, OhioFRAUDclosure: OHIO says enough !! - 9 Indicted from ARGENT MORTGAGE.

City Attorney To All Victims Of Recently-Convicted Upfront Fee Loan Modification Peddler: 'Pick Up The Phone & Call For Cash!'

In Southern California, The San Diego Union Tribune reports:

  • The San Diego City Attorney's Office is looking for homeowners who paid an up-front fee to a company that promised to lower monthly mortgage payments and never delivered, agency officials said [].

  • Christopher Dixon, the owner of the now-defunct Nations Mortgage Solutions, pleaded guilty in San Diego Superior Court on Friday to acting as an unlicensed real estate agent, while collecting up-front fees for loan modifications, which is illegal in California. Dixon has been ordered to pay a $1,000 fine and $6,500 in restitution to victims.

  • The City Attorney's consumer protection division filed charges against Dixon last year after looking into complaints from people who paid Dixon 1,000 to $3,000 to modify their loans and got nothing in return.

  • Agency officials are on the look-out for more people who may have fallen victim to the scam. Dixon has been ordered to pay restitution to victims who come forward within the next two months. Do you think you were victimized? File a claim by calling (619) 533-5600.

Source: Prosecutors seeking victims in loan-mod scam.

$100K Bail For Suspect Pinched For F'closure Rescue Fraud; Allegedly Stiffed Strapped Homeowners On Services After Clipping Them Out Of Upfront Fees

From the Office of the Ventura County, California District Attorney:

  • Ventura County District Attorney Gregory D. Totten announced [] that the Ventura County District Attorney's Office Real Estate Fraud Unit has filed a felony complaint against Aquilino Hernandez (aka Lino Hernandez, DOB 7/5/64) of Bellflower. The felony complaint charges Hernandez with two counts of foreclosure consultant fraud (Civ. Code § 2945.4(a)).

  • The charges filed against Hernandez arise out of a fraudulent home foreclosure rescue program he ran primarily under the business name of “Terra Bella Management” [...] in Bellflower, California. Hernandez is alleged to have targeted predominantly monolingual Spanish-speaking residents of Ventura County who were facing foreclosure of their homes.

  • Hernandez is accused of demanding or collecting thousands of dollars in upfront fees from victims while promising to save their homes from foreclosure. In reality, Hernandez completed no actual services for the victims who eventually lost their homes in foreclosure.


  • The arrest and prosecution of Hernandez is the result of a long-term investigation being conducted by the Ventura County District Attorney's Office Real Estate Fraud Unit into suspicious home foreclosure rescue schemes and follows the pending felony case of People v. Maria Victoria Santos [...]. On February 22, 2011, Santos pled guilty to four felony counts of foreclosure consultant fraud and four counts of felony grand theft. Santos is scheduled to be sentenced on June 28, 2011. Bail was set at $100,000 for Hernandez.

Go here for the Ventura County DA press release.

Virginia Woman Gets 12 Years For Role In Peddling Forensic Loan Audit/Mortgage Elimination Ripoff Targeting Homeowners

From the Office of the U.S. Attorney (Alexandria, Virginia):

  • Linda Sadr, 52, of Manassas, Va., was sentenced [] to 144 months in prison, followed by three years of supervised release, for her role in a “mortgage elimination” scheme that caused more than $11 million in losses. Sadr was also ordered to pay more than $9 million in restitution to the victims.


  • According to court documents, from 2004 through 2008, Sadr marketed a scheme known as a “Mortgage Elimination Program.” Sadr represented to the homeowners that lenders making refinance loans were operating illegally by, among other things, bundling the loans for resale and selling them to investment banks, which then used the loans as collateral to borrow additional funds.

  • Sadr fraudulently represented to homeowners that she and her companies could arrange for the satisfaction of the homeowners’ mortgages on their residences. Sadr represented that she would challenge the lenders, on behalf of the homeowners, for their purported illegal actions, would prevail in the challenges, and would thereby eliminate the mortgages.

For the U.S. Attorney press release, see Manassas Woman Sentenced to 12 Years in Prison for Mortgage Elimination Scheme.

Career Ripoff-Related Cons Go Down Again For Roles In Boiler Room Loan Mod Racket Purporting To Have Staff Of Attorneys, Forensic Accountants, Etc.

In San Diego, California, ABC News reports:

  • A San Diego man featured in an ABC News investigation has been sentenced to 30 months in federal prison and ordered to pay $460,000 for defrauding desperate homeowners who were trying to modify their home mortgages.

  • Michael Trap, who ran a business called Nations Housing Modification Center, pled guilty to wire fraud and money laundering after duping homeowners who were falling behind on their mortgages into paying $2,500 to $3,000 for loan modification services. Trap's partner Glen Rosofsky, who was also featured in the ABC News investigation, has already been sentenced to more than five years in federal prison for his role in the scam, which prosecutors say earned the men nearly $1 million.

  • As detailed in earlier reports by ABC News, Nations Housing Modification Center boasted a prestigious Capitol Hill address in Washington, D.C., and sent letters marked with the seal of the U.S. Capitol to prospective customers. According to NHMC's mail solicitation, the company's staff of "attorneys, forensic accountants and lender specific negotiators" could help homeowners lower the principal on their loans and reduce their mortgage rates to "as low as 2 percent."

  • ABC News found that the firm's Washington address was really a mailbox at a UPS Store. The firm actually worked out of a nondescript office building in San Marcos, Calif., where, as part of a "boiler room" operation, telemarketers read from a script tailored for anxious homeowners, according to a former Nations employee-turned-whistleblower. The company had no accountants or lawyers on staff. In his guilty plea, Trap admitting making false statements to convince homeowners to win business. Prosecutors say more than 300 homeowners took the bait.


  • Trap, Rosofsky and a third man running NHMC were well known to law enforcement authorities for their previous activities. Rosofsky and Bryan Rosenberg were convicted by federal prosecutors in 2003 of charges connected to a mortgage fraud scheme in Baltimore. Both men received jail sentences for their role in the fraud.


  • Michael Trap also has a criminal past. In 2003, Trap pleaded guilty to lying to a federal grand jury in connection with the PinnFund scandal, the largest Ponzi scheme in San Diego history.

For more, see San Diego Man Gets Prison For Bilking Homeowners in Massive Mortgage Fraud.

Tuesday, June 28, 2011

Another Sale Leaseback Peddler Feels The Pinch As Norfolk Feds Bag Foreclosure Rescue Operator To Face Equity Stripping Allegations

In Norfolk, Virginia, The Virginian Pilot reports:

  • Kathleen Harps of Chesapeake was arrested Friday by the FBI after she was indicted by a federal grand jury Tuesday, according to a news release from the U.S. Attorney’s office. Harps, 51, is being charged with one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and three counts of engaging in unlawful monetary transactions.

  • The indictment says that Harp operated a business named the New Beginnings Group in Hampton Roads that specialized in “foreclosure rescue” during 2006. Harps and others solicited homeowners facing home foreclosure and agreed to sell their homes to Harps or other buyers.

  • Harps promised them that during a one-year period after the sale, the homeowners would remain in their homes without having to pay the mortgage so they could buy back their homes at the end of the year. This didn’t happen, the indictment said.

  • Instead, the indictment says Harps and other property buyers lied to fraudulently obtain mortgage loans, which later defaulted. Foreclosures soon followed and the homeowners lost their homes and equity they built up, which they paid to Harps’ business, according to the indictment.

  • Harps faces a maximum of twenty years in jail for each of the conspiracy and mail fraud counts, and ten years in jail for the unlawful monetary transaction count.(1)

For the story, see Chesapeake woman charged with foreclosure fraud.

(1) In a recent case with reported similarities:

See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals for links to some earlier posts on government prosecutions involving these deals.

See National Consumer Law Center, Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-Stripping Foreclosure 'Rescue' Scams for more on this type of scam (which, by the way, is just the latest mutation of a real estate equity ripoff that's been around for centuries, as any student of the old common law cases from states around the U.S. (which, in turn, are based on the pre-1787 English common law) addressing the equitable mortgage doctrine (involving a conveyance of a 'deed absolute' in exchange for a loan) will attest to).

Lawsuit: Robosigning, Securitization-Documentation "Liabilities Appear To Be Hanging Like The Sword Of Damocles Over Wells Fargo & Its Shareholders"

Housing Wire reports:

  • Two pension funds filed a shareholder derivative lawsuit against Wells Fargo [last] week, claiming the bank and its leaders failed to properly address mortgage documentation issues, leaving Wells exposed to $15 billion in potential liabilities.


  • The pension funds claim the bank's leadership failed to promptly address robo-signing and documentation issues tied to the mortgage securitization process, resulting in a situation where "liabilities appear to be hanging like the sword of Damocles over Wells Fargo and its shareholders." The plaintiffs specifically named Wells Fargo CEO and Chairman John Stumpf a defendant, along with other board members and officers.

  • Investors in the pension funds claim Wells Fargo's leadership ignored early reports that robo-signing and issues with the Mortgage Electronic Registration System during the securitization process tainted some foreclosures and property titles.

  • The plaintiffs, who own a combined 169,000 shares of the banking giant's 5.3 billion shares outstanding, said in court papers the leadership continued "to prolong the illusion of Wells Fargo's success, concealing the adverse facts concerning Wells Fargo's actual financial condition, its lack of ownership over real estate debt that had been securitized through the MERS system, and the company's lack of clean title to real property, in judicial foreclosure states."

  • "This wrongful conduct exposed the company to billions of dollars of liability to investors in the secondary securitized debt markets, and hundreds of millions of dollars in litigation related expense and liability stemming from wrongful foreclosure and related litigation arising in judicial foreclosure jurisdictions," the pension funds allege. As part of the derivative suit, the two groups are suing Wells Fargo's directors and executives, claiming they breached their financial duties.

  • MERS, which is a subsidiary of Merscorp Inc., is accused in the complaint of aiding and abetting the bank by assisting and ignoring in some of the material breaches of fiduciary duties.

For the story, see Pension funds sue Wells Fargo, alleging executives breached fiduciary duties.

One More Homeowner In Foreclosure Hops On 'Conga Line' Of Appellate Court Reversals

Another ruling of a lower court adverse to a homeowner in a foreclosure matter was recently reversed by a Florida appeals court.

As in an earlier ruling (see Appeals Court 'Conga Line' Of Happy Homeowners Winning Reversals Of Erroneous Trial Judge Foreclosure Rulings Continues To Get Longer), the issue here involved whether the foreclosing lender complied with the written requirement contained in the mortgage that the borrowers be given written notice specifying the default, the action needed to cure the default, and the time period of thirty days to do so.

Despite the fact that the lender failed to establish that it had complied, Broward County Circuit Court Judge Ronald J. Rothschild rubber stamped the foreclosure judgment anyway. On appeal, a three-judge panel reversed, and booted the matter back to Rothschild.

This case serves as another reminder to homeowners in foreclosure that it's not enough to have the law on your side and expect a trial judge to rule accordingly. Inasmuch as it appears that some trial judges seem to have taken leave of their senses when ruling in foreclosure cases by screwing up on basic procedural fundamentals, homeowners also need the wherewithal to challenge an unfavorable ruling in an appeals court.

Marcy S. Resnik of Kahn, Chenkin & Resnik, P.L., Dania, and Mark L. Pomeranz of Pomeranz & Associates, P.A., Hallandale, represented the homeowners.

For the ruling, see Valencia v. Deutsche Bank National Trust Company, 4D09-3297 (4th DCA June 22, 2011).

Ill. Foreclosure Mill Removed Affidavit Signature Sheet & Reattached It To Pages With Altered Content, Says Illinois Suit Seeking Class Action Status

In Chicago, Illinois, the Chicago Tribune reports:

  • A former Chicago resident whose home is in foreclosure has filed a lawsuit against Fisher and Shapiro LLC, the law firm that admitted to Cook County Circuit Court that some of the mortgage foreclosures it handled contained altered documents.

  • The suit, filed in federal court in Chicago Monday, seeks class-action status and comes three months after the court’s Chancery division temporarily halted more than 1,700 mortgage foreclosure cases as a result of the law firm’s admission. Upon further review by the court, the number of cases that was temporarily stayed grew to 2,127.

  • Fisher and Shapiro did not admit to rubber-stamping of documents, as is the case in the various “robo-signing” investigations in states like Illinois, where foreclosure actions are processed through the courts. Instead, the firm said that in some cases, the signature page of foreclosure affidavits was removed, the document’s contents were altered and then the signature page was reattached, according to the general administrative order issued by the court March 2.

  • Stacy Hill, the plaintiff in the suit, alleges that the law firm’s actions violated the Fair Debt Collection Practices Act and the Illinois Consumer Fraud and Deceptive Business Practices Act.

  • In December 2009, Deutsche Bank National Trust Co. filed a foreclosure suit against Hill, who owned a home on Chicago’s south side. Hill has since vacated the home and relocated to the East Coast. That suit, still unresolved, is identified as one of the affected cases containing altered affidavits, according to her attorney, Kelli Dudley.


  • Hill’s suit, which seeks statutory, actual and punitive damages, will not get her home back and Dudley said her client does not dispute the facts of the foreclosure action against her. “This case is only about the procedure,” Dudley said. “The reason for pursuing the litigation is her rights were violated. Before you get to take her house away, you have to follow the procedures.”

For the story, see Law firm Fisher and Shapiro sued over foreclosure cases.

See also, Courthouse News Service: Class Claims Foreclosure Lawyers Doctored Documents.

For the lawsuit, see Hill v. Fisher and Shapiro LLC.

Suit Alleges Banksters Stiffed County Deed Registry Out Of Million$ In Deed Transfer Taxes On Foreclosure Sales

In Ingham County, Michigan, Bloomberg reports:

  • Bank of America Corp., Wells Fargo & Co. and mortgage servicers were sued by a Michigan county official who claimed they failed to pay millions of dollars in transfer taxes on foreclosure sales.

  • The banks and other defendants were part of an effort to “inappropriately” claim state and county tax exemptions on “improperly filed deeds,” Curtis Hertel Jr., Ingham County register of deeds, said [] in a lawsuit in state court in Lansing, the capital city. Hertel also sued Federal National Mortgage Association, Federal Home Loan Mortgage Corp. and two law firms that handle foreclosures.

  • We didn’t specify damages, but I believe it’s in the millions for the county and tens of millions for the state,” Hertel said [] in a telephone interview. “We intend to fight for it.”

  • The county claims that the banks would transfer ownership of a note to Fannie Mae or Freddie Mac to avoid transfer taxes in foreclosures, Hertel said. “Fannie and Freddie would foreclose and claim the exemptionon transfer taxes allowed for government entities, he said. As companies, not government entities, Freddie Mac and Fannie Mae aren’t eligible for the exemptions, he said.

  • The official transfer tax rate for counties in Michigan is $1.10 for every $1,000 of value being transferred, he said. “I want whoever is responsible to pay the transfer tax.”

For the story, see: Bank of America Sued for Foreclosure-Sale Taxes in Michigan.

Feds Tag Banksters w/ Suits On Behalf Of Now-Collapsed Credit Unions Left Holding Bag On Crappy Securitized Mtgs; Regulator: More Complaints To Come

The Wall Street Journal reports:

  • Federal regulators accused J.P. Morgan Chase & Co. and Royal Bank of Scotland Group PLC of duping five large credit unions into buying more than $3 billion in mortgage bonds that were "destined to perform poorly," and that quickly sank the credit unions.

  • The two civil lawsuits filed Monday in U.S. District Court in Kansas City, Kan., by the National Credit Union Administration are the most aggressive move yet by U.S. regulators to recover losses from Wall Street firms for alleged wrongdoing before and during the financial crisis.


  • The collapse of the five large institutions, called wholesale credit unions, "resulted in the worst crisis faced by the credit-union industry in its history," said NCUA Chairman Debbie Matz. "We believe numerous parties within the chain, primary underwriters and intermediaries as well, have responsibility."


  • Officials at the NCUA, a federal regulator that supervises the nation's credit unions, expect to file additional lawsuits against as many as eight more banks and securities firms that pooled individual mortgages into securities and sold them to the five credit unions, which failed in 2009 and 2010, according to people familiar with the situation.

  • The NCUA has issued 986 subpoenas to companies involved in the mortgage machine, including lenders that originate loans, investment banks that sell mortgage-backed securities, mortgage servicers and credit-ratings agencies, a spokesman said.

For more, see Feds Sue Bankers Over Fall in Bonds (requires paid subscription; if no subscription, GO HERE; or GO HERE - then click appropriate link for the story).

For the lawsuits, see:

Monday, June 27, 2011

Despite Successfully Obtaining Pinheaded Lower Court Foreclosure Ruling, Defense Attorney Gets Slammed With Sanctions, Bar Disciplinary Referral

A recent ruling by Florida's 3rd District Court of Appeal is evidence that a homeowner facing foreclosure can be the beneficiary of a pinheaded lower court ruling (Miami-Dade County Circuit Court Judge Peter Adrien), only to have it reversed on appeal.

The facts set forth in the 3-judge panel's ruling are 'mind-boggling' (a term used by the court elsewhere in the opinion), as evidenced by these excerpts:

  • Debtors and their counsel, Attorney Paul B. Woods, managed to convince the trial court that a mere letter of "tender" and a fabricated Unilateral Note, without payment of any kind, were sufficient to discharge the entire debt owed to Washington Mutual. Judge Adrien, in turn, granted the Motion to Vacate, vacated the final judgment, discharged the lis pendens, and dismissed Washington Mutual's complaint with prejudice.


  • Despite the nonsensical terms of the Unilateral Note, the Debtors amazingly claim that they are satisfying "any amount due Plaintiff pursuant to original promissory note" by tendering this newly concocted document, and therefore, owe nothing to Washington Mutual.

    The absurdity of this argument notwithstanding, there is absolutely no evidence in the record that Washington Mutual "negotiated and agreed [to]" the Unilateral Note, nor is there any evidence that Washington Mutual ever considered a possible pre-judgment modification of the Mortgage or renegotiation of the Promissory Note.

    Moreover, other than the Debtors' self-serving, unsupported statements, the record is devoid of any evidence demonstrating that the final judgment, much less the Promissory Note or the Mortgage, were ever satisfied. Given the sheer lack of evidence that there had been a satisfaction of any kind by the Debtors, the requirements of Florida Rule of Civil Procedure 1.540(b)(5) were simply not met, and, thus, there was no basis for vacating the final judgment.

    Accordingly, we reverse the trial court's April 2010 Order and remand with instructions to reinstate Washington Mutual's lawsuit, lis pendens, and the final judgment. The trial court is further instructed to reschedule the foreclosure sale.

The appeals court then went further:


  • Accordingly, we grant Washington Mutual's motion for appellate attorneys' fees and sanctions against both the Debtors and their attorney, Paul B. Woods, jointly and severally. See id.; §57.105 Fla. Stat.

    Also, given the essentially fraudulent behavior of the Debtors, and the potentially unethical conduct of their counsel, based upon and in furtherance of this behavior, we refer Paul B. Woods to the Florida Bar for its determination of whether professional discipline is warranted.
For the ruling, see JPMorgan Chase v. Hernandez & Hernandez, No. 3D10-1099 (Fla. App. 3d DCA, June 22, 2011).

(1) Once again, Section 57.105 of the Florida Statutes rears its head in a foreclosure case, and is expected to do so quite a bit as these cases continue to float up to the various Florida appeals courts.

For Florida foreclosure counsel unfamiliar with the operation of this statute, the Section 57.105 reading list is somewhat long. Whether one is seeking a recovery of prevailing party attorneys fees for a client, or looking to have a court impose sanctions on adversaries for their conduct (or dodge sanctions requested by one's adversaries), it might be a good idea to familiarize oneself as to how and when the statute has been applied in the past.

Foreclosure Slowdown Leads To Shaky Servicers With Major Cash Flow Squeeze

Housing Wire reports:

  • Mortgage servicers are facing a billion-dollar crisis when it comes to advancing payments and interest to the secondary markets. The problem, according to one panelist providing a mid-year outlook at the American Securitization Forum's annual meeting in Washington, is that mortgage servicers are growing weary of paying for property problems that aren't getting fixed.

  • Heavy foreclosure backlogs and other difficulties in liquidating distressed properties mean mortgage servicers are dealing more and more with negative cash flows in their RMBS portfolios. Mortgage servicers are advancing payments to the secondary markets, even when the properties aren't paying.

  • The assumption is the properties are going to be profitable again, one day. The concern is more and more mortgage servicers doubt this scenerio will actualize. Howard Kaplan, a partner at Deloitte & Touche, said the national average on turning around a distressed property is now more than two years.

  • "If it takes three years to recover, can you imagine the uproar in the markets if servicers stop advancing?" he asked. "Billions and billions of dollars in receivables would stop. This problem will get worse before it gets better."


  • Kaplan said secondary market players should appreciate the constraints mortgage servers face. In addition to principal and interest on distressed properties, the servicer still needs to pay local governments, insurance and cover maintenance costs.

  • "I can't emphasis enough the expense on servicers to keep the lawn mowed, the pool clean and pay taxes," he said. "And it's even more complicated if the home is occupied."

Source: Mortgage servicing faces billion-dollar secondary crisis.

Foreclosure Rescue Equity Stripping Victims Burst Into Courtroom Applause As Feds 'Frog-March' Sale Leaseback Peddler To Prison For 13+ Years

In Philadelphia, Pennsylvania, The Associated Press reports:

  • Victims applauded as a Pennsylvania man was sentence to over 13 years in prison for tricking homeowners into turning their houses over to him then evicting them.

  • A federal judge in Philadelphia ordered 47-year-old Gennaro Rauso taken into custody immediately after his sentencing Monday. KYW-AM reports victims who attended the hearing began clapped as he was led from the courtroom in handcuffs. Prosecutors say Rauso offered to rescue more than 200 struggling homeowners by offering them a deal that was too good to be true.

  • Officials say Rauso got his victims to sign over their properties in return for a promise to pay off the mortgage and rent the property back to the owners. But victims say Rauso took their money and homes then dumped them on the street.(1)

Source: Victims applaud mortgage fraud jail term in Pa.

(1) Rauso was also the target of at least one civil lawsuit (a suit that probably serves a good template for those looking to undo these types of real estate swindles) where a homeowner successfully voided the sale leaseback ripoff, and which left the (presumably unwitting) lender which failed to physically inspect the premises and inquire into the rights and equities of the occupants in possession before providing a mortgage loan to finance Rauso's scam partially holding the bag. See:

Philly Feds Complete Prosecution Of Foreclosure Rescue Equity Stripping Racket With Conviction Of Sale Leaseback Peddling Pair

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:

  • A Bucks County couple were convicted Tuesday in federal court of a $14.6 million mortgage-fraud scheme targeting homeowners facing foreclosure, prosecutors said. Edward G. and Jacqueline McCusker of New Hope face lengthy prison sentences, prosecutors said. The couple, both 47, also face large fines and possible forfeiture of the proceeds from their fraud.

  • The McCuskers operated Axxium Mortgage Inc. They worked with codefendants Jeffrey A. Bennett and Stephen G. Doherty, both lawyers, who have pleaded guilty and await sentencing. Codefendant John Bariana also has pleaded guilty and is awaiting sentencing. The defendants sought homeowners facing foreclosure and promised to help them find an investor to save their homes.

  • Prosecutors said the defendants engaged in real estate transactions with "straw" purchasers to obtain fraudulent mortgages. They took the equity the homeowners had left, used some of it to pay the new mortgages, and kept the remaining money for themselves.

  • Doherty solicited and referred homeowners to Edward McCusker, and used fraudulent bankruptcy filings to delay some foreclosures. Bennett handled the closings for real estate transfers, manipulating information provided to lenders. They operated from their Doylestown law firm of Bennett & Doherty. The case was investigated by the FBI and the Pennsylvania Department of Banking.

Source: Bucks County couple convicted in mortgage fraud.

Dubious Document Signed Years After Lender Tanked Surfaces In Ongoing South Carolina Foreclosure Action

Buried in a recent story in The Myrtle Beach Sun News on the foreclosure fraud scandal (story mentions Docx, Linda Green, LPS - the 'usual suspects') is the following excerpt on how one couple facing foreclosure was victimized by a dubious assignment of mortgage that was signed a couple of years after the mortgagee of record went out of business:

  • Bob and Christine Dorrie moved to Myrtle Beach from the Bronx in New York in 1998. Like many people during the economic boom, the Dorries used their credit cards to finance a lifestyle beyond their means. So, in September 2007, they decided to refinance their home in the Island Green East neighborhood to pay off some of their bills.


  • The Dorries' mortgage payment, which had been $987 a month, soared to $1,340 a month after the refinance. As the economy grew worse, the Dorries quickly fell behind on their house payment.

  • Wells Fargo Bank, the new owner of the Dorries' loan, filed a foreclosure lawsuit against the couple on Sept. 2, 2009. Bob Dorrie's emergency bankruptcy filing three days before the house was to be sold at auction has put everything in limbo. The Dorries now are questioning how Wells Fargo came to own their loan.

  • Ace Funding - the company that gave the Dorries their loan in 2007 - filed for bankruptcy protection and went out of business the following year, never officially assigning the Dorries' loan over to Wells Fargo.

  • Wells Fargo didn't file the assignment on behalf of the defunct Ace Funding until more than three weeks after the foreclosure lawsuit was filed. A lawyer representing Wells Fargo in the foreclosure lawsuit signed the document for Ace Funding, even though he "really has no authority to assign this mortgage," according to Terry Walden, an audit originator and attorney liaison for New South Financial.

For the story, see Mortgage papers raise Myrtle Beach real estate fraud claims (Signatures on documents used in foreclosure cases under review).

Sunday, June 26, 2011

Closing Agents Get 10 Years After Copping Pleas To Pilfering Proceeds From Loan Refinancings, Leaving Homeowners With Two Mortgages, Ruined Credit

In DuPage County, Illinois, the Naperville Sun reports:

  • Two DuPage County women stole millions intended to refinance their clients’ home mortgages, instead using the money for personal expenses and efforts to keep their own struggling title business afloat. Homeowners, meanwhile, often were left struggling with two mortgages, foreclosure threats and plummeting credit ratings.

  • Pamela Williams and Patricia Johnson [...] were each sentenced to 10 years in prison for the thefts they carried out in 2007 and 2008 while running PLM Title Company in Wheaton.


  • Williams, of Darien, and Johnson, of Naperville, pleaded guilty in April to felony theft charges as part of a plea agreement with prosecutors that limited their maximum prison terms to 11 years. The women also were ordered to pay $1.8 million in restitution, though prosecutors contended the pair likely stole more than $6 million, with thefts dating back to at least 2002.

  • Williams and Johnson pilfered escrow funds primarily from clients who were refinancing existing mortgages, prosecutor Diane Michalak said.

  • The money was supposed to go to pay off a client’s previous mortgage, but Williams and Johnson often used the money for personal expenses, including Chicago Bears season tickets, golf outings and paying at least $6,000 for Williams’ daughter’s wedding.

  • Much of the money, though, was used to cover other refinancing deals. The women even created counterfeit bank statements and other documents to try to hide their scheme, Michalak said. “They stole over and over and over,” Michalak said. “They knew exactly what they were doing and they didn’t care.”

  • Some homeowners said they still are struggling with financial problems caused by Williams and Johnson. “I have two mortgages on property now,” said Joycelyn Cole of Chicago, a U.S. Postal Service worker. “It ruined me, my credit.”

For the story, see Two DuPage County women receive 10-year sentence for mortgage scheme.

Escrow Agent Gets 4 Years For Real Estate Closing Ripoffs; Handiwork Included Failure To Properly Record Deeds While Pocketing Lien Payoff Proceeds

From the Office of the U.S. Attorney (Baltimore, Maryland):

  • U.S. District Judge J. Frederick Motz sentenced Daniel E. Fink Jr., age 44, of Baltimore, who operated Homemaxx Title & Escrow LLC (Homemaxx), a title company that conducted residential real estate closings with offices in Middle River and Parkville, Maryland, [] to four years in prison, followed by three years of supervised release, for wire fraud in connection with a scheme to defraud lenders and homeowners of more than $2.2 million. Judge Motz also ordered Fink to forfeit $2.2 million and to pay restitution in the full amount of the victims’ losses. The total loss amount has not yet been determined, but is estimated to be at least $2.2 million.


  • According to Fink’s plea agreement, from February 2003 to July 2004, Fink defrauded lenders, a title insurance company, and homeowners to obtain more than $2.2 million. Fink made arrangements for Homemaxx to act as the title company for real estate settlements and refinancing transactions. Lenders deposited funds in Homemaxx escrow accounts that Fink controlled. As part of the scheme, Fink caused title insurance to be issued to individuals purchasing or refinancing real estate, but concealed facts that negatively affected the buyers’ title in the real estate transactions. Fink also made misrepresentations to lenders in connection with transactions in which Fink purportedly was buying or selling the property and handling the settlement on behalf of Homemaxx.


  • In addition, despite Fink’s representations to lenders that escrow funds were properly distributed after settlement, Homemaxx to failed to pay outstanding first mortgages on real estate transactions or to properly record deeds.


  • In April 2004, Fink was confronted by representatives of the title insurance company about substantial amounts of money missing from the Homemaxx escrow account. Fink later fled the Baltimore area and used aliases to engage in real estate transactions in Florida. On March 26, 2009, a federal grand jury in Baltimore returned an indictment charging Fink with wire fraud and money laundering in connection with the scheme. Fink was arrested in Florida on February 15, 2010 by the Palm Beach Police Department.

For the U.S. Attorney press release, see Title Company Owner Sentenced to 4 Years in Prison for Mortgage Fraud Scheme Involving Losses of over $2.2 Million (Was a Fugitive for Almost a Year).

Politically-Influenced Receivership Appointments That Suck Cash Out Of Buildings In F'closure Origin Of Latest Stench Emanating From NY Court System

In New York City, The New York Times reports:

  • In 2009, a judge in Manhattan had a lucrative appointment to hand out: oversight of a diamond district building that was drifting into foreclosure. Nearly 600 people in Manhattan had been approved for such work. But the job went to a lawyer named Mark D. Lebow, who is the husband of Patricia E. Harris, Mayor Michael R. Bloomberg’s most trusted aide. Since then, Mr. Lebow has earned $352,000 in fees, more than $5,000 a week, according to court records.

  • The foreclosure crisis has caused a surge in the number of court-appointed receivers for distressed properties in New York, and politically connected lawyers are benefiting. Yet even as the fees mount, totaling millions of dollars, it remains unclear why judges are selecting some of these lawyers, and whether the fees are being well spent.

  • The court system in New York State has long been criticized for fostering a system of patronage appointments that enriches lawyers and others with ties to influential politicians. Court officials defend the process of selecting receivers for distressed properties, saying judges are looking for people who they know have done good work.


  • When a building goes into foreclosure, a judge appoints a lawyer as a receiver who acts a property’s temporary landlord during the process. Receivers are entitled to fees that typically amount to 5 percent of a property’s revenues. Judges can award less than 5 percent, but usually do not.

  • The court-appointed lawyers in turn usually hire property managers and other lawyers to assist in overseeing the properties. The receivers do not pay out of their own pockets for the costs of the property managers and other lawyers. That money comes from the properties’ revenues.

  • This is why mortgagees hate foreclosures,” said Harold Shultz, a senior fellow at the Citizens Housing and Planning Council, a nonprofit research group. “During this process all these people are sucking money out of the building.”


  • Perhaps the most profitable recent receivership went in 2009 to a retired judge, Seymour Boyers, 84. He was paid $760,000, or roughly $7,800 a week, to oversee the case of the sprawling Riverton apartments in Harlem. Mr. Boyers has specialized in medical malpractice and product liability while in private practice. Members of his law firm donated $1,000 to the campaign of the judge, Richard F. Braun, who appointed him as a receiver.

  • A court spokesman, David Bookstaver, said Justice Braun was not aware of the campaign contributions. Mr. Boyers “is a highly respected former jurist with outstanding credentials," Mr. Bookstaver said. At Riverton, the state’s housing division ordered rent reductions during Mr. Boyers’s tenure because repairs were not completed. Mr. Boyers said he was not aware of the request for repairs, which he said were sent to the property manager, until months after they were issued.(1)

For the story, see Politically Tied Lawyers Win Jobs Handling Foreclosures in the City.

(1) For other ripoffs having some connection to the NYC court system, see:

Florida High Court Battle Begins Over Use Of Voluntary Dismissal By F'closure Sweatshop After It Gets Bagged Submitting Allegedly Bogus Mortgage Docs

The initial brief in a case involving the use of a voluntary dismissal by a foreclosure mill in a foreclosure action to dodge court scrutiny of dubious documents that were submitted with the lower court was filed earlier this month with the Florida Supreme Court.

This issue was raised in Pino v. The Bank of New York Mellon, a Florida appeals court case, and involves conduct by the defunct foreclosure sweatshop headed by attorney David J. Stern.

For the brief, see Initial Brief - Pino v. The Bank of New York Mellon (go here for Appendix to initial brief).

Go here for links to other documents filed with the Florida Supreme Court.

Evidence Of Life Surfaces At Fla Bar; Lawyer Regulatory Body Finally Files Disciplinary Complaint Against Dethroned King Of F'closure Mill Sweatshops

The Palm Beach Post reports:

  • The Florida Bar is asking for disciplinary action against South Florida attorney David J. Stern for ignoring a 5th District Court of Appeal order in a foreclosure case where his firm represented SunTrust Bank.

  • A complaint filed Friday with the Florida Supreme Court charges Stern, whose Plantation-based company was once the largest foreclosure firm in the state, with violating rules of professional conduct and disobeying a court obligation.

For more, see Ex-foreclosure giant David J. Stern faces Bar trouble.

For the complaint, see The Florida Bar v. Stern, Case No. 11-1192 (June 17, 2011).

Go here for links to other relevant court documents.