Saturday, October 22, 2011

Clock Ticks On Bankster's Short Sale Incentive; Qualified Homeowners To Be Offered Up To $20K To Bail Out Of Underwater Homes

In Central Florida, the St. Petersburg Times reports:

  • The clock is ticking on homeowners who want to take advantage of Bank of America's recently announced short-sale incentive program. To collect up to $20,000, qualified sellers must get their homes listed for sale by the end of November.

  • The bank, which services 1.1 million Florida mortgages, says it is not limiting the offer to delinquent borrowers. Homeowners with good payment histories could also qualify, said Christina Beyer Toth, a Tampa-based Bank of America spokeswoman.

  • When the nation's largest lender announced the program offer last week, it didn't specify which homeowners would qualify or whether the bank wanted to only dump toxic loans it acquired from Countrywide Financial in 2008.

For more, see Clock ticking on Bank of America short sale cash offer.

See also, The Palm Beach Post: Bank of America offers up to $20,000 short sale incentive to struggling homeowners.

Man Sues Ex-Wife Alleging R/E Ripoff; Says She Was Unauthorized To Take Title To Property In Her Name While Acting As His Agent In Parcel Purchase

In Galveston, Texas, The Southeast Texas Record reports:

  • Joseph Van Huntington is suing his ex-wife in an effort to extract a title from her. According to a lawsuit filed Sept. 19 in Galveston County District Court, Alicia Van Huntington falsely represented that she was the plaintiff's spouse to secure a transaction involving real property in Galveston County 20 years ago.

  • The parties divorced in September 1984, but continued to remain friends, the original petition says. Recent court documents show Joseph Van Huntington purchased the parcels of land in question on Dec. 28, 1988. He was out of the country at the time of the aforementioned transaction so he requested the respondent to act as his agent and affect the purchase in question, the suit says.

  • It explains that the complainant "wholly paid for the property, and Alicia Van Huntington paid (nothing) for the property."Joseph Van Huntington, however, asserts that he did not authorize Alicia Van Huntington, who reportedly resides in Argentina, to purchase the property in her name nor convey any part of the subject land to her.

  • The suit further alleges she had said property deeded in the plaintiff's name with his knowledge or consent. "To date, the plaintiff, Joseph Van Huntington, desires to sell the subject property and Alicia Van Huntington refuses to convey (the) title to Joseph Van Huntington," the suit says. Consequently, the complainant seeks a declaratory judgment stating he is the property's sole owner.

Source: Former spouses in litigation over property title.

Cops To Homeowners: Take Caution When Responding To Roadside 'Bandit Signs' Offering Mortgage Help

In Lee County, Florida, WINK News reports:

  • Signs have been popping up around Fort Myers, promising big bucks if a company can assume your mortgage. Most of the handwritten signs read: "We pay $10,000 to take over your mortgage." At the bottom, there's a phone number to call, but no name or business listed.

  • Stacey Payne, with the Lee County Sheriff's Office Fraud Line, says the lack of information should be a red flag to homeowners. "With somebody who's saying they have a mortgage company or they're going to help you with your mortgage, there should be a business, a legitimate business tied to that phone number," Payne says.

  • While local law enforcement have not gotten any complaints about the signs, Payne says she hopes people will study up on the company and its offer before diving into anything.

  • "They should due their due diligence, due their research, Google the phone number, the name of the person, the name of the business," Payne says. That's because what the signs promise closely resembles a scam that has already been documented, she says.

  • In the foreclosure "rescue" scenario, scammers target homeowners having trouble making their mortgage payments. The scammers offer to help, then trick people into handing over much more."Individuals were signing over the deed to their home," Payne says. "It wasn't that they didn't have a mortgage -- they were no longer the owner of their home." She says that is when the new owner would send a letter demanding complete payment of the mortgage and threatening eviction.

  • WINK News found three different phone numbers on similar mortgage signs around town. All of them rang to the same voicemail. The person answering the phone declined to discuss the details of the mortgage offer, and hung up when pressed for the name of the company.

  • The Better Business Bureau was unable to find complaints tied to the phone numbers listed on the signs. However, the BBB says most mortgages cannot be transferred and usually require lender permission to do so.

Source: Deputies skeptical about roadside mortgage signs.

Friday, October 21, 2011

Homeowner Nearly Driven Into F'closure After Being Victimized By Her Tax Preparer In I.D. Theft Scam That Led To IRS Problems On Taxes She Didn't Owe

In Duluth, Georgia, WSB Radio 750 AM reports:

  • More identity theft cases stemming from a bust earlier this year are coming to light. Police say the total is up to nearly 9,000 and for the first time, one of the victims is speaking out.

  • Jeanette Adams says her problems began in early 2010 when the IRS sent her a letter stating she owed nearly $2,400 in taxes.

  • "I'm paying way more than I should ever of had to pay and I don't know why," said Adams. The 66-year-old retired nurse tells Channel 2 Action News she made the payments to the IRS, but it nearly forced her into foreclosure.

  • "I would pay one month, then pay another month and pay a partial payment," said Adams. Eighteen months later, the answer to her concerns came with a phone call from Duluth police.

  • "You are the victim of an identity fraud," I said that tells it all," said Adams. In April, Duluth police arrested Annette Ford after detectives found stacks of documents containing names, dates of birth and Social Security numbers inside her home. Authorities say Jeanette Adams' name was among them.

  • Police say Ford owned a business called E-Pro Tax Service that was registered with the secretary of state's office. Ford pleaded guilty to conspiracy and identity fraud in June. Derrick Picket has been charged in connection with the ring. Charges are pending against at least two more suspects.

Source: Police: 9,000 victims in Gwinnett ID theft case.

Convicted Real Estate Ponzi Scam Operator 'Buys Out' Of Prison Time; Deal For Victims' Restitution Calls For Installment Payments With $100K Down

In Denver, Colorado, the Denver Post reports:

  • Admitted fraudster Xavier Duran bilked a Denver police officer's widow and others out of more than $1 million, but he won't necessarily serve prison time. The deal prosecutors struck Tuesday with Duran — a guilty plea on one felony securities-fraud count in exchange for a suspended sentence and restitution payments — means victims such as Kelly Young could recoup some of their losses.

  • Young lost nearly $800,000 in the death benefits and charitable contributions she collected after her husband, Detective Donnie Young, was shot to death in 2005 while working security off duty.

  • "It's a double-edged sword," Young said of the plea deal. "He basically stole a lot of money. If he were to be sent to prison for 12 years, we'd never get any of the money back."

  • Duran's plea came just as lawyers were selecting a jury. Young said she was relieved that the case wouldn't go to trial. Eight other charges related to theft and racketeering were dropped in the deal. Duran, 45, will be formally sentenced Jan. 6.

  • Chief Deputy District Attorney Joe Morales stipulated to a sentence that would keep Duran out of prison as long as he complies with strict economic probation and keeps up with restitution payments. The felony will remain on his record.
    Morales said he's asked for an immediate payment to Young.

  • "To stay out of prison, he has to come in with $100,000 cash. After that, he'll have to pay the rest of the restitution over time," Morales said. "It was enough that I could justify taking a chance and giving him a break."

  • Duran in 2006 told Young and other victims — including another officer's widow, Young's sister and a newly divorced woman — that he would use the money they invested to buy, fix up and rent run-down properties. "He liked to take advantage of women who were in unfortunate circumstances," Morales said.

  • He represented himself as a former real estate broker now acting as an investment adviser offering a risk-free opportunity, according to Duran's indictment. What he didn't disclose was that new investments were paying off old investors as well as paying for Duran's personal expenses. In reality, his business was failing, and he was losing properties to foreclosure.

For more, see Con man to pay money back to stay out of jail.

Daughter Cops Guilty Plea To Ripping Off Now-Deceased Parents In Home Equity Scam; Pocketed Proceeds From Fraudulently-Obtained Reverse Mortgage

From the Office of the U.S. Attorney (Rochester, New York):

  • U.S. Attorney William J. Hochul, Jr. announced [] that Mary Ann Fulbright, 60, of Dallas, Texas, pleaded guilty [...] to bank fraud. The charge carries a maximum penalty of 30 years in prison, a fine of $1,000,000 or both.

  • Assistant U.S. Attorney Marisa J. Miller, who is handling the case, stated that the defendant fraudulently obtained a Home Equity Conversion Loan, a type of reverse mortgage, on a Rochester home owned by her now-deceased parents, Stephanie and Michael Geremesz.

  • Fulbright obtained the mortgage in Michael Geremesz’s name, knowing that it was based upon a fraudulent quitclaim deed that falsely purported to relinquish all of Stephanie Geremesz’s rights to the property.

  • As a result of the fraud, a mortgage in the amount of approximately $176,000 was levied against the property, the proceeds of which the defendant kept for herself.

For the U.S. Attorney press release, see Woman Pleads Guilty To Mortgage Fraud.

Thursday, October 20, 2011

Faulty Water Meters Driving Homeowners Into F'closure? Bogus H2O Bills Lead To Mtg. Payment Hikes; City Admits Knowledge, Says Empty Coffers Block Fix

In Brockton, Massachusetts, WCVB-TV Channel 5 reports:

  • Some Brockton homeowners are up in arms over a certified letter they received from the city giving them seven days to sign an agreement to pay an abated water bill that they say doesn't reflect the true cost. This latest development stems from a controversy that began in July 2009, when thousands of homeowners got bills totaling thousands of dollars. One woman's bill was $100,000.

  • After an extensive audit, the city's water department admitted knowing that faulty meters were giving false readings, but said there was no funding to replace them.

  • In the meantime, homeowners were saddled with liens on their properties. Some of those liens were paid by mortgage companies that caused monthly mortgage payments to go up by several hundred dollars.

  • Because of the problem, some homeowners are even facing foreclosure. Homeowners say they are willing to pay what they owe, but they want to know what formula the city is using to come up with its figures. They said they also want to know what the balance on those bills are before they sign anything.

Source: Homeowners Continue To Battle City Over Water Bills (City Sends Letters Giving Residents Days To Pay Bills).

Loan Servicer Screw-Up Suspected By Families Threatened By Foreclosure Despite Claim That No Payments Have Been Missed

In Orlando, Florida, WFTV-TV Channel 9 reports:

  • Several local families claim an Orange County loan company is threatening to foreclose, even though they haven't missed a payment. Michelle Martinez can't believe she's fighting to keep her parents Deltona home out of foreclosure.

  • Since she says the bank records show they have not missed a payment and yet foreclosure warnings keep arriving. "Countless calls to this company and never get a straight answer."

  • Michelle blames Litton Loan for creating the problem. Litton was sold to Ocwen Loan Servicing near UCF. She claims it's done nothing to resolve her parents nightmare. "Instead of resolution the problem it just gets bigger."

For more, see Action 9 Investigates Mortgage Loan Mess (Families fight mortgage company).

Title Company Paperwork Screw Up Leaves Houston Couple Facing Foreclosure, Despite Having Made All Mortgage Payments

In Houston, Texas, FOX Channel 26 reports:

  • For two years, a Houston couple diligently paid the monthly mortgage on their new home. Then came the unbelievable news that the home was never theirs; the title had never been transferred.

  • Soon after Brian and Khanklink Pyron bought their home in 2008, the title company they used, Esquire Title, filed for bankruptcy.

  • Therefore, the title to the home was never legally transferred to the Pyrons. It still belonged to Wells Fargo, the bank that held the previous owner's mortgage.

  • "We did everything we were supposed to do. All this had been going on for two years. Nobody has communicated with us, notified us. We had been paying our mortgage and everything," Brian said.

For more, see Family Hit by Surprise Foreclosure.

Wednesday, October 19, 2011

Pleas Entered In Mobile Foreclosure Sale Bid-Rigging Racket; Sentencing Delayed As Pair Agree To 'Sing' In Continuing Probe

In Mobile, Alabama, the Press Register reports:

  • Two real estate investors pleaded guilty [...] to federal bid-rigging charges accusing them of manipulating auctions of foreclosed properties.

  • According to their plea agreements, Harold H. Buchman and the company he co-owned, M&B Builders, conspired with Allen K. French and others to suppress bids at foreclosure auctions. The conspiracy dated to May 2001 and lasted until at least March of last year, according to court records.

  • The plea bargain calls for Buchman to serve 6 months in jail, pay a $21,141 fine and make at least $30,000 in restitution for violating the Sherman antitrust act. He also pleaded guilty on behalf of his company to the antitrust violation, as well as attempted mail fraud conspiracy. The firm will pay a $250,000 fine and restitution in the amount of at least $18,345.20, if U.S. District Judge Ginny Granade accepts the recommendation in the plea agreement.

  • French, meanwhile, could be eligible for probation for the antitrust violation. He agreed to pay a $20,000 fine and at least $23,000 in restitution.

  • Prosecutors asked for at least 6 months before sentencing so that the defendants can complete their cooperating in the ongoing probe.(1)It’s obvious we’re here today because he has cooperated, and I would say, has cooperated fully,” said Buchman’s attorney, Donald Briskman.

For more, see Mobile real estate investors plead guilty to manipulating foreclosure auctions.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions, generally.

(1) The only question remaining is how many bodies this duo 'throws under the bus' as part of earning their seemingly light prison sentences:

  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the courthouse' that breaks out among participants in an uncovered criminal conspiracy).

The defendants, at least implicitly, have acknowledged that their 'arrangement' at the foreclosure sales was not an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Granite State High Court To Rule On Banking Regulator's Order Voiding Bankster's Mortgage Note In Countrywide 'Bait & Switch' Case

In Manchester, New Hampshire, the New Hampshire Sunday News reports:

  • In his last administrative act as banking commissioner, on June 4, 2010, Peter Hildreth ruled that Countrywide Home Loans violated the state’s consumer protection law when it switched the terms of a Manchester woman’s mortgage just days before her closing.

  • He ordered the mortgage giant, which was purchased by Bank of America in 2008, to void the mortgage note, repay the woman’s money and pay her closing costs and legal fees. Countrywide appealed, and last week the case landed in the state Supreme Court.

  • The case goes to the heart of New Hampshire’s version of the Consumer Protection Act. The Legislature has established that four regulated industries — banking, insurance, securities and public utilities — are exempt from the CPA; instead, it’s the commissioners of those departments who enforce the law against unfair and deceptive trade practices.

  • Among the issues the high court must decide is whether the homeowner filed her original complaint and request for a rehearing within the legal time limits, and whether Hildreth acted properly in the kind of restitution he ordered.


  • Countrywide’s attorneys argue the law did not allow Hildreth to order attorney’s fees and vacate the mortgage note. And [the homeowner's] attorneys say he erred in not awarding her double or triple damages as allowed under the Consumer Protection Act.

For more, see Supreme Court hears mortgage dispute.

Texas AG Squeezes Roofing Company Into Settlement In Racket Duping Vulnerable Homeowners Hit w/ Severe Weather Events Into Signing 'Loaded' Contracts

From the Office of the Texas Attorney General:

  • A Rosenberg-based roofing contractor [] agreed to reimburse all homeowners who improperly paid the company’s “liquidated damages” contracts. In June, the Attorney General’s Office charged Holden Roofing Inc. (HRI) with subjecting homeowners to unlawful penalties if they did not hire the defendant to perform the work.(1)

  • According to court documents(2) filed by the Attorney General’s Office, HRI unlawfully coerced homeowners into using their services for roof repairs after severe weather events.


  • According to state investigators, HRI’s sales representatives targeted communities that experienced severe weather events such as hail storms or hurricanes. The defendant’s sales representatives visited individual homeowners – including senior citizens – and marketed themselves as roof repair consultants.

  • When the defendant’s sales personnel approached homeowners, they did so under the auspices of offering consulting expertise for customers seeking help with claims against adjusters and insurance carriers. As a result, many homeowners who signed the defendant’sconsultation and assistance agreementbelieved they were only consenting to a free roof inspection and work estimate. Others believed HRI was independently acting on their behalf to facilitate roof repairs or replacement under the terms of their homeowner insurance policies.

  • However, contrary to the sales staff’s in-person statements, the HRI contract obligated homeowners to hire the defendant to actually repair their damaged roofs – or pay a penalty if homeowners did not select the company to perform the roofing repairs.

  • In an apparent effort to coerce homeowners, HRI imposed a charge totaling 20 percent of the total roof replacement cost if homeowners retained another roofing contractor to perform the repair work.

  • An investigation by the Attorney General’s Office revealed that HRI failed to properly inform homeowners about their three-day cancellation rights under the Texas Home Solicitation Act. This requirement applies when services are solicited in person at prospective customers’ residences.

  • In addition to its “consulting” services, HRI is a traditional contractor that also independently offers roof repair and replacement services. State investigators revealed that HRI’s sales personnel also failed to clearly communicate homeowners’ three-day right of cancellation under its roofing contract. Then, the contract imposed a so-called 15 percentliquidated damagespayment against customers who canceled contracts outside the three-day window. The Attorney General’s Office alleged this forced payment under the contract was an invalid penalty, not “liquidated damages.”

  • According to investigators, homeowners who attempted to cancel their sales transactions received letters from the defendant demanding that the liquidated damages be paid. HRI warned homeowners that failure to pay the liquidated damages would result in a lawsuit. The State alleged that because the debts accrued under an invalid penalty provision, the defendant could not threaten litigation to collect on debts that accrued under such a provision.

For the Texas AG press release, see Rosenberg Roofing Contractor Agrees to Pay Restitution for Misleading Homeowners (State’s enforcement action charged Holden Roofing with unlawfully coercing homeowners with misleading contracts).

(1) According to the press release, HRI and its president Brett Holden were named as defendants in the State’s June 23 enforcement action. The defendant’s principal office is located in Rosenberg near Houston, but HRI also maintains branch offices in Corpus Christi, Dallas, San Antonio, Austin, Brownsville and Tyler.

(2) See:

Builder's Contract For Deed Scheme Used To Unload Unsold Inventory Leaves Would-Be Homebuyers Holding Bag As Bank Refuses To Extend Construction Loans

In Spokane. Missouri, KY-TV Channel 3 reports:

  • Entire neighborhoods of families in Christian County are being kicked out of their homes. The foreclosures come as quite a shock to the people living in those homes. Ernie and Sharlene Risinger and their 11 year old daughter love their Spokane home and community, but they're being forced out. Their American dream has turned into a nightmare.

  • Nearly four years ago, the Risingers moved into the place they call home. "Sounded like a great deal. He wanted $1,500 deposit or down and we would actually be buying our house," says Ernie Risinger. Or so they thought. The Risingers, like all their neighbors at River Birch Estates did owner financing with Harold Rogers. They pay him $1,100 a month on a 30 year loan.

  • All was fine until a few weeks ago. "He was taking pictures of the house, and I said, 'Are you with the insurance company or something?' and he said, 'No, I'm with the bank,'" says Risinger.

  • That man with People's Bank of the Ozarks told them to watch the mail and the paper. "It was just really hard getting information from anybody," Risinger says. In late September, the Risingers got a letter, telling them to start making payments directly to the bank. But Harold Rogers again asked the Risingers to pay him. They've decided to just put the money in the bank for now.

  • Now, the foreclosure notices are published. Rogers' attorney says the bank has refused to renew Rogers' short term construction loans. He also says the value of the houses have dropped because of the economic recession.


  • The Risingers and all their neighbors have close to 20 kids in Spokane schools, who are also taking the news hard. "She loves the teachers, she loves the school, it's just really sad," Risinger says of his daugther. With more than $60,000 invested in their American dream, the Risingers are forced to start over.

For the story, see Families in Nixa and Spokane being forced from homes in unexpected foreclosures (The Risingers and many of their neighbors did owner financing with Harold Rogers, and thought they were well on their way to owning their homes).

See also, KSPR-TV Channel 33: Ozarks Homeowners Paid Mortgages on Time but are in Foreclosure (16 homes in Nixa and Spokane are in foreclosure and the people who live in them say they never missed their mortgage payments).

Georgia Woman Falls Prey To Apparent Rent-To-Own Racket; Made Payments To Outfit In Hopes Of Future Ownership; Now Faces The Boot As Fannie Forecloses

In Ellenwood, Georgia, WSB-TV Channel 2 reports:

  • An Ellenwood woman says she rented a home thinking she could eventually buy it from the company who leased it to her only to have her dream of ownership come apart when Fannie Mae showed up at her front door.

  • The company that rented the home to Chiquella White said they got approval to rent the house out from the original owner who walked away from it. White said when she signed her contract, she was under the impression it was a lease-to-own contract.

  • The company said had she kept paying them rent, it would've been. "Nobody should have to go through this. This is wrong," White said. White rented her home from New Life Granted and said they told her she could eventually buy it from them. "This was their exact words. We are in the process of purchasing the home," White said.

For more, see Woman fears for her home over questionable business.

Tuesday, October 18, 2011

Bankster Required To Provide Evidence Of Actual Possession Of Mortage Note Where Copy Shows Endorsment 'In Blank'

A United States Bankruptcy Appellate Panel for the Eighth Circuit Court of Appeals recently ruled that summary judgment granted by a U.S. Bankruptcy Court judge in an action by a debtor to challenge the standing of a lender holding the mortgage on debtor's home was improper because there was a material issue of fact regarding whether the bankster had possession of the original promissory note.

  • As Kondaur admits, and is apparent from the copy of the note attached to its proof of claim, the promissory note the Debtors executed in favor of NCMC has not been specifically endorsed to Kondaur; it is endorsed in blank. Accordingly, it is a "bearer" note, which requires actual possession of the note to enforce or negotiate it.

    The Debtors raised the issue of whether Kondaur is the proper party to enforce the note and cast further doubt on Kondaur's standing by introduction of the Corrective Assignment. Unfortunately, there is nothing in the record evidencing the location of the note. Kondaur's counsel represented at oral argument before this Court that Kondaur has possession of the note, but its failure to produce the note prior to or at the hearing on its motion to dismiss (treated as a motion for summary judgment) precluded a determination that Kondaur has the right, as a matter of law, to enforce the promissory note.

    At oral argument, Debtors' counsel conceded that there is a valid mortgage on the property and that production of the note most likely will remove the final hurdle to Kondaur's pending motion for relief and Kondaur's motion to dismiss the adversary proceeding.

    For the reasons stated above, the bankruptcy court's order entering summary judgment in favor of Kondaur is reversed and remanded for proceedings consistent with this opinion.

For the ruling, see In re Banks, No. 11-6025 (Bankr. App. Pan., 8th Cir. October 11, 2011).

Thanks to Mike Dillon at GetDShirtz. com for the heads-up on the ruling.

'All Cash' Homebuyer/Couple Driven To Brink Of Foreclosure Over $60K+ Escrow Screw-Up; Closing Agent Cuts Check, Satisfies Lien After Media Intervenes

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

  • It's one thing to lose your home because you stopped making payments on your loan or property taxes, but a local couple discovered their dream home was up for auction, because of a $60,000 mistake by the escrow company.

  • Hisham and Anna Othman were in near panic mode when they contacted me Wednesday. Records show someone at the escrow company dropped the ball more than a year and a half ago and left a huge lien against the title of their home.

  • The first red flag was in June, the Othmans says the notice of default they got in the mail was addressed to the previous owners, and since they've received other calls and mail for the previous owners, they thought it was another mistake. "They had the wrong people." said Anna. "We just kind of brushed it off."

  • Five months later in August, they come home to find a trustee sale notice taped on their front door- saying their house was set to be sold at auction on the fourth of November. Hisham called the trustee attorney handling the foreclosure.

For more, see Mistake by escrow company almost costs couple their home.

'Qualified' Intermediary For 1031 Exchange Deals Gets 7 Years In $20M+ Escrow Ripoff; Confederate To Serve 21 Months For Role In R/E Investor Ripoff

From the Office of the U.S. Attorney (Los Angeles, California):

  • Ezri Namvar, a prominent Los Angeles businessman and real estate developer, was sentenced [] to seven years in federal prison for stealing approximately $21 million from four clients who allowed his “qualified intermediary” company to hold their money in safekeeping before it was reinvested in real estate.

  • Namvar, 59, of Brentwood, was sentenced this morning by United States District Judge Percy Anderson, who also ordered Namvar to pay $20,930,648 in restitution. In May, a federal jury found Namvar guilty of four wire fraud charges.

  • A second defendant also found guilty of the four wire fraud charges – Hamid Tabatabai, 63 of Agoura Hills, who was Namvar’s right-hand man at the qualified intermediary company – was also sentenced [] and received a 21-month prison sentence.

  • The evidence presented at trial showed that four victims entered into agreements to have approximately $25 million deposited with Namvar’s company, Namco Financial Exchange Corp. (NFE), which held itself out as a qualified intermediary for real estate transactions commonly called “like-kind exchanges,” “tax-free exchanges” or “1031 exchanges.”

  • Under exchange agreements with NFE, the money belonging to the victims was to be held in safekeeping so the money would be available upon demand to effectuate 1031 exchanges.

  • However, instead of holding the money as promised, Namvar, with the assistance of Tabatabai, used the victims’ money for a variety of unauthorized and undisclosed purposes, including paying off creditors and investors of Namvar’s investment company, Namco Capital Group, Inc. (NCG).

For the U.S. Attorney press release, see Prominent L.A. Businessman Sentenced to Seven Years in Federal Prison for Stealing Nearly $21 Million Entrusted to His Company.

Real Estate Closing Attorney Gets 21 Months In $1M+ Escrow Ripoff; Pocketed Entrusted Cash While Failing To Apply Loot To Satisfy Existing Mortgages

From the Office of the U.S. Attorney (New Haven, Connecticut):

  • David B. Fein, United States Attorney for the District of Connecticut, announced that BRIAN P. McMANUS, 43, of Fairfield, was sentenced [] by Senior United States District Judge Ellen Bree Burns in New Haven to 21 months of imprisonment, followed by three years of supervised release, for misappropriating more than $1 million in funds during real estate transactions he handled.

  • According to court documents and statements made in court, McMANUS, who operated a law practice in New Haven, engaged in a series of fraudulent transactions in his capacity as the closing attorney on a number of real estate transactions. Specifically, McMANUS failed to pay off existing mortgages on the properties involved in the real estate transactions in a timely fashion and illegally used mortgage funds that had been deposited into his IOLTA account for other purposes.

  • On July 22, 2008, McMANUS handled a real estate closing involving the refinancing of a residential property located in Greenwich. At the time of the closing, there was an outstanding mortgage on the property in the amount of approximately $2 million that was to be paid off using funds being provided by a different lender as part of the refinancing transaction.

  • However, rather than paying off the existing mortgage on the Greenwich property, McMANUS used more than $1.45 million of the new mortgage monies that had been transferred to his IOLTA account to pay off outstanding mortgages from prior, unrelated real estate transactions he had handled, to make monthly payments on the outstanding Greenwich mortgage loan that was to have been paid off in full, and to pay personal and business expenses.

  • On June 24, 2011, McMANUS waived his right to indictment and pleaded guilty to one count of bank fraud. [...], Judge Burns ordered McMANUS to pay restitution in the amount of $2,041,417.41, of which approximately $568,000 has previously been deposited with the clerk of the court. U.S. Attorney Fein noted that McMANUS has withdrawn from the practice of law and the Connecticut Superior Court has appointed a trustee to oversee the closing of his practice.(1)

For the U.S. Attorney press release, see Attorney Who Mishandled Mortgage Funds Sentenced To 21 Months In Federal Prison.

(1) The State of Connecticut Judicial Branch's Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Connecticut-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help 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.

Monday, October 17, 2011

Suits: Rabbi's R/E Acquisition Formula: Borrow Funds Against Properties After Using Forged Deeds To Snatch Title; Slow-Footed Cops Yet To Act

In New York City, Real Estate Weekly reports:

  • A web of lawsuits have been woven around an allegedly crooked rabbi accused of forging paperwork to steal a whole building. According to court records and knowledgeable sources, Benjamin Herbst and cohorts have been the focus of a number of real estate lawsuits similar to the one Real Estate Weekly reported last week he is involved in at the midtown office building 315 West 35th Street.

  • The court cases and lawyers involved in them accuse Herbst and his associates of taking part in a number of schemes in which they have forged documents and signatures in order to gain title to properties they do not own and also leverage money against them.

  • It’s like the Leonardo DiCaprio movie Catch Me If You Can, but instead of just forging checks this guy forges deeds,” said attorney Stephen Meister, who is involved in one of the lawsuits.

  • Last week, Real Estate Weekly reported that 315 West 35th Street, an office building in Manhattan, had fallen victim to such a scam.


  • The court cases speak for themselves,” [an attorney for one victim] told REW. “What I don’t understand is why the authorities have not moved to do something about this.”

For more, see Lawsuits pile up against accused rabbi.

Phony Bank Reconciliations Dupe Title Insurer In Effort To Cover Up $3M R/E Escrow Shortage; Underwriter Left With $1.7M Tab For Unpaid Loan Payoffs

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

  • Brenda Lukenich, age 60, of Hughesville, Maryland pleaded guilty [] to mail fraud arising from a scheme to defraud lenders and a title insurance company of $1.7 million. Two co-defendants are scheduled for trial on November 7, 2011.(1)


  • According to her plea agreement, Lukenich was the escrow accountant for title companies that did business in the Baltimore, Annapolis and Washington, D.C. metropolitan areas, including Troese Title Services, Inc. (Troese Title), located in Camp Springs, Maryland; Troese/Hughes Title Services, Inc. (Troese/Hughes), located in Greenbelt, Maryland; and Troese/Prestige Title Services, Inc. (Troese/Prestige), located in Ellicott City, Maryland. As the escrow accountant, Lukenich reconciled the escrow accounts and prepared monthly reconciliation reports for each escrow account.

  • Prior to 2005, Troese Title and Troese/Hughes shared a joint escrow account for the receipt and disbursement of funds in connection with real estate closings carried out by both title companies. By 2006, the joint escrow account had a $3 million shortage.

  • Lukenich’s reconciliation reports, which were sent monthly to the principal of the companies, clearly showed that there were significant shortages in the joint escrow account. Principals of the title companies re-financed their homes to attempt to cover some of the escrow shortages. Sometime in 2006, the joint escrow account was separated into separate escrow accounts and Lukenich allocated a $1.7 million escrow shortage to Troese Title and a $1.3 million escrow shortage to Troese/Hughes.

  • The Troese title companies had agency agreements with Chicago Title Company which enabled them to provide title insurance in conjunction with the settlement services they performed, and made Chicago Title liable for any title defects suffered by home owners and lenders.

  • Chicago Title performed audits at Troese Title and Troes/Hughes. Prior to each of the audits, Lukenich would alter the reconciliation reports to falsely show that there were not escrow shortages and that there were not outstanding mortgage payoffs that had not been made. After each audit, Lukenich would reverse the fraudulent adjustments.

  • In March 2008, Chicago Title terminated its agency relationship with Troese Title and Troese/Hughes. In response, Troese Title and Troese/Hughes operations were consolidated into a single title operation that would be part of Troese/Prestige. However, when Troese/Prestige conducted settlements, it used the new lender money to cover the mortgage pay-offs that were still outstanding at Troese Title and Troese/Prestige, instead of as instructed on the HUD-1 settlement statement, in violation of the express direction of the lender.

  • Eventually, there were not enough settlements to cover all of the shortages. Chicago Title received information that a mortgage had not been paid off and conducted a surprise audit of Troese/Prestige. The escrow account did not contain enough money to cover all of the outstanding mortgage pay-offs from Troese/Prestige.

  • Chicago Title, as the title insurer, was forced to make the mortgage pay-offs, and to pay off funds due to a seller from a settlement and pay to record the instruments that had not been recorded.

  • In total, the loss to Chicago Title stemming from the Troese/Prestige pay-offs was approximately $1.7 million.

For the U.S. Attorney press release, see Title Company Escrow Accountant Pleads Guilty In $1.7 Million Mortgage Fraud Scheme.

(1) Lukenich is the apparent winner of the 'race to the prosecutor's office' in this racket. What remains to be seen is how good of a deal she scores at sentencing for whatever cooperation she may provide the Feds with as she 'throws her cohorts under the bus':

  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the courthouse' that breaks out among participants in an uncovered criminal conspiracy).

Detroit-Area Non-Profit Law Firm Sets Sights On Land Contract/Contract For Deed Rackets Selling Homes With Crappy Title To Unwitting Novice Homebuyers

In Wayne County, Michigan, the Dearborn Press and Guide reports:

  • Wayne County residents, especially life-long renters with no experience of property ownership, need to take proper precautions when purchasing homes on land contracts.


  • [Legal Aid and Defender Association (LAD)] represents victims of what appears to be a major residential property scam in the city and the county. Out-of-state companies appear to be in the business of buying thousands of foreclosed homes for as little as a dollar each, then selling them to residents on land contracts for thousands of dollars without informing purchasers about past-due property taxes, utility bills or other liens on the homes that become the responsibility of the new owners.

  • LAD has filed a lawsuit in Wayne County Circuit Court in such a case claiming damages of more than $25,000 and is preparing to file additional lawsuits on behalf of other purchasers of these land contracts.

  • We want residents to be aware of the problem and take the proper steps to protect themselves," said Michelle L. Johnson, managing attorney of LAD's Detroit/Wayne office. They include title searches to make sure sellers have title to the properties, title insurance, and determining whether there are liens for unpaid taxes and utility bills, she said.

  • LAD is Michigan's largest provider of free civil legal services to low-income residents. It serves metropolitan Detroit through its offices in Macomb, Oakland and Wayne counties. It also represents criminal defendants in Wayne County and the U.S. District Court for the Eastern District of Michigan. Including brief consultations and comprehensive legal services, the public law firm handles some 15,000 legal matters yearly.

For the story, see Take proper precautions when purchasing homes on land contracts.

Sneaky Lender Uses Loan Modification 'Pre-Negotiation' Agreement To Dupe Borrower Into Inadvertently Ratifying Void Mortgage, Waiving All Rights

Lexology reports on the use of loan modification pre-negotiation agreements that lenders use to screw over property owners:

  • The son and wife of the sole shareholder of an entity owning real property arranged for a mortgage loan to be made to the entity without the shareholder's knowledge or consent.

  • The son and wife represented to the lender that they had the authority to enter into the financing transaction in the borrower's name. After the mortgage loan went into default, the lender filed a foreclosure action.

  • In an effort to avoid foreclosure and reach a settlement or modification of the mortgage loan, the shareholder, on behalf of the borrower, signed a pre-negotiation agreement required by the lender, which:

    a) confirmed that the borrower's obligations were legal and enforceable;
    b) waived the borrower's defences, counterclaims and offsets; and
    c) acknowledged that the lender waived none of its rights or remedies under the mortgage loan documents.

  • After the parties failed to reach agreement on a modification of the mortgage loan terms, the borrower filed for bankruptcy and argued that the mortgage loan transaction was unenforceable because the son and wife lacked authority to enter into the transaction in the name of the borrower.


  • [For various reasons discussed in the story], the court held that the pre-negotiation agreement was enforceable.

  • The court also held that the mortgage loan transaction was enforceable because, among other reasons, the pre-negotiation agreement evidenced a ratification of the underlying mortgage loan by the shareholder of the borrower despite the fact that the mortgage loan was originally entered into by parties which lacked authority to enter into the mortgage loan transaction.

For more, see Enforceability of distressed mortgage loan pre-negotiation agreements (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link for the story).

See also, Borrower’s inaction ratifies unauthorized corporate loan (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link for the story).

For the court ruling, see In re Vargas Realty Enterprises, Inc., 440 BR 224 (S.D. N.Y. 2010).

Sunday, October 16, 2011

Feds, Mortgage Servicers Begin Paving Road To Robosigning 2.0?

Georgetown University Law School Professor Adam J. Levitin writes in Credit Slips:

  • Do you have what it takes to be a Mortgage Foreclosure File Reviewer Level 2? An intrepid researcher forwarded to me a job ad for a mortgage foreclosure reviewer who will be reviewing bank foreclosures per the OCC/Fed servicing fraud consent orders.

  • I have seldom seen a document that says more about the bullshit malarkey [striken language in the original] that the OCC and Fed are trying to pass off to cover for the banks than this job ad.

  • I think it demolishes even the thin fiction that the OCC/Fed servicing consent orders are anything more than Potemkin villages. Instead, what we have here is nothing less than a federally-blessed Robosigning 2.0.

For more, see Robosigning 2.0: Mortgage Foreclosure File Reviewers.

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

Reports On Federal Government Effort To Sweep Foreclosure Fraud Scandal Under Rug Continue

American Banker reports:

  • Can you count on the emperor’s handpicked ministers to tell him when he’s naked? Banking regulators seem to think so.

  • The April consent orders against mortgage servicers let the companies pick one or more professional-services firms to review their foreclosure actions for abuses and report the findings to the agencies.

  • Allowing the banks to choose their own judge, jury, and jailer presents almost untenable conflicts of interest. All of the consulting firms that were initially being considered to do the work serve the banks already. The banks, and their mortgage servicing operations, are existing or prospective clients.

For more, see Banks Hire Friendlies for ‘Independent’ Foreclosure Reviews.

Chase Sues To Collect On Erroneously-Released M'tgage; Homeowner Admits Owing Money, But Leans On Statute Of Limitations To Tell Bankster To Get Lost

In San Antonio, Texas, the San Antonio Express News reports:

  • In a strange twist in the ongoing saga of shoddy record-keeping surrounding mortgage documents, Chase bank last month sued a San Antonio couple because they were mistakenly released from having to make any more house payments — nine years ago.

  • Chase filed suit in U.S. District Court in San Antonio last month against Ramiro and Delia Guerrero Jr. to rescind a mortgage-lien release recorded in 2002. The bank also wants the mortgage declared valid so the couple will have to resume making payments.

  • Stephen Cochran, the Guerreros' lawyer, acknowledged that the couple never made their mortgage payments after a 2001 refinancing, blaming that on the then-lender apparently losing the note and the couple's confusion over where to send their payments.

  • Nevertheless, Chase, which was assigned the loan last year, waited too long to fix the problem, Cochran said. A lawsuit to correct it needed to be filed within four years of the release-of-lien filing under the statute of limitations, he said.

  • We play by the rules all the time, and one of those rules is a statute of limitations,” Cochran said. “Lots of good cases ... have been lost because you're just out of time.”


  • Collection efforts, including three or four foreclosure actions, were taken against the Guerreros, but each time the couple presented the release of lien, and the matters were dropped, Cochran said. He didn't know why efforts to fix the problem weren't taken sooner.

  • In March 2010, the mortgage was transferred to Chase by Mortgage Electronic Registration Systems Inc., acting for Fleet. Chase both owns and services the mortgage. MERS is a private company that tracks loan ownership and servicing.

  • The transfer was signed by Whitney K. Cook, a MERS vice president. Various websites show that her name appears on numerous other mortgage assignments and that she holds various titles for different companies — raising doubts that she actually reviewed the documents and had the authority to sign them.


  • In August, MERS recorded a rescission of release of lien in Bexar County property records. But that document isn't signed by the Guerreros. Chase followed up by suing the Guerreros on Sept. 16.

  • While Cochran maintains that Chase is way past the deadline for seeking to void the lien release, the bank possibly could argue that it didn't learn of the mistake until recently.

For the story, see Mortgage error sparks lawsuit (Bank wants a San Antonio couple to restart their payments nine years after a mistake).