Saturday, January 14, 2012

Family Duped Into Leasing Home With Unpaid Mortgage Caught Between Rent Skimming Landlord, Foreclosing Fannie

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

  • A local family says they leased a home, and then a week later they received a Fannie Mae foreclosure notice on the door to move out. “I feel like I have been duped,” explained tenant Sonya Croft.

  • Croft says there weren’t any red flags when she signed the lease. The rent was reasonable, she paid a $300 deposit and the landlord allowed her to pay monthly or weekly. But she says what the landlord didn’t tell her is that he was trying to fend off the bank from foreclosing on their Acworth rental home. “He should have made us aware of what was going on. He should have disclosed to us that there was a possibility that this could happen, because he had to know. It didn’t happen in a week and half,” explained Croft.

  • Croft’s first call was to her landlord, Robert Lemal. “I contacted him, and he said disregard the notice because he was working on a loan modification,” said Croft.

  • Channel 2’s Craig Lucie called Lemal, too. He told Lucie that he didn’t want to do an on-camera interview, but did tell him that he was trying to get a loan modification from the bank. He says the bank foreclosed prematurely. He also told Sonya Croft that he would be cutting off her water and power right before the holidays since she quit paying rent.

  • Sonya says there’s reason why she quit paying him. “We were told not to pay him anymore money by Fannie Mae,” said Croft.

  • It’s become a lease dilemma that is now so common, there’s a federal law that protects tenants like Sonya Croft. It called the Protecting Tenants Act at Foreclosure. Croft and her family can stay for the remainder of their 12-month lease, but Fannie Mae is now making them an offer to get out.

  • The offer is nearly $1700 dollars to move. Croft says she doesn’t know if she wants to move her three children for the third time in a month.

Source: Renters face eviction weeks after moving into foreclosed home.

Lack Of Cash, Unrepaired Defective Boiler Leave Tenants In 100+ Units In Bronx Building Complex In Foreclosure Without Heat, Hot Water

In The Bronx, New York, The Riverdale Press reports:

  • It was a cold Christmas at the historic Shalom Aleichem Houses in Kingsbridge Heights. More than 100 apartments at the troubled housing complex were without heat for most of December, including on Dec. 25.

  • As Russell and Susan Paige’s family gathered around the table on Christmas Day, they donned winter coats just to keep warm. The Department of Buildings issued a violation for a defective boiler on Christmas Day and according to Mr. Paige, the apartment warmed up again on Dec. 27. But he said his radiator had been ice cold too often up until then. He had to set up a space heater in the living room and Ms. Paige had taken to bundling up with a blanket.

  • Approximately 117 of 234 apartments in the 15-building complex, located between Giles Place, Sedgwick Avenue, Cannon Place and West 238th Street, were without heat or hot water at times until Dec. 27, the latest in a long line of problems at the building.

  • Last year, tenants complained of no heat, a leaking roof, collapsing ceilings, crumbling walls and other dilapidated conditions. In May, the building went into foreclosure after owner Van Cortlandt Village LLC failed to make mortgage payments and could not negotiate a deal with New York Community Bank. Shortly afterward, the bank sold the mortgage note to Riverdale’s Chestnut Holdings.


  • The conditions have landed five of the buildings in the complex — however not the buildings without heat — onto Public Advocate Bill de Blasio’s NYC Worst Landlord Watchlist. Buildings at 3058 Godwin Terrace, 2709 Heath Ave. and 2856 Webb Ave. also made the list.

For more, see No heat for Christmas in troubled buildings.

Blaze In Building In F'closure Latest Problem For Tenants In Complex Plagued By Dilapidated Conditions, Lack Of Heat/Hot Water, Freezing Temperatures

In Chicago, Illinois, WGN Radio 720 AM reports:

  • Chicago firefighters [last week] quickly extinguished a small fire in a large South Side building that residents said has been without heat and hot water for all but a few hours since the weekend. More than a half-dozen residents of the courtyard building in the 7600 block of South East End Avenue managed to escape without injury, despite early reports of people being trapped, according to fire officials and neighbors.

  • The fire may have been caused by a cracked boiler in the building's basement, though an investigation was still under way, a fire department spokesman said.

  • The fire that temporarily forced residents into the cold streets was just the latest disruption at a South Shore building plagued with problems since it went into foreclosure, said resident Pachina Scarelli.

  • Hot water and heat at the building was cut off without explanation over the weekend, Scarelli said. Scarelli said building officials promised to fix leaky ceilings and broken doorbells when she moved in last May. But the problems worsened after the building was foreclosed on with a South Side property firm temporarily put in charge, she added. Busted ceilings, rain coming through the ceilings, it's just so much stuff going on and this is what we've been dealing with (in) 22-degree weather," she said.

  • The building's hot water and heat returned Tuesday evening only to be shut off again because of the fire. "Now we have no hot water, no heat and (some of) the lights are out (because of the fire)," Scarelli said.

  • Calls left with the building management company named by Scarelli weren't returned this morning.

For the story, see No heat, no hot water, then fire at South Side apartment building.

Friday, January 13, 2012

Daughter Convicted Of Improperly Pocketing Mortgage Payments & Forging Docs To Rip Off $105K Of Mom's Home Equity Insists Nothing Untoward Was Done

In Sussex County, New Jersey, the Star Ledger reports:

  • A Sussex County woman who fraudulently obtained a $105,000 second mortgage loan on her mother’s home used the money to help her and her mother make ends meets, and pay their monthly bills, her attorney said. “There’s nothing to suggest she spent the money on anything extravagant. Unlike other cases like this, there’s nothing in the house to suggest that she spent the money on anything but household bills,” said public defender Steven Insley, who represents 47-year-old Dianne Butto-Sibilia.

  • Insley also said Butto-Sibilia has a history of both mental and physical health problems. “This is a very, very sad case. It’s a very sad situation with her. In my opinion, she’s not a criminal and doesn’t belong in prison,” he said.

  • Butto-Sibilia, who lived with her 70-year-old mother in Hamburg, pleaded guilty last month in Newton to identity theft, perjury and theft, all third-degree crimes, before Superior Court Judge N. Peter Conforti. Assistant Prosecutor Rachelle Jones said the crimes came to light after Butto-Sibilia told a judge during an eviction hearing last year that she didn’t know why their home was facing foreclosure.

  • A subsequent investigation led by Detective Douglas Porter of the prosecutor’s office found Butto-Sibilia had stolen the monthly mortgage payments given to her by her mother that were supposed to be sent to the bank. She also had forged her mother’s name and the name of an attorney on the application for the second mortgage loan, said Jones.

  • The mom had no idea why the home was in foreclosure,” said Jones. “She (Butto-Sibilia) did the entire closing. She definitely had knowledge of real estate closings.”


  • Butto-Sibilia is expected to be sentenced to 364 days in jail, a probationary term and be required to pay full restitution to her victims when she is sentenced Jan. 23, said Jones.

For the story, see N.J. woman who fraudulently obtained home mortgage used money to make ends meet, attorney says.

Cops Tack On Forgery Charge In Prosecution Of Adverse Possession-Claiming Squatter; Allegedly Used Phony Papers To Get Power In Snatched Vacant Home

In Douglasville, Georgia, the Douglasville Patch reports:

  • Forgery will be added to the charges of criminal trespass and misdemeanor possession of marijuana for Roderick Walker who was arrested by the Douglas County Sheriff's Department on Dec. 22.

  • Sheriff Phil Miller said that Walker forged a signature to get utilities turned on by Greystone Power at another person's home. Walker counsels others to claim vacant houses as their own.

  • Walker first appeared on WSB-TV, explaining his use of the law of adverse possession to move into an abandoned Douglasville three-bedroom, 2½-bathroom house on Mackenzie Court; the house once was valued at almost $300,000.

Source: Add Forgery to Squatter's Charges (Forgery will be added to the charges of criminal trespass and misdemeanor possession of marijuana for Roderick Walker who was arrested by the Douglas County Sheriff's Department on Dec. 22).

Cops Begin Meeting With Local Homeowners, Residents To Address Concerns Over Adverse Possession-Claiming Squatters

In Douglasville, Georgia, The Holly Springs-Hickory Flat Patch reports:

  • Members of the Douglasville Police Department and the Douglas County Sheriff's Department have scheduled a meeting on Jan. 3 with homeowners and residents that are concerned with squatters.

  • Squatters have been using Georgia's adverse possession law, which is meant to resolve property disputes, to live in empty houses that are in a state of limbo. The process takes advantage of the high number of foreclosures and abandoned houses in recent years.

  • "We want people to feel more comfortable and want them to know what to look for," said Det. Mac Abercrombie of the Douglasville Police Department. "We see a problem and want to help address a need.

  • "We've been taking a pro-active approach to this problem," said Det. Mac Abercrombie of the Douglasville Police Department. "We've been planning this since October. This is not a reaction to recent stories in the news."

For the story, see Police Meet with Residents to Answer Squatting Questions (Members of the Douglasville Police Department and the Douglas County Sheriff's Department have scheduled a meeting on Jan. 3 with homeowners and residents that are concerned with squatters).

Thursday, January 12, 2012

Another Homeowner Needing Home Loan Modification Gets Put Through BofA Wringer

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

  • A Valley man calls it a rude awakening. Potential buyers knocked on this door Tuesday morning, saying his house was up for auction. "It made me angry," said Ryan Huber, homeowner.

  • Huber, who grew up in the home and currently shares it with his mother, said he called the bank to tell them the sale was a mistake – that they received letters from Bank of America saying they had been approved for loan modification. He said the bank representative confirmed it was a mistake, but he's still nervous about how things will shake out.

  • "We've been fighting with Bank of America since about July," said Huber. "Every time, we do what they ask of us, and something else comes up or they change it or reject what we send them, even though it's exactly what they asked for."

  • Huber said the whole ordeal has been stressful and frustrating to the point of tears. "It's not right," said Huber.

  • CBS 5 News reached out to Bank of America Tuesday afternoon after receiving Huber's call. A bank representative emailed, saying, "We are having the report researched, but there has not been adequate time to confirm details of the account for your story. If an unwarranted foreclosure takes place, the sale usually will be rescinded. If this is the case here, the bank will work with the Hubers to rectify the situation quickly."

Source: Man OK'd for home loan modification gets a surprise.

Keypad Error Results In 80 Cent Mortgage Underpayment, Leading BofA To Boot Homeowner From Loan Modification Program

In Largo, Florida, The Tampa Tribune reports:

  • When Tom Mudie was approved for a mortgage modification program, he thought his foreclosure troubles were over. Bank of America lowered his monthly payment by nearly $200. All he had to do was make the new payments — on time for three months — and the new amount would be made permanent.

  • But a simple error — hitting a "0" on his telephone keypad instead of an "8" — threatened not only to cancel the savings but also to cost him his home. "I want to keep my home," Mudie said. "And to lose it over 80 cents is crazy."

  • Mudie paid his second trial mortgage payment by phone. The keypad mistake meant that instead of paying $615.82, he paid $615.02. He was three quarters and a nickel short. The mistake meant that, in the precise calculus of the computer, Mudie broke his modification contract. He was kicked out of the program.

  • Banking and government officials say his story reflects a broader trend of simple mistakes with consequences that are all out of proportion, hurting homeowners' modification chances.

  • When he realized what happened, Mudie said, he contacted a customer service representative who told him to send a check for the 80 cents. That would clear up the problem, he said he was told.

  • "I did everything they told me to," Mudie said. "I wrote the check for 80 cents, as crazy as that sounds. I included it with my next payment. They cashed it." But the next month, Bank of America sent back the 80 cents — plus the next payment he had made. Then a letter from the bank arrived bearing bad news: "Your loan is not eligible for the Fannie Mae modification program because you did not make all the required trial period plan payments by the end of the trial period."

  • It goes on to say the foreclosure is back on track. Then other alarming paperwork arrived. "This home transition guide is through the United Way," read one pamphlet. "When you start seeing that," Mudie said, "you start thinking charities and stuff. So I knew that I am in trouble."

For more, see Typo involving 80 cents nearly cost man his home.

Citi Calls Off Erroneous Foreclosure, But Refuses To Bear Costs Incurred For Its Own Screw-Up

In St. Louis Park, Minnesota, the Star Tribune reports:

  • In a last-minute move, Citi- Mortgage called off the foreclosure sale of a St. Louis Park house whose owner battled to stay in her home with the support of the Minnesota attorney general.

  • Nancy Gosselin was scheduled to lose her house in a sheriff's auction scheduled for Tuesday, even though an investigation by the attorney general determined that at most, she had missed one payment of $584 more than two years ago. After Gosselin was featured in a Whistleblower column on Nov. 13, CitiMortgage postponed the foreclosure for a month. Then, this week, Gosselin got the good news.


  • A receptionist at Sela Roofing, Gosselin refinanced her house with Bremer Bank for a $84,100, 20-year mortgage in 2005. Then the mortgage was sold to CitiMortgage. Gosselin said she never missed any payments, and a loan officer at Bremer Bank agreed. Yet CitiMortgage began assessing monthly late fees on the Xenwood Avenue house, which she repeatedly contested, and last spring the company refused to accept Gosselin's monthly payments and took action to sell the house at foreclosure.


  • In a letter to William Gosiger of the attorney general's office, Susie Birmes of CitiMortgage's Executive Response Unit said it was waiving the late fees, reinstating the loan and canceling the foreclosure. But she said it was not waiving "foreclosure costs and attorney fees in the amount of $2,140.11," which "can be paid at any time during the life of the loan and will be required to pay ... in full, upon payoff."

  • Gosselin remains furious about those charges and says she will not pay them. CitiMortgage can pay their legal fees out of their bailout money," she said. Her Bremer Bank loan officer, Stephan O'Connor, said she should not have to pay them, because she was not at fault.

  • "If they are pursuing those [attorney fees], we will continue to go to bat for the homeowner to see whether the fees can be waived or reduced," said Ben Wogsland, a spokesman for Minnesota Attorney General Lori Swanson. "It's good that Ms. Gosselin will be able to stay in her home, that the sheriff sale has been called off and the loan has been reinstated."

  • Nick Slade, a Minneapolis attorney who works on foreclosure cases, said it takes an enormous amount of time, energy and resources on the part of numerous people to get something done for a homeowner fighting foreclosure. "It's only when you bring in the level of firepower that happened in this case that they pull it out of the nightmare bin in the regular process and give it to somebody and really truly handle it in a way that makes sense," Slade said.

For the story, see Whistleblower: With help on high, foreclosure avoided (St. Louis Park woman has mortgage reinstated, but CitiMortgage still wants fees for its attorneys and foreclosure costs).

Wednesday, January 11, 2012

Operators Of Outfit Suspected Of Snatching Foreclosed Homes Defend Their 'Non-Profit' Racket

In San Diego, California, KGTV Channel 10 reports:

  • Foreclosed homes in the South Bay are the subject of a dispute between real estate agents who want to sell them and a nonprofit group that has taken the titles and are renting them out.

  • Dexter and Dianne Brown formed Prudent Constituents Association (PCA) nine months ago after they were foreclosed upon. "All these homes where people are being evicted by the lenders are wrongful evictions," said Dianne Brown, who also goes by the name Harmony.

  • Using quick-claim [sic] deeds and other processes she won't name, PCA takes over a foreclosed home and rents it out. "The money from the rent goes to pay for taxes and litigation," Dexter Brown said. The lawsuits, according to the Browns, seek retribution against the lenders.

  • "When the case gets settled that's when PCA will split the award with the owners. If we can't find the former owners, then the money will go into a trust with the state," Dianne Brown said.

  • Some realtors 10News spoke to have called it a scam. The Browns, however, insist they are working for the public good. "All you have to do is research your rights. That's what I've done and that's what I am doing and that's how we're helping the people we are," Dianne Brown said.

Source: Group Responds To Foreclosure Scam Allegations (Prudent Constituents Association Says They Are Renting Foreclosed Homes Within Rules).

Financially Strapped Seniors Selling Off Pension, Retirement Payments To Meet Pressing Cash Needs?

In Greenville, North Carolina, The Daily Refector reports:

  • Many people are doing whatever they can to make it to the next mortgage payment or bill paying day. In some cases people face foreclosure on their homes and need a large cash payment in order to stop the bank.

  • Retirees and veterans who have a defined benefit pension now have another opportunity to get a lump sum payment but it does have a significant downside. They can sell the future stream of monthly pension payments to an investor who will provide a single lump sum of money in return.

  • This use of the secondary market has become very attractive for many investors. One feature of the pension investment is that the retiree signs a contract that yields a 5-6 percent interest rate for the purchaser. These transactions also are facilitated by websites that seek retirees willing to sell their pensions. These middlemen bundle the pension investments and send a sheet showing all available options to investors. The investor works through the middleman in completing the purchase transaction.

  • For this service the middleman agency collects a sizeable fee that is taken out of the stream of payments. Although the stated interest rate may only be 5-6 percent for the investor when the cost of middleman fees are added the effective interest rate is considerably higher.


  • Congress has [] taken notice of the pension purchasing business. Sen. Tom Harkin of Iowa heads a U.S. Senate committee that is investigating the pension-for-cash contracting business.

  • He is concerned that retirees are not fully aware of just how much interest they are paying as a result of signing away pension payments. There also is concern that retirees who are desperate have not thought through the effect of losing monthly payments.

  • Even though the Senate investigation is in its infancy, the business of purchasing pensions is not. It is moving forward just as fast as investment firms can find new methods of advertising it.

For more, see Pension payments sold to middlemen.

Maryland High Court: Criminal Conviction Invalid For Builder Who Accepted Cash From Customers, Then Failed To Deliver Homes

In Prince George's County, Maryland, The Washington Examiner reports:

  • Maryland's highest court has affirmed the reversal of a theft conviction for a builder sentenced to 12 years behind bars for failing to construct Upper Marlboro homes he had contracts to develop.

  • The Maryland Court of Appeals upheld a lower appellate court's decision to overturn Leon T. Coleman's June 2009 conviction in Prince George's County on charges of theft by deception and failing to deposit money into an escrow account.

  • The "evidence was insufficient to conclude that Coleman intentionally deprived the buyers of their property," the Court of Appeals opinion says.

  • The saga began in 2004, when Coleman entered into contracts with 10 families to build homes in an Upper Marlboro subdivision. The contracts said the buyers would purchase lots before their homes were built, according to court records. The buyers obtained loans for the purchases; Coleman used some their initial payments to buy the lots and put the rest in an escrow account, court documents say.

  • But he never went forward with construction because he ran out of money before he could obtain the necessary permits.

  • Prosecutors contended that Coleman never intended to build the homes, saying he didn't use the initial funds for construction and made "misrepresentations" about the development's progress. But that doesn't constitute theft, the appeals court said. "When a defendant has a right to receive money or property, he cannot be guilty of stealing it," the opinion says.

  • The prosecution also argued that Coleman's failure to spend some of the funds he received implies that he kept the money for himself or spent it improperly. The appeals court, however, said there was no evidence that Coleman used the money for anything other than the construction project.

  • Coleman was the first person prosecuted for building violations in Prince George's County under Maryland's Custom Home Protection Act, which requires builders to place advance payments in escrow accounts.

  • But because the buyers received the property deeds before the homes were built, the act isn't relevant, according to the appeals court. The court said the act "does not apply when a builder or vendor deeds land without a home on it."

  • Emma Coleman, the builder's wife, was also initially charged in the case, but the accusations against her were dropped.

Source: Maryland court affirms reversal of builder's theft conviction.

Tuesday, January 10, 2012

Lax Oversight, Snoozing Bureaucrats Make For Easy Ripoffs For Foreclosure Surplus Snatching Rackets

In Fulton County, Georgia, the Atlanta Journal Constitution reports:

  • John Nelson fought Fulton County and the private tax lien industry for years to keep his house in Inman Park. He lost the battle and nearly lost much more. After the Edgewood Avenue house was foreclosed in 2000 and sold at a sheriff’s auction, Nelson made the best of a bad situation and filed a claim for the excess funds — proceeds from the sale remaining after overdue taxes and other debts were paid.

  • He was entitled to $212,000 under state law. But somebody got there first, the sheriff’s office told him.

  • Nelson’s money was in a county fund that now totals $11.9 million, all from the excess proceeds from foreclosure sales. Most belongs to former property owners like Nelson.

  • It’s a perfect pot of money to attract con artists, experts say: there’s lots of it — Fulton collected $47.8 million over the last 10 years; oversight is easily dodged; and property owners who are due the money frequently don’t know it belongs to them.

  • Fulton has a troubled history with the fund. Seven years ago, it was at the center of a scandal that reached into the highest levels of county government and deposed a Fulton sheriff.

  • It’s not clear how often fraudulent claims are made on the fund. The company that filed a claim for Nelson’s proceeds said the claim was made in error. But property tax and legal experts agree cases such as Nelson’s are not isolated and the fund will attract scam artists as long as oversight is lax.

  • The county makes little effort to prevent fraud and has demonstrated unwillingness to prosecute fraud even when a property owner brings charges, they say. Other metro area counties have tougher controls on access to the funds.

  • Attorneys with knowledge of Fulton’s property tax operations say fraudulent claims on the fund are not uncommon. “I think a lot of people have been ripped off like this,” said Frank Moore, Nelson’s attorney. “You have however-many millions of dollars sitting in a pot and people thinking, ‘well, how can I get a piece of that?’

  • In Nelson’s case, a company named Guishard, Wilburn and Shorts submitted a claim for $212,000 in Nelson’s name, with a photo ID picturing a man who was not Nelson and a forged power of attorney, Moore said. The company has said they believed they were submitting documents provided by John Nelson.

  • The signature on the power of attorney was not Nelson’s. The notarization was also forged, according to the Secretary of State’s office in Colorado, where the document was supposedly notarized and where Nelson lives.

  • After Nelson filed his claim, the sheriff’s office asked Fulton Superior Court to settle the competing claims and Guishard, Wilburn and Shorts withdrew the claim they filed. Neither the sheriff’s office or the district attorney investigated, although Moore said he and Nelson requested an investigation.

  • Nelson took his case to U.S. District Court and a Rome judge released the money to Nelson in October.

  • Nelson said he never received notice that he owed $1,669 in taxes on the house or notice of the foreclosure auction.


Tempting targets

  • All Georgia counties collect excess funds and it’s common practice across the country. The funds are collected by the sheriff’s department or the tax commissioner’s office. If a property is sold for more than the value of the tax bill, penalties and other debts against the property, that excess cash is held until someone claims it. Mortgage companies often claim the funds to cover debt.

  • Often, ownership is unclear or property owners are unaware they can claim the extra proceeds. As a result, the money can sit for years and becomes a tempting target. Fulton has long-standing issues with the excess funds and with its overall handling of delinquent property taxes.

For more, see Tax lien issues plague Fulton.

Pair Faces Multiple Felony Charges For Engaging In Alleged Harassment Campaign By Filing $100+ Billion In Bogus Liens Against Public Officials

In Hennepin County, Minnesota, the Pioneer Press reports:

  • A Brooklyn Park man and his wife were charged Wednesday with filing of a slew of bogus and harassing liens worth more than $100 billion against public officials, including Hennepin County Sheriff Rich Stanek and Hennepin County Attorney Mike Freeman.

  • Thomas Wayne Eilertson, 44, and Lisa Joan Connery Eilertson, 47, filed false liens against "numerous individuals and businesses" using the name "Blessings of Liberty," according to criminal complaints filed Wednesday in Ramsey County District Court.

  • Lisa Eilertson faces 47 felony counts. Thomas Eilertson faces 30 counts. The Hennepin County sheriff's office referred the case to St. Paul police for investigation because several of the 12 victims are Hennepin County officials.

  • The Eilertsons' alleged activities stem from 2009, when their home at 4448 Cedar Ave. S. in Minneapolis went into foreclosure, the complaint said. A sheriff's sale was held Dec. 8, 2009, and the Eilertsons were evicted July 2, 2010. The complaint describes the subsequent events this way:

  • Someone they met online, identified in the complaint by the initials P.K., gave them instructions on how to file Uniform Commercial Code liens against people in retaliation for their economic problems. They were told that filing under the name "Blessings of Liberty" shielded them from civil and criminal liability.

  • P.K. described to them how they could "do death by a thousand paper cuts" by filing the liens, which are legal claims against an asset. All the liens - which totaled $114 billion over 2009 and 2010 - were filed at the secretary of state's office in St. Paul.

For more, see Couple accused of harassing Hennepin County officials with $114 billion in bogus liens.

Abrupt Close-Down Of Loan Modification Outfit Leaves Slew Of Homeowners In Mortgage Payment Limbo

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

  • People who sought help with loan modifications at a center in DeKalb County are getting a shock. The location has locked its doors. "It scares me, my family, my kids," one client said who asked not to be identified. He says he paid $250 to The Community Business Center in Chamblee for help with a loan modification to save his home from foreclosure. Now, he feels like he's been left in limbo.


  • [C]ustomers have been showing up, one after the other, trying to get answers about the status of their loans, fearing that their homes may have been sold at auction this week or could soon be sold. "I don't know what's going to happen right now, so I have to ... look for a lawyer or something," Alfredo Bustos said, who claims he also paid $250 for loan modification help.

For the story, see Homeowners left in limbo after loan modification office abruptly closes.

Pennsylvania Man Gets 81 Months For Using Fraudulent POAs To Pocket Cash From Refinancing Homes Owned By Elderly Parents, Other Family Members

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):

  • Anthony Iacono, Jr., 60, of Rutledge, PA, was sentenced [] to 81 months in prison for fraudulently obtaining over $2 million in cash, and real and personal property, announced United States Attorney Zane David Memeger. Iacono pleaded guilty to wire fraud, credit card fraud and aggravated identity theft charges on August 19, 2010.

  • Judge Bartle described the actions of the defendant as committed with a "depravity of heart and mind." Iacono fraudulently obtained over $2 million in loans secured by properties owned by his parents and other family members using fraudulent powers of attorney and credit cards in the names of relatives and businesses owned by relatives.

  • To obtain the credit card used in the identified credit card transactions, Iacono used the victims' names, dates of birth and social security numbers without permission. When he failed to pay the loans, his family bore the brunt of the lenders efforts to recover their money.

  • In addition to the prison term, U.S. District Court Judge Harvey Bartle III ordered forfeiture and restitution in the amount of $2,098,000. There was no fine imposed because the Court found the defendant without means to pay one.

Source: Pennsylvania Man Sentenced For Identity Theft.

Monday, January 9, 2012

Fla. AG Tags Alleged F'closure Relief Racket w/ Civil Suit; Outfit Allegedly Pocketed Upfront, Monthly Fees, Promised Homeowners Mortgage-Free Living

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

  • Two West Palm Beach-based companies are being sued by the state for taking upfront fees to help struggling homeowners and promising them they can live mortgage-free for years.

  • In return for the free-living, the homeowners paid CRS Marketing and MGD Management $300-a-month to stall a foreclosure, according to the state complaint. Also named in the suit is West Palm Beach resident Mark Dalen, who owns the two firms.

  • Florida Attorney General Pam Bondi obtained a temporary injunction and limited asset freeze against the companies, which also have offices in Hollywood. The lawsuit, dated Dec. 28, says hundreds of Florida consumers have been "victimized" by the companies' "false representations." Homeowners were also allegedly charged upfront fees of between $1,500 and $2,500 as well as the monthly $300 fee.

  • It is illegal in Florida for most companies to charge upfront fees for foreclosure rescue services or loan modification help.

For more, see Florida AG lawsuit: West Palm Beach firms preyed on distressed homeowners.

For the lawsuit, see State of Florida v. MGD Management, LLC, et al.

For the Florida AG press release, see Attorney General Pam Bondi Sues Two Foreclosure Management Companies for Defrauding Homeowners Facing Foreclosure (Attorney General Bondi Achieves Temporary Injunction and Limited Asset Freeze).

Lawsuit: Capital One Illegally Squeezed Short Sale Homeowners On Deficiency Payments

Courthouse News Service reports:

  • Homeowners say in a class action that Capital One illegally made them pay thousands of dollars in deficiency contributions after short sales of their homes, though the state prohibited that in 2010.

  • Then-Gov. Arnold Schwarzenegger signed Senate Bill 931 into law in late 2010 to reduce foreclosures and boost short sales. Before the law took effect in January 2011, homeowners had no incentive to short sell their homes because while lenders could not obtain a deficiency judgment on foreclosed properties, they could go after homeowners who sold short.

  • "However, it quickly became apparent that where there was a second mortgage, the junior lien holder often refused to release the lien and the short sale never went through," according to the complaint.

For more, see Class of Homeowners Sues Capital One Over Short Sales.

For the lawsuit, see Teson v. Capital One, N.A.

Texas Man Agrees To Plea Guilty In Fractional Interest Deed Transfer Foreclosure Rescue Scam

In Austin, Texas, the Austin American Statesman reports:

  • A Lakeway man who has been accused of fraudulent business dealings at least twice has agreed to plead guilty in a new investigation involving allegations that he was paid to fraudulently delay foreclosures on behalf of distressed property owners, according to court documents.

  • Frederic Alan Gladle, 53, is in jail awaiting his guilty plea to charges of bankruptcy fraud and aggravated identity theft. That plea is scheduled for Friday . He faces two to seven years in prison.

  • From 2007 until his arrest in October, Gladle operated a business that helped distressed property owners delay foreclosure by paying a monthly fee — usually about $750 a month, according to prosecutors and charging documents.

  • After clients signed up for his services, one of Gladle's salespeople had them sign deeds transferring a fractional share — usually one one-hundredth — of their distressed property, the documents said.

  • The shares were transferred to an unrelated person who had previously filed a bankruptcy petition in court, the documents said. Those people were unaware that Gladle was using their names, which were obtained from online court records, the documents said.

  • Gladle, or "a co-schemer operating at his direction," would then send a copy of the fractional deed and a copy of the unrelated person's bankruptcy petition to the lender that was expected to foreclose, the documents said.

  • Because bankruptcy proceedings automatically delay foreclosure actions, the lender would not be able to immediately foreclose on Gladle's client's property, the documents said.

  • Eventually, after the unrelated debtors claimed they knew nothing about owning the fractional interest, the foreclosure continued, according to the documents.

  • Gladle would then go through the process again, causing further delay, the documents said. Through the course of the scheme, Gladle and his unnamed associates collected $1.6 million from clients and delayed the foreclosure sales of more than 1,100 properties, the documents said.(1)

For the story, see Lakeway man to plead guilty in scheme to delay foreclosures.

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.

Sunday, January 8, 2012

Maryland AG, Wells Reach Settlement On Charges Involving Alleged "Pick-A-Pay" Mortgage Loan Ripoffs

In Baltimore, Maryland, The Baltimore Sun reports:

  • Under an agreement announced Thursday by the Maryland Attorney General's Office, Wells Fargo has agreed to make loan modifications and pay nearly $1 million in restitution to customers of two lenders acquired by the bank.

  • The office's Consumer Protection Division, which reached the agreement with Wells Fargo, said lenders Wachovia and Golden West Financial used deceptive marketing in offering consumers adjustable-rate home loans.

  • Wells Fargo will pay $940,056 to borrowers with "Pick-a-Payment" mortgages written by Wachovia and Golden West who lost their homes in foreclosure, the agreement says. Wells Fargo acquired the two lenders in 2008. So far about 250 borrowers in Maryland with "Pick-a-Payment" mortgages are known to have lost their homes to foreclosure, but that number could grow, said David Paulson, a spokesman for the Attorney General's Office.

  • In addition to the agreement in Maryland, Wells Fargo has signed similar pacts with attorneys general in 11 states.

For the story, see Wells Fargo agrees to pay restitution to mortgage borrowers (Consumer Protection Division alleges deceptive marketing of loans).

Ex-F'closure Mill King Tagged In Suit By His Now-Defunct Document Sweatshop For Allegedly Inflating Income By "Cutting Corners" In Litigation Process

In Fort Lauderdale, Florida, Reuters reports:

  • David J. Stern, who became one of the country's best-known foreclosure lawyers before shutting his business under regulatory pressure, has been sued for fraud by the publicly traded company he helped create to take on his now-defunct law firm's back-office operations.

  • DJSP Enterprises Inc said Stern, a former chief executive, concealed that his law firm David J. Stern PA inflated revenue by systematically "cutting corners" in the foreclosure process. It said this took place even though the firm knew that such clients as Citigroup Inc, Fannie Mae and Freddie Mac might flee.

  • DJSP said the shortcuts included letting workers sign foreclosure documents without reading them, known as "robo-signing," and submitting false or backdated documents to courts. It also said Stern awarded bonuses and "extravagant gifts" to workers who could churn out foreclosures quickly.

  • Stern had "specific intent to fraudulently induce DJSP" to assume the back-office operations, the company said. The demise last March of Stern's law firm "directly and necessarily resulted in the destruction of DJSP's business," it added.

  • DJSP in January 2010 took on the Stern operations in exchange for paying nearly $60 million in cash to Stern, whose lifestyle included luxury homes and a yacht.

For the story, see Foreclosure lawyer Stern sued by his old company.

NY Appeals Court: Missed Filing Deadline Not Enough To Dismiss Foreclosure Action

In New York City, Thomson Reuters reports:

  • A Brooklyn judge should not have tossed a foreclosure case just because the foreclosing bank's counsel--from the scandal-plagued Steven J. Baum P.C. law firm--missed a deadline for filing paperwork rebutting its alleged conflict of interest, a New York appeals court has ruled.

  • The unanimous, unsigned order from the Appellate Division, Second Department, restores the foreclosure action brought against Kelvy Guichardo by the trustee for his mortgage US Bank NA. The case had been dismissed sua sponte by Kings County Justice Arthur Schack in a Nov. 8, 2010 ruling.

For more, see Late foreclosure filing not grounds for dismissal: NY court.

For the ruling, see U.S. Bank, N.A. v Guichardo, 2011 NY Slip Op 09630 (App. Div. 2nd Dept. December 27, 2011).

Legal Loophole Makes Paying Real Estate Taxes Optional For Some Detroit Homeowners

In Detroit, Michigan, The Detroit News reports:

  • Paying property taxes has become optional for a growing number of Detroit landowners using a legal loophole to wipe away debt by buying back their properties in foreclosure.

  • As the city nears financial collapse, owners erased at least $4.7 million in property taxes and liens this fall on more than 400 properties Wayne County appeared to sell back to them for pennies on the dollar, according to a Detroit News analysis.

  • That's double the number of buybacks found at 2010's Wayne County tax foreclosure auction. In many cases, no one else bids other than the former property owners, who can reclaim the properties for as little as $500 apiece.

  • The increase has a top aide to Mayor Dave Bing and others calling on Wayne County Treasurer Raymond Wojtowicz or the state Legislature to crack down. "Unfortunately, some laws have loopholes, and in this case results in others exploiting matters for their personal advantage at the expense of responsible taxpayers and the city," Kirk Lewis, Bing's chief of staff, said in a statement.

  • "Legislative remedies must address and prevent the myriad of ways these property owners can scam the system for their personal gain."

For more, see Homeowners buy back own property, dodge taxes.