Saturday, February 25, 2012

Unwitting Renter Falls For Rental Ripoff; Pays Scammer $1600+ To Move Into Vacant, Bank-Owned Foreclosed Home Advertised On Craigslist

In Orlando, Florida, WESH-TV Channel 2 reports:

  • It looked like a good deal for a rental, but a single mom got taken by a rental scheme. The woman, who does not want to be identified, said she went on Craigslist looking for a home to rent and thought she found a great deal on a Lazy Hill Drive home in Orlando for $850 per month.

  • The mother of four paid more than $1,600 to a woman who called herself Sherri Copeland. She said Copeland gave her a receipt and what she thought was a lease. Days later, she got a rude awakening.

  • The home is not owned by Copeland or a rental company. The home is in foreclosure and owned by a bank. Deputies believe the scam artists broke the window, changed the locks and claimed it as their own. Now the victim is not only out of the money, but she has to move out.

  • Carlos Morales with the Orange County Consumer Fraud Unit said rental scams have risen with foreclosures.

For more, see Crooks Claim Foreclosure As Rental, Swindle Mom (Woman Out Of Money, Must Move).

Condo Owner Blames Spreading Mold, Shaky Ceiling On Leaky Plumbing From Vacant, Foreclosed Bank-Owned Upstairs Unit; Gets Loan Servicer Run-Around

In Royal Palm Beach, Florida, WPEC-TV Channel 12 reports:

  • A Royal Palm Beach homeowner says her ceiling is saturated with water and is about to cave in. But it gets worse. There's mold spreading everywhere. Patricia Garcia says a leak in the condo above her has caused extensive damage to her unit. The problem is the property is in foreclosure and has been vacant for the last few years.

  • Chase Bank owns the condo above her but she says every time she calls she gets the runaround. "Everytime I called, someone will be over. I'm speaking with them. I'm waiting for them to email me back. Every other day I called them they had an excuse," said Garcia.

  • Chase Bank did send someone to fix the leak after about two weeks, but they have not repaired the damage to her ceiling. A spokeswoman with the bank says they plan to investigate the matter.

Source: Royal Palm Beach condo leak is causing a moldy mess.

Foreclosure Action, Threat Of Operator's License Revocation Add To Uncertainty For Residents In Mobile Home Park Saddled w/ Dozens Of Code Violations

In Kronenwetter, Wisconsin, the Wausau Daily Herald reports:

  • An Appleton bank is foreclosing on the owner of a troubled Kronenwetter mobile home park. Residents of Bouche’s Mobile Home Park received notice today that AnchorBank in Appleton filed foreclosure proceedings in Marathon County [] against park owner Randy Bouche.


  • The foreclosure is another blow for park residents, some of whom own their trailers and lease land in the park, others of whom rent trailers from Bouche. There are 19 privately-owned homes, four occupied rental trailers and 12 vacant trailers in the park. On Jan. 23 the Kronenwetter Village Board voted to revoke Bouche’s license to operate a mobile home park unless he fixes the homes and infrastructure in the park.

  • Village officials in December condemned six mobile homes in the trailer park at 1624 Old Highway 51 for health and building code violations, including plumbing issues, leaky roofs, and mold and holes in the ceilings, floors and walls of units.

For the story, see Bank forecloses on mobile home park owner.

Massachusetts AG Pinches Couple In Alleged Ripoff Of Tens Of Thousand$ Of Federal Public Housing Subsidies

In Weston, Massachusetts, The Metrowest Daily News reports:

  • A Weston couple has been indicted in connection with fraudulently obtaining tens of thousands of dollars in Section 8 public housing subsidies, and defrauding mortgage lenders of more than $250,000, Attorney General Martha Coakley announced [...].

  • Paulo Montenegro, 45, and his wife, Rosana Pereira, 48, were each indicted on charges of larceny by false pretense (three counts) and conspiracy to commit larceny by false pretense (three counts), in connection with fraudulently obtaining Section 8 public housing benefits and fraudulently obtaining mortgage loans from financial lending institutions.


  • The Section 8 Public Housing program is a government program that provides safe and affordable rental housing for eligible low-income families. The U.S. Department of Housing and Urban Development (HUD) administers federal aid to local housing authorities, including the Cambridge Housing Authority, to manage housing for low-income residents at rents they can afford.

  • Authorities allege that Montenegro and Pereira misrepresented material information to the Cambridge Housing Authority and HUD to obtain the benefit of Section 8 public housing subsidies. According to authorities, Pereira, in conspiracy with Montenegro, under-reported her income and assets, and reported that she was unmarried, when in fact she was married to and living with Montenegro in Weston.

For more, see Weston couple indicted in connection with Section 8 fraud.

Friday, February 24, 2012

Insurer Says There's No Duty To Defend Insured Home Seller In Suit Alleging He Knowingly Unloaded Home With Crappy Foundation On Unwitting Buyer

In Jefferson County, Texas, The Southeast Texas Record reports:

  • In a recently filed lawsuit, an insurance company alleges a homeowner lied about the condition of a house in a real estate transaction. Allstate Texas Lloyd's claims defendant Anthony Smith sold his home on Josey Street in Beaumont to defendants James and Cayla Huffman while representing that it was free from problems. However, the home's foundation had serious defects, according to the complaint filed Jan. 13 in Jefferson County District Court.

  • The Huffmans describe the home's problems as "patent defects," the suit states. They filed a lawsuit against Smith because of the problems, the complaint says. In their complaint, the Huffmans seek economic and mental anguish damages, according to Allstate's petition.

  • "The petition also alleges that Mr. Smith made material representations regarding the quality of the home that were not true and, further, that the misrepresentations are actionable because because they qualify as false, misleading and deceptive acts or practices under the Deceptive Trade Practices Act," the complaint says.

  • Smith made the comments to the Huffmans with the intent that they rely on the misrepresentations to purchase the home, according to the complaint. Allstate had insured the home for Smith and promised to provide defense for him in the event of bodily injury or property damage, the complaint says. However, the insurance company claims it should not be required to defend Smith in the Huffmans' lawsuit because there are no allegations of accidental conduct on his part.

  • In its complaint, Allstate is seeking a judgment that it has no duty to defend Smith or to pay any damages to Huffmans, plus other relief the court deems just.

For the story, see Bank accuses home seller of deceptive trade.

Court Shuts Down Alleged Loan Modification Racket; Consumer Losses Approach $19M: FTC

From the Federal Trade Commission:

  • At the request of the Federal Trade Commission, a U.S. district court put the mortgage relief business permanently off limits to marketers who allegedly charged thousands of consumers up to $2,600 each, based on bogus promises to provide loan modifications that would make mortgages much more affordable.

  • The case against U.S. Mortgage Funding, Inc. is part of the FTC’s continuing crackdown on scams that target homeowners who are behind in their mortgage payments or facing foreclosure. According to the agency, the scheme caused consumer losses of nearly $19 million. All but two of the defendants settled with the agency, while the two remaining corporate defendants received default judgments.

  • The FTC alleged that the defendants used direct mail, the Internet, and telemarketing to target homeowners – even those whose lenders had denied them modifications or who had been sent foreclosure notices. The defendants typically asked for half of the fee up-front, falsely claiming a success rate of up to 100 percent, according to the complaint.

For the FTC press release, see FTC Action Leads to Ban on Alleged Mortgage Relief Scammers Who Harmed Thousands of Consumers (Defendant Ordered to Surrender Yacht, Cadillac, and Rolex).

Florida AG Continues Pattern Of Ineffectiveness In Foreclosures; 'Salvages' $59K In Restitution For 430 Homeowners Hurt By Upfront Fee Loan Mod Racket

In Tallahassee, Florida, WINK News reports:

  • Attorney General Pam Bondi's office has secured restitution of $59,000 for approximately 430 consumers(1) who were harmed by a foreclosure-related rescue service scam. The settlement resolves allegations that Home Owner Protection Economics, Inc., DC Financial Group, and Deleverage America, Inc., and owners Dennis Fischer and Christopher S. Godfrey illegally charged up-front fees for foreclosure-related rescue services and failed to perform the services for which they were paid.

  • Any homeowner who seeks the help of a foreclosure-related rescue service and is asked for an up-front fee should report that business to our office immediately,” stated Attorney General Pam Bondi. “This practice is prohibited by state law, and my office will continue to crack down on these illegal actions.”

  • An investigation revealed that the defendants purportedly charged as much as $2,000 a person in up-front fees, which is prohibited. Additionally, services were never rendered.

Source: Floridians harmed by foreclosure scams are getting relief.

(1) An average of $137.21 per victim.

Thursday, February 23, 2012

Loan Modification Ripoffs Not Considered A Civil Matter In Michigan As State AG Continues Bagging Scammers With Criminal Charges

In Lansing, Michigan, WILX-TV Channel 10 reports:

  • "It was just lies. They led me on and before I knew it, it was too late," said Aaron Winchell. Like many homeowners, he wanted a better interest rate. So a radio ad guaranteeing one sounded great.

  • "There was a $2100 fee up front. Never seen it again," said Winchell. "It ended up being a total scam. They led me on for probably about five months, and told me to disregard any foreclosure information, sheriff sales and all that."

  • The scamster told him not to pay his mortgage and that he was making offers on the house. "He was real good at what he was doing. He befriended me," said Winchell. The scamster worked at Michigan Modification in Lansing. "I went back to the company and told them what was going on. They told me they had no record of me even being in their office," said Winchell.

  • "They're literally just putting the money in their own pocket and walking away," said John Sellek, spokesperson for Attorney General Bill Schuette. Thanks to the AG's office, the person who scammed Winchell is now behind bars. But the damage to him and his family is done.

  • "We lost a wonderful home because of it. Me and my wife and two children. It really affected them as well, losing their house, changing schools. We had two weeks to find somewhere to live," said Winchell.


  • The attorney general has filed criminal charges against more than two dozen Michigan based companies and individuals. Many of them sound very convincing and legitimate. It's important to know that it is illegal in Michigan to ask for a payment up front before providing the service. If that happens, it's likely a scam.

Source: Mortgage Rescue Scams Target Michigan Homeowners ("Mortgage Rescue Scams" are sprouting up across mid-Michigan. Homeowners hear the promise of help avoiding foreclosure or locking down a better rate...and get taken advantage of).

Suit: Sellers Pocketed Upfront Cash, Monthly Installments On Sale Of Real Estate On Land Contract, Then Refuses To Transfer Title To Buyer

In Galveston, Texas, The Southeast Texas Record reports:

  • Claiming Dickinson resident Barbara Jean Morgan and her late spouse Freddie Morgan Jr. refused to convey local real property to him, James M. Ayers has filed a lawsuit. Recent court papers filed Feb. 2 in Galveston County District Court allege the Morgans committed fraud by representing that they owned property which they did not.

  • The original petition explains that Ayers purchased a plot located in the Moores Addition subdivision in Dickinson, for $13,500 from the defendants on Oct. 25, 2006. Ayers placed a down payment of $1,500 and consented to remitting a monthly payment of $260.99 for five years. According to the complaint, the Morgans provided a sworn affidavit stating they were owners of the property in question and that all taxes, fees and any other charges against it had been paid through 2005.

  • The plaintiff states he made 28 months worth of payments when an individual named Earnest W. Walker contacted him that the property was actually under the ownership of Earnest W. Walker Family Limited Partnership, "and that (the Morgans) had no interest in the property and had no right to have sold it to the plaintiff or to have represented they had title."

  • Ayers claims he immediately contacted the defendants about the development, and Freddie Morgan Jr. promised the plaintiff he would purchase the property from Walker and convey it to him in accordance with the original agreement in 2006. The Earnest W. Walker Family Limited Partnership turned the property over to the Morgans in May 2009, but the defendants "have failed and refused to convey the property to the plaintiff," the suit says.

  • The plaintiff claims unpaid property taxes and fines arising from numerous code violations total approximately $9,000. Consequently, Ayers seeks a declaratory judgment indicating that he has no ownership interest in or responsibility for the maintenance or taxes on that property as well as a jury trial.

Source: Dickinson man claims property sale was fraudulent.

Suit: Texas Woman Swiped Partial Title To Property From Jailed Co-Owner

In Jefferson County, Texas, The Southeast Texas Record reports:

  • A Jefferson County man says he and an incarcerated man are the sole owners of a piece of property that a woman has also begun claiming an ownership interest in. Frederick Voorhies filed a lawsuit Jan. 17 in Jefferson County District Court against Debra B. Harris.

  • In his complaint, Voorhies claims Debra Harris is attempting to claim a portion of Jefferson County land for herself. The land in question belongs to Voorhies and Jack M. Harris, according to the complaint. However, Jack M. Harris was arrested and remains incarcerated at the Texas Department of Corrections.

  • Debra Harris is attempting to say Jack Harris transferred his ownership rights to her, the suit states. Voorhies contends he and Jack Harris are the only owners of the property.

  • In his complaint, Voorhies seeks a declaratory judgment, declaring the owners of the land in question. He also seeks costs, attorney's fees and other relief the court deems just.

Source: Woman claims incarcerated man transferred property rights.

Landlord's Manager Charged w/ Theft After Allegedly Pocketing Rent, Failing To Pay Mortgage; Leads To F'closure Action, Owner's Credit In Shambles

In York, Pennsylvania, The York Dispatch reports:

  • A local attorney said the man accused of stealing more than $9,000 from him was a close friend for nearly two decades. "I totally trusted this guy," attorney Mike Fenton said of Stephen Lee Newport. "You just don't expect to be screwed by someone you've treated so well."

  • Newport, 58, of 718 Prospect St. in York City, remains free on his own recognizance, charged with the third-degree felony of theft by failure to make required disposition of funds. He was arraigned Feb. 1, according to court records.


  • The allegations: Since September 2005, Newport managed a property at 875 Prospect St. for Fenton, who bought it in September 2005, and Newport was supposed to collect rent from tenants and pay the mortgage on the property, according to his arrest affidavit. Instead, the mortgage wasn't paid, and the property went into foreclosure, the affidavit states.

  • Police said Newport collected rent, but didn't pay the mortgage and also allowed outstanding sewer and refuse bills to reach about $2,952, according to the affidavit. Court documents allege the scheme netted Newport $9,100. Fenton said the true amount is about $18,000.


  • [F]enton said he incurred fees in order to get the property out of foreclosure. The mortgage on the property is $432 a month, he said. "I have no idea why he would do this to me. I just paid more than $15,000 to cure the foreclosure," Fenton said. "I have a good tenant, and I'm back on course -- except for my credit, which is destroyed." Fenton said he believes the alleged scheme was going on for three or four years.

For the story, see Man charged with stealing thousands from York attorney.

Wednesday, February 22, 2012

Homeowner Threatened w/ Loss Of Home Over Crappy Title Issue Arising Years After Purchase; Bkptcy Trustee Says Land Was Subject Of Fraudulent Transfer

In St. Petersburg, Florida, The Tampa Tribune reports:

  • Charlene Thomas chose her new home, in part, because it had a spacious backyard where her children could play. But now, a bankruptcy trustee for a former owner of the property claims the land underneath Thomas' home was sold illegally and belongs to the trust.

  • "I love my house," Thomas said. "I love my land. I want my land. It's scary to hear there's a possibility that I may lose my house because this is my dream, to own my house."

  • Thomas paid $140,000 for the home in 2007, and the land was included in the price. The trustee, Angela Stathopolous, has sued Thomas and sent documents warning she could be ejected from the property. How it all happened illustrates how hectic property closings were during the housing boom and why it's so important to buy title insurance.

  • The builder, New Millennial Homes, also is named in the lawsuit. Executive Keith Collins says his company is a victim, too. "There were no issues that came up with anything that said something would cloud this title," Collins said. "This is about a clouded title, and that never came up."

  • Court documents show New Millennial paid $14,000 for the land in 2005, and no one objected to the sale. Shortly after Thomas bought the home two years later, she began getting letters from the trustee, and she was named in a lawsuit the next year. She said she was assured by attorneys and the builder that it would all be cleared up.

  • Nothing happened with the suit for a year. Then, last month, the trustee filed court documents saying she intended to move forward with taking back the land. Keith Mather, an attorney for the trustee, said he couldn't comment on the case but has asked the court for a mediation meeting with Thomas and the builder.

  • The trustee's position, according to the lawsuit, is that an owner who ended up filing for bankruptcy fraudulently transferred the land to a family member so it wouldn't be taken by the court. That person later sold it to New Millennial. The trustee maintains that the land always was supposed to go to the trust and never should have been sold.

  • So what about title insurance? Anyone buying a house with a mortgage is required to purchase title insurance. A title search is supposed to catch this kind of thing. Thomas closed her sale through Tampa's Fuentes and Kreischer Title Co. Fidelity National Title holds her title insurance policy.

  • Kathy Anderson, with Fidelity, said the company just learned of the problem this week and sent the information to its claims department for an investigation. Ron Donalson, a long-time Tampa title agent, said it's unusual for a bankruptcy trustee to try to reclaim property so many years later. The former property owner filed for bankruptcy in 2003.

  • If it's found that the title company really did miss something big, Donalson said, that's unusual, too. But that's what title insurance is for, he said. Once a mistake is made with respect to a title, Donalson said, it's easy for that error to be repeated the next time the property is sold. "They just took the policy forward, and in searching it forward, they may not have picked up on the prior problem," Donalson said.

  • Jack McCabe of McCabe Research & Consulting in Deerfield Beach said he agrees Thomas' dilemma is unusual. But he added he's not surprised by it, given that both sales were during the housing boom. "I'm hearing more and more of this sort of thing," McCabe said. "I think a lot of liens and judgments weren't caught because title agents were so busy."

  • Donalson says it's unlikely the trustee really wants Thomas' home. He thinks the trustee is just looking for money. Fortunately for Thomas, her title insurance policy should cover it. But first, a judge will have to decide if the trustee has any right to the property.

  • "I did everything I was supposed to do here," Thomas said. "I shouldn't have to deal with this."

Source: Murky land sale puts woman's home at risk.

Thanks to Deontos for the heads-up on the story.

Homeowner Cops Guilty Plea To Forging Document Purporting To Release $256K Federal Tax Lien Encumbering Property In Effort To Pocket 2nd Mortgage Cash

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

  • A Rocky Gap, Virginia woman pleaded guilty [] in federal court [...] to mortgage fraud. Janet Damewood, 60, admitted that in February 2007, she applied for a second mortgage from CitiFinancial, Inc. (now known as OneMain Financial, Inc.) on a home she owned in Princeton, West Virginia.

  • At the time the defendant applied for the mortgage, the Internal Revenue Service (IRS) had filed a $256,000 Federal Tax Lien at the Mercer County Courthouse against the property for Damewood’s failure to pay back taxes.

  • Damewood admitted that she did not disclose the Federal Tax Lien, which was later discovered by CitiFinancial during the underwriting process. Damewood further admitted that she created a false and fraudulent document which claimed to be a release of the Federal Tax Lien.

  • The defendant subsequently provided the false document to CitiFinancial as proof that the lien had been released. Based on her false representations, CitiFinancial funded a $37,000 loan to the defendant.

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

Jury Takes Less Than An Hour To Convict 'Don Juan' Accused Of Fleecing $370K Of Home Equity From Two Woman With False Promises Of Love, Marriage

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

  • A man accused of wooing two women and convincing both to marry him while fleecing them out of a combined total of more than $370,000 was convicted Thursday of organized fraud and two counts of grand theft.

  • Paul Francois, 57, faces 30 years in prison on each count, a total of 90 years. Deputies took him into custody immediately after the verdict was read. Sentencing is scheduled for March 1.

  • Jurors took less than an hour to reach a verdict in a case that comprised three days of testimony featuring dry bank statements interspersed with the accounts of two women who thought they found in Francois the man of their dreams.

  • Francois was accused of romancing Rose Marie Anglade, 52, and Sheila Brissault, 45, while convincing them to turn over money leveraged from homes they owned in New York in the summer of 2007.

  • Anglade sold her home, gave Francois the money and moved to Miramar to be with him. Brissault, who testified Wednesday, took out a home equity line of credit and gave Francois $100,000. He proposed to both women and promised each that he would buy a home in South Florida with them.

  • Defense lawyers Alex Hunt and Frank Negron painted their client as sincere in his affections for both women and classified his misdeeds as civil, not criminal. But prosecutors Don Tenbrook and Al Guttmann said love had nothing to do with Francois' actions.

  • Now awaiting foreclosure, Anglade remained in court throughout the day Wednesday and Thursday, even though she was through testifying. Before Thursday's verdict was read, she sat outside the courtroom and wondered aloud how long the jury would be and whether they would see in Francois the con man she now believes him to be.

  • As soon as the verdict was read to Broward Circuit Judge Cynthia Imperato, a court deputy put Francois in handcuffs. Anglade gave an audible sigh when she heard the click. "Justice is served," she said minutes later, looking across the courtroom as deputies fingerprinted the man who talked her into selling her house in Astoria, New York and moving to Broward with her then-16-year-old daughter. Outside the courtroom Thursday, Anglade called Francois a con man who deserves to spend the rest of his life in prison. "Everything was a lie," she said.

  • Anglade and Brissault testified that they did not know about each other until their relationships with Francois began to crumble. When Anglade asked for her money back, she said Francois threatened her and gave her a black eye. Brissault said he threatened to kill her and her children.

  • Defense lawyers said Francois was ready to be sentenced immediately after the verdict was read, but Imperato put off the sentencing when prosecutors said the victims deserved a chance to tell the judge directly how Francois' fraud affected their lives.

Source: Miramar man convicted of fraud, theft in 'Don Juan' case.

See also, Man wooed women, then swindled them, prosecutors say.

NY High Court Chief Announces Initiative Allowing All Empire State Homeowners With Some Legal Representation During Foreclosure Settlement Conferences

In Albany, New York, Reuters reports:

  • A new court initiative will allow all New York homeowners facing foreclosure to obtain legal representation and streamline the process of settling mortgage disputes out of court, Chief Judge Jonathan Lippman said Tuesday during his annual State of the Judiciary speech.

  • The "unprecedented" deal between the state, legal service groups and four large banks -- Wells Fargo, Citibank, Chase and Bank of America -- includes the creation of a new court part that will hear only foreclosure settlement conferences, Lippman said. Each week of the month will be dedicated to a different bank, with one attorney assigned to handle all cases for that lender.

  • "There will be no more excuses, no more delays," Lippman said. "Real negotiations will take place, and homeowners will leave the table with the best available offer."

  • The court system, Lippman said, is seeking to avoid scenarios that can delay settlement conferences for years, including homeowners being told their paperwork is out-of-date and lawyers for banks claiming to have incomplete sets of documents.

  • The program will kick off in New York City, where non-profit legal service groups have agreed to represent all homeowners entering the settlement conference process. The new part will not launch for "at least a couple of months," said Paul Lewis, who helps coordinate courts' handling of foreclosure proceedings for the Office of Court Administration.

For more, see Chief judge announces new foreclosure court part in state of judiciary speech.

Tuesday, February 21, 2012

U.S. Taxpayers To Help Subsidize Banksters' Obligations Under Recent Foreclosure Fraud Settlement

The Financial Times reports:

  • US taxpayers are expected to subsidise the $40bn settlement owed by five leading banks over allegations that they systematically abused borrowers in pursuit of improper home seizures, the Financial Times has learnt.

  • The deal, agreed last week, calls for Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial to pay about $5bn in cash fines and to reduce monthly payments and loan balances for distressed US borrowers by as much as about $35bn.

  • However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter.

  • The existing $30bn initiative, the home affordable modification programme, or Hamp, provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.

  • Neil Barofsky, a Democrat and the former special inspector-general of the troubled asset relief programme, described this clause as “scandalous”. “It turns the notion that this is about justice and accountability on its head,” Mr Barofsky said.

  • BofA, for instance, will be able to use future modifications made under Hamp towards the $7.6bn in borrower assistance it is committed to provide under the settlement. Under Hamp, the bank will receive payments for averting borrower default and reimbursement from taxpayers for principal written down.


  • [P]eople familiar with the matter told the FT that state officials involved in the talks had had misgivings about allowing the banks to use taxpayer-financed loan restructurings as part of the settlement. State negotiators wanted the banks to modify mortgages using Hamp standards, which are seen as borrower-friendly, but did not want the banks to receive settlement credit when modifying Hamp loans. Federal officials pushed for it anyway, these people said.

For more, see US taxpayers to subsidise $40bn housing settlement.

Irate Homebuyer Wants Cash From Seller's Bank After It Locked Her Out Of Her Newly-Purchased Home That Had Recently Fallen Into Foreclosure

In Powder Springs, Georgia, WSB-TV Channel 2 reports:

  • A woman says she no longer feels safe in her own home after the locks were changed a week after she purchased it. Dashi Goodloe purchased a home in Powder Springs on Feb. 2, but a little over a week later, she could not open her own front door.

  • I just bought the home and a week and a half later, I can’t access it. So, I was a little upset,” Goodloe said. Goodloe called the selling agent, who informed her that the seller had received paperwork from Citibank about a week earlier saying the property was in foreclosure. “The closing attorney told her, ‘Everything is OK. The bank is going to take care of it, so don’t worry about it.’ And then Monday, they changed the locks,” Goodloe said.

  • Channel 2 Action News reporter Eric Philips contacted the closing attorney, who said there must have been a miscommunication between the bank and the foreclosure attorney, so the foreclosure was never halted. While the problem is being resolved, Goodloe has been given the lockbox code to get into her home, but she said that does little for her peace of mind.

  • I have to pay bills. The lights are on. The heat is on. The water is on. The mortgage is due. So, I would like to be compensated for me not being able to feel comfortable enough to live in this home,” Goodloe said.

  • The closing attorney told Philips this is a fixable problem, but he said the bank did not tell him how long it would take to fix.

Source: Foreclosure on previous owner locks woman out of newly purchased home.

BofA Continues To Be Targeted In Lawsuits Alleging Abuse Of Financially Strapped Homeowners With Loan Modification 'Run-Arounds'

In Helena, Montana, KXLH-TV Channel 9 reports:

  • When Donna Peterson bought her dream home in Helena in 2007, she didn't know her purchase would turn into a nightmare. After being diagnosed with stage four cervical cancer in 2009, she lost both of her home-based businesses while undergoing treatment.
    It was then that she asked Bank of America for help.

  • Donna recalled, "They said 'Oh, no problem. Given your circumstances we can get you right into a 2% loan. All you have to do is to go into default, you are not eligible unless your payments are late.'" That was more than two years ago. Donna filled out scores of documents to restructure the loan, but Bank of America claims they never received them, and eventually they started foreclosure proceedings.

  • Now, the only hope she has of remaining in her home is relying upon the attorneys she has hired to file suit. She said, "I feel like I've spent the last two years screaming at the top of my lungs about what Bank of America has done wrong. And nobody was listening. And now I feel like there's somebody in my corner helping my voice be heard."

  • Attorney Jonathan Motl said, "When they finally got around to telling her they weren't going to give her the 2%, she was in a position where she couldn't do anything. And so she has filed a lawsuit to hold them to the contract they have promised her."

  • The law firm has already filed 10 cases against Bank of America for not honoring contracts, and they continue to receive about five phone calls a week.

  • Typically, the two types of complaints are promises to restructure that aren't kept, and illegal foreclosure procedures.

For more, see Helena woman claims Bank Of America wrong-doing in foreclosure.

Suit: Banksters "Fraudulently Conceal Their Unlawful Assessment Of Improperly Marked-Up Or Unnecessary Fees For Default-Related Services"

In San Francisco, California, Courthouse News Service reports:

  • Wells Fargo Bank and J.P. Morgan Chase charge homebuyers who go into default inflated fees and interest rates, customers say in a federal RICO class action. Lead plaintiff Latara Bias claims the defendants, including Chase Home Finance, service almost 20 million mortgage loans, approximately 25 percent of the home loans made in the United States.

  • The class claims the defendants use an automated mortgage loan management system, and subsidiaries, to "fraudulently conceal their unlawful assessment of improperly marked-up or unnecessary fees for default-related services, cheating borrowers who have least afford it."

  • The plaintiffs concede that when mortgage borrowers go into default, it is natural for lenders to act to protect their interest in the property. "However, lenders are not permitted to mark up the fees for such services to earn a profit," the complaint states.

  • "Nor are lenders permitted to assess borrowers' accounts for defaulted-related service fees that are unreasonably and unnecessary. Nevertheless ... using false pretenses to conceal the truth from borrowers, that is precisely what defendants do. In effect, to generate hearty profits, defendants have substituted inflated interest rates with inflated fees.

For more, see Homebuyers Sue Banks in RICO Class Action.

For the lawsuit, see Bias, et al. v. Wells Fargo & Company, et al.

Suit: Bankster Waits Until Homeowner Successfully Completes Ch.13 Payment Plan To Stop Foreclosure, Then Belts Her With Bogus Fees; Takes Home Anyway

In Clark County, Nevada, KTNV-TV Channel 13 reports:

  • Wrongful foreclosure, fraud and deceit... all allegations at the center of a lawsuit against JPMorgan Chase. As Contact 13 Chief Investigator Darcy Spears reports, the nation's second largest mortgage lender is accused of taking a family's home while it was supposed to be under court protection.


  • It started when Cathy [Gaither's] mother, [homeowner] Jo Ann Gaither, filed bankruptcy in 2003. She did that to re-organize her finances and keep her home while paying off her debts.

  • Her mortgage, originally through Washington Mutual, was part of the bankruptcy plan. But [Cathy's attorney Chris] Keller says the bank ignored the rules, repeatedly sending her foreclosure notices despite the fact that she was under bankruptcy protection. The bankruptcy was successfully dismissed in 2008.

  • "We thought finally we've completed it, now we can move on and pay normal mortgage payments and there's not gonna be any more notices posted on the window and we can move on now, it's a fresh start," Cathy recalls.

  • Not from the bank's perspective. The same month the bankruptcy was discharged, Washington Mutual sent a letter saying Jo Ann owed more than $15,000. "And they were seeking to foreclose on the property that same month -- the very month that she finished the bankruptcy itself!" Keller says in disbelief.

  • [Cathy's] lawsuit says payments during the bankruptcy were "illegally applied" and that the bank tacked on inappropriate late fees and other charges.

  • Washington Mutual's May 2008 letter even says "we understand you have been discharged from the indebtedness through bankruptcy. Nevertheless, our records reflect that your account remains delinquent and foreclosure proceedings may be warranted."


  • In the midst of it all, Washington Mutual became Chase, the loan modification was denied, and Jo Ann Gaither died. "And the last foreclosure notice that was sent to the property was forwarded the month that she died in July of 2010," [attorney] Keller explains. The house immediately went into probate in another court that Keller says the mortgage lender chose to ignore.


  • The court has ruled that Cathy can stay at her family home until her lawsuit, which is now in federal court, is resolved. But even that has proved impossible since Fannie Mae took over the house.

  • "Since that time, the water company has refused to allow the water to be on at the property because, technically, the property is owned by Fannie Mae," says Keller. "They won't allow me to get the water on and they actually had my power turned off three days after Christmas also," Cathy says.

  • The power was turned back on after Keller threatened an even bigger lawsuit. But the house has been without water for an entire year. "I have a 5-gallon bottle I bring in for my dogs or to do little things and that's about it," Cathy says.

  • She asked to talk with us out front because the house is in such bad shape. Even vandals have struck. "This window got busted out. There's two, looks like pellet gun holes in the window right here."

  • Making Cathy wonder why the bank even wants the house, and why they're putting her through this. "And not just to me but to so many people. There's so many people out there that don't have homes because of something like this."

  • Keller says this situation illustrates the flaws in our banking system. "And the inability of the banks to police themselves." Both legally, he says, and morally.

  • Cathy hopes her story will empower others to push back against the big banks. "I didn't give up for my mom's sake. And now, yeah, my mom passed away but I'm still not gonna give up."

  • Cathy recently got an order from North Las Vegas Justice Court that forces Fannie Mae to allow her to have water at the house while the case is ongoing.

For the story, see Chase accused of wrongful foreclosure.

Monday, February 20, 2012

Sacramento Feds Close Books On Mortgage Fraud Scam That Screwed Unwitting Investors, Lenders In Scheme Purporting To Assist Credit-Impaired Homebuyers

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

  • United States Attorney Benjamin B. Wagner announced [] that Gabriel Viramontes, 49, of Elk Grove, was sentenced [...] to four years and nine months in prison and ordered to pay restitution to his victims for a mortgage fraud scheme.

  • On March 31, 2011, a federal jury found Viramontes guilty of six counts of bank fraud and seven counts of mail fraud. Three co-defendants pleaded guilty to related charges before the trial.

  • According to testimony presented at trial, Viramontes and his co-defendants engaged in a Sacramento-area mortgage fraud scheme that involved at least 19 homes with loans of more than $8 million. From July 2006 through October 2006, they used VFM Investment Group, Esnian Mortgage Realty, and Freedom Capital Mortgage to engage in a mortgage fraud scheme.

  • They solicited people to purchase with no money down single-family homes on behalf of others with bad credit who wished to purchase homes. Those solicited were told they would benefit financially from the transactions.

  • The defendants then defrauded lenders such as Washington Mutual Bank, Long Beach Mortgage, and Fremont Investment and Loan by submitting fraudulent loan applications that inflated the buyers’ income, falsely stated that a buyer was employed at a specific job, and falsely stated that the properties would be owner-occupied.

  • The purpose of the scheme was to ensure that the home-purchase transactions closed, so that the defendants would receive substantial loan broker commissions and illegal kickbacks from real estate sales commissions.

  • Co-defendants James Roy Martin, 34, and Mario Fellini III, 42, who pleaded guilty and testified against Viramontes at trial(1) were also sentenced []. Martin was sentenced to 20.5 months in federal prison and Fellini was sentenced to six months prison and five months home detention. The fourth defendant, Joseph Salvatore Gallo, 38, was sentenced last month to five years probation. All are from the Sacramento area.

For the U.S. Attorney press release, see Elk Grove Man Sentenced In Mortgage Fraud Scheme.

See also, The Sacramento Bee: Elk Grove man sentenced in mortgage fraud.

Thanks to Tim McDaniel for the heads-up on the story.

(1) Another example of squealing defendants abandoning the conspiracy, not unlike rats jumping off a sinking ship, to win the race to the prosecutor's office and take a fellow co-defendant down by 'throwing him under the bus' to score a better break on a plea deal.

  • "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 phenomenon some refer to as the 'race to the courthouse' (or 'race to the prosecutor's office') that breaks out among participants in an 'about-to-collapse' criminal conspiracy).

Study Of San Francisco Foreclosures Shows Almost All Involved Legal Violations Or Use Of Dubious Documentation By Banksters

The New York Times reports:

  • An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

  • Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

  • The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

  • Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

  • Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

  • The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

  • But the precise terms of the states’ deal have not yet been disclosed. As the San Francisco analysis points out, “the settlement does not resolve most of the issues this report identifies nor immunizes lenders and servicers from a host of potential liabilities.” For example, it is a felony to knowingly file false documents with any public office in California.

  • In an interview late Tuesday, Mr. Ting said he would forward his findings and foreclosure files to the attorney general’s office and to local law enforcement officials. Kamala D. Harris, the California attorney general, announced a joint investigation into foreclosure abuses last December with the Nevada attorney general, Catherine Cortez Masto. The joint investigation spans both civil and criminal matters.

  • The depth of the problem raises questions about whether at least some foreclosures should be considered void, Mr. Ting said. “We’re not saying that every consumer should not have been foreclosed on or every lender is a bad actor, but there are significant and troubling issues,” he said.

For more, see Audit Uncovers Extensive Flaws in Foreclosures.

For the report, see Foreclosure In California - A Crisis Of Compliance.

Court Rulings Lean Heavily Against Screwed Over Homeowners Seeking To Sue For Banksters' HAMP Violations

Lexology reports:

  • The Home Affordable Modification Program (HAMP) is designed to help homeowners avoid foreclosure by modifying qualifying loans to a level that is both affordable and sustainable. The program is intended to provide clear and consistent loan modification guidelines for the mortgage industry and to incentivize loan modifications for borrowers, servicers and investors.


  • While HAMP does not mandate that any particular loan be modified (instead providing a framework for determining eligibility), the structure of the program has at least one undesirable side-effect: persuading borrowers who were either ineligible or unsuccessful in the program that their inalienable rights have been violated and that they should sue their servicer and investor for the failure to modify their loan.

  • Most of these lawsuits are subject to a motion to dismiss for failure to state a claim, because the vast majority of courts around the country have concluded that neither HAMP nor the Emergency Economic Stabilization Act of 2008 (EESA), under which the HAMP program was crafted, provide borrowers with a private right of action. According to a recent review, in 75 cases courts have found that there is no private right of action under HAMP.(1)

  • There have been two cases in which the opposite result was reached, both in the Southern District Court of California. A third trial court decision finding a private right of action is on appeal in Tennessee. These figures are not intended to be comprehensive, but to provide a broad view of the current status of this issue, and there may be other recently decided cases that were not included in the review.

For more, and a list of recent HAMP decisions, see No private right of action under HAMP: the growing consensus (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

(1) A possible 'work-around' to the obstacle that consumers have no private right of action under HAMP, at least in those states that have strong statutes prohibiting unfair and/or deceptive trade practices, is to bring an action under state law asserting that loan servicer conduct that violates HAMP constitutes a "per se" violation of the applicable state statute prohibiting unfair and deceptive trade practices. See, generally, National Consumer Law Center: CONSUMER PROTECTION IN THE STATES: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

For those in Florida looking for a helpful reference on this point, see The Florida Bar:

Owners Of Bay State Island Summer Retreat Lose Property In Sale Leaseback Deal They Believed To Be Financing Arrangement; Now Face The Boot

In Swansea, Massachusetts, the Herald News reports:

  • The embattled owners of Pleasure Island have lost the one-time summer retreat and may be evicted from the property. Last week, a panel of three judges of the Commonwealth of Massachusetts Appeals Court in Boston ruled that the property is owned by Costa Management.

  • Former owners, Kenneth and Sandra Stebenne of 469 Corp., have been in a title dispute with Costa Management for the past two years. The Stebennes sought to retain the property, but apparently signed paperwork turning it over to Costa Management in 2005. The Stebennes, if they choose, may appeal the decision with the Supreme Judicial Court within 30 days.

  • Attorney John Francoeur of Levin and Levin, representing Edward Costa and Costa Management of Westport, said Monday his client plans to go through with eviction proceedings.


  • The Stebennes faced a looming foreclosure in 2005. They believed they had entered into a private financing agreement with Edward Costa and retained ownership of the island. [Swansea Town Attorney Arthur Frank Jr.] said they actually transferred the property and entered into a lease agreement. They did have an option to repurchase the island.

  • Frank said the judges looked at the documents, including a purchase and sale agreement, which Sandra Stebenne signed as “seller” and Edward Costa signed as “buyer,” and found that they were clear and straightforward, and were binding whether the plaintiff understood what was signed or not.

  • Costa Management in 2009 filed the $462,908 2005 deed after offering the Stebennes a chance to repurchase the property. [...] Francoeur said Costa Management will likely put Pleasure Island up for sale.

For the story, see Court rules on title of Pleasure Island, saying Swansea property belongs to new owner.

Sunday, February 19, 2012

Savvy Business Reporters & Their Pinheaded Take On Foreclosure Fraud Settlement

Blogger David Dayen writes in Firedoglake:

  • We’re going to have to endure this line of argument from those savvy business reporters, and Diana Olick is at the head of the pack, so we might as well take on this argument about the foreclosure fraud settlement directly.

    "Let’s take a step back for a second to remember the fall of 2010, when “robo-signing” came to light. The idea that one low-paid guy sitting in a room was signing his, or perhaps somebody else’s, name to thousands of foreclosure documents was appalling. It is appalling, no question. But let us not forget that the vast, vast majority of those foreclosures being processed were in fact legitimate foreclosures; it was the documentation process that was fraudulent. Banks didn’t foreclose on borrowers for no reason, they foreclosed because borrowers weren’t paying their mortgages."

  • It continues to amaze me how this “no harm, no foul” argument gets employed, when it would not fly in any other context in jurisprudence. Let’s rewrite that claim slightly, with a different scenario but the same spirit.

    "The idea that one rogue cop sitting at the police station was fabricating evidence was appalling. It is appalling, no question. But let us not forget that the vast, vast majority of criminal suspects are in fact legitimately guilty of some crime; it was the evidence gathering that was fraudulent. Cops didn’t pick up suspects for no reason, they picked them up because they did something wrong."

  • This flies in the face of hundreds of years of established law, and the cop, as well as the police department, would be rightly condemned by everyone for allowing a systematic process of evidence fabrication to go on. Practically nobody would make the argument that the suspects were guilty anyway, evidence fabrication be damned. But that’s precisely what Diana Olick is saying with a straight face.

For more, see CNBC’s Diana Olick’s Wrongheaded Analysis of the Foreclosure Fraud Settlement.

High Court Declines To Hear Appeal Of Innocent Wife Who Lost Home Over Tax-Delinquent Hubby's IRS Lien; Still Gets To Split Proceeds From Forced Sale

Lexology reports:

  • The Supreme Court of the United States recently denied the taxpayer's petition for certiorari in United States v. Barczyk, 6th Cir. No. 10-1498 (Aug. 18, 2011) cert denied (Jan. 17, 2012).

  • In Barczyk, the Sixth Circuit upheld the lower court's order allowing the United States to foreclose on its tax lien and sell real property Deborah Barczyk owned with her tax-delinquent husband as tenants by the entirety. The Court of Appeals ordered an equal distribution of the sale proceeds, to the Internal Revenue Service and to Deborah Barczyk, applying the presumption that Deborah Barczyk and her husband had equal interests in the marital home.

For more, see Tax Court reaffirms that a tax lien attaches to property held in tenancy by the entireties: United States v. Barczyk (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

For the Federal appeals court ruling that was allowed to stand, see United States v. Barczyk, No. 10-1498 (6th Cir. Aug. 18, 2011).

'All Cash' Homebuyer Loses Priceless Family Heirlooms To Bankster's Trash-Out Contractor; Cops On Refusal To Take Crime Report: 'It's A Civil Matter!'

In Kansas City, Missouri, KCTV Channel 5 reports:

  • A Kansas City man's plans to move his mother closer to his home turned into a nightmare. And, he says, led to the theft of priceless family heirlooms. In September 2010, Alan Danforth helped purchase a two-story house on Agnes Avenue for his mother Carol Higgs.

  • Because it was a $16,000 cash short sale, with the proceeds going to Chase Home Finance, there was no mortgage on the home. The sale was recorded with Jackson County that same month. "We just gave them a lowball offer and surprisingly they took it and so that's how we got it," Danforth said.

  • Danforth began remodeling the house. This included redoing the floors, hanging new doors and putting up fresh paint. Higgs began moving in furniture, kitchen supplies and even some family heirlooms. "There were things that I had for my grandchildren, my great grandchildren, to pass on and pass down," she said.

  • But in November 2010, Danforth's remodeling work came to an abrupt halt when he discovered the locks had been changed and a notice was on the door. "A lockbox was put on the door, notices that the house was foreclosed upon. That it had been cleaned and winterized," he said.

  • Chase Home Finance had begun foreclosure proceedings on the residence before the short sale to the Danforths. The financial institution failed to update its paperwork. As a result, Chase hired Safeguard Properties to winterize the home, clean it and lock it up.

  • But Danforth says Safeguard did much more than that. "They cleaned it out," Danforth said.. "It's gone. Everything's gone. They cleaned out the garage; they cleaned out the house, cleaned out the barn. Everything was gone."

  • That included the pieces of family history that his mother had collected. "Broke my heart when I found it was gone," Higgs said. "Materialistic stuff can always be replaced. But they took things that belonged to my mother and my grandmother. I cried."

  • The two have repeatedly tried to get answers from Safeguard about where they took the property but have been unsuccessful. Dealing with Chase has been a nightmare because bank operators want Danforth's mortgage information before discussing the missing property.

  • "I kept explaining, 'There is no mortgage on this home. We paid cash for it,'" an exasperated Danforth said "And they were like, 'Why are you contacting us?' And I said, ‘Because I want help finding where the stuff went.' They're thinking I need help with the mortgage. There is no mortgage, it's paid for."

  • He tried to file a theft report with the Kansas City Police Department but officers declined to accept the report because it appears to be a civil dispute over a mortgage. "I explained to the police, ‘No we paid cash for it. There is no mortgage,'" said Alan. "And he goes, "That's between you and Chase.'"(1)

  • In desperation, the mother and son reached out to KCTV5's Investigative Unit. A Chase spokesman eventually admitted a mistake had been made.

  • The company accidentally sent Safeguard Properties into a home Chase no longer owned to winterize, clean, and change the locks. However, Chase denied the allegations that personal property was removed. Chase claimed it has pictures proving the Danforth home was empty when Safeguard entered it. But the bank refused to produce those pictures or do an on-camera interview with KCTV5.


  • [University of Missouri at Kansas City law professor Patrick] Randolph points out that in similar cases, some courts have hit banks with punitive damages of more than a million dollars.(2) "You've got to keep in mind, that the invasion itself that would justify punitive damages. It would be exacerbated by the fact that they lost this woman's treasures of a lifetime."

  • While punitive damages might pay for some of the property Higgs has had to replace, they won't bring back those heirlooms. For that reason, Higgs is seeking an apology from Chase. "Right is right and wrong is wrong and the least I would have expected was a 'sorry,'" Higgs said. "There is no 'sorry.'"

  • Danforth and Higgs are hoping to find an attorney willing to take their case and seek damages.(3) And hopefully get the return of the family heirlooms that no money can replace.

For the story, see KCTV5 Investigates: Chase for Answers.

Go here for other stories on homeowners getting screwed over by improper 'trash-outs.'

(1) This isn't the first time that cops have washed their hands when investigating these real estate-related crimes. See:

(2) 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:

(3) For examples of filed lawsuits involving illegal bank break-in, "trash-out" & lockout cases, see: