Saturday, December 1, 2012

Jury Slams Delinquent Borrower With Arson Conviction For Torching His Own Home While In Foreclosure; Defense: Wrongful Verdict Based On Circumstantial Evidence


In Little Falls, Minnesota, WJON Radio 1240 AM reports:

  • A Hillman man whose home was facing foreclosure has been convicted of setting the house on fire in 2010 for the insurance money.

    Jurors deliberated for four hours this week before finding 53-year-old Randy Donald Reed guilty of first-degree arson. He’s scheduled to be sentenced Jan. 9.

    Prosecutors say a fire marshal concluded that the cause of the fire was a butane torch. The investigator told authorities it appeared the torch was used to ignite gasoline at four different spots in the basement.

    Reed told investigators he had no idea who would have wanted to commit the arson. He also acknowledged that he and the property’s co-owner were behind on their mortgage.

    Defense attorney Mark Kelly of St. Paul said Saturday his client was wrongfully convicted based on circumstantial evidence.

Foreclosed Homeowner Torches Home, Then Kills Himself While Being Served Eviction Papers


In Warwick, Rhode Island, WLNE-TV Channel 6 reports:

  • A Warwick man committed suicide [] as he was being served with eviction papers. At first, Warwick firefighters were called to 88 Greylawn Avenue for a smoky house fire. As they were responding, police say they received calls about shots fired from the same address.

    A Constable had been serving foreclosure papers according to Warwick Police Capt. Joseph Coffey. The home was also for sale and under foreclosure according to Capt. Coffey.

    When firefighters reached the victim in the home, he was dead from a self-inflicted gunshot wound. As there was a concern about ammunition and suspicious packages in the home, the State Fire Marshal and the bomb squad were called in.

    A small remote control robot was used to check if any of the packages were explosives, and they were successfully neutralized and found not to be dangerous.

    Neighbor Diane Roberts said it was sad that foreclosure proceedings resulted in the man taking his own life.

Prosecutor: Financially Strapped Homeowner Attempts Foreclosure Dodge By Torching Home In Effort To Score $400K In Insurance Cash


In West Pottsgrove, Pennsylvania, The Mercury reports:

  • A West Pottsgrove man, who authorities claim fell behind on mortgage payments, must answer to charges in Montgomery County Court that he allegedly intentionally set fire to his Elm Street home with the hope of collecting $400,000 in insurance proceeds.

    Robert Francis Granger, 36, who owned the fire-ravaged home at 426 Elm St., waived his preliminary hearing [...] on charges of arson endangering persons and property, failure to control or report dangerous fire, conspiracy to commit arson and insurance fraud in connection with the July 2011 blaze that gutted the home. Granger, [...] is being held in the county jail in lieu of $50,000 cash bail.

    “He set the house on fire. He was way behind on his bills. He was way behind on his mortgage. He figured the house was worth more burnt than it was standing. He didn’t want the bank to foreclose,” alleged Assistant District Attorney John N. Gradel. “So he torched the place.”

    Granger’s fiancĂ©e, Heather J. Walters, who is charged as a conspirator in the crime, also waived her preliminary hearing. Walters, [...] was released on own recognizance bail to await further court action. Another alleged conspirator, Randy L. Eagle, 38, [...] previously waived his preliminary hearing on conspiracy to commit arson and related offenses in connection with the incident.

Friday, November 30, 2012

Another Tenant To Get Pre-Xmas Boot As Foreclosed Landlord Pocketed Rent While Stiffing Bank While Stiffing Bank Out Of House Payments


In St. Augustine, Florida, First Coast News reports:

  • Lisa Easter loved living in her small St. Augustine rental. She rented the house for two years. But like thousands of other renters across the nation, even though she's paying her rent, she's getting kicked out. "Here's the notice of termination saying I have to be out by the first," she said.

    By law, as the tenant of the home, the bank sent Easter a copy of the papers, showing the owner of the property was facing foreclosure. But she opted to stay in hopes of a new buyer letting her remain as a renter after a conversation she said she had with her landlord.

    "He told me he was going to put the house up for sale, do a short sale, but he was only going to get an investor to buy it. That way, I could stay here," she said. So, the short sale happened and Easter was surprised by the next notice she received. Before the house went to sale, the bank kicked her out. "So I have like 15 days to find a new place to live," she said.

    "They really have very few rights," said real estate attorney Daniel Copeland. This is a growing problem for renters, Copeland said. The tenant pays the rent, but the landlord does not pay the mortgage.

Rent Skimming Ex-Landlord, Foreclosing Bankster Leave Renters In 5-Unit Cleveland Building Without Heat, Water


In Cleveland, Ohio, WEWS-TV Channel 5 reports:

  • A growing number of tenants are being left without heat and other utilities, as apartment owners fall into foreclosure.

    Sirlinda Chase of Cleveland is doing all she can to raise her 7-year-old son, despite tough economic circumstances. However, over the past two months, her situation has gotten even more challenging after the heat in her apartment building was suddenly cut.

    Chase told NewsChannel5 the owner of the building went into foreclosure without warning, and when the bank took possession, the heat and water was turned off to all five units at the complex.

    "I gave him two months rent for a security deposit, he took my September and October rent, and never said the building was under foreclosure," said Chase. "Once we found out, that's when he stopped answering calls."

    Chase showed NewsChannel5 Troubleshooter Joe Pagonakis how she must now boil water on her electric range, and run the oven with the door open, in a desperate attempt to keep her unit warm." "I'm so beat just trying to fight this alone," said Chase. "I happy that you're here helping me. I'm crying out for help."

    5 On Your Side took this case the Cleveland Housing Court Judge Ray Pianka, and Housing Court Specialist Robert Fuchs. Fuchs explained a property owner must keep heat in all units, no matter how the rental unit has changed hands. "If it's below 50 degrees, the city code says and owner has to be able to provide heat at 70 degrees in the habitable areas of the house, said Fuchs.

    Judge Pianka explained the Tennant Protection Act calls for utilities to be maintained for at least 90 days, even after a property falls into foreclosure. "The landlord has an obligation, even if the property is purchased at sheriff's sale, to keep the property fit and habitable," explained Judge Pianka. "This is something they can't ignore, they are to provide heat."

    Cleveland Housing Court agreed to contact the bank that is now holding the property, and is working with the listing agent, in effort to get the heat restored. Cleveland Building and Housing inspectors are also being called to the complex, to make use the furnaces at the property are operable, and safe.
Source: Cleveland apartment building in foreclosure, tenants left without heat several weeks (Landlord collects rent while bank takes possession).

Florida Regulators OK New Form Of Title Insurance For Loan Modifications


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

  • Efforts to reduce or even review Florida title insurance rates have stalled for 20 years, but state regulators said Monday they have approved three insurers to offer a new lower-priced form of title insurance for loan modifications designed to help struggling homeowners avoid foreclosure.

    A new product, a Mortgage Priority Guarantee Policy, comes at a minimal flat cost of $125, instead of the many hundreds of dollars otherwise required, state officials said.

    This product is being offered at a time when innovative solutions from the insurance industry are needed to assist businesses and consumers,” Florida’s Insurance Commissioner Kevin McCarty said in a statement.

    Approved to offer it: Old Republic National Title Insurance Co., Westcor Land Title Insurance Co. and WFG National Title Insurance Co.

    The new product “is used when lenders amend an existing mortgage loan agreement in order to help a struggling homeowner remain in their home and prevent a foreclosure,” officials said.

Thursday, November 29, 2012

State Bar Shuts Down Attorney Who Allegedly Rented Law License To Convicted Felon To Run Bankruptcy-Related Foreclosure Rescue Ripoff


The State Bar of California recently announced:

  • The State Bar of California announced [] it has shut down the operations of an Ontario lawyer who allowed his name and law license to be used in a scheme to defraud distressed homeowners.

    The bar obtained a court order [...] to assume jurisdiction over the law practice of Gary David Tracy, 50, (bar # 167212). His firm, known as Realty Attorney Group APC and Realty Group & Consulting LLC, gave false hope to dozens of clients whose homes were already in foreclosure.

    Many of the clients’ homes had already been sold. In return for thousands of dollars in fees, the firm filed shell petitions in U.S. Bankruptcy Court that only delayed the inevitable loss of the clients’ homes.
***
  • Tracy formed an illegal partnership with a convicted felon and abdicated responsibility and control of his law practice to non-attorneys, Deputy Trial Counsels Mia R. Ellis and Lara Bairamian alleged in their petition to assume jurisdiction of the practice. “The clients in these situations are desperate and in financial turmoil,” the petition said. “They are vulnerable and seeking a lifeline from a legal professional that can save their home.”

    In July, the U.S. Bankruptcy Court for the Central District in Santa Ana sanctioned Tracy $10,000 after it found his firm was responsible for 80 bankruptcy filings, most of which did not identify the firm as the preparer of the petition.

    The State Bar has identified at least nine clients who paid money to the firm and were abandoned. One woman paid the firm $12,400, including an $800 payment deducted from her account after she lost her home and was evicted. Many of the clients had never met Tracy.

    [The] order by San Bernardino County Superior Court Judge Brian S. McCarville authorized the bar to secure the firm’s files, freeze its bank accounts and notify its clients to seek new counsel. Clients who have additional questions are advised to call the State Bar at 213-765-1778.

Pair Busted For Allegedly Running Loan Modification Racket Under Guise Of Non-Profit Group; Pocketed Homeowner Cash They Promised Would Be Applied To Mortgage Payments: Cops


In St. Tammany Parish, Louisiana, The Times-Picayune reports:

  • Two women who worked for a Mandeville nonprofit agency that was supposed to help homeowners in danger of foreclosure have been arrested and charged with theft. St. Tammany Sheriff's Office officials said the two women were pocketing money intended for mortgage payments.

    Shawn Singleton, 52, and Angela Lyle, 44, were booked last week into the St. Tammany Parish jail and charged with theft of more than $1,500. They each have been released on $10,000 bonds.

    Singleton, of Mandeville, and Lyle, of Biloxi, worked for Life Impact Center, a nonprofit organization affiliated with Life Church in Mandeville, Sheriff's Office Capt. George Bonnett said. The organization was billed as working with mortgage companies to restructure home loans and help homeowners avoid foreclosure, Bonnett said.

    According to GuideStar, a nonprofit organization that gathers and publicizes information about other nonprofit organizations, Life Impact Center was founded in 2010. It is listed as a financial counseling and money management organization.

    Bonnett said the Sheriff's Office received its first complaint about Life Impact Center in October 2011. Homeowners who were doing business with the organization said they had been making payments -- categorized as "good faith payments" -- to Life Impact Center, and believed the organization was in turn making payments to their mortgage company.

    Homeowners told Sheriff's Office investigators that their homes were foreclosed on even after they made those payments. Bonnett said when the mortgage companies were contacted, they said they never received money from Life Impact Center.

    Bonnet said the Sheriff's Office found that in the nearly 20 months the organization was in operation, it received $150,000 from clients. Of that money, 90 percent was spent on salaries for Singleton and Lyle, Bonnett said.

    The Sheriff's Office so far has received more than a dozen complaints about the organization, and Bonnett said the Sheriff's Office investigation into the organization continues. Singleton and Lyle are the only two people who have been identified as participating in this scheme, he said.

    If convicted of the theft charges, Singleton and Lyle each could face up to 10 years in prison.

Dozens Of Jacksonville-Area Homeowners Slapped With Mechanics Liens After Local Roofer Pocketed Their Cash & Stiffed Materials Supplier; Will Either Pay Twice For Same Job Of Face Foreclosure; Victims Seek Criminal Charges


In Jacksonville, Florida, First Coast News reports:

  • You pay thousands for a new roof and the last thing you want is to pay twice. That could happen to dozens of homeowners on the First Coast. First Coast News has learned that they're faced with liens against their properties, after Mann's Roofing failed to pay its suppliers.

    "They never paid the supplier, so even though I paid for the job in full, I received a lien on my home from the supplier, protecting their interest," homeowner Edmond Godreau said.

    Godreau is one of about 40 homeowners since January of this year who say they had Mann's install a new roof on their home. They explained they paid to have the work done. The company put the new roof on, but they allege the roofer never paid the roofing supplier for the materials. These customers say they carefully checked out Mann's before they used them, and they checked out well.

    "I had three other neighbors who had their house done my Mann's Roofing, they were all happy," said Gary Fusani.

    The suppliers are not only going after Mann's Roofing, they have also placed liens on the homes. "And also they've filed a lawsuit to foreclosure on my mortgage to get the money they're owed," Godreau said.

    Now this group is asking the State Attorney's Office to look into criminal charges against those behind Mann's Roofing.

Wednesday, November 28, 2012

Sale Leaseback Peddler Gets 3+ Years For Role In Equity Stripping Foreclosure Rescue Scam That Screwed Over Financially Strapped DC/Maryland Homeowners


From the Office of the U.S. Attorney (District of Columbia):

  • Carline M. Charles, 41, who ran a business that supposedly would rescue distressed homeowners from foreclosure, has been sentenced to 3 ½ years in prison for her role in a mortgage fraud scheme that cost homeowners over $774,000 and lenders more than $1 million, U.S. Attorney Ronald C. Machen Jr. and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, announced [].
***
  • According to a statement of offense, signed by the defendant as well as the government, Charles represented herself as the owner of C & O Property Solutions, LLC, a company that offered refinancing options to homeowners in the District of Columbia and Maryland whose properties were facing imminent foreclosure. In fact, she was operating a scheme that ultimately involved 12 homes along with fraudulently obtained mortgages, financial losses for lenders, and evictions for many of the people who turned to her for help.

    Charles and others contacted homeowners through solicitation postcards or by telephone, using foreclosure and land records to identify people who were in financial distress. Charles told the homeowners that they could refinance their mortgage loans with the assistance of financial partners or investors so they could buy time to repair their credit. She assured them that their names would remain on the property deeds after this “refinancing.” Later, after a period of about six months, according to Charles, the homeowners could refinance the mortgages and remove the partners or investors from the property deeds.

    While the homeowners believed they were refinancing their mortgage loans, in actuality they were selling outright their properties to straw purchasers recruited by Charles. Charles and others paid the straw purchasers fees of up to $10,000 per transaction in return for use of their personal information to purchase properties. All told, these actions led to mortgage lenders issuing loans of approximately $4 million. Charles arranged to siphon out roughly $1 million of this money from the properties for herself or her company. She used the money to pay her own personal expenses and to continue perpetuating the scheme.

    In addition, Charles required many of the distressed homeowners to pay a monthly “mortgage” payment, which she claimed would be forwarded to the lenders or placed in escrow. Many homeowners paid her, as required, providing a total of about $114,000. Charles forwarded the mortgage payments for a period of time, but eventually stopped doing so. This led to the foreclosure of 12 properties that had the fraudulently obtained mortgages, the evictions of most of the homeowners, and a loss to the lenders in excess of $1 million.(1)
For the U.S. Attorney press release, see Business Owner Sentenced to 3 ½ Years in Prison In $1.7 Million Mortgage Fraud Scheme (Homeowners Turned to Her to Avoid Foreclosure, Wound up Evicted).

(1) For more on this type of foreclosure rescue ripoff, see:

Loan Sharks Find Safe Havens On Native American Tribal Lands To Carry Out Their Handiwork


In Portland, Oregon, KATU-TV Channel 2 reports:

  • Online loan sharks are exploiting a gaping loophole to get their hands on your money - and local lawmakers are fighting back hard. What are these loan sharks doing that's so wrong?

    They're setting up shop on Native American reservations so they can avoid state and federal laws that protect consumers. It's one of the worst cases of online crime the KATU On Your Side Investigators have ever come across.

    Oregon Democratic Senator Jeff Merkley told KATU he has been fighting for years to stop it. "What they're doing is morally wrong," Merkley said. "It breaks state law. It destroys families and we have to stop it."

    We’ve been talking to a Salem woman – hard working but behind on her bills like a lot of us – who is in over her head with a payday loan company – way, way over her head.

    Elena Peralta, 20, took out $150 to pay her car insurance – but in a matter of weeks, she was on the hook for $4,500 and teetering on the brink of bankruptcy. The business she got the loan from is called US Fast Cash, which operates on the Ottawa tribe's reservation in Oklahoma.

    The loan company, Peralta found out, had the right to raid her bank account at will. And when that money ran out, she started getting phone calls from ‘collection agents’ every day and night, and even at work, threatening her with legal action and harassing her.

    And the payments Peralta did manage to make never touched the principal – just the outrageous triple-digit interest rates the loan company was charging her. "It affected my family," she said. "Not just myself, my whole family."

    Everything about this loan sounds illegal under Oregon law. Regulators agree - so much so that the state has already red-flagged these online lenders in this consumer alert.

    But here's what we found out when we started looking into this - nothing can be done to stop them, or bring the worst of these cyber loan sharks to justice. Not yet at least.

    This woman’s case – and thousands like it – is now at the center of a legal battle at the highest levels of the U.S. Government –a story that’s taken us from Portland, to the halls of Congress, to a dusty town in Oklahoma - and deep into the pages of one of the murkiest chapters in America’s history. Millions of dollars hangs in the balance as the rights of you, the consumer, are pitted against the rights of all Native Americans.

    Their treaties with the United States are century-old binding contracts upheld by numerous court decisions. But the issue of tribal sovereignty is taking center stage in the fight to stop online loan sharks.
***
  • Merkley is now trying to push a bill that he authored through the U.S. Senate. It would stop the lending from tribal lands in its tracks. "It simply says that you can't operate out of a tribal reservation or overseas, or anywhere else, and violate the state laws," Merkley said.

    If the bill becomes law, the Consumer Fraud Protection Bureau will also have the power to stop the loan sharks at the source, making it impossible for them to dip their electronic fingers into the bank accounts of anyone.

    Merkley expects a fight. He says lenders and their lobbyists will line up to stop the bill’s passage.

Sixth Defendant Sentenced, Gets 37 Months In Northern NJ Sale Leaseback Equity Stripping Racket


In Trenton, New Jersey, The Alternative Press reports:

  • What began as a joint investigation between the FBI and the IRS known as “Operation Follow The Money,” resulted in the subsequent arrest of several individuals, in July 2009, including Sussex County resident, Crystal Paling.

    On November 9, 2012, in a Trenton Federal Court, U.S. District Judge Peter G. Sheridan sentenced Paling, 52, of Sussex, to 37 months in prison, and imposed a three-year supervised probationary period. Paling was also ordered to pay $532,497 in restitution. [...] In March of 2012, Paling was found guilty of conspiracy to commit wire fraud, and money laundering, for her participation in a mortgage fraud scheme, that occurred in both New Jersey and Florida.
***
  • Per the original complaint, Paling and co-conspirators Daniel Verdia, 54, of Mahwah, N.J., Jaye Miller, of Pocono Lake, Pa., and Sandra Mainardi, 52, of Wayne, N.J., participated in a foreclosure bailout scheme working out of an office in Hasbrouck Heights, N.J. Between the periods of February and September of 2005 unsuspecting homeowners who were experiencing financial hardships, sought to either sell or refinance their homes.

    Homeowners were told that they would have the opportunity to repurchase their homes once they were in a more financially stable position. The homes eventually went into default, and the victim homeowners received little monetary return, or no compensation at all for their homes. Paling and her co-conspirators all profited from these transactions estimated at $1 million dollars.

    Paling facilitated these fraudulent transactions by recruiting buyers and sellers. She also falsified documents, and assisted in the transfer of monies.
***
  • After the arrests of the defendants in 2009, Wesyan Dun, FBI Special Agent in Charge, said of the individuals involved, "Those who are engaged in foreclosure bailout schemes are opportunistic thieves. The defendants in this matter are charged with preying on the financially weak and desperate, our lending industry, and ultimately the taxpayers. To swindle people out of the roofs over their heads is just deplorable. But we will continue working with our partners in uncovering these schemes, bringing the fraudsters to justice, and educating the public."
***
  • In addition to Paling, Verdia pled guilty to one count of conspiring to commit wire fraud, and money laundering. He was sentenced to 30 months in prison. Miller pled guilty to one count of conspiring to commit wire fraud, and money laundering, and has been sentenced to six months in prison. Apolito pled guilty to tax evasion, and was sentenced to five years probation. Robert Gorman, 64 of Long Valley, N.J., another defendant in the case, pled guilty to subscribing to false tax returns, and has been sentenced to two years probation. Mainardi received a 46-month prison sentence for her plea in Florida Federal Court to one count of wire fraud.(1)
For the story, see Sussex County Woman Receives 37 Month Prison Sentence For Committing Mortgage Fraud.

For the U.S. Attorney press release, see Sussex County, N.J., Woman Sentenced To 37 Months In Prison For Phony Mortgage Loan Scheme.

See Targeting Scammers Who Prey On Distressed Homeowners for a U.S. Attorney (Dist. of New Jersey) press release summarizing the sale leaseback equity stripping prosecutions brought by the office during the fiscal year ended September 30, 2012.

(1) For more on this type of foreclosure rescue ripoff, see:

Tuesday, November 27, 2012

Insurers To 'Sandy' Victims: 'It Was A Flood, Not A Hurricane!' Damage-Claiming Homeowners Without Flood Policies Told To Take A Hike!


In the Rockaways section of Queens, the New York Daily News reports:

  • Thousands of families still struggling in the aftermath of Sandy are learning that some insurance companies don’t seem to think the storm was a hurricane.

    Alex Savoie’s broker told her that her family’s Rockaways home was covered for hurricanes, so when Sandy trashed the place, she assumed she’d be okay.

    To Savoie’s surprise, the insurer said she wasn’t covered because the damage was caused by a flood — not a hurricane. Because she doesn’t have flood insurance, she’s out of luck.

    “They told me I’m at the end of the line,” Savoie, 41, said this week, standing inside the gutted remains of her first floor on Shore Front Parkway in the Rockaways. “The bottom line is very simple. I had hurricane insurance. It should cover a hurricane.”

    Homeowners in low-lying areas across the city have found themselves in the same situation. They’re turning to the feds in droves after their insurers won’t pay up.

    About 220,000 homeowners in New York City and Long Island have registered for emergency housing cash from the Federal Emergency Management Agency. FEMA has approved $557 million for homeowners. Some of the money is for temporary rent payments, but much of it is for emergency home repairs not covered by insurance. The insurance gap is an emerging issue along Savoie’s hard-hit stretch of Shore Front Parkway.

    The Oct. 29 Sandy surge busted up the boardwalk across the street, breaking it into thousands of wooden projectiles headed straight for their homes. A huge chunk of boardwalk slammed into Savoie’s three-story home. One long plank burst through her wall like a spear into a first-floor bedroom. The resulting hole allowed the Atlantic to bash its way in, tearing out walls and dragging in tons of beach sand.

    When Savoie and her partner, Peggyann Dubra, and their two small daughters returned after evacuating, they found the wall ripped apart and the house open to the elements.

    Savoie’s homeowners policy was typical, with coverage for “wind damage” and “falling objects” but not flood damage. She figured her home was covered for a huge piece of boardwalk crashing into her house.

    Before Hurricane Irene last year, she called her broker and was told that she was covered. But her Allstate adjuster showed up post-Sandy to say the plank that crashed through the wall was pushed by water, therefore the damage was, technically, from a flood. Allstate officials didn’t respond to requests for comment.
For the story, see Some insurance companies to Sandy victims: You are covered for hurricanes, not floods (To Alex Savoie’s surprise, the insurer said she wasn’t covered because the damage was caused by a flood — not a hurricane. Because she doesn’t have flood insurance, she’s out of luck).

For a similar story in neighboring Brooklyn on insurance companies stiffing their recently-victimized policyholders, see Storm-savaged Brooklynites fighting with insurers and the feds; free legal clinics offer them help (Thousands in need for legal help, official says):
  • An an Allstate adjuster said [homeowner Evelyn Droz'] water-logged lower floor apartment is a basement and isn’t covered — even though Droz’ policy specifies the two family-house has no basement.

State High Court Justice, Hubby Accused Of Doing Illegal 'Short Sale Shuffle' To Hide Title To Orlando-Area Abode While Unloading Underwater Michigan Mansion Gear Up To Fight Feds' 'Forfeiture-Snatch' Move


In Detroit, Michigan, the Detroit Free Press reports:

  • Michigan Supreme Court Justice Diane Hathaway, who is facing political pressure to resign amid a real estate scandal, isn't going down without a fight, her lawyer said.

    Hathaway, who is accused of hiding assets to justify a short sale of a $1.5-million Grosse Pointe Park home, is preparing to fight the forfeiture of a Florida home that federal prosecutors say was hidden from a bank to justify the short sale.

    "Justice Hathaway and her husband will certainly fight to keep their home, as would anyone else if the government tried to take their home," Hathaway's lawyer Stephen Fishman said Wednesday.

    Fishman's comments came a day after the U.S. Attorney's Office filed a civil complaint that says Hathaway and her husband, attorney Michael Kingsley, transferred a home in Windermere, Fla. to Kingsley's daughter before seeking a short sale of a home in Michigan. That short sale allowed Kingsley and Hathaway to erase nearly $600,000 in mortgage debt on the $1.5-million house in Grosse Pointe Park, which sold for $850,000, public records show.

    Hiding assets to justify a short sale can be considered illegal because it is done to defraud the bank or financial institution that holds the mortgage.

    Hathaway and Kingsley have not been charged [criminally]. The U.S. Attorney's Office declined to comment on whether she could be charged down the road, but noted that the forfeiture complaint is a civil matter, and that such complaints don't necessarily precede criminal charges.
***
  • According to the civil complaint filed in U.S. District Court, before Hathaway and Kingsley submitted a hardship letter to the bank in support of their request for a short sale, the couple "systematically and fraudulently transferred property and hid assets in order to support their claim to ING (Bank) that they did not have the financial resources to pay the mortgage on the Michigan property."

    The complaint says Hathaway and Kingsley quit-claimed the Florida property to Kingsley's daughter. The daughter then quit-claimed the property back to them after the short sale.

    The hardship letter was written Dec. 10, 2010. The house sold almost a year later.

Controversy Over County's Refusal To Allow Montana Couple To Sell Home Due To Interpretation Of Montana's Mortgage Parcel Exemption Law Reaches State High Court


In Missoula County, Montana, the Missoulian reports:

  • Say “mortgage exemption” and most eyes turn glassy. But the interpretation and application of the state statute are bubbling topics in Missoula County right now.

    So much so, in fact, that the county has taken a couple of its residents to the Montana Supreme Court in an attempt to overturn a ruling that District Judge Ed McLean issued late last year.

    Final briefs were filed and the case went to the high court on Nov. 2. There’s no sure way to predict, but a decision could be rendered by year’s end. Meanwhile, the Missoula Organization of Realtors held their first “tele-town hall” last week on the topic. More than 2,000 landowners were invited to dial in to learn if and how the case could affect them.

    “We actually had so many in the feed we couldn’t take them all,” MOR spokesman Austin James said.

    At issue is an interpretation of the transfer of mortgage exemptions – pieces of land broken off from larger properties for financing purposes.

    They’re perfectly legal, but they aren’t parcels that can be sold unless the bank or other lending institution forecloses on them.

    Because of some hazy language in the state statute, for years Missoula County and others in Montana recorded mortgage exemptions as legal parcels. Many still do, though an act by the 2003 Legislature removed all doubt of the intent.

    “It’s very, very clear under the law that a mortgage exemption does not create a parcel unless or until there’s foreclosure on it,” Missoula County deputy civil attorney James McCubbin said. “So the question is whether that was the case prior to 2003 when the statute was changed to make it abundantly clear.”

    The county says yes, that the legislative action nearly 10 years ago simply clarified the language of the existing statute.

    Rob Braach says no. The Missoula certified public accountant maintains the law was rewritten and that he and his wife Dawn should be allowed to sell the house they built on a mortgage parcel they bought in 2002, one that was approved by the county.

    When the Braachs attempted to sell their house off Reserve Street last year, the title company balked and sought advice from the county attorney’s office. McCubbin and his superior, chief civil attorney Marnie McClain, advised Clerk and Recorder Vickie Zeier not to record the deed since it wasn’t a legal parcel.

    “What that means,” said Ruth Link, chief executive officer of the Missoula Organization of Realtors, “is if somebody wanted to sell their property, despite the fact that they’ve owned it for years, the property technically never existed, even though it was created completely legally back before 2003.”

    James, MOR’s public affairs director, said he’s combed through the Certificate of Surveys and found some 390 properties in Missoula County that were created before 2003 through mortgage parcel exemptions. He said that only a handful of owners have tried to sell such parcels.

    “The first one to pop up and make a scene was Mr. Braach,” he said.

    When Zeier refused to record their deed, the Braachs enlisted Colleen Dowdall, a Missoula land-use attorney who was a deputy civil attorney for Missoula County from 1993-2006, to file suit.

    Because of this unusual retroactive interpretation, I suddenly was unable to sell my house, even though I had followed the law that was in effect at that time,” Braach told county commissioners in June. “We were forced, at considerable expense, to bring suit against the Missoula County Clerk and Recorder.”

    They were validated in district court by McLean, who ordered Zeier to record their parcel and also awarded the Braachs attorney fees of more than $27,000. The county was granted a stay of both actions pending the outcome of its appeal.

    McCubbin said there’s an easier way to do these things. “What we generally do is just agree with people to do a court-ordered split to recognize the equity of the situation for the purchaser,” he said. "I suggested to the title company we just go to court and get it done in a couple of weeks and be done with it.”

    The deputy county attorney said he doesn’t know why the Braachs and Dowdall didn’t choose that option, but it’s one his office will continue to offer for others who find themselves in the same situation.

    But according to James, a court-ordered subdivision doesn’t cut it for Missoula real estate agents or their clients. “The fact is, from the minute you sit down with the county attorney regarding your largest investment, you’ll need private counsel,” he said. “And the minute you speak to private counsel, you’ll have paid more than you ever should have been expected to in order to purchase that land.”

    The county’s decision to appeal to the Supreme Court was based on a couple of factors. “We didn’t feel that the judge’s order gave us a clear direction for future transfers,” Zeier said. Judge Jeffrey Langton ruled the other way in a similar case in Ravalli County a few years ago, McCubbin said.

    “Our feeling is that Judge Langton gave a very thorough legal analysis and was correct, and that Judge McLean did not give a correct legal analysis. It’s confusing and it’s unclear how it would implicate other properties. We felt we needed to appeal to make sure we had a clear understanding of the law.”

    By filing for a writ of mandamus in district court, the Braachs in essence claimed Missoula County was violating a clear legal duty. “That pretty much gives us no choice but to defend it,” McCubbin said. "We can’t very well say: Oh yeah, we violated a clear legal duty.”

    Link said that by appealing the Braach case to the state court level, the county is opening a can of worms – much as it did last year by pressing for Attorney General Steve Bullock’s take on Subdivision for Lease or Rent laws. Bullock’s sweeping opinion disappointed developers and Realtors.

    “We’re talking about one lawsuit, but when you think of Missoula County you’re talking hundreds of parcels,” Link said. “I can’t even imagine statewide how many parcels that could affect, and there’s just no reason for it. What is accomplished by this interpretation? That’s our question.”

    James said the county’s actions change the way landowners, investors and potential investors look at land in Missoula County. “When a buyer purchases a piece of property,” he said, “they do not buy it with the intent that their rights as citizens will change by a simple interpretation by whoever’s at the county attorney’s office.”

Feds Use Forfeiture Proceeding To Snatch Downtown NYC Condo Bought With Bribe Cash


In New York City, the New York Post reports:

  • Never mind the skeletons in the closet.

    The feds have taken ownership of a luxury Chelsea condo that was bought with bribe money paid to the former first lady of Taiwan.

    The two-bedroom apartment in the Onyx Chelsea, which sold for nearly $1.6 million in 2008, was one of two American properties that the family of ex-Taiwanese President Shui-Bian Chen bought to help launder the illicit payoffs.

    The $6 million pocketed by Sue-Jen Wu came from Yuanta Securities Co. to ensure her hubby’s government wouldn’t oppose its bid to acquire a financial holding company, according to US Immigrations and Customs Enforcement.

    A forfeiture deal with the shell company that held title to the condo and another property in Virginia means the feds will get some 85 percent of net sales proceeds.

Monday, November 26, 2012

Feds, Missouri AG Announce Guilty Pleas In Separate Criminal Prosecutions Of Ex-LPS Exec For Her Role In Flooding Property Recorders' Offices Throughout U.S. With Crappy Mortgage-Related Paperwork


From the U.S. Department of Justice (Washington, D.C.):

  • A former executive of Lender Processing Services Inc. (LPS) – a publicly traded company based in Jacksonville, Fla. – pleaded guilty [], admitting her participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States.

    The guilty plea of Lorraine Brown, 56, of Alpharetta, Ga., was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Middle District of Florida Robert E. O’Neill; and Michael Steinbach, Special Agent in Charge of the FBI’s Jacksonville Field Office.(1)

    The plea, to conspiracy to commit mail and wire fraud, was entered before U.S. Magistrate Judge Monte C. Richardson in Jacksonville federal court. Brown faces a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the crime. The date for sentencing has not yet been set.

    “Lorraine Brown participated in a scheme to fabricate mortgage-related documents at the height of the financial crisis,” said Assistant Attorney General Breuer. “She was responsible for more than a million fraudulent documents entering the system, directing company employees to forge and falsify documents relied on by property recorders, title insurers and others. Appropriately, she now faces the prospect of prison time.”

    “Homeownership is a huge step for American citizens,” said U.S. Attorney O’Neill. “The process itself is often intimidating and lengthy. Consumers rely heavily on the integrity and due diligence of those serving as representatives throughout this process to secure their investments. When the integrity of this process is compromised, illegally, public confidence is eroded. We must work to assure the public that their investments are sound, worthy, and protected.”

    Special Agent in Charge Steinbach stated, “Our country is increasingly faced with more pervasive and sophisticated fraud schemes that have the potential to disrupt entire markets and the economy as a whole. The FBI, with our partners, is committed to addressing these schemes. As these schemes continue to evolve and become more sophisticated, so too will we.”

    Brown was the chief executive of DocX LLC, which was involved in the preparation and recordation of mortgage-related documents throughout the country since the 1990s. DocX was acquired by an LPS predecessor company, and was part of LPS’s business when LPS was formed as a stand-alone company in 2008. At that time, DocX was rebranded as “LPS Document Solutions, a Division of LPS.” Brown was the president and senior managing director of LPS Document Solutions, which constituted DocX’s operations.

    DocX’s main clients were residential mortgage servicers, which typically undertake certain actions for the owners of mortgage-backed promissory notes. Servicers hired DocX to, among other things, assist in creating and executing mortgage-related documents filed with recorders’ offices. Only specific personnel at DocX were authorized by the clients to sign the documents.

    According to plea documents [], employees of DocX, at the direction of Brown and others, began forging and falsifying signatures on the mortgage-related documents that they had been hired to prepare and file with property recorders’ offices. Unbeknownst to the clients, Brown directed the authorized signers to allow other DocX employees, who were not authorized signers, to sign the mortgage-related documents and have them notarized as if actually executed by the authorized DocX employee.

    Also according to plea documents, Brown implemented these signing practices at DocX to enable DocX and Brown to generate greater profit. Specifically, DocX was able to create, execute and file larger volumes of documents using these signing and notarization practices. To further increase profits, DocX also hired temporary workers to sign as authorized signers. These temporary employees worked for much lower costs and without the quality control represented by Brown to DocX’s clients. Some of these temporary workers were able to sign thousands of mortgage-related instruments a day. Between 2003 and 2009, DocX generated approximately $60 million in gross revenue.

    After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country. Many of these documents – particularly mortgage assignments, lost note affidavits and lost assignment affidavits – were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions. Brown admitted she understood that property recorders, courts, title insurers and homeowners relied upon the documents as genuine.

    Brown also admitted that she and others also took various steps to conceal their actions from clients, LPS corporate headquarters, law enforcement authorities and others. These actions included testing new employees to ensure they could mimic signatures, lying to LPS internal audit personnel during reviews of the operation in 2009, making false exculpatory statements after being confronted by LPS corporate officials about the acts and lying to the FBI during its investigation. LPS closed DocX in early 2010.
For the U.S. Justice Department press release, see Former Executive at Florida-Based Lender Processing Services Inc. Admits Role in Mortgage-Related Document Fraud Scheme (Over 1 Million Documents Prepared and Filed with Forged and False Signatures, Fraudulent Notarizations).

(1) In a seperate prosecution, the Office of the Missouri Attorney General announced that Brown will also be pleading guilty to state criminal charges for her role in flooding the State of Missouri with bogus land documents.

For more, see St. Louis Post-Dispatch: Missouri Attorney General Chris Koster announces plea in mortgage forgery case.

Phoenix Condo Owner Who Paid Cash For Unit The Latest Victim Of Illegal Foreclosure Lockout; Fannie Reportedly Giggles About Screw-Up, Then Responds: 'Oops, It Was The Real Estate Agent's Fault!'


In Phoenix, Arizona, KTVK-TV Channel 3 reports:

  • A Phoenix man is outraged that he found himself locked out of this own condo. Kevin Hunter has a free and clear mortgage on his unit, since he paid cash. So he was shocked when he tried to get in one day, and his key didn't work. New locks had been installed on his doors.

    And now those new door locks have Hunter keyed up. “I'm mad,” he said. “It’s breaking and entering as far as I'm concerned!”

    The locks come from his west Phoenix condo that he paid cash for years ago. He rents the condo out. But since he doesn't currently have a tenant, only Hunter is supposed to have access inside.

    Apparently, that's not the case, because someone recently drilled out Hunter's locks and installed their own, preventing him from entering.

    “It looked just like this,” he said, pointing to his front door. “But none of it was mine. I have smart keys on it so every time I have a new renter I can rekey it without having a locksmith come. They drilled these out; they cut my lockbox off.”

    Hunter later found out that representatives from Fannie Mae were responsible for removing the locks and installing their own. Hunter says he spoke with the representative, who immediately acknowledged that a mistake had been made.

    They told me that they had drilled into the wrong unit. They drilled into 205 instead of 250 and laughed and thought it was funny,” he recalled.

    Turns out, Fannie Mae actually tried to take possession of Hunter's condo, unit 205, when they should have been at unit 250.

    Hunter immediately took Fannie Mae's locks off and put his own back on. But still, he says, he's outraged and feels that Fannie Mae should pay his $368 repair bill. “It’s public record who this belongs to and if it’s paid for or not,” he said.

    3 On Your Side wanted to know how Fannie Mae made such a mistake. Fannie Mae tells us unit 250 was in foreclosure and that was the unit they were attempting to take back. Fannie Mae representatives acknowledged when they went to Desert Breeze Villas, they mistakenly went to unit 205 instead, which is the unit which Hunter owns.

    But, Fannie Mae blamed the confusion on a real estate company called West USA Realty, which cut Hunter a check for $368, the amount he spent to repair his locks.

    Kevin says it was the right thing to do.(1)
Source: Locks changed at wrong home being called a mistake.

(1) For Kevin and other 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:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

Lawsuits Accusing MERS Of Mortgage Assignment Recording Fee Ripoffs Continue


In Multnomah County, Oregon, The Oregonian reports:

  • Emotional testimony from people who recently lost houses through bank foreclosures punctuated a meeting Thursday, during which Multnomah County's commissioners voted to proceed with a lawsuit against a mortgage giant linked to countless foreclosures nationally.

    The lawsuit, expected to be filed within weeks in Multnomah County Circuit Court, will seek damages for allegedly unpaid document-recording fees from Mortgage Electronic Registration Systems, or MERS.
***
  • Although MERS has been previously sued in Oregon by private parties and by counties in other states, this lawsuit will mark the first time an Oregon county has moved ahead with legal action.

    The lawsuit will claim that MERS has avoided paying anywhere from $3 million to nearly $25 million in local recording fees. The actual amount will be determined by how many mortgages are involved, how many times each of those mortgages was bought and sold without new transaction fees being paid, and by laws that may allow triple damages in certain instances.

Sunday, November 25, 2012

Diabetic Homeowner, Disabled Son Unable To Dodge Surprise Pre-Thanksgiving Foreclosure Boot Despite Having Received Dec. 31 Loan Mod Review Deadline In Writing From Bankster


In Miami, Florida, WPLG-TV Channel 10 reports:

  • A Northwest Miami-Dade woman evicted from her foreclosed home spent Monday night sleeping on the driveway along with all the belongings from her house. "I can't believe this. I'm in complete total shock," said Santa Rosa Armas.

    Armas, 53, said police knocked on her door at 8565 NW 5th Ter. and evicted her, her disabled son, her four cats, and removed her things from the house she had called home for nearly a decade. "Honestly, I don't feel like I'm living in Miami or the USA. I feel like I'm in Germany with Hitler people," she said.

    Armas showed Local 10's Baron James documents that list a deadline date of December 31, 2012, to finalize the latest in a series of mortgage modification reviews so that she could try to keep her home. She stopped making payments back in 2007.

    Many of her neighbors were shocked by the way the eviction happened. Some neighbors stopped by to help Armas, who is a diabetic with a heart condition on disability, sort through her things to trash some and hopefully store the rest.

    "It's three days before Thanksgiving. It's just very difficult to watch this," said Carmen Corzo. "Families sometime have to wait on a list for years before they get assistance, and to see someone, especially an elderly woman, on the street and all her belongings, it really breaks my heart."

    "I think it's really hard. I would be willing to help her store some of her stuff," added Jeanette Suarez. "I feel total frustrated. I want someone to help me, please," Armas said. Her disabled son spent the night with his father, Armas' ex-husband.
Source: Woman's furniture tossed out into street (Santa Rosa Armas forced to sleep in her driveway).

Low Income Tenants Face Pre-Xmas Boot As New Landlord Announces Renovation Plans For Premises


In Fort Lauderdale, Florida, WTVJ-TV Channel 6 reports:

  • Residents at a Fort Lauderdale apartment building have 20 days to find a new home. "It's rough, Christmas coming, Thanksgiving coming, and we got to get out on Dec. 1," Robert Newkirk told NBC 6 South Florida.

    Newkirk and other residents received a letter from the new owner of the apartments, located near Broward Blvd. and Interstate-95, telling them to be out by the first of the month. "We are animals to them, and we get kicked out like a dog," said Chester Goode.

    Goode has lived in the building for about 12 years. The Florida Asset Network sent a letter in Sept. saying it was a pleasure to notify residents of new ownership, but the tone of a letter six weeks later was absent of niceties.

    "We do have a veteran living here on the property -- one of Uncle Sam's men -- how do you think he feels?" Goode asked. He and the others don't have leases, but some are seniors citizens and all are low income.

    "If we would've had more time, you could've saved a little bit of money and then try to get you another place to stay and stuff like that, but other than that there's nothing we can do," Newkirk said.

    The building is on a boulevard once notorious for drugs and crime, in which millions of dollars have been spent sprucing it up. Residents understand the plan to renovate the building, but not the 20 days to get out. "This is the first year in 59 years I will not have a Christmas for this situation, and it's not fair to me," Goode said.
Source: Fort Lauderdale Apartment Residents Have 20 Days to Find a New Home (Chester Goode told NBC 6 South Florida he feels he's getting kicked out like a dog).

Elderly Couple Get Sudden Boot From Mobile Home Despite Prompt Payments; 20+ Others Face Similar Fate From Same Trailer Park


In Miami, Florida, WTVJ-TV Channel 6 reports:

  • A 79-year-old woman who said she's grown old with her husband in their Northwest Miami-Dade trailer home is now facing eviction. "I want to go to bed and never wake up," Margarita Giron told NBC 6 South Florida in Spanish.

    Giron said her life has been turned upside down ever since she received the notice. She is terrified of being kicked out from the Royal Duke Trailer park, located off Northwest 30th Avenue and 36th Street, and doesn't understand why she would be evicted.

    "They've been paying every month for the last year to the Clerk of the Courts, they haven't been able to evict them, but the guy came over, got $3,000 from them and told them not to pay the court anymore, to pay them," said foreclosure specialist Luis Valdeon.

    Valdeon, who usually works with foreclosure victims, has taken an interest in the case. He said the $3,000 the couple paid the trailer park owner was for code violations. Then, he said, the couple started paying the owner rent, but the checks were returned shortly before the eviction notice.

    "So what I fear is that they're trying to get rid of all the elderly people and all the people that live in this trailer park to make room for something else," said attorney Aleco Haralambides.

    Haralambides said there are more than 20 residents being evicted from the same trailer park.

    The residents facing eviction complain they are constantly being fined for violations even though the entire park is in deplorable condition.
Source: Man and 79-Year-Old Wife Face Eviction From Trailer Home (Foreclosure specialist Luis Valdeon said the couple has been paying the Clerk of Courts every month for the last year).

Law Students Step Up In Effort To Block Mobile Home Park Closure; 30+ Residents Owning Unmovable Homes On Rented Land Fear Pre-Holiday Boot


In Fort Morgan, Colorado, the Fort Morgan Times reports:

  • Dozens of young families and senior citizens living in a Fort Morgan mobile home park face eviction, and losing everything they have worked for, just days before the holidays.

    University of Denver Sturm College of Law student lawyers [] filed court documents seeking to block the proposed mobile home park closure and force park operators to provide clean, safe drinking water.

    The students are part of Denver Law's Environmental Law Clinic, working under the guidance of Professor Michael Harris. Their motion filed in District Court in Larimer County on Tuesday, Nov. 20 is aimed at holding up a complicated foreclosure, the result of owners who have left residents to live in conditions described as "deplorable" for at least the past two years.

    Rather than fixing the park's problems, including unsafe drinking water, the park owners are trying to terminate leases and force the families off the park.

    The situation involves more than 30 residents of the Wayward Wind Mobile Home Park west of Fort Morgan near Interstate 76.

    For at least the past two years, water at the park has been unsafe to drink or cook with, and residents have had to obtain water from a nearby service station. Residents have reported becoming ill simply from bathing in the water, which officials confirm is tainted with uranium, nitrate and other contaminants.

    After repeated violations and complaints and multiple changes in management, the park has slipped into foreclosure and residents are being ordered off the land. The result is extreme hardship for families and seniors who own their own mobile homes, but cannot afford to move them or find parks in the region to relocate.

    Attorneys argue the residents not only face logistical hardships through no fault of their own, they risk losing everything they have invested in their homes.

    "For well over two years now, the residents of this park have been unable to drink or cook with the water coming out of their own tap. Instead of complying with the law, the defendants, and now the receiver, have chosen to forego fixing the problem and instead to evict these people," court documents filed by the student lawyers state. "This is not only a misuse of the Colorado Mobile Home Park Act, but it is also inhumane. Not only are these evictions to occur during the holiday season, the residents have little means to move. Many have invested their hard earned savings into purchasing and improving their mobile homes."
For the story, see DU law students file suit in Wayward Wind foreclosure (More than 30 residents of mobile home park west of Fort Morgan affected).