IRS Eases Tax Rules On Mortgage Securtization Trusts That Engage In Loan Modifications Aimed At Reducing Foreclosures

Mondaq.com reports:

• Many pools of mortgages are held in tax advantaged entities that qualify for tax purposes as REMICs that avoid double taxation under the Internal Revenue Code. But for an entity to qualify as a REMIC, the pooled mortgages must be basically treated as static pools of mortgage loans. Loan modifications could force a REMIC to lose its favorable tax treatment, and once REMIC status is lost, it is lost forever. This means that REMIC efforts to minimize foreclosures through loan modifications can threaten favorable tax status of the REMIC and its owners.

• To address these risks, the Internal Revenue Service and U.S. Department of the Treasury have taken actions to expand safe harbor rules that apply to REMICS. Through a number of recently issued revenue procedures, the IRS has provided assurances that REMICs can retain their favorable tax status when mortgage servicers make certain loan modifications as part of programs aimed to reduce foreclosures. The safe harbors allow REMICs to engage in certain, previously prohibited activities that in the past could have resulted in significant tax penalties.

For more, see Relaxed REMIC Requirements: IRS And Treasury Efforts To Address The Subprime Mortgage Crisis.

NJ To Take Statewide Approach To Mandatory Mediation Program In Owner-Occupied Home Foreclosure Actions, State Chief Justice Says

The New Jersey Judiciary announced:

• [New Jersey Supreme Court] Chief Justice Stuart Rabner [last week] announced the roll-out of a statewide Judiciary program to assist homeowners in foreclosure actions. The program will provide mediators to help homeowners and lenders negotiate with one another and try to work out agreements to avoid foreclosures.

• Chief Justice Rabner said, “While the courts must remain neutral in all foreclosure matters, it is in everyone’s best interest to have a forum where homeowners facing foreclosure have the opportunity to negotiate to save their homes. Our goal is to get lenders and borrowers to meet at the table and work out a mutually beneficial arrangement. I encourage continued cooperation among the courts, lenders, borrowers, and the bar as we address the increasing number of foreclosure actions in New Jersey in today’s difficult economic times.”

• Under the program, the courts will require mediation in all cases in which homeowners contest owner-occupied foreclosure actions. Volunteer mediators will meet with eligible homeowners and their lenders in an effort to resolve the foreclosure action and renegotiate the terms of mortgage agreements.

For more, see Judiciary Announces Foreclosure Mediation Program to Assist Homeowners at Risk of Losing Their Homes.

Florida Court To Impose Formal Conciliation Process Upon Lenders In Home Foreclosure Actions

In Sarasota, Florida, the Herald Tribune reports:

• As more and more Florida homeowners slip into foreclosure, the law firms handling the cases for the banks have become harder to reach, those familiar with the system say. Homeowners and their attorneys, and even judges, cannot get a call back, making it impossible to dispute a debt or work out deals other than foreclosure until the case is in front of a judge. "The lenders are just not talking to them," Chief Circuit Judge Lee Haworth said.

• Now, Haworth and other 12th Judicial Circuit court judges are going to force those law firms to meet with the homeowner within 45 days for a frank discussion on alternatives to foreclosure. Those discussions could center around refinancing, forgiving part of the debt or clarifying the amount required to reinstate or pay off the loan.

• The Homestead Foreclosure Conciliation Program will start in December. It aims to keep people in their homes and reduce the strain on the court system from foreclosure cases, which are on pace to double this year compared with 2007. The program applies only to property registered as a primary residence under the homestead exemption. Local bar associations and legal aid organizations agreed to provide some attorneys to assist those homeowners during the meeting at no cost.

• The law firms representing lenders are also required to notify any homeowner of the program, contact them and invite them to participate. The large increase in foreclosures has strained almost every part of the foreclosure process, from serving legal papers to finding courtroom time. Coming to a solution within 45 days would avoid protracted legal battles and reduce the number of cases going through the system.

• Those long legal battles seem to be the only way to get law firms representing banks to return calls, Miami-based foreclosure attorney Rick Neustein said. "Most of the time they don't want to talk to us until they see this thing is being hotly contested," Neustein said. "They don't get serious until we're defending the foreclosure for nine months."

• Haworth said the main issue is only a small number of law firms handle the foreclosure cases for the banks for small legal fees, so they want to put as little time as possible into a case.(1) If the law firms do not comply with the new order, they will face courtroom sanctions that would cost them money, since it would take their attorneys more time to handle the cases.(2)

For the story, see Lenders told they can't hide (if there's a problem with this link, try here).

For more on the new foreclosure procedural rules in Florida's 12th Judicial Circuit, see:

• Administrative Order Establishing Circuit-Wide Homestead Foreclosure Conciliation Program.
• Attorney's Certificate of Compliance With Twelfth Circuit Homestead Foreclosure Conciliation Program.
• Chief Judge's Letter Summarizing New Foreclosure Procedures & Administrative Orders.

Go here for Notice To Attorneys Filing Foreclosure Actions in Florida's 12th Judicial Circuit.

(1) Go here for more on so-called Assembly Line, Foreclosure Mill Lawyering in foreclosure actions.

(2) According to the story, the law firms for lenders would not be able to settle the case through a summary judgment, a quick resolution to cases. The lender attorneys would no longer be able to appear at hearings over the telephone. And that lender's cases would be assigned the lowest priority for court hearing times, which may delay the case for an extended period. ForeclosureMillAttorneysAlpha

Lawmaker To Attempt To Lift State Homestead Exemption Limit To Attract Wealthy To Move To Nevada

Buried at the end of a story on a proposed new law to safeguard Nevada tenants unwittingly renting homes from landlords in foreclosure, the Las Vegas Sun reports:

• [L]egislators and local governments so far have asked that 633 bills be drafted for introduction next year. [One] recent request comes from Assemblyman Morse Arberry, D-Las Vegas, who wants to remove the cap of $550,000 on homestead exemptions.(1)

• The law protects the forced sale [except for mortgage foreclosures] of a home whose value is up to $550,000 to recover a debt if the property has been designated as a homestead. The 2007 Legislature raised the homestead exemption from $350,000 to $550,000.

• And Arberry said he is working on a bill to eliminate the cap as a way to attract rich people to locate in Nevada. Otherwise if these affluent people had a $1 million home that was designated as a homestead, it would be shielded from judgments to collect any debt [except home mortgages and certain other debts].

• The present law provides that if the home is worth more than $550,000, a judge must appoint three independent appraisers to value the home. If it exceeds the homestead exemption permitted, the judge must decide whether any part of the property can be sold to satisfy the debt without “material injury” to the home. If the judge decides the property can not be divided, than [sic] he can order home sold and the money divided between the creditor and the homeowner.

For the story, see Bill to protect renters in foreclosure cases.

(1) If successful, Nevada will be eligible for induction into the Homestead Exemption Hall of Fame, joining the great states of Florida, Texas, Oklahoma, Kansas, and Iowa who likewise impose no dollar limit on the amount of home equity (ie. loosely defined for homestead exemption purposes, as home value less existing home mortgages, unpaid real estate taxes, IRS tax liens, and unpaid home improvement costs - check the relevant state law for the exact specifics) a state resident can play "keep away" with when fending off unsecured general and judgment creditors seeking repayment of debts they've been stiffed on. There are, however, limitations based on property size, such a limit may depend on whether the home is located within or outside of an incorporated municipality (or, in the case of Texas, whether state law considers the homestead to be an "urban homestead" or a "rural homestead").

Extortion Sting Results In Charges Against Maryland Man For Allegedly Trying To Squeeze $5K From Winning Bidder At Foreclosure Sale

In Elkton, Maryland, The Associated Press reports:

• The Cecil County Bureau of Investigation has charged an Edgewood man with extortion for allegedly demanding money from the winning bidder in a home foreclosure auction. Authorities say 48-year-old Frank Wilhelm telephoned the winning bidder one day after the auction and threatened to challenge the sale unless he was paid $5,000. Lt. Bernard Chiominto says challenging the sale would have frozen the bidder's payment, possibly for months.

• Wilhelm was arrested last Thursday in Perryville, after the winning bidder contacted police and helped them set up a sting. According to Chiominto, Wilhelm told investigators that he had heard that winning bidders "usually pay up" when threatened with a contested auction sale.

Source: Edgewood man faces extortion charge.

Professional Conflicts Of Interest An Obstacle For Some Attorneys In Pro Bono Foreclosure Fight

American Banker reports:

• As the mortgage crisis deepens, lawyers around the country are volunteering to help distressed homeowners avoid foreclosure, but those with the most relevant experience often face the potential for conflicts of interest involving lender clients. [... G]etting involved has [...] created a delicate situation for some of the largest law firms, which have the most staff to contribute to such projects — but often represent major lenders.

***

• The conflict-of-interest question was particularly urgent for the Lawyers' Foreclosure Intervention Network, a New York pilot program that had to negotiate a structure that would satisfy the state's laws and the city's high concentration of major financial institutions — and the major law firms that represent them. [Read the New York City Bar's Ethical Opinion on Firms Handling Foreclosure Matters Pro Bono].

For more, see Homeowner Legal Aid Programs Address Conflicts.

Connecticut Renter Facing Foreclosure Eviction Invokes New Bailout Law In Attempt To Fight Off Fannie

In Hartford, Connecticut, The Hartford Courant reports:

• Four days after Evelyn Colon paid the September rent for her Hartford apartment, a U.S. marshal knocked on the door. He handed her a notice that she had to be out in a month. Fannie Mae, the huge mortgage financier, had foreclosed on her building and was evicting Colon and two other tenants.

• Colon is now fighting her eviction in what her attorneys believe is the first court challenge in the country to use a provision(1) deep within the government's $700 billion bailout legislation to seek protection for renters facing eviction after foreclosure. She will be able to stay in her apartment while the case is litigated.

***

• Colon's attorneys at Greater Hartford Legal Aid Inc., an agency that helps low-income clients, are arguing that Fannie Mae became a federal agency when it came under the control of the Federal Housing Finance Agency Sept. 7 and is therefore bound by the financial services bailout legislation.

For the rest of the story, see Hartford Tenant Fights To Stay In Home After Foreclosure (if link expires, try here or try here).

See also, WTNH-TV Channel 8: Renter fights back against foreclosure:

• "Basically we've asked the court to throw this case out, the eviction, out of court, or, if the court doesn't feel comfortable doing that, to kind of put things on pause until the Treasury or another federal agency, perhaps the F.H.F.A. (Federal Housing Finance Agency), issues a policy statement saying what does the language in the Bailout Bill mean," said Stephanie D'Ambrose from Greater Hartford Legal Aid.

(1) Section 109(b) of the Federal bailout bill may require the U.S. Secretary of the Treasury to work with the F.H.F.A. and other government entities to permit tenants like Evelyn to remain in their apartments after foreclosure. BetaTenantRentSkimming

L.A. Official Calls For Stop To Illegal Foreclosure Evictions; Lender Accused Of Stiffing Booted Tenants Out Of $7K "Relo Fee" Required By City Law

In Los Angeles, California, CBS 2 reports:

• Los Angeles City Council President Eric Garcetti called Friday on Countrywide Home Loans to stop the practice of evicting tenants from apartment buildings that have gone into foreclosure. The councilman pointed to the case of Johnny Lee, who lives in a triplex in Echo Park. Following foreclosure, Countrywide allegedly pressured Lee to leave the apartment and offered him a $2,000 relocation fee. City law requires a $7,000 fee in such cases, according to Garcetti.

• A representative for Countrywide was not immediately available for comment. "It's really frustrating, and I feel like I was duped," Lee said. "I had no idea that this was illegal and that I had a right to stay or to a minimum amount of money. In fact, I was told I would have to be out within 30 days and didn't have the right to any money, even my security deposit," he said. "I encourage others in this situation to learn more about their rights as tenants."

• In a letter to Countrywide, Garcetti said the Calabasas-based company attempted a similar eviction earlier this year in South Los Angeles. "Months later, it appears that Countrywide and its agents continue to violate city law by illegally pressuring tenants to vacate foreclosed properties and offering relocation fees below what is required by law," Garcetti wrote. "I am writing to ask that your company cease and desist illegal foreclosure-related eviction practices immediately. In addition, Countrywide must bring its eviction practices and guidelines into compliance with the city's Rent Stabilization Ordinance."

Source: Councilman To Countrywide: Stop Illegal Evictions.

See also: Countrywide to EP tenants: get moving. BetaTenantRentSkimming

Forensic Loan Review Firms Begin To Pop Up Offering To Find Errors In Loan Docs For Homeowners Fighting Foreclosure

A syndicated column in the Los Angeles Times reports:

• Homeowners who are having difficulty getting the attention of their lenders to discuss their troubled mortgages might want to obtain a forensic loan review to determine if their lenders made any mistakes when the mortgage was issued.

***

• In a forensic loan review, a legal pathologist scours your loan documents looking for errors in, among other things, the truth-in-lending statement the lender provided shortly after you applied for your mortgage and the lender's annual percentage rate calculation so you could compare loan costs. If the truth-in-lending statement doesn't match the HUD-1 closing-cost sheet you received at closing, if the APR is off by just a hair, you might have cause for legal action against the lender.

For more, see Errors in loan documents can save strapped homeowners (Even small mistakes in the paperwork may give borrowers the legal leverage to persuade lenders to rework their mortgages).

----------------

For a recent story of a foreclosure mitigation company which offers to audit and find errors in loan documents and promises homeowners help in fighting foreclosures, and which is now being sued by the Florida attorney general for alleged deceptive practices and the unauthorized practice of law, see:

• Lauderdale firm didn't deliver mortgage relief, state suit alleges (Lauderdale company denies wrongdoing and says it was let down by law firms it trusted to help individuals),
• Broward Foreclosure Debt Mitigation Company Sued for Deceptive Practices. UndoMortgageLoans TILAdelta

Texas Man Sues To Void Deed In Alleged Land Swindle

In Beaumont, Texas, The Southeast Texas Record reports:

• A Jefferson County man has filed suit against a Beaumont couple and the woman's mother, claiming their conspiracy against him has forced him to lose property that belongs to him. Glen Ray Waldrop claims he is the owner of 3.27 acres located [...] in Beaumont.

• He entered into what he believed to be a contract for deed with Jeff Allen and Theresa Ann Theal in May 2001, according to the complaint filed Oct. 21 in Jefferson County District Court. In the contract for deed, Waldrop believed the Theals would purchase the property through monthly installments, the suit states.

***

• In fact, the document Waldrop signed was a general warranty deed, transferring ownership of the property to the Theals, he claims. [...] Waldrop knew nothing about the general warranty deed or [the mother's] role until the Theals ceased their monthly payments in April 2007, the suit states.

For more, see Disabled man claims he was swindled out of property by local couple.

Go here, go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc. DeedTheftAlpha

Iowa Widow Seeks To Stop Foreclosure, Void Deed & Mortgage; Claims Now-Deceased Husband Forged Her Signature On Legal Documents

In Polk County, Iowa, the Des Moines Register reports:

• Ed Boesen's widow says she has rights to two commercial properties because her husband forged her signature on a loan document and a property transfer document. Maureen Boesen is asking a judge to clear the titles on two properties despite more than $5 million worth of defaulted loans on them.

• Lawyers for Maureen Boesen, as well as James Monroe, attorney for the Boesen estate, made the claim in Polk County District Court in response to two lawsuits filed by lenders against Boesen's estate. The lawyers contend Ed Boesen forged his wife's signature on a mortgage document on one of the properties and on a deed transfer on the other.

• "Maureen Boesen asserts she owns the property and that the signatures on documents are without her authority," a motion filed last week by her lawyers says. As a result, neither loan is valid, the lawyers claim.

For more, see Boesen widow alleges forgery.

Go here to compare Mrs. Boesen's actual signature with those that were allegedly forged.

Go here, go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc. DeedTheftAlpha

Feds, 23 States Join In "Operation Clean Sweep" In Attempt To Nail Credit Repair, Loan Modification, Debt Relief Operators

From the Florida Attorney General's Office:

• Attorney General Bill McCollum [last week] announced Florida’s participation in a collaborative effort targeting credit repair operators, many of which deceptively claim they can remove any and all negative information from consumers’ credit reports.

• The Federal Trade Commission (FTC) and 23 states joined forces in Operation Clean Sweep, a nationwide initiative to address this consumer protection issue. “Whether through credit repair, debt management, debt settlement, or interest rate reduction schemes, it is unacceptable to deceptively convince consumers facing financial distress to part with their money,” said Attorney General McCollum. Collectively, the FTC and the states took actions against 36 companies engaged in potentially deceptive or misleading conduct.

For more, see Florida Joins FTC, States Targeting Credit Repair Operations in "Operation Clean Sweep."

See also: Palm Beach Post: Claims of debt fraud soaring (Until he can persuade lawmakers to impose rules, Florida Attorney General Bill McCollum hopes lawsuits his office has filed and its investigations "send a message to this industry that preying on consumers in financial distress will not be tolerated.").

For the Florida AG's recent press release on a recent civil suit filed in this regard, see Broward Foreclosure Debt Mitigation Company Sued for Deceptive Practices.

Mortgage Loan Modification Companies Beginning To Draw Attention From Feds, Lawmakers

In Modesto, California, The Modesto Bee reports:

• The Justice Department is gearing up to probe potential scams targeting distressed homeowners in the San Joaquin Valley. On Friday, Rep. Dennis Cardoza, D-Merced, urged Attorney General Michael Mukasey to investigate mortgage-reduction schemes marketed in the region.(1)

• For an upfront fee, homeowners are being told their monthly mortgage payments can be renegotiated. At best, the homeowners may end up paying for work that's available for free. At worst, they'll pay for work that isn't done at all.

***

• The questionable solicitations come in different ways. Phone calls offering mortgage negotiation services have been ringing through the San Joaquin Valley for several months. [...] Official-looking letters are arriving in valley mailboxes, some citing congressional bill numbers or phone numbers for a "loss mitigation department."

• And Thursday in Modesto, some homeowners attended a workshop in which they were asked to pay $3,500 to get their mortgage woes resolved. Typically, the companies offer to renegotiate a mortgage in exchange for an upfront fee amounting to one month's mortgage payment, or more.

For more, see Loan-help schemes scrutinized (Claims to fix mortgages for fee set off red flags for the feds and Cardoza) (may require free registration).

(1) It may be that, in California, the services marketed by these operators may already be regulated under the state law regulating the conduct of foreclosure rescue operators who provide mortgage consulting services to financially distressed homeowners. The law, among other things, specifically prohibits the collection of an upfront fee. For the law, see California Mortgage Foreclosure Consultants Act - Section 2945 through Sction 2945.11 of the California Civil Code, as recently amended this year by AB 180, Mortgages: foreclosure consultants.

Arizona BBB Warns Of Possible Loan Modification Scams

The Better Business Bureau of Greater Arizona reports:

• In today’s economy, most homeowners would welcome a lower interest rate on their mortgage, which could result in a lower monthly payment. This has opened the door for loan modification companies to take advantage of consumers more than ever.

• Better Business Bureau is receiving reports from concerned Arizona consumers who are being solicited by unknown companies offering to help them reduce the interest rate on their mortgage loan.

• “The majority of the consumers being targeted by phone tell us they have never been late on their payments and are not even close to facing foreclosure,” said Matthew Fehling, President/CEO of BBB. “Consumers are being advised by these companies to stop making their mortgage payments and negotiate a lower interest rate. This is a definite red flag,” added Fehling.

For more, see BBB Warns Consumers about Loan Modification Phone Calls.

Reports Of Hedge Fund Threats Against Loan Servicers Making Loan Modifications Outrage Lawmakers

In Washington, D.C., Politico reports:

• Barney Frank is not happy with hedge funds. Specifically, he and other top House Democrats are “outraged” that some hedge funds are telling mortgage service companies not to modify distressed mortgages with the help of the government program Frank helped craft.

• The New York Times reports that at least two hedge funds told servicers they might take action against them if the servicers participated in the government program to help homeowners avoid foreclosure. The program, which became law in July, just took effect at the beginning of October.

• Frank (D-Mass.) and four other Democratic members of his Financial Services Committee wrote an angry letter to the CEOs of the hedge fund companies named in the article, Braddock Financial Corporation and Greenwich Financial Services. The lawmakers wrote that they “strongly urge” the companies to reverse their position on the modification issue and informed each CEO that they’re scheduling a Nov. 12 hearing at which both will be asked to testify.

For more, see Frank threatens financial industry, calls hearing.

See also:

• House Financial Services Committee press release: Lawmakers Demand Hedge Funds Drop Opposition to Foreclosure Prevention,
• Letter to Braddock Financial Corporation,
• Letter to Greenwich Financial Services,
• Letter to Managed Funds Association.

Disbarred Florida Attorney Gets 10 Years For His Part In Alleged Sale Leaseback, Foreclosure Rescue Scam That Defrauded 50+ Homeowners

In Tampa, Florida, WTSP-TV Channel 10 reports:

• A federal judge has sentenced a disbarred lawyer to ten years in prison on his guilty plea to a mortgage scheme that stole the equity from more than 50 homeowners. Graham Daniel Kligerman, 34, of Clearwater, was also ordered to pay $6.5 million in restitution. The U.S. Attorney's office said Kligerman was part of a mortgage foreclosure rescue scheme that defrauded more than 50 homeowners.

For more, see Disbarred lawyer sentenced in mortgage fraud.

See also:

• U.S. Attorney (Tampa, Florida) Press Release: Clearwater Man Sentenced To Ten Years For Mortgage Fraud,
• The Tampa Tribune: Clearwater Lawyer Gets 10 Years For Real Estate Scam,
• St. Petersburg Times: Disbarred Clearwater lawyer gets 10 years in Florida mortgage scheme,
• Original Criminal Complaint - U.S. v. Kligerman,
• Go here for more on Graham Kligerman.

Go here for criminal prosecutions of foreclosure rescue operators and home equity scammers.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

DC AG Settles Civil Suit With Title Closing Agent In "Money Store" Equity Stripping, Sale Leaseback Foreclosure Rescue Scam

In Washington, D.C., the Office of the District of Columbia Attorney General announced:

• Acting Attorney General Peter Nickles announced [yesterday] that the District has entered into a consent order with a title settlement company and its principal which participated in the Metropolitan Money Store mortgage rescue scam. The companies, Regional Title & Escrow, LLC and RTE Title LLC, and their principal, Valeria Tomlin, are permanently prohibited from performing settlement services in the District and will pay $575,000 to homeowners in the District of Columbia and Maryland who were stripped of title and substantial equity in their homes. The settlement is subject to approval by the DC Superior Court.

• The District’s complaint alleged that Tomlin and her title companies performed settlement services and otherwise participated in mortgage loans they knew were not bona fide. In entering into the consent judgment, Tomlin and her title companies denied that they engaged in wrongful conduct.

[...]

• The complaint also alleges that Metropolitan Money Store conducted a major mortgage rescue scam in which it targeted 25 homeowners in the District of Columbia. As part of a “Foreclosure Reversal” scheme, Metropolitan Money Store and others falsely promised to help the homeowners avoid foreclosure, keep their homes, and repair their damaged credit. Metropolitan Money Store then diverted proceeds from purported sales of these homes to itself and related companies.

• The District continues to seek relief for victimized homeowners from other defendants in its lawsuit filed in Superior Court, District of Columbia vs. Metropolitan Money Store, et al., Civil Action No. 6023-07 B.

For the D.C. AG's press release, see District Announces Agreement With Title Settlement Company in Mortgage Rescue Scam.

Go here and go here for other posts on the alleged Metropolitan Money Store foreclosure rescue scam. joyjackson

NJ AG Targets 39 In Suits Alleging Equity Stripping, Sale Leaseback Scams; Involved $13.5M In Bogus Loans & 48 Homeowners Screwed Out Of $3M+, Says AG

In Bergen County, New Jersey, The Star Ledger reports:

• Forty-eight New Jersey property owners have lost more than $3 million in home equity through "foreclosure rescue" schemes operated by Vest Financial and JP Global Property Management Inc., according to civil lawsuits filed by the state Attorney General's office.

• The lawsuits accuse the two companies, as well as 37 mortgage loan providers, mortgage industry employees, lawyers and others of violating the state's Consumer Fraud Act and the Racketeer Influenced and Corrupt Organizations Act. The state is seeking restitution for the property owners, penalties and permanent bans to keep them offering similar schemes to others.

***

• [New Jersey Attorney General Anne] Milgram said the companies preyed on desperate homeowners behind on their mortgages by persuading them to sell their properties to third-party investors as part of complex "sale and lease-back" schemes. [...] Vest Financial and JP Global never followed through on their promises. Instead, Milgram said, the companies stripped the homes of their equity value through the scheme and left the homeowners with no means to pay rent and with ruined credit histories.

For more, see State accuses firms of running predatory 'foreclosure rescue' schemes.

See also: Legal Newsline: Milgram: Foreclosure rescue schemes nothing but fraud ("Milgram says the defendants used predatory foreclosure rescue schemes to convince homeowners to sign over their homes, obtained at least $13.5 million in fraudulent loans and stole at least $3 million in homeowner equity.").

From the New Jersey Attorney General's office:

• NJ AG's lawsuit #1: Milgram v. Vest Financial LLC, et al.,(1)
• NJ AG's lawsuit #2: Milgram v. JP Global Property Management, Inc., et al.,(2)
• NJ AG's press release: Attorney General Sues Foreclosure Rescue Operations for Fraud and Racketeering (Defendants Allegedly Preyed on Homeowners Desperate to Avoid Foreclosure).

Go here for criminal prosecutions of foreclosure rescue operators.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

(1) The Defendants in this lawsuit are: Vest Financial, formerly of Paramus; Metropolitan Mortgage Services, Inc., of Cliffside Park; Alex Armani of Cliffside Park; Sohrab Moussavian of Englewood; Anthony Scordo III of West Orange; Felix Nihamin, an attorney who resides in Franklin Lakes and practices in New York City; Francis A. Ciambrone, an attorney with law offices in Paramus; Rhys A. Herrmann, of Belleville; JP Global Property Management LLC of Bloomfield; Peter H. Eckhardt, Jr. of Livingston; Philip Altieri of Flemington; Kristopher Pilone of Manalapan; DBK Realty Investments LLC of Edison; Tom A. Andriopoulos of Washington Township (Bergen County); Settlement Source, LLC of Edison; Vivian M. Ruiz of Hillsdale; and Glen B. Thompson, New York City.

(2) The Defendants in this lawsuit are: JP Global Property Management; Jeremy P. Sorvino of Waldwick; Jeffrey M. Malen of Ringwood; Peter Eckhardt, Jr.; Christopher William Eckhardt of Washington Township, (Bergen County); Anthony Scordo III of West Orange; Nihamin; Michael J. Andalaft, an attorney with law offices in Cedar Grove; Capital Hill Mortgage, Inc.; Stanley Capital Mortgage Company, Inc. of Englewood Cliffs; Rhys A. Herrmann of Belleville; Brendan Joseph Flynn of Fort Lee; Maryann E. Sorvino of Ridgewood; Frances B. Benna of Elmwood Park; Vincent F. Latorre of Kenilworth; Jennifer R. Kortman of Livingston; Rebecca A. Kortman of Chatham; William McVeigh of Wharton; Mauricio V. Almeida of Colonia; and Thompson.

California Woman Wins Race To Prosecutor's Office; Cops Plea In Upfront Fee Foreclosure Rescue Scam; Agrees To Testify Against Two Alleged Co-Scammers

In Monterey County, California, the Salinas Californian reports:

• One of three defendants in a Gonzales foreclosure scam made a plea deal Friday to charges including felony conspiracy to defraud, the Monterey County District Attorney’s Office said. All three defendants were accused of scamming more than 55 people in Monterey County of at least $100,000.

• Maria de Lourdes Ponce of Gonzales and Santa Cruz residents Fabian Olivares Casillas and Melissa Garcia were arrested in August, said John Hubank, a deputy district attorney with the consumer and environmental protection unit, on suspicion of taking thousands of dollars from homeowners after promising to save their homes from foreclosure.

Source: Plea deal in foreclosure scams against 55 Monterey County residents.

See also, The Monterey County Herald: Guilty plea in fraud case.

For the Monterey County DA's press release announcing the original charges, see District Attorney files felony charges filed against foreclosure scam artists.

Go here for earlier posts and available updates on this story.

Four Month Foreclosure Moratorium, Mediation Program Looming In Miami?

In North Miami, Florida, WFOR-TV Channel 4 reports:

• Miami-Dade County is dubbed the foreclosure capital of the state, and now the county could be taking on the most drastic housing relief effort to date. If Miami-Dade's chief judge approves this moratorium, it could stop all foreclosures for four months, starting as soon as November 1st. It's a measure that could eventually be adopted in all counties across the state.

***

• [North Miami Mayor Kevin] Burns wants a countywide moratorium on foreclosures, oddly enough one that even the banks could support. The program is mirrored of what Philadelphia started this summer that has remarkably saved 80% of their homes in foreclosure.

• "If they can do it in Philadelphia, the City of Brotherly Love, I think they can do it the City of North Miami but also in Miami-Dade County," said Burns. "And I assure you that if the Chief Judge approves it here in Miami-Dade County, they'll do it throughout the state of Florida."

• The plan is pretty simple: There would be a 120 day halt to all existing foreclosure filings, and new filings would be sent to mediators within 45 days of the filing. Essentially banks and homeowners would be forced to meet to work something out.

For the story, see North Miami Mayor Proposes Foreclosure Moratorium.

Bar Associations Ramp Up Nationwide Pro Bono Efforts In Fighting Foreclosures

The National Law Journal reports:

• [L]awyers across the country are doing their share to help homeowners facing foreclosures stemming from the subprime mortgage crisis. From Massachusetts to California, bar associations have formed task forces and organized pro bono projects offering services such as hotlines and free consultations regarding foreclosures, an issue many lawyers say could only get worse.

For more, see Bar Associations Nationwide Bulk Up Pro Bono Efforts in Foreclosure Cases.

Lenders Are Failing In Obligation To Identify All Occupants In Homes When Requesting Foreclosure Evictions, Says Chicago-Area Sheriff

According to a press release from Cook County, Illinois Sheriff Thomas J. Dart's office:

• [W]hile mortgage companies are supposed to conduct a basic due diligence investigation before requesting an eviction – identifying all occupants – sheriff’s deputies are regularly finding no work done by the mortgage company in advance, leaving the identifying work to deputies working at taxpayer expense.

• “These mortgage companies only see pieces of paper, not people, and don’t care who’s in the building,” Dart said. “They simply want their money and don’t care who gets hurt along the way. On top of it all, they want taxpayers to fund their investigative work for them. We’re not going to do their jobs for them anymore. We’re just not going to evict innocent tenants. It stops today.”

***

• [Dart] wants mortgage companies to be forced to provide sufficient information to the Sheriff’s Office in order to conduct an eviction. That will provide greater notification to tenants that their building is in foreclosure and will require mortgage companies and their attorneys to do more leg work in advance of an eviction.

For more, see Cook County Sheriff Suspends Foreclosure Evictions (Move comes in wake of growing mortgage crisis).

In related stories, see:

• Illinois Attorney General Backs Sheriff's Eviction Moratorium,
• Lawsuit Withdrawn Over Eviction Orders (A mortgage lender that filed a lawsuit to force the Cook County Sheriff to evict a suburban Chicago woman from her home has withdrawn the lawsuit. Accredited Home Lenders says it's also suspending its eviction action against Shirley McFarland of Dolton from her foreclosed bungalow.). BetaTenantRentSkimming

"No One Leaves Campaign" Takes To Boston Streets As Students Spread Word To Protect Tenants From Illegal Practices In Foreclosure Evictions

In Boston, Massachusetts, The Boston Globe reports:

• [106] Boston law and college students plan to join community activists to walk the streets of Dorchester, Hyde Park, and South Boston, to advise tenants to stand their ground and stay in their homes. Calling it the "No one leaves campaign," students aim to advise tenants of their legal rights to stay in their homes, even after foreclosure. That will help slow abandonment and blight in vulnerable neighborhoods. They are focusing on the 28 zones in Boston and Chelsea with the most foreclosures.

• "Tenants have an amazing amount of rights and a lot of ability to fight these evictions," said Harvard Law School student Nick Hartigan, 25, one of the main organizers. "Banks should do the responsible thing and allow people to stay."

***

• [Tracie Tyler, a 47-year-old administrative assistant fighting her eviction] is energized to have student involvement in what she sees as the important quest of getting the news out. "They are young, they are vibrant, they inspire us older folks," Tyler said. "There are people that are afraid who don't know where to go."

For more, see Students take to the streets to aid displaced tenants.

See also, Harvard Law Record: Harvard Law's foreclosure taskforce tackles housing crisis (Legal Aid Bureau leads effort to stop eviction of tenants in foreclosed properties). BetaTenantRentSkimming

Capital One, U.S Trustee Settle Charges Of Allegedly Screwing Over Consumers Filing Bankruptcy Over Credit Card Debt

The Wall Street Journal reports:

• The U.S. Trustee Program, an arm of the Justice Department that monitors bankruptcy courts, settled with Capital One Financial Corp. on Thursday over allegations that its credit-card unit filed about 5,600 claims on credit-card debts that it wasn't entitled to and improperly received $340,000 from debtors as a result.

• The settlement marks a victory for the U.S. Trustee Program, which in recent years stepped up its investigations into potential wrongdoing by some creditors against debtors in bankruptcy, following complaints from consumer advocates, law professors and judges that debtors weren't being adequately protected. That has been a particularly hot topic amid the current nationwide foreclosure crisis, in which many homeowners have turned to bankruptcy as a way to save their homes.

For more, see Capital One in Settlement Over Card Debt (may require subscription; if no subscription, go here, then click link for the story).

Finance Company Attempts To Collect Payments On A Paid Off Mortgage; Threatens Foreclosure, Damages Homeowner's Credit In The Process

In Saratoga Springs, Utah, KUTV Channel 2 reports:

• How would you like to pay off your mortgage, only to have some unheard of finance company ruin your credit ... And threaten foreclosure?? That's exactly what happened to a Saratoga Springs woman who decided to Get-Gephardt in desperation. The letter from M.G.C. Mortgage says the account is delinquent and they have the right to foreclose on the property...and they've reported it to our nation's credit bureaus!!!

For the rest of the story (video only), see Collections on a Paid Off Mortgage.

Foreclosure Rescue Victims May Have Been Scammed Again By Woman Accused Of Unauthorized Practice Of Law

In Central Florida, the St. Petersburg Times reports:

• [L]ike dozens of other Hispanic residents across Florida, they faced eviction because of their dealings with now-closed mortgage company 4 Solutions of Tampa. And like many of those 4 Solutions customers, they called Barbara Hernandez of Orlando after reading an ad in Spanish newspaper El Nuevo Dia where she offered to help people involved with the company.

• The residents say that she promised they'd get their houses back. That she said she'd lead them in a class-action lawsuit. That for only $50 a month, she'd help them file papers and go to court with them. About 80 families turned to her. The problem? She isn't a lawyer.

***

• Roberto Cruz, an attorney with the [non-profit law firm] Legal Advocacy Center of Central Florida, recently filed the [Florida Bar] complaint against Hernandez alleging unlicensed practice of law. Cruz of Sanford represents several residents hurt in deals worked out by 4 Solutions.

For more, see Victimized homeowners' advocate is not a lawyer.

San Bernardino Deed Theft Suspect Nabbed In Georgia

In San Bernardino County, California, the county district attorney's office recently announced:

• [H]oward Jerome Edwards was arrested by the Henry County Police Department at his residence in Locust Grove, Georgia. Edwards was arrested on the outstanding felony warrant that included charges of forgery, identity theft, and filing forged documents with the San Bernardino County Recorder’s Office.

According to the DA's office press release, Edwards and co-defendant John Foster, 50, of Riverside, forged the victim's signature on a Grant Deed and Deeds of Trust for property located in Fontana. Subsequently, Edwards and Foster sold the Fontana residence for $675,000.

Source: Man Arrested in Georgia on Real Estate Fraud Charges.

Con Man Gets 5+ Years For Victimizing Widow, Pocketing $2M In Refinance Scam

In San Francisco, California, The Recorder reports:

• Michael Edison, a con man who stole $2 million from the widow of a legendary law firm founder, has agreed to spend more than five years in jail. [...] Michael Edison admitted targeting Jean Phleger, widow of Brobeck, Phleger & Harrison founder Atherton Phleger, in a financial swindle. Originally introduced to Phleger by her son-in-law, the actor Don Johnson, Edison agreed to refinance Phleger's house, pay down her old mortgage, and use $2 million in leftover cash to pay Phleger's bills. But Edison instead used the money for a private jet, a boat docked in Malta, cars, and goods at Kmart, Foot Locker and other stores, according to court filings.

For more, see Con Man's Plea May Spare His Wife.

For earlier story announcing the indictment, see the San Francisco Chronicle: Man indicted in $2 million fraud.

Texas Man Faces Theft From Elderly Charge; Allegedly Conned Dementia-Suffering Widow Into Signing Away Deed To Home For Less Than 15% Of Value

In Houston, Texas, FOX 26 reports:

• Joseph Kelly Lecureux, 39, is charged with theft from the elderly; authorities are accusing him of trying to take advantage of an elderly widow whose home was on the verge of foreclosure. [...] According to Marian Rosen, [the homeowner's] attorney, the elderly widow was suffering from dementia when she signed the deed to her home over to Lecureux, selling it for less than 15 percent of it's value.

According to the FOX 26 video coverage, the widow's attorney filed a successful civil suit voiding the deed and restoring title to the home in the name of the widow. Sometime thereafter, local law enforcement authorities filed the criminal charges against Lecureux.

For more, see Man Faces Theft From Senior Charge (read story) (watch FOX 26 video report).

Go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc.

Go here, here, here, here, here, and here for other posts on elder financial abuse. FinancialAbuseOfElderlyAlpha deed theft xenon

NJ Homeowners Claim Fraud In Sale Leaseback, Foreclosure Rescue Lawsuit; Pattern Of Activity Should Qualify As Racketeering, Says Attorney

In Central New Jersey, the Asbury Park Press reports:

• [Little Egg Harbor resident Michael] Moreno says he was stripped of nearly $70,000 in equity in the February 2006 [sale leaseback, foreclosure rescue] deal, and he faces eviction from the house he thought he saved. He also is one of two former homeowners suing [Robert] Heath and related companies in an attempt to undo deals they claim are fraudulent.(1) Their attorney, Kevin Carlin of Hamilton, said the documents on the deals list transactions that never happened, a violation of federal law. Carlin also said there are more than 40 similar real estate transactions involving Heath in the state. In the lawsuit, Carlin argues "the pattern" of activity should qualify as racketeering.

***

• Deborah and Lawrence Mayo of Brick also have joined the lawsuit against Heath, and they also claim there was a fraudulent transaction. Carlin said at least three other families have contacted him about allegedly bad deals with Heath's businesses. Two of those families already were evicted from their homes, Carlin said.

***

• "On paper it looks like a typical real estate transaction with a purchase and a sale, but when you look behind the paper — which is what courts of equity will do — what you see is that the transaction was actually the granting of an equitable mortgage; they were really just refinancing the property," Carlin said. "And they accomplished it by using an attorney who gave the appearance of a disinterested party while she was the wife of the principal [Heath]."

For more, see Eviction looming, man sues over deal (He, others say they feel cheated).

(1) According to the story, Heath's Marlboro-based company, MGT Group, would offer to sell the home back to Moreno at a later date.

71 New Charges Filed Against San Diego Suspects In Alleged "Land Grant" Foreclosure Rescue Scam

In San Diego, California, KGTV Channel 10 reports:

• Five people accused of victimizing hundreds of San Diego County homeowners in a home foreclosure rescue scam were arraigned Friday on 71 new charges, including conspiracy and grand theft. Alleged ringleader William Hutchings, 62, his wife Xiaoke Li, 45, and Shawna Landis, 36, along with Diego Gil and Edgar Martinez, now face a total of 172 charges, including felony civil code violations alleging rent and foreclosure fraud, said Deputy District Attorney Stephen Robinson. The additional charges reflect counts against new victims and so-called "rent skimming," the prosecutor said.

***

• At a hearing in May, Robinson said the defendants allegedly offered to help homeowners keep their property by placing them in "land grants," when in fact the transactions were bogus and left the victims even worse off than they were before.

• Two methods were used to get owners of residences in foreclosure to participate in the so-called land grant program, Robinson said. One method required homeowners to pay a one-time fee of up to $10,000 to put their property in a land grant. The second method was a lease-back scheme in which homeowners transferred their property to the defendants and then paid rent to stay in their homes. In both scenarios, homeowners were eventually foreclosed on anyway and evicted and retained no legally recognized title to the property. In addition to losing their homes, the victims were swindled out of hundreds of thousands of dollars, authorities said.

Source: New Charges Filed In County Foreclosure Scam.

Another Upfront Fee Foreclosure Rescue Operator Faces The Heat As Ohio AG Files Civil Suit Alleging Violations Of Multiple State Laws

In Wood County, Ohio, WNWO-TV Channel 24 reports:

• In a continuing effort to fight consumer fraud fueled by the mortgage foreclosure crisis, the Ohio Attorney General filed a lawsuit Monday to stop a mortgage rescue scam from victimizing consumers in Auglaize, Hancock and Wood counties.

• The action alleges that Dwelling Assurance, Inc., and its owner, Nancy Schmidt of Lima, violated Ohio’s consumer protection laws by engaging in unfair and deceptive practices. The complaint alleges violations of the Ohio Consumer Sales Practices Act, the Credit Services Organization Act, the Debt Adjusters Act, and the Home Solicitation Sales Act [sections 1345.21 to 1345.28 of the Ohio Revised Code].

• The lawsuit is based on consumers who complained that Schmidt and Dwelling Assurance led them to believe that they could help save their homes. Instead, the complaint alleges the defendants took the homeowners’ money up front, without performing any services to stop the foreclosures.

For more, see Attorney General sues mortgage rescue company.

To view the lawsuit, see State of Ohio v. Schmidt.

Washington State AG Settles Civil Charges With Florida Foreclosure Rescue Operator

The Office of the Washington State Attorney General announced earlier this week:

• [T]he Attorney General’s Office accused United Home Savers, LLP, of Clearwater, Fla., and owners Stephanie and Darin Dietschy, of Belleair Beach, Fla., of violating Washington’s Consumer Protection Act, Credit Services Organization Act and Commercial Telephone Solicitation Act.

• The company is now out of business. Owners did not admit any liability, but agreed to a consent decree that prohibits them from engaging in alleged violations in the future. According to the state’s civil complaint and the settlement, filed [Wednesday] in Spokane County Superior Court, United Home Savers advertised to Washington homeowners that the company can rescue homeowners from foreclosure. The company charged $1,200 or more up front and promised a refund if their services weren’t successful.

• But Assistant Attorney General Jack Zurlini said the majority of homeowners received little or no help, and the company routinely refused or failed to refund money. [...] United Home Savers is also under fire from the Federal Trade Commission in a lawsuit filed in U.S. District Court for the Middle District of Florida.

For more, see Attorney General says United Home Savers is a misnomer (Florida company accused of charging homeowners for empty promises).

Florida AG Files Civil Suit Against Foreclosure Rescue Firm Promising To Find Errors In Homeowners' Loan Docs, Then Fight Lenders

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

• Fort Lauderdale-based Outreach Housing calls itself a grass-roots organization with "a groundbreaking initiative" to help South Florida homeowners threatened with foreclosure. But the Florida Attorney General's Office said Thursday that behind that promise of mortgage relief is a company engaged in deceptive practices that have left a trail of at least 50 complaining homeowners.

• The state filed a consumer protection lawsuit against Outreach Housing, asking a Broward Circuit Court judge to issue an injunction preventing it from engaging in any aspect of the real estate business. Also named as defendants in the suit are Blair L. Wright and Bryan Berry, the two men the state says own the company.

• Outreach Housing promises to help imperiled homeowners by finding inaccuracies in lending documents and then fighting mortgage companies to prevent foreclosure and obtain financial restitution, according to its Web site.

• The Attorney General's Office said Outreach Housing instructed clients to stop paying their mortgages and instead pay the company about 60 percent of what their monthly mortgage payment would be. Customers complained that Outreach Housing took their money, but they didn't receive any relief in return, the Attorney General's Office said.

• In addition, the company engaged in the unauthorized practice of law, according to the lawsuit filed Monday.

For more, see Lauderdale firm didn't deliver mortgage relief, state suit alleges (Lauderdale company denies wrongdoing and says it was let down by law firms it trusted to help individuals).

For the Florida attorney general's press release, see Broward Foreclosure Debt Mitigation Company Sued for Deceptive Practices (Their investigation revealed that more than 600 homeowners had signed up for the company’s services).

--------------

According to their website, "Outreach Housing has dedicated sufficient resources to provide relief for $1.2 Billion in residential properties. Through the efforts of Outreach Housing, a dedicated network of professionals will pursue restitution for thousands of homeowners faced with foreclosure by outlining the TILA and RESPA violations that occurred at the lenders level—bottom-line this effort will allow the homeowner to stay in their home." UndoMortgageLoans TILAdelta

Tampa Feds Obtain Another Indictment Alleging An Equity Stripping, Foreclosure Rescue Scam; Extradition May Be Necessary For Fugitive-Suspects

In Tampa, Florida, The Bradenton Herald reports:

• The operators of an alleged foreclosure-rescue scam that was active in Manatee County are facing federal criminal charges. A federal grand jury in Tampa last week indicted Jose Oliveri and Mario Quiroz each on 22 counts of conspiracy, wire and mail fraud, and money laundering, court records show.

• The Tampa-area men were principals in 4 Solutions Inc., a Tampa company that promised to help distressed homeowners avoid foreclosure. Instead, they sold the homes to third parties, fraudulently obtained excessive mortgages and let the homes fall into foreclosure anyway, prosecutors said.

• The alleged scheme netted more than $22.5 million, according to the indictment. Quiroz, also known as Juan Mario Quiroz del Valle and Juan Mario Quiroz del Valle Buch and Oliveri, also known as Jose Alberto Oliveri-Agurto, have not been arrested. They are considered fugitives, said Steve Cole, a spokesman for the U.S. Attorney’s Office in Tampa. “It’s likely they are in Peru and we will have to extradite them if they are,” he said Tuesday.

For more, see Charges pending in alleged scam.

For the indictment, see USA v. Quiroz, Oliveri.

Go here for earlier reports (and any available updates) on 4 Solutions.

For more on an earlier successful equity stripping, foreclosure rescue scam prosecution by the Tampa Feds, see:

• U.S. Attorney Press Release (3-29-07) - Tampa Federal Jury Convicts five Persons In Home Equity/Bank Fraud Scheme,
• For the grand jury indictment, see U.S. vs. Moumneh, et al.

Go here for other criminal prosecutions of foreclosure rescue operators.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Brooklyn Court Refuses To Dismiss Suit Alleging Fraud In Foreclosure Rescue Transaction

In Brooklyn, New York, a lawsuit in which a homeowner claims that he was scammed out of ownership of his former home, and in which he seeks reconveyance of the premises to him has been allowed to continue. In refusing to dismiss the complaint, Brooklyn Supreme Court Justice Arthur Schack ruled that there were triable issues of fact as to whether their the homeowner was fraudulently induced into conveying the premises to the defendant.

For the court's ruling, and the case law cited therein, see Bryan v Lindsay, 2008 NY Slip Op 51781(U); Decided on August 27, 2008.

New California Law Creates Registration, Bonding Procedure For Foreclosure Consultants; Addresses Foreclosure Surplus Scams

In Sacramento, California, the Central Valley Business Times reports:

• Legislation designed to protect homeowners and homebuyers in California and help establish a more accountable lending environment, was signed into law Thursday by Gov. Arnold Schwarzenegger.

Among the bills signed into law by the Governor is:

• AB 180 by Assembly Speaker Karen Bass, D-Los Angeles. This measure provides a registration and bonding process for foreclosure consultants and prohibits a foreclosure consultant from entering into an agreement to assist an owner in arranging the release of surplus funds after the trustee's sale is conducted.

For the story, see California toughens laws to protect homeowners and homebuyers.

More On Brooklyn Supreme Court Justice Arthur Schack

In a recent opinion involving the refusal to allow a foreclosing mortgage lender to continue with a foreclosure until certain requirements are met, Brooklyn Supreme Court Justice Arthur Schack finds himself wrestling with the employment status of one Margery Rotundo, a mortgage company executive whose name appears to regularly show up on documents filed with the court in foreclosure cases involving different plaintiffs. In several recent foreclosure cases he has presided over, Justice Schack has found that Ms. Rotundo has sworn in court documents that she is Senior Vice President for:

• Residential Loss Mitigation of Ocwen Loan Servicing, LLC,
• Residential Loss Mitigation of HSBC Bank USA, N.A.,
• Loss Mitigation for Nomura Credit & Capital, Inc., and
• an unnamed servicing agent for HSBC.

Justice Schack makes this observation on Ms. Rotundo's apparent knack to freely move from mortgage company employer to mortgage company employer, as the need appears to demand:

• The late gossip columnist Hedda Hopper and the late United States Representative Bella Abzug were famous for wearing many colorful hats. With all the corporate hats Ms. Rotundo has recently worn, she might become the contemporary millinery rival to both Ms. Hopper and Ms. Abzug. The Court needs to know the employment history of the peripatetic Ms. Rotundo. Did she truly switch employers or did plaintiff have her sign the "affidavit of merit and amount due" as its Senior Vice President solely to satisfy the Court?

For the rest of Justice Schack's opinion in this case, see HSBC Bank USA, N.A. v Charlevagne, 2008 NY Slip Op 51652(U) [20 Misc 3d 1128(A)]; Decided on August 4, 2008.

For another recent case in which Justice Schack finds himself wrestling with the employment status of another ostensibly omnipresent bank executive, a certain Scott Anderson, see HSBC Bank USA v Antrobus, 2008 NY Slip Op 51639(U) [20 Misc 3d 1127(A)]; Decided on July 31, 2008.

Go here for list of links to over thirty of Justice Schack's decisions denying foreclosure to mortgage companies for failure to establish legal standing to bring the legal action.

Foreclosure Scam Offering Phony Home Loan Document Audit Services Lands Oregon Man 5 Months In Jail

In Jackson County, Oregon, the Mail Tribune reports:

• A con man who posed as a "mortgage watchdog" was sentenced to five months in jail after being found guilty in Jackson County Circuit Court on multiple theft charges. Bart Arthur Blahosky's scam involved approaching people facing foreclosure. He told victims he would analyze their mortgage paperwork to find possible errors that could save them money when dealing with lenders. He would then take the paperwork, which includes sensitive information such as Social Security numbers, bank account numbers and dates of birth, and not return. He always charged a steep fee for this service, Jackson County sheriff's Detective Sgt. Colin Fagan said.

***

• Jurors spent only 10 minutes deliberating after hearing the evidence against Blahosky in a one-day trial Thursday. They found him guilty on all counts — first-degree theft, two counts of second-degree theft and one count of attempted theft, said Bridges.

For more, see 'Mortgage watchdog' gets five months in jail. rescue

Arizona AG Indicts Two In Alleged Equity Skimming Operation; Homes Involved Ended Up In Foreclosure, Say Authorities

In Phoenix, Arizona, the East Valley Tribune reports:

• Jeffery Z. Sayegh, of Cave Creek, and Kimberly R. Werking, of Phoenix, were indicted by the Arizona Attorney General's Office on five counts of forgery, one count of money laundering and one count of fraudulent schemes and artifices. Werking, 42, was also indicted on six counts of residential mortgage fraud, five counts of theft and one count of illegal control of an enterprise.

• The charges, all felonies, relate to an alleged equity skimming operation in Phoenix and north Scottsdale. These are among the largest indictments issued under the state's residential mortgage fraud statute, enacted in 2007.

***

• The indictment further alleges that Werking skimmed more than $1 million in equity from the homes through the refinancing process, and, once no more money could be pulled out of the properties, allowed them to go into foreclosure.

For more, see Pair indicted in mortgage fraud.

From the Arizona Attorney General's Office;

• Indictment: State of Arizona v. Werking, et al.,
• News Release: Terry Goddard Announces Indictments in $1 Million Mortgage Fraud.

Florida Legal Services Firm Gets $200K Grant To Open Office To Deal Strictly With Fighting Foreclosures

In Jacksonville, Florida, First Coast News reports:

• [T]hanks to a new $200,000 grant from the Jacksonville Community Foundation and the city, a new office strictly dealing with foreclosures will be opened soon by Jacksonville Area Legal Aid. "We're expecting people to come see us who are behind on their house payments, who need relief, want to know what their options are," said Michael Figgins with Jacksonville Area Legal Aid, or JALA. "They may have actually been served with foreclosure papers so we're going to focus solely on foreclosures, and saving homes in our community."

For the story, see Jax Legal Aid gets $200,000 to Fight Foreclosures.

Illinois AG Hauls Another Foreclosure Rescue Operator Into Court For Alleged Violation Of State Law; Count Now Up To 15 Firms

From the Illinois Attorney General's Office:

• Illinois Attorney General Lisa Madigan [yesterday] continued her aggressive legal fight against mortgage fraud by filing a lawsuit against a St. Marys, Pa., company, which has been operating a mortgage rescue fraud scheme and preying on vulnerable Illinois homeowners on the verge of foreclosure.

• Madigan filed suit in Sangamon County Circuit Court against Aeroworks, LLC, doing business as Augustus Rae and Reed, and its president, John F. Reed. The suit alleges that the defendants violated the Mortgage Rescue Fraud Act and the Consumer Fraud and Deceptive Business Practices Act by falsely promising to help consumers save their homes after they have fallen behind on their mortgage payments.

• According to the complaint, the defendants charge consumers up to $1,185 in upfront fees for homeownership counseling and mortgage rescue services but rarely produce successful results. They also fail to give consumers the right to cancel at any time. The complaint alleges that the defendants accepted money from at least 215 consumers throughout Illinois during 2006 and 2007.

For more, see Madigan Sues Pennsylvania Company For Mortgage Rescue Fraud (Company Preys On Illinois Homeowners Facing Foreclosure).

Homeowners Claim Improperly Reported "Zombie Debt" On Credit Report Prevented Mortgage Refinance; Lost Home To Foreclosure After ARM Interest Reset

The Wall Street Journal reports:

• [E]rica Noe of Burke, Va., says an old debt on her husband's credit file cost them their home -- in part because it prevented them from being able to refinance their interest-only adjustable-rate mortgage last year. Her husband, Kenneth, had filed for Chapter 7 bankruptcy in 2002; in that proceeding, the court discharged his prior debts. Nevertheless, they were unaware that a previous $7,000 credit-union loan remained on his report, pulling down his credit score for several years.

• "We thought that once we filed for bankruptcy, it would go away," says Ms. Noe. "But it didn't. It affected everything." The 31-year-old nurse says they didn't find out about the error until they tried -- but failed -- to refinance their mortgage. When the rate reset, the Noes' monthly mortgage payments shot up by about $1,000; they lost their home to foreclosure last November. "It was a snowball effect," she says. "Unfortunately, everything just kind of worked against us at the same time."

• "I tried to fix the error on the report by calling the credit union and telling them to stop reporting," she says. Currently, their lawyer, Robert Weed, is filing a separate lawsuit against Equifax and the credit union. Equifax declined to comment on an ongoing suit.

Source: Dealing With Debt That Refuses to Die (Court Ruling Requires Credit Bureaus To Wipe Away Bills Incurred Before Bankruptcy; Getting a New Report).

Go here for other posts on zombie debt. zeta

Federal Judge Orders Credit Bureaus To Clean Up Screw-Ups Affecting Consumers' Credit Reports In California Class Action Suit

The Wall Street Journal reports:

• [A] recent court order requires the three major credit-reporting bureaus -- Experian Group Ltd., Equifax Inc. and TransUnion LLC -- to clean up the credit files of millions of consumers who have filed for Chapter 7 bankruptcy. The problem: Old debts, which are typically forgiven by the courts in a bankruptcy filing, are still being reported as active on many consumers' credit reports. The judge for the case, David O. Carter of the U.S. District Court for the Central District of California, has given the bureaus until Oct. 1 to revamp their systems.

***

• This ruling is expected to clean up the credit files -- and potentially boost the credit scores -- of an estimated six million to 10 million people who have filed for Chapter 7 bankruptcy but still had errors in their files, according to plaintiffs' attorneys. Consumers with so-called zombie debt -- old loans they may have paid off years ago that can resurface when an aggressive debt collector erroneously demands payment -- are also likely to get some relief, if those debts also were discharged under Chapter 7 protection.

***

• The court order stems from a class-action lawsuit alleging that each of the credit bureaus violated the Fair Credit Reporting Act by failing to maintain reasonable procedures to assure the accurate reporting of debts that have been discharged in bankruptcy. The lawsuit could now move to a trial to determine liability and damages if Judge Carter decides later next month to give the damages portion of the case a class-action status.

For more, see Dealing With Debt That Refuses to Die (Court Ruling Requires Credit Bureaus To Wipe Away Bills Incurred Before Bankruptcy; Getting a New Report). zeta

Federal Judge Nails NYC Foreclosure Rescue Operator With 10 Year Sentence For Role In Equity Stripping Scam

In New York City, Reuters reports:

• A New York man was sentenced on Wednesday to 10 years in prison and will forfeit $2.5 million for his part in a home foreclosure "rescue" scheme targeting distressed homeowners. The case, which exemplified the easy credit and "no document" loans at the heart of the U.S. mortgage crisis, involved a scam that ran from November 2003 through April 2005 in the New York City boroughs of Brooklyn and The Bronx.

• Mary Banks, one of the victims of the scheme, told the U.S. District Court in Manhattan on Wednesday that she had put her life's work into her house since 1958 and was "still fighting to stay in my premises." She said defendant Maurice McDowall, who pleaded guilty in June to charges of conspiracy to commit bank and wire fraud, "deserves any misery he has put on us."

• Other victims told the court how they trusted McDowall to help them avoid foreclosure but fell foul of the scheme. McDowall, 49, said he was sorry for the crime and told the court, "While I was committing the crime we were all in the pot. Whatever we decided to do to save the home we did together."

• In sentencing McDowall, U.S. Judge Robert Patterson also ordered him to pay $100,000 restitution. The forfeiture of $2.5 million was part of his plea agreement. Another defendant Aleksander Lipkin also pleaded guilty in June. He agreed to forfeit $7 million and faces up to 30 years in prison when he is sentenced on October 10. Six people in all were indicted in December last year with fraudulently obtaining titles to scores of homes and taking out bad bank loans against them worth more than $20 million.

For more, see Judge hands 10-year sentence for foreclosure scam.

For the original indictment, see U.S. vs. McDowall, et al.

Go here for other posts on foreclosure rescue operator Maurice McDowall.

Go here for other criminal prosecutions of foreclosure rescue operators.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Southern California Foreclosure Rescue Operator Faces December Sentencing In Equity Stripping Scam That Screwed Over 100+ Homeowners

In Los Angeles, California, The Downey Patriot reports:

• Martha Rodriguez, 35, of Downey is scheduled for sentencing Dec. 10 in U.S. District Court in Los Angeles for a $12 million foreclosure scheme that victimized commercial lenders and more than 100 homeowners in Southern California. [...] Included in the indictments were Edward Seung OK, of Torrance; Cynthia Valenzuela, 23, of Downey; Vladimir Stefanovic, 35, of Lancaster; and Maria G. Juarez, 36, of Reseda.

***

• The indictment alleges that the homeowners were asked by the defendants to sign documents including loan applications, trusts and grant deeds, while being assured they wouldn’t lose the titles to their homes. Rodriguez and her co-schemers promised the deed would either be held in escrow or that the title would be returned to them once their credit was repaired.

• Instead of obtaining refinancing, loan applications were submitted in the names of “straw buyers” claiming to buy the property. Some straw buyers were paid up to $5,000 for the use of their personal information. In other cases, the defendants used the personal information of others without their knowledge. The false information on the applications caused lenders to fund mortgages to the straw buyers. The defendants would then pay off the loan in default and pocket the rest of the money.

• As a result, homeowners lost the titles to their homes and lenders sustained losses when the second loan would go into default because the straw buyers failed to make the loan payments.

• Rodriguez ran the foreclosure scam while awaiting sentencing after pleading guilty to defrauding the Department of Housing and Urban Development in another loan scheme.

For the story, see Resident awaits sentencing in foreclosure scam.

Go here for earlier posts and any available updates on this foreclosure scam.

More On Federal Court Ruling Disallowing Class Action Status In TILA Case Seeking Mortgage Recission

The National Law Journal recently ran a story on the recent win by the mortgage lending industry when a Federal appeals court stripped homeowners of class action status in a Truth In Lending Act ("TILA") lawsuit seeking recission of a mortgage in which the TILA was violated.

For the story, see Mortgage Lenders Fight Off Rescission Class Action in 7th Circuit.

For the court ruling, see Andrews v. Chevy Chase Bank (7th Cir., 9-24-08).

Break In Chain Of Title To Mortgage Loan Temporarily Stalls Foreclosure; Bankruptcy Judge Gives Lender Until Thursday To Prove It Owns The Debt

In Savannah, Georgia, The Augusta Chronicle reports:

• An Evans woman whose business dealings set off a series of foreclosures and bankruptcies fended off eviction from her own home Thursday -- at least for now. U.S. Bankruptcy Court Judge Susan D. Barrett gave the local counsel for American Home Mortgage Servicing until next Thursday to gather information to show that through a series of sales and transfers, it is the rightful owner of Regina Preetorious' $567,000 mortgage loan.

***

• American Home Mortgage petitioned the bankruptcy court to allow it to proceed with foreclosure on the couple's Windmill Lane home. The company contends they haven't made a mortgage payment since October 2007 on the 3,540-square-feet home. The couple's bankruptcy attorney, Todd Boudreaux, contends American Home Mortgage should prove it holds the legal security deed on their home.

• Ms. Preetorious signed the original loan on Nov. 30, 2006, with Option One Mortgage Co. In January, the company's loans were placed in a trust with Wells Fargo as the trustee. On April 30, America Home acquired all the assets and interests of Option One, company attorney James Overstreet said Thursday. The contents of the trust overseen by Wells Fargo were included, he said.

• But that last step wasn't clear Thursday. There appeared to be a break in the chain of ownership, Judge Barrett said. Mr. Boudreaux said the couple is entitled to know exactly who owns their loan.

For the story, see Businesswoman avoids eviction.

$8.68 Billion Settlement In The Works In Countrywide Litigation With 11 State AGs; Loan Mods For Many Countrywide Borrowers On The Way

In Sacramento, California, Legal Newsline reports:

• With news of a billion-dollar settlement between financial giant Bank of America and attorneys general from 11 states, thousands of homeowners facing foreclosures could soon have a rebirth of opportunity to save their homes. News of the settlement leaked out of several state attorneys general offices Sunday night. Those close to the negotiations hailed the progress as a significant step toward stemming the tide of the foreclosure crisis that has caused an earthquake in the county's economic foundations.

• "This is definitely a home run," said San Diego City Attorney Mike Aguirre, one of the many city officials suing Countywide Financial Corp. over its alleged predatory lending practices. California Attorney General Jerry Brown, who led much of the negotiations with Bank of America, parent company of Countrywide, too hailed the victory of homeowners. "Unlike last week's congressional bailout," Brown said, "This loan-modification program provides real relief for borrowers at risk of losing their homes."

• Brown said the $8.68 billion settlement, with $3.5 billion going to his state, is the largest of its kind, far surpassing the $484 million settlement with Household Financial Corp. in 2002.

For more, see Countrywide clients find new life in settlement.

See also California AG press release: Attorney General Brown Announces Landmark $8.68 Billion Settlement with Countrywide:

• In addition to California, attorneys general in 10 states, including Arizona, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Ohio, Texas and Washington, are participating in the settlement. Attorney General Brown’s office, along with the Office of the Illinois Attorney General, led the negotiations for the states.

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• The settlement does not include Angelo Mozilo, the former Chairman and Chief Executive of Countrywide Financial Corporation or David Sambol, formerly the President of Countrywide Home Loans and the President and Chief Operating Officer of Countrywide Financial Corporation. Brown will continue to prosecute his case against Mozilo and Sambol.