Denver Pastor Charged In Flipping Scam; Used Two Unwitting Churchmembers As Straw Buyers On 8 Homes Ultimately Ending In Foreclosure, Say Authorities

In Denver, Colorado, KMGH-TV Channel 8 reports:

• A Denver pastor, indicted for alleged mortgage fraud, turned himself into authorities late Thursday. The indictment alleges that Harold Joe Hicks used surrogates to purchase property and then falsified mortgage applications to get lower interest rates.

• "He would bring nearly completed mortgage applications... and (would) have the surrogate buyer simply sign off without reading it," said Lynn Kimbrough of the Denver District Attorney's office.

• Pastor Harold Joe Hicks, 64, of Mount Carmel Community Baptist Church was formally charged, Thursday, with eight counts of theft and eight counts of forgery.(1) The two surrogates listed in the indictment attended Mt. Carmel. According to court documents, Hicks told both Richard Martin and Sherri Wrightsil that he would rent the properties, pay the mortgages, taxes, insurance and other expenses.

For more, see Grand Jury Indicts Pastor In Alleged Mortgage Fraud Scheme (Eight Properties Purchased Through Surrogates End Up In Foreclosure).

See also:

• Criminal Indictment: People v. Harold Joe Hicks,

• Rocky Mountain News: Minister indicted on 16 counts (Harold Hicks accused of stealing $80,000 in mortgage scheme) - "It is one of the most heinous examples of real estate fraud I've ever seen," said Jim Spray, a mortgage fraud expert familiar with details of the Hicks case. "To use his level of trust and abuse it severely, and hurt people so deeply that it shatters their faith . . . heinous doesn't even describe it."

• Rocky Mountain News (July 7, 2007): Signing on faith (Ex-church members say pastor misused trust to conduct shady real estate deals).

(1) It should be noted that the forgery charges relate to the signatures appearing on the allegedly fraudulent mortgage applications used to obtain the loans. According to the indictment, the signatures are alleged to be the authentic signatures of the unwitting straw buyers; Pastor Harold Joe Hicks, while accused of filling out the mortgage applications with fraudulent information, has not been accused of actually signing these documents. Notwithstanding, he is facing the forgery charges in connection with those signatures.

Regardless of whether forgery convictions are obtained against Hicks, this case should serve as a reminder that, in Colorado as well as in some other states, the act of forgery need not be done by the hand of the person being charged; fraudulently procuring the signature of another to an instrument which the signer either has no intention of, or is otherwise tricked into, signing constitutes forgery on the part of the procurer in some states. It is sufficient that the forgerer caused or procured it to be done. See also:

• May 27, 2008 post (1): New York Court Decisions A Reminder That Viable Forgery Claim May Arise When Homeowner Is Tricked Into Signing Deed; and
• May 27, 2008 post (2): California Appeals Court Says Genuine Homeowner Signature On Instruments In Foreclosure Rescue Scheme Not A Bar To Scammer's Forgery Conviction.

By the way, in the State of Ohio, the crime of tricking someone into signing any writing that either conveys an interest in property, or creates a monetary obligation, is called "Securing Writings by Deception" - see Sec. 2913.43, Ohio Rev. Code) ForgeryGenuineSignatureKappa

Little Known Defense In Foreclosures Of FHA-Insured Mortgages Highlighted In Florida Homeowner's 4-Year Fight To Save Home

In Jacksonville, Florida, MSNBC.com reports on the story of Vickie Lewis, an area homeowner fighting a foreclosure action filed against her by Washington Mutual, and who has been living with the uncertainties of being in foreclosure limbo for the last four years.

• [F]or the past four years, Lewis, 48, has seen her name on dozens of legal documents and spent hours in court as her mortgage holder, Washington Mutual Bank, pursued foreclosure on the only home she has ever owned. And she has no more idea now than when this began where or how it all might end.

***

• Lewis is one of scores of clients represented by [April] Charney, an attorney with Jacksonville Area Legal Aid who has developed numerous foreclosure defenses that have kept many of the troubled borrowers she represents in their homes for years.

• Charney’s defense of Lewis has been based largely on claims that Washington Mutual did not follow federal regulations by offering her a “reasonable opportunity to get current” and “a face-to-face meeting” before three monthly mortgage installments went unpaid, among other requirements.(1)

• According to court filings, prior to foreclosure, WaMu never discussed any options with Lewis other than demanding all back mortgage payments in full.(2) The bank is now demanding the entire balance, which had since ballooned by thousands of dollars with the addition of “illegal and outrageous” charges for attorney’s fees, collection costs and insurance, the filings allege.

For more, see When foreclosure limbo becomes a lifestyle (Like millions in U.S., Florida woman lives with housing uncertainty). (For the entire story on one web page, try here).

(1) These requirements apply to FHA-insured mortgages. According to the story, the FHA program is intended to provide a chance at home ownership for low-income and credit-challenged buyers. There’s a built-in expectation that FHA borrowers may have more trouble staying current on their payments than so-called prime borrowers, and so the borrowers pay hefty insurance premiums that protect the lenders for the life of the loan. Because of this, the FHA demands that lenders follow its extensive rules about dealing with borrowers who are in default.

(2) According to the story, Charney said lenders’ disregard for federal loss mitigation procedures and default loan servicing rules is just one sign of a larger problem: a mortgage-lending industry that ran wild for years under scant government review, inflating appraisals, overstating borrowers’ credit and income and creating such a maze of trusts and securities that the ownership of millions of mortgages is now almost impossible to establish.

Illinois AG, Cook County SA Say Firm Filed Phony Mechanics Liens & Started Foreclosure On Homeowners Refusing To Be Squeezed

From the Office of the Illinois Attorney General:

• Attorney General Lisa Madigan and Cook County State’s Attorney Anita Alvarez [Wednesday] both filed lawsuits against a Chicago mechanic’s lien filing service for filing invalid liens against property owners and for intimidating homeowners either to pay debts they don’t owe or to overpay for debts incurred with contractors.

***

• According to the Attorney General’s complaint, Contractor’s Lien Services (CLS) and its founder, Steve Boucher, analyze, prepare and file mechanic’s liens on property on behalf of general contractors and subcontractors. CLS allegedly misrepresents to contractors that it has valid cause for filing mechanics liens against homeowners when, most often, those contractors do not actually have valid claims under state laws.

• CLS also allegedly files liens without the knowledge of some contractors and, in other instances, CLS files liens against homeowners when contractors have not performed work at the properties in question.

• After filing foreclosure liens, CLS allegedly files foreclosure actions against consumers who don’t pay off the debts. Some contractors claim that CLS collects money on behalf of contractors but then fails to redistribute the collected debts to them.

For the Illinois AG press release, see Attorney General Madigan, State's Attorney Alvarez Sue Chicago Lien Filing Service For Fraudulent Practices.

For what sounds like a similar matter recently resolved by the Massachusetts Attorney General's Office, see Mass AG: Firm Agrees To Remove Mechanics Liens On Houses (Resolves Complaints By Paid-In Full Homeowners Of Improper Squeezing By Contractor, Supplier).

Go here for other posts on suspected mechanics lien scams. StiffingContractorsTheta MechanicLienScamTheta

Arrest Warrant Issued For Unlicensed California Contractor Suspected Of Illegally Slapping Phony Mechanics Liens On Homes In Foreclosure

In Vallejo, California, the Vallejo Times Herald reports:

• A $30,000 arrest warrant has been issued for a Benicia man who officials believe has been trying to profit illegally from Vallejo's foreclosure crisis. A team from the Solano County District Attorney's Office and Vallejo Police Department on Wednesday went to arrest James Paul Jones in the Vallejo home he's been occupying and found him gone, said Deputy District Attorney Laura Undlin.

• Jones, 53, also known as James King and King James, is suspected of contracting without a license and filing false or forged documents, Undlin said. The false document charge is a felony, she said.

• Jones has filed mechanic's liens against several foreclosed Vallejo homes he claims to have done work on for which he wasn't paid.(1) [...] Reached by phone Friday, Jones appeared surprised to hear about the warrant, and insists he's done nothing wrong.(2)

For the rest of the story, see Man trying to cash in on foreclosures, officials say.

Go here for other posts on suspected mechanics lien scams.

(1) If Jones actually did what he is suspected of doing, he possibly felt that having the mechanics liens would facilitate a claim on his part to all or part of any surplus funds generated by a subsequent foreclosure sale, in the event the home sold at auction for more than what was owed to the foreclosing lender.

(2) Reportedly, in one case, Jones seems to have contracted for $40,000 worth of water damage repairs with a relative of Jones's who owned the property before it was foreclosed on, according to Deputy DA Undlin. Jones is then said to have then filed a $75,000 mechanics lien six days later. "We don't believe that such extensive work could be done in six days, and, in fact, we have a witness that says he saw work being done for six to eight weeks after the lien was filed," Undlin said. StiffingContractorsTheta MechanicLienScamTheta

Texas Legal Aid Firm Files Suit Alleging Developer Tricked Seven Families Into Signing Over Deeds To Property They Just Agreed To Buy

In San Juan, Texas, The Monitor reports:

• Seven families are suing a developer, saying he tricked them out of the property they had just agreed to purchase. The lawsuit against William Schwarz alleges he used deceptive practices to trick low-income, Spanish-speaking families into signing the titles to their property over to him the same day the families made down payments on the land.

• None of the families mentioned in the suit have lost their homes at this point, but the developer is moving in that direction, said Corinna Spencer-Scheurich, an attorney for the South Texas Civil Rights Project who filed the suit on behalf of the families. She said the closing documents they signed could allow the developer to evict them from the property at any time.(1)

***

• The lawsuit against William Schwarz accuses him of violating the [Texas] Deceptive Trade Practices Act and committing three types of fraud.

For more, see Lawsuit filed against developer alleges fraud.

(1) According to the story, area community organizers have been meeting with families in two local subdivisions to try to determine how widespread the practice may have been, Spencer-Scheurich said. She suspects hundreds of families were affected.

Fine Print Buried In Debt Relief Firm's Contract Leaves Orlando Couple Screwed Out Of Thousand$

A recent story in the Orlando Sentinel warning against phony debt relief companies and other scams targeting people with financial trouble contained this excerpt on how one area couple was left screwed over after dealing with one of these firms:

• [Orlando bankruptcy lawyer Anne-Marie Bowen] recently worked with a young couple as clients who had paid a debt-relief company thousands of dollars to fend off creditors. But the company never paid their creditors a dime, Bowen said.

• When Bowen looked at the deal her clients had signed, she found a clause tucked in the fine print stating that the first 11 payments would go directly to the company itself as the fee for its "service." The company didn't negotiate at all with the couple's creditors, who continued to charge them late fees and turned them over to bill collectors.

• "They had gotten so many harassing phone calls and had been burned so badly," Bowen said. "By the time they came to me, they were at wits' end."

Source: Beware of bogus debt relief.

Attorney Accused Of Pocketing Closing Funds Due To Lien Holders Seeks "Free Pass" From Prosecution As Psych Pros Contest Competence To Stand Trial

In Pittsburgh, Pennsylvania, the Tribune Review reports:

• Two mental health experts had differing opinions Wednesday on whether a once-prominent Fayette County trial attorney is competent to stand trial on theft charges.

• Adam Sedlock, a Uniontown psychologist, testified [...] that crippling physical ailments have reduced Mark F. Morrison of Hopwood to functioning at the level of a seventh-grader. He said Morrison's condition is permanent and he will never be able to assist in his own defense.

***

• Morrison, 51, is accused of stealing about $99,000 in mortgage-settlement payments from two elderly Hopwood couples.(1) Instead of settling outstanding mortgages on the two properties, Morrison allegedly paid off smaller mortgages and diverted most of the money.

For more, see Ex-attorney Morrison's ability to face theft trial disputed.

(1) Reportedly, Morrison is charged with two counts each of:

• theft by failure to make required disposition of funds received,
• forgery,
• tampering with records or identification, and
• misapplication of entrusted property.

California Lawmaker Urges AGs For Probe Into Loan Modification Firms Targeting Distressed Homeowners Charging High Fees, Producing Low Results

In Riverside County, California, The Desert Sun reports:

• [C]iting complaints from constituents about fraudulent and suspicious mortgage-reduction schemes, [California Congresswoman Mary] Bono Mack sent a letter to U.S. Attorney General Michael Mukasey and California Attorney General Jerry Brown, urging that comprehensive steps be taken to address the problem and ensure those who commit mortgage crimes be held accountable.

***

• Bono Mack noted that local residents have contacted her office about fraudulent individuals and companies who continue to approach homeowners with promises of mortgage loan modifications or interest rate reductions. These individuals have been charging large up-front fees and offering little to no service to homeowners.

For the story, see Bono Mack presses for probe on homeowner scams.

Nothing Civil In Civil Court As Schoolyard Brawl Breaks Out Between Attorneys In Rival Class Actions; Colleagues Jump Into Fray To Bust Up Donnybrook

In New Orleans, Louisiana, The Times Picayune reports :

• Two attorneys competing for clients, prestige and a bounty of legal fees opened a hearing at Orleans Parish Civil District Court [last week] with a schoolyard brawl that shocked the buttoned-up crowd and ended with one led away in handcuffs on charges of contempt.

• The courtroom was filled with the early morning murmur of shuffled papers and crinkled newspaper when fisticuffs broke out between attorneys Madro Bandaries and J. Robert Ates, who were pushing rival class-action suits about the late handling of insurance claims.

For more, see Brawl erupts between two lawyers at civil court.

Let Courts Modify Bad Loans Says Consumer Bankruptcy Group; Quality, Sustainability Of Current Modifications Depends On The Individual Servicer

The Philadelphia Inquirer reports:

• With fresh evidence that voluntary mortgage modifications aren't working, a national lawyers' group is urging the government to let the courts fix bad loans. "Court supervision of loan modification is needed, and unlike so many of the responses to the foreclosure crisis so far, there will be no cost to the taxpayer," Henry Sommer of Philadelphia, president of the National Association of Consumer Bankruptcy Attorneys, said Thursday.

• A study in November of mortgage-servicer reports to investors by Valparaiso University School of Law Professor Alan White showed that of 3.5 million subprime and slightly less-risky Alt-A mortgages examined, 10 percent were in foreclosure and 10 percent more were delinquent.

• Of the 21,000 of these delinquent loans modified, two-thirds saw an increase in principal, called "negative prepayment," which added an average of $11,000 to loans of $210,000, White said. [...] "There is a tremendous variation in the number and quality of modifications, and the chance of getting one depends on the servicer," White said, adding that the monthly payments on 45 percent the 21,000 loans modified actually increased.

For more, see Lawyers: Let courts fix bad loans.

In a recent related statement from the Center for Responsible Lending, see Repeat Failures on Home Loans Reveal Faulty Modifications. loan modification

New Los Angeles Ordinance Prohibits All Tenant Foreclosure Evictions Until Property Is Sold To New Owner

In Los Angeles, California, CBS2 reports:

• Renters whose residences have gone into foreclosure cannot be evicted until the property is sold to a new owner under a city law signed Friday by [Los Angeles] Mayor Antonio Villaraigosa. The one-year ordinance, spearheaded by Council President Eric Garcetti, will impact 300,000 apartment buildings and single-family homes. [...] Renters [in Los Angeles] who are being evicted as a result of foreclosure were urged to contact the city's Housing Department at (866) 557-RENT.

For the story, see Mayor Passes New Rental Foreclosure Law. ThetaTenantRentSkimming

Another Foreclosure Screw-Up As Lender Approves Short Sale, Then Locks Out New Owner From Home A Week After Moving In

In Fort Wayne, Indiana, The Journal Gazette reports:

• [First-time homebuyers Brian and A.J. Spitznaugle] had arranged what is known as a short sale, an increasingly common transaction these days. The owner of the house was in default on the mortgage, so the bank that held the mortgage, Chase, agreed to sell the house to the Spitznaugles for slightly less than was owed.

***

• Slightly more than a week [after the closing], the couple got the shock of their lives. Brian Spitznaugle arrived at the house on a Saturday morning to find it cold and dark. The bank, it turned out, had contracted with a company named Safeguard Property Management, which in turn hired a company called B&CG Services to go to the home, turn off the water and electricity, drain the pipes, winterize the home and padlock it shut. Oh, and before workers left, they’d rifled through all the boxes in the garage.

For more, see Bank sells house, locks out buyers.

Go here for other posts on improper foreclosure lock-outs and other lender screw ups. ForeclosureLockOuts

Upstate NY Foreclosure Rescue Operator Files For Ch. 11 Bankruptcy Protection; Over 40 Current Sale Leaseback Deals Listed On Petition

In Albany, New York, the Daily Gazette reports:

• Geoffrey Goldman over the past two years portrayed himself as a savior in the foreclosure crisis. He made a living by buying homes from cash-strapped owners who wouldn’t be kicked out after sales closed and could even buy the properties back under leaseback agreements. “We’re helping more people than ever,” Goldman said in an April 2007 press release.(1)

• Now Goldman is in need of help. Two of his real estate leaseback businesses filed Tuesday for Chapter 11 reorganization in U.S. Bankruptcy Court. His Rivertown Investments and its real estate holding company, Momentum Properties, recently closed after falling victim to downturns in the housing and credit markets, according to documents filed with the Albany court.

***

• The liquidation of those assets could cast into limbo the former homeowners who entered leaseback agreements with Rivertown. Rivertown lists in its Chapter 11 petition more than 40 leaseback agreements in New York, New Jersey and Pennsylvania.

For more, see Real estate leaseback company files for bankruptcy.

See also, Albany Times Union: Lease-back plan for homes fails (Owner of dozens of properties files for bankruptcy protection).

(1) The article reports that under Rivertown’s leaseback program, according to the 2007 press release, homeowners sold their homes because they were on the verge of foreclosure or too far behind on payments to reinstate their mortgages. Sellers used proceeds from the sale to pay off their mortgages, then made rental payments to Rivertown so they could continue living in their homes, which they ultimately hoped to buy back.

"No-Deficiency" Laws Give Homeowners "Get Out Of Jail Free" Card When Walking Away From Unaffordable Mortgages In Some States

The Associated Press reports:

• Mortgage law experts say the incentive to walk away from a home loan is highest in states that have anti-deficiency statutes, which prohibit lenders from suing borrowers for additional funds after foreclosure.

• "These anti-deficiency laws make a huge impact on foreclosure rates because they are basically 'get out of jail free' cards," said Todd Zywicki, a law professor at George Mason University [...].

• This handful of non-recourse mortgage states includes the high-foreclosure states of California and Arizona, which not coincidentally also are leaders in the numbers of mortgage walkaways.

For the story, see Walkaways highest in 'non-recourse' states.

Florida Legal Aid Attorney Earning National Reputation For Foreclosure Defense Both As Advocate For Clients & Trainer For Other Lawyers

In Jacksonville, Florida, MSNBC.com reports:

• [April] Charney, a lawyer with the Jacksonville Area Legal Aid agency, is quickly developing a national reputation as a champion of homeowners facing foreclosure and a serious adversary for those attempting to take possession of those homes. Her encyclopedic knowledge of contract law, debt-collection practice, securitized mortgages, the trusts that hold them and the agreements that govern the trusts have put her at the forefront of the rapidly expanding specialty of foreclosure defense.

• While carrying her own load of 70 to 100 foreclosure cases as a legal aid attorney, Charney, 51, also has become one of the nation’s top trainers of other lawyers eager to learn how to serve the growing clientele spawned by America’s mortgage meltdown.(1)

For more, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers).

(1) According to the story, about 1,500 lawyers have attended her daylong classes on foreclosure law so far, 80 to 200 at a time. She has taught in Ohio, California, Minnesota, South Carolina, Missouri and throughout Florida. She offers the classes at cost with the help of local bar associations and aid groups and requires that all students perform 20 hours of pro bono legal work in their communities.

"Money Store" Suspects In Sale Leaseback, Foreclosure Rescue Scam Continue To Fall

In Greenbelt, Maryland, The Associated Press reports:

• A Fort Washington woman has pleaded guilty in a scheme to defraud homeowners facing foreclosure. Jennifer McCall, 47, pleaded guilty in federal court Thursday to conspiracy to commit mail and wire fraud.

• McCall was the chief executive officer of Metropolitan Money Store, a company that claimed to provide help to people in danger of losing their homes. But prosecutors say the company left homeowners worse off by draining equity out of the properties and imposing exorbitant transaction fees. Prosecutors say McCall is responsible for a loss of more than $16 million dollars.

McCall is the fifth defendant in this case to cop a guilty plea.

Source: Md. Woman Pleads Guilty In Mortgage Fraud Scheme.

See also, U.S. Attorney (Maryland) press release: CEO Of Metropolitan Money Store Pleads Guilty In Mortgage Fraud Scheme (Conspirators Took Title of Homes from Financially Distressed Homeowners and Secretly Used Home Equity for Furs, Jewelry and Other Personal Benefits, Defendant Caused Over $16 Million in Losses).

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

Colorado Slaps Subpoenas On 13 Loan Modification Firms; Creating Fear To Squeeze Cash From Consumers Concerns State Regulator

In Denver, Colorado, The Denver Post reports:

• The Colorado Division of Real Estate has issued subpoenas to 13 mortgage loan-modification companies in Colorado, California and Arizona.(1) "Our concern is that there appear to be fly-by-night operations that are soliciting Colorado consumers who appear to be in trouble," said Erin Toll, director of the division. [...] "This is a brand-new cottage industry. These loan-modification companies are springing up like wildfire."(2)

***

• Toll said many solicitations are misleading. At the top of one company's solicitation is "Notice & Demand" in large type, making it appear to be an official document. Some solicitations appear to be from the U.S. Department of Housing and Urban Development until the small print at the bottom of the page. "What we're hearing from consumers is they feel threatened when they get these notices," Toll said.(3)

Toll added that it's illegal even to solicit Colorado residents for loan modifications without being a state-licensed mortgage broker.

For more, see Loan-modification firms subpoenaed.

For story update (12-19-08), see The Denver Post: 3 more loan-modification firms subpoenaed (All are based in California. Such companies may be preying on desperate homeowners).

(1) According to the story, among the paperwork the division wants are documents used for marketing to Colorado consumers; lists of borrowers who have attempted loan modifications and the status of their cases; bank statements; copies of checks; and lists of mortgage lenders or mortgage services the companies have worked with.

(2) Problems occur, Toll said, when the companies or individuals charge large up-front costs, usually one month's mortgage payment, plus a fee of several hundred dollars, then fail to return the borrowers' money when they are unable to renegotiate the loan.

(3) Using written communications that simulate either official court documents, or documents issued by a Federal or state government agency, for the purpose of extracting money from a consumer are the types of deceptive practices that have been declared illegal when done in the debt collection context. See Fair Debt Collection Practices Act, § 807(9), § 807(13). The false representation or implication that a company is vouched for, bonded by, or affiliated with the United States or any State has also been declared to be an illegal practice in the debt collection context. FDCPA, § 807(1). It sounds to me that some of the loan modification people using these types of deceptive practices may be grifters formerly in the debt collection industry who have simply "grifted" into a new line of work.

FTC, Pennsylvania Lender Settle Race Bias Charges; Borrowers' Credit Risk Didn't Warrant Higher Loan Costs, Say Feds

In Horsham, Pennsylvania, the Philadelphia Inquirer reports:

• Gateway Funding Diversified Mortgage Services L.P., a Horsham mortgage lender, has settled federal allegations that it charged African Americans and Hispanics higher prices for loans than it did white borrowers, the government said yesterday.

• "We are not admitting that we did it," said Bruno Pasceri, president and chief executive officer of Gateway. "I can tell you we certainly do not discriminate against anybody. I'm glad it's over."

***

• The FTC found that Gateway loan officers charged several thousand African American and Hispanic consumers more - in higher interest rates and higher up-front charges - than was warranted, given the borrowers' credit risk.

• The settlement payment was set at $200,000, even though the FTC had alleged $2.9 million in damages to consumers. The FTC said it allowed the lower payment because of Gateway's "inability to pay."

***

• Irv Ackelsberg, a consumer attorney with Langer, Grogan & Diver P.C. in Center City, said millions of borrowers were paying more than they should be, feeding the nation's foreclosure problem.

For more, see Horsham lender settles discrimination case.

From the Federal Trade Commission in the matter of FTC v. Gateway Funding:

• Complaint For Permanent Injunction and Other Equitable Relief,
• Stipulated Final Judgment and Order For Permanent Injunction and Other Equitable Relief,
• FTC News Release.

Go here, Go here, and go here for other posts on alleged race bias in real estate transactions. DiscriminationPredatoryLendingAlpha

Foreclosure Rescue Scammer Convicted On State Charges Now Faces Federal Bankruptcy Fraud Allegations Involving Fractional Interest Deed Transfers

In Oakland, California, the San Francisco Chronicle reports:

• A Livermore business owner is facing federal charges for allegedly taking advantage of the mortgage crisis by running an elaborate foreclosure rescue scam, court records show. Sonia Alburez, 37, [...] is accused of inducing homeowners desperate to avoid foreclosure to transfer an interest in their properties to what turned out to be sham companies. She was charged Friday with four counts of bankruptcy fraud in U.S. District Court in Oakland.(1)

***

• She claimed that her company, Community Home Saver Program, could delay or stop foreclosure proceedings so long as homeowners transferred an interest in their properties as a gift to one of several companies and paid fees, authorities said.

• But her customers didn't realize that the companies in question were fictitious and bankrupt, authorities said. Alburez is accused of filing fraudulent bankruptcy petitions for properties in Fremont, San Ramon, Vallejo and Modesto from January to March to delay foreclosure proceedings.

For more, see Livermore woman charged in foreclosure scam.

See also: this report on the use of abusive bankruptcy court filings in connection with foreclosure rescue scams.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

(1) According to the story, Alburez and Verena Silva pleaded no contest earlier this year in Alameda County Superior Court in a similar case. Prosecutors said the women bilked more than a dozen homeowners of $1,500 to $2,500 a month in exchange for a plan the two allegedly said would save homes from foreclosure. Instead, the victims still lost their homes, as well as the money they paid Alburez and Silva. According to an earlier story, they were found guilty of two felony counts each of foreclosure rescue fraud and grand theft. loan modification

Solicitors For Loan Modification Firms "Loitering" At Free Foreclosure Prevention Seminars Seeking New Business Get The Boot

Buried in a recent story on loan modification firms in The Sacramento Bee is this blurb on how some of the companies are reportedly attempting to drum up business:

• [L]ast week, vendors passed out postcards for modification firms at a free Hope Now foreclosure-prevention workshop in Sacramento. State and Consumer Services Secretary Rosario Marin said solicitors always stalk such free events "and we boot them out."

For the story, see Beware of mortgage rescue solicitors.

Missouri "Contract For Deed" Operator Hit With C&D Order By Securities Regulator, Preliminary Injunction By State AG

In Springfield, Missouri, the Springfield News Leader reports:

• The Missouri Securities Division [yesterday] issued a cease-and desist order against Greenleaf Companies of Springfield, its subsidiary and owners Eric Gagnepain and Scott Dasal prohibiting them from offering their real estate investment program, said Ryan Hobart, spokesman for the Missouri Secretary of State’s office.

***

• Greenleaf came under public scrutiny after many of the houses the company brokered recently were lost — or threatened to be lost — to foreclosure.

***

• Greenleaf commissioned the construction of hundreds of investment houses and solicited investors — both in Missouri and out of the state — to take out loans and purchase those homes. In exchange for the use of their good credit, Greenleaf promised the investors at least $10,000 in returns after three years.

• Greenleaf hoped to sell the homes to those with blemished credit histories, letting them move in first on a contract for deed. Greenleaf would collect monthly payments and forward enough to investors to cover their monthly obligations, such as loan principle, interest, taxes and insurance.

• Without enough buyers and adequate income, Greenleaf has been unable to pay its investors, who in turn are defaulting on their mortgages, triggering foreclosures not only in Greene County but Branson, northwest Arkansas and south of Kansas City.

For the story, see State orders Greenleaf to cease and desist operations.

See also:

• Attorney General files preliminary injunction against Greenleaf Companies,
• Greenleaf Companies responds to Attorney General’s injunction.

Go here for other "contract for deed" problems involving Greenleaf Companies.

Legal Aid Effort In Connecticut Has Nationwide Effect As Fannie Persuaded To Reverse Course On Foreclosure Evictions; Freddie Expects To Follow Suit

In Hartford, Connecticut, The Hartford Courant reports:

• What began with a single mother in Hartford fighting her eviction has led to a policy change by Fannie Mae allowing renters to remain in their homes after their landlords are foreclosed on, a switch that could help thousands of renters across the country.

***

• Legal Aid lawyers in Hartford — and subsequently, New Haven — began fighting tenant evictions by Fannie Mae in Housing Court after Congress passed a financial market bailout bill containing provisions protecting tenants in good standing from eviction.

***

• The [Emergency Economic Stabilization Act of 2008] applies to federal agencies that control mortgages. Legal Aid lawyers argued that provisions in the law(1) pertained to both Fannie Mae and Freddie Mac because they were taken over by the federal government. The policy change — Freddie Mac said Monday it expects to follow suit — will have vast implications for renters because Fannie Mae and Freddie Mac guarantee or own half of the country's residential mortgages, which apply to buildings that house one to four families.

For the story, see Hartford Renter's Fight Leads To Fannie Mae Policy Change (Renter Wins Fannie Mae Fight) (if link expires, try here).

See also:

• New Haven Independent: Foreclosure Evictions Halted.
• The Wall Street Journal: Fannie Mae to End Tenant Evictions in Foreclosures.

(1) See Section 109(b) of the Emergency Economic Stabilization Act of 2008, which, they argue, requires Fannie Mae "to permit bona fide tenants who are current on their rent to remain in their homes under the terms of their lease." ThetaTenantRentSkimming

Washington Woman Faces Forgery, Theft Charges In Alleged Refinancing Scam; Accused Of Using Stolen Notary Stamp, Abusing POA In Scheme To Pocket $32K

In Bremerton, Washington, the Kitsap Sun reports:

• A Bremerton woman was charged with forgery and theft [...] after an investigation found she'd stolen a notary stamp and taken more than $32,000 through refinancing schemes where she served as a power of attorney, according to documents filed in Kitsap County Superior Court.

• Ebony L. Washington, 33, was found by a Bremerton police detective to have refinanced an Arsenal Way duplex twice with power of attorney given to her by a 46-year-old Bremerton man.

For more, see Woman Accused of Pocketing $32K in Refinancing Schemes.

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

Ex-Pastor, Ex-Banker Charged With Mortgage Fraud, Forgery, Theft By Deception, Etc. In Alleged Scheme To Swindle Church Members

In Macon, Georgia, the Macon Telegraph reports:

• A former Macon pastor and a former Macon banker were indicted [last] Tuesday by a Bibb County grand jury on RICO charges stemming from an alleged scheme to swindle church members into taking out fraudulent loans totaling more than $600,000, according to court records. The indictment names Steven Pittman, a former employee of BB&T Bank in Macon and Jimmy Collins, former pastor of God’s Worship Center on Gray Highway.(1)

***

• Pittman and Collins allegedly used Pittman’s position as a bank officer to obtain loans and lines of credit for about 10 church members, according to the records. [...] Collins and Pittman provided false financial information about the church members in banking documents, submitted forged documents to the bank and misrepresented the true use of the loan funds, according to court records.

For more, see Ex-pastor, ex-banker hit with racketeering charges in Bibb County.

(1) According to the story, the indictment charges Collins and Pittman with, among other things, violation of the RICO Act, bank fraud, residential mortgage fraud, forgery, theft, and theft by deception, according to court records. DeedTheftAlpha

Mosque Leader Gets 20 Years On Deed Theft Scam Targeting The Elderly & Deceased

In Miami, Florida, The Miami Herald reports:

• An officer at a Liberty City mosque was sentenced to 20 years in prison on Tuesday for his role in a housing scam that stole homes from the elderly -- and even from dead people. Sameer Muhammad, the vice president of Muhammad Mosque No. 29 [...] was convicted earlier this year of nine counts of grand theft, forgery, identity theft and using false identification.

***

• Investigators say Muhammad, 51, and a partner, Carolyn A. Murphy, targeted elderly residents who had liens on their homes. Murphy would file fraudulent deeds showing herself as the owner of the home, and Muhammad would then sell the homes through his real estate investment company, Bar None Properties Inc.

• In one case, investigators found a deed a couple purportedly signed, transferring their home to Murphy years after they had died. Murphy pleaded guilty last year and was sentenced to three years in prison in exchange for her agreement to testify against Muhammad.

For more, see Mosque leader jailed over scam targeting the elderly (A Liberty City mosque leader was given a 20-year sentence for stealing houses from the elderly). DeedTheftAlpha

Stolen Identities, Phony Documents Used In NYC Deed Theft; Leaves One Victim With Ruined Credit & Unwitting Widow Facing Foreclosure

In Jamaica, Queens, the New York Daily News reports on a scam where a con man was paid $1,000 by an alleged fraud ring to show up at a closing pretending to be a homeowner who has been dead for 19 years to sell a home from out from under the deceased homeowner's widow. A stolen identity, backed up with phony documents, was used by a purported buyer to obtain a $533,000 mortgage, which has since gone unpaid, leaving a widow facing the loss of her home of over 30 years, and the identity theft victim with her credit in shambles.

For the story, see Dead man gets mortgage worth whopping $533G. DeedTheftAlpha

Fannie To Extend Moratorium On Foreclosure Evictions; Freddie Mum On Further Action

The Wall Street Journal reports:

• Fannie Mae is finalizing a national policy that will allow tenants to remain in their homes even if their landlord goes into foreclosure -- a landmark decision for tenants. The policy will be in effect Jan. 9, Fannie Mae said Sunday, and reflects growing pressure on the mortgage company from a legal-aid group that threatened to sue over recent evictions. The company said it will also ensure its current holiday moratorium on new evictions is being followed until the new policy takes effect.

***

• In late November Fannie Mae and Freddie Mac said they would suspend tenant evictions temporarily during the year-end holidays. [Connecticut legal aid firm] New Haven Legal Assistance said that despite the pledge, Fannie Mae was proceeding with more than a dozen new eviction cases in Connecticut. The advocacy group said the evictions would violate legislation passed earlier this year to rescue the two mortgage-finance giants that required them "to permit bona fide tenants who are current on their rent to remain in their homes under the terms of their lease."(1)

• In his letter Sunday to the New Haven group,(2) Fannie Mae General Counsel Curtis Lu wrote: "As far as we know, this will be the first nationwide program of its kind." [...] Freddie Mac hasn't announced a similar policy reversal, though a spokesperson said they are "currently evaluating additional actions."

For more, see Fannie Mae to End Tenant Evictions in Foreclosures.

(1) Section 109(b) of the Emergency Economic Stabilization Act of 2008 may require the U.S. Secretary of the Treasury to work with the F.H.F.A. and other government entities to permit tenants in foreclosed homes to remain in their apartments after foreclosure.

(2) Fannie Mae General Counsel Curtis Lu was responding to a December 8, 2008 letter sent by New Haven Legal Assistance, demanding that FNMA immediately cease violating Section 109(b) of the Emergency Economic Stabilization Act of 2008.

Central Florida Non-Profit Loan Modification Organization Leaves Legal Aid Attorney Concerned

In Daytona Beach, Florida, the Daytona Beach News Journal ran a story on the Helping Hands Foundation, reportedly a non-profit, 501(c)(3) organization with the mission of doing loan modifications for homeowners facing foreclosure.

• Foundation directors George and Daisy Raisler(1) gave a free foreclosure prevention/education public workshop this week in Daytona Beach with 20 attendees. They spoke of being able to form a team of experts to review "intake" packages and pick ones that may be successful in getting mortgages modified. They charged $200 for the packages and ask for a donation equal to one month's salary to try to negotiate loan modifications. [...] Anita Lapidus, an attorney with Community Legal Services of Mid Florida, sat through the 90-minute presentation and left concerned.

For more, see Mortgage fraud up as homeowners seek help.

(1) According to the story:

• Court records show Czech-born George Raisler, 41, pleaded guilty in 1996 in South Florida to conspiracy to commit mail fraud and income-tax fraud. He was ordered to pay partial restitution of $45,000 to insurance companies and served five years of supervised probation. That was extended a year after he violated the terms. He also voluntarily filed for bankruptcy in 1997, was ordered to pay $395 after losing a civil complaint in 1996 and in 2000, the Florida Department of Law Enforcement arrested him for grand larceny, trespassing and fraud. He was acquitted, according to court records. Raisler did not respond to telephone calls Friday, asking about his past.

Mass AG Obtains Injunction Against Upfront Fee Foreclosure Rescue Operator; 1st Lawsuit Invoking New State Regs Targeting "Home-Saving" Activities

In Essex County, Massachusetts, The Boston Globe reports:

• The office of Massachusetts Attorney General Martha Coakley said [Friday] that she has obtained a temporary restraining order against David Coleman, "a Methuen mortgage broker who allegedly preyed upon financially distressed homeowners by representing himself to be an attorney and a bankruptcy expert who offered to file bankruptcy petitions to save consumers’ homes from foreclosure."(1)

***

• A press release issued by Coakley's office said: "Coleman would target vulnerable homeowners on the brink of foreclosure by combing newspapers for victims’ contact information in foreclosure notices. He would then allegedly make unsolicited calls to the homeowners where he would offer to save their homes from foreclosure by assisting them in filing for bankruptcy in exchange for a $1,000 cash fee upfront."

For more, see Mass. AG sues mortgage broker.

Go here for the Massachusetts AG's press release: AG General Martha Coakley Obtains Restraining Order Against Methuen Mortgage Broker Who Deceived Homeowners into Believing He Could Assist Them in Saving Their Homes From Foreclosure (First Lawsuit Alleging Violations of Attorney General Coakley’s Regulations on Foreclosure-Related Services ).

(1) According to the story, the temporary restraining order that Coakley obtained in Essex Superior Court prohibits Coleman and his company, Mortgage Finders of New England, from contacting individuals to offer foreclosure related services or assisting individuals with filing for bankruptcy, Coakley's office said. loan modification

Despite Intimidating Letters To The Contrary, NJ Tenants Have Protection From Foreclosure Eviction

In Jersey City, New Jersey, The Jersey Journal reports on the growing practice by real estate agents and others of sending intimidating letters to renters in foreclosed homes in attempts at forcing them to move, despite New Jersey law protecting them from foreclosure eviction.

• The notices the two renters received are typical of the shady "cash for keys" deals being pushed on tenants in foreclosed buildings throughout Hudson County. In each case, a lump sum is offered in exchange for the tenants agreeing to vacate the property [...].

• But when [the tenants] turned to Jorge Aviles, a former councilman and attorney for the Housing Resource Center in Jersey City, he told them they did not have to move because New Jersey law protects tenants from eviction in foreclosure actions.

• Aviles said the "marginally legal" notices are frightening people, especially seniors, who are not aware of their rights. [...] "This is an attempt to trick people into thinking the foreclosure has some impact on them," Aviles said, adding that in his 27 years as a lawyer, he's "never seen stuff like this."

For more, see Shady letters tell tenants to leave now.

See also: Officials acting to protect tenants:

• [T]he notices, which are popping up more often in Hudson County and other areas hit hard by foreclosures, tell the tenants they will be kicked out if they do not take cash to vacate their apartments, despite a state law that forbids such evictions. ThetaTenantRentSkimming

San Bernardino County Man Charged In Theft Of Elderly Couple's Home; Allegedly Pocketed $250K In Subsequent Refinance

In Southern California, the San Bernardino County District Attorney's Office announced that investigators in its Real Estate Fraud unit arrested real estate agent Anthony Vargas, 34, at his office in Rancho Cucamonga, CA.(1) According to the DA's press release:

• [I]n February 2008, Vargas fraudulently acquired a property in Rancho Cucamonga that belonged to an elderly Rancho Cucamonga couple. Vargas completed a Grant Deed and forged the victims' signatures, granting the property into his name. Vargas recorded the Grant Deed with the San Bernardino County Recorder’s Office and became the owner of record of the residential property. The victims owned this property outright with no mortgage owed. Vargas immediately took out a loan on the property in the amount of $250,000. [...] During the loan process the property was appraised at $1,200,000.

For the press release, see Rancho Cucamonga Man Arrested for Real Estate Fraud.

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

(1) Vargas faces felony counts of Grand Theft (PC 487), Forgery (PC 470), Filing a False/Forged Document with the County Recorders Office (PC 115a) and Financial Elder Abuse (PC 368d), according to the DA's press release. Links are to the relevant sections of the California Penal Code. DeedTheftAlpha

Closing Agent Get 21 Months In Prison For Pocketing Escrow Cash Intended To Pay Off Existing Mortgages; Title Underwriter Takes $877K Hit

The U.S. Attorney for the District of Maryland announced Monday that Marny Arlen Bailey, age 35, of Highland, Maryland, was sentenced to 21 months in prison followed by five years of supervised release for wire fraud in connection with a scheme to steal real estate settlement funds which were intended to pay off the homeowners’ previous loans. She was also ordered to pay restitution of $877,000, to the title company who paid off the homeowners’ loans after the fraud was discovered. According to the U.S. Attorney's press release:

• Beginning in late 2007 or early 2008, Bailey used funds which were intended to pay off mortgage lenders for her own purposes. In early 2008, she diverted whole settlement amounts to her personal accounts, and started gambling in an attempt to recoup the amounts she had stolen. [... S]he stole settlement monies from as many as four homeowners, for a total of over $877,000.

For the press release, see Settlement Officer Sentenced For Diverting Funds Intended To Pay Off Mortgage Lenders (Stole Over $877,000 in Just Three Months).

Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds. EscrowRipOffAlpha

NYC Pro Bono Effort Taking Hold As Attorneys Answer The Call, Step Up To The Plate

In Brooklyn, New York, the Brooklyn Daily Eagle reports:

• [I]n Kings County, the Volunteer Lawyers Project is spreading. And despite the economic crisis that this country is facing, the project is expanding — perhaps even surging — with new attorneys willing to work for free.

***

• “It’s truly been an explosion of pro bono,” said Jeannie Costello, executive director of The Brooklyn Bar Association’s Volunteer Lawyers Project. “This has been an extraordinary year for the VLP.”

For the story, see Local Pro Bono Attorneys Forego Paychecks for Applause.

**************

In a related story, see The AmLaw Daily - Pro Bono Picks Up in Down Times:

• When the Association of the Bar of the City of New York hosted a session in mid-October to train commercial lawyers to handle pro bono foreclosure cases, they expected about 70 to 80 people to show up. "We ended up with 245," says Lynn Kelly, executive director of the City Bar Justice Center, the public interest arm of the city bar association. "It took us completely by surprise."

NY Times Considers Possible Sale Leaseback Of Its Free & Clear Interest In 52-Story Headquarters; Seeks "Rescue" From Potential Cash Flow Squeeze

In New York City, The New York Times reports:

• The New York Times Company plans to borrow up to $225 million against its mid-Manhattan headquarters building, to ease a potential cash flow squeeze as the company grapples with tighter credit and shrinking profits.

• The company has retained Cushman & Wakefield, the real estate firm, to act as its agent to secure financing, either in the form of a mortgage or a sale-leaseback arrangement, said James M. Follo, the Times Company’s chief financial officer.

• The Times Company owns 58 percent of the 52-story, 1.5 million-square-foot tower on Eighth Avenue, which was [...] completed last year. The developer Forest City Ratner owns the rest of the building. The Times Company’s portion of the building is not currently mortgaged, and some investors have complained that the company has too much of its capital tied up in that real estate.(1)

For more, see Times Co. to Borrow Against Building.

(1) Unlike the average homeowner in foreclosure, The Times is affirmatively and publicly expressing its interest in a possible sale leaseback with potential funding sources, and has retained the services of professionals to seek out such a transaction. The Times, with its access to sophisticated legal and financial advisers, has the kind of bargaining power that makes it an unlikely target for an equity-stripping scam. See generally, DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams.

Accordingly, such a transaction, should it take place, probably runs a minimal risk of being recharacterized as an equitable mortgage. See generally, When is a Sale-Leaseback an Equitable Mortgage?

Missouri Feds, State AG, Local Cops Raid "Contract For Deed" Operator; Firm Subject To Numerous Complaints; Company Issues Public Statement

In Springfield, Missouri, OzarksFirst.com reports:

• Springfield police, the FBI and the Missouri Attorney General's office raided the Springfield office of Greenleaf Companies Tuesday. The company, which has been accused of real estate fraud, acts as a go-between, between home buyers and sellers - some buyers say Greenleaf never submitted their payments to the seller, sending the homes into foreclosure.

For the story, see Greenleaf Offices Raided by FBI.

See also, Springfield News Leader: FBI, Attorney General's office investigating Greenleaf.

********************

Story update:

The Springfield News Leader reports that Greenleaf Companies and its sister company, The Real Estate Co., issued a statement Wednesday afternoon addressing Tuesday's search of their Springfield offices by the Missouri attorney general's office. For their statement, see:

• Greenleaf issues statement about attorney general's probe.

See also, Greenleaf defends business after authorities search its offices.

*********************

Go here for other "contract for deed" problems involving Greenleaf Companies. Arkansas

City Of Memphis, Shelby County Consider Lawsuits Against Predatory Lenders

In Memphis, Tennessee, WHBQ Fox-TV Channel 13 reports:

• The city and county mayors are considering drastic action because of the area's foreclosure epidemic. The idea is still in the early stages, but Memphis and Shelby County leaders are heavily researching a plan to sue mortgage companies. Leaders blame these loans for Memphis having the highest foreclosure rate in the state.

• Similar lawsuits are underway in another part of the country. The City of Baltimore is overrun with foreclosed homes. Leaders there saw predominately African American neighborhoods with extremely high foreclosure rates. The situation is similar in Memphis, where 10 percent of some neighborhoods have foreclosed homes.

For more, see Local Leaders Consider Suing Mortgage Companies.

See also, The Memphis Daily News: Predatory Lending Suit Could Gain Traction.

For lawsuits alleging predatory lending filed by officials in Baltimore, Maryland, and the state of Massachusetts, see:

• Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al. (approx 9.74 MB),
• Commonwealth of Massachusetts v. H&R Block, Inc., et al. (approx 5.25 MB).

Lawyer Successfully Squeezes Settlement From Insurer For Client's Damage Claim From Unknown Meth Lab

In Loveland, Colorado, the Denver Daily News reports on a story of a local couple who rented out a basement apartment to their son-in-law, only to have their entire home subsequently condemned as a result of contamination caused by the son-in-law's clandestine meth lab operation on the premises. Local officials promptly kicked the couple out of their home because, until the the contamination could be remediated, the premises was deemed uninhabitable.

Reportedly, after having their insurance claim for the damage denied, and after having their case turned down by a number of attorneys unwilling to go after the insurance company, the homeowners found legal counsel willing to take the case and who successfully obtained a satisfactory settlement from the insurer for the meth lab damage.

An excerpt from the story regarding how to handle a meth contamination claim with an insurance company:

• The trick is showing that homeowners had been the victim of mischievous behavior or vandalism — an unknown meth lab would fall under that category, said [Attorney Brett A.] Buccheit [with the Denver-based Frankl Law Firm].

• “The contamination exclusion is solid, you can’t get around it. No amount of fancy lawyering is going to change the words of the policy,” he said. “But if the property is treated in a manner inconsistent with the homeowners’ rights, such as malicious mischief or vandalism, then that is covered.” [...] The [homeowners] say they were able to settle for an amount that paid most of their costs.

For the full story, see Lawyer fixes meth mess (Denver-based Frankl Law Firm aids family with no other options).

Go here and Go here for other posts on home-based methamphetamine labs. meth lab yak

Texas AG, State Legislator Propose Law Targeting Upfront Fee, Sale Leaseback Foreclosure Rescue Scams

From the Office of the Texas Attorney General:

• Texas Attorney General Greg Abbott and state Sen. Craig Estes (Wichita Falls) announced a legislative initiative that will help protect Texas homeowners from foreclosure rescue scams. If enacted, the proposal would enhance the Attorney General’s enforcement authority, provide new protections for homeowners, and place new restrictions on foreclosure prevention consultants.

For the rest of the press release, see Attorney General Abbott, Sen. Estes Propose Bill To Protect Texans From Foreclosure Rescue Scams (Foreclosure Rescue Fraud Prevention Act to strengthen penalties for scams).

AZ R/E Agent Admits Forgery On Subordination Agreement Making Seller-Held Note Junior To New Financing; Both Loans Now In Default

From the Office of the Arizona Attorney General:

• Attorney General Terry Goddard [last week] announced that former real estate agent Roy Keith Fife, 47, of Tucson, pleaded guilty to fraud and forgery charges at a hearing in Pima County Superior Court [...].

• At the hearing, Fife admitted forging the signature of a client for whom he served as a residential real estate sales agent. Fife forged the signature on loan documents to facilitate the sale of the client’s property. Through this sale, Fife obtained a commission of more than $100,000.

• As a result of Fife’s forgery, his client’s carryback loan was made junior to a million-dollar equity loan taken out by the buyers. The seller specifically required in the sales contract that his carryback would be in first position. The buyers of the property have since defaulted on both loans.

For the press release, see Tucson Real Estate Agent Pleads Guilty to Fraud, Forgery.

Forged Deed & Subsequent Refinance Leaves Bronx Homeowner Facing Foreclosure, I.D. Theft Victim's Credit In Ruins

In The Bronx, New York, the New York Daily News reports:

• Phillip Powell, who lives in Baldwin, L.I., never even laid eyes on a house on E. 215th St. in the Bronx when one day he learned that he owned it. He received mail saying he owed payments on a $370,000 mortgage he had taken out on the single-family home.

***

• Paula Penrose, who lives at the east Bronx property that she bought in 2002, was equally shocked when she learned Powell owns her home.

***

• In a classic case of deed theft, someone stole Powell's identification and forged a deed transferring ownership from Penrose to Powell.

• Then, the person pretending to be Powell used the forged deed to take out a $370,000 mortgage from New Century Mortgage Co. on the E. 215th St. home. Because neither the real Powell nor the fake Powell were making monthly mortgage payments, New Century began foreclosure proceedings against the property, and Penrose and her family face eviction.

For more, see You own a house - but we're taking it. DeedTheftAlpha

Feds, State Authorities Bust Global I.D. Theft Ring For Allegedly Hijacking Homeowner HELOCs; Millions In Equity Drained Out Of Homes

The Washington Post reports:

• Federal authorities [last month] announced a series of arrests and convictions in connection with a global identity theft ring that stole millions of dollars by hijacking home-equity lines of credit issued to thousands of consumers.

***

• The cases highlight what the FBI calls an "emerging scheme" afflicting the struggling real estate and mortgage market. In such crimes, thieves target people with good credit and large, untapped home-equity lines of credit, digging through public records -- such as property deeds and mortgages -- as well as publicly available Internet databases to obtain credit applications, credit reports and victim signatures.

• "Home-equity lines of credit are an expanding front in the battle against mortgage fraud," said New Jersey U.S. Attorney Christopher J. Christie. "Homeowners should carefully review their statements to make sure their hard-earned equity is not disappearing from under their noses."

For more, see Thieves Stole Identities to Tap Home Equity.

Subprime Loans That Lenders Knew Or Should Have Known Were Unsustainable Are Illegal, Says Massachusetts High Court

The Boston Herald reports:

• The Bay State’s highest court has issued a landmark ruling tentatively declaring whole classes of subprime mortgages unfair under Massachusetts law. “Originating loans with terms that in combination would lead predictably to . . . default and foreclosure (is) within established concepts of unfairness,” state Supreme Judicial Court justices unanimously ruled yesterday. The decision upholds a lower-court injunction issued against subprime-lending giant Fremont Investment & Loan.

• Suffolk Superior Court Judge Ralph Gants handed down the injunction in February, declaring - apparently for the first time in state history - that some subprime-mortgage terms automatically violate Massachusetts law.

• Ruling in a lawsuit brought by state Attorney General Martha Coakley, Gants found that many of Fremont’s Bay State subprime loans seemed “doomed to foreclosure” from the start. The judge ordered Fremont to give Coakley’s office a chance to object before foreclosing on any of 2,700 Massachusetts subprime mortgages with terms Gants deemed “structurally unfair.”

• Last month, the judge issued a similar injunction against Option One Mortgage, which oversees another 8,000 questionable Massachusetts subprime loans. Although Gants’ rulings are preliminary, and subject to change as cases work their way through courts, experts still see yesterday’s SJC move as precedent-setting.

• “We think this is an important milestone not just for Massachusetts, but also for other states that want to use their consumer-protection powers against unfair and deceptive (mortgage) marketing,” Coakley said.

For the story, see High court hits subprime lenders.

See also:

• Massachusetts Supreme Judicial Court decision: Commonwealth vs. Fremont Investment & Loan (for a possibly easier to read version with all the footnotes appearing at the end of the case, try here),
• Massachusetts Attorney General press release,
• Massachusetts Lawyers Weekly: SJC restricts ‘subprime’ foreclosures,
• The National Law Journal: Mass. High Court Upholds Order Restricting Subprime Lender From Foreclosing.

For posts that reference the failure of some mortgage lenders and their attorneys to prove ownership of the promissory note when starting foreclosure actions, Go Here, Go Here, Go Here, and Go Here. missing mortgage foreclosure docs gamma SloppyForeclosuresAlpha

Fear Of Investor Lawsuits Impede Loan Modification Efforts

In Bradenton, Florida, a column in the Bradenton Herald offers a view on why mortgage lenders are so reluctant to offer loan workouts on delinquent home mortgages:

• [T]hat's because most lenders sold their mortgages, which were soon packaged with others and the packages sold in shares. Now, ownership and securitized stakes in the expected profits are in the hands of multiple institutions and retirement funds and such.

• According to April Charney, a lawyer who teaches other lawyers about this stuff, some institutions don't even own what they invested in. It is a huge problem for our country that, systemically, a Ponzi scheme was at work as, she said in an e-mail, "originating lenders failed to legally transfer notes and mortgages, leaving the investors in these trusts (us, our states, our schools, our pensions, the Bank of China, etc.) owning air. Sliced and diced air."

• That ownership web can make it hellish to find anyone who dares restructure a mortgage. Often no one is sure who has authority to make a deal, let alone thousands of deals. Mortgage servicers fear being sued by investors if they exceed contractual authority, and the contracts with different investors vary.

For more, see Why won't the lenders try to cut a deal? missing mortgage foreclosure docs gamma MortgageServicingIssuesAlpha

Compelling Loan Modifications A Violation Of Investors' Constitutional Rights? Not So, Says One Expert

David Dana, professor of law and associate dean for academic affairs at Northwestern University School of Law writes in The Huffington Post:

• In recent years, mortgages have been carved up into so many pieces that the re-working of mortgages -- and the saving of homes from foreclosure -- is not happening even when there are responsible homeowners who are willing and able to make reasonable payments.

• Regulators and politicians have done nothing yet to compel the re-working of mortgages, in part because they fear that they will be labeled as trampling upon the constitutional rights to property of the investors who own parts of these troubled mortgages.

***

• Our property law and property rights tradition simply does not require, or even allow, our lawmakers to sit back while the ill-advised chopping up of property into competing interest creates a gridlock that undermines national prosperity. As Abraham Lincoln famously remarked, the Constitution is not a suicide pact.

For the case Professor Dana makes in support of his position, see The Feudal Mistake.

Ohio Homeowner Hits Jackpot; Lender Loses Right To Foreclose On Delinquent Mortgage Due To Violation Of Procedural Rule, Says State High Court

In Canton, Ohio, The Repository reports:

• A city man took his foreclosure dispute to the state’s highest court, and according to a ruling issued today, he won. What that means for Giuseppe Gullotta is that he gets to remain in his house without a mortgage. What it means for homeowners around the state remains to be seen.

• The case involved a rule that limits plaintiffs to one re-filing after a civil lawsuit has been voluntarily withdrawn. During a two-year period, U.S. Bank filed three foreclosure actions against Gullotta, [...]. The bank voluntarily dismissed the first two complaints.

• In 2005, it filed a third. Gullotta said that broke the re-filing rule, but the trial court and 5th District Court of Appeals said the foreclosure was legal. In March, the Ohio Supreme Court heard arguments. U.S. Bank argued that the third case wasn’t the same as the first two because it didn’t try to collect payments and interest owed before April 2005, which the other cases did.

• But Gullotta’s attorney said the complaints were essentially the same. The court justices agreed in a 5-2 vote.

According to the court decision, the amount owed at the time of the start of the foreclosure action was $164,390.91, plus interest at the rate of 7.35 percent per year.

For the story, see North Canton man wins foreclosure case in Ohio Supreme Court.

For the decision of the Ohio Supreme Court, see U.S. Bank Natl. Assn. v. Gullotta (2008-Ohio-6268, slip op., December 10, 2008). UndoMortgageLoans TILAdelta SloppyForeclosuresAlpha

NYS Appeals Court To Review County's Foreclosure Attempt Where Owner Failed To Include $25 Late Fee With Tendered Tax Payment; Faulty Notice An Issue

In Canandaigua, New York, the Daily Messenger reports:

• A panel of nine judges with the state Appellate Division’s Fourth Department will hear arguments Monday in the case of a man battling Ontario County to keep his Monks Road property off the auction block.The eight-acre wooded parcel overlooking Canandaigua Lake was to be auctioned this past May 14 at Ontario County’s annual foreclosure auction for unpaid property taxes.

• But property owner Bruce Middlebrook took the county to court, claiming he had tried to pay the amount he was told he owed by the due date, however, the county refused to accept his payment because it lacked a $24.74 late fee.

• Middlebrook’s attorney, David Whitcomb, said he will argue two points. The first is the county failed by giving Middlebrook wrong information about the amount owed. Additionally, Whitcomb will argue, it failed to notify Middlebrook the foreclosure process had begun in January 2006, because Middlebrook did not receiving notice of the back taxes until October 2007, four months before the final date to pay his bill Jan. 18, 2008.

For more, see County, homeowner battle over auction.

For another report on a lawsuit involving the issue of giving faulty notice to a property owner in an Ontario County, NY tax foreclosure action, see Court Denies Dismissal Of Suit Accusing County Of Screw Up In Giving Proper Notice To Owner In Tax Foreclosure Action. foreclosure faulty notice

Another "Money Store" Defendant Falls; Maryland Feds' Tally Reaches Four In Equity Stripping, Foreclosure Rescue Scam Prosecution

From the Office of the United States Attorney (District of Maryland):

• Katisha Fordham, age 35, of Washington, D.C., pleaded guilty [yesterday] to conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.(1)

For the U.S. Attorney's press release, see Metropolitan Money Store Loan Processor Pleads Guilty In Mortgage Fraud Scheme (Under the Scheme Conspirators Took Title of Homes from Financially Distressed Homeowners and Secretly Used Home Equity for Personal Benefit).

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

Go here for criminal prosecutions of foreclosure rescue operators.

(1) According to the press release, Katisha Fordham is the fourth defendant to plead guilty in the Metropolitan Money Store mortgage fraud scheme. Richard Allison, age 37, of Camp Springs, Maryland, an attorney and employee of the U.S. Census Bureau; Clifford McCall, age 47, of Lanham, Maryland, president of Burroughs & Smythe Financial Services, Inc., based in Lanham and a director of the Fordham & Fordham Investment Group, Ltd., a foreclosure consulting and credit servicing business based in Lanham and Greenbelt, Maryland and Carlisha Dixon, age 31, of Hyattsville, Maryland, vice president and a director of Burroughs & Smythe Financial Services, Inc.; each pleaded guilty to the conspiracy and are facing a maximum sentencing of 30 years in prison. joyjackson

Texas AG Gets Permanent Injunction Against Upfront Fee Foreclosure Rescue Operator; Firm To Pay $1.55M

Buried in a recent press release is the following announcement from the Office of the Texas Attorney General:

• [A]ttorney General Abbott revealed the results of a recent enforcement action against a mortgage rescue fraud scheme. Arizona-based Abell Mediation, Inc., and its president and vice-president, Elizabeth Cory and Michael Cory, respectively, were charged with fraudulently claiming that their company could save homeowners from imminent foreclosure. Homeowners who were delinquent on mortgage payments responded to the defendants’ solicitation cards and Web site. The defendants’ cards claimed that “Abell Mediation, Inc. has saved over 7,000 homes from foreclosure,” boasted about a “staff of highly trained loss mitigation specialists” with established relationships with mortgage lenders and banks nationwide and promised to “achieve results that no one else can.”

• Under an agreement secured by the Attorney General, the defendants are permanently enjoined from conducting a foreclosure mitigation business in the future. The defendant is also required to pay a total of $1.55 million in fines, restitution and attorneys’ fees.

Go here for the Texas AG 12-10-08 press release.

Go here for the Agreed Final Judgment with Abell Mediation, Inc.. loan modification

Disabled Michigan Woman Fighting Eviction After Being Screwed In A Sale Leaseback, Foreclosure Rescue Scam

In Sturgis, Michigan, Workers World reports the story of a disabled homeowner who is now fighting off eviction after being victimized by mortgage fraud when she attempted to save her home after she fell behind on payments due to medical expenses. From the story:

• A bogus mortgage company, which subsequently had its license revoked, tricked Brown into signing her house over to them. She continued making what she believed were the mortgage payments.

• Recently, after being served with eviction papers, Brown learned she had been scammed and the house was in foreclosure. She discovered she had lost her property rights and was only a tenant in her own home. She filed complaints with the FBI, police and the State Office of Financial Services.

For more, see Help stop eviction of disabled woman.