Queens DA Bags Seventeen Suspects In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket

From the Office of the Queens District Attorney's Office:

• Queens District Attorney Richard A. Brown, joined by New York State Banking Superintendent Richard H. Neiman(1) and Acting New York State Police Superintendent John P. Melville, [] announced that 17 individuals – including two Queens attorneys – have been charged with defrauding legitimate homeowners and various lending institutions out of more than $3 million in equity that had been stripped from 26 refinanced residential properties valued at $13 million.(2)

***

• The investigation further allegedly revealed that [Roger] Huggins and [Inderpaul] Sookraj targeted homeowners in Queens, Brooklyn and the Bronx who had substantial equity in their residences but either faced foreclosure due to their inability to make monthly mortgage payments or were simply behind in their mortgage payments and looking to refinance or modify their loans with their lenders. It is alleged that Huggins and Sookraj offered to help the homeowners by instructing them to permit title to their homes be put in the name of a third-party purchaser (a “straw buyer”) for one year, during which time the two defendants promised to improve the homeowners’ credit rating, help them obtain more favorable mortgages on their homes and ultimately, return to them the title to their homes. What allegedly occurred at the closings, however, was that Huggins and Sookraj – in order to keep as much of the mortgage proceeds as possible – fabricated reasons why they needed to hold the homeowners’ funds in escrow – such as that the equity withdrawn from the properties would be used to pay the mortgages and expenses on the homes and to repair the homeowners’ credit.(3)

For the Queens DA press release, see Seventeen Individuals - Including Two Attorneys Charged in Massive Multi-Million Dollar Real Estate Fraud (Ringleaders Allegedly Targeted Distressed Homeowners in Mortgage Rescue Scams; 26 Refinanced Residential Properties Stripped Of More Than $3 Million In Equity).

Go here for a Queens DA flowchart of how the alleged racket worked.

Thanks to Catherine Isobe of Bedford Stuyvesant Community Legal Services, Brooklyn, NY (a part of the Legal Services NYC network of organizations providing free legal services for low income people throughout NYC) for the heads-up on the press release.

(1) State Banking Superintendent Neiman said, “The fact that these defendants took advantage of homeowners in distress, and in the guise of helping, actually stripped them of their equity and ownership, is compounded by the fact that some of these defendants were licensed professionals – attorneys, mortgage brokers and real estate advisors. Instead of acting as the gatekeepers whose function it is to protect the interests of vulnerable homeowners, they abused their positions in order to steal millions of dollars. [...]"

(2) The defendants are variously charged with first- and second-degree grand larceny, first degree criminal possession of stolen property, first-degree money laundering, first-degree identity theft, second-degree forgery, second-degree criminal possession of a forged instrument, first-degree falsifying business records, first-degree offering a false instrument for filing, first-degree scheme to defraud and fourth-degree criminal facilitation. If convicted, the defendants face as much as 25 years in prison. For the entire "honor roll":

HOME SOLUTION OWNERS (2)

• ROGER HUGGINS, 34, of 92-06 Springfield Boulevard, Queens Village, New York, is the co-owner of Home Solutions, located at 127-16 Liberty Avenue in Richmond Hill, Queens. He is also the owner of Huggins Realty, LLC (an alleged shell corporation) and a loan officer with DMV Mortgage.
• INDERPAUL SOOKRAJ, 44, of 116-01 Sutter Avenue, South Ozone Park, New York, is the co-owner of Home Solutions, located at 127-16 Liberty Avenue in Richmond Hill, Queens. He is also the owner of Marlon Brando Construction Company (an alleged shell corporation). (Fugitive)

ATTORNEYS (2)

• SHAWN D. CHAND, 34, of 248 Mill Road, Valley Stream, New York, maintains a law office at 110-13 Jamaica Avenue, Richmond Hill, Queens.
• TREVOR RUPNARAIN, 48, of 114-28 149th Avenue, South Ozone Park, maintains a law office at 131-02 Liberty Avenue and previously at 117-15 101st Avenue, both in Richmond Hill, Queens. He is also the registered real estate broker and owner of Remax Xcel Realty located at 131-02 Liberty Avenue.

REAL ESTATE PERSONNEL (3)

• ANAND BHARAT, 54, of 94-38 216th Street, Queens Village, was a licensed real estate salesperson with defendant Rupnerain’s company, Remax Xcel Realty, and owned A&T Realty, a non-licensed real estate brokerage company (an alleged shell corporation), and Signature Management Company (also an alleged shell corp oration).
• * PRAHALAD MAHADEO, 32, of 89-15 205th Street, South Richmond Hill, New York, was a licensed real estate salesperson with defendant Rupnerain’s company, Remax Xcel Realty, and owned Reliance Realty, a non-licensed real estate brokerage company, and New Liberty Construction.
• MANGAL SINGH, 57, whose last known address was 774 Regent Drive, Westbury, New York, was the principal founder and owner of DMV Mortgage, located at 127-18 Liberty Avenue. The company is presently out of business and the defendant is believed to be in India. (Fugitive)

RECRUITERS (2)

• ** ARIEL HUGGINS, 36, of 92-06 Springfield Boulevard, Queens Village, New York.
• MOHAMMAD ABDALLAH,37, of 106-19 Guy R. Brewer Boulevard, Jamaica, New York. (Fugitive)

STRAW BUYERS (8)

• MICHAEL ABDUL, 44, whose last known address was 107-12 129th Street, South Richmond Hill, New York, is believed to be in Florida. (Fugitive)
• FAIZ ALI, 46, of 101-67 121st Street, South Richmond Hill, Queens.
• JAGDESH KULDIP, 31, of 245-28 147th Road, Rosedale, New York.
• PURNIMA MAHAMMED, 29, of 102-12 135th Street, South Richmond Hill, New York.
• ANEESA MOHAMMED, 30, is believed to be in Florida. (Fugitive)
• KRISHNA RAMROOP, 56, of 102-12 135th Street, South Richmond Hill, New York.
• VADIANUTH SANICHAR, 44, of 97-14 129th Street, Richmond Hill, New York.
• DAVID SOOKDEO, 29, of 144-07 168th Street, Jamaica, New York.

* was also a recruiter
** was also a straw buyer

(3) According to the DA's press release, investigators believe that this alleged racket also engaged in using forged documents to steal homes out from under homeowners, one of whom was already dead, according to this excerpt:

• In another instance, it is alleged, Huggins and Sookraj drafted and filed fraudulent documents which purported that they had purchased a home from a homeowner who, in fact, had died a year prior to the closing. The defendants subsequently flipped the property to a straw buyer at an inflated price ($420,000), thus allowing them to keep and split the entire loan proceeds between themselves and their co-defendants as there was no actual seller of the property. To date, the Jamaica, Queens, property remains vacant and the loan has gone into default.
• It is additionally charged that Huggins and Sookraj stole the property deeds of at least two homes outright by fraudulently creating documents – complete with such identifying information of the homeowners as their social security numbers, dates of birth and driver’s licenses – which purported that the homeowner had sold their homes to Huggins and Sookraj, who then turned around and sold the properties to straw buyers. The homeowners neither had any knowledge of the fraudulent transactions, nor did they realize that their home had been stolen. In both instances, the original homeowners allegedly had met Huggins when he offered to assist them with the “short sale” of their properties. In one case, the homeowner had gone to Huggins because he had lost his job and his wife was stricken with cancer.

Two Phoenix Cops Face Internal Police Probe After Financially Strapped Homeowners' Complaints About Off-Duty Business Peddling Sale-Leaseback Programs

In Phoenix, Arizona, The Arizona Republic reports:

• Two Phoenix police lieutenants are under investigation after residents complained that some of the 120 real-estate purchases conducted by their off-duty business were unethical or illegal. Lts. Mark Tallman and Lee Brent Shaw have been involved in several lawsuits, each of which were dismissed or settled for small amounts, court records show.

• The lieutenants' Better Choice LLC focused between 2002 and 2006 on buying distressed homes where owners were on the brink of foreclosure. In many cases, they developed lease-buyback options where residents could remain in the homes with the option to buy. Another company, Taken Care of Investments, identified the at-risk homeowners and worked with the lieutenants - who are accused of charging exorbitant fees to manage the properties in various trusts.

• The Phoenix Police Professional Standards Bureau is looking into allegations against Tallman and Shaw, though police on Thursday could not confirm the full nature of the allegations.(1)

For the story, see Phoenix lieutenants face probe over real-estate business.

(1) The story is silent as to how, if at all, these sale leaseback transactions differed from those involved in the foreclosure rescue, equity stripping racket that the Arizona Attorney General's Office prosecuted in a civil lawsuit last year. See:

• 400 Sale Leasebacks Are Disguised Equitable Mortgages, Says AZ AG In Invoking State Consumer Fraud Act, TILA In Suit Against Foreclosure Rescue Firm,
• Foreclosure Rescue Operator To Cough Up $690K+ To Resolve Arizona AG Civil Charges In Alleged Sale Leaseback Equity Stripping Scam.

Judge Sticks Sale Leaseback Peddler With Tab For Victim's Interim Attorney's Fee Even Though NJ Consumer Fraud Act Lawsuit Is Still In Discovery

In Newark, New Jersey, the New Jersey Law Journal reports:

• In a case of first impression, an Essex County, N.J., judge has awarded counsel fees during a pending Consumer Fraud Act suit, brought by a couple who claim they were scammed by two foreclosure-rescue companies.

• Superior Court Judge Kenneth Levy made the award after granting preliminary injunctive relief for the plaintiffs, saying "the question is ... can the court award counsel fees at this stage in the proceeding, and there is really no case law that's been presented to me that says I cannot do that."

• In his motion for the pre-judgment fee award, plaintiffs lawyer Abraham Borenstein, who heads a firm in Springfield, N.J., said there is precedent for interim awards in other fee-shifting cases though none under the applicable Consumer Fraud Act section, N.J.S.A. 56:8-19. Ruling on April 23 from the bench, Levy found the preliminary injunction -- based on a probability of success on the merits -- was sufficient to trigger that section, which provides for fees and costs to anyone granted equitable relief under the Act.

• "Although I'm not in a position to order a final judgment, I think that the plaintiffs should be awarded counsel fees for at least the work that they had to do through obtaining the preliminary injunction," the judge said in Pena v. Newell Funding, LLC, ESX-C-16-09.

• The case is still in discovery, but Levy cited strong evidence of fraud already uncovered, which probably will result in the court imposing an equitable mortgage: a remedy that returns title to people who have been defrauded out of their property by an illegal mortgage scheme.(1)

• In the suit, plaintiffs Juan Miguel and Iluminada Pena of Newark, N.J., claim that when they sought help from Newell Funding, a New York mortgage company, to forestall foreclosure of their home, Newell devised a scheme that purported to give them a $125,000 mortgage loan but actually had them execute a deed to a newly formed company, 376 Broad Street LLC, for little or no consideration. The suit charges Newell and other defendants -- including another mortgage company, Multi Solutions LLC -- used confusing documents to turn the loan into a sale without the plaintiffs' knowledge.

• In January of this year, Levy entered a temporary restraining order barring the defendants from selling, encumbering or transferring the home, and in March he granted the preliminary injunction.

• Levy awarded fees incurred from the outset of the case, filed in August 2008, to the entry of the injunction in March 2009. The award was made jointly and severally against the two mortgage company defendants and five other defendants. Borenstein calls the fee award "groundbreaking" and says it means that "litigants -- who previously could not afford to initiate a lawsuit -- are now empowered to fight and expose mortgage fraudsters."

• Borenstein is preparing his certification of time spent on the case, saying he will seek his customary hourly rate of $500 and will renew his fee application periodically as the case proceeds. "The right to attorneys' fees, in my estimation, is not dependent on winning the entire case," he says. "It's dependent on winning relief. We have won relief already."

• Newell was represented by Raphael Jacobs, of Jacobs & Bell in Tenafly, N.J., but on April 23, Levy approved a plaintiff's motion to disqualify him and add him as a defendant, says Borenstein's associate, Massimo D'Angelo. Jacobs declines to comment. The attorney for Multi Solutions, Scotch Plains, N.J., solo Richard Friedman, says, "I don't believe there's any support for the award of attorney's fees." He adds that the allegations against his client are "without foundation."

Source: Interim Attorney Fees Awarded in Consumer Fraud Suit Over Mortgage.

(1) In another recent New Jersey case in which, among other things, the attorney for the victim of another sale leaseback, foreclosure rescue equity stripping ripoff reportedly filed a request with the court to order the scammer to pick up the bill for his attorney's fees, see:

• Foreclosure Rescue Operator, Closing Attorney Found Jointly Liable For $690K+ In Bogus Sale Leaseback, Equity Stripping Ripoff,
• Bankruptcy Judge Disregards Terms In Sale Leaseback Docs In Home Sale; Recharacterized Equity Stripping F'closure Rescue Scam As An Equitable Mortgage.

The underlying story in these posts, originally reported in the New Jersey Law Journal (see Real Estate Lawyer Liable for Damages for Role in Client's Mortgage Scam) contained the following excerpt in this regard:

• [Gabriel] Halpern, of PinilisHalpern in Morristown, N.J., has already filed an application for $33,932 in fees and asked U.S. Bankruptcy Judge Raymond Lyons Jr. to multiply the amount by three, for an enhanced fee of $101,797.

(By the way, the appication of a "lodestar multiplier" in calculating the amount of enhanced plaintiff's attorney fees a court will impose on a losing defendant is not unheard of in foreclosure rescue scam cases. For example, in affirming a lower court judgment against a foreclosure rescue operator for violations of the state's Consumer Protection Act in operating a sale leaseback scam, the Nebraska Supreme Court in Eicher v. Mid America Financial Investment Corp., 270 Neb. 370, 702 N.W.2d 792 (2005) ok'd use of a multiplier of 1.3 in calculating the total tab of $375,000+ for plaintiff's attorney's fees that the operator was responsible for paying. Plaintiffs’ lead counsel requested fees based on 2,589 hours of billable time by various persons in his law firm.)

Bay Area Foreclosure Help, Rent Skimming Racket Pocketed $2K Both From Homeowners To Sign Away Deed & Tenants To Lease Home Subsequently Auctioned Off

In Northern California, KGO-TV Channel 7 reports:

• Dozens of distressed Bay Area homeowners say they have been lured into signing away their homes to a company offering to help them. A seven-month 7 On Your Side investigation has uncovered what happens to many of these homeowners after they sign on the dotted line.

• This story shows just how vulnerable people can become when they are facing a foreclosure. Many of these people have not only signed away their homes, they paid a company to take it from them.

• Arnel Reyes remembers the day he signed over the deed to his house to United Investments of Hayward. His wife had just lost her job and the couple was facing the foreclosure of their home in Bay Point. "I couldn't afford a mortgage plus the other bills that we had, at that point I just wanted to save my credit," said Reyes.

• United Investments charged Reyes $2,000 to take possession of his home. He claims the company told him it had a potential buyer and could do a short sale. The contract made no guarantees a foreclosure could be prevented, but Reyes figured by signing up he could save his credit, if not his house. "They said if they couldn't save it, they would foreclose on it under their name and not our name," said Reyes.

• Hayward resident Lorenzo Lawson answered an ad on Craigslist from United Investment offering to rent out the Reyes home. Lawson said the company told him he might eventually be able to buy it. "If they want to have me stay there, maybe I could rent to own," said Lawson. He paid $2,000 to United Investments before moving in and before he knew it, he found a foreclosure notice on his door. Lawson was forced to leave the home and the lender foreclosed on the Reyes' property. Reyes says he felt deceived.(1)

For the rest of the story, see People sign away their homes in foreclosure scam.

(1) Reportedly, four of the five transactions 7 On Your Side tracked, ended in foreclosure. The fifth house belonged to a couple who, while avoiding foreclosure, were surprised when they found out United Investments wasn't paying off their mortgage, the story states. The company's president is Carl Renowitzsky, the man both Reyes and Lawson say they dealt with the story states. 7 On Your Side reportedly showed up at his office several times in an attempt to see Renowitzsky and was nowhere to be found, but 7 On Your Side did find a cease and desist order against Renowitzky in 1999 from the state Department of Real Estate. The Alameda County District Attorney's Office has reportedly launched an investigation of United Investments.

Brooklyn Judge Strikes Again; Dismisses Foreclosure With Prejudice Where Assignment Of Mortgage Fails To Transfer Title To Promissory Note

In Brooklyn, New York, State Supreme Court Justice Arthur M. Schack has, in a recent ruling, added to the list of foreclosing lenders he has booted from his courtroom for filing lawsuits without having legal standing to do so.(1) According to Justice Schack:

• The instant June 16, 2009 assignment [of mortgage] from MERS, as nominee for FREMONT, to U.S. BANK is a nullity, because MERS, as nominee for FREMONT, did not assign the note, but only assigned "said Mortgage, and the full benefit of all the powers and of all the covenants and Provisions therein contained and the said Assignor hereby grants and conveys until the said Assignee, the Assignors beneficial interest under the Mortgage."

In addition, he cited upstate New York foreclosure mill operator Steven J. Baum, P.C. for an apparent conflict of interest in that it appears to be in violation of 22 NYCRR § 1200.0 (Rules of Professional Conduct, effective April 1, 2009) Rule 1.7, "Conflict of Interest: Current Clients." According to the court ruling, the Baum firm represents both MORTGAGE ELECTRONIC REGISTRATION SYSTEMS [MERS], as nominee for FREMONT INVESTMENT AND LOAN [FREMONT], the ineffective assignor of the instant mortgage, and plaintiff U.S. BANK, the ineffective assignee of the instant mortgage.

For Justice Schack's ruling, see U.S. Bank, N.A. v Emmanuel, 2010 NY Slip Op 50819 (NYS Supreme Court, Kings County, May 11, 2010).

(1) For links to over 30 of Justice Schack's court rulings in which he bounced unprepared foreclosing lenders and their lawyers out of his courtroom for sloppy an/or non-existent paperwork, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced.

Go here for other posts on Justice Schack.

Massachusetts AG Obtains Indictment Of Attorney Accused Of Using Forged Mortgage Assignments In Attempt To Hijack Payoff Proceeds In R/E Closings

From the Office of the Massachusetts Attorney General:

• A Marblehead attorney has been indicted by a statewide Grand Jury for allegedly attempting to retrieve over $1.3 million dollars in mortgage funds in connection with a sophisticated mortgage fraud scheme. Leon Gelfgatt, age 49, allegedly used false documents to create the appearance that mortgages on several Massachusetts properties which were scheduled for impending sale had been transferred to a fake company created by Gelfgatt. Gelfgatt allegedly did this in order to obtain the payoff funds sent by real estate closing attorneys when the properties were sold.(1)

For the Massachusetts AG press release, see Marblehead Attorney Indicted in Connection with Orchestrating Multi-Million Dollar Forged Mortgage Assignment Scheme.

(1) According to authorities, between August and November of 2009, Gelfgatt allegedly identified and targeted fourteen high-end properties which were scheduled for an imminent sale. Gelfgatt then recorded seventeen forged mortgage assignments at the Registries of Deeds in Suffolk, Norfolk, and Middlesex Counties. These false mortgage assignments appeared to transfer the mortgage from the correct mortgage company to either Baylor Holdings, Ltd., or Puren Ventures, Inc., which were inactive corporations being offered for sale on the Internet. Gelfgatt created an elaborate system of email addresses, phone numbers, and electronic fax numbers to give the impression that these were functioning and legitimate businesses.

Gelfgatt then waited for attorneys responsible for clearing the title to the properties to reach out to these sham companies to request a “payoff statement”. A payoff statement is a document used by mortgage companies to state the precise amount necessary to pay a mortgage in full. Authorities allege that on two occasions Gelfgatt, in the guise of Baylor Holdings, Ltd., allegedly provided these closing attorneys with false payoff statements. The payoff statements instructed the closing attorneys to overnight the funds required to pay off the mortgages to an office address in Boston. Gelfgatt was arrested after he attempted to retrieve these payoff funds.

Lender Allegedly OK'd Loan Modification, Then Carried Out Foreclosure Sale Anyway, Says West Virginia Homeowner In Lawsuit

In Charleston, West Virginia, The West Virginia Record reports:

• A Cross Lanes man is suing Countrywide Home Loans, Bac Home Loans Servicing and Federal National Mortgage Association after he claims the companies participated in predatory lending and loan servicer abuse that resulted in the wrongful foreclosure of his home.

• Bradford Corder purchased a home in September 2002 for $185,000, according to a complaint filed April 13 in Kanawha Circuit Court. Following a divorce, Corder submitted loan modification information to the defendants in January 2010 and was informed on March 11 that he had been approved, according to the suit. Corder claims he spoke with the defendants on March 16 and was told foreclosure on his home was postponed until the loan modification package was provided to the defendants, but on March 17 the defendants proceeded with the foreclosure anyway.

• As a result, Corder as suffered economic loss, property loss, considerable stress, worry and fear, according to the suit. Corder is seeking actual damages and appropriate civil penalties. He is being represented by Daniel F. Hedges.

Source: Cross Lanes man sues Countrywide, others for wrongful foreclosure.

Couple Forced To Pay Twice For Home Construction Bills After Contractor Pockets Their Payments & Stiffs Subs, Building Material Suppliers

In South Lake Tahoe, California, KGO-TV Channel 7 reports:

• If you ever have to hire a contractor, you could end up paying twice for the same bill. It's happening to more and more people. [...] Images of the devastating Angora Fire in South Lake Tahoe are still etched in the minds of Howard and Joann Manning. The fire destroyed their home three years ago, but they're still living with the consequences today.

***

• The couple decided to rebuild their home and in December 2008, the home was completed. They made their final payment to HR Construction and owner Jack Aleshire that month. But then, the Mannings life took an abrupt turn.

• Within days, Meeks Lumber contacted them demanding money. So did Doug Bolton's Floor Show and Ponderosa Glass. In all, the couple heard from six subcontractors that HR Construction hired to either work on or supply materials for their home. All six said Jack Aleshire of HR Construction left town without paying them. All six held the Mannings responsible for making those payments and all six placed liens on the Manning home.

***

• [T]here are things you can do to protect yourself. Pay with a two party check made out to both the contractor and subcontractor -- that way you know the subcontractor will get paid. Ask the contractor for a lien release.(1) That releases you from all liens; by law the contractor has to give it to you if you request it. It's something the Mannings are only learning about now.(2)

For the story, see Couple's home in jeopardy due to contractor.

(1) Lien releases should also be obtained from all subcontractors and suppliers, as well as from the general contractor.

(2) According to the story, the California Contractors State License Board received 648 complaints in the 2006-2007 fiscal year about contractors not paying their subcontractors. That number increased more than 3.5 times in the last fiscal year, the story states.

Condo Converter Accused Of Unloading Mold-Infested Apartments On Unwitting Buyers, Leaving Unit Owners With Unaffordable $4M Remediation Price Tag

In Redmond, Washington, KOMO-TV Channel 4 reports:

• What many thought would be a dream condo ended up instead with a moldy mess. And to make things worse? The person the condo owners believe is responsible is nowhere to be found.

***

• Thirteen homes in this community have been hit with water intrusion and mold. The problem appeared a few years ago, so homeowners commissioned an independent study. It found the problem was there since the apartments were converted to condos in 2006, and should have been fixed then.

• We tried tracking down the developer, which was an LLC out of Las Vegas. It has since been dissolved, according to state records. Sources say the owner-operator moved to Mexico when the market went soft.

• Homeowners face a $4 million price tag to fix the place, something no one can afford. "That, on top of an underwater mortgage… it's like throwing money into a bottomless pit," said homeowner Jason Ing. One other option: walk away and let the banks foreclose. Something the Bailes family feels could be their only option. "I feel like we're getting screwed, basically," Jessica Bailes said. "The fact that we can't get a hold of this developer."

For the story, see Condo owner: 'I feel like we're getting screwed.'

Residents In Dilapidated Mobile Home Park In Foreclosure Threatened With Immediate Boot Over Unpaid Water Bill

In Jacksonville, Florida, The Florida Times Union reports:

• Among the dozens of ravaged homes, trash piles and overflowing sewage in a once thriving Jacksonville neighborhood stand eerie monuments to a time when the streets bustled with people. [...] About 40 people, a quarter of them children, still live in the Westport Mobile Home Park on 103rd Street near Interstate 295. The JEA plans to cut water and sewer service Monday over the owners’ delinquent $4,800 account, JEA records show. The JEA told residents last week the park will then be considered uninhabitable. The city can seek to have them removed within 30 days over safety issues.

• Poverty-sticken residents wept when asked about their future. Some vowed to stay and fight, despite being circled by squalor. Those who own their homes can’t move them because the structures are too old.

***

• The park’s owners, including St. Augustine businessman Farid Ashdji, have faced foreclosure since May 2009 after being cited for owing $1.3 million, court records show. [...] The city has cited the owners for safety and code violations and condemned dozens of properties stripped by vandals. The owners have not responded and face fines, said Renee Brust, a city spokeswoman. Brust said the city does not relocate people but can offer temporary assistance to residents who seek help.

For more, see Jacksonville residents to lose neighborhood ('It may not look like much, but it’s a home for my babies’).

For story update, see Residents of Jacksonville mobile home park get some time (Families at the Westport Mobile Home Park faced losing water and sewer service Monday; future remains uncertain):

• About 40 people living in a nearly destroyed Jacksonville mobile home park got a break in plans to have their water and sewer service cut next week when the owners paid a delinquent $4,800 JEA bill late [Friday] afternoon.

City Of Atlanta, Management Company Work To Relocate 180 Residents Left Stranded In Dilapidated, Foreclosed Apartment Complex

In Atlanta, Georgia, the Atlanta Journal Constitution reports:

• Josephine Roberts has to move – right away – out of the rundown southwest Atlanta apartment that has been her home for 25 years. “It’s probably for the best,” Roberts, 65, told the AJC on Thursday after meeting with an apartment management company that is trying to relocate the 180 people stranded in the Hidden Pines apartments after the bank foreclosed on the property. “The conditions [at Hidden Pines] are not [safe] living standards. I don’t think we, as a people, should live in this type of environment… It was unbelievable.”

***

• “This property is not safe,” said Mitzi Bickers with the Mayor’s Office for human services. Bickers said city workers discovered the Hidden Pines residents when crews were dispatched to investigate reports that broken pipes were spewing untreated sewage. She said several senior citizens and pregnant women were moved Friday while the others will leave over the next few weeks.

For more, see Atlanta trying to relocate residents in foreclosed apartments.

Tenant Gets 12 Years For Operating Indoor Pot Farm From Basement Of Rented Home

From the Office of the Monmouth County, New Jersey Prosecutor:

• On April 12, 2010, Michael Papazoglou, 30, of Freehold Township, N.J., was sentenced to a 12 year State Prison term for the first degree crime of Maintaining or Operating a Controlled Dangerous Substance Production Facility. The charge stems from the November 18, 2008, arrest of Papazoglou and four others at Papazoglou’s rented Freehold residence.

***

• The investigation revealed that Papazoglou had been growing the marijuana plants in the basement of the residence, that a decision had been made to move the marijuana plants elsewhere, and that Wheeler and Farmer were responsible for transporting the marijuana plants to the new location. On the day of the arrests, Wheeler rented the UHaul truck and traveled to Freehold where he met with Farmer, Papazoglou and another, unidentified man. The four men then loaded the marijuana plants and growing equipment into the U-Haul truck so that the production operation could be resumed at a different location.

For the Monmouth County Prosecutor's press release, see Freehold Man Receives 12 Year Prison Term For Operating A Marijuana Production Facility.

(1) On December 7, 2009, Jeremy Wheeler, 30, of Tuftonboro, N.H., and Jamil Farmer,26, of New York City, N.Y., also appeared before Judge Reisner and entered guilty pleas to second degree Possession of a Controlled Dangerous Substance With Intent to Distribute. On February 19, 2009, Wheeler was sentenced to a six year State Prison term. On January 29, 2009, Farmer was sentenced to a five year State Prison term. Based upon the factual bases provided by Papazoglou, Wheeler and Farmer during the entry of their guilty pleas, related charges against Stephanie Federico, 19, of Hoboken, N.J., and Alysson Woolley, 25, of Long Branch, N.J., which were contained in the same indictment were dismissed. marijuana grow house

Ohio AG Cautions Consumers Against Racket Targeting Payday Loan Customers For Debt Collection Ambush

From the Office of the Ohio Attorney General:

• In a new twist on an old scam, con artists are now targeting recipients of payday loans using debt collection tactics. Attorney General Richard Cordray [] warned Ohioans to verify callers and money owed before paying out to debt collectors.

• “My office recently received notice that con artists are posing as debt collectors attempting to collect on payday loans in Ohio,” said Cordray. “The ploy is dangerous because scammers aim to catch consumers off-guard by calling out of the blue and demanding repayment. Even if the consumer has not borrowed money, the natural instinct for some will be to respond to this ambush by paying a debt that they do not owe. In this situation it is absolutely imperative that consumers ask for a letter stating the debt owed and then verify the source. Under no circumstance should consumers rush to make payment or give out any personal information including banking and credit card information.”

For the entire Ohio AG's press release, see Legitimate Debt Collector or Con Artist?

Novice Homebuyer May Be Out $8K After Unwittingly Signing Contract Sans Loan Contingency On Foreclosure, Then Discovers Mortgage Insurance Unavailable

In Edmonton, Alberta, CTV Edmonton reports:

• A young woman is now fighting for her life savings after a housing venture went through the cracks. Brenda Vanner says she cashed in her RRSPs [Registered Retirement Savings Plans] and her savings to make an offer on a property that was up for foreclosure. "It seemed like a good deal and a real good property to buy," she said. But days before the deal was set to close, the woman says she was denied mortgage insurance because of deficiencies on the property.

• The 23-year-old signed a contract with no conditions, and may now be out $8,000. "I was naive. I took for granted that someone was looking out for me and I will never do it again. I just want to make sure it won't happen to someone else."(1)

For more, see Young woman fights for life savings after housing venture plummets.

(1) This story illustrates the importance of being properly advised before signing a real estate contract, as well as having the premises thoroughly inspected for defects (preferably by an inspector the buyer obtains on his/her own, not referred by anyone who has a vested interest in seeing the transaction consummated (ie. seller or commissioned real estate or mortgage broker/salesperson). For a story on what can happen when a buyer gets the wrong inspector, see Contra Costa Times: Brentwood leader's company crumbles in wake of questionable home inspections (A Brentwood councilman's contracting firm has collapsed under the weight of impending lawsuits over home inspections gone awry, underscoring the perils for homeowners and firms alike in a largely unregulated industry)).

New Wave Of Foreclosures Currently On Hold As Lenders Drag Feet In Dealing With Delinquent, Underwater Condo Owners

A recent column in Barron's addressed the problem of mortgage lenders dragging their feet on condominium foreclosures in order to avoid taking title to units in order to avoid becoming responsible for footing the bills for the HOA's maintenance fees:

• IF A CONDOMINIUM OWNER is behind on his mortgage, he usually isn't paying his condo association dues either. And that, oddly, could be helping to prevent the already roaring rate of U.S. condominium foreclosures from becoming even worse.

***

• In the most troubled markets -- think Florida, California, Nevada, Arizona and parts of the Midwest -- some condos are three years in arrears on association fees. When a bank takes ownership, it risks having to pay those fees, plus any that accrue until it resells the unit. Fourteen U.S. states now have "super lien" laws mandating that a lender pay at least part of the owed dues when it seizes a property. Ohio legislators are even fighting to make association liens in their state superior to first mortgages. In states where there's no law mandating payment, condominium associations must sue the lenders to recoup any dues shortfall, and they're not always successful.

• For lenders, the simplest way to delay -- or avoid -- paying the dues is by postponing foreclosure until a buyer turns up who's willing to shell out the accrued dues if the property is priced low enough. But in the current market, especially in the worst-hit areas, that can take a very long time.(1)

For more, see The Condo Conundrum (Lenders reluctance to pay overdue condo fees is merely postponing a new wave of U.S. foreclosures). (requires paid subscription; if no subscription, TRY HERE; or TRY HERE, then click link for the story).

(1) A new tactic in dealing with delinquent condo units where mortgage lenders are now being challenging to foreclose or get out of the way (essentially being required to decide to either take title to the financially upside down unit, or release their mortgage) was recently reported in Florida. See:

• Foot-Dragging Mortgage Lender Yields To HOA Demand; Abandons Foreclosure On Unwanted Collateral, Releases Security Interest In Condo Unit,
• Miami Judge Forces "Reverse Foreclosure" On Foot-Dragging Lender; Court Grants HOA's Request To "Strong-Arm" Bank Into Taking Title To Home.

Blanket Receiverships Come To Daytona Beach In Fight Against Deadbeat, Rent Skimming Condo Owners Stiffing Associations On HOA Fees

In Daytona Beach Shores, Florida, The Daytona Beach News Journal reports:

• At the peak of the area's housing boom four years ago, Chicago native James Dolan bought a unit at the nine-story Oceanside Inn here when it converted from a hotel to a condo-tel. [...] But, since then, the housing bust has cost him plenty. The owners association recently passed its second special assessment, on top of monthly maintenance fees, to make up for other owners who are in foreclosure or walked away and are not paying their fees.

***

• The frustration is widespread. So, the owners association, the inn's hired management firm and a local attorney sought and won a rare legal ruling that should help them recover the $154,000 owed by 23 of the building's 123 owners. Circuit Court Judge Richard Graham recently approved the appointment of a "blanket receiver" for the Oceanside Inn. It's the first such ruling in the 7th Judicial Circuit, attorney Jason Harr said.(1)

• "It's groundbreaking in this district. It's been approved in other districts, but it's never been asked for and the court has never approved it here prior to when we did it," he said. "It's given a life preserver to the association that was in dire straits. There are some owners who owe as much as $16,000."

For the story, see Condo associations gain weapon to collect fees from deadbeats.

Go here for other posts on blanket receiverships.

(1) The story states that the blanket receivership order allows the association to include all delinquent units in one filing, and that similar blanket receivers have been approved in just a few Florida jurisdictions. "It's up to each judge to interpret the statutes in each case," one lawyer said. "But, it's a new strategy, a new argument, novel and it is catching on."

Lenders Refuse To Finance Condo Sale Where 15%+ Of Members Delinquent On HOA Fees, Leaving Unit Owner Unable To Unload Apartment

In Baltimore, Maryland, WBAL-TV Channel 11 reports:

• The tightening of the mortgage industry is keeping one Glen Burnie man from selling his home. Dave Shaffer said he has a buyer for the home, but that buyer is having trouble getting a home loan because of a lending rule that's just recently been enforced.

• Shaffer is disabled and unable to work. He said he can't afford to live in his condo community anymore, so he found a buyer to purchase it. Shaffer's home in the Elvation Towne Condominium neighborhood has been on the market for a year and a half. He said he was excited to find a buyer, had packed up his home and was ready to close on the deal last week.

• "A day and a half before we were to go to closure, I was called and told the banks could not underwrite the loan," he said. Shaffer was told that more than 15 percent of the homeowners in his neighborhood are behind on their homeowners association fees, so his buyer couldn't get a loan. He said they tried many banks and mortgage companies. [...] He said he can't afford to stay in his home, can't refinance because he doesn't have a job and, if he can't sell his home soon, it'll go into foreclosure.

For more, see HOA Fee Law Keeps Man From Selling Home.

Minnesota Woman Faces Charge Of Ripping Off Dementia-Disabled Aunt Of Life Savings, Leaving Her Facing Eviction From Nursing Home & Foreclosure

In Dakota County, Minnesota, the Minneapolis Star Tribune reports:

• An Eagan woman faces a felony charge of exploiting a vulnerable adult for allegedly stealing more than $35,000 from her disabled aunt. She is accused of gambling away the woman's life savings. Misty M. Williams, 30, was the conservator of the estate of Doris Jean Johnson, 72, who has dementia and lives in an assisted care center in Eagan. [...] Papers filed in probate court show an even higher loss. An examination of Johnson's accounts estimated the losses at more than $50,000 and possibly as high as $125,000, records show.

• Johnson's bills and rent had gone unpaid, she faced eviction, and her home, which her estate still owned, went into foreclosure because of a mechanic's lien by a homeowner's association, records show.

Source: Eagan woman accused of stealing aunt's life savings, gambling it away.

Bid-Rigging Attorney Gets 12 Months In 5-Year, $10 Million Conspiracy At Baltimore-Area Real Estate Tax Lien Auctions

In Baltimre, Maryland, The Maryland Daily Record reports:

• Baltimore County lawyer and real estate investor Harvey M. Nusbaum was sentenced Tuesday to a year and a day in federal prison for his role in a five-year, $10 million bid-rigging conspiracy at tax lien auctions in Maryland. The Justice Department’s Antitrust Division had requested an 18-month sentence, while Nusbaum’s attorney recommended a term of home detention coupled with daily community service, arguing Nusbaum did not know he was committing a crime. U.S. District Judge J. Frederick Motz doubted Nusbaum’s claimed naiveté throughout the day-long hearing, asking about the 72-year-old defendant’s “moral compass.”

***

• Nusbaum, who was indicted along with longtime friend Jack W. Stollof in June and pleaded guilty in February, must also complete 100 hours of community service and serve two years of probation. In keeping with his plea, he must pay $800,000 in restitution, $250,000 of which he has already paid. He will also lose his law license and not be able to work as an accountant or participate in tax lien auctions, according to his attorney, Paul Mark Sandler.

***

• The hearing featured a previously undisclosed star witness for the government: John K. Reiff, an attorney, who, along with law partners Anthony J. De Laurentis and Richard Turer, formed an investment fund tax lien that conspired with Nusbaum, Stollof and others to rig bids.

• Nusbaum’s and Stollof’s names have been in the news for years, thanks to The Baltimore Sun’s 2006 investigation into the problem of ground rents in Maryland. Co-conspirator Steve L. Berman pleaded guilty in June 2008. Reiff and his partners’ involvement had not been made public before Tuesday. (Berman, who did not testify Tuesday, is scheduled to be sentenced later this month.) Thanks to an amnesty agreement reached with federal prosecutors, Reiff will likely have to pay restitution but has not pleaded guilty to any crime, and he, De Laurentis and a third man, John E. Reid, still operate a law office in Highlandtown. Neither De Laurentis nor Turer testified Tuesday.

• Speaking in a low voice, Reiff detailed how he and his co-conspirators met before or at 10 auctions in Baltimore City and Anne Arundel, Baltimore, Montgomery and Prince George’s counties to make sure they didn’t bid against one another, or “beat each other up,” creating what he called a “sort of round-robin effect.” Reiff said he and his partners bought approximately 5,000 liens from 2003 to 2007, a period in which their firm, then in Columbia, was bidding on behalf of investor clients.

• Two of those clients have come under legal scrutiny elsewhere for alleged bid-rigging: Bank Atlantic has been sued in federal court in Chicago, and Mooring Tax Asset Group has been subpoenaed in a New Jersey antitrust grand jury investigation.

For more, see Lawyer, 72, sentenced for bid-rigging conspiracy.

Go here for more on bid rigging at real estate-related auctions.

Cook County Continues Sitting On Million$ In Unclaimed Foreclosure Surplus Funds

In Chicago, Illinois, WFLD-TV reports:

• If your house has been foreclosed on, believe it or not -- you may have some money coming to that you don't know about. The Cook County Circuit Court Clerk's office has a list of former homeowners who are owed what's called a mortgage surplus. "We have money for you, and we want to give that money to you," Dorothy Brown, Cook County Circuit Court Clerk said. "Our list goes from 13 cents to $461,000 dollars."

• The mortgage surplus is the amount left over when a foreclosed home is auctioned off and sold for more than you owe. Once the bank is paid off, the rest is yours. Cook County has more than $19 million in unclaimed mortgage surplus funds. The problem is finding foreclosed home owners. Legally, the auction company has to mail out a letter. But the address they have for foreclosed homeowners is usually the house that's just been foreclosed.

***

• The Cook County Circuit Court clerk's office is also making an extra effort. They recently added a special search engine where you can check on their web site. If you find your name on the clerk's website, you have to file for a court appearance and prove to the judge you are the person on the foreclosed mortgage.

• Dupage and Will Counties also have mortgage surplus funds. If you live in one of those counties, call the Circuit Court Clerk's office or the Sheriff's Department there to see if you are owed this type of money.

For the story, see Millions In Unclaimed Foreclosure Cash For Cook County Residents.

See also, WLS-TV Channel 7: Clerk: $18M due to foreclosed homeowners:

• The clerk's database found about 1,900 people are due surplus money. The surpluses mostly involve foreclosures from the 1990s and not the recent subprime mortgage collapse.

Indiana AG Files Suit Against Alleged Foreclosure Assistance Racket Accused Of Taking Over Financially Distressed Homes & Failing To Pay The Mortgage

In Noblesville, Indiana, WRTV-TV Channel 6 reports:

• The state has filed suit against a man in the wake of numerous complaints about foreclosure rescue programs. [...] Investigators said Daniel Shrader worked as an agent for at least 10 such companies, including Northstar Homes, Orion, Great Homes LLC, Prizm Partners, Regal Partners and the Oakbay Group, along with a website offering foreclosure help, indy-housebuyers.com.

• According to the complaint, Shrader and the companies took over homes but failed to pay the mortgage, and failed to follow state rules on providing services that would help people save their homes from foreclosure. [...] A Hamilton County judge on Friday ordered Shrader to a pay delinquent mortgage payment for one of his customers. He then had to be chased down by a state investigator waiting to serve him with a lawsuit seeking an injunction against his business practices.

For the story, see State Reports Rash Of Foreclosure Rescue Complaints (Suit Filed Against Agent For 10 Companies).

Lender Exercises Setoff Rights To Drain Cash From Unwitting Couple's Bank Account

In Atlanta, Georgia, Next Student Student Loan Blog reports:

• An Atlanta couple has found themselves with their savings wiped out after their bank, Wells Fargo, cleared out their checking account in order to pay a piece of what bank officials maintain is an outstanding student loan (“Suddenly, Bank Account Was Gone,” The Atlanta Journal-Constitution, May 1, 2010).

• After Hope and Matt Hughes had problems trying to make a purchase with their debit card last month, they discovered that Wells Fargo had cleaned them out, withdrawing $4,059.82 — everything they had — from their checking account. They were also hit with $385 in overdraft fees for debit-card purchases they had made on the day their checking account was emptied.

• Wells Fargo appropriated the funds under its right of “setoff,” a prerogative held by most banks that allows a bank to take money from a customer’s savings or checking account in order to pay off any other account — a home mortgage, credit cards, student loans — that the customer holds with the bank that’s overdue.

For more on a bank’s license to help itself to your money, see Wells Fargo Empties Customer’s Checking Account to Pay Delinquent Student Loan.

Maryland AG Moves To Halt "Free Rent" Investment Racket That Resulted In 100+ Tenants Being Bounced Out Of Homes

In Baltimore, Maryland, The Baltimore Sun reports:

• The Maryland attorney general's office moved Thursday to halt an alleged pyramid scheme by a Gambrills company and its owner, who are accused of bilking about 500 people out of hundreds of thousands of dollars by promising commissions, free rent and cars in exchange for recruiting more investors.(1) The plan started to fall apart when rent checks bounced and the investors were evicted. More than 115 people paid several thousand dollars into the company for an apartment, and most have been tossed out, according to authorities.

***

• Among those allegedly duped [...] were Helen Martin, a 59-year-old social worker, and her two daughters who together lost more than $11,000, including scholarship money and savings. They said they were lured by the promise of better housing, and they felt assured by testimonials from a network of friends and family.

For more, see 'Free rent' pyramid scheme ordered to halt operations (More than 115 people evicted).

For the Maryland AG press release, see Securities Division Orders Halt to "Free Rent" Pyramid Scheme, and go here for the AG's cease and desist order.

(1) The Maryland Attorney General's office says the people were allegedly scammed out of hundreds of thousands of dollars in a pyramid scheme that included promises of a year's free rent in exchange for upfront payments toward a supposed business venture. The securities division of the attorney general's office issued a cease-and-desist order against Diversified Marketing Consultants Inc., its owner, Lamondes D. "Monte" Williams of Clinton, and related companies Digital-Zone Electronics Warehouse and Mainline Properties LLC., the story states. The division contends the operation raised more than $800,000. Williams was reportedly convicted in 2005 of running a similar scheme. According to the story, his most recent troubles triggered a probation violation hearing scheduled for Friday in Prince George's County Circuit Court, according to court records. In the previous case, he was reportedly sentenced to five years in prison and three years of probation and ordered to pay $146,000 in restitution.

Nevada AG's Office: Forensic Loan Auditing Is The Next Evolution In Mortgage Modification Scams

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:

• Odds are you or someone you know is desperate to save a home from foreclosure. But as you know, many offers for assistance are simply too good to be true. For months, Contact 13 has been digging up dirt on the latest foreclosure rescue scam. It's called forensic loan auditing. Upside down in his mortgage like so many other Southern Nevadans, Al Lopez reached out to a forensic loan audit company called Home Protection Service for help.

***

• Al says Home Protection Service took his money, but did little to help protect his home. When he received his loan audit, he says they claimed everything passed. Al says the company didn't even do the work they were supposed to.

***

• The state attorney general's office tells Contact 13 forensic loan auditing is the next evolution in mortgage modification scams. The AG's office is currently investigating 194 companies for similar types of foreclosure rescue fraud. The California Attorney General issued a release warning homeowners to avoid forensic loan audits all together.

***

• Contact 13 reached out to Home Protection Service, which used to be based in an office complex. Contact 13 started with a phone call, then an email, but never got a response. When we showed up to speak to someone in person, we found the company has closed up shop and basically disappeared, leaving no forwarding address or new phone number. Unlike mortgage modification firms in Nevada, there are no regulations on forensic loan auditing companies.(1)

For more, see Forensic loan auditing is the latest foreclosure rescue scam.

(1) It's difficult to believe that this service, when performed by non-attorneys (or attorneys not licensed in the jurisdiction in which the services are performed) directly for the general consumer public, does not constitute the unlicensed practice of law (which, in most places that I know of, is a felony).

Arizona AG Shuts Down Foreclosure Help Outfit That Allegedly Promised To Buy Clients' Defaulted Loans From Lenders, Then Re-Work Payment Terms

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

• State regulators have shut down a mortgage rescue company that CBS 5 investigators exposed one week ago. [... Homer] Becker and thousands of other homeowners said they handed over $1,595 each to Guardian [Group], which was supposed to buy their homes from the bank and then sell them back to the homeowners at a reduced price.(1) However, dozens of Guardian clients told CBS 5 that the company just took their money.

***

• Last week CBS 5 exposed some complaints against Guardian Group. When CBS 5 reporters showed up at the company's Scottsdale office to ask questions, the receptionist ran out the back door. A sign hung on the entrance said the office was closed due to technical difficulties. But a cease and desist order issued Thursday by state regulators means Guardian is effectively out of business.

For the story, see Company Shuts Down After CBS 5 Investigation (Guardian Group Accused Of Operating As Unlicensed Mortgage Broker).

(1) 5 Investigates discovered that the plan was laid out in a power point presentation the company sent to desperate homeowners. Go here for Guardian's Principal Reduction Presentation.

Convicted Loan Modification Scammer Buys His Way Out Of Jail Time By Coughing Up $10K+ In Victim Restitution Prior To Sentencing

From the Office of the Nevada Attorney General:

• Attorney General Catherine Cortez Masto announced [] the sentencing of William Vargas in connection with his involvement with a mortgage foreclosure rescue company, Federal Housing Aid, whose operation included a call center in the Philippines.

• District Court Judge Michael Villani sentenced Vargas to a year in the Clark County Detention Center, but suspended the sentence pursuant to a plea agreement. Vargas was allowed to enter a plea to a gross misdemeanor charge of attempted theft but was required to pay half of the restitution owed prior to sentencing. Vargas is required to pay total restitution of $21,000 to the victims of his crime.(1)

For the Nevada AG press release, see Defendant Sentenced In Mortgage Rescue Scam Operated From The Philippines.

(1) According to the press release, Vargas would contact homeowners facing foreclosure and offer to stop the foreclosure proceeding and save their credit. The victims entered into an agreement to pay an up front fee ranging from $700.00 to $1,500.00 as compensation for effecting a solution to the foreclosure. Once these fees were forwarded to Federal Housing Aid, no further action was taken. The homeowners, some of whom were over the age of 60, were never provided with assistance in resolving their problems and, in fact, ended up losing their homes.

Indiana AG Targets Now-Defunct California Company In Alleged Upfront Fee Loan Modification Scam

In South Bend, Indiana, the South Bend Tribune reports:

• [I]ndiana Attorney General Greg Zoeller has filed a lawsuit [...] against [USA Mortgage Aid Inc.], a purported business that Zoeller says has swindled hundreds of Indiana residents out of hard earned money. Zoeller was in South Bend [] to file the suit in the St. Joseph County clerk's office and also to urge residents to beware of likewise scams.

• Since the foreclosure crisis, many businesses have popped up, touting themselves as "mortgage rescue," companies," Zoeller said. The M.O. is usually the same: money up front, help later. [...] Zoeller said [] USA Mortgage Aid Inc. violated several state consumer protection laws by demanding the money and by not being properly bonded. The attorney general's office also accuses the company of misrepresenting its positions and lying to consumers about having in-depth industry knowledge. [...] According to the California secretary of state website, USA Mortgage Aid, based in Irving, Ca., is now a dissolved company.

For the story, see Indiana attorney general files lawsuit against purported foreclosure aid company (Mishawaka man reports losing $1,700).

For the Indiana AG press release, see Action taken to curb foreclosure scams.

NJ Appeals Court: NY Lawyer Unlicensed In NJ Representing Homeowners In Settling F'closure Cases Subject To NJ Jurisdiction In Legal Malpractice Suit

The New Jersey Law Journal reports:

• A New York lawyer who represented clients in a New Jersey real estate case [involving the representation of a couple who she knew to be New Jersey residents, for the purpose of settling pending or impending foreclosure actions in a New Jersey court for New Jersey properties] without crossing the Hudson is nonetheless subject to New Jersey's jurisdiction in a legal malpractice suit, a state appeals court said [].

• Overturning a judge below who "relied almost exclusively on the absence of credible evidence of defendant's physical presence in New Jersey," the Appellate Division said personal jurisdiction was warranted because the lawyer was hired to stop a pending New Jersey foreclosure action, pertaining to four properties in the state, which provided sufficient minimum contacts.

• What's more, subjecting the defendant to jurisdiction in New Jersey is reasonable because the minimal inconvenience she will experience is outweighed by the state's substantial interest in regulating the unauthorized practice of law within its borders, the court said in Halley v. Myatt, A-1378-09 (N.J. App. Div. May 3, 2010).(1)

For more, see N.J. Malpractice Suit Can Proceed Against Lawyer Who Did Work From New York.

(1) Reportedly, the couple was represented by Leena Khandwala, a clinical teaching fellow at the Seton Hall University School of Law, Center for Social Justice, a pro bono and clinical program designed to give its law students hands-on experience while providing pro bono legal services for economically disadvantaged residents in the region.

Idaho Couple Say Loan Servicer Approved Loan Modification, Accepted Subsequent Payments, Then Foreclosed On Them Anyway

In Ada County, Idaho, the Idaho Statesman reports:

• Carey and Tracie Kinghorn were content with their adjustable-rate mortgage, but they were pleased when the Texas-based servicer that had bought their loan offered them a modification to lower their monthly payment by about $500. The change cost them $11,000 in fees and charges, but the Kinghorns signed a contract in April 2009.

• The company cashed the check but never recorded the modification, the Kinghorns said. In February, they said, they learned that the home would be sold at a foreclosure auction because they hadn't been paying the original full monthly payment. They tried to stop the sale, but it went forward in March.

• The Kinghorns blame the mortgage servicer for taking their money and selling their home. The company says it handled the Kinghorns' mortgage properly and tried to reach the couple by phone and mail in the past year to no avail. The couple contends they were not contacted.(1)

For more, see Complaints about mortgage relief mount in the Treasure Valley (Some Idaho homeowners say foreclosure threats often follow empty promises of help).

(1) According to the story, an Idaho Statesman story April 7 about a family whose owners said their home was sold after a botched loan modification prompted dozens of responses from Treasure Valley residents complaining about loan servicers, lost paperwork, miscommunication and prolonged modification trial periods. Many reportedly said their loan representatives told them the only way the family could get help was to stop paying their mortgage for several months, and several reportedly said they had lost their homes through foreclosures that shouldn't have happened.

CBS' 60 Minutes On Underwater Homeowners & Strategic Defaults

eCreditDaily reports:

• 60 Minutes [last night] put the national spotlight on strategic defaults, or homeowners walking away from “underwater” mortgages and into foreclosure, despite being able to make their payments. In a segment that aired [last night], Morley Safer interviewed homeowners mired in negative equity, a spreading “epidemic” for an estimated 11 million homeowners.

For more, see Foreclosures & Walking Away: 60 Minutes Eyes an ‘Epidemic’.

For the CBS 60 Minutes' piece, see Mortgages: Walking Away (or for the 60 Minutes' transcript, see Strategic Default: Walking Away from Mortgages (60 Minutes: A Million Have Walked Away; Trend Could Undermine the Fragile Economic Recovery).

Flood Of Foreclosure Fraud Complaints Overwhelms DA's Office; Financially Strapped Victims Told To Prosecute Cases Themselves By Filing Civil Suits

In Riverside County, California, The Press Enterprise reports:

• A nonprofit organization representing 23 faith congregations in Riverside and San Bernardino counties demonstrated Friday, calling for county government to give higher priority to fighting foreclosure fraud with prosecutions and education. [...] Speaking for the grassroots organization, called Inland Congregations United for Change, Tim Lucas, a member of St. Catherine of Alexandria Church in Riverside, said they are asking the district attorney's office, the assessors office and the board of supervisors for help.

***

• Lucas complained that the district attorney's real estate unit does not have enough staff to handle its workload. Also Lucas complained that the district attorney has told the group that the majority of foreclosure fraud complaints should be prosecuted as civil rather than criminal cases. He said that would require victims, many of which are of modest means, to hire lawyers.(1)

• In response to the criticism, Ryan Hightower, spokesman for the Riverside County district attorney, said "We work with the resources we have and make the most of them." He said real estate fraud already is a high priority for the office and every complaint is evaluated on an individual basis for possible criminal prosecution. There are 350 cases in some stage of investigation or prosecution, Hightower said.

For the story, see Group demands action on foreclosure scams (DEMONSTRATION: The Riverside County DA's office says fraud is a high priority and is investigating 350 cases).

(1) It's not uncommon for authorities to claim that such incidents are "civil cases," suggesting the victim would need to file a civil lawsuit against the scammer to seek a remedy. California case law has clearly addressed the notion that some scammers have that they can insulate themselves from prosecution by using terms and conditions contained in legitimate-looking business contracts to screw over consumers. The rule in California is cited in, among other cases, People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401 (case law links are found at Findlaw.com - may require free registration):

• The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

In People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726], a California appellate court made this observation:

• Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.

***

• Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft. The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

Matchmaker To Link Victims Of Foreclosing Lenders' Loan Modification Jerk-Arounds With Reporters Looking To Cover These Stories

ProPublica reports:

• Millions of homeowners face losing their homes in the continuing foreclosure crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse.

• Sometimes the communication breakdown within the banks is so complete that it leads to premature or mistaken foreclosures. Some homeowners, with the help of an attorney or housing counselor, have eventually been able to reverse a foreclosure. Others have lost their homes.

***

• The problems happen even among servicers participating in the administration’s $75 billion foreclosure-prevention program. Servicers operating under the year-old program are forbidden from auctioning someone’s home while a modification decision is pending. It happens anyway.

For more, see Disorganization at Banks Causing Mistaken Foreclosures.

ProPublica reports that it is matching local journalists around the country with homeowners having trouble getting loan mods.

• Go here if you are a homeowner with a story to tell.
• Go here if you are a reporter and want to cover it.

Attorney Cranked Out Paperwork For $2 Per Each Blindly Signed Document Filed In Florida Foreclosure Mill's Home Loan Lawsuits

In Central Florida, a recent story in The Tampa Tribune contained the following execrpt on how notorious assembly line, foreclosure mill law firm Florida Default Law Group, headed by attorney Michael Echevarria, has, in the past, put in requests for attorney fee awards in foreclosure actions:

• In 2004, The Florida Bar reprimanded Echevarria for violating certain Bar rules, one of which concerned attorney fees. According to Bar documents, Echevarria's law firm asked a Land O' Lakes attorney named Anthony Woodward to certify that Echevarria's legal fees were reasonable, given the amount of time the firm spent on each case.

• Instead of reviewing each foreclosure case fully, as he was supposed to do, Woodward was simply signing documents attesting to the fairness of Echevarria's fees. Each time Woodward signed his name to a document, he received a $2 fee, the Bar documents show. When reached for comment Friday, Woodward referred a reporter to his own Florida Bar disciplinary case file, which was not available late Friday.

• Several months ago, Woodward told a Tribune reporter that Echevarria's legal fees - about $1,000 per foreclosure case - were so low he was confident they were reasonable even without reviewing each case.

Source: State AG investigates its own.

Chicago-Area Foreclosure Rescue Operator Peddling Sale Leaseback Programs Targeted In Multiple Lawsuits, Illinois AG Probe

In Chicago, Illinois, the Chicago Tribune reports:

• The accusations that have piled up against Eliseo Carrillo run counter to the image the Chicago entrepreneur cultivated as a champion of Latino immigrants. As the housing market weakened in recent years, Carrillo's smiling face appeared on billboards throughout the city's Mexican-American neighborhoods. Spanish-language TV commercials featuring Mexican music and Carrillo wearing a stylish cowboy hat promised that his real estate companies — all using the name "Protecta" — were friends and guardians of immigrants in need.

• But after signing what they believed were loan papers to save their homes from foreclosure, at least four of his struggling clients have filed lawsuits alleging that they were misled into surrendering the deeds to their homes in complex "mortgage rescue" schemes they didn't understand.(1)

***

• Protecta, which Carrillo has shut down, and two other companies he directs — Loan Negotiator and Cairo Holdings — are being investigated by the Illinois attorney general's consumer fraud division. A spokeswoman for the attorney general confirmed the probe of Carrillo's companies but declined to discuss specifics. Carrillo and his companies also have been targeted by at least a dozen lawsuits since 2006, including the four filed by clients regarding Protecta schemes in which third parties "lent" their credit to distressed homeowners by assuming ownership and taking out a new mortgage in exchange for a profit, with the original homeowner paying rent to cover that second mortgage.

***

• Lea Weems, an attorney with the Legal Assistance Foundation of Metropolitan Chicago,(2) which represents [one screwed over homeowner], said her nonprofit organization has been looking into nearly 70 cases of alleged mortgage rescue fraud involving a variety of operations. Referring to Protecta, she added: "This one is particularly egregious."(3)

For more, see Mortgage 'rescuer' preyed on immigrants, clients allege (Immigrants sue and say they were misled into surrendering deeds to their homes).

(1) According to the story, the mortgage lawsuits depict Carrillo, 36, as a "scam" operator, savvy in the arcane laws governing real estate transactions, who saw profit in the thousands of troubled home mortgages taken out by immigrants less likely to understand the complicated English-language legal documents and less prone to speak out if something went awry. A few of the clients were in the country illegally, making them even more vulnerable, according to attorneys and community activists, the story states. Two suits are described by the story:

• In a federal suit, Rafaela Moreno claimed she was steered by Carrillo into signing over the deed to her house in a $10 quit-claim transaction after he allegedly promised to fix her credit. A new loan taken out by an investor on the house paid off her $120,000 mortgage balance. It also earned Carrillo a bank check for $86,320.The next year, Moreno was allowed to repurchase the home, but for $250,000 — more than twice what she owed on the first mortgage, according to court documents. In a 2008 settlement of Moreno's lawsuit, Carrillo agreed to pay Moreno $62,500 in compensation for her losses. He paid nearly half that amount but stopped payments late last year, court documents show.

• Yet another lawsuit, filed last year by Carmen Macias, tells a similar tale, accusing Protecta and its agents of "stealing" her Southwest Side home after she thought she was refinancing her mortgage in 2006. Instead, the suit claims, the deed was transferred to an investor. Protecta earned $1,800 in fees, while another real estate company with whom Carrillo had had a partnership received $38,000, according to closing documents.

(2) According to its website, the non-profit law firm Legal Assistance Foundation of Metropolitan Chicago has provided free civil legal assistance to tens of thousands of low-income and elderly individuals in Chicago and suburban Cook County for over 40 years.

(3) Innocent straw buyers were reportedly also lured into the scam under the belief that they can participate in helping homeowners facing foreclosure and get paid for it at the same time. Two Protecta investors interviewed by the Tribune described the "sale leaseback" programs Carrillo pitched to help immigrants in financial trouble. From the story:

• In the arrangement, the investors expected to collect monthly payments from the original homeowners. But in [two] cases, the rent payments went to Protecta, their lawsuits say. Carrillo confirmed that Protecta did handle the rent payments but said it was merely to help document them.

• One investor, who spoke on the condition of anonymity because he's in the country illegally, was a maintenance man who wound up owning four houses besides his own, according to closing documents naming Protecta as the broker. Though the man said he initially profited about $20,000, all four of the houses now are in foreclosure proceedings. In loan documents recorded by a Protecta agent, the man's monthly income was reported to be $7,200 — more than twice the $3,400 per month his pay stubs at the time say he earned — which made it easier for him to qualify for the loans. "If he would have explained this is how it would happen, we would never have done it," said the investor, who is named as a defendant in one case. "I never wanted to cause pain to those families, nor mine."

• The second investor, Sergio Villegas, received a profit of $12,438 in one Protecta-arranged transaction, according to court documents. Several properties under his name now are in foreclosure proceedings or were taken over by a bank. "My credit is ruined," Villegas said. "All of this has been very bad."

Loan Modification "Jerk-Arounds" Continue For Homeowners Seeking Relief From Foreclosure

Lenders continue in their efforts to sell false hope to financially strapped homeowners seeking to keep their homes out of foreclosure by offering them loan modification deals, then pursuing foreclosure against them anyway, despite the fact that the payments on the loan modification are current and up to date. For two recent stories, see:

• Puyallup, Washington (Bank of America): Puyallup family fights to keep home (Recession: Owners of Sumner cafe thought they were in federal program, but now foreclosure looms),

• Los Angeles, California (Citimortgage): Home Loan Modification Nightmare.

The BofA Apologies Continue For Wrongfully Seizing Homes

In Fort Worth, Texas, the Star Telegram reports:

• Freda Snowden's months-long ordeal to stop a bank from wrongly seizing a house her son owns in far south Fort Worth has ended. Bank of America apologized [] and agreed to pay for damage to the three-bedroom house on Oldham Court caused by agents the bank hired to secure the property for foreclosure. Snowden said bank executives admitted that their records had a coding error and know they have no claim to the property. She said it was frustrating trying to get anyone at the bank to listen to her, let alone return phone calls and e-mails.

***

• Snowden calls the ordeal, which sent her through several layers of bank bureaucracy to get the problem fixed, a nightmare. "If it's happening to me, how many other families is this happening to?" she said. "These last four months has taken at least 10 years off my life."

• The bank, she said, was preparing to foreclose on the previous owner. That person bought the house in March 2007 and defaulted on the loan nine months later, deed records show. [...] Snowden said her 29-year-old son bought the 1,460-square-foot house in a September 2008 foreclosure auction and moved in a month later. He put in new appliances, changed light fixtures and was enjoying his house, she said.

• That changed in November 2009, when he returned home one day to find that the house had been broken into. Nothing was taken, but someone had tried to re-key the home's locks. Not feeling safe, he put the house up for sale in December and moved out, she said.
  In February, the house was broken into again and the locks re-keyed. And again, nothing was taken. Police suggested that squatters might be entering the house, Snowden said.

• The mystery started to clear a few days later when a real estate agent was showing the house and an uninvited man walked in. When the agent asked why he was there, he said the bank hired his company to re-key the house because of a pending foreclosure. Snowden immediately called her son's lender and the title companies for the sale, she said. All assured her that yes, her son owned the house. "I started calling everyone at Bank of America. No one would talk to me," Snowden said.

For more, see Bank apologizes for error that nearly cost a Fort Worth man his home.

BofA Strikes Again; Hits Central Florida In Its Relentless Seizures Of Wrong Homes Followed By An Apology

In Sarasota, Florida, ABC Action News reports:

• Neighbor Scott Mondro started asking questions as soon as he spotted the stranger drilling holes in his neighbor's door. Turns out the guy with the hardware was representing Bank of America. Scott Mondro shares the conversation. “He says 'we are foreclosing on this property' and I said 'You have the wrong address. You guys are making a great, big mistake.'”

***

• The landlord sent Action News an email saying she had previously informed Bank of America about this ongoing mix-up. [..] We asked Bank of America for an explanation, and days later they responded with this statement: "The owners have been contacted to apologize for this inconvenience and to let them know that we are rectifying the process internally. We have also asked the 3rd party contractor to stop all actions."

For more, see Bank attempts foreclosure on wrong home.

Another Lender Wrongfully Seizes Former REO It Recently Sold

In Grand Rapids, Michigan, WZZM-TV Channel 13 reports:

• It's happened again -- another recently purchased home broken into by a company that was hired to take care of foreclosed homes. WZZM 13 News reported a story Monday about a Newaygo County couple who paid cash for a foreclosed home, only to have their possessions taken six months later.

• On Tuesday morning, we got another call. This time, workers with a non-profit organization in Grand Rapids said they had a near-identical situation. The organization purchased a foreclosed home a year ago and completely renovated the property. Last month, though, the same company that maintains foreclosed homes, broke-in and winterized the property.

***

• There were several warning signs posted throughout the house. [Vanessa] Remo called the company listed on the papers, Field Asset Services. "They were very adamant that American Home, a mortgage company, was the person that owned it, so we called and did some research and it was Deutsche Bank that sent them out," says Remo. "I must have sat on hold for two hours, and nobody ever called back."

For more, see Company apologizes for removing property from Newaygo County family's home.