U.S. attorney accuses 27 in South Florida of mortgage fraud

U.S. Attorney Wilfredo Ferrer announced charges in four separate cases against South Floridians accused of participating in various mortgage fraud schemes.

Four separate indictments were unsealed Tuesday by the U.S. Attorney’s Office in Miami accusing 27 people in various mortgage fraud schemes against banks and South Florida homeowners.

The charges range from mail fraud to insurance fraud to arson, and highlight the problems that South Florida faces as the nation’s top market for mortgage loan fraud, U.S. Attorney Wilfredo Ferrer said.
“We keep leading the nation in mortgage fraud, and that is something we are working to stem,” he said. “The perpetrators of this fraud have infiltrated every level of the mortgage industry.”
The schemes unveiled Tuesday resulted in more than $30 million in bad loans, Ferrer said.
Two of the cases involve typical mortgage fraud schemes, with straw buyers using falsified loan applications to buy homes at inflated prices while the fraud orchestrators pocketed large portions of the bank loans.
According to the first unsealed indictment, businessman Luis A. Oramas, loan processor Mariela Hernandez, closing agent Elayne Gutierrez, all of Miami-Dade County, and real estate agent Keskea Hernandez-Frei, of Broward County, recruited 13 straw buyers to orchestrate a $20 million fraud on mortgage lenders.
From January 2006 to March 2008, the group purchased 22 properties in Miami-Dade using bogus loan documents and taking out multiple loans on some properties. Straw buyers allegedly received kickback payments of $30,000 to $100,000 for the use of their credit information.
The second unsealed indictment describes a similar scheme, allegedly carried out in Palm Beach County by mortgage professionals Ghaith Al Nahar, of Lake Worth, Michelle Austin-Wilks, of Boca Raton and Romy Defay, of West Palm Beach. That case involves more than $9.2 million in bank loans for homes bought by straw buyers, the indictment states.
“Criminals are always looking for new ways to exploit vulnerabilities and devising new methods to defraud,” said John V. Gillies, special agent with the FBI’s Miami office.
A third indictment describes several crimes on a single property, including mail fraud, arson and insurance fraud. According to the indictment: Gerardo Wilhelm, a Miami real estate agent, bought a Doral townhouse in 2006 using falsified employment information. When he could not keep up with the payments and the bank began to foreclose in 2007, he allegedly conspired with two others to burn down the home and collect $180,000 in insurance coverage.
In 2009, Wilhelm engaged in a fraudulent short sale of the property, selling it to a friend for $77,000, despite the fact that he owed $300,000 on the mortgage. A year after the sale, the buyer transferred the property to a company controlled by Wilhelm. That company, whose vice president is Wilhelm’s mother, sold the townhome in March for $240,000. Lenders lost as much as $500,000 due to the various frauds, according to the indictment.
A fourth case charges Miami attorney David Donet Sr. with misappropriating more than $1 million in client funds during the closing process of real estate transactions. Instead of using the proceeds of a client’s refinance to pay off the existing mortgage, Donet allegedly kept the money for personal use, leaving homeowners susceptible to foreclosure.
Of the 27 defendants charged, 25 are in custody. If convicted, the defendants could each face 20 years in prison. Here are the names of the straw buyers charged in these cases: Ana Taveras, Joaquin Gomez, Manuel Valdes, Yudith Padilla, Ivan Padilla, Martha Fernandez, Maribel Diarth, Carlos Sanchez, Ivett Lorenzo, Guillermo Rivero, Napoleon Cadalzo, Hisamara Esponda, Rafael Bonne, Lucien Laguerre, Jeffery Gilbert and Philip Jay Newman.
“If someone is willing to pay money for the use of your name or your credit information, that should send a clear signal to you that it could be, and most likely is, a fraud,” Ferrer said.
In the arson case, Juan J. Flores and Alejandro Figueredo are charged with conspiracy to commit arson.
Florida has led the nation in mortgage fraud for the past five years, with South Florida ranking as the most active metropolitan area in the state last year, according to research by the LexisNexis Mortgage Asset Research Institute.
The Mortgage Fraud Task Force, a multi-agency group launched in 2007 to root out mortgage criminals, said it has prosecuted more than 600 scam artists in the last four years.

HOMEOWNER WINS AGAINST BANK OF AMERICA

In a modern-day evocation of David's slingshot triumph over Goliath, a couple of foreclosed homeowners in Naples, Florida reportedly foreclosed on a Bank of America branch last week, their attorney actually having moving trucks pull up in front of a Naples branch to execute a foreclosure judgment against the bank.
What must have seemed to observers like a scene out of a parallel universe - you can see some video here - was actually the fair and logical conclusion to a situation which, the court had ruled, had an unfair and illogical start. In 2009, retired police officer Warren Nyerges and his wife, Maureen Collier, paid $165,000 cash for their 2,700 square foot home in the Golden Gate Estates subdivision, and never took a mortgage out on it. So imagine their surprise when, in Februrary of 2010, Bank of America initiated foreclosure proceedings against them. The Nyerges hired an attorney, Todd Allen, to defend them against the wrongful foreclosure, and the Bank eventually abandoned the matter.
But not before the Nyerges incurred $2,534 in attorney's fees, which they requested informally from Bank of America multiple times before resorting to the courts, which ordered the bank to make the couple whole. When B of A still had not paid the judgment after five months of phone calls and letter writing by Allen and the Nyerges to the bank insisting that the court order be obeyed, Allen took the next step in the legal collection process, obtaining an order of foreclosure against the bank. (See The Best Blogs of 2011)
"They've ignored our calls, ignored our letters, legally this is the next step to get my clients compensated," Allen stated during an interview with CBS News.
Allen then reported to a local branch of the bank with sheriff's deputies, who he instructed to remove cash from the tellers' drawers, furniture, computers and other property. Approximately one hour later, the Naples News reports, the bank manager produced a check for $5,772.88 to satisfy Allen's fees and additional costs.
"We apologize to Mr. Nyerges that there was a delay in receiving the funds," read the bank's written statement to the Naples News. "The original request went to an outside attorney who is no longer in business."
Some might say all's well that ends well in this scenario, seeing as the Nyerges got their home, Allen got his fees and the bank got its come-uppance. But there are deeper implications to every one of these foreclosure foul-up horror stories we read about, and even those we don't. The finger-pointing to outside attorneys seems reminiscent of the banks' excuse for the robo-signing scandal that broke last fall, and just as flimsy: the fact that a bank has lots of foreclosures to process and hires an overworked, underqualified or otherwise not-up-to-the-job professional to do it does not justify the nonchalance with which documents and properties of such gravitas were treated. The similarity didn't escape Allen, who told CBS News "this is a symptom of a larger problem." (Foreclosure Watch: It's Not as Bad as You Think)
Further, these excuses also doesn't stand up to snuff: I've pointed out before that in transactions with far less monetary significance than foreclosure (and far greater frequency), banks get it right, almost every single time. Just think: when was the last time you got an extra $20 bill at the ATM? I've never yet met someone who could remember such a time. Similarly, while one or even several of the Nyerges' efforts to get B of A to pay the court judgment might have gone to the defunct lawyer's office, the Nyerges say they actually submitted their pleas directly to the bank, multiple times, to no avail: "I talked to branch managers, I called anyone who would listen to me," the couple told the Naples News. "And I wrote a certified letter to the president (of the bank). No response, nothing." (See the Top 9 Successful Ex-Playboy Bunnies)
And all these instances - from the robo-signing news to the refusal to pay this judgment, may contribute to the depression of home values, with just a few degrees of separation. A survey last year found that the robo-signing scandal caused American adults to trust the banks less. Not surprising, but perhaps this is: a study by professors at Northwestern University and the University of Chicago recently found that the vast majority of homeowners, even those with negative equity, would rather keep their homes than strategically default on them. However, "people who are angrier about the current economic situation are more willing to express their willingness to default, as are people who trust banks less."
To be fair, the Office of the Comptroller of the Currency's sweeping investigation into the robo-signing scandal concluded that only a small number of foreclosures actually took place wrongfully, and that even those were only wrongful because of an intervening law or event (like a bankruptcy filing by the homeowners), not because the mortgage payments weren't actually delinquent.
But if ever there was a business argument for the banks to get their procedures and processes together when it comes to foreclosure and cleaning up the messes created by the few, truly wrongful foreclosures which, like the Nyerges' case, will get widespread notoriety and further tear down consumer trust in the banks, it might be contained in these three simple statements. Less trust, more walk aways. More walk aways, more foreclosures. More foreclosures, lower home values. Enough said? We'll see.

HOW TO PRICE YOUR HOME

It's a tough time to be a homeowner trying to sell. The national statistics show inventories and prices holding steady through the first half of 2010. While this is a relief from the grim free fall that home sellers faced after the real estate bubble burst, there still isn't the upward momentum that owners prefer when they're looking for home sales.

According to a Wall Street Journal report, only 47 percent of houses listed for sale in major U.S. markets had actually sold by August 2010. Several of the remaining listings were taken off the market. Moreover, the national averages belie the differences that realtors and other experts are seeing from one region to another, and even one neighborhood to the next.

"There's no longer a national housing market," says Armando Montelongo, the real estate maven who was featured on A&E's "Flip This House," a housing-bubble-era reality show. "You can drive 200 miles and see a totally different real estate climate."

You might not have to drive that far. Realtors report homes getting offers after a few days on the market in some neighborhoods and languishing for six months or more the next town over. So how do you figure home value and set the right price?
"We have a lot of pockets of activity," says Debbie Cobb, RE/MAX realtor in the Research Triangle area of North Carolina. "Out in the country we had foreclosures and that area is still sluggish, but we also have an area closer in, called North Hills. That market is still steady, although it's not as quick a sale as it use to be."

In short, home sellers who want a quick home sale, say to move for a job or transition to a more affordable place, need to be very price sensitive, especially if they live in average or underperforming areas (like those hit hard by foreclosures). "You can't price a home too low today, but you can price it too high and not have it sell," Montelongo cautions.

The best thing, real estate agents say, is to price a home appropriately to begin with. Try to resist the urge to overestimate your home's value; you want to avoid having your house sit for several months while you lower the price again and again. The more you do this, the more people will wonder what's wrong with your place, says Chad Goldwasser, a realtor with his own shop in Austin, Texas.

Here's how to figure out a fair home value:


1. Don't make it personal

The second you decide to put a house on the market, stop referring to it as "my home," Montelongo says. "It's a property," or at the very least, "the house." This will help you to get some emotional distance as a home seller. You can view the place with the objectivity that potential buyers have and think about pricing, and the home's value, in a realistic way.


2. Tour the neighborhood

Cobb suggests asking your Realtor to take you around to open houses in the neighborhood, or grabbing the local listings and going yourself to research home values. Focus on homes within a mile of your own that are a similar size with similar property, adds Montelongo, who has been buying and selling properties around the country for 10 years.

Pay attention to "how they show." That is, does the outside property look tended to? Are the kitchen and bathrooms up to date? The windows and siding in good shape? The floors and carpets clean and the walls freshly painted? Would the buyer have to make any immediate, obvious repairs or correct any extreme style choices (like a macho black-marble bathroom or way-too-green kitchen)? Is the temperature comfortable? Consider the price and see how long the house stays on the market. In the meantime, come back to your house and approach it the same way you did the others, the way a buyer would. How does your house "show" in comparison? Be ready to make some improvements or adjust your price.

"The homes selling quickly are in the best condition they can be in. They're cleaned up, staged well and priced correctly," says Goldwasser.

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3. Follow the comps

"Comps" are the price tags on homes, comparable to a seller's, that have sold or gone into contract. While open houses will tell what home sellers are asking, comps tell you what they're actually getting, and therefore what the true home values are in your neighborhood. The comparison of those two numbers can itself be instructive. Your Realtor can give you local comps, as can websites like AOL Real Estate.

Since many Realtors won't list a price until the deal has closed, comps can lag a little bit. Follow them for as long as you have a property on the market to know which way local prices are trending.

Montelongo adds that you also want to know how long comparable houses sit on the market. If local properties are moving in less than a month, you're in a robust market and can price more aggressively. Thirty to 60 days means a good but not great market; more than 90 days means you're in a slow market and you've got your work cut out for you.


4. Do a test run

Watch what happens during the first three weeks that your property is on the market. If people look but don't make offers, you probably priced it a little too high. If no one even comes to look, you aren't in the right ballpark. In either case, "Get the price down as quickly as you can," says Goldwasser.

How much do you cut? Look at the latest comps and set a price that sits on the low end of them, or lower.


5. Reset the clock

If you've already made too many price cuts or the house has sat for too long and is getting stale, you might consider taking it off the market for a while. But before you do, Cobb advises, find out how long you'll have to wait before it shows up as a new listing (it could be one or a few months) and if the listing will tell how many cumulative days the house has been on the market; then decide whether it's worthwhile to do so.


6. Make your house a good deal

If he knows homes in a certain market are selling for about $300,000, Montelongo won't hesitate to put his on the market for $275,000. He figures that making it look like a really good deal will make people curious enough to come out and look. "You want to generate interest," he says. He's OK with selling for less than he could if it means getting out from under a house quickly. But it's not unusual, he says, for homebuyers who think they've spotted a good deal to bid the house up a little, bringing it closer to what the seller who lists at $300,000 might wind up having to come down to.

In a few select markets, trying to sell your home for too much might mean sitting on it for a lot longer than you prefer, but in most markets, it might mean not selling at all, experts say. As long as it's a buyers' market, getting the price right, and correcting pricing mistakes quickly, is one of the most important things that a home seller can do to attract a buyer and get to that closing date fast

SHORT SALE - WORTH THE WAIT??

A Short Sale Worth the Long Wait

By Aol Real Estate Staff(RSS)

May 10th 2011 11:01PM

The term "short sale" is enough to make many homebuyers bolt out the door in a panic. But when Jennifer Craft and her husband discovered that the house of their dreams was listed with the often-misunderstood sales tag, they didn't balk.

With a little luck and a lot of perseverance, the Crafts successfully navigated the short sale process and came out the other end with a fabulous new home.

In 2003, Jennifer and her husband purchased a starter home in Knoxville, Tenn. At the time, it was the perfect size for a new family.

But after a few years in the house, the couple was ready for something larger with a bit more character. So on the advice of a friend, they spoke to a Realtor about a spacious listing in a great neighborhood.

"From the quality of the granite countertops to the hardwood flooring, it was exactly what we were looking for," Jennifer says. And for the price, the couple would gain about 1,000 square feet for nearly $40,000 less than similar homes in the area. There was just one catch: The house was listed as a short sale.

A short sale is a home purchase in which the price falls short of what the original owner owes on the mortgage. The lender who issued the mortgage agrees to cut its losses and accept the proceeds from the sale, while the seller avoids the risk of foreclosure and, in some cases, has the outstanding debt forgiven. In an ideal scenario, the lender avoids a lengthy foreclosure process, the seller suffers less damage to his or her credit, and the buyer gets a home at a steep discount.

(Learn more about short sales here.)

The problem with short sales, though, is the uncertainty of the process. It could take several months before the offer goes through, and even after months of waiting, the home could still potentially be foreclosed on, or the owner could come to terms on a mortgage modification. And for repeat homebuyers like the Crafts, there's also an added risk in timing the transaction.

"We actually sold our first home in just 48 hours," says Jennifer. "We were amazed." With only a month until the new owners moved in, Jennifer and her family would have to move out regardless of whether their short sale offer was accepted.

Unwilling to rent for an indefinite amount of time, the family decided to move in with Jennifer's parents.

"You really have to be prepared to wait for an uncertain amount of time, which can be a strain on the family," she says about the temporary arrangement.

Jennifer lived with her husband and toddler son in her parents' house for four long months before getting confirmation that their offer was accepted.

When all was said and done, the Crafts purchased the four-bedroom, 2.5-bath home for $225,000 -- almost $40,000 less than what other homes in the neighborhood sold for.

And while Jennifer is the first to admit that the process is not for everyone, she says she's glad they went through with it.

"Because we were able to wait, now we have a great house in a great neighborhood," she says. "It was really worth all the struggle. We couldn't be happier."

To hear the whole story, watch the video above

VIDEO: IS A SHORT SALE WORTH THE WAIT?

A Short Sale Worth the Long Wait

By Aol Real Estate Staff(RSS)

May 10th 2011 11:01PM

The term "short sale" is enough to make many homebuyers bolt out the door in a panic. But when Jennifer Craft and her husband discovered that the house of their dreams was listed with the often-misunderstood sales tag, they didn't balk.

With a little luck and a lot of perseverance, the Crafts successfully navigated the short sale process and came out the other end with a fabulous new home.

In 2003, Jennifer and her husband purchased a starter home in Knoxville, Tenn. At the time, it was the perfect size for a new family.

But after a few years in the house, the couple was ready for something larger with a bit more character. So on the advice of a friend, they spoke to a Realtor about a spacious listing in a great neighborhood.

"From the quality of the granite countertops to the hardwood flooring, it was exactly what we were looking for," Jennifer says. And for the price, the couple would gain about 1,000 square feet for nearly $40,000 less than similar homes in the area. There was just one catch: The house was listed as a short sale.

A short sale is a home purchase in which the price falls short of what the original owner owes on the mortgage. The lender who issued the mortgage agrees to cut its losses and accept the proceeds from the sale, while the seller avoids the risk of foreclosure and, in some cases, has the outstanding debt forgiven. In an ideal scenario, the lender avoids a lengthy foreclosure process, the seller suffers less damage to his or her credit, and the buyer gets a home at a steep discount.

(Learn more about short sales here.)

The problem with short sales, though, is the uncertainty of the process. It could take several months before the offer goes through, and even after months of waiting, the home could still potentially be foreclosed on, or the owner could come to terms on a mortgage modification. And for repeat homebuyers like the Crafts, there's also an added risk in timing the transaction.

"We actually sold our first home in just 48 hours," says Jennifer. "We were amazed." With only a month until the new owners moved in, Jennifer and her family would have to move out regardless of whether their short sale offer was accepted.

Unwilling to rent for an indefinite amount of time, the family decided to move in with Jennifer's parents.

"You really have to be prepared to wait for an uncertain amount of time, which can be a strain on the family," she says about the temporary arrangement.

Jennifer lived with her husband and toddler son in her parents' house for four long months before getting confirmation that their offer was accepted.

When all was said and done, the Crafts purchased the four-bedroom, 2.5-bath home for $225,000 -- almost $40,000 less than what other homes in the neighborhood sold for.

And while Jennifer is the first to admit that the process is not for everyone, she says she's glad they went through with it.

"Because we were able to wait, now we have a great house in a great neighborhood," she says. "It was really worth all the struggle. We couldn't be happier."

To hear the whole story, watch the video above

FORECLOSURES ARE DOWN

Foreclosure activity has fallen to a 40-month low, but not because of any recovery in the housing market, a new report finds. Rather, the slowdown comes from massive delays in processing foreclosure paperwork.

In April, overall foreclosure filings - including default notices, scheduled auctions and bank repossessions - declined for the seventh month straight to 219,258, a 9 percent decrease from March and a 34 percent decrease from April of last year. Banks seized 69,532 homes last month, a 5 percent drop from March, according to data provider RealtyTrac.
"This slowdown continues to be largely the result of massive delays in processing foreclosures, rather than the result of a housing recovery that is lifting people out of foreclosure," said James J. Saccacio, chief executive officer of RealtyTrac, in a press release.

Nationwide, foreclosures completed in the first quarter of the year took an average of 400 days from initial default notice to conclusion, up from the 340 days the process took last year and more than twice the average time - 151 days - it took to complete a foreclosure in the first quarter of 2007. In some states, that number soared higher. In New Jersey and New York, the average time frame in the first quarter of this year was 900 days. In Florida, it was 619.

With home prices still falling, a slowdown in foreclosures driven by paperwork delays is bad news for the overall housing market recovery. Home prices hit their lowest point in two years in April, falling 0.7 percent below March 2009 levels, according to a recent report by Clear Capital. Housing experts say that the data from RealtyTrac's report does not indicate that a reversal of this trend will be quickly forthcoming

MORE PEOPLE ARE BUYING

Existing home sales continued on an upward though unsteady path in the first quarter of this year, thanks in large part to sales of foreclosures and other discount properties.

Home sales rose in 49 states and Washington, D.C., according to a report released Tuesday by the National Association of Realtors. Total existing home sales increased by 8.3 percent to 5.14 million, up from 4.75 million in the last quarter of 2010. The only state not to not see growth in the quarter was Vermont.

The uptick can be largely attributed to more investor and repeat-buyer purchases. Investors made up 21 percent of sales, up from 18 percent a year ago, while repeat buyers were 47 percent of the market, up from 40 percent.
The growing prominence of these cash-ready homebuyers reflects tight credit conditions that continue to keep first-time buyers priced out of the market. First-time buyers accounted for only 32 percent of the homes purchased in the recent quarter, down from 42 percent last year, when the homebuyer tax credit (of up to $8,000) was still in effect.

A trend continuing in this year's first quarter is the popularity of distressed properties, which typically are 20 percent cheaper than homes not in foreclosure, according to NAR figures. Those homes accounted for 39 percent of sales this quarter, up from 36 percent a year ago.

Lower priced homes saw the biggest sales increase this quarter, in part because of all-cash buyers. The median existing home sales price fell to $158,700 -- down 4.6 percent from $166,400 this time last year.

But as the overhang of distressed properties shrinks, home sale prices will eventually start to rise, according to NAR chief economist Lawrence Yun.

"The rising sales trend in nearly all states is a part of the healing process to clear off inventory," he said in a press release. "Sales need to rise before prices can firm up."

First-time buyers should take note, however, that foreclosures are not the only bargain properties. With such a huge inventory of homes available, first-timers should compare prices on all the properties in their area before undertaking the often complicated process of buying a foreclosure.

NO SHAME

These are hard times - you hear it everywhere, and worse yet, you feel it everywhere.  I'm here to say there is no shame in taking advantage of programs that are out there for homeowners as well as other legal avenues.  They are here for people like us who work hard every day for every dollar in an economy that is a bust.

Many times we struggle to make our mortgage payment to avoid foreclosure, but there are many other alternatives.  There is refinancing, new loan modifications that are coming out all the time, having an attorney see if the lender committed fraud in lending you money, and deed in lieu - where you can negotiate the money you owe.  Also, perhaps bankruptcy could help aleviate your other debts where you can more comfortably make your mortgage payments. 

For example, if you owe less than $729,000 on your mortgage, the President’s Making Home Affordable Program could cut your mortgage payments by up to $12,000 per year.

Ask your bank, or if you have an attorney, ask your attorney, about the President's Making Home Affordable Program. 

The key is to know that there are options, and you're not alone.  Hundreds of homeowners are receiving good news everyday in Miami about their finances.  If you need to speak to an attorney about what is available to you, we can recommend a very good one in Miami.  It just takes a free consultation to plan your future finances and help you during these times when we are making less money than before and everything is more expensive.  There is no shame in it and you will feel less burdened.

Email us or call us to get more information about the attorney.

HOMEOWNERS FOUGHT LENDER AND WON

A New Jersey couple fought a lender's foreclosure proceedings and ended up being able to keep their home. George Elghossain and his wife, Mona, successfully defended against a mortgage loan servicer that tried to foreclose on their 4-bedroom home. The April 4 court decision set a precedent for other homeowners in the state who now should be able to cite this case for having their own foreclosures dismissed.

Elghossain of North Brunswick, N.J., a real estate broker who raised four children in the bi-level home, pictured left, used his industry knowledge to fight his case in court without a lawyer after he noticed that the servicer of the loan that sent him the notice of intent to foreclose was not the lender that owned his loan.

"When I got the foreclosure complaint I found out the people suing me was not the people I had been paying. Now I had issues with am I paying the right party, and paying the right bank," Elghossain told AOL Real Estate. "So naturally I didn't continue payments, even though I could've made the payment."
By New Jersey state law, the homeowner is suppose to be notified of various items, including the name of the lender that owns the loan and its contact information.

In its paperwork, loan servicer Bank of America failed to include the names of the lender and the lender's representative in its notice of intent to foreclose,

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thus violating New Jersey's Fair Foreclosure Act, which was enacted in 1995 and has been updated several times.

"The Fair Foreclosure Act is clear, unambiguous, and readily comprehensibly (especially to a sophisticated lender)," according to the opinion written by Judge Glenn Berman of Middlesex County.

Bank of America wanted the judge to expand the meaning of who is a lender so that it would include any "mortgage lender, mortgage investor or mortgage loan servicer that owns ... or is authorized to negotiate the terms of the homeowner's mortgage." Berman said the bank's argument "is misplaced."

Elghossain purchased the home in 1985 and with his wife and refinanced it in 2004 with a local bank called New Millenium Bank for $260,000 at a 6.25 percent interest rate for 30 years. Zillow currently estimates that the home is worth about $295,000, down from a peak of about $485,000 in 2008.

About a month after Elghossain refinanced, New Millenium sold the loan to Countrywide Document Custody Services, which shortly transferred it to Countrywide Home Loans, Inc. Countrywide sold it to the Bank of New York, but maintained a servicing agreement, which was recorded on December 7, 2006. When Countrywide was purchased by Bank of America, BofA became the servicer, but Bank of New York remained the holder of the mortgage.

Bank of New York was one of 24 lenders to file 200 or more foreclosure actions in New Jersey in 2010, reported the New Jersey Law Journal.

"Homeowners in New Jersey don't contest their foreclosures, and they should," said the 50-something-year-old Elghossain. "With all the forgery and fraud, people should contest their foreclosures. That's my advice. If they can't do it themselves, they should consult an attorney to make sure the lenders have complied with the rules."

Elghossain, who was last with Weichert Realty before becoming his own broker with GME Realty, says the financial downturn in the industry took its toll on his business. In November 2009, he missed a payment on his mortgage and he received the intent to foreclose about 30 days later.

"Before Bank of America filed its lawsuit, I wrote them a certified letter saying I'd like to start making my payments again. Instead of taking that with open arms, they never responded and they filed for foreclosure."

Although the family, with two kids still living at home, are still holding on to the property, Bank of America still has the right to come back and serve the Elghossains with a proper notice of intent to foreclose.

For others facing similarly situations, Elghossain repeats, "Fight your foreclosures. New Jersey law gives you a lot of protection. People say the courts are biased, but that's not my experience." And to buyers of foreclosures, this former real estate instructor says, "Make sure the bank has the right title, or else you'll be facing previous homeowners who find out they still have rights to the title."

BANK WALKED AWAY FROM FORECLOSURE AND LEFT HOME TO HOMEOWNER

Amid all the foreclosure horror stories, every now and then we hear about a good outcome, whether it's by winning a lawsuit through a homestead loophole, because the lender didn't properly serve the owners, or because it doesn't really own the mortgage. Or in the case of one underwater Florida homeowner once facing foreclosure, the bank is simply walking away. The house is his, free and clear.

That's what happened to Perry Laspina and an investment property he owns in Jacksonville, Fla. He was facing foreclosure after the 9.5 percent adjustable rate mortgage spiked, sending his payments from $605 to $1,058 on the $72,000 mortgage, reported the Florida Times-Union.

Despite Laspina receiving an extremely high mortgage rate for the time period, he told the paper, it didn't matter. "I figured I'm going to flip this house within six months, maybe three months," he said about his 2006 purchase during the height of the housing boom. After tearing up carpet, refinishing hardwood floors and painting walls, he hoped he'd fetch about $120,000 for the 1,120-square-foot home he purchased for $80,000.
Although the former used car dealer had made several payments on the home he purchased with $8,000 down, the $72,000 principal had only been paid down about $1,000 before he stopped

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making payments. The economy turned, housing prices slid, and he couldn't unload what he had hoped would be an easy flip.

The bubble burst. Laspina was unable to sell it or rent it out, reported the paper, so he chose to stop making payments on the 2-bedroom, 1-bath home, which last appraised for $46,000, according to the Duval County appraiser's office.

The mortgage was through EquiFirst, the nation's 12th-largest subprime lender at the time. In 2009 its corporate parent, Barclays plc, shut the doors of the Charlotte, NC-based mortgage origination business that operated in 47 states, reported the Charlotte Business Journal. America's Servicing Co., a subsidiary of Wells Fargo, was servicing the loan at the time of the default.

The attorney handling the foreclosure on behalf of the lender was foreclosure king David Stern, who went down with his law firm, as we previously reported in "Foreclosure King Falls from Grace." (Stern is in his own legal battle now, suing the lenders who once hired him, as we later reported.)

Through all the mess and the upside down mortgage, it seems Wells Fargo just wanted one less headache. A bank spokesperson apparently told the Florida Times-Union that the loan was written off and the house given to the owner "because of the significant decreased value of the property."

SWAT TEAM FORCED SQUATTERS OUT OF A FORECLOSURE

The Naples, Fla., police department doesn't fool around when it comes to ridding a foreclosed home of illegal squatters. A SWAT team, called to a foreclosed home last month due to a so-called disturbance, gassed the place in an effort to force out a possible squatter who allegedly was hiding in the attic. In the end, three people were arrested inside the home for sale; and two toddlers, ages 2 and 3, were taken by Florida Department of Children and Families.

"It makes me so sad it gives me chills," neighbor Erica Vanover told the local NBC news station. "This is a quiet neighborhood. This is the only house we have in here that's in foreclosure."

Arrested in the 1980-built home were the children's mother, 20-year-old Tatiana Gil, Mitch Werman, as well as alleged attic-croucher, 25-year-old Ryan Kiskadden, pictured, whose uncle supposedly owned the abandoned 5-bedroom, 3-bath home since November 2005. The 2,892-square-footer had been used as the address of Mel's Towing Service.

"Anytime we have houses which are abandoned, it's a place for people to go who don't have residences ," said Det. Wade Williams, of the Collier County Sheriff's Office.

If you suspect a foreclosure in your neighborhood could be a target for being illegally accessed, there are steps you can take to help prevent the situation.

Start a neighborhood crime watch program. Formally, or informally, you and your neighbors

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can band together to keep an eye on vacant foreclosed homes. Even if you don't have a formal group, ask your neighbors to report to the police any suspicious activity they see at the vacant foreclosed property.

Help with lawn maintenance. You may have to do the work yourself, alternating with neighbors on shoveling snow, or who mows the grass; or just pool money in to hire a lawn service. (Think of it as helping to keep your own property values from falling).

Have it appear as if someone's home. Even if the city has already cut the electricity, you and your neighbors can do your part by parking a car in front of the house, so would-be criminals can't easily identify the house as an obvious vacant foreclosed home.

Check with local law enforcement. But before you take on any of those tasks, check local trespass laws so you know whether doing the extra chores could land you in a bit of legal trouble.

Be proactive. If you know the neighbors are going to leave the house vacant, ask them to sign a statement giving your neighborhood watch group permission to take care of the home in their absence. Or if the home is now bank-owned, speak with its representative -- you might even get reimbursement or a contribution toward your efforts

GET A LOAN WITH BAD CREDIT

To easily snag a home loan, an applicant needs to be a "triple threat" -- have an excellent credit rating, a large down payment, and low debt-to-income ratio with steady significant income. But even if you have bad credit, you don't have to rule out future home ownership.

Homebuyers with bad credit due to a foreclosure or bankruptcy, or who have previously been turned down for a loan, can still get a home loan.

Melanye Miller, a 40-something Chicago schoolteacher, has been hankering for three years to move out of the single-family home she was renting, so that she could purchase a place big enough for her and her three children. But when her credit report revealed a poor score, she knew banks would not give her a home loan, especially not one with zero down payment.

To increase her chances of getting a home loan, Miller began a long road to recovery from her bad credit history, which included not using credit cards and setting aside money each month for her house fund. Finally, in November, after saving for almost two years, she purchased a four-bedroom condo. "I saved and saved, but I decided to purchase a foreclosure condo because it was less expensive and required fewer funds," she says. "Owning a home is not out of the question if you have bad credit. You just have to do your research, know what you can really afford, do even more research, and save your money."

There are hurdles, for sure. But for those with a less than stellar credit history, you need to highlight your "compensating factors" -- those mitigating factors not reflected in your bad credit score or on your credit report.

Even though there are few opportunities for personal appeals when applying for a home loan -- for instance, explaining why a bill was not paid on time -- you can still try to present yourself in the best possible light. It just may help tip the scales in your favor when you've got bad credit in your history.
Here are seven compensating factors to consider submitting with your home loan application to help improve your chances for obtaining a mortgage, even with bad credit:

1. Flaunt other assets. If you don't have a large cash reserve or a large down payment, show loan officers the financial assets you do have. For example, if you have whole life insurance, list the cash value on your home loan application. If you have a sizable 401(k) or other retirement accounts, be sure to list them all and their current values. This strategy lets lenders know that if you're ever in a bind paying your mortgage, you're able to pull from one of these other sources to make ends meet. And if you're seeking to refinance, showing a low loan-to-value rating is a huge plus.

2. Stress job stability. If you have been working in the same industry for several years, and even with the same company for, say, five years or longer, be sure to highlight that to offset a bad credit history. And don't forget to mention any regular pay raises that you've received. If you have a cost-of-living increase every two years, or an annual merit-pay increase, be sure to mention in your home loan application how your income has risen over the years. The same goes for regular bonuses. Proof of rising pay or additional money will help lenders know that you will have funds to offset any possible rise in expenditures, such as property taxes or utilities.

3. Show discipline. Prove to lenders that your bad credit is a thing of the past and that you know how to save. If you've been socking away $600 a month to a savings account or have been contributing yearly to a retirement account, this will help you obtain a home loan. You are trying to show discipline, consistency and stability.

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4. Willingness to stay put. Prove to lenders that you're not a flight risk. Home loan lenders like to believe that you're going to stay put in that home for some time (though you can always upgrade or downsize). Show that you're committed to the home, neighborhood or greater community by listing how long you lived at your last residence, if the length of time was significant -- three years or more. If that time was spent living in your mother's basement, that might not fly, unless you show that the home you're interested in is down the street from Mom. Strong ties to the community can help.

5. Increase your down payment. The days of zero down payments are pretty much gone. Yes, you can get a house with a 10 percent down payment, or 3.5 percent under FHA. But in general, the larger the down payment, the quicker the home loan approval. Historically, the single largest obstacle to purchasing a home has been amassing enough money for the down payment and closing costs. If you can't come up with that money on your own, there are a few down-payment assistance programs as well as state and local municipality programs to help. Check with your city for possible homebuyer assistance; show your banker that you're not afraid to ask for help and that you have the tenacity to solve any of your own financial problems.

6. Don't bite off more than you can chew. Be reasonable about the amount of house and home loan you can afford, even if some real estate agents or brokers are telling you that you can afford more. The best advice is to start out smaller than you want. Spend some time getting to know home prices in the area where you want to buy, and know that you always can move up later. It's far better to own a home you can afford than to move into something outside your payment comfort level -- only to lose it and amass more bad credit down the road.

7. Have proof. It's one thing to tell potential home loan lenders that you never were late on your rent, or that you always pay your child support obligations. It's another thing to be able to show them. Be prepared to give documentation to back up all of the items on your compensating factors list. For example, show canceled checks for payments you've made to any entity, show bank statements to prove regular deposits of income or contributions to retirement. A letter from a landlord saying that you paid rent on time is not enough. If you cannot produce these documents, you will raise doubts about the veracity of your credit history.

The bottom line is there are certain red flags that give home loan lenders pause. When your credit history is less than perfect, get past the warning signs by highlighting other, positive aspects of your financial profile.

NEW MORTGAGE RULES FOR APRIL 1ST

Could new mortgage regulations created to protect homebuyers under the Truth in Lending Act actually hurt more than it helps? The debate rages on, as mortgage brokers brace for what some argue will lead to less competition in the market, and therefore less credit for consumers. Charles Hugh Smith at our sister site, DailyFinance, explores the nuances of the new rules set to go into effect on April 1, to explain why the amendments may be shortsighted -- even harmful -- for prospective homebuyers.
New regulations limiting mortgage brokers' compensation go into effect on April 1, and they might prove to be appropriate for an April Fools' Day. Though aimed at unscrupulous mortgage brokers, it seems the regulations will instead hit the nation's struggling housing market.
The Federal Reserve Board says that its regulatory goal is to "protect mortgage borrowers from unfair, abusive, or deceptive lending practices that can arise from loan originator compensation practices." The basic idea is to prevent loan officers from steering borrowers into riskier types of loans or a higher-than-average interest rate to make a higher commission.

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Officially titled "Loan Originator Compensation amendment to Regulation Z," The new rules apply to mortgage brokers and the companies that employ them, as well as mortgage loan officers employed by banks and other lenders.

Since most of us only deal with mortgage loan origination fees when we buy a home or refinance a mortgage, the average citizen will have a tough time sorting out the often-arcane issues at stake. But the bottom line is straightforward: the already-limited mortgage market is about to become more limited, as small mortgage brokers are essentially being shoved out of business. Call it "unintended consequences" or a cloaked plan to channel more of the mortgage business to the "too big to fail" big banks -- but regardless of the motivations, the rules may end up limiting consumer choice and make it harder for home buyers to get a loan.

While the stated goal of the new rules is laudable, those in the mortgage industry say it's a case of closing the barn door after the horse has bolted: the risky, subprime-type mortgages that were the root cause of the problem have already vanished from the mortgage market.

FLORIDA FORECLOSURE PLAN FALTERS

The Florida Supreme Court continues to devise programs in an effort to help homeowners in foreclosure, or so it would seem. The Residential Mortgage Foreclosure Mediation Program initiative was announced in 2009 and a Florida Supreme Court Task Force was assigned to implement the program. The 52-page report by the Task Force has all the first source information and fact-finding that led up to them establishing the Mediation Program.

The task force included court administrators and defense people who warned that there was going to be a crisis. Attorney Matt Weidner of Tampa, Fla., who has been instrumental in representing clients during the foreclosure crisis, as well as fighting much of the wrongdoing, told AOL Real Estate:
"The findings of fact are what's leading to the collapse of this mediation program, and we all said from the beginning that this is not going to work. This goes back to us not knowing who owns these properties, so we don't even know who needs to come to the table at these mediations."

The courts were pressured to establish the mediation program at a great expense, and so far there is only a single-digit percentage of success stories. That's because there are relatively few plaintiffs coming to the table. Also, the named plaintiff in these cases isn't the real party in these interests, the party driving this, the investors should be the ones at the mediation table but they're just going through the motions.

"There's a fundamental inability to identify who owns anything," says Weidner. "It all gets back to that."


Attorney Tom Ice, of Ice Legal in West Palm Beach, agrees with Weidner, saying, "In our opinion, the banks merely go through the motions so they can check mediation off their list of required things to do, but are not seriously contemplating a modification."

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The mediation process is mandated for every foreclosure case filed. The banks have to fill out the forms indicating it's a homestead property. One of the requirements of the administrative order is that the plaintiff (the bank) is required to begin the process, which includes hefty fees.

"In virtually every case I've been to in mediation, the banks never provide the proper documents, which again permeates the entire process," says Weidner. "These documents are what shows they have the right to be at the table."

In many cases, the investors will not agree to the modification which is the best business decision because they then do not receive the FDIC or investment money. Weidner says the system is in lockdown because of system failure. These modifications don't address the homes that are vastly underwater or the principal reduction.

FORECLOSURE DROP IS DROP IN THE BUCKET

The headlines blared last week about a 27 percent drop in foreclosures, after RealtyTrac released their U.S. Foreclosure Market Report for February. On the surface, it looked like maybe it was positive. And most journalists covered the release as good news for the housing market. But when examined closely, it is perhaps just the opposite: another sign of how depressed the housing market really is.

To their credit, the professionals at RealtyTrac went on to give what seems to be a real analysis of what is going on: "Foreclosure activity dropped to a 36-month low in February as allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets," said James J. Saccio, chief executive officer of RealtyTrac. "While a small part of February's decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures. We expect to see the numbers bounce back, but that will likely take several months."

So, what exactly does that mean?

First, it means that the drop in the actual number is more a reflection of delays in the legal process

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than it is a suggestion that the malaise is over. Second, it means that the pipeline of new 'foreclosed' homes for sale, so called REO inventory at banks is not really slowing down. That pipeline is a big part of what we call shadow inventory, the size of which is getting bigger as home values continue to drop. And that shadow inventory is a big problem for home prices. Simply put many more sellers than buyers. Not the environment in which prices will naturally go up. But to us, the real key is that this is another example of how homeowners, homebuyers and everyone else who wants to know what the real story is need to be careful about how they interpret what they read and hear.

In my last column, I pointed out that there are a large number of data released about housing and that, unfortunately, more often than not; the headlines that accompany the data do not capture the whole story. Now as we head into the spring, the normal start of home buying season, it becomes crucial that participants pay close attention to the details, not just the headlines. No one wants to buy a house in a neighborhood where it looks like foreclosures have stopped coming, only to find out they were not going away, only being delayed. Without a close look, everyone is at some risk of being drawn to the wrong conclusion.

We will continue to call the market as we see it. And we hope that will help

SCAM VICTIMS GET MONEY BACK

Who kicks a guy when he's down? During these hard financial times, unfortunately, lots of people. But today, one of the most frequently targeted groups, foreclosure victims, is getting a fair shake in civil court. Thanks to a Federal Trade Commission investigation, nearly 1,500 victims of foreclosure rescue scam fraud will be reimbursed for a portion of their losses. Jorgen Wouters from our sister site, WalletPop, has the full story.
Nearly 1,500 consumers ripped off by a mortgage loan modification and foreclosure rescue scam will be receiving refund checks from the Federal Trade Commission.

The ringleader of the scam, Bryan D'Antonio, has run afoul of the FTC more than once since 1999 for defrauding consumers and violating court-ordered bans against telemarketing.

Some 1,455 victims of D'Antonio's latest scam,Tax Relief ASAP, will receive checks averaging approximately 24% of their total losses. But that won't be much comfort to victims who lost their homes to foreclosure by falling for his bogus foreclosure rescue scheme.
D'Antonio's first run-in with the FTC occurred in 1999, when the agency filed a complaint against him and his company, Data Medical Capital, Inc. for running a work-from home telemarketing scheme. The FTC accused D'Antonio of lying to consumers by promising them incomes of at least $23,400 per year by purchasing his medical billing work-at-home program.

Very few consumers who bought into his work-at-home scheme, the FTC said, were able to generate clients, start a business or earn any money. D'Antonio settled with the FTC in 2001 and was fined more than $600,000 to reimburse his victims. He was also banned for life from marketing business ventures, employment opportunities, work-at-home opportunities and telemarketing

HOMEOWNER SUES MORTGAGE COMPANY

All Patrick Rodgers wanted was for someone at his mortgage lender to talk to him. But when the bank ignored repeated requests, the Philadelphia homeowner sued -- and won.

According to Rodgers, all he wanted was for the lender to answer his questions about its demand for him to purchase more home insurance.

Yet the bank still hasn't responded, Rodgers says, even though it has paid the $1,300 judgment.

Rodgers, a concert promoter who in January 2002 purchased a 6-bedroom, 3-bath Tudor-style home for $179,000, did as all homeowners do when they obtain a mortgage: He purchased home insurance to cover its replacement value should it ever be destroyed in a fire or other catastrophe.

About seven years later, his mortgage lender, Wells Fargo, asked him to insure the home for $1 million after an insurance inspector valued it at that amount. The amount was an estimate of what the home would cost to replace, reported the Philadelphia Inquirer. Rodgers balked. Wells Fargo went behind his back and bought him a policy, so Rodgers sued when the bank refused to respond to his inquiries.

Although home values have waxed and waned since he purchased his house in the Wynnefield Heights neighborhood, there's one thing this founder of Dancing Ferret Concerts knows for sure: The 1925-built home has never been worth $1 million.

"The area we are in is kind of close to the wrong side of the tracks," he told AOL Real Estate in a phone interview. "It was comparable to other prices in the neighborhood at the time." In fact, property records we dug up show that a smaller six-bedroom home across the street sold for $185,000 just seven months after Rodgers moved in.

"If you moved the house about five minutes west of here the price would go down about half and 15 minutes the other direction, it would go triple," he said.

Wells Fargo never sent Rodgers an appraisal report showing its estimated $1 million value, he says. To substantiate a change in the replacement value, up or down, a person or entity must show proof of the changed value through an "accepted industry rebuild estimators or an appraisal with the cost to replace new on the dwelling," says Mark Boyer, CEO of Foundation Financial Group in Jacksonville, Fla.

"The market value and the insurance coverage amount are in no way related," says Mark D'Agostino, the owner and president of R.F. D'Agostino Insurance Agency Co., in Brockton, Mass., outside of Boston. "The coverage amount is the cost to rebuild the home in the event of a total loss; the homeowner can ask that the replacement cost be reevaluated at any time. Going up is generally easier to do than going down."

Outside of some exterior repairs he did to the

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home a couple of years after he purchased it, Rodgers hasn't made any other upgrades or changes that would warrant such a drastic increase in value.

So Rodgers said no to Wells Fargo's request for additional insurance. Then Wells Fargo bought it for him, and his insurance company notified him that the new policy would cost him an additional $500 per month above his previous policy.

Rodgers wrote to Wells Fargo explaining his situation and demanding an explanation for its actions. By law under the Real Estate Settlement Procedures Act, Wells Fargo had 20 days to respond. When it didn't, Rodgers wrote another letter letting them know they had missed the deadline, and giving them one more chance to respond. After another 60 days had passed and Wells Fargo missed another RESPA-mandated deadline, Rodgers moved for a judgment against his lender for failure to respond. His reward: a default judgment of $1,000 since a Wells Fargo representative never appeared in court.

When the lender didn't pay up, Rodgers contacted the Philadelphia sheriff's department for help. The sheriff scheduled a sale of the items in a Wells Fargo office to cover the monies owed to Rodgers. That, along with media reports, got Wells Fargo's attention and they sent Rodgers several checks totaling the approximately $1,300 they owed him for the RESPA violation, court costs, sheriff's levy, and scheduled sale. (The sheriff's sale has been cancelled now that the bank has paid.)

Rodgers has received the money, but no phone call or letter. "No one from Wells Fargo has reached out to me yet and that was the point for me in initiating all of this. It wasn't that I wanted to litigate and get $1,000. I just wanted someone from Wells Fargo to talk to me."

WILL ROBO-SIGNING BANKS GET PUNISHED?

Is the ever-evolving trend of quickie foreclosures, robo-signing, rocket dockets and more that banks have adopted as of late finally going to cause them to get more than a handslap? According to recent reports, the answer is yes.

Tom Ice of Ice Legal who was profiled in AOL Real Estate however, has a different viewpoint pointing specifically to the serious flaw in the investigation. "I have said it from the beginning that this process was going to take much longer than the months they have projected," he told AOL Real Estate. He points out the article in the Washington Post which highlights a group investigation by the federal government and 50 state attorneys general.

The worst part is the attitude of the courts and the attorneys, who in many cases still don't know who owns the loan on any given home. "In every single affidavit we are signing," says Ice, "it states that the plaintiff and the homeowners are the owner of the note."


Still, the courts can't produce the paper for about 500 cases Ice and others are working, and they're saying only a handful of homeowners were foreclosed on wrongly.
"If you say servicers are entitled to foreclose, this is incorrect, because they are rarely the owners and never claim to be the owners," he says.

This threat or handslap, Ice believes, actually serves the banks in their attempt to influence public opinion, sending the message that not all banks are implicated in the scandal.

In essence, banks were accessing the accounts of homeowners before they went through the foreclosure process. Under their watch, they offered a trial period with a suggestion that at the

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end if homeowners made all their modified payments, they would get a permanent modification. That's exactly what happened. However, in the fine print of many mortgage documents, all that is stated is that the lender will consider a permanent modification.

"What I am afraid is that [the mortgage modification initiative] won't really have any permanent effect and will in turn adversely affect the economy if they take it any further," says Ice. "They're going to come up with something great on paper, but no one will ever benefit from it."

And is the practice still going on? Ice says absolutely, because even in the Florida Supreme Court system they have supposedly devised a plan to stop the robo signing that has also been "robotized" where now they're not really checking that the facts in the complaint are true.

"There's a huge resistance to get additional depositions from those who have already been deposed, because they've lawyered up," says Ice. "To me, it's an acknowledgement that there's still a problem."