Homeowners Say Banks Keep Them Underwater by Spurning Loan Program Rules

By Judson Berger- FOXNews.com

A slew of struggling homeowners are coming forward with complaints about the way banks are operating under a federal loan modification program announced last year by the Obama administration.

You qualify.

Those two words, from the mouth of a bank representative last October, triggered a wave of relief for Tracy Davis and her husband James. The couple had been in and out of work for three years and were struggling to pay their mortgage — so when the Bank of America worker told them they qualified under a federal program to have their loan modified, they finally saw a path to keeping their house.

“We walked out thinking, great,” Tracy Davis said.

But weeks went by, and nobody contacted them, and they weren’t able to reach anyone — other than representatives at a call center in India.

“To this day, we’ve not heard from someone,” she said. “It’s February. This goes back to October 30.”

The Davises, who live in Cincinnati, are among a slew of struggling homeowners coming forward with complaints about the way banks are operating under a federal loan modification program announced last year by the Obama administration. The program, called the Home Affordable Modification Program, aims to keep 3 to 4 million people in their homes. Federal statistics show banks are making plenty of offers, but relatively few of those loan changes are being made permanent — of the more than 1 million homeowners who have started the required three-month trial period, only 116,000 have had their new terms made permanent.

The complaints have a common tune. Homeowners say the banks are giving them the runaround — either by pledging to modify loans and then not following through, as with the Davis family, or by signing them up for the trial period and then leaving them in limbo.

Read more here: http://www.foxnews.com/politics/2010/03/01/homeowners-say-banks-underwater-spurning-loan-program-rules/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%253A+foxnews%252Fpolitics+%2528Text+-+Politics%2529

Ex-lawyer charged in $143G swindle

James Tinley, New Haven Register

A former city lawyer has been arrested in the theft of more than $143,000 while handling the refinancing of a client’s home mortgage in 2007.

Morris I. Olmer, 81, of Belleveue Road, was arraigned at Superior Court on a single count of first-degree larceny.

He is accused of pocketing $143,530.35 instead of paying off the original lender when a Hamden client refinanced a mortgage, according to the arrest warrant affidavit.

Olmer’s client was then on the verge of foreclosure when the mortgage was paid off by the Client Security Fund. All practicing lawyers pay into the state fund to aid victims of attorney misconduct.

Olmer, a former city alderman who had practiced law for more than 50 years, had his law license suspended for six months in February 2007 in an unrelated mortgage scheme. He resigned as a member of the Connecticut bar in July 2008, according to state judicial records.

Olmer is accused of swindling his client in January 2007.

Bank records show Olmer cashed checks from the misappropriated money for personal expenses, to run his law office and even to give his secretary a $5,000 car loan. She paid back $2,325, according to the arrest document.

The criminal charge came when two complaints were filed with the Statewide Grievance Committee by the owner of the Hamden home and another client. Those complaints were forwarded to the office of the chief state’s attorney for prosecution.

http://www.nhregister.com/articles/2010/02/27/news/new_haven/a1_–_bad_lawyer_0227.txt

State cracks down on five South Florida home loan rescue companies

Diane C. Lade, South Florida Sun Sentinel

State regulators took the first step Thursday in what they said will be an ongoing effort against unlawful mortgage modifiers, ordering several South Florida operations to immediately stop doing business.

The Florida Office of Financial Regulation cited five companies Thursday morning: Foreclosure Solution Specialists Inc., of Tamarac; the Federal Housing Assistance Program, west of Fort Lauderdale; Liberty Home Solutions, of West Palm Beach; Keep Living in Your Home, of Boca Raton; and Saving Your Home, of Miami.

They were alleged to have violated two state laws by taking money upfront for mortgage modifications and by not being licensed to perform those services.

Sharon Dawes, an area financial manager with Financial Regulation in Broward County, said this sweep will be the first of many, as the department looks to ensure foreclosure rescue operations follow the new licensure law.

As of Jan 1, loan modifiers, loan originators and mortgage lenders were required to have a state mortgage broker’s license. Previously, modifiers were largely unregulated.

Upfront fees have been prohibited, in most cases, for almost a year under a 2008 law.

Last year, legislators narrowed an earlier exemption given to attorneys, allowing advance fees only when they handle modifications in relation to an existing case, like a bankruptcy.

Dawes said the state sent out about 1,000 letters to mortgage companies statewide late last year, notifying them of the licensure change.

State officials started following up with visits to their offices in January, Dawes said.

Officials will go back to the ones they said still aren’t in line with the regulations, Dawes said. Those companies will be ordered to stop doing business until they are in compliance, Dawes said.

http://www.sun-sentinel.com/business/fl-loan-modification-sting-0219-20100218,0,6835319,full.story

5 People Sentenced to Federal Prison in $13 Million foreclosure rescue scam

LOS ANGELES – A Downey woman who orchestrated a real estate fraud scheme that caused nearly $13 million in losses after falsely promising to help homeowners in default on their mortgages has been sentenced to 10 years in federal prison. A second person involved in the scheme was sentenced yesterday to 15 years in prison after a federal judge determined that he had refused to account for proceeds of the scheme in an off-shore bank account that he had agreed in his plea agreement to repatriate.

Martha Rodriguez, 38, who pleaded guilty to mail fraud and money laundering charges in relation to the scheme that ran from May 2003 until November 2005, was sentenced yesterday morning to 120 months in prison by United States District Judge George H. King. In issuing the decade-long sentence, Judge King noted that Rodriguez perpetrated the mortgage fraud scheme while she was free on bond after being charged in another real estate fraud scheme.

Edward Seung Ok, 44, of Huntington Beach, who pleaded guilty to mail fraud, was sentenced yesterday afternoon to 15 years in prison. Before issuing the sentence, Judge King ruled that Ok violated his plea agreement by failing to provide investigators with access to an account in the Bank of Nevis on the Caribbean island of St. Kitts into which Ok had transferred more than $1.6 million during the course of the fraudulent scheme. In his plea agreement, Ok had agreed to repatriate and transfer to the government all of the funds in that account. In addition to continuing to conceal the money, Ok transferred more than $1 million of the off-shore money into a secret account in the United States, where he could access the funds for his personal expenses, which included golf club memberships, illegal drugs and a $235,000 Lamborghini Gallardo, prosecutors told Judge King during yesterday’s hearing. Addressing the court during yesterday’s hearing, Ok admitted that he spent more than $1 million of the money he had hidden in the off-shore account during a two-year period when he was free on bond in this case.

The prison sentences stem from a fraud case in which Rodriguez, Ok and three others used computerized databases that list homes going into foreclosure to locate victims, who were promised refinancing services. The scheme was operated through Rodriguez’s real estate and escrow agencies, Silvernet Properties in Downey and Bellasi Escrow in Seal Beach. Instead of obtaining refinancing, Rodriguez and her co-schemers submitted loan applications in the names of “straw buyers” who were purportedly buying the properties. In some cases, the defendants paid the straw buyers for the use of their personal information. In other cases, the defendants used personal information of people without their knowledge. The loan applications for the straw buyers – which always contained false information – caused a series of lenders to fund more than 100 mortgages worth more than $40 million. The loan proceeds were used to pay off the loans in default, sometimes to make a few mortgage payments on the new loans, and to provide some instant cash to homeowners. However, the remaining proceeds, typically representing the bulk of the homeowner’s equity, were skimmed off by Rodriguez and her co-schemers.

Even though they were promised that they would be able to keep their homes, the victim homeowners usually lost title to their homes. The lenders suffered losses when the straw buyers then failed to make loan payments and the new loans went into default. Lenders were often unable to foreclose because the straw buyers did not know the properties were in their names. The scheme targeted commercial lenders and more than 100 homeowners across the Southland.

Three other defendants in this case were sentenced late yesterday by Judge King. They are:

Cynthia Valenzuela, a 27-year-old Orange resident who pleaded guilty to mail fraud, was sentenced to one year and one day in prison;

Vladimir Stefanovic, 38, of Huntington Beach, was sentenced to 18 months in prison; and

Maria G. Juarez, 39, of Canoga Park, was sentenced to three years in prison, in part because, after she was arrested on the case, she continued to perpetrate loan fraud while she was free on bond.

This case is the result of an investigation by the Federal Bureau of Investigation and IRS – Criminal Investigation. The Los Angeles County Department of Consumer Affairs, Real Estate Fraud Section, provided substantial assistance during the investigation.

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