Beware of foreclosure scams currently under investigation by the District Atorney

19 Jun

Each day I get calls from desperate people hoping against hope the there is a magic document that can be filed or recorded the will magically give them their home free and clear without recourse. I tell them if it sounds to good to be true it probably is. That’s not to say that I don’t agree with the position that the documents that now exist as to these securitized loans are not defective. I do believe that the real party in interest is not the one foreclosing. I also believe that the party who is out the money or the true lender has been paid with insurance (one such insurer was AIG), or is being paid under the pooling and servicing agreement, or has a guarantee from a bailout program. They are going to get paid and they are going to take the house based upon forged documents.

The homeowner is being told he doesn’t qualify for a principal reduction. That although they qualified for a $4,000.00 monthly payment when they got the loan now they do not qualify for a $2,400.00 payment.

The world is crazy right now. Take a look at what the Los Angeles County District Attorney’s Office is investigating now.

Los Angeles County District Attorney’s Office
Responses to Preventing Foreclosures
and Foreclosure Rescue Fraud

1. Types of Foreclosure Rescue Fraud Cases Being Investigated
• Home Equity Sales Contract Fraud: Suspects convince homeowners to grant title of the property to them and pay them rent. Suspects usually promise to return property back to the victims in a year or two when their credit is improved. Suspects either take out loans against the property or sell the property and pocket the equity.
•Mortgage Foreclosure Consultant Fraud: Suspect contacts homeowner whose home is in foreclosure and claims to be able to assist in delaying or preventing foreclosure by obtaining new financing. Suspect instructs homeowner to transfer title of property to an individual (suspect or suspect’s accomplice) who can qualify for new financing. Suspect obtains new loan including all equity. Usually within months, the homeowner receives a notice of default in the mail and the suspect has already absconded with sales proceeds.
•Bankruptcy Fraud: Suspects file fraudulent bankruptcy cases using a fictitious business and/or trust using fractionalized deeds. Homeowners pay a monthly fee to the suspects while foreclosure is being delayed because of the bankruptcy proceedings. When a fraudulent bankruptcy case is dismissed, suspects file another fraudulent bankruptcy case.
•Loan Modification Fraud: Suspects charge an upfront fee and/or monthly fees to negotiate with lenders on the behalf of the homeowners. Typically, they provide no service or minimal service and just take the money.
•Forged Reconveyance Fraud: Suspects file a forged reconveyance on a property, making it appear that the property is owned free and clear. Suspects encumber the property with a new loan and run off with the new loan proceeds.
•Rent Skimming: Trespassing on vacant property and renting to unsuspecting tenants.
2. How Are We Addressing the Crisis
•Cases are investigated where there are a significant number of victims and losses. Consideration to investigate a case is also based on the facts of a complaint submitted to our office for review.
• The Los Angeles County Real Estate Fraud Task Force meets monthly and shares
information on current trends and cases being investigated. The task force has
been in existence for approximately ten years. The task force is comprised of the
following agencies: Department of Real Estate, County Department of Consumer
Affairs, County Registrar Recorder, Los Angeles Police Department, Los Angeles
County Sheriff’s Department and County Assessor. Other law
enforcement/county agencies also attend the task force meetings.
• We coordinate with outside agencies to investigate cases that have multiple
victims in various jurisdictions.
3. Type of Scams
• Phony counseling: Scam artists convince homeowners that they can negotiate a
deal with lenders. Once they collect the fee, they take off.
• Rent-To-Buy Scam/Rent Skimming: Suspects convince homeowners to grant title
of the property to them and pay them rent. Suspects usually promise to return the
property back to the victims in a year or two when their credit is improved.
Suspects either take out loans against the property or sell the property and pocket
the equity. Suspects benefit from rent money and the equity they stole.
• Bankruptcy Foreclosure: Suspects file fraudulent bankruptcy cases using a
fictitious business and/or trust using fractionalized deeds. Sometimes scam artists
file bankruptcy in homeowners’ names – sometimes without their knowledge.
Often attorneys are involved in this scam.
4. Challenges
• Thousands of complaints are received throughout the county annually and due to
limited personnel (e.g. detectives, prosecutors, etc.) many cases are often not
investigated.
• Cases investigated are often complex and labor intensive.
• Many of the companies have gone out of business that have the records to prove
the crime (e.g. Title Company, Escrow Company, financial institution, etc.).
5. Tools or Resources Needed
•Additional investigators and prosecutors.
•Continue Community Outreach Programs to educate the public on what government programs are available to assist them.
•Enhance current statutes with greater punishment (longer prison sentences) and reconvey clear title through the criminal process thus returning the property to the original owner.
•Greater regulatory oversight and accountability over all of the players involved in all real estate transactions (e.g. Appraisers, loan brokers, title companies, etc.) .
•Improve the manner/verification in which records for recordation are accepted.
•Restrict access to real estate records by the general public (Need-to-Know/ Right-to-Know).

Advertisements

2 Responses to “Beware of foreclosure scams currently under investigation by the District Atorney”

  1. Randy Frodsham June 19, 2011 at 11:04 am #

    This article is quite worthwhile. However, there is one ambiguous statement that seriously needs clarafication and, at the very least, an attempt at specificity.. It is “Cases are investigated where there are a significant number of victims and losses.”

    I realize the difficulty in getting too specific in these types of matters, but for a lender or foreclosure trustee to be a violator, how many injured homeowners would = (equal) “a significant number of victims or loses?” Would it be one lender or trustee wrongfully foreclosing on 3 homeowners? 5 homeowners? 10 homeowners? 50? 100? Seriously, for a bank or trustee to be a “violator” in the eyes of the DA’s office, is there a number – or, better question, even an interest no matter what the number?

    If lenders and trustees are creating fraudulant documents or recording false documents to initiate a foreclosure in violation of several statutes including California Penal Code Section 115, should they to not be investigated and prosecuted? Of all the illegal actions that seem to be of interest to the DA, listed in the article above, NONE would point to a lender or trustee fraudulantly foreclosing on a property. If lenders had to actually PROVE their standing prior to the initiating of a foreclosure, many of those crimes into which the LA District Attorney indicates an interest, and is undoubtedly investing many, many man-hours at taxpayer expense, would disappear. Has anyone considered that possibility?

    BTW, the punitive fine for violation of PC 115 is up to $75,000.00 per count (no jail time), and a single foreclosure may mean as many as three counts – Do you think the County and State could use the money right about now? Oh yeah, they can’t do that because the money would be coming from the banks and trustees (who can afford it), not from the taxpayers (who always get the screw).

  2. laurie mendoza June 25, 2011 at 8:26 am #

    Mr. McCandless,

    Im sure you are aware of the agreement Wells Fargo made in December 2010 to pay restitution to us here in California who had the World Savings Bank Pick -A -Payment loan. My understanding is that Welss Fargo would notify homeowners who already foreclosed by June 2011. Well here it is almost July 2011 and I have goggled my fanny off trying to find out who to notify because i had this type of loan and “I WANT MY MONEY NOW”. i SEE NEW JERSERY has set up a form to fill out on line for its residents. but i think California is lagging. Could you please advise me on a contact. I did email our Attorney General and Governer since he worked so hard to get this agreement for us here in California. Guess what? i havent heard anything from anybody.
    sincerely
    laurie mendoza

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: