New figures released by the Financial Crimes Enforcement Network show California, Nevada and Florida to be the states with the highest incidence of debt elimination and foreclosure rescue schemes.
A Phoenix area mortgage broker is being sued over allegedly manipulating FHA down payment requirements. The Lending Company, Wells Fargo Funding and RJ Reynolds are all named as defendants in the class action suit.
A pair of Valley residents plead guilty on Monday to conspiring to commit multiple-transaction mortgage fraud, a case valued at $5.3 million.
The following is the text of Arizona Attorney General Terry Goddard’s press release dated December 8, 2010:
Goddard Announces $458,000 Judgment in Fraud Case Involving Two Police Officers
“Attorney General Terry Goddard today announced a judgment totaling $458,000 in civil penalties and restitution for consumers as a result of a mortgage fraud investigation and lawsuit. These enforcement actions come as part of Goddard’s continued crackdown on businesses and individuals that prey upon homeowners struggling to avoid foreclosure.
On November 24, 2010, Goddard filed a lawsuit on behalf of his Office and the Arizona Department of Financial Institutions against Lee Brent Shaw of Gilbert and Mark Tallman of Chandler and their limited liability companies, Better Choice Investments, LLC, and Better Solutions, LLC, alleging that they defrauded some 148 Arizonans of their homes. Both Shaw and Tallman are also Phoenix Police Officers.
In the suit, Goddard alleged that between 2003 and 2007, the two defendants, through their Better Choice Investments, LLC, purchased sale-leaseback transactions from solicitors who had convinced homeowners to sell their homes for far less than the market value, promising to save them from foreclosure.
The solicitors persuaded struggling homeowners to deed them their homes in return for assuming their monthly mortgage payments and paying off the full value of their delinquent payments, often using funds advanced by defendants. The lease agreement provided for a monthly fee equivalent to the mortgage payment to remain in the home as a renter. Neither the owner’s mortgage lender nor servicer was notified of the transfer of title.
After the initial paperwork was signed, the deal was quickly turned over to defendants Shaw and Tallman, in return for a commission paid to the solicitors. The defendants recruited a pool of investors willing to assume co-ownership and refinance, for a 50 percent share in the profits
The owners-turned-renters had the option to repurchase the house within one year for a fee of approximately $15,000, if they met all of the conditions of the sale-leaseback agreement. If the owner-turned-renter violated any of the conditions, such as by making a late rental payment or being evicted, the option to repurchase the home became void and the individual was subject to immediate eviction.
Almost all of the owners-turned-renters proved unable to repurchase their properties, at which time the defendants sold or refinanced the home at full market value, earning profits in the tens of thousands of dollars.
“The Attorney General’s Office will continue to fight those profiting from mortgage foreclosure fraud at all stages of the process, whether it is the door-to-door solicitors or the investors who make the scheme possible.” Goddard said.
In November 2009, the Attorney General resolved the case against the solicitors who found the properties and initiated the transactions: Richard Winer and his companies Taken Care of Investments, LLC, Homeowner Solutions, LLC, Bourbon Street Property Management, LLC, and Filibuster, LLC.
The lawsuit claims that the defendants acted in concert with Winer to violate numerous state laws, including the Arizona Consumer Fraud Act, and the Arizona Debt Management Companies Act, by knowingly purchasing the fraudulently obtained properties.
According to the terms of the settlement, defendants must:
● Pay $310,000 in restitution to homeowners victimized by their scheme.
● Pay $148,000 in civil penalties to the Attorney General’s Office and the Arizona Department of Financial Institutions.
● Pay $27,717 in costs and attorney’s fees.
● Refrain from participating as a director or officer in any financial institution or enterprise licensed by the Arizona Department of Financial Institutions.
● Refrain from engaging in any activity requiring the issuance of a license under the authority of the Arizona Department of Financial Institutions.
● Refrain from any ownership interest in a sale-leaseback transaction.
This case was handled by Assistant Attorney General Rebecca Salisbury. Copies of the complaint and consent judgments are attached.
The Attorney General’s Office website includes a page dedicated to helping homeowners avoid foreclosure rescue scams and loan modification scams, as well as locate legitimate services and programs available to them. To access this page, go to www.azag.gov and click on “Foreclosure Resource Center.”