Attorney General Madigan Files Lawsuit Against Chicago Area Business for Alleged Mortgage Rescue, Debt Reduction Fraud

Chicago--(ENEWSPF)--November 9, 2010. Attorney General Lisa Madigan today filed a lawsuit in Cook County Circuit Court against three men and their businesses, alleging repeated instances of fraudulently soliciting consumers for mortgage and credit card debt relief in violation of the state’s Mortgage Rescue Fraud and Credit Services Organization Acts.

Madigan’s lawsuit charges the Chicago-based Omega Business Center was an umbrella organization for several entities that solicited consumers through print and radio advertising in the Polish community to reduce their mortgages and bring down credit card debt but did not provide the promised services. The lawsuit alleges the organization charged consumers upfront fees for services that were never provided, and never issued refunds to customers who canceled their contracts.

Also named as defendants in the lawsuit were Michael Borowiak, of Niles, president of Omega Tax and Accounting and manager of Omega Investment and Development; Jorge Paredes, of Chicago, principal of Wall Street Inc.; and Jay Fortier, of Oak Park, manager of Halbulst Asset Management LLC. These businesses, along with others registered with the state, all worked under the Omega Business Center, claiming to offer mortgage and credit card debt reduction assistance, the lawsuit states.

“Homeowners should be wary of any debt-assistance business that requires upfront fees for their services,” Attorney General Madigan said. “Mortgage rescue scam artists should be aware that my office aggressively investigates these allegations and will pursue those who prey on unsuspecting homeowners.”

The Attorney General received nearly a dozen complaints from consumers living in Cook, Lake and DuPage counties before filing her lawsuit. Those consumers together have lost $300,000 as a result of entering into contracts with these companies.

Madigan is asking the court to prohibit the defendants from engaging in the businesses of mortgage foreclosure rescue or credit services and from future violations of the Consumer Fraud Act. The suit also asks the court to void all contracts between the defendants and Illinois consumers made through these unlawful practices and provide restitution for consumers. The action also asks the court to order the defendants to pay a $50,000 civil penalty per count, additional penalties of $50,000 for each violation found to have been committed with the intent to defraud, as well as $10,000 per violation found to have been committed against a senior 65 years or older. The lawsuit also asks the court to require the defendants to pay the costs of the investigation and prosecution of the case.

Assistant Attorney General DaToya Burtin-Cox is handling the case for Madigan’s Consumer Fraud Bureau.

source: www.enewspf.com

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Mortgage debt surpasses $1 trillion

Canadian mortgage debt for the first time has surpassed $1 trillion, according to the sixth Annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals released Monday.

Over the last 15 years, the volume of outstanding residential mortgages has expanded by 194 per cent, or a growth rate of 7.5 per cent per year, according to the report.

In 2009, approvals of residential mortgages in Alberta was almost $37.5 billion, up seven per cent from the previous year, representing 15.2 per cent of all approvals in the country.

"Growth (in Canada) was especially rapid during 2004 to 2008, exceeding 10 per cent per year, but has eased to 7.6 per cent ($71 billion) in the most recent 12-month period," said the report.

The report also said the vast majority of Canadians with mortgages are able to afford at least a $300 increase in their monthly mortgage payments. One in three (35 per cent) mortgage holders have either increased their payments or made a lump-sum payment on their mortgage in the last year.

And 89 per cent of Canadian homeowners have at least 10 per cent equity in their homes and 80 per cent have more than 20 per cent equity.

Overall home equity is at 72 per cent of the total value of housing in Canada. For homeowners who have mortgages, equity level averages 50 per cent.
source: www.calgaryherald.com

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A big four mortgage brings stability, but also comes with a price

November 7, 2010 - TO SOME, the term big four conjures images of caravan parks. But it's certainly no holiday having a mortgage, especially if it's with one of the four major banks.

Just ask Clint Bailey. Like many home owners, he has a mortgage with a big four bank, Westpac, which charges the fifth-most expensive loans out of the 48 providers ranked by financial comparison site Infochoice.

Westpac's comparative variable rates (taking fees into account) are about 7.64 per cent. At least he's not with the Commonwealth Bank - which after raising its rates during the week now ranks as the second-most expensive home loan provider.
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Still, Mr Bailey is paying quite a deal more than he could be. Ten providers, mostly small independent players, charge less than 7 per cent.

But three years ago, said Mr Bailey, it was a different story - Westpac's rates were quite cheap. ''We went on the advice of [mortgage brokers] Ufinancial and basically looked at all the rates. We did go for one of the big ones because they were a stable business but they also had the best interest rate at the time.

''I guess it's a common thing - they lock you in to a good thing and then do what they like from there.''

Mr Bailey said he was relieved to be part of a big institution during the global financial crisis when interest rates plummeted.

But since then his monthly repayments have been steadily climbing.

''It was fantastic there for a little while, but it very quickly jumped back up. Now it looks like it will go higher and higher,'' he said. Mr Bailey, who lives at Frankston with his wife, Natasha, and two young children, is not overly worried, in part because his mortgage is relatively small. It was $200,000 three years ago. He has since repaid about an eighth, reducing payments to about $1300 a month, but he's thinking of getting Ufinancial to find him a better deal with another provider.

''I have asked the question. I guess I'll just keep an eye on things and see what the options are,'' he said.

He said while he was ''fed up'' with the big four, their stability was attractive.
source: www.smh.com.au

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Bank of America Lawyers Demand Names in Mortgage-Bond Fight With Investors

Nov 6, 2010 - Bank of America Corp., responding to the attorney for a bondholder group that’s pushing the bank to repurchase soured home loans, demanded proof the lawyer is authorized to mount an attack on behalf of investors including units of BlackRock Inc. and MetLife Inc.

Wachtell, Lipton, Rosen & Katz’s Theodore N. Mirvis is among lawyers for Bank of America who said in a letter yesterday to Houston-based Gibbs & Bruns LLP’s Kathy Patrick that they want the names of individuals who approved signatures on a letter Patrick sent the Charlotte, North Carolina-based lender last month. They also want to know whether the board of directors for the bondholders Patrick said she represents approved signing of her correspondence.

“Troubling aspects of your letter strongly suggest that it was written for an improper purpose, or in furtherance of an ulterior agenda,” Bank of America’s attorneys wrote, saying they see no need to take action in response to Patrick’s letter.

Investors are stepping up efforts to recoup losses on mortgage bonds, which plummeted in value amid the worst slump in home prices since the 1930s. Bank of America Chief Executive Officer Brian T. Moynihan said Oct. 19 the lender will “defend our shareholders” by disputing any unjustified demands for mortgage buybacks.

Bank of America’s lawyers said they couldn’t determine “whether any investigation of your allegations is warranted” unless Patrick proves her clients own as much of the bonds created by the bank’s Countrywide Financial Corp. unit as they claim. Patrick also needs to show on a deal-by-deal basis how the bank is falling short of its responsibilities in servicing the home loans in the 115 securitizations at issue, they said.

Moynihan’s Surprise

Moynihan, 51, said yesterday that he was surprised by the Oct. 19 letter from investors, which included the Federal Reserve Bank of New York.

Moynihan’s company has resolved other debt disputes with the investors, and he has called BlackRock CEO Larry Fink to discuss the mortgage buyback issue, he said.

Patrick declined to comment.

Jerry Dubrowski, a spokesman for Bank of America, confirmed the letter’s authenticity and declined to comment further.

Lawyers Brian E. Pastuszenski of Goodwin Procter LLP and Marc T.G. Dworsky of Munger, Tolles & Olson LLP also signed the yesterday’s letter to Patrick, which was reported earlier today by the New York Times.

‘War of Attrition’

Banks have been waging a “war of attrition” in seeking to dissuade bondholders from invoking their contractual rights to force repurchases of certain bad loans, David Grais, a lawyer at Grais & Ellsworth LLP, said on Oct. 27 at a conference in New York. Grais, who organized the meeting to discuss investors’ options, represents bondholders suing banks including Bank of America and New York-based JPMorgan Chase & Co.

Owners of the bonds Patrick’s clients now hold have suffered almost $8 billion of losses on the underlying mortgages, and more than $22 billion of the remaining loans are at least 30 days late, according to data compiled by Bloomberg. The underlying loan balances, originally $105 billion, stand at $47 billion after defaults, loan refinancings and home sales.

Brian Beades, a spokesman for New York-based BlackRock, declined to comment. The company, the world’s largest money manager, said Nov. 3 that Bank of America, which own a 34 percent stake in BlackRock, plans to sell at least 34.5 million of those shares.

‘Taken Aback’

Bank of America’s lawyers also wrote that they were “taken aback” that the investors were attacking Countrywide “for not foreclosing on homeowners quickly enough and for making loan modifications that may keep borrowers in their homes.”

Patrick has said her clients are concerned processing mistakes and insufficient staffing at Bank of America are unnecessarily delaying foreclosures, though her clients aren’t opposed to loans being reworked for “deserving borrowers.”

The investors are also challenging the way the bank handles loans it discovers didn’t match Countrywide’s representations. If the lender uncovers such discrepancies while working with homeowners on mortgage modifications, it should repurchase the debt from bondholders, Patrick’s letter said.

Bank of America may also be dragging out the time it takes to deal with bad home loans in order to boost its income from servicing the mortgages, according to the letter.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net. Jody Shenn in New York at jshenn@bloomberg.net
source: www.bloomberg.com

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Fake mortgage broker accused of pocketing money

November 5, 2010 - An Anaheim resident is accused of targeting and defrauding Hispanic victims of more than $87,000 in bogus real estate deals.

Arthur Gonzales Diaz, has been charged with seven felony counts of grand theft and one misdemeanor count of engaging in business as a real estate broker without a license. Diaz, who faces a maximum sentence of eight years in state prison, was arraigned on Friday.

Beginning in 2008 Diaz is accused of posing as a mortgage broker even though his license had been suspended for the last decade. Diaz is accused of convincing Spanish speaking victims into giving him money for real estate deals which he pocketed.

Diaz is being held on $75,000 bail.

source: www.sfgate.com

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