The following post is taken from a letter to the editor of the Torrance Tribune. I post it today as a sample of some of the tactics going on in the real estate industry. It is not meant as advice, simply as an example of what not to do.

By Gerry Chong

An interesting story is currently circulating around the Internet that is purportedly true, but I could not vouch for its authenticity. I repeat this only to describe a mindset that ensues when an entitlement mentality erodes society’s morality:

As a Realtor for the past 28 years, I thought I had seen or heard it all… until now. I was showing homes in Pontiac, Michigan one afternoon recently and showed up at a home at the 4 p.m. time my appointment was scheduled for. After I woke up the homeowner, she let us in and then proceeded to tell my buyers and I (sic) that she had already entered into a contract to sell the home on a short sale (a short sale is a sale where the bank accepts less money than is owed on the home). After some chit-chat, she proceeded to tell us that she and her sister (who also lived in the area) were buying each other’s homes via the short sale process. I mentioned to her that I thought relatives could not be involved in those transactions. She smiled and said, “We have two different last names, so no one knows the difference.” She went on to tell us that each of them owed over 100K on their homes and were in the process of buying each other’s homes for 10-15K cash. To top it off, they were each receiving $3,000 in government-provided relocation assistance at the closing.

My buyers and I were amazed that she was outright admitting to fraud and yet, she continued. She began to tell us that the best part of her scheme was that because they are currently not working, that they (both) are now receiving Section 8 vouchers. I said I thought those were for renters and she said, “That’s the best part–me and my sister are going to be renting each other’s homes so we don’t even have to move, and Obama is going to give us each $800 a month to pay the rent!” She then picked up a picture of Obama and did a little happy dance around her living room and while she kissed the picture she was singing, “Thank you, Obama…thank you, Obama.”

So here’s the bottom line…Both of these scammers got at least $80,000 in debt for- given–$3,000 in cash for relocation (when in fact, they did not relocate); and to boot, you and I will be paying $1,600 in rent for them each and every month, perhaps forever… End of story. Prominent Stanford University Economist and Hoover Fellow Dr. Thomas Sowell wisely noted, “One of the consequences of such notions as ‘entitlements’ is that people who have contributed nothing to society feel society owes them something, apparently for being nice enough to grace us with their presence.” Dr. Sowell continued, “I have never under- stood why it is ‘greed’ to want to keep the money you’ve earned, but not greed to want to take somebody else’s money.”

Three people face charges for their role in an alleged fraud scheme by using the Internet to target struggling homeowners in Northern California.

Ronald Cupp, 58, of Santa Rosa, Randall Heyden, 69, of San Rafael and Angelle Wertz, 38, also of Santa Rosa were arrested on 57 charges including theft, forgery, notary fraud and recording of false documents, Attorney General Kamala Harris announced on Monday.

The three are accused of luring the homeowners through six websites, including “” and collected thousands of dollars in upfront fees ranging from $1,000 to $10,000.

The scam ran through Cupp’s mortgage company—North Bay Trust Services—the three created fraudulent documents that only delayed a homeowner’s foreclosure, but did not satisfy the preexisting mortgage debt to the original lender.

“Vulnerable California homeowners thought they were working to save their homes but were actually the victims of a fraudulent scheme,” Harris said in a statement. “Today, it’s not enough to dismantle the brick-and-mortar aspect of a criminal operation; we need to shut down criminal operations in cyberspace as well.”

Prosecutors in Marin and Sonoma counties received a tip about the scam, said Nick Pacillo, a spokesman at the AG’s office. It is not known how many people have been victimized as state prosecutors are hoping more will come forward.

Cupp, Heyden and Wertz did not enter pleas during their appearance in Sonoma County Superior Court on Monday. Cupp and Heyden are being held in the Sonoma County jail on $500,000 and $75,000 bail, respectively.

A federal jury found Hoda Samuel, 60, of Elk Grove, CA guilty of a conspiracy to commit mortgage fraud.

After a 10-day trial in Sacramento, Samuel was found guilty on 30 individual counts of mail fraud.

Samuel, a licensed real estate broker and owner of Liberty Real Estate & Investment Co., served as a real estate broker for 30 transactions which defrauded lending institutions, according to court documents.

Court records showed Samuel’s conspirators and employees at Liberty Mortgage prepared loan applications with false financial information. When lenders called to verify information, they got Liberty employees who verified the false information.

In about half of the transactions, Samuel also served as the seller’s representative. In all but one of the transactions, she secured financing for the buyer.

At least 28 of the properties went into foreclosure, representing a loss to lenders of more than $5.5 million, according to court records.

Samuel is scheduled to be sentenced April 30.

A San Diego loan officer was sentenced Monday to 2½ years in federal prison for a mortgage fraud conspiracy that netted him and a cohort $1 million.

Simon Saeid Koli, 41, pleaded guilty in July to conspiring to commit mail fraud, wire fraud and money laundering, the U.S. Attorney’s Office said. A co-defendant, Kian Ashkanizadeh, also a loan officer in North San Diego County, also has pleaded guilty.

Both men worked at Southern California Finance, a mortgage company, where they recruited family members and friends to act as straw buyers for four expensive houses, all on the same street in Carlsbad, a wealthy seaside northern suburb of San Diego.

After fabricating job titles, income and assets to qualify for $1 million mortgage loans on each property, the men arranged for $200,000 in bogus consulting fees for each loan, and another $45,000 for sham “construction fees” for each one, prosecutors said.

Koli was ordered to appear in court on Jan. 25, 2013, for a hearing on restitution.

Ashkanizadeh will be sentenced on Jan. 28.

Accusing Wells Fargo & Co. of reneging on a sweeping mortgage-modification deal, a lawyer for troubled homeowners is trying to reopen a case involving risky “pick-a-pay” loans written during the housing bubble.

Legal filings last week claimed Wells Fargo failed to provide wide-ranging reductions of loan balances to delinquent borrowers as it had promised two years ago when it settled a combined national class-action suit. A bank spokeswoman strongly disputed the claim, saying it was riddled with errors.

The litigation illustrates how lawsuits continue to dog major home lenders more than five years after the mortgage industry imploded, including recent challenges to certain cases the banks thought had been put to rest.

The original lawsuits over pick-a-pay, or pay-option, mortgages contended that the loans were issued with inadequate notice to borrowers that the amount owed would rise if they chose the lowest payment among four options. The loans were made by banks later acquired by Wells Fargo.

“Hundreds of thousands of homeowners were suffering the effects of undisclosed negative amortization for their Pick-a-Payment loans, while the declining U.S. housing market was sucking the remaining equity out of their homes,” plaintiffs attorney Jeffrey K. Berns said in a filing Friday.

The settlement was reached in December 2010 before U.S. District Judge Jeremy Fogel in San Jose. At the time, the San Francisco-based bank said it would provide at least $50 million and as much as $600 million in modification benefits to troubled borrowers with the pay-option loans, the Reuters news service reported.

Berns, of Woodland Hills, had calculated the number might reach $2 billion.

Of the 66,000 requests for loan modifications made in the 18 months ending Sept. 30, Wells Fargo granted 1,746, or 2.6%, Berns alleged.

“Thousands of people have been denied loan modifications — people who, in our opinion, should not have been denied,” Berns said in an interview Monday.

Mortgages are the traditional key to U.S. homeownership. But a multitude of risky home loans, many of them made without documenting borrowers’ incomes, dashed the dreams of millions of Americans as the housing bubble burst, sending shock waves of foreclosures across the country. In reaction, the Federal Reserve has pushed interest rates to record lows, creating opportunity for those borrowers who can qualify for mortgages under the tight lending standards imposed after the meltdown.

Test your knowledge of the volatile mortgage market with this quiz from the LA Times. Click here for the quiz and please let us know how you do!