Tuesday, May 24, 2016

Suspected Seattle-Area Crackpot Faces Criminal Charges For Allegedly Fleecing Thousand$ From Unwitting Wannabe Homeowners By Peddling Program Purporting To Allow Squatters To Record Legitimate Real Estate Documents To Hijack Legal Ownership Of Vacant Homes

In Seattle, Washington, seattlepi.com reports:
  • Call him Naziyr Yishmael.

    Or James Allen Keith. Or Ruwack Yishmael. Or Ahmad Abdullah-Muhammad.

    Investigators say the Des Moines man who has gone by all those names was hawking a bogus homestead scheme purported to allow squatters to seize legal ownership of abandoned houses.

    Yishmael, 46, is alleged to have swindled desperate people out of thousands of dollars each, selling the dream that home ownership could be achieved through a legal loophole. He has been charged with first-degree theft and five related counts but has not been jailed.

    Prosecutors claim Yishmael marketed his bogus system as a legitimate way for people to own houses facing foreclosure. According to charging papers, Yishmael sent out lists of homes ripe for seizure and helped his clients file bogus paperwork meant to legitimize the takings.

    Investigators claim to have identified at least 11 homes occupied by members of Yishmael’s club. Some members managed to hang on to the houses for months before being evicted by police.

    The criminal action comes as Yishmael pursues a lawsuit against a mortgage lender in which he claims he was wrongly foreclosed upon. Yishmael, who is acting as his own attorney in the matter, has claimed he lost the deed to the property for four years before finding and filing the paperwork 10 days before the Des Moines home was slated to go up for auction. Despite all the litigation, Yishmael’s legal name wasn’t entirely clear.

    Prosecutors now list James Keith as his true name, though the people he is alleged to have swindled knew him as Yishmael. He was known as Yishmael in 2001 when he was prosecuted federally for bank fraud after stealing $85,000 from his employer, Boeing Employees Credit Union.

    In October 2014, King County prosecutors filed burglary and title fraud charges against five people accused of taking over Seattle-area homes. The charges were dismissed a year ago as investigators came to believe those people were the victims of a fraud, not the perpetrators.

    Writing in court papers, a special agent with the Federal Housing Finance Agency’s investigative arm said those four women and five men paid Yishmael thousands of dollars to become part of the Association of Autonomous People, also known as the People’s Autonomous Society.

    Leading group meetings, Yishmael claimed Washington’s homestead law allowed people to claim vacant homes as their own, the special agent said in charging papers. Yishmael and his wife then sent out emails alerting members of properties “available” for squatting.

    Many of the homes involved had been abandoned in the face of foreclosure. The squatters often weren’t discovered immediately, and the debtors had little interest in removing them from homes their lenders were trying to claim.

    Yishmael then helped members file false paperwork at the King County Recorder’s Office in an effort to legitimize the squatting, the special agent continued. A member of the group changed the locks on the homes.

    “Even after the arrest of several of the members, Yishmael continued to tell the group that what they had done was legal and he would sue the government for their wrongful prosecutions,” the federal agent said in court papers.

    Members of Yishmael’s group each paid him more than $7,000 for the guidance that saw them face felony charges, according to charging papers. Several of those members were already in dire financial straits when they turned to Yishmael.

    One woman told investigators she and her daughter were being evicted from her home when she learned of Yishmael’s “adverse possession” scheme. Because the woman was a friend, the special agent said, Yishmael allowed her to make payments on the $7,500 membership fee.

    Yishmael, the agent said, “told her that the program is to help ‘folks that are doing what they can to make it.’”

    Yishmael held classes at South King County libraries and community centers outlining a complex, and specious, system through which he claimed members could seize possession of vacant homes, the special agent continued. He is alleged to have assured them it was legal to move into the abandoned homes.
Source: Charges: Squatter guru bilked Seattle-area followers (Des Moines man took in thousands selling scheme to ‘homestead’ in abandoned, foreclosed homes, investigators claim).

Real Estate Agent Pinched On Suspicion Of Grand Theft, Elder Abuse For Allegedly Filching Nearly $1 Million From Clients Conned Into Believing They Were Buying Foreclosed Homes At Bargain Prices

In Santa Clara County, California, Bay Area News Service reports:
  • A real estate agent has been arrested for allegedly defrauding her older clients out of nearly a million dollars by fooling them into thinking they were buying foreclosed homes at bargain prices and then keeping the cash for herself, according to the Santa Clara County Sheriff's Office.

    A $1 million arrest warrant has landed Geana Or, 46, of Lathrop, in San Joaquin County jail on suspicion of grand theft and elder abuse, the Sheriff's Office announced []. Arrangements are being made to transport her to Santa Clara County for prosecution. The suspect also goes by Geana Lay.

    According to investigators, the West Valley Patrol Division was alerted to the fraud after a 73-year-old Los Altos Hills resident reported that he was approached by his real-estate agent last year and proposed that he purchase two homes that were "supposedly approaching foreclosure." Between January and March of 2015, the agent, since identified as Or, convinced him to write 10 cashier's checks in her name, totaling about $475,000.

    Or allegedly convinced a resident of South Santa Clara County to buy into a similar arrangement, investigators said. In December, both clients said they were informed that the real-estate deals fell through, but never saw their money again.

    An investigation led to the issuing of an arrest warrant for Or, who was arrested May 1 near her home.

    The Real Estate Fraud Unit with the Santa Clara County District Attorney's Office is prosecuting the case, and Sheriff's investigators believe Or could have additional victims. Anyone with information for authorities can contact Sgt. Mark Roggia at 408-868-6631 or their local law-enforcement agency.

Monday, May 23, 2016

Florida Appeals Court Temporarily Slams Brakes On 2nd Foreclosure Attempt On Same Property; No Proceedings Allowed Until Bankster Pays Off Homeowner's Court-Awarded Legal Fees From Earlier Dismissed Case

A recent ruling from a Florida appeals court serves as a reminder that, when a homeowner successfully obtains a dismissal of a foreclosure action and, in the process, obtains a court award ordering the bankster to pay the homeowner's legal fees, a subsequent foreclosure involving the same property cannot go forward until the legal fee award in the earlier case is paid.

Further, this is required even when the bankster in the earlier lawsuit tries to dodge paying the legal fees by subsequently assigning its note and mortgage to another bankster, so that it is the second bankster, not a party to the first foreclosure action, that is bringing the subsequent foreclosure lawsuit.(1)

For the court ruling, see Villalona v. 21st Mortgage Corp., No. 4D15-4151 (4th DCA May 4, 2016).
-------------------------
(1) From the court ruling:
  • The defendant in a foreclosure action petitions for certiorari review of the circuit court’s order denying her motion for stay of the action. The defendant argues she was entitled to a stay because she had not been paid her attorney’s fees and costs incurred in defending an action previously dismissed by a first plaintiff, which later assigned the note and mortgage to the second plaintiff. We grant the petition, because the second plaintiff acquired not only the rights, but also the obligations, of the first plaintiff.

California Homeowners' Claims Attributable To Attorneys Running Illegal Loan Modification Rackets Play Significant Role In Driving State Bar's Client Security Fund Into Insolvency

The following excerpts come from the recently-issued audit report by the California State Auditor blasting the California State Bar for financial mismanagement:
  • [T]he primary purpose of the State Bar’s Client Security Fund is to compensate victims of dishonest attorneys through a claims process.(1) However, the number of claim applications to the Client Security Fund program soared beginning around 2009, in large part because many Californians had become victims of loan modification schemes.

    By the end of 2015, the State Bar indicated it had about 5,500 applications either in process or awaiting payment, and it estimated that it would pay a total of about $18.9 million related to those claims. Unfortunately, the available balance in the Client Security Fund had dropped to approximately $2.2 million by that time; this lowered balance thus severely reduced the State Bar’s ability to pay these claims.(2)
    ***
    A 2015 report by the State Bar to its board of trustees (board) noted an unprecedented increase in claim applications for its Client Security Fund program beginning in 2009, with about half of the fund’s pending claims as of July 2015 related to loan modification schemes. In 2009 the number of new claim applications nearly tripled, as shown in Figure 3. The State Bar’s reports show that applications it received peaked at 3,900 in 2010, compared to only 800 applications in 2008.

    By the end of 2012, pending applications totaled 7,800. The Client Security Fund’s administrative costs rose as it employed temporary help and authorized overtime in 2013 and 2014 to help reduce the large inventory of pending applications, but at the end of 2015 the State Bar indicated it still had about 5,500 applications in process or awaiting payment, compared to only 710 applications at the end of 2008. The Client Security Fund currently has 11 staff, including three attorneys, who process the applications.

    Client Security Fund applicants can experience significant delays in obtaining reimbursement for their claims in part because the State Bar has to wait to complete the processing of most applications until the California Supreme Court (Supreme Court) orders that the attorney in question be disciplined, as Figure 4 on page 26 illustrates. The State Bar reported that in 2014 the median total time from its receipt of a complaint to the final decision by the Supreme Court was 505 days.

    Further, in March 2016, the State Bar reported that 1,100 claims filed during 2009 and 2010 against one attorney for loan modification schemes were still awaiting completion of the discipline process. Once the Supreme Court orders that an attorney be disciplined, the State Bar can pay the related claims from the fund if it has money available.(3)
For the California State Auditor's report, see The State Bar of California: Its Lack of Transparency Has Undermined Its Communications With Decision Makers and Stakeholders.
------------------------
(1) The California State Bar's Client Security Fund is intended to be a public service of the California legal profession. The State Bar sponsored the creation of this fund to help protect consumers of legal services by alleviating losses resulting from the dishonest conduct of attorneys. The amount the fund may reimburse for theft committed by a California lawyer depends on when the loss occurred. A maximum of $50,000 is reimbursable if the loss occurred before January 1, 2009. A maximum of $100,000 is reimbursable if the loss occurred on or after January 1, 2009.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

(2) California State Auditor's Report, p. 1.

(3) Ibid., p. 24.

Trump's World-Famous South Florida Golf Course Faces June 28 Lien Foreclosure Sale After Paint Supplier Claims It Was Stiffed Out Of $30K+

In Miami, Florida, the Miami Herald reports:
  • Miami-Dade County Circuit Court Judge Jorge Cueto has ordered the Donald Trump-controlled company that owns the Trump National Doral Miami golf club to pay a paint supply company $34,863.92 by June 28 or face the forced sale in auction of the world-famous property.

    Trump bought the property in 2012 for $150 million. But, according to records, Cueto has already filed the paperwork for a 9 a.m. foreclosure sale to the highest bidder June 28 at the main courthouse in downtown Miami.

    Trump’s spokesman didn’t return a call for comment.

    The billionaire GOP presidential frontrunner has been the target of dozens of liens from contractors hired for a major overhaul of Trump National.

    But, so far, only The Paint Spot, a paint supplier, actually acted on a lien with an attempt to foreclose.

    According to court records, The Paint Spot claims it’s been owed the money since 2014.

    At least, The Paint Spot knocked $76 from the total bill, according to records, for erroneously billing Trump for a step ladder.

Sunday, May 22, 2016

Facing Accusations Of Bullying Code Enforcement Efforts (Inspections w/ Armed Police Escorts, Arrest Threats, Unwarranted Condemnation, etc.) Targeting Mostly Non-English-Speaking Latino Mobile Home Owners, City Of Richmond Agrees To Cough Up $40K, Comply w/ Other Non-Monetary Terms To Settle Lawsuit Alleging Fair Housing/Civil Rights Violations

In Richmond, Virginia, WTVR-TV Channel 6 reports:
  • The City of Richmond has settled a housing discrimination lawsuit(1) over alleged civil rights violations of 33 current and former mobile home park residents.

    The residents, majority of them are Latino [of Mexican & Central American origin], were represented pro bono by the Legal Aid Justice Center(2) and the law firm of Crowell & Moring LLP. They alleged that an aggressive housing code enforcement campaign violated their civil rights.

    Neighbors in Rudd's Trailer Park were among those who sued, saying city inspectors with armed escorts went into their homes without warning. They said they felt targeted, because the inspector condemned homes for not meeting unrealistic standards.

    “This settlement is a positive outcome for our clients and for all mobile home park residents in the City of Richmond,” said Marie Diveley, Crowell & Moring senior counsel. “The City has agreed to take important steps that will not only benefit vulnerable mobile home park residents, but will also ensure that limited English speakers can access City services without unnecessary language barriers.”

    According to the lawsuit, the City also refused to provide adequate interpretation and translation services for the limited English proficient residents, in violation of federal civil rights laws.

    The city admitted no wrong-doing, but agreed to pay about $40,000 to help residents make repairs or relocate.

    Under the terms of the settlement, the City of Richmond agreed to institute policies that will help minimize the displacement of mobile home residents in future enforcement activities and will better serve residents who are not fluent in English.

    “This settlement is the culmination of a long process of negotiation to address serious concerns on both sides,” according to Phil Storey, the Legal Aid Justice Center’s lead attorney on the case. “We are pleased that the City and the residents were able to reach a mutually agreeable resolution.”
Source: Mobile home residents, City of Richmond reach settlement in discrimination lawsuit.
--------------------------
(1) For the lawsuit, see Altamira-Rojas, et al. v City of Richmond, et. al.

Among the allegations made by the mobile home residents:
  • Beginning in 2012, the City adopted a policy targeting mobile homes and mobile home parks with an aggressive campaign of inspections and Virginia Maintenance Code (“VMC”) enforcement. The City formulated and, in early 2014, began executing this policy with the knowledge that it would likely result in the forced displacement of hundreds of disproportionately Latino families of Mexican and Central American national origin in violation, inter alia, of the federal Fair Housing Act, 42 U.S.C. § 3601 et seq.

    Even after a Coalition of concerned mobile home park residents and non-profit service providers approached the City offering less discriminatory alternatives that would address poor housing conditions without displacing families, the City continued to issue violation notices and to condemn mobile homes, leaving families homeless. Further, the City refused to provide these violation notices to Plaintiffs and other residents in languages other than English, despite the City’s knowledge that many of the Plaintiffs and other residents of the mobile home parks do not understand English.

    The City has subjected Plaintiffs and other mobile home park residents to: intrusive inspections with armed police escorts; threats of unwarranted condemnation, criminal prosecution, and large monetary fines; unreasonable and legally unjustified standards that make compliance nearly impossible; and no coordinated effort to address the entirely foreseeable mass displacement and resulting hardships created by condemnations.
(2) The Legal Aid Justice Center provides legal representation for low-income individuals in Virginia, having offices in Charlottesville, Falls Church, Petersburg and Richmond.

Texas City Agrees To $475K Squeeze To Settle Fair Housing, ADA Allegations That It Used Overly Restrictive Zoning, Land Use Ordinances To Keep Out Small Group Homes For Persons w/ Intellectual, Developmental Disabilities

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department [] announced that the city of Beaumont, Texas, has agreed to pay $475,000 and change its zoning and land use practices to resolve a lawsuit alleging that it discriminated against persons with intellectual or developmental disabilities who sought to live in small group homes in the city’s residential neighborhoods.(1)  The consent decree must still be approved by the U.S. District Court for the Eastern District of Texas.

    The lawsuit, filed on May 26, 2015, alleged that the city violated the Fair Housing Act and the Americans with Disabilities Act when it imposed a one-half mile spacing rule that prohibited many small group homes from operating in Beaumont. The suit further sought to prohibit the city from imposing fire code requirements that exceeded those imposed by the state of Texas as part of its certification and funding of such homes.

    These restrictions prohibited numerous persons with intellectual or developmental disabilities from living in Beaumont and resulted in the institutionalization in a nursing home of a woman who was forced to move out of her home. Although the city alleged that its restrictions were justified by a Texas statute, the state of Texas later clarified in a statement it submitted to the court during the litigation that neither the spacing requirement nor the heightened fire code requirements were required by Texas law.

    Under the terms of the consent decree, the city will allow small group homes to operate in any residential district and will not subject such homes to fire code requirements that exceed the state’s requirements for certification of such homes. The city will also pay $435,000 in monetary damages to 11 individuals with disabilities, their family members and companion care providers who were subject to the city’s discriminatory code enforcement practices.

    The city will also pay $15,000 to the United States as a civil penalty and $25,000 to Disability Rights Texas, the organization that represents the individuals who filed the U.S. Department of Housing and Urban Development (HUD) complaints and intervened in the United States’ lawsuit. Beaumont will take other remedial measures, including implementing a comprehensive reasonable accommodation policy, requiring its officials to attend fair housing training and appointing a fair housing compliance officer.

    “Persons with disabilities have the same right to live in and enjoy their communities as all other families do throughout our nation,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “The Justice Department will continue to eliminate discriminatory barriers that impede these individuals from doing so.”

    “I applaud the parties for reaching this common-sense, fair agreement,” said U.S. Attorney John M. Bales of the Eastern District of Texas. “Beaumont is a great city in which to live and the prior restrictions now being set aside were inconsistent with that greatness. Now everyone can reside where they wish in an environment that is best for their lives.”

    “Group homes provide a critical source of housing for persons with disabilities and their availability shouldn’t be limited by discriminatory practices,” said Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Today’s settlement reaffirms HUD and the Justice Department’s commitment to ensuring that jurisdictions meet their obligation to adhere to the nation’s fair housing laws.”

    The lawsuit arose as a result of complaints filed with HUD by persons with intellectual or developmental disabilities whose homes were closed and were threatened with closure under the city’s challenged housing restrictions. After conducting an investigation, HUD referred the matter to the Justice Department. The individuals who had filed complaints with HUD later intervened in the United States’ lawsuit. Today’s settlement resolves their lawsuit as well.
Source: Justice Department Reaches $475,000 Settlement With Beaumont, Texas, to Resolve Disability Discrimination in Housing Lawsuit.

Go here for the consent decree - USA, et al. v. City of Beaumont, Texas.
----------------------------
(1) Olmstead v. L.C., 527 U.S. 581 (1999), is a United States Supreme Court case regarding discrimination against people with mental disabilities. The Supreme Court held that under the Americans with Disabilities Act, individuals with mental disabilities have the right to live in the community rather than in institutions if, in the words of the opinion of the Court, "the State's treatment professionals have determined that community placement is appropriate, the transfer from institutional care to a less restrictive setting is not opposed by the affected individual, and the placement can be reasonably accommodated, taking into account the resources available to the State and the needs of others with mental disabilities." (Reference: Wikipedia).  zoning land use 

Michigan Municipality Gets Tagged w/ Fair Housing Complaint For Passing Ordinance Banning Tenants' Use Of Gov't Housing Subsidies (ie. Section 8, etc) In Newly-Constructed Residential Complexes

In Ypsilanti, Michigan, National Public Radio-affiliate Michigan Radio reports:
  • The Fair Housing Center of Southeast and Mid Michigan has filed a discrimination complaint with the United States Department of Housing and Urban Development against Ypsilanti Township. The complaint relates to an ordinance the township passed last year banning government subsidies in a new development. That would exclude tenants with Section 8 vouchers. It is the first time a Michigan municipality has attempted to ban subsidized housing.

    Pam Kisch, Director of the Fair Housing Center, says the ban violates the U.S. Fair Housing Act. "It has what's called a disparate impact on people who either have Section 8 vouchers or are on a waiting list for Section 8 vouchers."

    The township has asked for more time to respond to the complaint. Kisch says that the desired outcome of the ban is, "First and foremost, the ordinance has to be repealed." She also hopes that the township will meet with representatives from the Fair Housing Center to discuss further changes to correct discriminatory housing practices.
Source: Fair housing complaint filed against Ypsilanti Township.

For a follow-up story, see Justice Department investigating Ypsilanti Township over section 8 housing discrimination (The Justice Department is investigating Ypsilanti Township over alleged housing discriminations stemming from rules the township put in place to limit Section 8 and rental housing. Last July, the township developed a first-of-its-kind plan to ban section 8 housing and limit rentals in new subdivisions). zoning land use

Lawsuit: California Municipality Used Zoning, Land Use Ordinances In Effort To Unlawfully Restrict Transitional Homes, Support Services For Convicts Released On Probation & Otherwise Banish People w/ Criminal Records From Community

The American Civil Liberties Union of Southern California recently announced:
  • A charitable organization dedicated to reducing homelessness and several of its clients filed a federal lawsuit [] challenging the city of Hesperia’s attempts to unlawfully restrict housing and support services for individuals with criminal records.

    The ACLU Foundation of Southern California (ACLU SoCal) filed the lawsuit on behalf of Victor Valley Family Resource Center (VVFRC), a nonprofit in Hesperia that connects individuals who are homeless or at risk of becoming homeless to transitional supportive housing. The suit argues that efforts by Hesperia to shut down three transitional homes are intended to banish residents released on probation.

    “The city’s efforts to shutter these homes is little more than an attempt to banish individuals with criminal records from their community,” said Adrienna Wong, a staff attorney with ACLU SoCal. “That’s unacceptable and violates the California Constitution and the 1st & 14th amendments of the U.S. Constitution.”

    Currently, the San Bernardino County Probation Department refers individuals released from incarceration who have no place else to go to VVFRC, which provides transitional housing for up to one year, as well as meals, case management services and permanent housing placement.

    The lawsuit, filed against the city of Hesperia, San Bernardino County Sheriff John McMahon and other city and sheriff’s officials, argues that several Hesperia municipal codes which were used to target VVFRC violate both the California and U.S. Constitutions. In some cases, Hesperia enforced a code prohibiting residential structures that house more than one individual on probation who are not related by blood or marriage, violating the individual plaintiffs’ right to association. One of VVFRC’s transitional homes was forced to close as a result, and the remaining homes may face the same fate.

    The city also violated privacy rights by enacting an ordinance requiring landlords to provide their tenants’ personal information to police in Hesperia for purposes of a background check and registration of tenants in a database administered by the police.

    Under the same ordinance, the city requires landlords to evict tenants if the chief of police sends a “notice of criminal activity” – even if the tenants are never convicted, charged, or even arrested for any crime.

Another New Jersey Municipality's Restrictive Zoning, Land Use Rules Again At Issue In Federal Suit Brought By Orthodox Jewish Congregation Alleging Violations Of Fair Housing, Religious Land Use Acts

In Howell Township, New Jersey, nj.com reports:
  • An Orthodox Jewish congregation has filed a federal lawsuit against Howell Township and its zoning board of adjustment, saying the township's denial of its plan to build a religious education center was motivated by religious "hostility."

    Congregation Kollel and its land holding company filed the complaint Tuesday.

    The congregation, the lawsuit says says, wants to build a classroom building for teen-aged and young adult males studying to become future Orthodox leaders, a dormitory and townhouses for faculty.

    However, actions taken before and after the Kollel bought the property were designed specifically to prevent Orthodox facilities from being built in the township, the lawsuit says.

    Township Attorney McKenna Kingdon did not immediately return a request for comment.

    The new lawsuit is at least the fourth active case involving a religious group suing a New Jersey community over restrictive land-use rules. An Islamic Society is suing Bernards Township over its rejection of a proposed mosque, a decision that has attracted the attention of the U.S. Justice Department. Additionally, a Jewish community is suing Toms River over its rejection of a religious center and another is suing Ocean Township over its rejection of a proposed Yeshiva.

    The Kollel's lawyer, Christopher K. Costa, says in the lawsuit that the property the congregation bought last year on Ford Road was, at the time, in a zoning district that permitted educational facilities. The tract, at 344 Ford Road, is 10.1 acres, the lawsuit says.

    Howell Township Council in May of that year revised land-use requirements that "severely restricted" where schools could be located — a move motivated by "animus toward ultra-Orthodox Jews," it says.
    ***
    The 11-count suit cites the Religious Land Use and Institutionalized Persons Act of 2000, the First and Fourteenth Amendments, the Fair Housing Act, the state constitution in seeking to void the township's land use ordinances; overturn the application's denial; prohibit new efforts to overburden religious exercise; and damages and costs.

Saturday, May 21, 2016

New Jersey Landlord's Alleged Refusal To Accept Section 8 Housing Voucher To Cost Him $5K In Damages To Tenant To Resolve Allegation Of Unlawful Housing Discrimination

From the Office of the New Jesrey Attorney General:
  • Acting Attorney General Robert Lougy and the Division on Civil Rights announced today that a Monmouth County landlord has agreed to pay a woman $5,000 to resolve allegations he refused to rent her an apartment once she indicated her intention to pay using federal Section 8 housing vouchers.

    In addition to paying Shakisha Wallace $500 per month for 10 months, attorney Scott Kelly and his company, 374 Sairs Avenue LLC, will be subject under a settlement agreement to monitoring by the Division for two years to ensure compliance with fair housing laws.

    Under the agreement, Kelly also must attend a Continuing Legal Education (CLE) class focused on the New Jersey Law Against Discrimination (LAD). The CLE course must include a module on fair housing laws that is approved by the Division.

    Going forward, Kelly and 374 Sairs Avenue, LLC also must keep a detailed record of all prospective tenants who complete applications for rental housing, including their names and contact information, the type of rental unit they sought, whether they were offered an opportunity to rent, and the reason for any applicant rejection.

    “This settlement represents a fair resolution to a troubling matter,” said Acting Attorney General Lougy. “The search for safe, affordable housing that meets all of one’s daily needs can be difficult enough without the added obstacle of unlawful discrimination. Hopefully, this case will serve as a message to other [New Jersey] landlords that it’s illegal to refuse public housing assistance vouchers, and that we will hold accountable any landlord who engages in such conduct.”

    “Landlords cannot reject otherwise qualified, hard working families who are looking for safe, clean housing and can pay their rent simply because they rely on rent subsidies to make ends meet,” said Division Director Craig T. Sashihara.

    Under New Jersey law, that behavior is no different than rejecting a qualified tenant based solely on his or her race, sexual orientation or religion.”
For more, see Settlement Announced in Case of Landlord Accused of Denying Apartment to Woman Who Sought to Pay with Rental Assistance (Woman Responded to Long Branch Apartment Rental Advertised on Craigslist).

Go here for the initial charges, and here for the settlement agreement.

Blind Central New York Tenant Forced To Forfeit Long-Awaited For Housing Subsidy Voucher Because She Couldn't Find Anywhere To Use It After Being Rejected By Multiple Landlords Refusing To Accept Section 8 Renters

In Syracuse, New York, The Post-Standard reports:
  • Monica Johnson is an ideal tenant by most standards. She's neat. She doesn't smoke. She has no pets. She's quiet and lives alone.

    Still, more than half of the dozens of landlords she called during a recent apartment hunt refused to rent to her. That's because Johnson was looking for a place that would accept her Section 8 housing voucher.

    Johnson was eventually forced to forfeit that federally funded voucher -- for which she'd waited three years -- because, after 120 days, she couldn't find anywhere to use it.

    'I'm not a bad tenant'

    Johnson is blind. She lost her sight at 29 after a diabetic attack that nearly killed her. It took her several years to regain the strength to walk. Today, at 43, she makes her living as a motivational speaker, preaching inspiration at corporate events and schools. She makes less than $23,000, making her eligible for federal housing assistance.

    Under New York State law, property owners can't legally discriminate against Johnson because she is blind. But they can refuse to rent to her based on the assistance she receives from the government.(1)

    "I need financial help, but I'm not a bad tenant or a messy tenant," Johnson said. "I'm not bringing fleas or bedbugs. I'm not lazy. You could eat off my floors."
    ***
    Johnson applied for Section 8 in 2012 and received approval for a voucher last summer. Prior to that, she had been living in a facility that cost $1,000 per month and was struggling to afford it.

    Section 8 vouchers are transferable financial aid tickets from the government that are redeemable for a portion of a recipient's rent. Once approved, a recipient has 60 days to find housing using the voucher. After 60 days, that person can apply for two 30-day extensions -- a total of 120 days to find housing.

    In order to receive the funding, Johnson first had to attend several classes that outlined the federal housing program's rules. For example, Section 8 doesn't allow tenants registered as sex offenders or those arrested for selling methamphetamine. The government can revoke vouchers from tenants arrested for criminal activity.

    Under the terms of the voucher, Johnson could spend up to $700 per month on rent and utilities. She would pay a portion of that and the federal government would cover the rest.

    Johnson said she called to inquire about more than 30 apartments. At least half told her they did not accept Section 8 vouchers. Many that did, she said, were located in areas where she, as a blind woman, didn't feel safe.

    "I need a secure building," she said. "If someone broke into my house I wouldn't even know it until I stepped on the broken glass."
For more, see Landlords refuse to rent to blind woman because she gets Section 8.
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(1) While there may be no statewide law in New York prohibiting housing discrimination based on a tenant's source of income (including public assistance, pensions, annuities and government rent subsidies such as Section 8), some municipalities in the state have passed local ordinances which do prohibit such discrimination.

See this August 4, 2008 New York Attorney General press release, Attorney General Stops Buffalo Apartment Complex Owner From Discriminating Against People Receiving Financial Housing Assistance (Undercover investigation reveals Section 8 recipients denied housing), which identifies New York City, Buffalo, Nassau County, Hamburg, and West Seneca as a few municipalities in New York State that have passed such laws.

Excessive Ongoing Repairs Force Shutdown Of 20-Story Montreal-Area, Jewish-Tradition Retirement Home, Leaves 171 Mostly English-Speaking, Kosher-Observant Canadian Seniors Facing The Boot; Dozens Fear Having Nowhere To Go

In Côte-St-Luc, Quebec, the Montreal Gazette reports:
  • Anne Barbis pushed her walker slowly outside the Castel Royal seniors’ residence Friday morning, a look of anxiety crossing the 98-year-old’s face as she contemplated the prospect of being uprooted from her home within a year. A private attendant followed closely behind, making sure Barbis wouldn’t fall.

    “I’m shocked,” said Barbis, who moved into the 20-storey Côte-St-Luc building two years ago, thinking it would be her final place of residence.

    “I can’t believe it,” she added. “I haven’t got a clue where I’m going to move now.”

    On Tuesday, staff at the Castel Royal slipped notices under the doors of all the apartments informing the 171 residents — some of whom are in their 90s and Holocaust survivors — they will have to be relocated within the next 12 months because of plumbing and other problems in the building.

    Chartwell Retirement Residences, which runs the Castel Royal, announced it has hired a placement agency to find new homes for the tenants, and will pay the full cost of moving everyone. But Côte-St-Luc has run out of private assisted-living units for semi-autonomous seniors after the Manoir Montefiore closed last year.

    Most of those living in the Castel Royal are Jewish, eat kosher and want to stay in Côte-St-Luc.

    “This is a crisis in our seniors’ community, particularly our Jewish community, where the resources for anglo residences are dwindling,” said Bonnie Sandler, a geriatric consultant.

    After the Manoir Montefiore closed, its residents were relocated to Le Waldorf, an upscale assisted-living facility on Côte-St-Luc Rd. But that retirement home is now full, with a waiting list to get in. Although there are other retirement homes in the Montreal area, most don’t offer a kosher menu, as the Castel Royal did.

    “This is a very sad situation,” Sandler added. “Some of the residents will relocate to the West Island or move to be closer to their children in other cities like Toronto. But that still leaves about 100 residents who want to stay in Côte-St-Luc. Who is looking out for them?”

    Chartwell, which operates a chain of retirement homes across North America, acquired the Castel Royal about 10 years ago. Over the years, it has renovated the property, but in the past five months the building was hit with four floods. For two days last winter, there was no heating, prompting Chartwell to put up some of the residents at hotels.

    “We’ve had building issues here for many, many years,” said Marie-France Lemay, Chartwell’s vice-president of operational business services in Quebec. “We’ve had to invest more than $5 million over the past four years (in repairs and renovations), and we’ve just come to the decision that this building is not suited to be a retirement home.”
    ***
    The Castel Royal was charging about $3,000 a month per resident for accommodations, two meals a day, housekeeping and nursing supervision. Although the ground-floor synagogue was renovated recently, much of the brick and concrete exterior is in need of repair. Workers have spray-painted yellow circles around craters in the concrete pavement near the main entrance.

Mobile Home Park Owner's Failure To Pay Bills Leads To Water Shutoff, Triggering Code Enforcement Boot For 11 Rent-Paying Families

In San Antonio, Texas, KSAT-TV Channel 2 reports:
  • The city of San Antonio is offering to help residents of a mobile home park find a new place to live.

    The city said the owner of the Plaza Mobile Home Park Joseph Sandoval has repeatedly failed to pay his water bill forcing SAWS to shut off the water service to his tenants.

    "We pay our rent on time. We pay our water on time but for some (reason) like I paid my water last week on a Wednesday and my water was off Thursday," said tenant Matthew White.

    The director of the city's Development Services department Roderick Sanchez says Sandoval owes thousands of dollars and it must all be paid by May 27.

    "He still owes SAWS $3,000 at the end of the month where once again they may turn off the water. Where we come into it is if that trailer park the mobile home park does not have any water we're in a situation where we have to vacate it," Sanchez said.

    The city says nine of the 11 families at the mobile home park have agreed to accept the city's help in finding a new place to live.

    "We're just trying to find a decent place for them to live in their price range and probably some moving assistance as well," Sanchez said.

    It's an offer resident Matthew White said he could not pass up. "I've tried everything you can think of possible to stay here but it's not working out. If it ain't the water it's something," White said.

    Sanchez said code-compliance crews will be out at the mobile home park in the coming week to see if living condition are up to standards.
Source: City helps move residents from mobile home park without water (Joseph Sandolval, owner of Plaza Mobile Home Park, failed to pay bill, city says).

Regional Gang Task Force Collars Two Tenants In "Section 8 Raid" For Possible Perjury, Alleged Fraud To Score Gov't Rent Subsidy; Pair Accused Of Pocketing Federal Aid While Housing Felons, Gang Members, Drug Dealers

In Hemet, California, The Press Enterprise reports:
  • A regional gang task force raided four Section 8 housing locations in and near Hemet where they made three arrests, investigators said.

    Task force officers and federal Housing and Urban Development agents served the search warrants Thursday, April 28, on Section 8 recipients suspected of receiving federal aid while housing violent felons, gang members or drug dealers.
    ***
    Two people were arrested for investigation of perjury and defrauding a public housing authority. One person was arrested on a felony parole warrant. Their names were not released.

Friday, May 20, 2016

Surprise! Surprise! Recent Homebuyer With Renovations In Mind Spends $1.375 Million For 3-Bedroom Brooklyn Co-Op, Then Gets Bagged For Fines By Local Building Department When Host Of Previously-Existing Illegal Repairs, Re-Habs That Were Completed Without Proper Permits Comes To Light

In Brooklyn, New York, DNAInfo New York reports:
  • Picture this: you've saved up for the renovations that'll finally make your home perfect. But as you're about to take a sledgehammer to some sheetrock, a host of previously-existing repairs and renovations that were done before you moved in come to light, and guess what: you're responsible for all the fines that come with the illegal work.

    That's what happened to a couple in Cobble Hill who after spending $1.375 million on a three-bedroom co-op in a pre-war limestone walk-up last summer, decided to upgrade the guest bathroom and add a shower to the master bedroom's half bath.

    The couple, who asked to withhold their last name to stay on good terms with their co-op board, anticipated it would be a relatively simple renovation, but when they went to file permits with the Department of Buildings, their troubles began.

    Previous renovations by past owners were done illegally, unbeknownst to the new owners. The prior work raised red flags for the DOB, resulting in a string of rejected permits and even a fine for the new owner.

    Applying for the permits, which should have taken several weeks, drew out over several months.

    “With the real estate market in New York the way it is, you don’t really have the time to look into an apartment’s history that way,” said Adam, one of the owners.

    After getting the OK from the board of his nine-unit building to do renovations, he hired an experienced architect for the roughly $300,000 job, along with a reputable contractor through the start-up Bolster, which aims to transform the renovation experience by guaranteeing projects never go over budget. The team also included a seasoned expeditor to help move along the permitting process through the DOB, and without whom, the process would have likely taken even longer.

    When permit application is submitted to the DOB, its plan examiners review the paperwork to ensure the projects conforms to construction codes and the city's zoning resolutions. If there are red flags, the owner must make revisions and resubmit the plans. Once a permit is granted, construction begins. When the work is completed, an inspector visits the site to sign off on the project.

    Adam was determined to follow this process to the letter, but was frustrated that the examiner kept unearthing new issues on each visit.

    “The system was difficult to navigate,” he said.

    Here’s what happened and tips to avoid such complications when doing a renovation.

    A new owner can be on the hook for illegal work that was previously done.

    The initial permits, filed in mid-October, were denied because there wasn’t enough clearance over the washer and dryer in the master bath, the examiner said.

    So Adam’s team fixed that. But during the next round, the DOB examiner then noticed the bathroom had a different flaw: its window led to a fire escape — which is a no-no for a point of egress, it turned out, and there were no permits on file to legalize that.

    The half-bath was added to all of the units when the building was converted from a rental to a co-op in 1983, Adam explained. To hunt for possible past permits, his team tried calling the plumber who did the work, but he had passed away more than a decade ago. The architect of that project was also nowhere to be found.

    Ultimately, they had to redesign the bathrooms so the fire escape wasn't in it and then returned to the DOB with new drawings.

    This time, the plan examiner noticed something unrelated to the bathroom was problematic: the entire layout, with the current configuration of bedrooms, was different from the layout the DOB had on record.

    Because of that, the examiner again rejected the bathroom application and fined the owner $5,000 to legalize the layout.

    The permits were finally approved in January.

    “You can’t necessarily count on having a consistent experience with every plan reviewer,” said Bolster's David Yum, the architect for the project, who’s worked in the city for more than 20 years.

    The plan reviewer for this project was a newbie, Yum noted.

    “He probably was overcompensating by being very detailed,” Yum said. “I think technically the comments were very valid, but it was sort of using the precision of a heart procedure for a tiny cut on the finger.”

    Before you buy, look at previous permits filed for your apartment.

    The layers of an apartment’s history can sometimes be hidden, even to professionals, and can be especially complicated in pre-war buildings that were renovated decades ago when they turned into co-ops, experts said.

    When purchasing old apartments in co-ops, be sure to ask when the apartment was last renovated and find out whether it was granted a permit, advised Fraser Patterson, Bolster’s CEO and founder.

    If work was done after 1993, the DOB’s website should list previously filed permits. If the work was done before then, ask the co-op board to provide you with hard copies of drawings and permits. If they don’t have the permits, you can order the original microfiche from the DOB, Paterson said.

    Have your lawyer look into previous alterations.

    Ensure your attorney does due diligence on previous alterations — and require an affidavit from the seller with recourse, Patterson suggested.

    “Usually when you buy a new property,” he noted, “the contract has a statement asking the seller to certify that they have only conducted legal renovations to the best of their knowledge.”

    He added: “Attorneys are very picky when someone doesn't make that statement and will raise a huge red flag.”

    Have an architect inspect the property.

    Yes, it may cost about $1,000 for a few hours of the architect’s time, but it’s important do a site visit to check if blatantly illegal conditions exist before beginning the renovation, Patterson said.

    Also have the architect, or a code consultant, review the permit history to see if a deeper dig might be merited, he advised.

    While it can be difficult to ascertain whether a property has illegal work, reviewing as much as possible should be part of the process before the design is in place, he suggested.

    “The price to pay an architect for a few hours is nothing compared to the problems and costs you may encounter legalizing an apartment during a renovation,” Patterson said.

Owner Of Event & Wedding Venue Loses Building To Foreclosure After Pocketing Thousand$ From Soon-To-Be-Married Couples, Leaving Them High & Dry

In Chattanooga, Tennessee, the Times Free Press reports:
  • Lindsay Street Hall, a high-profile event and wedding venue in downtown Chattanooga, was sold to a new owner [] at a foreclosure auction on the courthouse steps because the former owner, who filed for bankruptcy in October, wasn't paying the mortgage — which means about 10 couples will be out thousands of dollars they already paid for weddings.

    "If I hadn't been there [at the auction], the building would have been padlocked," said Chattanooga businesswoman Tara Plumlee, who was the sole bidder for 901 Lindsay St., a former First Congregational Church that's on the National Register of Historic Places.

    Plumlee, who owns three other local event venues and a catering company, will rebrand the building as 901 Lindsay.

    She said she spent Tuesday contacting couples who had prepaid for weddings with Kenneth E. Crisp Sr., the owner of the now-defunct Lindsay Street Hall.

    "Some of them are out all of their money," she said, adding that some wedding parties are out $20,000.

    Plumlee said she can't do the upcoming weddings free of charge, but she's trying to work out something.

    "I've been working with every bride, every momma of the bride," she said. "We've been on the phone with everybody. We've cried together. There are parents that are hiding it from their children. We've been instructed not to tell certain brides."

    "This has been an incredible scandal, and I'm trying to do my darnedest," Plumlee said. "That's why I showed up on the courthouse steps — because I just wanted to do the right thing."

    'He assured us there weren't any issues'

    The Times Free Press contacted several couples who had prepaid for upcoming weddings at Lindsay Street Hall, but they declined to comment on advice of their attorneys or because they wanted to focus on their upcoming nuptials.

    Crisp's bankruptcy court filings show that in October eight couples prepaid an average of $3,500 for upcoming weddings. But Plumlee said that some couples paid more since then, as much as $20,000.

    "May is a big wedding month," she said. "Those people have already paid in full."

    One man, who had prepaid for a wedding but didn't want to be named, said Ken Crisp Sr. assured him not to worry about the May 3 foreclosure auction, because Crisp promised that he'd retain control of the venue.

    "He assured us there weren't any issues," the groom-to-be said. "We had already paid them a little more than $5,000."

    Crisp didn't return phone calls left at the telephone number he put on court documents filed in U.S. Bankruptcy court in the historic courthouse on 11th Street in downtown Chattanooga.
For more, see Families lose thousands after Chattanooga wedding venue goes bankrupt.

In a related story see Wedding insurance offers safety to help couples prevent disaster on their big day:
  • "Our biggest claims are really venue-related," said Todd Shasha, a managing director at Traveler's, a publicly-traded insurance giant that has about 30,000 employees. "[Wedding] pictures never show up. Your florist does not deliver the flowers."

    Insurance typically covers the cost of lost deposits if a venue goes out of business. It also can pay to reconvene the wedding party to retake photos if the photographer doesn't show.

    Insurance can cover costs in the case of natural disasters, such as tornadoes, that make weddings impossible, and reimburse in the case of other wedding disruptors, such as the illness of a bride or groom or their military deployment.

    "Obviously, you never know when you're going to get deployed," Shasha said.

    Traveler's least-expensive policy is $160, Shasha said, and covers such things as $7,500 toward the venue and $1,500 toward the wedding photographer. Traveler's wedding insurance tops out at $1,025, which covers a $175,000 wedding. "The average cost of a wedding, I think it's around $30,000 today," Shasha said. "If you don't have the coverage, you're really putting it all at risk."

    Wedding insurance isn't a big product line for insurance companies, though Traveler's spokewsoman Sperry Mylott said its popularity is growing.

    There are no deductibles with Traveler's wedding insurance plans, so couples who buy one don't have to pay anything out of pocket.

    [Insurance agent Jim] Hartley said he's only sold two wedding insurance policies. "It's not popular in this area," Hartley said. "In Tennessee, [many] people go to the JP — justice of the peace."

    Cold feet is one thing that wedding insurance is not good for, he said. "If the bride backs out or the groom backs out — that's not covered," Hartley said.

Thursday, May 19, 2016

New York Fund That Provides Reimbursement To Clients Who Were Fleeced By Dishonest Attorneys Hits Its All-Time Record For Annual Payout$; $12.3 Million In Coughed-Up Funds In 2015 More Than Doubled 2014 Payout$

The New York Law Journal reports:
  • Reimbursements from a state-maintained fund to compensate the clients of dishonest attorneys reached a record $12.3 million in 2015, or more than double the amount paid out in 2014, the state Lawyers' Fund for Client Protection said.(1)

    The total reimbursement made to the clients of 51 lawyers was the highest in the fund's 33-year history. All the lawyers involved have been suspended, disbarred or are deceased, the fund said in its annual report for 2015.

    The fund's executive director, Timothy O'Sullivan, [...] credited the increase to the anomaly of claims from several high-volume compensation cases rather than the emergence of new abusive kinds of misconduct by lawyers.

    "I don't believe it's a trend of seeing our numbers of dishonest lawyers going through the roof," O'Sullivan said. "But for some reason, we got hit substantially [with claims] within this one year."

    Nearly two-thirds of total payouts in 2015 went to former clients of five attorneys: William Parente ($2.03 million in client reimbursements), Stephen Krawitz ($1.73 million), Donald B. Rosenberg ($1.44 million), Robert Fontanelli ($1.36 million) and Timothy Griffin ($1.05 million).

    While thefts from clients' real property escrow accounts remain the most common misconduct resulting in reimbursements from the fund, O'Sullivan said 2015 was atypical because three of the most abusive attorneys—Krawitz, Rosenberg and Fontanelli—stole money from proceeds of settlements that clients had won in litigation.

    The fund is composed of money accumulated by a $60 assessment on the $375 biennial registration fee on attorneys in New York state.
Source: Five Cases Drive Surge in Client Compensation (requires paid subscription; if no subscription, TRY HERE, then click the appropriate link for the story).

Go here for the 33-year 'hit parade' of New York lawyers whose dishonest conduct led to Fund payouts, & amounts awarded to their clients 1982-2015 (total payouts per attorney range from as little as $40 to over $4,000,000).

See, generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession:
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.[...] The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
---------------------------
(1) The Lawyers’ Fund For Client Protection Of the State of New York manages and distributes money collected from annual dues paid by members of the state bar to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the New York bar acting as an attorney or a fiduciary.

Typical losses reimbursed by the Fund include the theft of escrow deposits in real property trans- actions, estate and trust assets, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions within an attorney-client relationship and the practice of law, and unearned fees paid in advance to lawyers who falsely promise their legal services.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

See generally:
  • N.Y. fund for cheated clients wants thieving lawyers disbarred, a July, 2015 Associated Press story on this Fund reporting that the Fund's executive director, among other things, is calling for prompt referral to the local district attorney when the disciplinary committee has uncontested evidence of theft by a lawyer injuring a client or an admission of culpability;

    When Lawyers Steal the Escrow, a June, 2005 New York Times story describing some cases of client reimbursements ("With real estate business surging and down-payment amounts rising with home prices, the temptation for a lawyer to filch money from a bulging escrow account and later repay it with other clients' money has never been greater, said lawyers who monitor the thefts."),

    Thieving Lawyers Draining Client Security Funds, a December, 1991 New York Times story that gives some-real life examples of how client security funds deal with claims and the pressures the administrators of those funds may feel when left insufficiently financed as a result of the misconduct of a handful of lawyer/scoundrels.

Golden State's Head Auditor Rips California Bar For, Among Other Things, Screwing The Already-Screwed Victims Of Dishonest Lawyers By Stiffing Them Through Its Currently-Insolvent Client Protection Fund, Obscuring Fact That Payout Estimates Approach $19 Million While 2015 Year-End Cash Balance Sits At Only $2.2 Million; Victims Can Be Left Sucking Wind For Years Before Claims Are Paid

In Sacramento, California, the Courthouse News Service reports:
  • The California State Bar lacks millions of dollars in funding to compensate victims of attorney misconduct, but pays some of its executives more than the governor, the state auditor said [last week].

    The state bar, which regulates the conduct of attorneys through its discipline system and administers the California bar exam, is supported primarily through annual member fees.

    It also receives revenue through recovery payments from dishonest attorneys who have caused the bar to reimburse their clients. But according to the audit, disbarred attorneys rarely pay the money they owe — leaving the agency to rely almost entirely on annual member fees to reimburse the victims of dishonest attorneys.

    The review, released by State Auditor Elaine Howle, said that the agency has not been upfront about its lack of money in its client security fund necessary to compensate all of the victims.(1)

    "Since 2010, estimated future payouts to consumers have far outstripped the amount of money in the client security fund available for payments. Because the state bar did not take sufficient action when it first identified this potential problem, it is currently unable to make timely reimbursements," the 68-page audit stated.

    At the end of 2015, the agency reported a backlog of 5,500 applications for payment and estimated that it would need to pay a total of $18.9 million related to those claims.(2)

    "Nonetheless, it had only $2.2 million available in its client security fund at the time. In other words, the fund's likely future payouts outstripped its assets by $16.7 million," the report stated.

    Victims can potentially wait four to five years before receiving any reimbursement, the audit said.

    "The state bar's long delays in paying claims harm the people who are waiting and who may be counting on these resources to meet basic needs," the report said.

    The audit also pointed out that the state bar's salaries are its largest and fastest-growing expense, with the agency's top 13 executives making more than Gov. Jerry Brown's salary of $182,791.

    The senior director of admissions' maximum annual salary is just over $208,000, while the maximum salary for state agencies' civil services executives with comparable responsibilities is just under $136,000.

    "If the state bar capped all executive staff salaries in positions below that of the operations officer at the highest level for comparable [executive assignment positions], it could save as much as $428,000 annually," the report said.

    The audit also highlighted problems with the agency's errors and lack of transparency when it comes to its financial reports, which limits "stakeholders' ability to understand the state bar's operations and the Legislature's ability to ensure the appropriateness of the state bar's fees," Howle said.

    Additionally, the bar has made some inappropriate financial decisions, the report said.
For more, see Calif. State Bar Blasted for Lack of Transparency.

See also, The Recorder: New State Bar Audit Finds Problems New and Old (may require paid subscription; if no subscription, GO HERE, then click the appropriate link for the story).

For the State Auditor's Report, see The State Bar of California: Its Lack of Transparency Has Undermined Its Communications With Decision Makers and Stakeholders.

Go here for Report Summary, and here for Fact Sheet.

----------------------------
(1) The California State Bar's Client Security Fund is purportedly a public service of the California legal profession. The State Bar sponsored the creation of this fund to help protect consumers of legal services by alleviating losses resulting from the dishonest conduct of attorneys. The amount the fund may reimburse for theft committed by a California lawyer depends on when the loss occurred. A maximum of $50,000 is reimbursable if the loss occurred before January 1, 2009. A maximum of $100,000 is reimbursable if the loss occurred on or after January 1, 2009.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

(2) The report states that the number of claim applications to the Client Security Fund program soared beginning around 2009, in large part because many Californians had become victims of loan modification schemes.

Wednesday, May 18, 2016

Recently-Unsealed Whistleblower Suit Alleges More Of The Same Against Sleazy Bankster; Ex-Employee Claims Mortgage Servicer Canned Him For Resisting Requests To Lie To Homeowner/Borrowers

In Portland, Oregon, The Oregonian reports:
  • A Damascus man claims he was terminated by Wells Fargo & Co. in 2014 after he discovered the bank was repeatedly collecting on mortgage loans for which it did not have the proper documentation.

    When Duke Tran, 54, complained about the practice, he claims he was told to lie to customers. When he resisted, the bank fired him in November 2014, Tran said.

    In a whistleblower lawsuit unsealed [earlier this month], Tran claims Wells also defrauded the U.S. government. He argues the bank illegally collected hundreds of millions of dollars in federal foreclosure-prevention funding for loans the bank knew lacked proper documentation.
    ***
    Tran's wrenching transition from happy 10-year veteran at Wells Fargo to self-proclaimed whistleblower began in December 2013 when he fielded a call from a couple terrified they were going to get foreclosed out of their home. They were overdue on their second mortgage and Wells Fargo was demanding a balloon payment.

    Tran, who worked at the bank's Beaverton call center, checked and checked again. He claims he could find no trace of the couple's loan in the bank's computer system and he told the couple so.

    Tran says his bosses were not happy. Three months later, on April 21, 2014, Tran and the rest of his team received an email from a supervisor telling them that full disclosure was a bad idea.

    "Please remember when you come across a situation where we have a lost contract, deed, any type of document, really, but especially when It relates to securing a property, we are not to share that with the customer," reads the email, which Tran submitted into the court file.

    Tran was troubled. The first-generation Vietnamese-American and volunteer in the US Army Reserve considered it illegal and unethical for the bank to threaten foreclosure when it didn't have the mortgage contract in question.

    "The company told me to lie about that," he said in an interview. "I don't think that's right, for the customers, for the company or the entire country."

    Tran continued to question the policy. In response, he claims, his managers grew increasingly critical of his performance. On Nov. 24, 2014, Wells Fargo fired him.

    Last June, Tran filed the whistleblower suit alleging bank managers illegally retaliated against him. He filed the suit also on behalf of the federal government, alleging Wells Fargo violated the False Claims Act when it collected $1.4 billion in government foreclosure prevention funding.

Trump Names Ex-OneWest Bank Foreclosure King As Campaign Finance Chairman

From a recent blog post in The Slatest:
  • Donald Trump has successfully run for the Republican presidential nomination as a friend of the common man. His speeches are about standing up for people who've been victimized by the recession, free trade agreements, and marauding hordes of Mexican rapists. His voters—relative to other Republicans, though not to Americans as a whole—skew working-class. He sometimes suggests that he wants to raise taxes on rich people.

    And yet. Trump's fortune is derived from having inherited millions of dollars and a real-estate company from his father. His own recent business history is one of fraudulently preying on regular people. His actual tax plan involves massive, hugenormous breaks for people in his income bracket.

    And now, the New Republic reports, he's named a national finance chairman who made a ton of money running a bank that, per TNR, repeatedly committed fraud in the course of foreclosing on struggling homeowners during the housing crisis. That individual is Steve Mnuchin, former chairman and primary owner of OneWest Bank.

    Here's a fact about that institution's business practices:
  • Erica Johnson-Seck, a vice president of foreclosure and bankruptcy for OneWest, explained in a July 2009 deposition that she “robo-signed” 6,000 foreclosure-related documents per week, spending just 30 seconds on each sworn affidavit that attested to the veracity of all relevant information in the case. Johnson-Seck admitted to not reading the documents before signing them, to not knowing how the records were generated, and to not signing in the presence of a notary, all of which made the affidavits she signed false evidence in court.
  • Here's another fun bit about OneWest's foreclosures on reverse mortgages, which are marketed to seniors:
  • OneWest disclosed in its most recent annual report that it’s under investigation for this disproportionate share of widow foreclosures” by HUD’s Inspector General. The victims include 103 year-old Myrtle Lewis of North Texas, who OneWest put into foreclosure after her insurance coverage lapsed; Karen Hunziker, who got a foreclosure notice from OneWest ten days after her husband passed away in 2014; and a host of others.

See also, New Republic: Donald Trump’s Finance Chair Is the Anti-Populist From Hell (Steve Mnuchin specialized in fraudulent foreclosures during the heart of the Great Recession. Power to the people).

Tuesday, May 17, 2016

Predatory Land Contract/Contract For Deed Rackets Used By Private Equity Outfits To Peddle Dilapidated Foreclosed Money Pits To Unsophisticated Low-Income Homebuyers w/ Crappy Credit Now On Consumer Feds' Radar

The New York Times reports:
  • A revival in seller-financed home sales aimed at people who cannot qualify for a mortgage has started to attract scrutiny from the nation’s top consumer watchdog.

    The Consumer Financial Protection Bureau recently assigned two enforcement lawyers to investigate the prevalence of seller-financed home transactions and determine whether the terms of some deals may violate federal truth in lending laws, said two people with direct knowledge of the matter but who were not authorized to speak publicly at the request of federal officials.

    The regulator’s interest in seller financing was prompted by discussions between members of the commission staff and one of its advisory boards, the people said. The advisory board began raising questions about seller-financed home transactions in the wake of reports on the subject, including a front-page article in The New York Times on abuses in a marketplace that targets lower-income buyers.

    Such contracts proliferated in recent years as banks retrenched from lending to low-income families and private investment firms like hedge funds stepped in to fill the void.

    Sam Gilford, a consumer bureau spokesman, confirmed that staff members had conversations with members of the consumer advisory board about seller financing, specifically a type of arrangement called a contract for deed or a land contract.

    “We want all consumers to be treated fairly, and we monitor the marketplace to stay apprised of emerging developments in consumer finance,” Mr. Gilford said in an emailed statement. “As part of that work, staff from our research, markets and regulations division have had conversations with members of our consumer advisory board about land contracts.” He declined to comment on whether the agency had assigned two enforcement lawyers.

    A contract for deed is a long-term, high-interest installment financing deal.

    Actual ownership, or title to a home, passes to the buyer from the seller only after the last payment is made. The contracts, which can run for as long as 40 years, have become widespread in the Midwest and the South, where there are a large number of homes that sell for less than $100,000.

    In the wake of the financial crisis, contracts for deed and other seller-financing arrangements have had a resurgence. The foreclosure crisis created a bountiful supply of cheap, often dilapidated, homes for investors to buy and left millions of people with damaged credit histories. Thousands of the homes that are now being sold to borrowers under contracts for deeds were ones that had been foreclosed on by Fannie Mae, one of two mortgage finance firms bailed out by the federal government.

    The Consumer Financial Protection Bureau may or may not look to bring any enforcement actions over contracts for deeds and it is only in the early stages of researching the financing model.

    The regulator, now nearly five years old, has been seeking to flex its muscles of late. Last week, the Consumer Financial Protection Bureau announced a new rule that would prohibit many financial companies from requiring customers to resolve disputes through mandatory arbitration. The agency is also said to be preparing a new set of regulations for payday loans — high-interest, short-term loans aimed at the same people as those who often enter contracts for deeds.

    Contracts for deeds and other seller financing transactions have been around for decades, often used by family members or friends to sell properties to one another. But the arrangements have had a history of being predatory and the terms have often benefited the seller at the expense of the buyer.

    Legal aid lawyers in 13 states say that the contracts are being aimed at black and Hispanic homebuyers, according to a national survey undertaken by the National Consumer Law Center. The center has begun to survey housing lawyers in states where these contracts are most commonly used, in part to help determine the effect of new institutional players in the market.

    Statistics on the number of homes sold through contracts for deeds are hard to come by because not every state requires contracts to be recorded with the county. It is also not uncommon for borrowers to walk away from homes without contesting a seller’s eviction proceeding in court.

    Often issues with homes that are sold through contracts for deeds emerge only once local municipalities bring cases against the sellers. Even then, the sellers sometimes do not show up to court and the code violations on their homes pile up.

    Heather K. Way, a professor of law at the University of Texas, said: “This segment of the homeownership market cries out for greater federal oversight. It’s a toxic mix out there of sellers looking to make a quick and easy buck on the shoulders of vulnerable, unsophisticated buyers.” She added, “Unlike bank-financed sales, with seller financing there is typically no outside third party involved in the sale.”

    Homes sold through a contract for deed often are put on the market “as is,” meaning buyers must spend a significant portion of their disposable incomes on repairs and renovations. When they do not — or cannot — problems result.

    Municipal officials across the United States have complained that out-of-state investors selling properties with a contract for deed often tend to do little maintenance on properties and fall behind on paying property taxes or water bills.

    “They do not take care of the code violations with these properties, which is why they are trying to pass them off to other people,” said Jill Steele, city attorney for Battle Creek, Mich.

    Ms. Steele said Battle Creek has had a number of code violation issues with Harbour Portfolio Advisors, a firm out of Dallas that is one of the larger national players in the contract for deed business.

    Harbour Portfolio bought more than 6,700 single-family homes following the financial crisis of 2008, most of them from Fannie Mae through bulk sales. In recent months, Harbour has sold more than 600 homes with existing contracts for deeds in place to other investment firms and individual investors.

    The Consumer Financial Protection Bureau is trying to determine how many other firms are selling homes nationally with a contract for deed already in place or are renting out homes with an option to buy, said the people with direct knowledge of the matter.

    Still, there are some in the housing market who think that contracts for deeds and seller-financing plans can help people with no credit get back on the housing ladder.

    Odell Barnes, a longtime buyer and seller of foreclosed homes who operates out of Gilbert, S.C., chafed at the idea of government regulation in the industry and emphasized that seller financing contracts were a way to make homeownership accessible to anyone.

    “Our government thinks all poor people are stupid,” Mr. Barnes said.

No Charges Yet In Year-Long Probe Into Phoenix-Area Land Contract/Contract For Deed Racket As Victim List Now Includes 25 Families; Unsophisticated, Non-English-Speaking Homebuyers Paid Downpayments & Monthly Payments To Seller But Lost Homes To Foreclosure Anyway Due To Seller's Non-Payment Of Undisclosed Liens

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • The wheels of justice are turning too slowly for families who say they were duped out of their homes by a Valley business.

    Now they're banding together hoping to push the case forward.

    When the Attorney General's Office started investigating Montecristo Properties nearly a year ago there were five listed victims.(1)

    Twenty five have now come forward hoping their collective stories will help make the case stronger.

    The victims say they bought new homes, made the mortgage payments, but received foreclosure notices because their money never made it to the bank.

    “You feel so violated when you have to get up and leave," said one victim named Ana.

    In some cases, the company didn't even own the homes it was selling but the victims didn’t know that.

    They all say the financial loss was crippling but the emotional toll is even greater. "I’ve lost a good part of my dreams, my hopes," said Ana.

    "We're all frustrated because Francisco is free while all of us have suffered tremendous damage," said Silvia Gallo, one of the original complainants referring to the company’s owner Francisco Aguirre.

    There still have been no arrests. The AG's office says it expects a case update soon.
Source: 25 victims listed in homeowner fraud investigation; group banding together to push case forward.
-----------------------------
(1) See Valley homeowners say they're victims of fraud; AG's office investigating Montecristo Properties LLC:
  • The Arizona Attorney General's Office is investigating Phoenix real estate company Montecristo Properties, LLC for selling people homes without telling them loans had been taken out against the properties.

    Court documents show Montecristo defaulted on those loans resulting in foreclosure notices for people who thought they had been paying off their homes.

    At least five people are listed in the investigation and the AG's office says there could be dozens more. Court documents also show all of the victims are Spanish speaking and many trusted company managers to translate the sale contracts.
    ***
    Aguirre does have a felony criminal record after a 2008 plea deal for sale of unregistered securities which came with a 2.5-year prison sentence.

Spotlight Continues To Burn On Predatory Land Contract/Contract For Deed Real Estate Rackets; Arrangements "Are To Housing What Payday Loans Are To Banking & Rent-A-Centers Are To Furniture!"

From The Washington Post's Wonkblog:
  • Beryl Satter knew something like this was bound to happen. Or, rather, to happen again.

    The Rutgers historian wrote the book on an obscure form of predatory lending from the mid-20th century that victimized black home buyers when banks would not lend them mortgages.

    Her book, "Family Properties," came out in 2009,(1) on the heels of the housing crash. And as she traveled the country talking about it — about families defrauded from the homes they thought they owned, about sellers who promised home ownership but collected deposits and evictions instead — people kept approaching her.

    "Pretty much everywhere I go, people say 'I’ve been hearing about this,'" Satter says. "Contract" lending is making a comeback.

    In this model, buyers shut out from conventional lending are offered an alternative: They can make monthly payments on a home directly to the seller, instead of a bank, with the promise of receiving the deed only once the property is entirely paid off, 20 or 30 years down the road. In the meantime, they have few of the legal protections of a typical home buyer but all of the responsibilities of one. They don't build equity with time. They can be easily evicted. And if that happens, they lose all of their investment.
    ***
    What is particularly alarming about the trend, though, is that we've seen it before. In its earlier incarnation, it was an explicitly racist form of exploitation. And now it is victimizing the same groups again: mostly lower income and minority home buyers who can't access traditional credit.

    "There’s nothing new here in the slightest," Satter says. "This is just a continuation of the same old game. That’s what’s so disturbing."
    ***
    "When the banks close down, people still need to buy," Satter says. And so they find a way. Just as creative investors find a way to meet their demand. Land contracts are to housing what payday loans are to banking and Rent-A-Centers are to furniture. What people in need can't access through credit someone is always willing to provide — for a price.
For more, see Why a housing scheme founded in racism is making a resurgence today.
------------------------
(1) See generally:
  •  In Chicago, Real Estate and Race as a Volatile Mix,
  • You Tube Video: Book TV: Beryl Satter "Family Properties" (describes the process known as "contract selling," where landlords in post-World War II Chicago would sell African-Americans overpriced homes and retain the homes title while charging exorbitant interest rates. Upon default of the loan the home's owners would be evicted and the process would start anew with another family.). contract for deed

Report: HUD Sales Of Delinquent FHA Mortgages Yields Big Payoffs For Sleazy Loan Servicers & Easy Profits For Private Equity Investors While Hastening The Boot For Struggling Homeowners

From a recent press release from the National Consumer Law Center:
  • The U.S. Department of Housing and Urban Development’s (HUD’s) program for selling defaulted Federal Housing Administration (FHA) loans is the largest auctioning off of government-insured home mortgage loans in the nation’s history, yet the big winners are the large mortgage servicers who flout HUD rules while homeowners often unnecessarily lose their homes.

    To date, under the Distressed Asset Stability Program (DASP), HUD has sold over 105,000 FHA-insured home loans valued at $17 billion, primarily to private equity companies and hedge funds that bought the loans at big discounts.

    “HUD’s own data show that selling FHA mortgages through its Distressed Asset Stability Program does not help struggling homeowners and their communities in the long term,” said National Consumer Law Center attorney Geoff Walsh and author of Opportunity Denied: How HUD’s Note Sale Program Deprives Homeowners of the Basic Benefits of Their Government-Insured Loans.

    “HUD excludes homeowners from the loan sale process by not even notifying them before the sales. As a result of the sales, a homeowner loses valuable protections from foreclosure, protections that are available only when the loan is FHA-insured.

    Through DASP sales, HUD pays off the mortgage servicers who routinely flout the agency’s own rules, and then sells the loans at fire-sale prices to private speculators who reap profits while doing little to help vulnerable homeowners remain in their homes.”

Full report, charts and tables (including the 10 largest buyers of DASP note sales), and web only materials are available at: http://bit.ly/1WTd5sW