Homeowner Facing Foreclosure Commits Suicide By Setting Home Ablaze, Say Cops

In Elk River, Minnesota, the Minneapolis Star Tribune reported last month:

• The man who died when his Elk River house burned set the fire on purpose in what police said [...] was a rare manner of suicide. Corey R. Cook, 43, used a flammable liquid to start the fire [...], police said. Police said Cook's home was under foreclosure. He died of smoke inhalation, police said. No one else was in the home at the time.

Source: Man who died after setting house on fire is ID'd; home was under foreclosure.

See also, Elk River fire claims man’s life (Elk River Star News).

For other stories on fires & foreclosures, go here and go here.

Go here for other posts on foreclosures and suicide. suicide homeowner foreclosure zeta foreclosure arson yak

Church In Foreclosure At Center Of Arson Fire

In Albany, Georgia, The Albany Herald reported earlier this month:

• Investigators are questioning a possible suspect in the arson of an Albany church, while more details of the church’s financial troubles are revealed, authorities said. [Last week], fire officials and police responded to the 2400 block of West Gordon Avenue to a fire. When they arrived, they found the sanctuary of Trinity Metropolitan Baptist Church burning. The fire, which Albany Fire Chief James Carswell called a malicious act of arson, is believed to have caused an estimated $150,000 in damage to the building, fire officials said. [...] According to a legal ad placed in The Albany Herald [...], at least three different lenders were set to foreclose on the property and sell it at auction Wednesday [January 2, 2008] on the courthouse steps.

For more, see Church was set for auction.

For other stories on fires & foreclosures, go here and go here. foreclosure arson yak

Arson Claims Another Home As Vacant Foreclosure Goes Up In Flames

In Sugarcreek Township, Ohio, the Greene County Dailies reported last month:

• State and local authorities are looking for a group of witnesses who may have information about a Nov. 18 arson that destroyed an [sic] vacant Fernwood Court house valued at about $400,000. [...] The house was believed by investigators to have been vacant since around October 11, when Citizens Bank, of Flint, Mich., took possession of it after foreclosed on the owners, [Fire Chief Randy ] Pavlak said.

For more, see Witnesses sought in Fernwood arson.

For other stories on fires & foreclosures, go here and go here. foreclosure arson yak

Insurance Regulator Directive Aims To Stem High-Profile Attorney Fraud On Massachusetts Consumers

Massachusetts Lawyers Weekly reports:

• Insurance companies in Massachusetts are to notify consumers by mail when a settlement payment of $5,000 or more is sent to an attorney, according to a recent directive from the [Massachusetts] commissioner of insurance. Under the new guidelines, insurers are instructed to send consumers a written notice that refers to the amount of the check, the name and address of the party to which the check is mailed and a copy of the check — or, if the payment is made by electronic transfer, the amount and date of the transfer. The measure has been hotly debated since it was first proposed by the [Massachusetts] Clients' Security Board ["CSB"], which spent several years lobbying for the guidelines. The CSB argued that payee notifications would stem the infrequent but high-profile cases of attorney fraud. [...] Calling the measure "far from foolproof but better than nothing," [CSB Chairman Peter G.] DeGelleke predicted that, in the end, the guidelines "will make a difference. New York reports that the implementation of the rules there reduced losses and claims."

For more, see Insurers told to send payee notification letters to clients (Measure 'far from foolproof' but seen as an improvement).

For members of the public who have sustained a financial loss caused by the dishonest conduct of a Massachusetts attorney acting as an attorney or a fiduciary, see Massachusetts Clients' Security Board. Go here for links to summaries of cases they've heard involving clients' claims against Massachusetts attorneys.

For other states, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association - January, 2008);
• Check the Client Protection Funds Maps (USA map) (Canadian map) or
• try this "Google" search.

Two Year Degree Now Required For New California Appraisers

VoiceOfSanDiego.org reports:

• With prosecutors nationwide illuminating real estate fraud schemes undertaken during this decade's heated housing market, at least one of the state's legions of real estate professionals face new training requirements. California's Office of Real Estate Appraisers raised the bar last week for would-be appraisers wishing to join the 19,500 appraisers already licensed and working around the state. The tightened requirements are expected to increase professionalism and to help weed out unscrupulous potential licensees looking for an easy job. [...] Now, with more stringent education requirements -- notably, a required two-year associate's degree from an accredited institution to become a certified residential real estate appraiser, tougher examinations and increased course hours -- they sense the change will help. Previously, potential appraisers had been required to attend private appraisal training but no additional college training.

For more, see With Fraud Gaining Attention, New Appraisers Now Must Go to College.

More On Abandoned Pets & Foreclosures

In Vallejo, California, the Times-Herald reports:

• A holiday surge in unwanted pets is filling kennels and creating a need for more animal adoptions, a Vallejo-Benicia Humane Society worker said Wednesday. "During November and December, we usually see a surge in the number of surrenders," said Peter Wilson, director of humane services at the no-kill shelter, which includes 20 kennels for so-called adoptable dogs and 30 for cats. [...] While other cities and counties have reported more abandoned animals in the wake of the foreclosure crisis, Solano County animal rescue workers said there is little evidence of a direct correlation locally.

For more, see Unwanted pets fill kennels in Vallejo.

For more on "foreclosure pets", go here and go here. petsII and foreclosures

City Of Cleveland Files Subprime Mortgage Suit Against Wells Fargo, 20 Others For Leaving Neighborhoods In Ruins

In Cleveland, Ohio, The Cleveland Plain Dealer reports:

• Mayor Frank Jackson took aim at Wall Street on Thursday with a lawsuit against 21 major investment banks that he said have enabled the subprime lending and foreclosure crisis here. The one-of-a-kind suit, filed in Cuyahoga County Common Pleas Court, accuses venerable institutions such as Deutsche Bank, Goldman Sachs, Merrill Lynch and Wells Fargo of creating a public nuisance. Jackson contends the companies irresponsibly bought and sold high-interest home loans. The result: widespread defaults that depleted the city's tax base and left entire neighborhoods in ruins.

***

• Cleveland is the second major U.S. city this week to sue over the ills of subprime loans. On Tuesday, Baltimore sued Wells Fargo, alleging the bank intentionally sold high-interest mortgages more to blacks than to whites - a violation of federal law. The Baltimore and Cleveland efforts are believed to be the first attempts by large cities to recover losses blamed on the foreclosure epidemic, which has particularly plagued Ohio.

• But Cleveland's suit is even more unique because the city has based its complaints on a state law that relates to public nuisances. The suit also is far more wide-reaching than Baltimore's in that it targets the investment banking side of the industry, which feeds off the mortgage market.

For more, see Cleveland sues 21 investment banks over subprime mess (Big-name firms blamed in costly subprime crisis).

See also, The Cleveland Free Times: Payback Time (Cleveland Sues Banks Over The Foreclosure Crisis, But Takes A Legal Road Less Traveled).

For a copy of the lawsuit, see City of Cleveland v. Deutsche Bank Trust Company, et al. (available online courtesy of Bill Moyers Journal) (if you have a problem with this link, drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail it to you - be sure and put "City of Cleveland v. Deutsche Bank" in "subject" line).

Go here for updated posts on Cleveland's lawsuit against 21 investment banks.

FBI Fails To Pay Phone Bills; Results In Service Shutoffs, Lose Access To Wiretaps

It's been often reported that a big hurdle faced by the FBI in pursuing all the mortgage fraud going around is its lack of resources. If a recent story by Dan Eggen of The Washington Post is to be believed, they are apparently having enough trouble just keeping their phone bills current.

• Telecommunications companies have repeatedly cut off FBI access to wiretaps of alleged terrorists and criminal suspects because the bureau did not pay its phone bills, according to the results of an audit released yesterday. [...] "Late payments have resulted in telecommunications carriers actually disconnecting phone lines established to deliver surveillance results to the FBI, resulting in lost evidence," [Justice Department Inspector General Glenn] Fine said in a seven-page summary of the audit's findings (pdf format) (html format).

***

• The late payments were part of a broader pattern of lax bookkeeping identified by Fine's review. A review of 35 employees with access to such funds found that half had personal bankruptcies or other financial problems, the report said. In one case prosecuted in June 2006, an FBI telecommunications specialist pleaded guilty to stealing more than $25,000 intended for telephone services.

***

• The group's national security policy counsel, Michael German, also said that the report raises questions about the motives of large telecom firms, which have, in many cases, allowed the government to run wiretaps on their systems without warrants. "It sounds as though the telecoms believe it when the FBI says the warrant is in the mail, but not when they say the check is in the mail," said German, a former FBI agent.

For more, see FBI wiretaps go dead as phone bills go unpaid (The Boston Globe), or Wiretaps Are Cut Over Unpaid Bills (The Daily Herald).

For the FBI official response to the Inspector General's report, see Response to Inspector General Audit of FBI Management of Confidential Case Funds and Telecommunications Costs.

Minnesota Closing Agent Gets 24 Months For Preparing Phony Closing Docs In 60+ Real Estate Deals

(original post 1-10-08; revised 1-11-08)
In Minnesota, the Prior Lake American reports:

• Jill Lehn of Prior Lake was sentenced to 24 months in prison in Federal Court on Thursday afternoon, according to an IRS Criminal Investigation spokesperson. Lehn, a former mortgage loan closing agent and real-estate purchaser, pleaded guilty to federal fraud charges relating to a mortgage pay-out scheme on Dec. 20. Lehn pleaded guilty to one count of wire fraud and one count of money laundering before U.S. District judge Michael J. Davis. Court documents prepared between December 2004 and August 2006 state that Lehn prepared fraudulent closing documents relating to over 60 real-estate transactions.

For more, see Lehn sentenced to serve two years in prison for role in LHS mortgage-fraud case.

See also, the Minneapolis Star Tribune: Two more people convicted of a fraud scheme run through LHS Mortgage in Burnsville were sentenced this week in a St. Paul federal court - Also reports that another member of the scheme, Isadore Stewart, 40, of Stillwater, was sentenced Wednesday to 18 months in prison and three years of supervised release.

For a four page article by Jill Lehn in which she urges others in the real estate business not to make the same mistakes she made, see Tips On How To Ruin Your Life, by Jill Lehn.

Go here for earlier posts related to Jill Lehn and this mortgage fraud case.

Maryland Servicemember Has Home Sold Out From Under While On Duty; Lender Falsely Represented Military Status In Foreclosure Action, Says Suit

In a recent column in The Baltimore Sun on the Maryland foreclosure process in which it is described as being "greased a little too slickly in favor of lenders," an example is given of one Maryland homeowner who, while away serving in the U.S. Army, had his home sold out from under him in a foreclosure sale by the mortgage lender:

• Army Staff Sgt. Kevin Atiase was serving his country at Fort Sam Houston, Texas, when a mortgage company sold his Frederick house in a foreclosure proceeding a year ago. He couldn't attend court and didn't learn a judge approved the sale until it was too late, according to a brief filed with the Maryland Court of Special Appeals.

***

• Because of his military status, Atiase, the Army sergeant, was entitled to a freeze of foreclosure proceedings under the federal Service Members Civil Relief Act, his lawyer argues. The act is to help "those who dropped their affairs to answer their country's call," the Supreme Court has said. But the lender falsely represented that Atiase was not in the military, the suit alleges, and the house had already been sold by the time he found out what was happening.

For more, see Seizing of homes too easy in Md.

Go here for other posts on the Servicemembers Civil Relief Act.

Communication Problems Between Collection & Loss-Mitigation Departments Cause Impediments For Homeowners Facing Foreclosure

A recent column by syndicated real estate columnist Kenneth Harney highlights the impediments that financially strapped homeowners run into when trying to work out a payment plan on home mortgages in default with their lender.

• Listen to real estate attorney Nancy Gusman of Largo, Md., who represents financially distressed homeowners seeking ways to avoid foreclosure: "It's insane," she said in an interview. "(Mortgage) servicers tell everybody, 'Call us as soon as you have problems making the monthly payment.' But then the borrowers call and are told, 'Oh no, we can't talk to you about a loan modification. Your file is in the collections department (not the loss-mitigation department where loan modifications and short sales are handled) because you're only 30 days late.'"

***

• Robert Padgett, director of nonperforming loan servicing for mortgage investor Freddie Mac, says mishandling of troubled accounts between collection departments and loss-mitigation and workout departments is "a problem. The collection folks are trained to recognize loss-mitigation (loan modification) opportunities early" in the process, and are supposed to push them through quickly to the specialists who can custom-craft workout solutions. But clearly that doesn't always happen.

For more, see:

• Loan industry unable to 'help' quickly enough, or
• Borrowers Seeking Help May Feel Lost at Sea, for the same story.

South Jersey Upfront Fee Foreclosure Rescue Operator Facing Felony Charges

In Mount Holly, New Jersey, the Burlington County Times reports:

• A judge ruled yesterday that a Mount Laurel businessman will face separate trials on charges that he stole $105,000 from customers and that he fraudulently obtained $250,000 from insurance and risk-management companies. Peter Rogers, 64, of St. David Drive committed the crimes as president of Express Consolidation Refinance & Mortgage Consultation Inc. of Cinnaminson and Moorestown, prosecutors said.

***

• As president of Express Consolidation, Rogers contacted individuals whose properties were in foreclosure and offered to help them save their homes through renegotiating, refinancing and reassignment of mortgages, prosecutors said. Rogers was paid between $400 and $3,700 by each homeowner but did not do any work, prosecutors said. As a result, the victims either lost their homes or declared bankruptcy, prosecutors said.
  Fifty-five of the 77 victims were Burlington County residents, prosecutors said.

• Rogers will face charges of theft by deception, forgery and securing execution of documents by deception in the trial involving the alleged theft from his customers.

The case is being handled by the Burlington County Prosecutor's Office in Mount Holly.

For more, see Judge says businessman will face two trials (Of the 77 alleged victims, 36 lost their homes, 28 declared bankruptcy, one turned his property over to Rogers and a few were able to save their homes).

See also, Two trials ordered in Mount Laurel fraud case.

Go here for story updates on this case.

Realtor Uncovers Rent Scam Involving Her Listing & Craigslist

In Chico, California, the Chico Enterprise Record recently reported:

• A local Realtor, who happens to be the 2008 president of the Chico Association of Realtors, was exposed to a new take on Internet scamming involving real estate. Debbie Brodie of Realty World Choice Properties discovered a house she was representing was the target of a scam when she started getting calls from people asking about renting the place. Brodie was trying to sell the house for the owner. Brodie discovered that scammers were promoting the three-bedroom house for rent on Craig's List, an Internet-based ad service. Scammers picked up the house photo from Brodie's Multiple Listing Service information, and included her name in a e-mail address that wasn't hers. The scammers were trying to get $600 a month for rent, with a $200 deposit, and may have been asked for two months rent in advance. Brodie uncovered the scam when she was called by potential renters who had searched for her name on the Internet.

For more, see Scammers find real estate a sweet target.

Go here for other posts on tenant rent scams involving people renting out homes they don't own. unwitting tenant rent scam zebra

Tenants Entitled To Actual Damages For Emotional Distress, Says California Court; Landlord Allowed For Unsanitary Conditions

A recent article in Realty Times poses the following query:

• Suppose a tenant finds him or herself living in a "slumlord" unit. Everything is deteriorated. Unsanitary conditions prevail. What is the tenant's recourse? Is he or she entitled to damages? More specifically, is he or she entitled to damages for emotional distress?

• The answer is "yes" if you live in California's Second Appellate District, where the case of Un Sil McNairy et al. v. C.K. Realty et al. was heard.

In affirming a Los Angeles Superior Court ruling finding a breach of the warranty of habitability and violations of former California Civil Code section 1942.4, subdivision (b)(1) (awarding $5,000 in actual damages, $1,000 in special damages, and $4,000 in punitive damages to each of 20 tenants), the California intermediate appellate court looked to both earlier California cases, as well as cases from Arizona, Oregon, West Virginia and Vermont in support of its decision that the calculation of a tenant's actual damages for being subjected to unsanitary conditions by a landlord includes damages for emotional distress.

Further, the court also ruled that, with two execptions, an additional 84 tenants who were prohibited from testifying during the damage portion of trial should be afforded the opportunity to testify regarding their damages, if any, as a result of the lack of potable water and the cockroach infestation.

The court quoted a 1980 California appellate case for the proposition that a tenant's monetary damages in these circumstances does not necessarily reflect the true nature of his/her actual damages:

• " 'Generally, the residential tenant who has suffered a breach of the warranty does not lose money. He instead cannot bathe as frequently as he would like or at all if there is inadequate hot water; he must worry about rodents harassing his children or spreading disease if the premises are infested; or he must avoid certain rooms or worry about catching a cold if there is inadequate weather protection or heat. Thus discomfort and annoyance are the common injuries caused by each breach and hence the true nature of the general damages the tenant is claiming.' " (Stoiber v. Honeychuck (1980) 101 Cal.App.3d 903, 915-916.)

For the Realty Times article, see A Tenant's Emotional Damages may be Actual Damages.

For the California Appeals court decision, see McNairy v. C.K. Realty (2007); 150 Cal.App.4th 1500 , -- Cal.Rptr.3d -- (Case available online courtesy of FindLaw.com; may require free registration).

Editor's Note: The tenants' emotional distress in this case was suffered in the context of living in an apartment with unsanitary conditions. I wonder, in the context of a rent skimming situation, where an unwitting renter unexpectedly finds him/herself facing a foreclosure eviction due to the landlord's pocketing of the tenant's rent and security deposit without making the mortgage payments, whether the tenant's emotional distress would be compensable as actual damages, or the landlord's conduct punished with punitive damages.

Prince George’s County Could See 8,000+ Foreclosures In '08, Warn Officials

In Prince George's County, Maryland, Gazette.net reports:

• From the bench at the Prince George’s County Courthouse, Circuit Court Judge Herman C. Dawson has seen a daily line of people unable to pay for their homes. In 2005, there were about 3,700 foreclosure cases in court, he said. But in 2006, the number rose to 4,100. And in 2007, Dawson estimated more than 6,000 people went through foreclosure proceedings in the county – the highest in Maryland. And it’s expected to get worse, state officials said at a conference Jan. 3 with local leaders in Upper Marlboro, where they warned that more than 8,000 county homeowners might face foreclosure this year.

• "The tsunami is coming in July and August of 2008,” said Raymond Skinner, secretary for the Maryland Department of Housing and Community Development. "There are going to be situations where people will have to actually sell their house and move on.”

For more, see State fears ‘tsunami’ of failed mortgages (Warning that Prince George’s could see 8,000 foreclosures, Maryland officials urge assistance message).

Michigan Man Faces Charges Of Race-Based Threats Interfering With Rights Of Home Seller, Real Estate Agent

From the U.S. Department of Justice:

• [Federal officials recently announced] that Curtis M. Gottler of Livonia, Mich., was indicted by a federal grand jury for hate crimes and other charges stemming from threats he allegedly made to a local couple and their real estate agent in an attempt to keep the couple from selling their home to African-Americans. The defendant was also charged with a hate crime and a threat for sending a threatening letter through the U.S. mail to an African-American resident of Livonia.

• One count in the indictment charges Gottler with attempting to interfere with the right of the couple to sell their home without discrimination on the basis of race. According to the indictment, on Aug. 24, 2007, Gottler left a handwritten note at the couple’s home indicating that he would track them down and harm them if they sold their home to African-Americans.

• Gottler is also charged with one count of attempting to interfere with the real estate agent’s right to assist the couple in selling their home without regard to race, and one count of making a threat in interstate commerce. According to the indictment, these charges relate to a threatening e-mail Gottler sent on Sept. 15, 2007, to the real estate agent who was representing the couple in the sale of their home.

• Gottler is also charged with two counts stemming from a letter he allegedly sent on June 25, 2007, to an African-American resident of Livonia, in which he threatened to harm the resident if the resident failed to leave Livonia. For this incident, the indictment charges Gottler with one hate crime and one count of sending a threat through the U.S. mail.

For the U.S. DOJ news release, see Livonia Man Indicted for Federal Civil Rights Violations for Threatening African-American Residents.

Indiana Man Gets 15 Months For Interference (Cross Burning) With Another's Housing Rights

The U.S. Department of Justice announced earlier this month:

• A federal judge [recently] sentenced Kyle Shroyer of Muncie, Ind., to serve 15 months in prison for his role in burning an eight-foot cross in front of a biracial family’s home, announced [federal officials]. Defendant Kyle Shroyer admitted in September 2007 that he and another man conspired to violate the civil rights of a woman and her three biracial children by burning the cross at their home in Muncie, Ind., in March 2006. At the hearing [...], Shroyer was sentenced to 15 months in prison, three years supervised release, a $500 fine and a $100 special assessment. The judge enhanced the defendant’s sentence because the crime was racially motivated and because several of the victims were unusually vulnerable because of their age.

For more, see Indiana Man Sentenced for Role in Cross-burning.

Fannie To Reimburse Loan Servicers For "HOPE" Counseling Referrals For Delinquent Homeowners

Fannie Mae announces:

• As part of its ongoing commitment to support borrowers facing potential foreclosure, Fannie Mae will reimburse its servicing partners when they refer homeowners who are behind in their mortgage payments to the HOPE Hotline for counseling. "We have to do everything we can, and early intervention and delinquency counseling are key to helping many at-risk homeowners avoid foreclosure," said Jason Allnutt, Vice President for Credit Loss Management and Quality Assurance at Fannie Mae. "We believe that in these difficult times, independent counseling agencies can play a unique role by helping servicers help borrowers find more opportunities to avoid foreclosure and keep their homes." The toll-free hotline, 1-888-995-HOPE, is available 24-hours a day to provide mortgage counseling in multiple languages.

For more, see Fannie Mae Will Reimburse Its Servicers for Referrals to HOPE Hotline.

See also, How to Avoid Foreclosure and Protect Home Equity.

Gary-Area Mortgage Broker Nailed With Federal Indictment In Alleged Scam To Fraudulently Obtain $1 Million For Clients To Buy 27 Homes

In Northwest Indiana, The Times (Munster, IN) reports:

• A Merrillville mortgage broker has pleaded not guilty to charges she used fraudulent information on credit applications to persuade banks to loan her clients more than $1 million to buy 27 homes, nearly all in Gary. Tameka Bryant, 35, of Lynwood, appeared in court Wednesday on 14 counts of fraud. In addition to the mortgage fraud charges, prosecutors say Bryant used someone else's Social Security number on loan forms at a jewelry store and elsewhere.

For more, see Feds: Woman obtained 27 Gary homes through fraud.

South Florida Condo Buildings Buckling Under Pressure From Defaults

In South Florida, The Miami Herald reports:

• As the region's housing market sputters into the new year, a collection of largely unoccupied new towers are straining under hundreds of millions of dollars in defaulted mortgages. In the 20 buildings in Miami-Dade and Broward counties with the largest numbers of units in foreclosure, loans in default totaled more than $271.8 million, according to an analysis by Condo Vultures, a Bal Harbour real estate consulting firm and brokerage. The epicenter: Miami's financial district along Brickell Avenue, where three of the top five buildings are located. Condo Vultures' principal Peter Zalewski jokingly refers to that area as Miami's "foreclosure district.''

***

• "It reflects the speculators that were coming in and coming in hard. They all had expectations of how spectacular Brickell was going to be from an investment perspective," with its new vibe, retail and night life, Zalewski said. Others said widespread mortgage fraud, involving inflated appraisals and faux buyers, also led to the dizzying rise in defaults.

***

• Lisa Magill, a lawyer with Becker & Poliakoff, which represents community associations, said she knew of associations struggling to cover expenses because more than 10 percent of their residents were behind on fees. Unkept grounds and disruptions in services could result, she said.

For more, see Condo buildings buckle under foreclosures (South Florida’s many condo buildings began to sink under hundreds of foreclosures – and it may get worse in 2008).

Go here for other posts related to the Miami condo market problem.

More Discriminatory Predatory Lending Suits Possible, Says Baltimore City Solicitor

In Baltimore, Maryland, The Daily Record reports:

• A Fair Housing Act lawsuit filed by the city of Baltimore against lender Wells Fargo & Co. could be the first of its kind, but it may not be the last. City Solicitor George A. Nilson said Tuesday that at least one other “significant” lender in the Baltimore market is “under evaluation” as a potential target for a similar suit, in which the city seeks to recover its own losses from foreclosures in Baltimore’s black neighborhoods. “There could be more,” Nilson said.

For more, see City could sue other lenders for Fair Housing violations (if link expires, try here).

In a related editorial, see Suspect foreclosures (an editorial by The Baltimore Sun).

To view the City's lawsuit against Wells Fargo, see Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al. (8.76 MB).

Representing the City Of Baltimore is the Washington, D.C. law firm Relman & Dane.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

Mortgage Fraud Charges Tacked On To Three Suspects Facing Charges Of Running 10 Indoor Florida Pot Farms

In Port St. Lucie, Florida, TC Palm reports:

• Three people already sitting in jail on multiple drug charges were charged with mortgage fraud Tuesday. Law enforcement officials allege Juan Carlos Calderon-Mencriff, 41, Carmen E. Fernandez, 48, and Jorge Luis Fernandez, 58, all of Port St. Lucie, were part of an extensive father-and-son pot-growing operation that allegedly used a local home-building company as a front and a network of workers to cultivate hundreds of pounds of marijuana. Roberto Alberto Cepero and his son, Roberto Patricio Cepero — the father and son officials suspect ran the operation — were arrested in November, along with 20 others as part of an investigation that focused on those associated with Global Homes Builders Inc. and that shut down 10 marijuana grow houses in St. Lucie County.

For more, see 3 PSL residents in jail on drug charges now face mortgage fraud charges.

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops alpha

Grand Rapids Woman Cops Arson Plea For Torching Home Facing Foreclosure

In Grand Rapids Township, Michigan, The Grand Rapids Press reported last month:

• A former Gaines Township woman pleaded no contest [last month] to charges she set fire to her own home with her husband and children inside. Sheryl Christman wanted to get insurance money to get out of her mortgage, which was teetering on the brink of foreclosure, to be with her new boyfriend, according to the prosecution. She pleaded [...] to the arson of her family's home [...] in exchange for the Kent County Prosecutor's office dropping a 10-year-felony charge of committing arson in order to profit from insurance. The 38-year-old mother set fire to mattresses in the garage on Sept. 1. She then sat outside the $150,000 home weeping as the structure burned, according to investigators.

For the story, see Woman pleads no contest to arson of her own home.

For earlier post on this story, see Woman Facing Foreclosure Torches Home; Faces Arson Charge.

For other stories on fires & foreclosures, go here and go here. foreclosure arson yak

City Of Buffalo Approves $7.2M Settlement With 226 Plaintiffs; Homes Built On Contaminated Soil

In Buffalo, New York, WKBW-TV Channel 7 reports:

• Owning your own home. It's part of the American dream. But, for residents in South Buffalo's Hickory Woods neighborhood it's become a nightmare. "My house that I bought for $70,000 is assessed for $15,000," says Patrick Blake who has lived in Hickory Woods for 11 years. The financial losses are not even the worst of it for many. Blake says his family and his neighbors are suffering serious health problems from living in homes built on contaminated soil. "We were lied to by the E.P.A," says Blake, "We were lied to by the Health Department. The Health Department is probably the worst agency in this state. They do not care about anything but big business. They wanted to get this cleaned up so they could put businesses across the street. They didn't care about us at all."

• Now after many years of battling, at least some help is finally on the way. The Buffalo Common Council on Tuesday approved a $7.2 million settlement for 226 plaintiffs in a lawsuit.

For more, see Multi-Million Dollar Settlement for Hickory Woods (read story) (watch video) (no longer available online).

Maryland High Court To Address Constitutionality Of State Foreclosure Notification Requirements

In Maryland, The Baltimore Sun reports:

• Judges on Maryland's highest court yesterday suggested they could intervene to change the notification procedure for foreclosures, which have ballooned as more people took out loans they couldn't afford and lenders made deals they couldn't keep. "The argument that this court change its rules in light of changing circumstances in the mortgage industry" could be persuasive," Judge Dale R. Cathell told an attorney arguing a foreclosure case before him yesterday in the Maryland Court of Appeals.

***

• Yesterday's case looked at whether the foreclosure notification process in Maryland met the due process requirements of the Constitution. [...] The case involves [Maryland] homeowner Joyce Griffin, the Pasadena resident who says she first found out her home had been foreclosed in May 2006, when the new owner tacked a handwritten note to her front door.

For more, see High court takes up foreclosure notification (Judge hints procedure may be too quick).

Go here for earlier posts on this case.

Baltimore Files Suit Against Wells Fargo Alleging Discriminatory Predatory Lending Practices In Violation Of Fair Housing Act

In Baltimore, Maryland, The Baltimore Sun reports:

• Baltimore homeowners could receive counseling and financial support - including short-term loans to help avoid foreclosure - if the city wins the predatory and discriminatory lending lawsuit it filed yesterday against Wells Fargo Bank, Mayor Sheila Dixon said. [...] The lawsuit, filed in U.S. District Court in Baltimore, has been in the works since early last year, when city attorneys started to review foreclosure data. Wells Fargo issued a statement Monday saying the lender does not engage in illegal discrimination. City officials estimate that they could win "tens of millions" in damages if they prevail in the lawsuit and that a chunk of that money would be funneled into public programs to aid homeowners struggling with mortgages with adjustable interest rates.

For more, see City files suit over foreclosures (If Baltimore prevails, homeowners could receive counseling and financial support) (no longer available online).

See also:

• Baltimore Is Suing Bank Over Foreclosure Crisis (The New York Times),
• Baltimore Sues Wells Fargo for Subprimes (The Associated Press).

To view the lawsuit:

• see Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al. (8.76 MB) (available online courtesy of the Washington, D.C. law firm Relman & Dane, representing the City of Baltimore), or
• lawsuit also available here courtesy of Public Citizen's Consumer Law & Policy Blog, or
• go to this this direct link on the PACER system (approx. 11 MB - PACER registration required - 39 pages - $2.40).

For yesterday's post, see City Of Baltimore To Target Wells Fargo In Federal Race Bias Suit Alleging Discriminatory Predatory Lending.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

Countrywide Fabricated Documents In Consumer Bankruptcy Case, Says Court Transcript

The New York Times reports:

• The Countrywide Financial Corporation fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records show, raising new questions about the business practices of the giant mortgage lender at the center of the subprime mess. The documents — three letters from Countrywide addressed to the homeowner — claimed that the borrower owed the company $4,700 because of discrepancies in escrow deductions. Countrywide’s local counsel described the letters to the court as “recreated,” raising concern from the federal bankruptcy judge overseeing the case, Thomas P. Agresti. “These letters are a smoking gun that something is not right in Denmark,” Judge Agresti said in a Dec. 20 hearing in Pittsburgh.

***

• O. Max Gardner III, a lawyer in North Carolina who represents troubled borrowers, says that he routinely sees lenders pursue borrowers for additional money after their bankruptcies have been discharged and the courts have determined that the default has been cured and borrowers are current. Regarding the Hill matter, Mr. Gardner said: “The real problem in my mind when reading the transcript is that Countrywide’s lawyer could not explain how this happened.”

For more, see Lender Tells Judge It ‘Recreated’ Letters.

For additional documents in this case, see:

• Allegedly bogus letters from Countrywide,
• Transcript of Courtroom Exchange on the allegedly bogus Countrywide Letters.

Go here for other posts on the Countrywide matter in the Pittsburgh federal bankruptcy court.

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

Go here , go here , and go here for posts on questionable mortgage servicing practices.

For more on the alleged misconduct and sloppiness by lenders and servicers against homeowners in the context of consumer bankruptcy cases, go here to download Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter - University of Iowa - College of Law. questionable mortgage servicing practices tactics yak

More On Alleged Fraudulent Claims By Countrywide In Consumer Bankruptcy Cases

In South Florida, the South Florida Sun Sentinel reports:

• In December, U.S. Bankruptcy Judge Paul Hyman in West Palm Beach told Countrywide to turn over internal documents relating to how the company calculates its claims to the U.S. trustee, a Justice Department official who monitors bankruptcies. Countrywide is appealing Hyman's order. It's the second such case in Florida and part of a national investigation by bankruptcy trustees of lenders, including Countrywide, in at least three other states, Pennsylvania, Texas and Arizona. The trustees want to know if the lenders are making false claims against bankrupt homeowners or using questionable proof to make them pay. U.S. personal bankruptcies rose 40 percent last year, according to the National Bankruptcy Research Center.

• "As a general principle, if it is judicially determined that lenders are intentionally attempting to rip off their customers with false or fraudulent proofs of claim, that would have serious consequences for lenders," U.S. Bankruptcy Judge A Jay Cristol, who's presiding over a similar case in Miami, said Tuesday in an interview.

For more, see Countrywide accused of false claims (Bankruptcy rumors sink stock) (When link expires, try here for the same story).

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

Go here , go here , and go here for posts on questionable mortgage servicing practices.

For more on the alleged misconduct and sloppiness by lenders and servicers against homeowners in the context of consumer bankruptcy cases, go here to download Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter - University of Iowa - College of Law. questionable mortgage servicing practices tactics yak

Title Underwriters Fined $240K+; Incorrect Rates Used When Issuing Title Insurance To Homeowners

The Missouri Department of Insurance, Financial Institutions & Professional Regulation recently announced:

• The department announced [Jan. 3] that it is ordering two title insurance companies to pay over $240,000 in fines and to fix current title agency rating procedures. Market conduct examinations completed by the department indicate Land Title Insurance Company of St. Louis and First American Title Insurance Company, of California, allowed independent title agencies writing title insurance on their behalf to use incorrect risk rates or risk rates not filed with the department. Risk rates are used in calculating the premium a consumer will pay for the cost of title insurance.

For more, see Two title insurance companies ordered to pay over $240,000 in penalties (Action comes as new title insurance laws become effective).

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Regulator Reviewing Elderly Complaints Against Financial Advisors With Lofty Titles

The Wall Street Journal reports:

• The Financial Industry Regulatory Authority is starting to evaluate complaints by investors about brokers who hold any of three popular designations that imply expertise in working with seniors and retirees. Susan Merrill, the agency's enforcement chief, says her staff is evaluating the requirements behind the three most popular senior-related designations: Chartered Retirement Planning Counselor, Certified Senior Advisor and Chartered Advisor for Senior Living. The agency also is compiling the records of complaints against advisers who hold those designations, to see whether any patterns exist.

• Many of the more than 50 titles that imply expertise in advising seniors or retirees reflect training that shows advisers "how to sell to this market" rather than how to help clients, says Jean Setzfand, director of financial security for AARP, the Washington-based advocacy group for people 50 years old and older.

For more, see Title Check (The latest news from the world of financial planners) (2nd story from the top; may require subscription - if no subscription try here, then click link).

Go here , go here , and go here for other posts on elder financial abuse. xero

City Of Baltimore To Target Wells Fargo In Federal Race Bias Suit Alleging Discriminatory Predatory Lending

In Baltimore, Maryland, The Baltimore Sun reports:

• In a potentially groundbreaking lawsuit intended to stem foreclosures in Baltimore, Mayor Sheila Dixon's administration is suing a leading mortgage provider for what the city says has been a pattern of predatory lending in black neighborhoods. The lawsuit, which the Dixon administration plans to file today in U.S. District Court, alleges that California-based Wells Fargo Bank sold higher-interest subprime mortgages to blacks more frequently than to whites and that the practice, known as reverse redlining, violates federal housing law. Lenders are increasingly coming under legal attack from borrowers and investors stung by the subprime mortgage crisis, but Baltimore's lawsuit could be the first in the nation in which a city is attempting to recapture costs associated with foreclosed homes that wind up vacant.

***

• "They knew that the minority community was so desperate to get loans because they had been denied credit for so long," said John Relman, a partner at the Washington law firm Relman & Dane, which the city hired to help litigate the case. "They knew that people were so ready to say yes to anything that they went in there and charged them higher rates."

For more, see Lawsuit by city targets lender (Subprime mortgages unfairly marketed to blacks, it alleges).

See also:

• Baltimore Is Suing Bank Over Foreclosure Crisis (The New York Times),
• Baltimore lawsuit will accuse bank of predatory lending practices (The Associated Press),
• City sues Wells Fargo (Examiner.com).

To view the lawsuit, see Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al. (8.76 MB).

Representing the City Of Baltimore is the Washington, D.C. law firm Relman & Dane.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

"Bank Day" A Bad Day In Buffalo Housing Court For Foreclosing Banks Stuck With Blighted Homes

The cover story on a recent issue of BusinessWeek reports on what a few cities around the country are starting to do to hold giant lenders accountable for the blight being left behind by the foreclosure problem. The story begins as follows:

• On Dec. 17 in a windowless Buffalo courtroom, Cindy T. Cooper, a prosecutor for the city, buzzes among a dozen men in suits, cutting deals. "You've got to unboard [the house], go in, and clean it out," she tells one. "If all the repairs are done quickly, I wouldn't ask for any fines." To another, she says, "the gutters weren't done right," and asks to see receipts for the work. It's "Bank Day" in Judge Henry J. Nowak's housing courtroom, more typically a venue where landlords and tenants duke it out over evictions and back rent.

• Instead, Cooper is asking lawyers for CitiFinancial, JPMorgan Chase, and Countrywide Financial to fix problems like peeling paint, broken masonry, and overgrown or trash-filled yards at houses the city says the banks are responsible for maintaining. It may be surprising to find these financial-services giants hauled before this obscure local tribunal. In fact, Cooper and Nowak are at the forefront of a pioneering effort to deal with a vexing problem: the surging number of vacant and abandoned homes resulting from the mortgage market meltdown. The vacancies occur when lenders bring foreclosure suits against delinquent borrowers. Mere notice that such an action might be filed often sends residents packing. In Buffalo and other Rust Belt cities, the problem has been particularly acute, because in many cases banks are abandoning the houses, too, after determining that their value is so low that it's not worth laying claim to them. When city officials try to hold someone responsible for dilapidated properties, they often find the homeowner and bank pointing fingers at each other. Indeed, the houses fall into a kind of legal limbo that Cleveland housing attorney Kermit J. Lind calls "toxic title". While formal ownership remains with a borrower who has fled, the bank retains its lien on the property. That opens up a dispute over who is responsible for taxes and maintenance. Even when lenders do complete the foreclosure, they may walk away from the property, leaving it to be taken by a city for unpaid taxes, a process that can take years. Orphaned properties quickly fall into disrepair, the deterioration sometimes hastened by vandals who trash the interiors, lighting fires and ripping out wiring and pipes to sell for scrap. Squatters or drug dealers may move in.

For more, see Dirty Deeds (The mortgage crisis has blighted the landscape with boarded-up houses. Now a few cities are holding giant lenders accountable for what foreclosure leaves behind).

For a related post on a lender and a former homeowner "pointing fingers at each other" with regard to the responsibility for property maintenance on a foreclosed home, see Foreclosing Lender Fails To Record Title To Ohio Home, Leaving Former Owner On The Hook For Criminal Building Code Charges.

NYC Lawyer Suspended For Alleged Mismanagement Of Retired Judge's Estate

In Brooklyn, New York, the Brooklyn Daily Eagle reports:

• The allegations of fraud that have swirled around the handling of a retired judge’s once-vast real estate empire have finally taken solid form after a blockbuster decision by a Manhattan disciplinary committee leveled serious charges against a lawyer long at the center of the controversy. The attorney disciplinary body of the Appellate Division, First Department, recently rendered a decision condemning the handling of retired judge John Phillips’ assets by court-appointed attorney Emani P. Taylor. The former property guardian was charged with mismanagement of close to three-quarters of a million dollars in cash and real estate during her two-plus year tenure as property guardian. In the Dec. 27, 2007, decision by investigators looking into the case ordered Taylor, “be suspended from the practice of law, effective immediately.”

For more, see Disciplinary Committee Suspends Attorney (Retired Judge’s Former Property Guardian Charged With Improper Handling of Estate Funds).

See also, Judge’s Guardian Suspended For Handling Of Money (North Country Gazette).

For the New York Appellate Court ruling on this case, see In the Matter of Emani P. Taylor, (Supreme Court Appellate Division, 1st Department, December 27, 2007).

For an earlier post on this story, see Retired NY Judge Reportedly Left Homeless & Broke By Guardianship Process.

Go here for other posts on the escapades of public administrators' / public guardians' offices when taking over the assets of the dead and incapacitated. daily eagle retired judge

Insurance Cash Motive For Torching Omaha Home In Foreclosure, Says Investigator

Years ago, homeowners who dutifully made their home mortgage payments until the loan was fully paid would engage in a ritual konwn as "burning the mortgage" whereby, upon receiving their mortgage papers back from the bank (yes, in the old days and unlike today, the bank would actually return that (negotiable) promissory note that you signed at the mortgage closing years earlier after it was fully paid), the homeowner would burn the loan papers as a symbol that the mortgage obligation no longer existed.

In recent times, however, some financially strapped homeowners are increasingly engaging in a slightly different ritual; rather than paying off the home mortgage and torching the papers, they're torching the home and letting the insurance company pay off the mortgage. The following excerpts from the Omaha World-Herald describe one homeowner suspected of doing same:

• Arson charges were filed Friday in Omaha against the owner of a Rockbrook neighborhood home that was badly damaged by fire in November. Brad T. Cox, 27, is accused of having a friend, 29-year-old Joseph Smith, start the fire at Cox's house, [...] . The alleged motive: insurance fraud. A big clue: Some of Cox's furniture ended up in Smith's home, [...] , investigators say. The Nov. 10 blaze caused an estimated $240,000 damage to Cox's house, according to its insurer, Travelers Insurance, said Capt. John Glesinger, an Omaha Fire Department investigator. At the time of the fire, the house was going into foreclosure, Glesinger said. "Our allegation is that Mr. Cox wanted to have the house burned to collect insurance money on it," Glesinger said. Cox is accused of persuading Smith to start the fire. "This was done while Mr. Cox was out of town to make sure the shadow of suspicion would not be cast upon him," Glesinger said.

For more, see Owner, friend face arson charges in Omaha house fire.

For other stories on fires & foreclosures, go here and go here. foreclosure arson yak

Clients Sue Financial Firm For Losses In Mortgage-Backed Junk; May Be Part Of "First Wave" Of Subprime Litigation

The New York Times reports:

• The State Street Corporation, which manages $2 trillion for pension funds and other institutions, ousted a senior executive on Thursday and said it would set aside $618 million to cover legal claims stemming from investments tied to mortgage securities. State Street made the announcement after five clients sued it, claiming they had lost tens of millions of dollars in State Street funds that they were told would be largely invested in risk-free debt like Treasuries. One fund lost 28 percent of its value during the credit troubles in the summer after placing big bets on mortgage-related securities, according to the lawsuits.

***

• Last month, a town in Australia sued a unit of Lehman Brothers for selling it collateralized debt obligations that lost 84 percent of their value, a charge refuted by the firm. In Norway, Terra Securities filed for bankruptcy protection in November after regulators revoked its license for selling risky American securities to a cluster of towns near the Arctic Circle. “This is the first wave of these securities fraud suits,” said Gregory J. Hindy, a securities lawyer and partner at McCarter & English in Newark. “There could be many, many more.”

For more, see State Street Corp. Is Sued Over Pension Fund Losses.

For a related story, see Tort Lawsuits Soar Over Subprime Lending (The New York Sun).

The Boston Globe On NACA CEO Bruce Marks

The Boston Globe recently ran a story on their 2007 Bostonian of the Year, consumer advocate / housing activist Bruce Marks, the founder and chief executive officer of the nonprofit Neighborhood Assistance Corporation of America, or NACA. The following excerpts provide a prelude for the rest of the story:

• [I]f you should find yourself up against one of the nation's most powerful banks, feeling abused by a maddening loop of automated messages, threatening letters, and buck-passing paper pushers, if you should feel powerless to reassure your little daughter when she tearfully asks you if you're going to lose the only home she's ever known, well then, there's nobody you'd want in your corner more than Bruce Marks. And sadly, a whole lot of desperate people had to turn to Marks for help this year, and a whole lot more will need his emergency services in the year ahead.

One veteran banking executive describes Marks as follows:

• "It's almost as if Bruce has two personalities. There's the advocate and bomb thrower, which has made many people in banking wary of him. But behind that, there's this incredibly effective, disciplined businessperson."

For more, see Guarding the House (Wall Street made billions off the backs of homeowners. But when the mortgage crisis blew up, a pit bull named Bruce Marks stood up for the Average Joes and, incredibly, got some of the biggest banks to bend).

HUD Settles Case With Six Home Builders In Alleged Scheme To Hide Title Insurance Kickbacks

HUD allegations of violations of Federal law by six major homebuilders involving hidden title insurance kickbacks, referral fees, etc. allegedly received by them were settled by the parties, according to the following excerpt from a 10-29-07 HUD press release:

• The U.S. Department of Housing and Urban Development [...] announced separate settlement agreements with six major homebuilders that engaged in complex business arrangements involving captive title reinsurance. The agreements announced [...] stem from alleged violations of The Real Estate Settlement Procedures Act (RESPA) and total nearly $1.4 million. [...] “There’s no legitimate purpose for captive title reinsurance when it comes to single-family homes,” said Brian D. Montgomery, HUD Assistant Secretary for Housing and Federal Housing Commissioner. “It’s increasingly clear to us that these complicated business arrangements serve no other purpose than to hide referral fees and kickbacks which are expressly forbidden by law.” [...] In HUD’s view, any captive title reinsurance arrangements in which payments are not bona fide and exceed the value of the reinsurance are a violation of RESPA.

The six builders targeted by HUD in this enforcement action were: Pulte Homes, Inc., KB Home, Beazer Homes USA, Inc., Meritage Homes Corp. and affiliates, The Ryland Group, Inc., and Technical Olympic USA, Inc. (TOUSA Homes), along with their captive title reinsurance companies.

For more, see HUD Announces Six Settlement Agreements With Builders Involved In Captive Title Reinsurance Arrangements (Nearly $1.4 million in settlements the result of Department’s enforcement effort).

For links to the six separate 10-29-07 settlement agreements, as well as RESPA settlement agreements resulting from enforcement actions by HUD against other alleged RESPA violators, see RESPA Settlement Agreements, on the HUD website.

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Santa Clara DA Obtains Indictment In Alleged Foreclosure Rescue, Refinance Scam

In Santa Clara County, California, the Silicon Valley / San Jose Business Journal reports:

• In one of the first criminal cases in the Silicon Valley stemming from the subprime scandal, the [Santa Clara] district attorney obtained indictments against a Realtor and a broker with the now-defunct Su Casa/Century 21 office [...] . Charged are Realtor Alberto Parra and mortgage broker Oscar Nuñez, who set up [an] alleged scam that snared [homeowner Boris] Michel and his family, according to the indictment in Santa Clara County Superior Court. Parra and Nuñez have pleaded not guilty.

***

• Prosecutors call the Su Casa case a co-signer scam. According to the district attorney, [... t]rouble began [...] when [Michel] lost his warehouse job at Lifescan, when the company transferred positions to Japan. His mother and sister also worked there and lost their jobs. Parra had also worked at Lifescan, but left before the layoffs to become a real estate broker. Michel's mother contacted him. According to court documents, Parra arranged a $16,000 short-term loan to Michel and then, later, a refinance.

• But this was not your usual refinance. Since Michel had missed some payments, he was no longer credit worthy. [Assistant district attorney Stephen] Gibbons says Parra arranged for a co-signer. Michel claims that he was not aware that the deed of trust would be in the name of the co-signer, and that he could lose his home. Nuñez was the mortgage broker on the deal. The grant deed Michel signed was a blank document, investigators say. The name entered on the deed was not Michel but [a straw buyer], who was paid $3,500 for the use of his name, the case file says.

• In April 2004, the Michels received a good clue that something was wrong: the loan servicing statement they received was addressed to [the straw buyer]. According to the investigation report, Parra told the Michels not to worry about that, but to just make the payments. On July 21, 2004, they were served with a notice of eviction.

For the story, see Santa Clara district attorney targets subprime loan scandal.

Three Lenders Belted For $100+ Million In Class Action Damages For Clipping Missouri Homeowners For Illegal Fees On 2nd Mortgages

(originally posted 1-5-08)
In Jackson County, Missouri, The Kansas City Star reports:

• A Jackson County jury Friday ordered three mortgage lenders to pay $99 million in punitive damages to Missouri residents who claimed they were charged illegal fees for second mortgages. The jury, which had assessed $5.1 million in actual damages against the three companies earlier in the day, reconvened in the afternoon and handed down the punitive damage awards. Collectively, the awards are among the highest assessed by a Jackson County jury in recent years in a commercial case.

• The mortgage companies — Residential Funding Co. LLC, Household Finance Corp. III and Wachovia Equity Servicing LLC — bought second mortgage loans from a lender that had charged excessive interest and illegal origination, loan discount, underwriting, processing, document preparation and legal fees under Missouri’s Second Mortgage Loan Act [sections 408.231 to 408.241, RSMo.]. The plaintiffs claimed that the companies knew of the lender’s fraudulent conduct and “stepped into its shoes.”

***

• The originating lender, Mortgage Capital Resource Corp. of California, is no longer in business. Its former chief executive, Kenneth C. Ketner of Newport Beach, Calif., was sentenced last year to 57 months in prison for mortgage fraud and ordered to repay banks he swindled $9.27 million.

• Hit hardest by Friday’s jury’s verdict was Residential Funding, which is owned by GMAC Mortgage Group and was ordered to pay $4.33 million in actual damages and $92 million in punitive damages.

***

• The case is one of several pending in Jackson County against mortgage companies that allegedly violated Missouri’s Second Mortgage Loan Act. About 10 months ago, one of the suits, against Memphis, Tenn.-based First Horizon National Corp., resulted in a $36.3 million settlement. The settlement covered the claims of more than 4,000 homeowners who obtained second-mortgage loans from First Horizon and Kansas City-based McGuire Mortgage Co. between Nov. 16, 1994, and April 13, 2005.

For more, see Mortgage lenders ordered to pay $99 million in punitive damages.

Ohio Court Rulings Frighten Away Federal Court Foreclosure Filings

In Ohio, the Cleveland Plain Dealer reported late last month:

• A Cleveland federal court ruling that has the potential to block foreclosures across the country looks as if it is already doing that in the court where the decision was written. And the bandwagon may be just starting to roll. The federal court averaged 100 new cases a month before judges recently started insisting that banks provide up front a document giving them authority to collect loans made by other lenders and held by investors. As of Friday, the number of new filings in December was two. Foreclosures are rare in federal courts but zoomed in Cleveland's in the last two years as banks seized a quicker alternative to a clogged Cuyahoga County system. Foreclosures are mounting nationwide, and filing could get tougher throughout the country if state courts adopt the federal ruling.

For more, see Federal court ruling stems foreclosure cases (Case dismissals slow banks' filings).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

NYC Federal Judge Halts Eviction Of Low Income Tenants In HUD-Owned, Mortgage Fraud Affected Buildings

In New York City, The New York Sun reports:

• A plan by the federal government to sell thousands of subsidized housing units in New York to private developers has suffered a setback, after a federal judge ruled Thursday that tenants facing eviction had been denied any explanation or opportunity to challenge their removal. At issue are eviction notices from the Department of Housing and Urban Development ["HUD"] to residents living in low-incoming housing, mostly in Harlem and the Bedford-Stuyvesant section of Brooklyn. A judge in Brooklyn, Frederic Block of U.S. District Court, said the notices violate the Constitution's guarantee of due process by failing to explain the reason for the evictions. Additionally HUD the agency must provide tenants with an avenue to contest them, Judge Block found.

The federal government ended up stuck with the buildings following large-scale mortgage fraud by real estate operators who obtained HUD-insured mortgages secured by the buildings, and then stiffed the lenders out of their mortgage payments, abandoning the buildings and allowing them to fall into foreclosure For more, see HUD Suffers Setback in Plan To Sell N.Y. Properties.

Landlord, Justice Dept. Settle Discrimination Complaints; Allegations Include Tenant Lease Terminations Based On National Origin

From The U.S. Department of Justice:

• The Justice Department [Friday] announced that it has reached an agreement resolving a housing discrimination lawsuit against Gary Luke, Mary Ngo and Hoa Ngo concerning alleged discrimination on the basis of national origin. Under the consent decree filed [Friday] in federal court in Santa Ana, Calif., the defendants will pay $270,844 in monetary relief to the complainants and the United States. The Department’s amended complaint alleges that the defendants terminated the leases of Hispanic tenants to replace them with Vietnamese tenants, misrepresented the availability of units to non-Vietnamese prospective tenants, and made statements in connection with the rental of apartment units that expressed a preference, limitation, or discrimination based on national origin.

***

• In addition to $174,000 in damages to be paid to the aggrieved tenants, the landlord agreed to pay the following amounts: (1) $59,344 for legal fees and expenses to the tenants' attorneys; (2) $30,000 in civil penalties to the United States; and (3) $7,500 in damages to an aggrieved individual.

For more, see Justice Department Settles Housing Discrimination Case with Orange County, California, Landlords.

For copy of lawsuit, see Complaint - U.S. v. Luke, et al.

Missouri Apartment Manager Settles HUD Housing Discrimination Charges Of Making Eviction Threats To Families With Children

From the Department of Housing and Urban Development:

• The U.S. Department of Housing and Urban Development [last month] announced a $170,000 settlement with managers of a St. Louis apartment complex for alleged violations of the Fair Housing Act. Seven families claimed the managers of the Ridge Crest Apartments subjected them to stricter community rules than residents without children and/or retaliated against them for exercising their fair housing rights. [...] Management at Ridge Crest Apartments routinely threatened tenants with eviction for allowing their children to play outside unsupervised and at least one tenant was unlawfully evicted.

***

• Under the [HUD] settlement agreement, Ridge Crest's management will pay $83,000 to the seven families and establish a $15,000 fund for any additional victims. The property will also spend $72,000 over the next two years to create an after-school program for children who live at the complex.

The apartment management applied their policy on unsupervised children to anyone under 18 years of age, according to the HUD press release. For more, see HUD Settles Discrimination Complaints Against Managers Of St. Louis Apartment Complex.

The HUD Housing Discrimination Complaint Form is available for download. For more on housing discrimination from HUD, see Fair Housing--It's Your Right, on the HUD website. Complaints must be filed within one year after an alleged violation.

California Man Facing Federal Felony Charges In Alleged Scam Promoting Sale Of Lists Of Foreclosed Homes

The Des Moines Register reports:

• A California man who authorities say stole $560,000 from more than 100 newspapers and their readers has dropped plans for a guilty plea after federal prosecutors moved to put him in prison for nearly seven years. Mark Allen Davis allegedly used bogus newspaper ads - eight were placed in The Des Moines Register between September 2004 and January 2007 - to raid the bank accounts of 998 people across the country.

***

• Federal prosecutors say Davis used his Tiburon, Calif., home to run a scheme focused on the resale of foreclosed properties. Documents say people who called a toll-free telephone number in newspaper ads would be promised a list of government-foreclosed properties in their area. Instead, a federal indictment charges, Davis used bank information provided by the callers to raid their accounts for between $126 to $189 per person.

Reportedly, documents say the scheme ultimately cost 998 individuals about $236,000, while the newspapers were stiffed to the tune of about $248,000 (including $3,700+ owed to The Des Moines Register) when Davis paid for 700+ ads with rubber checks. Abandoned accounts with negative balances allegedly controlled by Davis accounted for an additional loss of about $83,000 to a half dozen banks.

For more, see Mail fraud suspect rejects plea deal.