Saturday, February 28, 2009

3,000 Mobile Home Park Residents Get The Boot As Landowner Decides To Put 20 Acre Property To New Use

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • One of the town's largest mobile home parks is set to close today, forcing hundreds from their homes. Sonja Borrero is just one of them. But her plight, chronicled in the Sun Sentinel on Thursday, touched the hearts of more than two dozen strangers. Through e-mails and calls to the paper, they offered Borrero money and a place to stay.

***

  • On Friday, Borrero was one of about 100 people remaining at Palma Nova. The 940-unit park lost the majority of its 3,000 tenants after eviction notices arrived in August telling them to move out by Feb. 28. A hearing on Friday requested by Legal Aid Service of Broward County failed to halt the eviction. Park owner Austin Forman has not revealed his plans for the 20-acre parcel.

For more, see Davie mobile home park resident's plight tugs at heartstrings (Saturday is deadline to move, Public responds to evicted Palma Nova resident).

State AG Reminds Servicemembers That Upfront Fees For Foreclosure Rescue, Debt Reduction Programs Are Illegal In NC

From Pope Air Force Base, North Carolina, The Fayetteville Observer reports:
  • North Carolina’s attorney general [last week] cautioned military personnel about scams. [... North Carolina Attorney General Roy] Cooper spoke to an audience of commanders, senior noncommissioned officers and airmen at the Military Saves Week Kickoff at the Pope Airmen and Family Readiness Center.

***

  • Companies prey on people by offering to help them fight foreclosure and getting money up front. “They write a perfunctory letter to the lender, and they may do something just to show they are doing something, but they really aren’t doing anything,” he said.

  • These kinds of scam artists are the reason that we passed a law in North Carolina that it is illegal for you to charge money up front to help with foreclosure,” he said. "It is also illegal to charge money up front to get people out of debt.”

For more, see N.C. atttorney general warns of scams.

NYC Lawmakers Move To Toughen Regs On Debt Scavengers Buying Up, Filing Lawsuits To Collect "Zombie Debt"

In New York City, the New York Post reports:
  • The city moved yesterday to toughen regulations against collection agencies, 17 months after a study found debt-ridden New Yorkers are losing judgments worth $800 million each year because they're not showing up for court hearings. Councilman Dan Garodnick (D-Manhattan) said unscrupulous agencies are gobbling up consumer debts for pennies on the dollar to pursue debtors without regard to the law and, perhaps, without serving notices of lawsuits ["sewer service"]. "We've even heard of cases where debt collectors would threaten to have residents deported," he said.

For more, see TARGETING DEBT CHEATS.

Go here for other posts on zombie debt. zeta SewerServiceAlpha

Law Students To Staff Jacksonville Legal Clinic Representing Low Income Tenants Facing Eviction

In Jacksonville, Florida, the Jacksonville Business Review reports:
  • Florida Coastal School of Law recently launched a new housing rights legal clinic so students can work with low-income families facing housing-related legal problems. The clients are tenants who could be facing eviction and whose household income falls within the federal poverty guidelines. The clinic offers the service free to people who qualify and in conjunction with Jacksonville Area Legal Aid.

  • Most of these people are in between an emergency and living on the street,” said Professor Lois Ragsdale, who oversees the clinic at Florida Coastal. [...] The clinic focuses on landlord-tenant cases in Duval County ranging from security deposit issues up to evictions.

For more, see Florida Coastal School Law program fights evictions.

Law Students, Others To Staff California Statewide Hotline Established For Tenants In Foreclosure Situations

California Chronicle reports:
  • Tenants Together, California's Statewide Organization for Renters' Rights, is launching a new hotline for tenants in foreclosure situations. The hotline is the first of its kind to emerge in response to the foreclosure crisis.(1) Tenants Together announced the hotline to address a growing problem – the harassment and displacement of tenants who are innocent victims of the mortgage crisis.(2) California tenants can reach the Tenant Foreclosure Hotline at 415.495.8012.

***

  • While foreclosures extinguish most leases, tenants in California are generally entitled to a 60-day notice to vacate in foreclosure situations. The 60-day notice requirement became law in July 2008, but many owners still do not comply with it. In cities with local "just cause" eviction protections, such as Los Angeles, Santa Monica, Oakland and San Francisco, most tenants are not legally required to move as a result of a foreclosure, but many owners ignore this limitation and seek to evict anyway.

For more, see Statewide Organization Launches Foreclosure Hotline -- for Tenants.

(1) Reportedly, the hotline will provide information and referrals to tenants whose landlords are at some stage of the foreclosure process. The hotline is staffed by specially-trained volunteers, including a team of law students from University of California Hastings College of the Law.

(2) Among the nightmare situations being faced by tenants in real estate in foreclosure are: being locked out of their homes, having utilities shut off because the defaulting landlord or the bank fails to pay the bills, being displaced without getting their security deposits back, being misled by banks and realtors into believing that they must vacate immediately upon foreclosure or that because of the foreclosure the landlord has no responsibility to continue providing heat, water and other services to the tenants, and other related problems, according to the story. SkimmingKappaRent

San Francisco Bans Utilities Shutoffs In Single-Meter Buildings Facing Foreclosure Thru 2010

In San Francisco, California, KCBS Radio 740 AM reports:
  • The City of San Francisco has taken action to prevent apartment tenants from losing gas, electricity and water service if the landlords don't pay the bills. The declaration, issued by the city attorney and the SF Department of Building Inspection, applies to apartment buildings that face foreclosure. City Attorney Dennis Herrera says there have been cases where the landlord has simply stopped paying the bills leaving the tenants high and dry without heat, lights or water.

  • Utilities in those buildings will not be allowed to be shut off from now until December 31st, 2010,” said Herrera. This declaration of a health and safety hazard only applies to multiple units where a single meter controls the delivery of utilities.

For the story, see SF Tenants Protected if Landlord Fails to Pay the Bills. SkimmingKappaRent

Fake NY Lawyer Cops Plea To Swindling Two Out Of $200K In Home Sale Proceeds; Failure To Pay Existing Mortgage Leads To Foreclosure Notice

In New York City, the Staten Island Advance reports:
  • A West Brighton man who bilked his girlfriend's family and an acquaintance of almost $200,000 by pretending to be a lawyer now faces real consequences: Up to eight years in prison. Renauld A. Gregg, 29, pleaded guilty yesterday in state Supreme Court, St. George, to three felony counts of grand larceny stemming from two separate incidents.

  • Gregg was charged in July with swindling $156,877 from an acquaintance by keeping the proceeds from the sale of her Stapleton home. [...] He was successful with the sale in 2007, police say, but didn't use the cash to pay off Ms. White's mortgage, instead keeping it for himself, prosecutors said. Ms. White discovered her home had been sold when she received a notice of foreclosure, said William J. Smith, spokesman for District Attorney Daniel Donovan. The lender stopped foreclosure proceedings after learning Ms. White had been victimized.

  • Gregg also persuaded his girlfriend and her family to let him represent them in a real-estate deal on May 23 of last year. [...] He bilked the unwitting victims of $31,100, then wired his ill-gotten gains to the Borgata Casino in Atlantic City to pay off gambling debts, prosecutors said.

For more, see Man who pretended to be lawyer faces up to 8 years in prison (West Brighton resident bilked his girlfriend's family and an acquaintance of almost $200,000).

NY Man Cops Plea To Using The Internet To Sell Homes He Didn't Own

In Lockport, New York, The Buffalo News reports:
  • Real estate scammer Joseph S. Furan pleaded guilty today to selling two Niagara Falls houses he did not actually own to an Englishman over the Internet. Furan, 40, of Lockport Road, Niagara Falls, pleaded guilty to third-degree grand larceny [...]. Furan sold an English investor two houses in February 2007: one [...] for $19,000 and one [...] for $32,000.

***

  • "This con artist masqueraded as a legitimate real estate entrepreneur who lured victims into costly scams by selling properties he did not even own," Attorney General Andrew M. Cuomo said in a written statement. "As the entire country deals with continuing economic woes and a faltering housing market, my office will continue to pursue criminals like this who jeopardize investment in New York State."

For the story, see Real estate scammer admits to selling houses he didn't own.

Go here for earlier posts on the NY AG's pursuit of Joseph Furan.

Foreclosure Ghost Towns

The following stories describe the kind of mess vacant foreclosed homes and condos are creating in the neighborhoods in which they're located:
  • Fort Lauderdale, Florida: [Developer Glenn] Wright has left a trail of lawsuits, unhappy contractors, angry would-be homeowners and unfinished building sites. His development companies are in the red for more than $100 million, according to Blair International, the company that now holds Wright's properties. [...] Over the past 10 months, 34 lawsuits have been filed in Broward County courts against Wright and his companies, chiefly Glenn Wright Construction & Development. Not only are homebuyers unhappy; at least eight contractors or subcontractors have sued Wright. And his grandest project, La Preserve, is in limbo. Off Southwest 20th Street and 14th Avenue, it was envisioned as an idyllic gated community of upscale homes, surrounded by footbridges, gazebos and the lush greenery of old Florida. Homes there sold for as much as $1 million. Today, 39 of the 67 properties in La Preserve are in foreclosure. Some were never finished. Other homes were built but sit empty. [...] The unfinished houses in Victoria Park have become magnets for the homeless, [president of the Victoria Park Civic Association Jay] Holloway said. Condoms and beer cans have been found littering the sites, he said. See Unfinished business: High-end home builder in Fort Lauderdale sued, properties in foreclosure (High-end builder in Lauderdale sued, properties in foreclosure).

  • Chicago, Illinois: The children who live on West Wilcox Street won't go out at night for fear of 12 vacant graystones that draw criminals to their block. In Rogers Park, a half-empty 39-unit condo building on Farwell Avenue has become a hide-out for squatters and feral cats. Two streets that have little in common—Wilcox on the West Side and Farwell on the North— illustrate the latest chapter of the housing crisis: a surge in vacant homes that is sinking property values and blighting swaths of the city. As foreclosures soar to historic levels, the infection has spread beyond places of perennial concern, such as West Garfield Park and Englewood. Condo ghost towns replete with granite and stainless steel have emerged on stretches of the North Side, leaving a pox of hollow buildings dotting the landscape. [... In Humbolt Park], gangs often take over abandoned homes, peeling back the bowed plywood from the windows to store drugs and set up shop, residents say. [...] In Chicago Lawn, hardly a block has been spared. People are walking away from homes they can neither sell nor afford. See Foreclosures spur neighborhood ghost towns (Chicago beset with a staggering number of vacant homes).

  • East Cleveland, Ohio: Residents of one Cleveland suburb said enough is enough. They are tired of seeing abandoned homes on every corner, and they are taking action. East Cleveland has more than 2,200 empty homes -- that's 20 percent of the city. It has one of the highest foreclosure rates in the state, NewsChannel5 reported. See Residents Want Abandoned Homes Torn Down.

  • New York City: When the Oro Condominiums building in Downtown Brooklyn was still under construction in 2007, the Brooklyn Paper branded it as a "deluxe singles bar in the sky." Now, though, the glitter has apparently faded. On a recent winter night, only a smattering of light emanated from the otherwise eerily dark (though now completed) 40-story luxury tower on 306 Gold Street, not far from the Manhattan Bridge. A hip-looking young woman entering the building, who identified herself as an owner of one of the 300 homes but who preferred to remain anonymous, said the building "feels empty." See Confronting the Condo Glut.

Go here, Go here, Go here, Go here, and Go here for posts on vacant homes leaving their mark on neighborhoods. BetaVacantForeclosure

Friday, February 27, 2009

Foreclosure Public Notice Lists Incorrect Address; Crowd Flocks To Wrong Home

In Rockett, Texas, WFAA-TV reports:
  • In one Ellis County community, a small mistake has left Larry Bivins with a big concern. "I didn't believe they could make that big of a mistake,” the homeowner said of the mistake that has turned into a big hassle. “And then, when I tried to get it corrected, they wouldn't correct it." For a week now, people have stopped in front of Bivins' house to look at his property.

***

  • But on the courthouse steps in Waxahachie, official notices list Bivins' home as up for auction next Tuesday. The problem is that it's the wrong owner listed on the document. While it's not Bivins’ legal property description, it is clearly his address, [...] that now attracts potential buyers who don't know they're looking at the wrong house.

For more, see Oops! Foreclosure auction advertised at wrong house.

Go here for other posts on lender screw ups. ForeclosureLockOuts

NCLC Report: Antiquated State Laws Harm Homeowners, Fuel Foreclosure Crisis

From the National Consumer Law Center:
  • While many states have taken steps in recent years to strengthen the rights of renters, only a handful of states have updated their home foreclosure laws, which are now "tilted against homeowners" and acting as a little-understood factor that is helping to accelerate the U.S. home foreclosure crisis, according to a major new report by the National Consumer Law Center (NCLC). Based on a survey of existing state laws, the NCLC report identifies some of the most antiquated state law provisions, including "fast track" foreclosures without any court oversight in 30 states and no requirement of direct notification to homeowners in 33 states upon the initiation of foreclosure proceedings.

For the report, see Foreclosing A Dream: State Laws Deprive Homeowners of Basic Protections.

Go here for the entire NCLC press release.

Thanks to Scott Stapf at The Hastings Group, LLC in Arlington, Virginia for the heads up on the report.

Watch Out For Masquerading "Non-Profit" Organizations Promoting "HOPE"

In Washington, Connecticut, the Hartford Courant's CT Watchdog blog posts this letter from a reader:
  • I recieved a letter from H.O.P.E (Homeownership Protection Education Alliance INC). I called the number and talked to a Gentleman [...]. He started off by telling me they are a non profit agency that helps homeowners trying to keep there [sic] homes from foreclosure. I became suspicious after he told me they could help me but it would require a $1900.00 donation. Then he asked for my social security number and banking information. I did not give him the information, I told him I would call him back.

For more, see Washington residents figures out H.O.P.E. spells SCAM.

Postscript:

The Connecticut Attorney General announced this week an investigation into the activities of a firm called H.O.P.E Alliance in response to consumer complaints against it alleging phony offers of loan modification, foreclosure rescue help while masquerading as a legitimate non-profit organization. See Blumenthal, Courtney Warn About Harmful Mortgage Rescue Deals Hitting Connecticut.

CNBC's "Power Lunch" Interviews Florida Legal Aid Attorney On Lenders' Failure To Prove Ownership Of Mortgage Loans In Foreclosure Actions

CNBC's program Power Lunch yesterday featured an interview with Florida attorney April Charney with Jacksonville Area Legal Aid on the inability of many lenders to produce proof that they actually own the promissory note they are trying to enforce through foreclosure.

For the interview (about 5 minutes), see Foreclosure Loophole. ThetaMissingDocsMtg

State AG Gets Temporary Injunction Against Central Florida Loan Modification Firm; Company Banned From Continuing To Pocket Upfront Fees

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [Monday] announced that his office has obtained a court order temporarily prohibiting an Orlando loan modification company from charging up-front fees to homeowners for loan modification services. According to the order issued by the Orange County Circuit Court, FMA Servicing, Inc. is barred from charging homeowners any fee in advance of providing loan modification services. FMA Servicing must comply with written notice requirements contained in the Foreclosure Rescue Fraud Prevention Act.

For the rest of the Florida AG's press release, see Court Grants Request to Temporarily Stop Loan Modification Company's Up-Front Fees.

For the lawsuit filed earlier this month, see State of Florida v. FMA Servicing, Inc., et al.

Homeowner Facing Foreclosure Gets Help From WV AG In Cleaning Up Mess Left By Loan Modification Firm; Tells Story To Congress

In Charleston, West Virginia, West Virginia Public Broadcasting reports:
  • Nancy Dix of Ansted, 67, [testified] before Congress about how she almost lost her home to predatory lenders. She says she came close to being homeless.

***

  • [A] Houston-based business called Mortgage Rescue said they could stop the foreclosure – if she sent them $921. “They said if I sent them $921, they would take the loan over and get the payments lower on me. Well, they didn’t. And I lost $921. Because I never did hear from them again.”

  • Dix contacted state Attorney General Darrell McGraw’s office, who forwarded her to lawyer Bren Pomponio with Mountain State Justice. They helped her keep her home. Now, she’s [testified] before the Senate Commerce Committee and its new chairman, Senator Jay Rockefeller.

For the story, see Predatory lending victim speaks to Congress.

See also, The Charleston Gazette: W.Va. woman to testify before Jay's panel (Focus will be on consumer foreclosure scams).

For the Senate proceedings, see Consumer Protection and the Credit Crisis.

Foreclosure Rescue, Debt Reduction Complaints Bombard Florida AG's Office; Frantic Callers Jam State Scam Hotline

Buried in a recent Miami Herald article on a Florida loan modification firm currently being sued by the state attorney general is this blurb:
  • In the past two weeks, the Florida attorney general's office fielded 108 complaints from possible victims of foreclosure rescue schemes.

Go here for information on filing a consumer complaint with the Florida Attorney General's Office.

Source: Home 'saviors' can make a mortgage mess (Sometimes a firm that promises to help modify your delinquent loan can make matters far worse).

*************

In Panama City Beach, Florida,WJHG-TV Channel 7 reports:

  • Calls from people who have been scammed by companies offering to help lower debt or save their home have more than doubled to one state hotline. Call center operators are having a hard time keeping up with the call volume.

***

  • Calls here used to average 300 a week, but have been rising steadily. Two days this week they hit 650. Many are about foreclosures, debt loads and worries about companies claiming they can help. Call Supervisor Jack Hagadorn says a new state law says the companies can no longer ask for money up front, but many still do.

  • We’re getting calls from consumers who are being charged, 1200, 1800, 2000 dollars for companies who are claiming they are going to modify the loan with a lender. But when they find out later on that the company has never contacted the lender, and they are now in foreclosure.”

***

  • The call volume at the hot line is so high, some callers are being asked to leave a message or go to a web site. If you have a complaint, the number to call is 1-866-966-7226. The web site is myfloridalegal.com.

For the story, see Attorney General’s Hotline Swamped with Scams.

Legal Aid Stops Illegal Foreclosure Eviction, Recovers $1,400 For Los Angeles Couple

A recent Los Angeles Times op-ed piece calling for the right to counsel for the indigent in civil cases recounts this anecdote on a tenant/couple's experience with a scammer when faced with an illegal foreclosure eviction, and their good fortune when a local, non-profit legal aid office took their case:
  • Maria de Leon and her husband, Jesus Batista, were on the verge of homelessness when they arrived at the nonprofit Inner City Law Center on skid row. They'd always paid their rent on time and never complained to their landlord, even as conditions in their unit deteriorated. But then their landlord fell into foreclosure and the bank holding the mortgage attempted -- illegally -- to evict the family. A man who had promised to help with the eviction disappeared with $1,400 of the couple's money. Despite their woes, the De Leon-Batista family was lucky. The Inner City Law Center took on their case, stopped the illegal eviction and got the family's money back from the scammer.

For the op-ed column, see Rescuing legal aid (As more and more Americans unnecessarily lose homes and jobs to well-funded opponents, it's time we move toward recognizing a right to counsel in civil cases).

Thursday, February 26, 2009

Senate Committee Hearings On Foreclosure Rescue, Debt Management, Credit Counseling Scams

The Senate Committee on Commerce, Science, and Transportation held a full committee hearing on Consumer Protection and the Credit Crisis and enforcement against fraudulent credit repair schemes under the Credit Repair Organization Act (CROA).

The Committee examined consumer protection in credit counseling, debt management, and foreclosure rescue programs and fraud. The Committee also examined oversight of the federal authorities, protecting distressed consumers from mortgage fraud scams, and steering families away from these fraudulent schemes toward a path of financial stability.

To watch the proceedings, see Consumer Protection and the Credit Crisis (fast forwarding the video by about 10 minutes may be required).

Foreclosure Rescue Leaves Former Homeowner On The Hook For Unpaid Mortgage

In Johnston County, North Carolina, MyNC.com reports on the experience of a local homeowner facing foreclosure with a local foreclosure rescue operator:
  • Karen Harms lives in Johnston County. She lost a job months ago, and got behind on her house payments. [...] Then, one day, she got a post card in the mail. The company offered to buy her house, and take care of the debt, so she took them up on their offer.

  • She moved out, and hoped to begin a new chapter on her life, but Harms' decision to do business with Four Oaks-based Sunshine Properties began a new set of worries. "Come to find out, [the house] was [still] in my name," she said. "The insurance is in my name, and someone else lives in the house."

For more, see Housing Scams Target Foreclosure Victims.

Senate Commerce Committee Hearing On Loan Modification, Foreclosure Rescue, Debt Reduction Scams To Be Held Today

In Charleston, West Virginia, The Charleston Gazette reports:
  • [T]oday in Washington, [Senator Jay] Rockefeller, D-W.Va., is devoting his first full hearing as the new chairman of the Senate Commerce Committee to [debt-related, consumer] scams. He plans to introduce legislation to stop a rising tide of con artists who are preying on people in economic distress.

***

  • The hearing will focus on three rapidly growing consumer scams: scammers who promise to stop foreclosures, con artists who promise to fix credit ratings, and phony credit counselors who say they will negotiate with creditors and lower the fees and amount owed.

For the story, see W.Va. woman to testify before Jay's panel (Focus will be on consumer foreclosure scams).

Milwaukee Legal Aid Exposes $600K+ "Sewer Service" Racket By Local Landlord

From the website of the Legal Aid Society Of Milwaukee:
  • An African American couple came to the Legal Aid Society with a $5,100 judgment against them. They stated that they had never received notice of the case. Attorney Colleen A. Foley launched an investigation. She found out that the lender, an inner-city landlord, had obtained more than $600,000 in small claims judgments against hundreds of tenants and borrowers – all of them by default. Further investigation revealed that none had been served with notice of his claims. The landlord had filed false affidavits in each of these cases fraudulently claiming to have served his legal notices.

  • As a result of Attorney Foley’s conscientious investigation, the Milwaukee County Circuit Court vacated $600,000 in judgments obtained by the slumlord. The court also vacated the $5,100 judgment against the African American couple and dismissed the complaint against them on the merits. After the case’s conclusion, the District Attorney’s Office began a criminal investigation into the activities of the slumlord.

Source: Success Stories: Legal Aid Society exposes fraud by a slumlord.

For other stories on sewer service(1), see:

(1) According to at least one source, "sewer service" is so named on the theory that the person serving the papers on a defendant in a lawsuit simply tosses the legal papers into the sewer instead of attempting to deliver them to the proper party named in the lawsuit. The server then files a sworn statement with the court attesting that the papers were properly served on the named parties. SewerServiceAlpha

"Triple Damages" Award When Foreclosing Lenders Forcibly, Unlawfully Enter Home Resulting In Personal Property Loss Gains Steam With Nevada Lawmakers

In Carson City, Nevada, The Associated Press reports:
  • A proposed 1-sentence law change, approved Wednesday by a key Assembly panel, would help homeowners who face errors by mortgage companies of the sort that cost a Las Vegas family irreplacable personal possessions.

  • AB132, approved by the Assembly Judiciary Committee, was backed by Nevada Justice Association attorney Bill Bradley who said it stems from a lawsuit against Countrywide Home Loans Inc. filed by Gerald and Katrina Thitchener after an improper foreclosure on their condominium.

  • After a long legal fight, the Thitcheners won a $3.1 million judgment against Countrywide but saw it reduced to about $2.2 million by the state Supreme Court. The high court wouldn't allow a tripling of part of the award which had been granted by a lower court for loss of personal property.(1)

  • AB132, [...] would make clear that Nevada allows for the treble damages in cases where "forcible or unlawful entry" into someone's home results in loss of personal property.

For more, see Bill deals with faulty foreclosures.

For an earlier story on Countrywide's screw-up in this case, see Sometimes little people come out on top against arrogant big shots.

For the Nevada Supreme Court decision, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008).

Go here for other posts on foreclosure screw ups involving improperly changed locks, removal of belongings, etc.

(1) For the Thitcheners, the losses weren't just items that could be replaced, such as furniture and clothing, when their condo was "trashed out" by mistake in 2002, the story states. Among other things, they lost Katrina Thitchener's wedding band and dress, a video taken they day they were married, Gerald Thitchener's Gulf War service medals and a photo of his Air Force unit's meeting with then-President George H.W. Bush, according to the story. ForeclosureLockOuts

Debate On Judicial Role In Loan Modifications Continues

The National Law Journal reports:
  • Congress and the president have been immersed in attempts to solve the economic and housing crisis. Will judges soon take their turn? President Obama's recent proposal to address the rising tide of home foreclosures calls for legislation to allow bankruptcy judges under Chapter 13 of the bankruptcy code to modify the terms of home mortgages when families run out of other options.

For more, see Debating judges' role in foreclosure remedy (Proposal lets them modify mortgages).

Loan Modification Firm Engaged In The Unlicensed Practice Of Law, Says Florida AG

In a recent lawsuit filed by Florida Attorney General Bill McCollum, he accuses loan modification firm Outreach Housing with, among other things, engaging in the unlicensed practice of law in the conduct of its business activities. He describes the loan modification firm's activities in this regard as follows:
  • Attorneys licensed in Florida enter into an agreement with Outreach Housing which acknowledges that Outreach Housing retains Limited Power of Attorney for the homeowners (clients) and that Outreach Housing may remove any file from an Attorney with or without cause upon two week’s written notice. (Lawsuit - paragraph 21);

  • Outreach Housing’s clients make monthly payments to Outreach Housing for its services. These monthly payments are placed in individual segregated accounts [...] over which Outreach Housing has power of attorney. Outreach Housing authorizes the release of these funds to Attorneys for filing fees and legal representation. These subsequent monthly payments are shared between Outreach Housing and the selected Attorney on a pre-agreed basis. (Lawsuit - paragraph 23-24);

  • Defendants represent to consumers that they or their non-lawyer agents review and analyze the homeowners’ mortgage closing documents, identifying violations of federal law, including the Truth-in-Lending Act and Real Estate Settlement Procedures Act, which have occurred. (Lawsuit - paragraph 27);

  • Defendants’ putative analyses of homeowners’ mortgage documents for violations of federal law constitutes the unauthorized practice of law in accordance with the principles of the Florida Supreme Court. See State of Florida ex rel. The Florida Bar v. Sperry, 140 So.2d 587 (1962). (Lawsuit - paragraph 28);

  • Defendants have engaged in the practice of law by employing Florida licensed attorneys to offer and provide legal services through the Defendants to clients of the Defendants. (Lawsuit - paragraph 29);

  • Defendants have engaged in the practice of law by controlling the way Florida licensed attorneys provide legal services to clients of the Defendants. (Lawsuit - paragraph 30);

  • Defendants have engaged in the practice of law by controlling the way Florida licensed attorneys are compensated for providing legal services to clients of the Defendants. (Lawsuit - paragraph 31);

  • Defendants’ business in offering and providing legal services to the public through Florida licensed attorneys which Defendants engage, control and compensate constitutes the unauthorized practice of law in accordance with the principles of the Florida Supreme Court. See The Florida Bar v. Consolidated Business and Legal Forms, Inc., 386 So.2d 797 (1980). (Lawsuit - paragraph 32).

If, in fact, these activities constitute the unlicensed/unauthorized practice of law, it appears that non-attorney loan modification firms that market and provide "foreclosure defense" services directly to the consumer through the use of forensic loan audits and other activities commonly associated with the work of an attorney have significant cause for concern when operating in Florida, as well as in any other state/jurisdiction that has similar laws regulating the unlicensed/unauthorized practice of law.

Source: Lawsuit: State of Florida v. Outreach Housing, et al.

Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

Postscript:

According to a recent Miami Herald report, at least one attorney who was associated with Outreach Housing is currently under investigation by The Florida Bar. (See State Bar Probe Looks Into Attorney's Role With Embattled South Florida Loan Modification Firm). UnauthPractOfLawKappa

Virginia Lawmakers Revise Statute Prohibiting Upfront Fees By Loan Modification, Foreclosure Rescue Firms; Bill Awaits Governor's Signature

In Petersburg, Virginia, The Progress-Index reports:
  • The General Assembly has passed a bill tightening the rules for companies that offer to help struggling homeowners. [...] Last year, the Legislature passed a law meant to stop widespread abuses in the foreclosure-rescue industry, including the practice of charging an upfront fee for services. However, because language in the law could be read to mean that it applied only if the home was sold, legislators returned to the issue this year.

  • The revised law prohibits "the supplier of service to avoid or prevent foreclosure" from charging or receiving "a fee prior to the full and complete performance of the services it has agreed to perform if the transaction does not involve the sale or transfer of residential real property."

  • The bill, which the state Senate passed unanimously Monday after the House approved it by the same margin earlier this month, now waits Gov. Tim Kaine’s signature.

For more, see Bill comes too late for local woman.

Wednesday, February 25, 2009

Milwaukee Moves Towards Establishing Foreclosure Mediation Program

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:
  • Plans are in progress for a foreclosure mediation program to help Milwaukee residents keep their homes, Mayor Tom Barrett announced today. In his "state of the city" address, Barrett pledged $100,000 of city money toward the program, which he estimates will cost a total of $300,000 or $400,000.

***

  • The goal of a mediation program would be to head off foreclosures before homeowners are forced out of their houses, Barrett said. It would provide a way for property owners to sit down with mortgage company representatives to work out their problems near the beginning of the foreclosure process, he said.

  • Barrett, Gov. Jim Doyle and others have been voicing support for mediation for several months. [...] The Milwaukee program would likely be spearheaded by the Legal Aid Society [of Milwaukee] and others in the legal community, Barrett said.

For more, see Barrett moves forward on foreclosure mediation program.

Equity Stripping Victim To Stay In Home Pending Outcome Of Civil Case Alleging Fraud Against Recently-Indicted Foreclosure Rescue Operator

In Honolulu, Hawaii, the Honolulu Star Bulletin reports:
  • Whatever happened to Debbie Aurelio and her family, who lost title to their Ewa Beach home and faced eviction after allegedly being swindled by mortgage scammers?

  • Aurelio and her family have been able to stay in their home, after the Legal Aid Society [of Hawaii] staved off eviction proceedings. Her civil case alleging fraud and deception by the mortgage broker and others is still pending in Circuit Court. The defendants in the case have been filing cross claims against each other, and no trial date has been set.

  • But on Feb. 11, one defendant, John Dimitrion, was indicted in U.S. District Court on criminal charges involving mortgage loan transactions on the Aurelio home and two other houses, one in Ewa Beach and one in Kapolei.(1)

For more, see Family allowed to remain in home as mortgage fraud case proceeds.

(1) According to the story, Dimitrion and others are accused of a criminal scheme in which they solicited homeowners facing foreclosure and offered to help them. Instead they allegedly arranged fraudulent loans for straw buyers for the homes and drained equity from the properties, then tried to evict the homeowners.

State Bar Probe Looks Into Attorney's Role With Embattled South Florida Loan Modification Firm

Buried in a recent article in The Miami Herald on some of the homeowners who were allegedly victimized by Outreach Housing, a South Florida loan modification firm that is currently the target of a lawsuit by the Florida Attorney General, is this excerpt on an attorney who allegedly had some association with the modification company:

  • [Blair] Wright, Outreach Housing's owner, blamed an attorney working with the firm for mismanaging the cases of hundreds of clients. [...] Wright has sued the lawyer involved, Kirsten Franklin, and The Real Estate Law Group, which has since been dissolved. Franklin declined to comment. The Florida Bar has received a grievance against Franklin involving her work for Outreach that is ''pending,'' said Arlene Sankel, chief disciplinary counsel for the Florida Bar in Miami.(1)

***

  • Wright said his firm had found a way to streamline the drafting and filing of federal complaints, since so many lenders and brokers failed to follow basic rules when originating home loans.(2) Sometimes, he said, to settle the cases, lenders offered better loan terms.

For the story, see Home 'saviors' can make a mortgage mess (Sometimes a firm that promises to help modify your delinquent loan can make matters far worse).

For more on the lawsuit, see:

Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

(1) The Florida Attorney General's lawsuit also included allegations of unlicensed practice of law (see Complaint - paragraphs 20 through 33). No word if The Florida Bar probe is looking into those allegations against Outreach Housing. For related information on allegations of unlicensed pratcice of law by loan modification firms, and the aid by attorneys to non-attorneys in connection with the unlicensed practice of law, see:

(2) For some of the types of activities that have been found to constitute the unlicensed practice of law in the State of Florida, see The Florida Bar v. We The People Forms And Service Center Of Sarasota, Inc., 883 So. 2d 1280; (Fla. 2004). In his lawsuit, the Florida AG cites State of Florida ex rel. The Florida Bar v. Sperry, 140 So.2d 587 (1962) (Complaint, at paragraph 28), and The Florida Bar v. Consolidated Business and Legal Forms, Inc., 386 So.2d 797 (1980) (Complaint, at paragraph 32). UnauthPractOfLawKappa

New Jersey Couple File Suit After Loan Servicer Screw-Up In Handling Mortgage Payoff Results In Damaged Credit Score

In South Jersey, the Gloucester County Times reports:
  • When Paul and Heidi Wexler sold their West Deptford Township home two years ago, they made their final payment to the mortgage company and thought that was it. Some six weeks later, however, they learned something was amiss after being denied store credit to purchase furniture for their new home in Florida. The final payment on the home had not been processed, and the lender, Option One Mortgage Corporation, had filed pre-foreclosure proceedings.

***

  • The couple, married nearly eight years, has now filed a lawsuit against the mortgage company, claiming the mistake damaged their credit. The case was scheduled for trial this past week but has been put on hold while the two sides try to come to an out-of-court agreement.

***

  • "We're trying to make a statement here that the mortgage company's actions have real consequences for real people," said Pitman-based attorney Christopher Manganello. "It's the mentality of the big corporation thinking it can get away with anything. We're not going to let that happen here." [...] Option One has acknowledged that the Wexlers were not at fault, the couple's attorney said, but has done nothing more to repair the damages.

For more, see Couple runs into a different mortgage morass.

CNN On The Lee County, Florida Foreclosure "Rocket Docket"

On the heels of the recent stories in The Wall Street Journal and CBS News (here and here) on the Fort Myers, Florida Foreclosure "Rocket Docket," CNN comes out with its own coverage of the Southwest Florida court blasting away at the backlog of foreclosure cases.

For the story, see As foreclosures mount, Florida court turns to 'rocket docket.' (read story) (watch video). ThetaMissingDocsMtg

Another Call For Right To Counsel In Civil Cases

In a recent op-ed piece in the Los Angeles Times, Clare Pastore, a law professor at the USC Gould School of Law and a former legal services lawyer, offers her views on a right to counsel for the indigent in civil cases:
  • [E]very day, Americans without access to legal counsel unnecessarily lose homes, jobs, retirement benefits, healthcare and custody of their children. This is because in America, we have not yet recognized a right to counsel in civil cases, except in a tiny number of narrow areas. Indigent clients with the law on their side often find themselves losing to well-funded opponents simply because they have no means of fighting back.

***

  • Today, it is unthinkable to imagine an indigent criminal defendant having to face trial, conviction and incarceration without a lawyer. Yet that scenario played out in courtrooms across the country until the Supreme Court held in 1963 that criminal defendants have a constitutional right to a lawyer.

  • The court ruled in that case, Gideon vs. Wainwright,(1) that "any person hauled into court, who is too poor to hire a lawyer, cannot be assured a fair trial unless counsel is provided for him." Justice is not served, said the court, "if the poor man charged with crime has to face his accusers without a lawyer to assist him." We can no longer afford not to guarantee equal justice to the poor in civil cases as well.

For more, see Rescuing legal aid (As more and more Americans unnecessarily lose homes and jobs to well-funded opponents, it's time we move toward recognizing a right to counsel in civil cases).

(1) 372 U.S. 335, 83 S.Ct. 792, 9 L.Ed.2d 799 (1963). Go here for the Wikipedia post on Gideon v. Wainwright.

“Produce the Note” Approach Also Effective In Non-Judicial Foreclosure States

The Consumer Warning Network reports:
  • In some states, a lender can foreclose on your home without going to court. These are called non-judicial foreclosure states. You can still use the “Produce the Note” strategy in these states, but it takes a few more steps on your part.

For more, see How to use “Produce the Note” in Non-judicial Foreclosure States. ThetaMissingDocsMtg

Tuesday, February 24, 2009

Multi-Billionaire Not Immune To Bad Economy; Seeks To Wiggle Out Of $634M Home Purchase Contract; Asks For His $49M Deposit Back

The New York Post reports:
  • No one is safe from the housing mess - not even a billionaire Russian oligarch. Moneybags Muscovite playboy Mikhail Prokhorov has been hit so hard by the worldwide economic downturn that he's trying to back out of a deal to buy the world's most expensive mansion on the French Riviera.

  • Last year, he thought nothing of making a deal to pay $634 million for the Villa Leopolda. But after losing $8 billion of his $20 billion net worth, Prokhorov is trying to get back his $49 million deposit from current owner Lily Safra.

Source: RUSSIAN RENEGING ON RECORD $634M HOUSE BUY.

ABC News On The "Produce The Note" Approach To Holding Foreclosing Lenders' Feet To The Fire

ABC News' Good Morning America broadcast a story this morning on the "Produce The Note" strategy of hammering sloppy lenders and their attorneys attempting to foreclose on homes without first establishing in court that they have the legal standing to do so.

For the story (approx. 5 minutes), see Fighting Against Foreclosure (Some homeowners have found a new tactic to keep the banks at bay).(1)

Go here for helpful legal documents that can be used in fighting foreclosure.

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) For the related Associated Press story published last week, see Homeowners' Rallying Cry: Produce the Note (AP Enterprise: Homeowners stave off foreclosure by demanding the bank produce the note). ThetaMissingDocsMtg

Delinquent Debt Lawsuits Keeping Process Servers Busy

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • With foreclosures at an all time high in Nevada, those who serve foreclosure notices have been busier than ever. In some cases, letting people know they are about to lose their homes has turned into a dangerous job for process servers.

***

  • [Norma] McMahan runs a legal process service that serves people with legal notices -- a job that isn't getting any easier, "It's all having to do with collections, people losing their homes, people losing their vehicles, people who can not make ends meet." Hard times are keeping her servers busier than ever, "Before all this happened, I rarely saw a foreclosure. We didn't see them very often, in all honesty."(1)

For more, see Busy Times for Las Vegas Process Servers (read text) (watch video).

(1) This story should serve as a reminder to foreclosure defense attorneys to carefully scrutinize the affidavits of service that process servers file in connection with foreclosure actions. It's not unreasonable to believe that the busier the process servers are, the more screw-ups there will be in serving the court papers. Process servers and foreclosing lenders' attorneys may fail in exercising the required diligence necessary to find and serve defendants before resorting to the use of service by publication, or the "nail & mail" approach (where allowable). They may also take the lazy approach to serving unknown occupants in a property subject to foreclosure by simply identifying them as John and Jane Doe without exercising the appropriate level of diligence in attempts to ascertain the occupants' true names. See, for example,

Further, to the extent there may be any unscrupulous process servers, the chances of "sewer service" taking place goes up. Go here for posts on process server screw ups. foreclosure faulty notice ScrewUpProcessServing

Another Meth Nightmare As Recent Homebuyers Walk Away From Home After Discovering Toxic Residue In Home; Leaves Lender With Contaminated Collateral

In Grapevine, Texas, the Fort Worth Star Telegram reports the story of the Rodriguez family, whose purchase of a home last October quickly turned from a dream into a nightmare:
  • It didn’t take long for them to regret their purchase. Just weeks after they moved in, their dog, Bruin, started having seizures and had to be put to sleep. After the dog’s sudden death, they began to hear rumors that methamphetamine may have been used in their house. The couple hired a company to check the house for chemicals and discovered traces of meth contamination. While the cause of the dog’s death was not determined, the couple believe their house is not safe to live in.

***

  • The Rodriguezes, who have three children, are now renting about a block away while they figure out what to do with the 1,430-square-foot house, which is under foreclosure.

  • Experts say methamphetamine contamination of apartments, hotel rooms, houses, storage sheds and even cars is more common than people may imagine. Meth-making or heavy use can leave chemicals in carpets, air ducts and attics. And without proper cleanup, experts say, the chemicals linger and expose people to health risks.

For the rest of the story, see Meth left a residue of trouble for Grapevine home buyers (After dog dies, family moves out as tests reveal traces of drug in Grapevine house).

In a related story, see The National Law Journal: Meth Lab Residue in Homes Triggers Litigation (Lawsuits over contaminated homes focus on failure to disclose issue).

Go here and Go here for other posts on home-based methamphetamine labs. meth lab yak

Anatomy Of An Equity Stripping, Sale Leaseback Foreclosure Rescue Scam

An appellate brief filed a couple of years ago in the District of Columbia Court of Appeals tells the story of Maria Wilson, a Washington, D.C. homeowner who was victimized by foreclosure rescue operators Vincent Abell and Calvin Baltimore. The narative gives a step-by-step description of how Abell And Baltimore expropriated Wilson's home from her for practically no consideration.

As ugly of a story that it is, Ms. Wilson ultimately found herself the beneficiary of some pretty effective lawyering. Somehow or other, the parties wound up back in a D.C. trial court and, after a week-long jury trial, Ms. Wilson obtained a substantial jury verdict, including $3.3 million in punitive damages, against the perpetrators on account of the fraudulent sale-leaseback transaction. The eight-person jury found that the defendants — Vincent Abell, his company Modern Management, and his agent Calvin Baltimore — defrauded the plaintiff Maria Wilson and wrongfully took her home for a tiny fraction of its value.

For the story, see:

Shortly after the successful verdict in Maria Wilson's case, law firm Hogan & Hartson obtained very favorable settlements from many of the same defendants for five other D.C. homeowners victimized in similar sale-leaseback "expropriations" of their homes. Under the terms of the settlement, the defendants returned the homes of several of the victimized homeowners (many of them cleared of their old mortgages), plus more than $455,000 in cash compensation. See Hogan & Hartson Lawyers Save Homes for Washington D.C. Homeowners Victims Fall Prey to Mortgage Lending Scam.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Maryland Feds, State, Local Law Enforcement Form Mortgage Fraud Task Force; Bogus Foreclosure Assistance Firms Among The Targets

The Washington Post reports:
  • Maryland U.S. Attorney Rod J. Rosenstein yesterday announced the formation of a task force linking federal, state and local agencies in the fight against mortgage fraud, a group whose goals will include seizing assets from scam artists and paying restitution to victims.

***

  • The task force brings together representatives of 17 agencies, including members of the FBI, state regulators, federal housing officials and local prosecutors from Montgomery County, Prince George's and Baltimore. It is similar to three dozen federally coordinated mortgage fraud task forces that have been created nationwide. Amid the continuing financial crisis, the Justice Department has made mortgage fraud and other financial crimes a priority.

For more, see More Muscle Against Mortgage Fraud (U.S., State, Local Agencies Form Task Force).

See also, The Associated Press: Task force targets Md.'s high mortgage fraud areas:

  • The task force is attacking a spectrum of fraudulent acts, from phony home appraisals and loan documents to dubious foreclosure-prevention specialists who prey on those who've lost the equity in their home and need to rebuild credit. loan modification

B'klyn Judge Slams Brakes On Another Foreclosure As "Standing-Lacking" Lender Fails To Prove Ownership Of Note, Right To Sue

In Brooklyn, New York, the New York Post reports:
  • Aquila Rose got a $475,000 mortgage from Fremont Investment & Loan for her Flatbush home in January 2007 and made exactly one payment before defaulting. When Fremont started a foreclosure action on Oct. 15 that year, it seemed like a slam dunk - like Rose would soon be forced from her East 35th Street home.

  • But Rose has not been foreclosed upon, according to court papers. Her case in Brooklyn state court is assigned to Justice Arthur M. Schack, one of a growing number of judges in the country creating a new front in the foreclosure epidemic by forcing banks and mortgage-service agents to prove they own the mortgage.

  • In Rose's case, as in most mortgages, the lender, Fremont, sold the loan and, when pressed by Schack, couldn't prove it owned the mortgage - therefore didn't have the right to sue.(1) So Schack stopped the proceedings in its tracks.(2)

For the story, see HOW B'KLYN WOMAN KEPT HER HOME.

For Justice Shack's decision, see Fremont Inv. & Loan v Rose, 2008 NY Slip Op 52409 [21 Misc 3d 1137 (December 2, 2008).

Justice Schack received an "honorable mention" in this recent New York Post article.

Go here for other posts referencing Justice Arthur M. Schack.

(1) According to the story, Fremont claimed, according to court papers, that it sold the loan to GRP Loan. But Schack wanted to know why Fremont and GRP share the same White Plains office. The judge was also curious why the GRP lawyer also represents Fremont in the transfer of ownership - and threatened to sanction the lawyer for an apparent conflict of interest. Schack gave GRP until Feb. 2 to come back to court and prove that it owned the mortgage. They never showed. Meanwhile, Rose continues to live in her house.

Apparently, Fremont and GRP have a similar office-sharing arrangement that Justice Schack uncovered and referred to in another foreclosure action involving a different lender. In his written decision in HSBC Bank USA, N.A. v Charlevagne, 2008 NY Slip Op 51652 [20 Misc 3d 1128]; (August 4, 2008), he found it curious that, according to court documents filed in a number of cases he has presided over, the financial behemoths HSBC Bank USA, N.A., Ocwen Loan Servicing, LLC, Mortgage Electronic Registration Systems, Inc., Deutsche Bank and Goldman Sachs all share the same office space at "the ever popular Suite 100" at 1661 Worthington Road, West Palm Beach, Florida 33409.

(2) For a list of links to over thirty of Justice Schack's decisions denying foreclosure to foreclosing lenders who lacked standing to initiate the legal action, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced. ThetaMissingDocsMtg

Monday, February 23, 2009

Wachovia Hit With Class Action Over Option ARMs; Suit Calls Mortgage A "Neutron Bomb That Will Kill All The People But Leave The Houses Standing"

In a Federal District Court somewhere in Illinois, The Madison County Record reports:
  • A class action lawsuit has been filed against three financial corporations, including banking giant Wachovia, alleging Illinois homebuyers were forced into negative amortization after the banks deceived them when they issued option adjustable rate mortgages. Lead class plaintiffs Michael and Jayme Brunkhorst claim the lenders and brokers that sold them an option ARM mortgage [...], touted the minimum payment and downplayed or failed to disclose the negative amortization that could result from making such payments, according to the suit filed Feb. 17 in U.S. District Court.

***

  • "Option ARM loans have been called 'the riskiest and most complicated home loan product ever created' and have been termed a 'neutron bomb' that will kill all the people but leave the houses standing' by an economist at the Ford Foundation," the suit states.

For more, see Home owners file class action against Wachovia over option ARMs.

For other posts on homeowners using state & federal law to try and undo bad mortgage loans, Go Here, Go Here, and Go Here.

(1) Among other remedies, the Brunkhorsts and the putative class are asking the court grant equitable relief to restructure their loans through rate buy downs, principal reduction and conversion into conventional fixed rate loans. UndoMortgageLoans TILAdelta

CBS News On Upfront Fee Loan Modification, Foreclosure Rescue Scams

The CBS News' The Early Show ran a story last week on loan modification, foreclosure rescue scams that are proliferating across the country. Interviewed for the story was Illinois Attorney General Lisa Madigan, and one Illinois homeowner facing foreclosure on her condo who wound up getting clipped for $2,000 from a company that approached her with a solicitor who appeared at her front door.
  • [The homeowner] says she signed a contract with a company named Foreclosure Solutions. She initially gave them $695 and later paid them another $1400 which they said they'd forward to her lender. "The things he was telling me was just what I needed at that particular time," [she] said. [She] says she believed her mortgage problem was being addressed. So imagine her shock when she found out her home was just days away from being auctioned off. "I was really, really upset. I cried. Yes, I did," [she] said. [... She] lost $2,000 and had to file for bankruptcy in order to save her home.

Illinois Attorney Lisa Madigan has filed a lawsuit against Foreclosure Solutions, charging that they did not contact consumers' lenders immediately as promised and that instead of forwarding the mortgage payments, they kept the money.

For more, see Beware Of Forclosure Rescue Scams (People Facing Foreclosure Are Being Victimized) (read text) (watch video).

Connecticut AG Probes Loan Modification Firm Allegedly Masquerading As Reputable Non-Profit Clipping Homeowners For Upfront Fees For Bogus Help

From the Office of Connecticut Attorney General Richard Blumenthal:
  • Attorney General Richard Blumenthal and U.S. Rep Joe Courtney [Thursday] announced an investigation -- and issued an urgent warning to homeowners -- about so-called mortgage rescue deals that may actually cost consumers their homes. [...] Blumenthal is investigating H.O.P.E. Alliance (HOPE Alliance), Inc. after Courtney alerted his office about the company's alleged false promises to rescue homeowners from foreclosure.

  • Blumenthal said, "I am alarmed by allegations that HOPE Alliance is masquerading as a reputable non-profit and erasing all hope for homeowners. I thank Congressman Courtney for alerting my office and aiding victims. We are investigating HOPE Alliance because it allegedly took consumer money, convinced homeowners to stop mortgage payments and then left them with nothing."

***

  • HOPE Alliance's name mimics that of HOPE NOW, a non-profit alliance of counselors, mortgage companies, investors and others that offers outreach to distressed homeowners free of charge.

For more, see Blumenthal, Courtney Warn About Harmful Mortgage Rescue Deals Hitting Connecticut.

For the story of the two women who were clipped for a total of $3,000 that precipitated the Connecticut AG's announcement, see WFSB-TV Channel 3: Women: We Fell For Foreclosure Scam (Hope Alliance Masquerading As Conn. Nonprofit, AG Says).

Florida AG Vows Continued Pursuit Of Firms Collecting Upfront Fees From Homeowners Facing Foreclosure

From a recent newletter from Florida Attorney General Bill McCollum:
  • My office has seen a substantial increase in the number of scams based on offers to modify homeowners' loans or rescue them from impending foreclosures. Last year I worked with our Legislature to pass a new law protecting consumers from foreclosure rescue fraud, and my Mortgage Fraud Task Force has already sued several companies for allegedly collecting up front fees and not providing any promised services.

***

  • My office will continue to aggressively pursue companies and individuals who are targeting Florida's homeowners and trying to profit from their desperate situations.

For the Florida AG's newsletter, see Saving Florida Homeowners from Foreclosure Rescue Fraud. loan modification

Traveling Foreclosure Defense Seminar Featuring Florida Legal Aid Attorney To Make "Broadway Debut" Next Month

The New York Post recently ran a story on Florida foreclosure defense attorney April Charney from Jacksonville Area Legal Aid, who is traveling the country spreading the word on a well publicized strategy(1) for hammering mortgage lenders and loan servicers in foreclosure actions.
  • [C]harney has held seminars in Ohio, Oregon, South Carolina and throughout Florida to educate lawyers on how to implement the courtroom defense. [...] She is scheduled to [...] hold her first New York seminar next month.

For the story, see THE LOAN RANGER (Lawyer Outwits Banks In Foreclosure Battles).

Go here for a diagram of the complicated, convoluted mortgage securitization process that is now making it difficult for foreclosing entities to prove they actually own the promissory notes.

(1) According to the story, she asserts that the loan servicers bringing most of the foreclosure actions in the country don't own the mortgages and have no standing to take away a person's home. The strategy has spread virally around the country and now thousands of foreclosure lawsuits are sitting idly - in legal limbo. "I have one case from 2004 where the bank has not returned to court and where my client now has deposited more money into a trust account than the house is worth," Charney noted. The legal issue is that banks turn the mortgages into bonds, which are put into trusts, like collateralized debt obligations, or CDOs. The bank "sells" the CDOs the right to collect the revenue stream but, according to Charney, not the right of ownership of the loan/promissory note itself. ThetaMissingDocsMtg

Sunday, February 22, 2009

Ponzi Schemes, Ski Masks, Uzis & The "Standing-Lacking" Foreclosure Interlopers

In Jacksonville, Florida, The Florida Times Union recently ran a story that contained this observation about foreclosing lenders from attorney April Charney, head of foreclosure defense with Jacksonville Area Legal Aid:
  • [B]anks, investors, securitized trusts filled with home loans, rating organizations and others - all, according to Charney, were involved in and continue to facilitate a Ponzi scheme in which originating lenders did not transfer loans legally. In many cases, she says, the foreclosing entity has neither loaned money to a homeowner nor collected any payments.

  • "These court interlopers might as well be wearing a ski mask and carrying an Uzi for as much right as they have to force homeowners out of their homes," Charney said Wednesday.

***

  • Charney travels across the country, training other lawyers in how to stop foreclosures. She said she has trained at least 1,500. "Even judges are getting it now," she says. "In a case in California, the judge told the plaintiff, 'You can't even show me why you're here.' "(1)

For more, see 'Interlopers' in mortgages find foe in Legal Aid (April Charney fights shady lenders to help residents save homes).

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) Apparently, the "Rocket Docket - judicial rubber-stampers" blasting their way through foreclosure actions at the Lee County, Florida (Fort Myers) courthouse have yet to get the memo. See:

Mandatory Mediation Program To Go Into Effect For Florida Treasure Coast Foreclosure Actions

On Florida's Treasure Coast(1) (ie. Martin, St. Lucie, & Indian River Counties), TC Palm reports:
  • Thousands of distressed Treasure Coast homeowners could have a better chance to stave off foreclosure as a result of a judicial order set to go into effect on March 13.(2) The order would require all lenders filing home mortgage foreclosure lawsuits involving owner-occupied houses to participate in a mediation program to see if they can work out a deal with the borrower, said 19th Circuit Chief Judge William Roby (Editor's Note: Florida's 19th Judicial Circuit also includes Okeechobee County).

For more, see Mandatory mediation in new foreclosures starts March 13 on Treasure Coast.

Go here for more information regarding Florida's 19th Judicial Circuit Administration Order for Residential Foreclosure Mediation.

(1) For those unfamiliar with the location of Florida's "Treasure Coast," it's just north of the state's "Gold Coast" (Dade (Miami), Broward (Fort Lauderdale), and Palm Beach Counties), on the southeastern coast of the peninsula).

(2) One requirement in the administrative order is that, where a home against which a foreclosure action is owner-occupied, the lender's attorney is required to file a copy of the promissory note, mortgage and the pooling and servicing agreement. What strikes me as somewhat curious about this requirement is that this filing requirement:

  • is silent as to requiring copies of any addendums/allonges to the note, as well as any assignments of the note that constitute the chain of title showing title to the note being properly held by the entity bringing the foreclosure action. In contrast thereto, see the Ohio Supreme Court's 11-Step Foreclosure Mediation Program Model, which, in step 2, specifically requires filing of evidence of any assignments or other evidence that the plaintiff is the holder or servicer of the note and mortgage if the plaintiff is not identified in the note and mortgage as the holder or servicer.

Central Florida Chief Judge Gives "First Responder" Training To Local Attorneys Assisting Homeowners Facing Foreclosure

In Central Florida, the Sarasota Herald Tribune reports:
  • The chief judge in Manatee and Sarasota counties spent his lunch [Friday] training what he called the "first responders" for home rescue -- about 80 private attorneys willing to help homeowners in foreclosure on the cheap.(1) The attorneys will represent homeowners who don't qualify for free legal representation. They will help homeowners during a meeting with lenders to try to settle foreclosure cases outside of the court system.

For more, see Legal-Ease: 911 for those facing foreclosure.

Go here for other posts on the foreclosure mediation program in Florida's 12th Judicial Circuit (Manatee, Sarasota, and Desoto Counties).

(1) Contrast this approach to handling foreclosures by Manatee/Sarasota/Desoto County (Florida's 12th Judicial Circuit) Chief Judge Lee Haworth, who also already requires mandatory mediation, with that of Lee County Chief Judge G. Keith Cary, whose "Rocket Docket" approach to blasting through foreclosure cases recently drew attention in a recent Wall Street Journal story as well as in a recent CBS Evening News report (here and here).

Mississippi Public Interest Law Firm, NCLC Training Attorneys, Counselors In Battle Against Foreclosure

In Jackson, Mississippi, WLBT-TV Channel 3 reports:
  • [T]he [non-profit, public interest law firm] Mississippi Center for Justice with the help of the National Consumer Law Center in Washington is training attorneys, housing counselors and financial professionals to negotiate on behalf of troubled homeowners. "What we're trying to do is catch people who are delinquent before they're facing foreclosure," said [a spokesperson]. More than 130 attorneys have already signed up to help in foreclosure prevention.

Mississippi residents having trouble with their lenders renegotiating payment terms on home loans are asked to call the Mississippi Center for Justice at 877-352-2269. They can put you in touch with one of their professionals to help negotiate better terms for your mortgage.

For more, see Local group training attorney to help negotiate for hurting homeowners.