Sunday, September 27, 2009

Kansas Supreme Court Ruling Unfavorable To MERS Getting National Attention?

In Topeka, Kansas, The Lawrence Journal World reports:
  • Some are touting a recent Kansas Supreme Court decision as a major development in the protection of people facing foreclosures. In Landmark National Bank v. Kesler, the court ruled unanimously that Mortgage Electronic Registration Systems had no standing to bring action in a foreclosure case.(1) According to some reports MERS holds some 60 million mortgages, over half of all new U.S. mortgages. While the case applies only to Kansas, folks who defend homeowners are saying courts in other states could take note of the ruling.

For more, see Kansas court ruling in foreclosure case getting national attention.

(1) While some (see, for example, Waking up to discover the mortgage market was a giant criminal enterprise) have apparently interpreted this case as holding that MERS had no standing to bring action in a foreclosure case, this is simply an incorrect interpretation. Nowhere in the court's ruling did it "hold" or "find" that MERS lacked standing in the case. It simply ruled that the lower court did not abuse its discretion in denying the motions to vacate a default judgment entered in the case and for joinder in a foreclosure action brought by a prior mortgage holder, and in holding that MERS (putatively representing, and asserting the legal rights of, the 2nd mortgage holder) was not denied due process when a foreclosing 1st mortgage holder failed to serve it with notice of the foreclosure action.

In order for MERS to vacate the default judgment entered in this case, it would have to demonstrate to the court that it had a tangible interest in the mortgage, and demonstrate any injury it suffered because it did not receive service of the foreclosure action from the first mortgage holder. In this regard, the court observed:

  • Counsel for MERS explicitly declined to demonstrate to the trial court a tangible interest in the mortgage. Parties are bound by the formal admissions of their counsel in an action. Dick v. Drainage District No. 2, 187 Kan. 520, 525, 358 P.2d 744 (1961). Counsel for MERS made no attempt to show any injury to MERS resulting from the lack of service; in fact, counsel insisted that it did not have to show a financial or property interest.

Given that the attorney for MERS made no attempt to either establish a tangible interest in the second mortgage, or show any injury suffered due to the lack of service, there was no need for the court to make any finding that MERS, generally, lacks standing, is a real party in interest, or (in cases like this one where it is a defendant as a putative second mortgage holder in a foreclosure action brought by the first mortgagee) is a necessary party in foreclosure actions. The court simply made the following finding, explicitly leaving unanswered the question of whether or not MERS was entitled to notice of the foreclosure action from the 1st mortgage holder:

  • Even if MERS was technically entitled to notice and service in the initial foreclosure action--an issue that we do not decide at this time--we are not compelled to conclude that the trial court abused its discretion in denying the motions to vacate default judgment and require joinder of MERS and Sovereign. The record lacks evidence supporting a claim that MERS suffered prejudice and would have had a meritorious defense had it been joined as a defendant to the foreclosure action. We find that the trial court did not abuse its discretion and did not commit reversible error in ruling on the postdefault motions.

***

  • We find that the district court did not abuse its discretion in denying the motions to vacate and for joinder and in holding that MERS was not denied due process.

Presumably, the next time MERS finds itself in a foreclosure action like this one in Kansas in which it seeks to vacate a default judgment, its legal counsel won't fail to make a vigorous attempt to demonstrate that MERS has a tangible interest in the second mortgage, and attempt to establish the injury it suffered by failing to receive service of a first mortgagee's foreclosure action. Only at that point will a Kansas court have the opportunity to consider whether or not MERS, generally, has a sufficient interest in the mortgages it attempts to foreclose so as to make it a real party in interest in the litigation, and whether it has legal standing to be heard in said litigation. EpsilonMissingDocsMtg

NY Times On MERS' Ruling From The Kansas Supreme Court

The New York Times reports:
  • WITH the mortgage bust approaching Year Three, it is increasingly up to the nation’s courts to examine the dubious practices that guided the mania. A ruling that the Kansas Supreme Court issued last month(1) has done precisely that, and it has significant implications for both the mortgage industry and troubled borrowers.

  • The opinion spotlights a crucial but obscure cog in the nation’s lending machinery: a privately owned loan tracking service known as the Mortgage Electronic Registration System. This registry, created in 1997 to improve profits and efficiency among lenders, eliminates the need to record changes in property ownership in local land records.
    Dotting i’s and crossing t’s can be a costly bore, of course. And eliminating the need to record mortgage assignments helped keep the lending machine humming during the boom.

  • Now, however, this clever setup is coming under fire. Legal experts say the fact that the most recent assault comes out of Kansas, a state not known for radical jurists, makes the ruling even more meaningful.

For more, see The Mortgage Machine Backfires.

In a related post on MERS being hammered in court, see Judge Slams Sloppy Lender Unable To Prove Note Ownership; Voids Debtor's $461K Home Loan; Docs Signed By Multiple Hat-Wearing VP Sinks Servicer, MERS.

(1) Landmark Nat'l Bank v. Kesler, No. 98,489, 2009 Kan. LEXIS 834 (August 28, 2009), affirming Kansas Court of Appeals in Landmark Nat'l Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177, 2008 Kan. App. LEXIS 138 (2008). EpsilonMissingDocsMtg

N. Virginia Code Enforcement Investigators Stumble Into Massive Straw Buyer Scam That Leads Feds To Bag 20 Suspects; As Many As 200 Homes Involved

In Fairfax County, Virginia, the Daily Press reports:
  • Mundane complaints about noise and parking problems in a Washington suburb led authorities to uncover a sweeping mortgage fraud scheme involving as many as 200 properties valued at more than $100 million, officials announced Thursday. Twenty northern Virginia residents were arrested, and authorities have warrants for four other people in what they said was just the first phase of the case, related to 35 houses. Most of those arrested are facing federal charges including wire and mail fraud. Eight of the 20 were arrested on state charges of using false statements to obtain property or credit.(1) Fairfax County Police and federal officials said real estate agents and mortgage brokers used straw buyers with good credit ratings and low income to fraudulently obtain loans they would never have qualified for. Properties were sold and resold within the alleged ring.

For more, see 20 arrested in Fairfax mortgage fraud bust.

See also, The Washington Post: Family Charged In Loan Fraud (Va. 'McMansions' Allegedly Became Boardinghouses):

  • The safety hazards of these new boardinghouses prompted Fairfax County to launch a Code Enforcement Strike Team in 2007. Deeper investigation uncovered the biggest mortgage fraud scheme in Fairfax history, officials said Thursday, and squads of officers arrested 20 people involved in allegedly cheating local banks out of more than $9 million.

(1) According to the story, the federal indictment states that real estate agents Ruben Rojas, 30, and his sister-in-law, Litcia Linares, 32, organized the fraudulent transactions, along with Rojas' sister, 28-year-old Lourdes Rojas Almanza, a loan officer, and his brother, Jaime Rojas. The other people charged in the scheme were straw buyers, many of whom bought multiple properties.

Minnesota AG Targets Three Outfits In Civil Suits Alleging Upfront Fee Rackets Promising Help With Credit Card Debt

From the Office of the Minnesota Attorney General:
  • Minnesota Attorney General Lori Swanson [...] filed three lawsuits against separate companies that promised consumers they would lower the interest rates on their credit cards in exchange for payments of up to $1,995 but then failed to provide the promised services.(1)

***

  • [The] lawsuits were filed against Priority Direct Marketing, a Washington corporation charging consumers fees of up to $1,590, Clear Financial Solutions, a Florida corporation that charged consumers fees of up to $999, and Moneyworks LLC, based in Georgia, which charged consumers fees of up to $1,995.

For the entire Minnesota AG press release, see AG Swanson Files Three Lawsuits Against Companies Claiming To Help Consumers Lower Their Credit Card Interest Rates (Swanson Warns Minnesotans To Be On Guard Against “Here Today, Gone Tomorrow” Companies That Charge High Fees for Supposed Debt Assistance Services During These Tough Economic Times Then Disappear).

(1) Swanson warned the public to be on guard against fly-by-night companies seeking high payments from consumers in exchange for supposed financial help. She said that many companies are aggressively seeking out struggling citizens to exploit during these tough economic times--in which people face record high levels of credit card debt and high credit card interest rates. After the citizen pays the money, however, the companies often disappear, fail to return phone calls, file bankruptcy, or go out of business, driving consumers even deeper into debt.

Justice Department Obtains Guilty Pleas In Cross Burning Incidents; Race-Based Harassment, Intimidation Used To Drive Families From Homes, Say Feds

In two separate incidents, the U.S. Department of Justice recently announced:
.
#1: Two Indiana Men Plead Guilty to Cross Burning:
  • Richard LaShure, 41, and Aaron Latham, 20, both of Muncie, Ind., pleaded guilty to conspiring to violate the civil rights of an African American family and to interfering with their housing rights by burning a cross in the family’s yard. According to the charging document, on July 25, 2008, the two men, acting with the assistance of a third participant, built a cross and poured gasoline on it, then set it on fire in the yard of an African-American family who lived in the neighborhood. They will be sentenced on Nov. 5, 2009.

  • This is the second case in two years in which the Civil Rights Division has brought charges for a cross burning that occurred in Muncie, Ind. Two men were convicted in 2008 for burning a cross at the home of a woman who had biracial children. "These two men used a despicable and unmistakable symbol of hatred, the burning cross, to intimidate a family because they are African American," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will continue to prosecute this type of illegal, hateful behavior to the fullest extent of the law."

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#2: Four Arkansas Men Convicted of Civil Rights Charges in Cross Burning Conspiracy:

  • The Justice Department announced that Jacob A. Wingo, Richard W. Robbins, Clayton D. Morrison and Darren E. McKim pleaded guilty [...] to conspiring to drive a woman and her children from their home in Donaldson, Ark., because they associated with African Americans. A fifth defendant, Dustin Nix, 21, pleaded guilty to similar charges in July 2009.

  • All defendants pleaded guilty in federal court in Hot Springs, Ark., to civil rights charges and charges of making a false statement to a federal law enforcement officer. Each admitted and pleaded guilty to a felony civil rights charge for conspiring with each other to force a woman and her young children from their home by threats and intimidation because she associated with African Americans. Wingo and Morrison also pleaded guilty to an additional civil rights charge related to their direct involvement in an attempt to burn a cross at the victims’ home to intimidate the victims into leaving. All four defendants also pleaded guilty to a related charge of lying to agents of the FBI in an attempt to cover their conduct.(1)

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(1) In other related press releases from the U.S. Justice Department in connection with those charged with the use of fire to interfere with housing rights of others, a felony:

  • (4-27-2009) Anderson County Man Indicted for Cross-Burning: Steven D. Archer, 49, Heiskell, Tennessee, has been indicted by a federal grand jury on charges of willfully interfering with a couple's federal housing rights because of their race by burning a wooden cross, in violation of Title 42, U.S. Code § 3631(a), outside the residence in Anderson County that the victims were occupying.

  • (11-21-2008) Rutherford County Man Sentenced In U.S. District Court In Asheville In Connection With Cross Burning Incident (Defendant to Serve More Than Two Years in Federal Prison): Curtis Gene Worley, 51, of Spindale, North Carolina, was sentenced Wednesday to serve 28 months in federal prison, followed by two years of supervised release. Worley was indicted in October 2007 on one count alleging use of fire to injure, intimidate, and interfere with rights to occupy a dwelling because of race or color. According to information presented in open court during the hearings, Worley built and burned a cross on or near the property occupied by his neighbor, an adult African American female. See also: (10-25-2007) North Carolina Man Indicted In Cross-Burning Case: The indictment charged that Worley used a burning cross to intimidate and interfere with an African-American family because of race and because the family was occupying a dwelling. The indictment charges that Worley violated Title 42, U.S. Code § 3631(a), which provides criminal penalties for interference with the rights of citizens under the Fair Housing Act. Since 2001 and up through and including this prosecution, the Civil Rights Division brought 41 cross-burning prosecutions and convicted 60 defendants for these crimes.

    (6-6-2008) Muncie, Indiana, Man Sentenced to 121 Months in Cross Burning Case: Kyle Milbourn of Muncie, Ind., was sentenced by a federal judge [...] for a hate crime stemming from a cross burning last year that was directed at a woman and her three biracial children. Milbourn was convicted by a jury of one count of interfering with the housing rights of another person; one count of conspiring to interfere with civil rights; one count of using fire during the commission of a felony; and one count of tampering with a witness.

  • (4-23-2007) Two Men Plead Guilty In Lassen County Cross Burning: Kevin William Ridenour, 21, and Nicholas Edward Craig, 18, both of Westwood, California, each pleaded guilty in Sacramento to interference with housing rights, a felony. The crime relates to the burning of a cross outside the rectory of a Catholic church in Westport, California. The Priest who resides in the rectory is from Rwanda, central Africa, and was assigned to Westport by the Catholic Archdiocese of Sacramento in October, 2006. The defendants admitted that they did so in order to threaten and intimidate the Priest because of his race, and the fact that he was occupying the rectory building. They also admitted that, while building the cross, they discussed the fact that the "KKK" had used burning crosses to intimidate black persons.

  • (1-31-2007) Florida Man Sentenced in Cross Burning: Neal Chapman Coombs, a 50-year-old resident of Hastings, Fla., was sentenced to 14 months in prison, to be followed by three years of supervised release. Coombs pleaded guilty to a racially-motivated civil rights crime involving a cross burning. Coombs was charged with knowingly and willfully intimidating an African-American family that was negotiating for the purchase of a house in Hastings, Fla., by threat of force and the use of fire. Specifically, it was alleged that Coombs’ actions were motivated by the family’s race and that he burned a cross on property adjacent to the house. According to the press release, the plea agreement indicatedt that Coombs, who is Caucasian, made a remark about having a “house-warming,” and also made derogatory remarks about the visiting family.

  • (9-26-2006): Federal Jury Convicts Two for Cross Burning: A federal jury convicted Christopher Mitchell and James Bradley Weems of burning a cross in front of the home of an African-American man in Fouke, Ark. The jury convicted each defendant of one count of conspiracy to violate the victim’s civil rights. The evidence at trial established that Mitchell and Weems, attended a party where they discussed an African-American man who lived nearby, using racial slurs to describe him. The defendants, along with a third man, Christopher Baird, who had pleaded guilty to his role in the offense, used wooden boards to erect a cross. The defendants then planted the cross near the home of the African-American man and lit it on fire. Witnesses testified that as a result of the cross burning, the African-American victim and the family he lived with all moved from their home because they were too frightened to remain in the town.

  • (9-2-2004) Two Men Plead Guilty In Kentucky Cross Burning Case: Matthew Scudder, of Florence, Kentucky, who was 18 at the time the crime was committed, and James Foster, of Independence, Kentucky, who was 19, admitted to conspiring to threaten and intimidate an African-American couple and their two children in order to drive them from their Burlington home. Scudder admitted that on July 2, 2004 he burned a wooden cross on the family's lawn. Foster admitted that he helped carry out the plan.

  • (6-15-2004) Indianapolis Man Sentenced For Cross Burning: The Justice Department announced the sentencing of Jerry Dean Landis, of Indianapolis, Indiana, to 18 months in prison for his role in a July 2000 cross burning. Landis participated in the building and burning of a cross in the front yard of an African-American family in Indianapolis. Landis admitted that he and his associates took part in the cross burning in order to “send a message” to the family. Since 2001 and up through and including this 2004 prosecution, the Department prosecuted 29 cross burning cases, filing criminal civil rights charges against 46 defendants.

  • (2-9-2004) Macomb, Illinois Man Sentenced For Cross Burning Targeting Interracial Couple: Charles Lambert was sentenced to thirty-seven months in prison for his role in a July 2001 cross burning targeting an interracial couple. Forest Hatley, a co-defendant in this case, was previously sentenced to forty-one months imprisonment and three years of supervised release. Lambert and Hatley each admitted that they agreed to burn a cross at a home in Macomb, Illinois where an interracial couple lived. The defendants constructed a cross and doused it with gasoline. The two men then transported the cross to the victims’ yard, planted it in front of the home and ignited it. Lambert and Hatley also admitted this action was taken to intimidate the couple because of the male’s race and because he was living with a person of another race.

  • (1-29-2004) Georgia Man Sentenced For Cross Burning In Moultrie: The Justice Department announced the sentencing of Moultrie, Georgia resident Michael Craig Jordan for his role in an April 2002 cross-burning. Jordan pled guilty to criminal civil rights violations in November 2003. He admitted to participating in the April 2002 burning of a wooden cross with the purpose of preventing a biracial African-American and Hispanic couple - as well as their two young children - from moving into the house next door.

Saturday, September 26, 2009

Lender's Rep Stumbles Into Indoor Pot Farm While Changing Locks At Home In Foreclosure; Cops "Bag" 60 Marijuana Plants, One Suspect

In Vero Beach, Florida, TC Palm reports:
  • Authorities on Thursday discovered a home going into foreclosure was being used as a marijuana grow house. Eric Sotero Martinez, 26, [...] was charged with cultivation and possession of marijuana with intent to distribute. He was also charged with possession of illegal mushrooms. [...] The operation [...] was owned by Martinez’s fiancee, according to his arrest affidavit.

  • A representative of a holding company went to the home to have the locks changed as part of foreclosure proceedings, the affidavit said. He told the Indian River County Sheriff’s Office he discovered the marijuana plants inside the home when he went to change the locks. Investigators found 60 marijuana plants in a bedroom of the Stockbridge home along with industrial lights, a carbon dioxide machine and several fans, the affidavit said. Martinez’s fiancee said the plants were the second crop he had grown, the affidavit said. Detectives also found more than a pound of packaged marijuana and four bags of mushrooms in the home. The case is still under investigation, but Martinez’s fiancee will not be charged, sheriff’s spokesman Deputy Jeff Luther said.

Source: Man changing locks on Vero Beach house finds leafy surprise inside. pot grow ops beta

Accused Squatter Family Claims To Be Legal Tenant; Refuses To Show Lease, Won't Pay Rent Or Leave Foreclosed $1.5M Home

In Manhattan Beach, California, the Daily Breeze reports:
  • The buyer of a foreclosed Manhattan Beach house last owned by a former Los Angeles Clipper is suing the occupants, alleging they are refusing to leave the once $2.7 million residence or pay rent. The lawsuit by Soda Partners, a company that purchased the house Sept. 2 for $1.5 million, charges that [a family] and their children are squatters because they have failed to provide documents showing they have a lease to be in the house [...].

  • [One occupant] declined to answer questions Friday when contacted by the Daily Breeze. "The lawsuit is in litigation. We don't want to comment on that," [he] said. "Tenants do have rights and I would point that out." The lawsuit filed Thursday in Los Angeles Superior Court alleges the [occupants] have failed to pay the new owners any money since the sale was completed.

***

  • Attorney Ronald Richards, who represents Soda Partners, said no one knows if [they] ever paid rent because they refuse to answer his calls. [...] In [a] brief phone call with the Breeze, [one of the occupants ...] refused to comment on whether he had rented the home from Zeljko Rebraca, who played for three NBA teams, including the Clippers, from 2004-06. [...] If [they] are paying rent or have a lease, they could protect themselves under the tenants' rights laws.

For more, see Manhattan Beach house buyer sues tenants. hijack

Cops Let Would-Be Foreclosure Stripper Off Hook; Pleads Ignorance Of The Law, Agrees To Stop, Refunds Money On Sale Of Cabinets, Yanks Craigslist Ad

In Medford, Oregon, the Mail Tribune reports:
  • Mike Vaughan was surprised when an elderly couple was willing to pay $60 for some old kitchen cabinets from an east Medford home that is heading into foreclosure. The couple had seen an ad the 30-year-old Vaughan posted on Craigslist Wednesday that offered to sell almost every fixture in the house on Cedar Links Circle — including the kitchen sink. Vaughan, who said he didn't think anybody would really want the old cabinets, was even more surprised when two Medford police fraud investigators approached the couple as they were leaving Thursday. They informed the couple it was against the law to sell anything attached to the house.

***

  • The two Medford fraud investigators, alerted to the ad by some observant citizens, decided not to press charges against Vaughan, who previously lived in the house, which was owned by his father-in-law. "We were able to catch it in time so that no crime was committed," said Medford Detective Sgt. Mike Budreau. [...] After questioning Vaughan, the detectives determined he didn't realize he was doing anything illegal and he agreed to stop. He had been paid $60, but the couple planned to come back later after he removed the cabinets from the wall. After a discussion with the detectives, Vaughan gave the money back and removed the Craigslist ad, which offered to sell sinks, a mirror, bedroom doors, a laundry door, cabinets, light fixtures, ceiling fans, stair rails, attic stairs and an old water heater. [...] He said he had done a lot of work on the house, which his father-in-law bought with the provision that Vaughan would make the monthly payments. He said the house wasn't in foreclosure yet, though he said it would be at the end of the month.

***

  • Budreau said banks and other lenders have been sending letters to police agencies advising that it is illegal to take items that are attached to a house during a foreclosure action. He said the key issue for law enforcement is whether there is an intent to defraud someone, but he said the issue could get into a gray area depending on the status of the loan. "It does get tricky," he said, noting that many police agencies have relatively little experience dealing with foreclosures. [...] At this point, Medford police would prefer to educate people about the law rather than put anyone in jail, [Detective Brenda] Garich said.

For the story, see Police on alert for attempts to sell pieces of forceclosure. foreclosure fixture stripping apple foreclosure stripping

S. Florida Squatters Expand Housing Search Into High-End Neighborhoods; Family Hijacks Foreclosed Waterfront Home; Lender's Agent Caught Flat-Footed

In Coral Gables, Florida, WTVJ-TV Channel 6 reports:
  • Miami's squatter problem has garnered national media attention over the past year and a half, as the foreclosure crisis threatened to transform the Magic City into something resembling a lawless, "Mad Max"-esque landscape. The squatters mostly kept a low profile, moving in [...] to neighborhoods where they could take over unnoticed.

  • But now come reports that squatters are seeking out more ritzy neighborhoods, including the pricey, tree-lined streets of Coral Gables. "They seem to be squatters, I don't think that they pay rent. I don't think that they own the house, the house is in total disrepair," said Gables by the Sea resident Bruce Hornik, who said he couldn't believe his eyes when he saw a family set up shop in the waterfront neighborhood. [...] The bank which owns the property hired a realtor to sell it last month, and the realtor said they have no idea who could be staying in the home.

For more, see Ritzy Gables Pad Plays Host to Squatters (Residents say free-home seekers took over waterfront home).

Water Shutoff Threats Face Tenants In Financially Troubled Apartment Buildings; Notices Sent To Central Jersey Renters In 70 Units

In Plainfield, New Jersey, myCentralJersey.com reports:
  • Notices informing tenants that their water service could be shut off in less than three weeks appeared Monday at two downtown apartment buildings managed by Connolly Properties Inc., but a company spokesman said that residents there shouldn't be concerned. The notices appeared at Pingry Arms(1) and Viola's Place,(2) buildings that include a combined 70 apartment units and sit directly across East Seventh Street from each other on Crescent Avenue.

***

  • Banks since June have filed for foreclosure against at least nine companies owning 17 different apartment entities managed by Connolly Properties, and at least six of those companies then filed for Chapter 11 bankruptcy protection. Debts listed in those proceedings combine to approach $60 million. Connolly Properties manages a total of 3,000 apartment units in more than 60 different apartment entities in New Jersey and Pennsylvania.

For more, see Utility threatens service suspension to two Connolly-managed buildings in Plainfield.

(1) Reportedly, Pingry Arms, the larger of the two Crescent Avenue buildings at 50 units, is not tied to any known pending foreclosure or bankruptcy case.

(2) Viola's Place is reportedly owned by Plainfield Apartments LLC, the company that in August filed for bankruptcy protection after a North Jersey bank filed for foreclosure against its nine city properties. RentSigmaSkimming

Landlord's Unpaid $100K Electric Bill Leaves Building's Tenants In The Dark, Without Refrigerators, Elevators

In Highland Park, Michigan, WJBK-TV Channel 2 reports:
  • Residents of the Highland Towers apartments say they've paid their rent, but they're being left in the dark. It's been more than a week since power to the building was shut off. DTE Energy admits it is a horrible situation, but they say the owners of the building owe $100,000 in unpaid bills.

  • A small but spirited demonstration outside DTE headquarters was meant to shed light on a serious problem. Residents of the Highland Towers apartments have been living without power for more than a week. Latanya Lloyd is one of them. "It's not fair. I don't have money to just up and move somewhere again right now," she said. You can hear the emotion from tenants who have nowhere to turn.

  • DTE says it had no choice but to kill the lights because the building's owner hasn't paid the utility bill in a year and owes $100,000. "The building is not shut down because the people that lived there were delinquent in paying their (bills)," Lloyd said. Residents have the receipts to prove it, but they're the ones stuck in the dark without lights, refrigerators and even elevators. Without the elevators, residents have no choice but to walk up and down a dark stairwell.

  • In the midst of this mess, the building's owner and manager are nowhere to be found. DTE sent the United Way to try and help people who are still at the building. "So far, we've identified about 30 people who are still in the building, including women and children, and we're working with all the resources we have to try and get them placed," said Nick Monterosso with the United Way.

Source: Apartment Tenants Living Without Lights.

For story update, see Struggle restores power to apartment residents. RentSigmaSkimming

Another Tenant In Building In Foreclosure Faces Immediate Boot Due To Landlord's Unpaid Water Bill

In Visalia, California, the Visalia Times Delta reports:
  • By April, [Tracy Wood] and a friend were able to save enough money for the security deposit on a two-bedroom apartment. The deposit was steep more than $2,000 but the $675-a-month rent was just the right price. "I finally thought I was getting back on my feet," she said. Now she's about to become homeless again.

  • The notices of foreclosure started to arrive a few months after she moved in. She called the apartment complex's owner but got no answers. "He was avoiding us and kept telling us not to worry, that he was restructuring his debt," she said. But the notices kept coming, and Wood's roommate moved out.

  • "I've been looking for other places, and everyone wants a completely clean credit history," she said. "I went through a divorce, lost my house in a tornado and was homeless you don't go through that and keep a spotless credit history."

  • Stuck, she waited for the other shoe to drop. And last week it did. She came home from work and found a notice on the door saying the water bill was past due for a total of $800. Like many apartment dwellers, Wood is not directly responsible for paying the monthly water bill, which is paid by the owner.

  • If the water is turned off, city sanitation rules will prevent Wood from staying in the apartment. [...] "Tenants can set up their own account and they won't be responsible for the unpaid balance," [superintendent with Visalia's water provider Mike Markarian] said. But there's a catch. Woods lives in a triplex and would be responsible for the entire property and other tenants' bills if she were to set up such an account. "It would be about $200 a month," she said. "I don't have that kind of money." The Times-Delta attempted to contact Wood's landlord, Habes Alrawashdeh, but phone calls were not returned [...].(1)

For the story, see Foreclosure fallout: Visalia tenant unaware of landlord's financial status (Visalia woman, 4-year-old son may lose use of water).

(1) I suspect that the recently enacted Federal law, known as the Protecting Tenants At Foreclosure Act of 2009 and which gives tenants some protection against being immediately booted from their rented homes in foreclosure eviction situations, may not apply when the tenant displacement is a result of a local municipality applying its ordinances relating to the health and sanitation issues that arise when water service to a home/apartment building is shut off, even though the premises is in foreclosure. RentSigmaSkimming

Foreclosure Stripping Alive & Well In Chicago Suburbs

In suburban Chicago, Illinois, SouthtownStar reports:
  • Now appearing in the Southland: the amazing disappearing kitchen! It's not magic, though. It's homeowners leaving their foreclosed houses bare, stripping and selling everything they can to pay bills or stick it to the bank that's giving them the boot. [...] From ceiling fans to furnaces, light fixtures and water heaters, some homeowners are taking whatever they can. And since they're usually unskilled and doing this in haste, they're damaging things along the way.

  • [Real estate agent Patrick] Zomparelli recently sold a foreclosed house in Orland Park for $89,000. Its entire kitchen had been removed, leaving only the paint outlines of where the cabinets once were. Someone had tried to take the tub, damaging it in the process. They even took the carpet, Zomparelli said, leaving a home that would have sold for much more if left intact.

  • Rich Hofeld, owner of HouseMasters home inspection services, said his employees see items stripped from about 20 percent of foreclosed homes they inspect. "Often, the plumbing is gone, the water heater, furnace," said Hofeld, who is the mayor of Homewood. "I can't say that it's people who've lived there, or someone who came along after they moved out."

For more, see Foreclosure stripping leaves some suburban homes bare.

See also, Chicago Sun Times: Evicted owners stripping homes of all valuables (FORECLOSURES: 'They took everything' -- some homes stripped bare by ex-owners). foreclosure fixture stripping apple

Foreclosure Stripping Among Charges Landing Oregon Man 45 Months In Jail; Ukrainian National May Now Face Deportation

In Clackamas County, Oregon, The Oregonian reports:
  • The Damascus man who stripped his own foreclosed home of more than $50,000 worth of property was sentenced [...] to 3 years and 9 months of prison, as part of a plea bargain that included the defrauding of an electric company. Grigoriy Bogoslavets, 33, was convicted in a Clackamas County Circuit Courtroom of one count of first degree aggravated theft for taking everything from the air conditioning system to the kitchen cabinets in his former home. He was found guilty of four more counts of first degree aggravated theft for his crime involving $400,000 in electrical supplies.

***

  • "The unfortunate thing about this is that you were kind of living the American Dream," [Judge Robert] Herndon said as he addressed Bogoslavets [an electrical supply business owner and non-U.S. citizen from Ukraine], who may now face deportation.

For more, see Man who stripped his own foreclosed home gets prison time. foreclosure fixture stripping apple foreclosure stripping

Owner In Foreclosure Loses Personal Possessions; Contents Seized & Auctioned Off As Alleged Drug Dealer Holding 3rd Mortgage Moves Into $2M+ Home

In Vancouver, British Columbia, The Vancouver Sun reports:
  • The owner of a Shaughnessy heritage home was in tears after learning that all her worldly possessions had been seized by a bailiff and sold at auction. Gail Hewitt is also angry that the man who has taken possession of her $2-million-plus home is an accused drug dealer, Robert Luigi Poloni. Poloni holds a $600,000 third mortgage on Hewitt's house, [...] which is in the midst of foreclosure proceedings. Hewitt, who is living in California, said her neighbours called her about three weeks ago and told her someone had moved into her house.(1)

***

  • Hewitt said the contents of her home were worth about $400,000. "I had about $100,000 worth of clothes, fur coats, at least $50,000 worth of jewelry, furniture, a $40,000 grand piano and five oriental rugs, some worth $15,000," she said in an interview. [...] "I can't believe it's all gone and it's all sold," Hewitt said, crying. "There's nothing I can do. Everything I own has been taken away from me."

For more, see Shaughnessy homeowner stunned by sale of possessions (Says she did not know she was dealing with an accused drug trafficker).

For story update, see Judge rules against Shaughnessy homeowner who sought more time to sell home.

(1) According to the story, Hewitt's neighbors took photos of two men on the property and she recognized them as Poloni and Robbie Della Penna, who were jointly charged with cocaine trafficking offences but were acquitted by B.C. Supreme Court Justice Peter Leask. The Crown has filed a notice to appeal those acquittals. Neighbours called Hewitt again Sept. 10 to tell her that trucks had arrived on her property and were taking out her furniture and personal property.

Friday, September 25, 2009

Slumbering Foreclosing Lenders Unable To Document Loan Ownership Beginning To Face Complete Wipeout Of Mortgage Interests Thru "Quiet Title" Actions?

A recent story in The Huffington Post on the "Produce The Note" strategy of defending against foreclosure actions contained the following tidbit:
  • In Florida, Jacksonville Area Legal Aid attorney April Charney has been using the missing-note argument since she first identified the lenders' weakness in 2004. She began arguing that those initiating foreclosure proceedings on behalf of securitized pools of mortgage loans had no right to do so, because they couldn't prove they actually owned the debt.

  • Five years later, some of those homeowners are still in their homes, she says. Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action "quiets" all other claims).(1)

Source: Who Owns Your Mortgage? "Produce The Note" Movement Helps Stall Foreclosures.

Go here for other posts referencing the work of attorney April Charney.

(1) An earlier post (see Using Statute Of Limitations To Wipe Out Lenders' Right To Foreclose A Mortgage?) referred to a December, 2008 story reported on msnbc.com which alluded to Charney's intent to apply the Florida statute of limitations (see Sec. 95.11(2)(c), 95.281(1)(a), Florida Statutes) to terminate a foreclosing lender's right to foreclose when her clients' cases became ripe for such an attack:

  • Charney said that in a number of her cases, once there is no longer an ability for the loan servicer to profit, the foreclosure “just goes to sleep, and unless I’m going to pursue it, nobody’s setting hearings, nobody’s pursuing anything to get it to trial.”

  • After five years, which is the statute of limitations to enforce a contract in Florida, she can try to help her clients own their homes mortgage-free, Charney said. The first opportunity for her to help clients do that may arise next year.

  • And that legal limbo is where the lion’s share of her cases stand now, Charney said. So far this year, she has achieved two “workouts” and lost two cases. “Many, many, many” of the rest are in sleep mode or getting a single filing each year by plaintiffs’ attorneys just to keep them alive.

For the msnbc.com story, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers) (for the entire story on one web page, try here). EpsilonMissingDocsMtg

Mortgage Servicer Sued For Wrongful Death For Allegedly Making Caustic Collection Calls That Lead To Delinquent Homeowner's Fatal Heart Attack

In Tampa, Florida, The Associated Press reports:
  • A widow claims that debt collectors hounded her husband to death with as many as nine caustic calls per day, causing stress that contributed to his fatal heart attack. She's suing the Florida couple's mortgage company in a unique wrongful death case.

  • Dianne McLeod wants Green Tree Servicing to pay damages for what she said are illegal collection practices that led to her husband's heart failure on Dec. 4, 2005. Her 57-year-old husband, Stanley, was already in poor health from a heart attack years earlier that also had left him on disability. An executive at Green Tree Servicing called the claim "outrageous and meritless."

  • Lawsuits against debt collectors alleging illegal practices are common. But McLeod's Tampa attorney, William Howard, believes it's the first time one has ever been sued for wrongful death. [...] Some of the calls were recorded on the family's answering machine, and Howard said he is eager to play them for a jury.

***

  • Howard sued Green Tree on the family's behalf in 2005, then added the wrongful death count in 2006 after Stanley McLeod died. The case has been winding its way through courts since. Earlier this month, the 2nd District Court of Appeal in Florida again ruled against Green Tree in the company's efforts to force the case into arbitration. Howard said he will ask a judge to set the case for trial soon. He hasn't decided yet how much he will seek.

  • "What happened to Stanley McLeod happened to a lot of people," said Howard, who has about 500 pending cases that claim undue harassment by debt collectors. "To be held hostage in your own home is a terrible thing. It's a helpless feeling." Howard works for the law firm of Morgan & Morgan, which has offices around the state, heading a division that sues debt collectors for unfair collection practices.

For the story, see Widow: Debt collectors hounded husband to death.

Veteran Fraudster Gets 97 Months For Running Realty Scams; Bogus Sale Leaseback Foreclosure Rescue Deals Among Rackets Resulting In $1M+ In Losses

From the Office of the U.S. Attorney (New Jersey):
  • A Phoenixville, Pa., man was sentenced to 97 months in prison [...] for his leadership role in operating two Ponzi schemes upon members of a Toms River church, which resulted in total losses of more than $1 million, Acting U.S. Attorney Ralph J. Marra, Jr., announced. U.S. District Judge Joseph H. Rodriguez also ordered Terence Mayfield, 47, to serve three years of supervised release upon the completion of his prison term.

***

  • According to the Information, Mayfield operated two frauds from November 2006 through July 2008. In Count One, Mayfield is charged with mail fraud in connection with his scheme to defraud numerous members of The Church of Grace and Peace of more than $1 million through a phony real estate investment scheme.

  • Count Two charges Mayfield with wire fraud relating to his scheme to defraud three sets of homeowners, who participated in three “foreclosure bailouts” purportedly involving two properties in Georgia and one in Pennsylvania, of more than $75,000.(1)

For the entire U.S. Attorney press release, see Phoenixville, Pa., Man Sentenced to 97 Months in Federal Prison for Operating Ponzi Schemes Upon Members of a Toms River Church.

See also, The Philadelphia Inquirer: Pa. man sentenced to prison for Ponzi scheme at church:

  • This was not Mayfield's first fraudulent venture. In 2005, he was sentenced to two years' probation for a Ponzi scheme in Philadelphia in which eight victims reported losing $198,000, Smith said. In October, he was indicted on securities-fraud charges in Delaware, accused of taking money from two investors who had trusted him with a combined $225,000, state Deputy Attorney General Greg Strong said.

(1) The press release states that, in regards the foreclosure rescue scam, Mayfield admitted that he solicited potential investors to invest in the program he referred to as “foreclosure bailouts.” To induce these individuals to invest in this program, Mayfield explained that the investor would buy the home of a homeowner who was at risk of foreclosure and then lease the home back to the homeowner for a two-year period. The homeowner would then use a portion of the proceeds to pay the investor an “investment fee” and Mayfield a “broker’s fee.” Additionally, the homeowner would place two years’ worth of rent payments into an escrow account, which would be maintained by Mayfield, as a security deposit. At the end of the two-year period, Mayfield explained, the homeowner would have the opportunity to repurchase the home from the investor.

Mayfield made substantially the same representations to homeowners with a significant exception: That the escrow account funds would not serve as security for the investor, but rather would be “drawn down” on a monthly basis and used to pay the homeowner’s monthly rent payments. Mayfield admitted he did not maintain the funds in escrow, but instead pocketed the funds for his own benefit.

Title Agent Cops Plea To Illegally Dipping Into Escrow Funds From Real Estate Closings; "Katrina" Credited For Slamming Brakes On Ponzi-Style Scam

In New Orleans, Louisiana, the Times Picayune reports:
  • A 68-year-old Metairie man pleaded guilty Wednesday in federal court to wire fraud for his role in a local refinancing scheme, authorities said. Hubert Edward Ellzey Jr. acknowledged that, as an independent title agent for Commonwealth Land Title Insurance Company of Louisiana, he wired money from the refinanced properties to a special escrow fund, court records show. He dipped into this account and used the money for personal use [...], according to a news release from U.S. Attorney Jim Letten's office. Ellzey also used the company money from future home closings to pay off some of the previous loans he should have canceled.

  • The scheme was unearthed shortly after Hurricane Katrina because all the closings came to a halt and Ellzey was unable to account for the money he had taken, Letten's office said. In all, Ellzey defrauded his employer of about $775,000. He is scheduled to be sentenced in January.

Source: Title agent pleads guilty to misusing money in wire fraud case. EscrowRipOffKappa

Title Agent Admits To Stiffing Existing Lienholders In Real Estate Closings; Pocketed Cash Due Lenders, Wrote & Sold Phony Secured Notes, Kited Checks

From the Office of the FBI (Louisville, Kentucky Field Office):
  • Candace Hill, United States Attorney for the Western District of Kentucky, announced that Wavy Curtis Shain, age 26, of Louisville, Kentucky, pled guilty on September 18, 2009, to nine counts of wire fraud, and one count of bank fraud.

  • Shain pled guilty to using businesses he owned and operated, Derby City Title and Capital Distribution, LLC, to perpetrate fraudulent schemes on various lending institutions and mortgage companies. The schemes perpetrated by Shain included misappropriating substantial amounts of loan proceeds received by him on behalf of borrowers using Derby City Title to obtain loans to purchase homes or to refinance existing home loans, and, by doing so, failing to pay off existing loans and mortgages held by previous lenders.

  • Additionally, Shain pled guilty to preparing false and fraudulent notes and mortgages purportedly associated with the purchase of houses and selling these instruments to willing buyers. Lastly, Shain plead guilty to perpetrating a check kiting scheme using business accounts maintained with US Bank and BB&T Bank.

For the entire FBI press release, see Louisville Man Pleads Guilty to Defrauding Loan Companies and Banks. EscrowRipOffKappa

Lender Knowingly Wrote Millions Of Dollars In Crappy Loans, Abandoning Prudent Underwriting Standards, Says Mortgage Insurer In Lawsuit

In Los Angeles, California, Courthouse News Service reports:
  • MBIA Insurance Corp. says IndyMac Bank knowingly loaned millions of dollars to borrowers who could not afford to repay the loans, leaving the stock insurance company to pay out more than $487 million on its guarantees with an expected $566 million more to come, MBIA claims in Superior Court.(1)

  • MBIA says IndyMac "abandoned any reasonable and prudent underwriting standards" in an "effort to expand its market share during the mortgage lending boom," according to the complaint. MBIA also says IndyMac encouraged its workers to inflate borrowers' incomes on loan applications to get them loans for which they wouldn't have qualified. MBIA says the thousands of mortgage loans in default or foreclosure "would not have occurred if IndyMac had followed the loan-origination practices that it represented to investors it was following."

***

  • In May, 20 banks and financial services companies sued MBIA with allegations that it fraudulently restructured itself to strip it of $5 billion in cash and securities and to start a new insurance business to duck its obligations to the banks.

For the story, see MBIA Insurance Sues IndyMac.

(1) MBIA provided financial guaranty insurance in the form of guarantees of the trust obligations to make principal and interest payments on the loans.

Ringleader In Cash Back Mortgage Scam Gets 30 Years; Used Phony Repair Invoices, Shell Corporations To Skim $1.1M From Closing Proceeds On 34 Homes

In Denver, Colorado, The Denver Post reports:
  • The ringleader of a multimillion-dollar mortgage-fraud ring was sentenced [...] to 30 years in the Colorado Department of Corrections. Uto Essien, 45, a Nigerian national, will be deported after completing his sentence. Essien was convicted in July of four felony counts related to the use of shell corporations and false invoices to skim money off the top of nearly three dozen real estate transactions. Essien's conviction resulted from a 45-count, 10-person indictment handed down in March 2008. The indictment alleged that Essien and his colleagues fraudulently obtained $10.9 million in mortgages to buy 34 properties in Adams, Denver and Jefferson counties between April 28, 2004, and Dec. 29, 2006.

  • Essien and his colleagues then skimmed $1.1 million from the real estate transactions, which they said paid for repairs the shell corporations never did to the properties. Essien and his colleagues used false invoices from the shell corporations to justify the payments. The jury convicted Essien of violating the Colorado Organized Crime Control Act and of two counts of forgery and theft by receiving. According to the indictment, Essien, while acting as a real estate broker, negotiated the property acquisitions and directed the buyers to create the shell corporations. Nine of Essien's co-defendants have either pleaded guilty or been convicted following a jury trial.

Source: 30-year term for leader of fraud ring (Nigerian Uto Essian was convicted of skimming off the top of real estate deals).

Thursday, September 24, 2009

Ex-Real Estate Agent Faces Forgery, Theft Charges For Use Of Fraudulent HUD-1s To Dupe Lenders Into Giving 100% Financing To Same Buyer For 6 Homes

In Weld County, Colorado, The Greeley Tribune reports:
  • A former Greeley Realtor whose license was yanked last year faces 12 felony charges in Weld District Court upon a grand jury indictment. The Weld County Sheriff's Office has a warrant out for the arrest of Tracy Todd, 35, of Greeley. The grand jury handed down the 20-page indictment against Todd in late August, alleging he participated in a kickback scheme on six home sales in February 2006. Todd's Realtor license was suspended in June 2006, and it was revoked last year for his participation in mortgage fraud schemes.

  • The indictment charges Todd with six counts of felony forgery and six counts of felony theft. The forgery charges stem from misrepresentations alleged on the Housing and Urban Development [closing] statements [also known as HUD-1] that are included in any home sale closing. The indictment also charges six counts of felony theft, each of which could put him in prison for 12 years. According to the indictment, Todd participated in a scheme to sell six homes to the same investment buyer, Tom Lee, paying $78,000 on all the sales for the buyer to qualify for 100 percent financing, plus an additional $36,000 after the sales went through, without disclosing it in the sale documents. The kickback schemes all apparently have many forms, but the common theme for most is forgery, or misrepresentations on closing documents.

For more, see Greeley man faces 12 felony charges for his alleged role in mortgage fraud.

Mandatory Foreclosure Mediation Programs Get Low Grades From National Consumer Advocacy Group

From a press release from the National Consumer Law Center:
  • A spate of new state and local programs that have emerged over the last year requiring mediations or conferences before foreclosures sales take place have great potential to help homeowners, but are suffering from the same lack of industry accountability that has plagued voluntary federal mortgage modification programs, according to a major new study from the nonprofit National Consumer Law Center (NCLC).(1)

For the entire press release, see REPORT: Foreclosure Mediation Programs' Potential To Help Homeowners Now In Jeopardy Due To Lack Of Accountability (NCLC Looks at 25 Programs in 14 States; Mediation Programs Seen as Faltering For Same Reasons as Struggling Federal Voluntary Foreclosure Modification Efforts).

For the report, see State and Local Foreclosure Mediation Programs: Can They Save Homes?

(1) Mediation programs were reviewed in the following 14 states: California, Connecticut, Florida, Indiana, Kentucky, Maine, Michigan, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon and Pennsylvania.

Some In Congress Seek To Make "Produce The Note" Strategy Mandatory To Level Playing Field In Defending Against Sloppy Foreclosing Lenders, Servicers

The Huffington Post reports:
  • Modern-day home mortgages have been so sliced and diced by rapacious financiers that some homeowners are successfully delaying -- or even blocking -- foreclosures through the simple tactic of demanding that banks produce the original mortgage note, which amazingly enough is often not so easy for them to do. As the foreclosure rate continues to set new highs, a little-noticed legal provision that requires bankers, if challenged, to prove they hold the original mortgage documents before getting possession has spawned a minor homeowner rebellion, alternately called "produce the note" or "show me the note". For homeowners trying desperately to keep their homes, the tactic is one way to buy some time -- and maybe even get the upper hand on the lender.

***

  • The fouled-up paperwork or other lack of legal compliance "has resulted in a much higher rate of negotiated [mortgage] modifications" [...], said [North Carolina congressman and House Financial Services Committee member Rep. Brad] Miller. "It gave the homeowner additional defenses and counterclaims that strengthened their hands substantially."

***

  • Some in Congress are trying to make it easier for homeowners. Rep. Marcy Kaptur, an Ohio Democrat, introduced a bill in February with Rep. John Conyers (D-Mich.) that would actually prohibit foreclosures unless lenders produced necessary documentation in court, including the note and evidence that the homeowner was, in fact, notified each time the note was transferred.

  • "I am encouraging [homeowners] to stay in their homes [and] go through the court proceedings until the institution in question can produce [the] note, because chances are, they can't," Kaptur said in an interview Monday. "Somehow the playing field has to be leveled here, and [the bill] provides a very strong means of doing that." The bill is languishing in the House Financial Services Committee, headed by Rep. Barney Frank (D-Mass.), she said.

For more, see Who Owns Your Mortgage? "Produce The Note" Movement Helps Stall Foreclosures. EpsilonMissingDocsMtg

Conn. AG Puts Kibosh On Shaky "Option To Buy" Obtained By Pair From Hospitalized Dying Woman; Deal Would Have Allowed Purchase For Less Than 50% FMV

From the Office of the Connecticut Attorney General:
  • Attorney General Richard Blumenthal [...] announced that his office has successfully challenged a questionable agreement to sell the home of a deceased Greenwich woman, securing at least $300,000 more for charities named in the woman's will. [...] Probate Judge Daniel F. Caruso voided an agreement under which Mona Lee Johnson of Greenwich granted her neighbor Mark L. Lovallo and her long time accountant, David Alfano, an option to buy her home for $500,000 after her death. In fact, the home was estimated to be worth more than twice as much -- about $1.2 million -- when she died in 2005. Johnson signed the agreement at Lovallo's urging a month before she died when she was in the hospital.(1)(2)

For the entire AG's press release, see Attorney General Successfully Challenges Questionable Agreement To Sell Greenwich Home, Secures At Least $300,000 More For Charities.

(1) According to the press release, because real estate values have fallen since Johnson's death, it's unlikely the home's fair market value is still the $1.2 million estimated in 2005. In the current market, Blumenthal's office expects the house to fetch at least $800,000. It seems to me that these two characters should be hammered for the damages suffered by the estate and the beneficiaries of the will for the home's $400,000 diminution in value during the time they improperly clouded the title to the deceased woman's home with this bogus deal.

(2) Attorney General Bloomenthal said:

  • "The net result in this long legal battle is at least $300,000 more for good causes, particularly educational institutions, for a total of about $1.5 million or more. I fought successfully to stop this suspect agreement denying hundreds of thousands of dollars to charities intended to benefit from the home's sale. In charity law, the donor's wishes are paramount, and this extraordinarily generous donor sought to benefit charities, not these two men. This donor never wished to sell her home at a bargain basement price, less than half its estimated value at the time, significantly slashing proceeds to charities named in her will."

  • "Ill and infirm -- this woman supposedly signed papers while hospitalized and in the last month of her life -- raising grave doubt the agreement reflected her true wishes. This decision restores moneys rightfully belonging charities -- as well as charitable intentions. My office will continue to carefully monitor estates, intervening when appropriate to assure that the wishes of the deceased are respected and realized."

LA Man Charged With Stealing, Flipping House; Girlfriend Accused Of Notarizing Falsified Documents Used In Deed Theft

In El Monte, California, KTTV-TV Channel 11 reports:
  • A Los Angeles city firefighter who works as a part-time real estate broker and his ex-girlfriend pleaded not guilty [...] in connection with an alleged real estate scam. Brent Lamont Mathews, 43, is charged with six counts of forgery, three counts of attempt to file a false or forged instrument and two counts of grand theft, according to the Los Angeles County District Attorney's Office. Joi Rochelle Smith, 33, a notary public who was Mathews' girlfriend at the time of the alleged crimes, faces the same charges.

  • Prosecutors allege that Mathews put himself on the title of a Hacienda Heights property without the owner's knowledge or consent through a series of forgeries and false filings. Mathews allegedly went on in 2008 to defraud two investors he had solicited as partners to flip the house and who collectively lost $146,000, according to the District Attorney's Office. Smith is accused of notarizing key documents, enabling the illegal transactions, according to prosecutors. Mathews sold the property for $699,000 and netted $203,969, though none of the proceeds from the sale were used to satisfy the trust deeds or to benefit the property owner, according to the District Attorney's Office.

Source: LA Firefighter Facing Scam Allegations (Man, ex-girlfriend charged in real estate case).

Minnesota Man Dodges Add'l Jail Time For Swindling Dying Mom; Pocketing Proceeds Of Home That Subsequently Fell Into Foreclosure Among Bad Acts

In Duluth, Minnesota, the Duluth News Tribune reports:
  • A Twin Cities man has been sentenced to time served and nearly $10,000 in fines and restitution after pleading guilty to swindling his dying mother in Duluth, including draining her bank accounts of more than $170,000. Errol John Gilbertson II, 31, of Woodbury, Minn., told police he used his mother's money because of his addictions to methamphetamine and gambling, according to the criminal complaint.

  • His mother, Vicki Gilbertson, was diagnosed in January 2007 with brain cancer and suffered from dementia and aphasia. At the time of her cancer diagnosis, she had more than $160,000 in bank accounts, according to the complaint. When she died at age 58 on July 22, 2007, Vicki Gilbertson's bank accounts had negative balances totaling nearly $11,000.

***

  • [Among his bad acts,] Gilbertson refinanced his mother's home and received an equity check for about $30,000. The home was refinanced for $112,000 and payments were not made. The home is in foreclosure.

For more, see No prison for swindler of dying mom. DeedContraTheft

Mortgage Broker Charged With Using I.D. Stolen From Customers To Buy Two Homes That Have Since Gone Into Foreclosure

In Marion County, Oregon, KTVZ-TV Channel 21 reports:
  • Salem police arrested a mortgage broker accused of stealing personal information to buy houses - one during the height of the housing bubble and the other after it popped. Lt. Steve Birr says 38-year-old Julian Ruiz of Keizer financed a $376,000 home in 2006 by using stolen personal information from a customer. The house went into foreclosure the next year. Birr says Ruiz stole another customer's information to buy a $417,000 house in 2008, and that place also went into foreclosure. Ruiz has been lodged at the Marion County jail on charges of mortgage fraud, identity theft, theft by deception, forgery and issuing a false financial statement.

Source: Salem mortgage broker charged with fraud.

Wednesday, September 23, 2009

Final Conspirator In Maryland Sale Leaseback Foreclosure Rescue Scam Gets 46 Months

From the Office of the U.S. Attorney (Maryland):
  • U.S. District Judge Deborah K. Chasanow sentenced Cheryl Brooke, age 52, of Upper Marlboro, Maryland [...] to 46 months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud in connection with a scheme in which she and her conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

According to Brooke's plea agreement:

  • [Miachael K.] Lewis, Brooke, and co-conspirator Winston Thomas specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The goal of the conspirators was to steal the homeowners’ equity out of their property by inducing the homeowners to sell their property to co-conspirator Earnest Lewis and converting sale proceeds to the use of the conspirators. Lewis and his co-conspirators did this by fraudulently representing to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes.

For the entire U.S. Attorney press release, see Final Conspirator Sentenced in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads (Defendants Ordered to Forfeit Over $2 Million).

For the earlier press releases announcing the sentencing of the three other conspirators, see:

Mortgage Servicers Drifting Into Upfront Fee Loan Modification Scam Racket??? Media Intervention Helps Undo Screwing Over Of Two Arizona Homeowners

In Phoenix, Arizona, KPHO-TV Channel 5 reports:
  • Many homeowners say their banks won't call them back regarding a loan modification; however, some homeowners are paying hundreds of dollars for a loan modification only to have the bank foreclose on them.

  • Valley resident Miguel Lozania said he was approved for a loan modification, so he signed his paperwork and sent the bank the $900 fee. "It sounded like it was going to work," he said. "I even got a letter from IndyMac Bank saying they were going to do a modification." IndyMac foreclosed on his house anyway, selling the home for $70,000. Lozania's original loan was for $205,000.

  • Another Valley resident, Joan Hoyt, said she wanted to refinance her loan before the interest rate on her current mortgage reset. Her lender, Washington Mutual, said it just needed a $750 application fee; Hoyt paid it. As it turned out, Washington Mutual did not offer the type of loan Hoyt applied for. The bank did not offer a refund of the application fee.

  • Homeowners across Arizona have written to 5 Investigates to complain about lenders losing modification documents, changing requirements for modifications and being unable to answer basic questions about the process. Arizona Attorney General Terry Goddard stopped short of saying the banks' behavior is criminal; however, he called the complaints "very troubling." "It may constitute deception on the part of the individual company that's leading these people along," he said.

  • Goddard said his office is swamped with complaints that he believes many of the larger banks should have been prepared for. "What we're seeing is a financial industry that doesn't want to handle this problem," he said. He also encouraged people who are having trouble with their modifications to contact his office.

  • As for Lozania, five hours before the story was set to air Monday, a spokeswoman for IndyMac's new owner One West Bank called 5 Investigates to say the company had made a mistake, and they are rescinding Lozania's foreclosure. Washington Mutual refunded $750 to Hoyt after 5 Investigates contacted the bank about the investigation.

Source: More Loan Mod Problems Reported (Ariz. AG Terry Goddard: Complaints 'Very Troubling').

Loan Officer Gets 37 Months For Role In Maryland Foreclosure Rescue Equity Stripping Scam Peddling Bogus Sale Leaseback Deals To Desperate Homeowners

From the Office of the U.S. Attorney (Maryland):
  • U.S. District Judge Deborah K. Chasanow sentenced Winston Thomas, age 43, of New Carrollton, Maryland today to 37 months in prison, followed by three years of supervised release, for failure to file federal tax returns and for conspiracy to commit wire fraud in connection with a scheme in which he and his conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

Thomas was one of the participants in the foreclosure rescue, equity stripping conspiracy headed by Michael K. Lewis, and included Cheryl Brooke and Earnest Lewis.(1)

  • [Michael K.] Lewis and Thomas, a senior loan officer with a mortgage lender, told the homeowners that the “good credit” of Earnest Lewis would be used to temporarily refinance their homes, that they had to sign their homes over to Earnest Lewis and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes only by paying inflated “rent” and fees, which payments were directly debited from their bank accounts to an account belonging to co-conspirator Cheryl Brooke’s company “In the House Technologies.” Brooke then made payments to Earnest Lewis and Thomas, with the remaining funds being used by Michael K. Lewis and Brooke for their personal benefit.

For the entire press release, see Senior Loan Officer Sentenced in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads.

(1) For an earlier press release on the sentencing of both Lewis brothers, see Leader of Mortgage Fraud Scheme Sentenced to 6 ½ Years in Prison - Targeted Victims with TV Ads.

Connecticut AG: Foreclosures Might Be Void Where Unauthorized Process Servers Are Used To Deliver Legal Papers To Delinquent Homeowners

In Hartford, Connecticut, The Hartford Courant recently reported on state Attorney General Richard Blumenthal slamming some state marshals for charging inflated fees when engaged in process serving in foreclosure actions. Another issue of concern raised by the AG was whether non-marshals were being subcontracted out to deliver the legal papers on the delinquent homeowners.
  • Blumenthal also said that [...] state law does not allow the use of non-marshals to deliver most legal papers,(1) comparing the practice to a police officer delegating arrest powers to a non-officer.

***

  • [U]nclear is whether any foreclosure actions might be in jeopardy. Blumenthal said that overcharging would not invalidate a lawsuit, but that if legal papers were served on a homeowner by someone other than the marshal who attested that the papers were delivered, then that service might be deemed defective, and that could jeopardize the underlying suit.

For the story, see Blumenthal: Some State Marshals Broke Law By Double-Billing.

(1) According to a recently-issued legal opinion by Attorney General Blumenthal:

  • State statutes direct that State Marshals serve legal process without the use of indifferent persons except in narrowly defined circumstances. The sole exceptions to this general rule are for matters where there is express statutory authority for an indifferent person to make service, such as subpoenas, service of notices of lis pendens on a property owner, and service of notices to quit.

  • Where there is express statutory authority (such as for service of a subpoena, service of a notice to quit, or service of a notice of lis pendens on a property owner) for use of an indifferent person to make service, the use of an indifferent person is permissible. It is not permissible under any other circumstances.

See: Connecticut AG Legal Opinion issued to Herbert J. Shepardson, Esq., Chairperson, State Marshal Commission (p.19). SewerServiceAlpha

Arizona Couple Seeks Loan Modification; Lender Responds By Freezing Funds In Checking, Savings Accounts

In Scottsdale, Arizona, KPHO-TV Channel 5 reports:
  • A Scottsdale couple who asked for a loan modification and then got behind on their payments recently got a rude surprise. Roger and Staci Schneider went to their bank, the Desert Schools Credit Union, on Thursday to make a withdrawal. They claim the branch manager denied the transaction because their assets had been frozen, even though the Schneiders had $20,000 in their checking and savings accounts. "We've done everything the bank has asked us to do and now they're seizing our funds and I have no idea why," Roger Schneider said. "We haven't been able to get a response." [...] The couple said they have some advice for struggling homeowners. Do not keep your money in the same bank that holds your mortgage.

For more, see Couple: Bank Froze Our Assets (Couple Asked For Loan Modification, Gets Rude Surprise).

Loan Servicer Drags Feet On "Deed In Lieu" Offer By Delinquent Borrower; Home Sits Vacant For A Year Before Title Finally Passes In Foreclosure Sale

In Hopkins, Minnesota, the Minneapolis Star Tribune reports:
  • Bob Lerner knew he couldn't afford the mortgage payments on his family's home in Hopkins. So in January, Lerner told the bank: The house is yours. Eight months later, Lerner is still wondering why the bank wouldn't take it. [...] In October 2008, as they prepared to file for bankruptcy, the couple and their teenaged son moved out of their Cape Cod-style house [...] and into an apartment in Minnetonka.

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  • Lerner's attorney sent a letter to Lerner's lender, U.S. Bank, saying the family was prepared to walk away from the house. Called a "deed in lieu of foreclosure," the deal would spare everyone the costly process of foreclosure, which can drag on for months. Lerner said bank employees were agreeable, but wanted to make sure there were no title problems or other hang-ups. He checked back every few weeks but was always told that no decision had been made.

  • Then in March, a worker arrived at the empty house and changed the locks. That same month, the bank filed paperwork in Lerner's bankruptcy case to protect its stake in the house, acknowledging "Debtor intends to surrender the property." Lerner figured the deal was finally done. "To me, that means for all intents and purposes, they've taken possession," said Lerner, 48, who works in tech support for Hennepin County.

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  • On Sept. 10, U.S. Bank finally made its intentions clear: It bought the house at a sheriff's foreclosure sale. [...] Lerner figures he is out as much as $3,500 in property taxes, home insurance and gas bills -- money he thought he had saved by leaving the property in the hands of U.S. Bank early this year.(1)

For the story, see Owner tried to give house to bank - but bank balked (Hoping to avoid foreclosure, Bob Lerner tried to give his house back to the bank. Eight months and $3,500 later, the bank bought it at auction).

(1) As if it wasn't bad enough that the mortgage servicer's foot-dragging resulted in the home sitting vacant for about a year before the foreclosure sale took place, Minnesota law (see Section 580.23, Minnesota Statutes (2009)) gives foreclosed homeowners a six-month right of redemption period to reclaim their home, which may mean that the home will continue to sit vacant for at least an additional six months before the servicer can legally take possession of the home and prepare it for resale.

Mortgage Servicer Threatens Foreclosure, Initiates Debt Collection Proceedings Despite Valid Loan Mod Being In Effect, Says Ohio Homeowner In Lawsuit

In Hamilton County, Ohio, The Cincinnati Enquirer reports:
  • Carolyn S. Cable thought she had worked out a deal with her mortgage company to save her home from foreclosure after she had multiple brain surgeries and suffered a stroke that made her unable to work. But in a lawsuit filed in Hamilton County Common Pleas Court Friday, the Colerain Township woman alleges that Bank of America reneged on the deal and threatened foreclosure - even sending debt collectors after her. [...] In [her] case, she said a Bank of America representative told her that her loan modification was lost in the computer system.

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  • When she fell behind on her payments in 2008, Countrywide Home Loans - under pressure from the Ohio Attorney General to offer loan modifications - lowered her interest rate and extended the loan term. Her payment went from $524 a month to $401 a month - which Cable said she paid. But then Countrywide went out of business, and Bank of America bought its mortgages. Cable's lawsuit says Bank of America told her the loan modification agreement was still in effect, but then initiated debt collection proceedings against her anyway.

  • Cable is represented by the Legal Aid Society of Southwest Ohio. Lawyer Noel M. Morgan also represents a Clinton County couple in an almost identical situation, and said Bank of America's actions have become part of a growing practice by the bank to breach its agreements.

For the story, see Lawsuits: Bank reneged on loan deals.

Tuesday, September 22, 2009

Minister, Wife Charged Of Duping Elderly Man Into Signing Over Home; Subsequent Refinancing, Failure To Make Payments Leave House In Foreclosure

In Ventura, California, the Ventura County Star reports:
  • The pastor of the Solid Rock Christian Center in Ventura and his wife were arrested Thursday for allegedly duping an elderly man into signing over the deed to his home. Alonzo Gene McCowan, commonly known as the Rev. Lonnie McCowan, 49, was charged with two counts of theft from an elderly person and two counts of money laundering in an amount that surpassed $500,000, according to a felony complaint. His wife, Kimberly Ann Oglesby McCowan, 45, is charged with one count of grand theft and one count of money laundering in the same complaint.

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  • Alonzo Gene McCowan is accused of taking advantage of Leo Gilmond, now 86, by getting him to sign over the deed to his Ventura house in October 2004. In exchange, the pastor promised to pay Gilmond $460,000. McCowan told Gilmond “he wanted to buy the home so he could use it as a rental for church dignitaries and students,” according to an affidavit filed by Frank Huber, investigating officer for the Ventura County District Attorney’s Office.

  • When negotiating the purchase, McCowan told Gilmond he needed a signed grant deed that “would be held in the church office solely for the purpose of verifying the purchase of the property to church leaders and to demonstrate his authority to rent the property,” the affidavit states. It adds that Gilmond “knew signing a grant deed was risky but he trusted (A. McCowan) because he represented himself as a religious man; it was these religious representations that made Gilmond more trusting of (A. McCowan).”

  • In the years that followed, the McCowans made installment payments totaling $10,000 according to the agreement, said investigators. A balloon payment of $450,000 was due in January 2008. When Gilmond tried to collect it, he found his home was in foreclosure, according to court records. According to the investigator, “Gilmond was in disbelief. (A. McCowan) admitted to Gilmond that he had taken out a $420,000 loan on the property and had lost the money in the stock market.”

  • McCowan offered to continue the monthly payments while he worked with the bank but Gilmond went to his son, Gary Gilmond, and attorney Greg Jones to find out how McCowan was able to take out the $420,000 loan, according to the affidavit. They learned the McCowans had withdrawn $420,000 in equity by refinancing the property in Kimberly McCowan’s name.(1)

For more, see Pastor arrested in bilking of senior (Deed to Ventura home signed over).

For story update, see Judge cuts bail for the Rev. McCowan, who is charged in theft.

(1) For the McCowans to have obtained $420,000 in refinancing proceeds, the $450,000 payment the elderly homeowner was due to receive on the purported home sale was either unsecured by a mortgage/trust deed on the home he sold, or, if secured, the security agreement may have contained some form of subordination clause making it inferior in priority to any future mortgage/trust deed (thereby enabling the McCowans to refinance out $420,000 with a first mortgage and leaving the unwitting elderly homeowner in second position). DeedContraTheft