Jury Says St. Pete-Area Foreclosure Rescue Operator Liable For Duping Financially Strapped Homeowner Into Signing Over Home Under Guise Of Help

In Sarasota, Florida, the St. Petersburg Times reports:

• In a "groundbreaking'' case that could be the first of its kind in the nation, a jury this week found that the owner of a St. Petersburg foreclosure rescue company scammed a 60-year-old Port Charlotte woman out of her home. The Sarasota County jury awarded $93,467 to Wanda Costa, who unwittingly sold the house to Gideon Rechnitz for nothing in 2006 even though she had substantial equity at the time. Under the guise of helping her, Costa's lawyers said, Rechnitz and associate Thomas Cook duped her into signing over the deed without making it clear she would still be responsible for the mortgage and thousands of dollars in "commissions.''(1)

• "What the jury did in this case was say 'No' to that kind of behavior,'' said attorney Elizabeth Boyle of Gulfcoast Legal Services, which represented Costa for free. "I hope other people will come forward because they may get some relief, too.''

***

• As fraud proliferates, there has been a growing number of cases nationwide in which judges ruled in favor of homeowners who claimed they were cheated out of their property.(2) Boyle said her research indicated that Costa's case may the first in which a verdict was rendered by a jury. The nonprofit National Consumer Law Center said it did not know if there have been jury verdicts elsewhere.

For more, see Jury finds Rechnitz defrauded widow of her home in a foreclosure scam.

(1) According to the story, Rechnitz, the subject of several St. Petersburg Times articles, is among scores of individuals and foreclosure prevention companies under investigation by Florida Attorney General Bill McCollum.

(2) After a six day bench trial, the Office of the Washington State Attorney General similarly secured a significant award (nearly $4.2 million) from a foreclosure rescue operator peddling sale leaseback deals to, and running alleged "foreclosure surplus snatching" scams on, financially strapped homeowners. The operator entered into transactions with more than 300 property owners, and no one ever successfully regained their home from him, according to the state AG's office [see Pay time for notorious foreclosure rescue scammer (Attorney General announces major victory in state’s case with Washington man who promised help but took homes)].

• “Kaiser’s victims were elderly, disabled or low-income individuals – people who trusted him to solve their foreclosure problems and were betrayed,” [Prosecuting attorney James] Sugarman said. “Kaiser portrayed himself to these people as an expert in saving homes facing foreclosure, when he is actually an expert in taking homes facing foreclosure.”

For more, see Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M.

Nevada AG Secures Indictment Against Two In Alleged Loan Modification Scam; Non-Attorneys Accused Of Peddling Legal Services To Desperate Homeowners

In Las Vegas, Nevada, the Las Vegas Sun reports:

• Two Las Vegas residents were indicted [..] for allegedly operating a foreclosure rescue scam in Las Vegas, Nevada Attorney General Catherine Cortez Masto said. Jack Ferm and Mario Saunders allegedly operated the foreclosure scheme from September 2008 through September 2009 under the business name US Justice Foundation.

• The indictment alleges that Ferm and Saunders operated US Justice Foundation, described as a document preparation business that charged $2,500 and misled customers into thinking that the service would stop foreclosures on their homes or help them obtain loan modifications, Masto said. [...] In most cases, Ferm and Saunders required the victims to pay a monthly charge of $150 for litigation costs in addition to the original $2,500 retainer, despite the fact that neither Ferm nor Saunders were licensed attorneys in Nevada, authorities said.(1)

For the story, see Two Las Vegans indicted for alleged foreclosure scam.

In an earlier post, see Nevada AG Files Felony Theft Charges Against Owner Of Vegas Loan Modification Firm.

(1) Ferm was indicted on one felony theft count for obtaining money in excess of $2,500 by misrepresentation from a person 60 years of age or older; five felony counts of theft; and one felony count of theft of money in excess of $250 by misrepresentation from a person 60 years or older; and three felony counts of theft obtaining money in excess of $250 by misrepresentation. An indictment against Saunders included four felony counts of theft in excess of $2,500 and one felony count of theft of $250 or more by misrepresentation.

Complaints Begin Rolling In Against Florida Attorneys Offering Loan Modifications; Lack Of Legal Representation, Fee Structure Among Concerns

In South Florida, the Miami Daily Business Review reports:

• Gladis Heras [...] thought she was in good hands. Heras said she paid [attorney Daniel] Fox $3,500 in January 2009 to modify her mortgage. Yet months later, the bank told the New York resident it had never been contacted by Fox about the modification. Her story is familiar, according to the attorney general’s office and [Florida] Bar officials. The officials say homeowners most frequently report that lawyers charged them from $1,500 to $5,000 to negotiate lower monthly mortgage payments. And that once paid, the attorneys either stopped answering calls or made no effort to contact the lender.

• On top of lack of representation cases before the AG’s office and the Florida Bar, there also are ethical questions about how lawyers handle foreclosure defense and loan modifications, especially the way homeowners are billed. Some lawyers are being criticized for aggressive fee structures that are tied to the amount owed on the mortgage rather than the scope of work involved. Some lawyers charge homeowners monthly fees until the case is resolved or flat fees billed in monthly installments.(1)

***

• Another issue: Some homeowners believe that as soon as they start making monthly payments to an attorney they have legal representation. That is not always the case, [local foreclosure defense attorney George] Castrataro said. Although the payments are in installments, legal representation may not begin until a minimum amount is deposited into a lawyer’s trust account. That could take two to six months.

***

• Another pitfall for homeowners who don’t want to do [their loan modification] themselves: Castrataro said some lawyers take on modification cases where they know — or should know — the homeowner doesn’t qualify for a loan modification. After taking a fee and overseeing a needless process, they tell the homeowner the modification was denied. Castrataro says inexperience or taking too many cases is as much to blame as greed for that situation.

For the story, see Record number of complaints target modification lawyers.

For a related story on similar problems faced in California, see Calif. Bar Official: "The Number Of Attorneys Using Their Law Licenses To Essentially Take Money From Unwary But Trusting Consumers Is Astounding!"

For State Bar advisories addressing lawyer conduct in loan modifications, see:

• California Ethics Alert: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications,
• Florida Ethics Alert: Lawyers should be very wary of loan modifiers.

(1) Both fee structures are problematic, said George Castrataro, a former lawyer with Legal Aid Service of Broward County who now has his own firm and does foreclosure defense work. “The fees should be directly related to a reasonable number of hours an attorney spends working on the case,” he said. “The amount often taken is very similar to client mortgage obligation. If it takes two hours to resolve it, that is what it should cost, and not how much they pay in mortgage. That [practice] is in direct violation of our obligations.” UnauthPractOfLawTheta

Nevada Homeowners Seek Preliminary Injunction To Halt MERS' Foreclosures

In Las Vegas, Nevada, the Las Vegas Sun reports:

• A bankruptcy judge here, joining judges across the country, is throwing a bit of sand in the gears of the mortgage machine and its ruthless foreclosure blade. She has raised this issue: In many home foreclosures springing out of bankruptcy proceedings, the foreclosure is being triggered by a representative of the lender — a surrogate that may not have a legal, equity stake in the proceedings. As a result, it is conceivable — though still something of a legal long shot — that the homeowner who is filing for bankruptcy protection could end up saving his house.

• The argument that a lender’s surrogate can’t trigger foreclosure has drawn notice of Nevada homeowners, who are preparing a class action lawsuit. They are seeking a preliminary injunction this month to stop their foreclosures.(1)

***

• [I]n a Las Vegas case this spring, federal Bankruptcy Judge Linda Riegle ruled that MERS had no standing because the company is not the real party in interest — it doesn’t actually own the loan. In other words, in the course of bankruptcy proceedings, MERS had no claim to the house.(2)

For more, see Ruling by judges rattles mortgage industry (Some foreclosures may at least be slowed).

See also, United Press International: Nevada Suit Could Halt Thousands of Foreclosures.

(1) Reportedly, University of Utah law professor and former consumer rights attorney Christopher Peterson has been hired by the Reno law firm Hager & Hearne as an expert witness in a class action lawsuit that will seek to invalidate the right of MERS to trigger foreclosure. Their case will reportedly rely heavily on a recent Kansas Supreme Court ruling [see Landmark Nat'l Bank v. Kesler, No. 98,489, 2009 Kan. LEXIS 834 (August 28, 2009)]. In that foreclosure case, the court said that MERS had “no right to the underlying debt repayment secured by the mortgage ...”

(2) In re Mitchell, Case No. BK-S-07-16226-LBR (D. Nev. 2009). See also, Las Vegas Business Press: Judge's ruling deals blow to national mortgage servicer.

Cops: Land Grabber Hijacked Vacant Homes, Rented Them To Unwitting Tenants; Used Bogus Adverse Possession Claims, Quiet Title Suits To Swipe Deeds: AG

In North Las Vegas, Nevada, the Las Vegas Review Journal reports:

• Former real estate agent Eric Alpert, whose nefarious business practices were brought to light by the Las Vegas Review-Journal in 2003, has been arrested by North Las Vegas police for renting homes he did not own or have permission from the owner to rent. [...] Alpert, 54, has been charged with four counts of burglary; four counts of theft; four counts of obtaining money under false pretenses; and seven counts of forgery. The district attorney's office said it also plans charges on three counts of offering a false instrument.

• Alpert identified properties that appeared to be abandoned or in foreclosure, cleaned them up and changed the locks, then rented them cheaply to people who had no suspicion of his wrongdoings. He had about 20 homes in Las Vegas, some of them titled to living trusts and under the name of his former business, Sherlock Homes, according to Clark County Assessor records.

***

• Court filings reveal that Alpert apparently continued to engage in real estate activity that's at least similar to what he was doing a few years ago, attorney Mark Connot of Hutchison & Steffen law firm said. Alpert appears to file an action to quiet title on properties, and if the owner does not appear to contest the action, he receives title to the property, the lawyer said. He claimed at that time to be legally taking homes by "adverse possession" under Nevada law, but the attorney general's affidavit notes that NRS 11.150 specifically states that "requirements for adverse possession is occupation continuously for five years" and payment of taxes, which Alpert did not do.

For the story, see: Ex-agent arrested for renting homes he didn't own (Victims lured by cheap rent soon evicted).

For a follow-up story, see Victims of rental scam speak out. KappaPhonyLandlordScam

Metro Detroit Authorities Alert Would-Be Tenants To "Phony Landlord" Rent Scams Using Hijacked Homes

In Oakland County, Michigan, the Daily Tribune reports:

• A 30-year-old professional chef from Keego Harbor fell in love with a house in Berkley that she saw listed for rent on the Web site Craigslist. She especially liked its kitchen. But it turned out the house was not really for rent, and the woman nearly fell prey to a scam that's targeting renters in Oakland County and elsewhere.

• Authorities say the scam artists pose as homeowners looking to rent out their houses. They often pick a house that's for sale so it's not occupied, and post a real picture of the property with a "for rent" advertisement on Craigslist, an online classified service.

***

• Berkley Public Safety Detective Sgt. Michael Crum has taken nine or 10 reports of similar scams since the end of May. In two of those, people lost money, he said. [...] Crum said scammers also will sometimes open the lockbox on the outside of the door of a house for sale, take the key inside and make a duplicate. The duplicate key will be given to the renter, who moves in — to the shock of the real estate agent who is listing the house. Crum said the scam has happened in other states, such as South Carolina and California, and now seems to be hitting the metro Detroit area.

For the story, see Authorities warn of rental home scams. KappaPhonyLandlordScam

UM School of Law Announces Foreclosure Defense Fellowships; Nationally Recognized Legal Aid Attorney To Train Newly Minted Lawyers

In Coral Gables, Florida, the University of Miami announces:

• The South Florida community is ground zero for the national foreclosure crisis. In response, the University of Miami School of Law has created Foreclosure Defense Fellowships that will enable newly minted lawyers to give free help to local residents caught in the foreclosure crisis. The School of Law is one of the first schools in the nation to create a program of this kind in response to the crisis that is sweeping the country. Recent UM graduates will acquire real-world work experience and address a serious need in the community at the same time.

***

• Eight UM Law graduates were the winners of these fellowships. Six fellows [...] will work for the Legal Services of Greater Miami, Inc. (LSGMI). Two additional fellows [...] will work at the Legal Aid Service of Broward County, Inc. They will receive a limited grant totaling $10,000 in exchange for working at least three days a week for 27 weeks, commencing in early October. The fellows will receive intensive training [...] at a foreclosure workshop hosted by the UM School of Law, featuring April Charney, JD ’80, a consumer lawyer and nationally recognized foreclosure defense expert.

• In addition, three students from the School of Law’s LL.M. in Real Property Development [...] will inaugurate a clinical track in that program by providing 15 hours per week of free foreclosure defense representation. The LL.M students will work under the supervision of local lawyers who also will be working without pay. These fellows will be placed at “The Foreclosure Project,” created by Richard Burton, JD ’74, which provides free legal representation to homeowners facing foreclosure in Dade and Broward counties.

For the entire press release, see School of Law Announces Foreclosure Defense Fellowships.

NJ Attorney Dodges Serious Sanctions In Improper Fee-Splitting Deal w/ Foreclosure Surplus "Snatcher"; Lawyer "Not Venal" - Just Clueless, Says DRB

In Trenton, New Jersey, the New Jersey Law Journal reports:

• The New Jersey Supreme Court has censured a Point Pleasant, N.J., solo for splitting fees with a company that helped him find clients entitled to surplus funds from sheriff's foreclosure sales.(1) The court adopted the Disciplinary Review Board's finding that Garrett Lardiere's business relationship with Vermont-based Equinox Research and Recovery Co. constituted impermissible sharing of legal fees with non-lawyers.

• According to the DRB, Lardiere's relationship with Equinox dates to 2003. The company researches foreclosure records to find surplus funds from sheriff's sales on deposit in New Jersey Superior Court. Equinox sent letters printed on Lardiere's letterhead to individuals it believed were entitled to such funds. The letters were signed by an Equinox employee and listed the company's toll-free phone number.

***

• The DRB, in a July 23 opinion, said the record included letters from Equinox to Lardiere that "call into question respondents' professional independence" in the matters in question. In one, Lardiere was urged to refer inquiries from would-be clients to Equinox, because "we know what is going on in the case and stand a better chance in getting them to sign at a higher rate," a company representative wrote.(2)

• Lardiere "relinquished control of his cases to an organization of non-lawyers who were acting under color of his name in dealing with his clients," the DRB found. In addition, he failed to ensure that his clients' interests would be protected.(3)

***

• The DRB said either a censure or a three-month suspension could be supported for the fee-sharing offense, combined with the record-keeping and failure to cooperate offenses. It imposed censure based on Lardiere's 35-year unblemished record. "Respondent is not venal. Rather, he has a distinct lack of knowledge or a lack of understanding about his responsibilities as a member of the bar," the DRB said.

For more, see Attorney Censured for Splitting Fees With Foreclosure-Research Company.

For information on how foreclosed New Jersey homeowners can claim any surplus funds on their own, see:

• this state Attorney General press release,
• this state Consumer Affairs office circular, and
• this Surplus Money Application.

Go here for other stories on "foreclosure surplus" scams.

(1) When the sales price of a home sold at a foreclosure or sheriff's sale exceeds what is owed to the mortgage holder, the excess is generally referred to as the "foreclosure surplus," "surplus funds," or "the overage."

(2) Reportedly, people who responded to the solicitations were asked to sign a contingency agreement with Lardiere, which came attached to the letter. But the letters contained none of the language required in attorney-solicitation letters under New Jersey Rule of Professional Conduct 7.3, such as a prominent heading with the word "Advertisement" or a notice that the recipient may contact the Committee on Attorney Advertising if the content is misleading or inaccurate, the DRB said.

With respect to the compensation scheme. Equinox received a percentage of the funds recovered, and Lardiere received a cut of Equinox's share, along with a flat fee of $750 per case. When Lardiere received a recovery, he deposited it in his trust account and disbursed the proceeds to the client, to Equinox and to himself.

(3) The DRB also found Lardiere's violated record-keeping strictures by keeping unreconciled trust accounts, and further that he was reluctant to give ethics investigators unfettered access to his files, constituting a failure to cooperate with disciplinary authorities. lawyer renting UnauthPractOfLawTheta

Landlord To Cough Up $134K To Settle Allegations Of Refusing Rental To Woman w/ "Too Many Children," Charging Other Tenants Extra Fees For Having Kids

From the U.S. Department of Justice:

• The Justice Department’s Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Alabama and the Department of Housing and Urban Development (HUD) [...] jointly announced an agreement with the owners and managers of Pina’s Mobile Home Park in Daphne, Ala., to settle allegations of discrimination against families with children. Under the consent decree, [...] the defendants must pay up to $104,130 to victims of discrimination and an additional $30,000 to the government as a civil penalty.

• The lawsuit [...] originated from a charge filed by HUD on behalf of a woman who tried to rent at Pina’s Mobile Home Park, but was told she had too many children (three) to live in the park. Numerous other tenants were charged extra monthly fees for having children in their mobile homes. The complaint alleges that Arthur C. Witherington and Pina D. Witherington violated the Fair Housing Act when they discriminated against applicants and tenants with children under 18.(1)

For the entire press release, see Justice Department Obtains $134,000 in Discrimination Settlement with Mobile Home Park in Daphne, Alabama.

(1) "Limiting how many children a tenant can have and charging extra fees for children are discriminatory, and families are protected from this kind of discrimination by the Fair Housing Act," said Acting Assistant Attorney General Loretta King of the Civil Rights Division. "People do not lose their rights to fair housing because they have children," said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. "HUD and the Department of Justice will defend their rights vigorously."

Landlord, Feds Settle Suit Alleging Violation Of Servicemembers' Right To Terminate Lease Under SCRA

From the U.S. Department of Justice:

• The Justice Department [...] announced that it had reached a settlement with a Virginia landlord to resolve allegations that she violated the Servicemembers Civil Relief Act (SCRA). The lawsuit alleged that the landlord failed to return prepaid rent and security deposits to a tenant who had terminated her lease early in order to comply with military orders to relocate to Georgia.(1) [...] The complaint, which was filed with the settlement, represents the first lawsuit involving a landlord-tenant matter brought by the Justice Department under the SCRA.(2) Under the terms of the settlement, which must be approved in federal court in Virginia, the landlord must pay her former tenant a total of $5,600 in damages and is enjoined from engaging in future violations of the SCRA.

***

• The tenant in this lawsuit, Colonel Debra Bean, is a highly decorated member of the armed forces. Colonel Bean currently serves as Vice Commander for the 78th Air Base Wing at Robins Air Force Base in Georgia.(3)

For the entire press release, see Justice Department Announces Settlement of Its First Landlord-Tenant Case Under the Servicemembers Civil Relief Act.

(1) The SCRA provides certain protections to active duty servicemembers who must terminate residential leases to comply with military orders for a permanent change of station or for deployment.

(2) According to their press release, the Justice Department’s investigation of this matter originated with a referral to the Civil Rights Division from the U.S. Air Force. The Civil Rights Division received enforcement authority under the SCRA in 2006, and has since reviewed numerous allegations of SCRA violations and resolved investigations in the following areas without the need for litigation:

• the charging of excess interest over the six percent interest rate cap;
• the repossession of vehicles without court orders; and
• the foreclosure on home mortgage loans without court orders.

Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Office locations may be found at http://legalassistance.law.af.mil/content/locator.php. Additional information on the Justice Department’s enforcement of the SCRA and other laws protecting servicemembers is available at www.servicemembers.gov.

(3) The landlord obviously picked the wrong person to mess with.

LSC "Justice Gap" Report Highlights Continuing Unmet Basic Legal Needs Of Low Income Individuals, Families

From the Legal Services Corporation, a private, nonprofit corporation that promotes equal access to justice and provides grants for civil legal assistance to low-income Americans:

• Nearly a million poor people who seek help for civil legal problems, such as foreclosures and domestic violence, will be turned away this year by the nation's largest nonprofit legal aid network because of insufficient resources, the Legal Services Corporation (LSC) projects in a report released [Wednesday]. The report is the Corporation's second analysis of the "justice gap" in America -- the difference between the level of civil legal assistance available and the level that is necessary to meet the legal needs of low-income individuals and families.

***

• "Many of these Americans in need of legal assistance are the most vulnerable among us-they are trying to escape from domestic violence, trying to avert foreclosure and homelessness, trying to qualify for disability benefits, trying to recover from natural disasters. Legal aid saves lives and makes communities stronger," LSC President [Helaine M.] Barnett said.

For the entire press release, see LSC Releases Updated Report on the Justice Gap in America.

For the full report, see Documenting the Justice Gap in America: The Current Unmet Civil Legal Needs of Low-Income Americans. (2.4 MB)

Ex-NH Prosecutor/Former State Lawmaker Cops Plea To Lying On Mortgage Loan Applications, Failing To Disclose To Lender Side Deal With Builder

In Concord, New Hampshire, the New Hampshire Union Leader reports:

• A former part-time Hillsborough County prosecutor(1) pleaded guilty yesterday to defrauding two mortgage companies and could face a federal prison sentence when she returns to court in January to be sentenced, federal prosecutors said [...]. Brookline resident Paula Philbrook, 41, admitted that she inflated her income on applications in order to obtain more than $600,000 in mortgage financing to build two homes in Brookline. She falsely claimed she was living in one home, although she actually was leasing it out and had it on the market. And her mortgage application omits a key portion of the contract between her and her builder. The deal called for Philbrook and her builder to split the down payment and mortgage payments and share in the proceeds of the sale.

For more, see Ex-prosecutor admits $600k mortgage scam.

For the U.S. Attorney press release, see Former County Prosecutor Pleads Guilty To Mortgage Fraud.

(1) Reportedly, Philbrook is also a former state lawmaker - a member of the New Hampshire House of Representatives - who represented Nashua in the 1990s.

Minn. Man Charged With Leaving 95-Year Old, Dementia-Suffering Mom Behind In Rent; Accused Of Looting Bank Accounts, Persuading Her To Buy Him House

In Ramsey County, Minnesota, the Pioneer Press reports:

• A 95-year-old Roseville woman, who suffers from dementia, had her bank account frozen and fell behind on rent after her son cashed thousands of dollars in checks from her account, a criminal complaint stated. Joel Allen Berntsen, 58, of Minneapolis, was charged with financial exploitation of a vulnerable adult.

According to the criminal complaint:

• Berntsen told police he borrowed $290,000 from his mother in 2006 to buy a house in North Oaks. She also gave him $2,000 a month for house payments. But in 2008, the home — which was in his mother's name — went into foreclosure. The IRS later notified his mother that she owed $12,928 in back taxes on the home.

***

• In March, Ramsey County Adult Protection said the woman qualified as a vulnerable adult, after a health care worker who took care of her called police because the woman's bank accounts were overdrawn because of the large amount of checks Berntsen cashed. In June 2006, the community organization Lifetrack Resources found the woman to be a vulnerable adult at risk of mental or financial exploitation.

***

• Roseville police discovered that the woman was behind on her rent and that several of her checks had bounced because of insufficient funds. A review of her checking account at North Star Bank disclosed that between April 1, 2008, and March 1, 2009, Berntsen cashed 26 checks — 25 of them payable to himself.

For more, see Man charged with financially exploiting 95-year-old mother (Son, 58, charged with exploiting vulnerable adult).

See also, the Star Tribune: Son accused of duping his mom, 95, out of thousands (The charges say he wrote checks on her account and persuaded her to buy him a $290,000 house in North Oaks). FinancialAbuseOfElderlyAlpha

Two Charged With Throwing Tenant Out Of Foreclosed Home; Accused Of Nailing Windows Shut, Terminating Water & Electric Service

In Clawson, Michigan, WJBK-TV Channel 2 reports:

• Two people in Clawson are accused of taking the law into their own hands and throwing a young mother out of her home. "They took everything, brought it out, cleaned it. I mean, the house was clean. It wasn't like it was trashed, but everything was out on my porch," said Amanda Champagne. The 19-year-old is renting a house in Clawson that's in foreclosure. Technically, she, her boyfriend and her two children have until December to get out, but two of her neighbors are accused of throwing her out early.

• Police say 56-year-old Timothy Simon and 45-year-old Monica Kaufman went into the home on September 13 while she wasn't there, cleared everything out and made sure nobody could get in. The windows were actually nailed shut and there was even a no trespassing sign nailed to the front of the house. "They shut off the water. They shut my refrigerator off, so all my food spoiled," Champagne said. Police say the suspects said they were taking back their street and securing an abandoned drug house.

• Police say they've been called to the home in the past for parties and loud music and Champagne has been arrested for disorderly conduct, but there have been no drug related arrests.(1)

For the story, see Two Accused of Throwing Mom Out of Home.

(1) A related story reports:

• The renters, whom [police] said had a lease to rent the home until December even though it's in foreclosure, were out of the town. They returned to find all of their belongings -- clothing, a TV, video games -- on the front and back porch. [... Police] said the home "isn't the best looking house on the block" but the lawn was cut and the renters had a legitimate lease. [One investigator] said police had visited the house more than twice for loud music, animal complaints, but drugs didn't appear to be an issue.

See The Detroit News: Clawson neighbors charged in break-in of foreclosed home.

Tear Gas Raid At Oakland Apartment Building In Foreclosure Leaves Five Families Homeless

In Oakland, California, KTVU-TV Channel 36 reports:

• Five families were still homeless [...] after being displaced by a standoff [...] at their East Oakland apartment building. They said they have been caught in the middle of two raids in just six months and that it's made their lives extremely difficult.

• Tamesisha Marbray said her apartment was boarded up Monday afternoon when she tried to return home. Her home is the apartment building where Oakland Police and the Alameda County Sheriff's SWAT team conducted a raid on Friday. SWAT team members shot tear gas into the building during a search for a shooting suspect they believed was hiding inside. As it turned out, he wasn't there.

***

• Residents said the smell of tear gas lingers in their apartments and on their belongings. One woman said her children didn't have clean clothes to wear to school. Tamesisha Marbray said she tried to salvage what she could for her newborn daughter and move their belongings into a relative's van. "All this stuff is brand new stuff. She'll never be able to wear it; it smells like gas," said Marbray. Adding to the residents headaches, a letter from the company managing the apartment building notified them that the building is in foreclosure.

For the story, see Raid At Troubled Apartment Building Leaves Families Homeless.

For follow-up stories, see:

• Tenants nervous to return to raided building,
• Tenants offered way out of troubled building.

Square-Off With Police Sharpshooters Fatal For Foreclosed Phoenix Homeowner

In Phoenix, Arizona, The Arizona Republic reports:

• As officers closed in, Kurt Aho drank his beer, ignoring commands to drop his gun. Before police arrived he told neighbors he refused to surrender himself or the home he lived in for nearly 30 years. Faced with foreclosure and stacks of medical bills to treat a recurring battle with cancer, the 64-year-old squared off Tuesday against a team of Phoenix police sharpshooters moments after he shot out the tires of two trucks parked on his cul-de-sac near Bell Road and 31st Avenue.

***

• Jeffrey Hobson said he shared a final beer with Aho moments before the confrontation. He said he worried when Aho told him he wanted to die. “He said, ‘When the cops get here either I'm gonna die by them or I'm gonna kill myself,'” said Hobson. “They gave him exactly what he wanted.”

For more, see Foreclosure may have sparked fatal clash with police. DeputyEvictionTheta

Communication Problems With Loan Servicer Jeopardize Homeowner's Forbearance Agreement, Resulting In Foreclosure Threats

In Jeffersonville, Indiana, The News and Tribune recently ran a column by a local homeowner who, despite entering into a seemingly valid forbearance agreement with her loan servicer, details the mess she's facing due to the subsequent communication problems she's having with the company's different departments, reflecting their apparent inability to handle her situation:

• One collections employee actually offered a quote for this column explaining that, though it might seem the right hand doesn’t know what the left hand is doing, they’re operating on the principle of “prevalence.” I never caught on to what prevalence meant. This guy probably wasn’t authorized to talk to the media. He changed his mind about being quoted and didn’t want to identify himself.

Among the alleged screw-ups is the handling of one payment on her forbearance agreement, which the servicer pocketed and placed in “unapplied funds,” which she describes as those funds they already have, but you still owe.

For the story, see House might be lost in translation.

Media Intervention Helps Houston Widow Recover Foreclosed Home After Loan Servicer Screw-Up

In Houston, Texas, KRIV-TV Channel 26 reports on a local homeowner faced with financial trouble after Hurricane Ike hit, which caused significant damage to her home, only to be followed by a home repair scammer who pocketed $4,000 of her money without doing any repairs on her home:

• Desperate to get her house back to normal, she asked her mortgage company, Merrill Lynch for an extension of her mortgage payments. The company agreed. And once the insurance money arrived, she was able to catch up on her payments. She also paid an additional $31,000 to her principal.

• Days later she got a letter saying her home was being foreclosed. But things got worse. She then got a second letter stating her home was going to be auctioned off. She says she immediately called Merrill Lynch. '(I) finally got somebody and they said, 'OK, we're taking you off the foreclosure list. You should never have been on there.'"

• Amanda thought her emergency as over; it wasn't. When she got home from shopping one day she discovered a 'notice of sale' posted on her front door. Her home had been sold and she had to move out.

Armed with documents showing that the homeowner had paid all her bills and that someone with the mortgage servicer had made a big mistake, Channel 26 intervened on Amanda's behalf. Neither her mortgage company or the attorneys involved in the foreclosure would discuss the issue; however, the homeowner ultimately received papers stating that the foreclosure was canceled and the sale rescinded.

For the story, see Error Lands Lady's House in Foreclosure.

Elderly Foreclosed Couple Resists Bogus Bank Employees Attempting Lock-Changing Scam To Bluff Them Out Of Home

In Redding, California, The Record Searchlight reports:

• Everett and Delores Dale knew something wasn't right when two men pulled up to their Enterprise-area home one day unannounced and told them they needed to get out. Though the couple had lost their home to foreclosure on Sept. 2, the bank had not given the Dales a move-out date. But the men in the pickup were persistent. They advised the Dales they were representing Bank of America and would return in two days to change the locks, 80-year-old Delores Dale recalled.

• The Dales would later learn they nearly became victims of a scam popular in Southern California. Posing as bank employees, the scammers go to a foreclosed home and give the occupant an ultimatum. Often, the victim will get scared and move out, leaving the house vacant. The scammers either move in or rent out the house until the bank catches on.

For more, see Foreclosure scammers hit Redding (Delores and Everett Dale are losing their home to foreclosure. Two men came to their door recently and told them they were there to change the locks, a scam that has been making the rounds in Southern California).

Pressure On State Bar To Implement Special Review Process To Discipline Florida Attorneys That Play Fast & Loose When Representing Foreclosing Lenders

In Sarasota, Florida, Sarasota Herald Tribune columnist Tom Lyons comments on the recent news from The Florida Bar, which will reportedly look into implementing a special review process to specifically discipline attorneys for foreclosing mortgage lenders guilty of playing fast and loose with their court filings in, and representations to judges presiding over, foreclosure actions:

• Lawyer jokes aside, the legal system only functions as well as it does because most lawyers are honest. That is, most don't make flat-out lies and forgeries a routine part of their work. They spin the facts, yes, and they are adept at dodging and weaving around troublesome features of reality while presenting a case.

• But filing fake documents to establish the right to take possession of someone's home? That's not something a lawyer should do. So what if that were suddenly happening in cases all over the nation? What if some law firms that specialize in bulk handling of mortgage foreclosures for the lending industry were having so much trouble finding original loan documents, and documents showing the ownership trail as debts were packaged and resold, that many started filing forged documents in their place?

• That seems to be the fact, according to a study by a Florida Bar group. And Harley Herman, a lawyer who is part of a Florida Bar group pushing for a special review of ethics violations in foreclosure cases, says this is a serious problem.

For the story, see Foreclosure chicanery not a funny lawyer joke.

Ohio Lawmaker Calls For GAO Probe Of Lender Practice Of Initiating, Then Abandoning, Foreclosure Actions, Leaving Vacant Homes In Legal Limbo

From the Office of U.S. Senator Sherrod Brown (D-Ohio):

• A growing number of lenders are refusing to take possession of homes after they have been foreclosed, leading to vandalism and neighborhood decline in Cleveland and cities across Ohio. In response to this alarming trend, U.S. Sen. Sherrod Brown (D-OH) called for a federal investigation of so-called “bank walkaways.”(1)

***

• In a typical foreclosure, the lender assumes responsibility for the property once the foreclosure proceedings have been completed. The property is then put up for auction, [...]. In the event that no one meets the opening bid, the lender takes over the title of the home and tries to resell it. Because the lender owns the property, it has an interest in maintaining the home’s condition and dealing with tax liens.

• In a rising number of cases across Ohio, however, lenders are refusing to take possession of foreclosed homes – leading to properties that are neither being sold at auction nor maintained by the lender. The result is an increase in vandalism and a decline in property values in the area surrounding the abandoned home. And foreclosed homeowners – who have been forced to leave their homes – are left with back taxes and housing code violations for homes at which they no longer live.

For Senator Brown's entire press release, see Brown Points to Rising Occurrence in Ohio of Lenders Refusing to Take Possession of Foreclosed Homes, Leading to Vandalism, Neighborhood Decline.

(1) “I am concerned that bank walkaways are exacerbating the problems that homeowners are already facing as a result of the foreclosure crisis,” Brown wrote in a letter to the Government Accountability Office (GAO) requesting an investigation of the practice. “I am also concerned that bank walkaways could complicate government efforts to help stabilize distressed neighborhoods through the acquisition, rehabilitation, and resale of foreclosed properties.”

MD AG Wins "Rescue" Scam Civil Suit; Settles w/ Lenders Who Financed Bogus Sale Leasebacks, Saves Homes For Some, Clips Closing Agent For $100K

In Baltimore, Maryland, The Real Estate Wonk Blog in The Baltimore Sun reports:

• Stop me if you've heard this one before: Borrower needs help. Borrower goes to foreclosure-rescue business to get help. Borrower signs documents to get or start the process of getting the mortgage refinanced, only to discover later that the foreclosure-rescue specialists were really getting the home signed over to them. Such fraud has happened across the country, both before and after the housing market went downhill.

• One local case just wrapped up in Baltimore City Circuit Court with a judgment ordering the defendants to pay just over $1 million in restitution and penalties. The business associates, Michael K. Lewis, brother Earnest Lewis, Cheryl Brooke and Winston Thomas, pleaded guilty earlier in the year to criminal charges related to dozens of foreclosure rescue scams. Michael Lewis was sentenced to 6 1/2 years in prison, Earnest Lewis to 4 1/2 years, Brooke to almost four years and Thomas to just over three years.

• The Baltimore civil case, brought by the Consumer Protection Division of the Maryland Attorney General's Office, covered 13 properties, most in the Baltimore area. Once the homeowners unwittingly signed over their properties, Earnest Lewis pulled all their equity out with a new loan and split the money with the defendants, said Bill Gruhn, chief of the Consumer Protection Division. "Some of the homeowners have moved," he said. "Other homeowners are in their homes and we were able to facilitate settlements" with the lenders.(1)

For more, see Homeowner beware.

See also, Maryland Attorney General press release: Attorney General Gansler Announces Judgment of More Than One Million Dollars in Restitution and Penalties in Foreclosure Rescue Scam:

• The [Consumer Protection] Division also entered into a consent order with Cornerstone Title & Escrow, Inc., a real estate settlement company, that the Division sued for participating in the scheme and for using practices that violated the Consumer Protection Act. Cornerstone denied the Division’s allegations and has not admitted any wrongdoing. [...] The consent order entered with Cornerstone requires the company to pay $100,100, [among other things].

(1) Last year, Massachusetts Attorney General Martha Coakley similarly reached a settlement with ten lenders and loan servicers who financed equity stripping ripoffs for a foreclosure rescue group who peddled bogus sale leasebacks to financially strapped Massachusetts homeowners facing foreclosure. The settlement impacted 26 residential properties, was designed to return homeowners to their financial position before they were screwed over in transactions that stripped their home equity, and provided an opportunity for the victims to reacquire the legal title to their homes. The victims' mortgage liens were to be reduced to the lower of the actual amount paid for prior mortgage loans on the property, subtracting any beneficial payments to the homeowners; or 80% of the then-current value of the properties, resulting in approximately $1.8 million in reduced mortgage obligations. See Court Approves Massachusetts Settlement With Lenders In Bogus Foreclosure Rescue; Case Involved AG Claims Of Equitable Mortgage, Usury, Etc.

Include Arkansas Supreme Court On List Of Legal Authorities Having A Problem With MERS' Business Model

Attorney Kathleen E. Kraft, with the Washington, D.C. law firm Thompson Coburn LLP, writes:

• On March 19, 2009, the Supreme Court of Arkansas determined that Mortgage Electronic Registration Systems, Inc. (“MERS”) was not a necessary party to a foreclosure action involving the foreclosure of a junior mortgage, where MERS was not the true beneficiary of the senior deed of trust nor was specifically authorized by the lender to act on the lender’s behalf in the foreclosure proceedings. Mortgage Electronic Registration Systems, Inc. v. Southwest Homes of Arkansas, -- S.W.3d --, 2009 Ark. 152, 2009 WL 723182 (Mar. 19, 2009). Coming in on the heels of Landmark National Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177 (2008)(1) (also finding that MERS was not a necessary party to a foreclosure action), Mortgage Electronic Registration Systems, Inc. v. Southwest Homes of Arkansas places MERS on unstable ground in mortgage foreclosure actions.(2)

For more, see Another Nail in the MERS Coffin: Arkansas Court Rules That MERS Was Not A Necessary Party To A Foreclosure Action In Which MERS Served As Lender’s Nominee On The Senior Deed Of Trust.

(1) This 2008 ruling of the Kansas Court of Appeals was recently affirmed by the Kansas Supreme Court. See Landmark Nat'l Bank v. Kesler, No. 98,489, 2009 Kan. LEXIS 834 (August 28, 2009).

(2) In a separate, unrelated lawsuit, the following all star lineup of mortgage lenders have been named and identified as allegedly the controlling shareholders of MERS:

• Citigroup, Inc., the now-deceased Countrywide Financial Corporation (now owned by Bank of America), Fannie Mae & Freddie Mac (both of which are sucking wind financially, and are currently operating under the control of the Federal government), GMAC-RFC Holding Company, LLC, (doing business as GMAC Residential Funding Corporation), HSBC Finance Corporation, JP Morgan Chase & Co., the late Washington Mutual Bank (now owned by JP Morgan Chase & Co.), and alleged "ghetto loans" peddler, Wells Fargo & Company.

See Homeowners In Foreclosure Being Clipped For Illegally Inflated Legal & Appraisal Fees, Says Lawsuit. EpsilonMissingDocsMtg

Cops: Wife Used Improperly Notarized POA In Sale Leaseback Of Home Without Hubby's Consent; Subsequent Use Of "Rubber" Rent Checks Gets Them The Boot

In Bantam, Connecticut, The Register News reports:

• A Bethlehem woman is facing criminal charges for allegedly selling her marital home without her husband’s knowledge. Shelley Ciriello, 55, [...] is scheduled to appear in Bantam Superior Court Oct. 5.

***

• Ciriello reportedly sold the house to Lurlyn Seigler of Boston, Mass. and agreed to rent it from the woman for $3,767 per month. But when the rent checks started to bounce, the woman filed a complaint at the Bethlehem Resident Trooper’s office in July. The couple was evicted in June, according to court records.

• But even though his wife had been to court and making deals with Seigler, the eviction came as a surprise to James Ciriello. The husband didn’t know he was renting the house he purchased with his wife in 1974. Shelley Ciriello maintained the family finances and books for his business. “I never knew what she was doing with the accounts and the money,” James Ciriello told police in his statement. Ciriello reportedly used a power of attorney to negotiate the sale of the house and subsequent court actions.

• A woman Ciriello worked with at a physician’s office in Waterbury notarized the power of attorney on Ciriello’s word that it was for her disabled brother-in-law. When police talked to the notary, she admitted she executed the document and added Ciriello was fired from the job for stealing co-payments from the office, according to the warrant. Ciriello admitted her husband was not involved in the sale of the house.

• The couple owned the house free-and-clear after purchasing it from her husband’s parents. But Ciriello reportedly abused a line of credit, using the three-bedroom Cape as collateral.

For more, see Wife sold house, husband clueless.

Stranger Pays Back Taxes On Nursing Home-Bound 92-Year Old Alzheimers Patient's Vacant House, Then Rents It Out In Attempt To Lay Claim To Property

In Boise, Idaho, the Idaho Statesman reports:

• On May 16, 2007, David Foldesi walked into the Ada County Courthouse and paid $8,875.62 in delinquent property taxes on [92-year old Marcella] Boylan's house. Both Boylan and her husband, Dudley, who died in 2005, had faced serious health problems - and the costs added up. When the taxes weren't paid on the house, the county started the steps toward putting it up for public auction - a process called a tax deed sale. The online auction was scheduled for May 19-21, 2007.

• Once the county starts the tax-deed process, the county takes ownership of the property until it is sold or the delinquent taxes are paid, whichever comes first. In Boylan's case, the delinquent taxes were paid, by Foldesi, just three days before the auction. Once the delinquent taxes were paid, the county canceled the auction and granted a "redemption deed" to Boylan. Foldesi is named in the redemption deed as the person who paid the delinquent taxes.

• But a redemption deed does not convey ownership of, or access to, a property - and neither does paying somebody's property taxes, county officials say. When Foldesi paid the taxes, that did "nothing more in this case than cancel the tax deed and all related proceedings," Ada County Treasurer Cecil Ingram said.

• Foldesi thinks differently. When asked who gave him permission to rent out Boylan's house, he said: "The owners. Who are the owners? The tax deed holder." But neither Foldesi nor anyone else can hold a tax deed to the house, because there is no tax deed for this property, according to the county.(1) Only if the house had gone to auction could someone have bought the tax deed, which would have given that person ownership over the home. Some states do sell tax deeds or tax liens without an auction giving ownership to the person who pays off the tax bills. That may be part of the confusion.

For more, see Stranger rents out Boise woman's home without her permission (A Boise house belongs to a nursing-home resident, officials say, but a man profits from renting it out).

(1) Not surprisingly, Foldesi reportedly spoke only briefly to the Statesman before hanging up. He has not returned subsequent calls, including requests to see a tax deed for the house or a certificate of sale from the county, according to the story. DeedContraTheft hijack

FBI Probe Forces Shutdown Of Loan Modification Racket?

ProPublica earlier this week published a follow-up to a story (see Why Authorities Haven’t Stopped the Foreclosure ‘Rescue’ Boom) which focused on the antics of one loan modification outfit, Southern California-based 21st Century Legal Services (also known as Fidelity National Legal Services):

• As we reported, four states obtained court injunctions barring the company from operating there, but those actions did little to slow the company down. Since then, however, we’ve learned that the company is under investigation by the FBI.

• Last Wednesday, the FBI executed search warrants at eight locations in the Rancho Cucamonga area, said Laura Eimiller, spokeswoman for the FBI’s Los Angeles office. Both business and residential addresses were searched, she said, but she would provide no other details about the continuing investigation. Kathleen Moreno, the lawyer for 21st Century president Andrea Ramirez, confirmed that Ramirez’s residence was among those searched.

• The FBI searches seem to have finally stopped the company from operating. Its Web site is down, and no one answers the phone. But as for whether its unhappy customers can hope to recoup their money, it’s far too early to tell.

For the story, see The Foreclosure ‘Rescue’ Boom on Marketplace.

Indiana Cop Cops Plea To Ripping Off Now-Deceased 89-Year Old Alzheimer's Victim Of Home, Cash

In Gary, Indiana, the Post Tribune reports:

• Gary police Sgt. Joshua Wiley admitted he stole money and a home from his former neighbor who suffered from Alzheimer's disease and dementia and has agreed to repay $116,765 to the woman's estate. On the day his jury trial was scheduled to begin, Wiley pleaded guilty [...] to two felony charges -- theft and exploitation of an endangered adult.(1)

***

• In court, Wiley admitted he knew that his former neighbor, Helen Chentnik, who died Dec. 22, 2006, at age 89, was an endangered adult who was not competent to make financial decisions on her own behalf. [...] Wiley obtained a fraudulent quit claim deed to Chentnik's home at 3630 E. 12th Ave., Gary and recorded the deed, knowing that it was signed by him while claiming to have Chentnik's power of attorney.(2)

For the story, see Gary police officer says he stole home, money of Helen Chentnik who suffered from Alzheimer's.

(1) Reportedly, under terms of the plea agreement, which Lake Superior Court Judge Diane Ross Boswell took under advisement, Wiley will be sentenced to eight years -- three years in the Lake County Community Correction Kimbrough Work Program and five years suspended and served on probation. The plea agreement calls for Wiley to serve his probation and Kimbrough Center sentence simultaneously. Wiley, 51, also must pay $53,255 within 30 days and the remaining $62,765 in monthly installments of $1,000, also starting within 30 days.

(2) According to the story, Wiley also looted Chentnik's credit union account "by using his influence on the victim or by using an ATM-debit card issued to the victim" to withdraw cash or buy items and services for his personal use without Chentnik's consent, according to the plea agreement. Wiley then reportedly opened a joint checking account for Chentnik and himself at Mercantile National Bank, deposited the woman's monthly Social Security and pension checks and funds from her credit union account, and then made withdrawals in cash and wrote checks for goods and services, the majority of which were for his personal use. FinancialAbuseOfElderlyAlpha DeedContraTheft

Ontario Man Admits To Defrauding Elderly Parents; Looted Bank Account, Used Forged POA To Pilfer Profits From Sale Of Home

In Peterborough, Ontario, The Peterborough Examiner reports:

• A 44-year-old man pleaded guilty [...] to defrauding his parents of about $140,000 in a series of crimes that involved forging a power of attorney, selling his parents' home behind their back and racking up thousands of dollars in credit card debt in his father's name. David Edwardes-Evans pleaded guilty to 10 charges in Ontario Court of Justice including fraud, uttering a forged document and breaching court orders.

• Edwardes-Evans began to defraud his parents after they both became permanent residents of a retirement home in June 2007, court heard. He shared power of attorney over his parents' finances with his sister, Crown attorney Paula Thompson said, and managed their accounts on their behalf.

• About a month after his father moved to the retirement home, Edwardes-Evans began taking out credit cards in his father's name, using his father's own credit cards without permission and made withdrawals from his parents' joint bank account, Thompson said. He then tricked them into signing away their Oriole Dr. home and forged a power of attorney to sell the house, court heard. "The document had been forged ... in order to facilitate the liquidation of the home," Thompson said.

• Police arrested Edwardes-Evans [...] after his sister discovered irregularities in her parents' accounts. By then, Edwardes-Evans had racked up $15,000 to $20,000 in credit card debt and had pilfered the profits from the sale of the home, Thompson said.

Source: Man guilty of defrauding parents. FinancialAbuseOfElderlyAlpha DeedContraTheft

Sacramento Feds Bag Two In Alleged Mortgage Scam Targeting Cambodian Immigrants; Home Buyers Left With Unaffordable House Payments, Facing Foreclosure

From the Office of the U.S. Attorney (Sacramento, California):

• United States Attorney Lawrence G. Brown announced [...] that a criminal complaint was filed this morning charging IRENE SOTIRIADIS, 23, and HELEN SOTIRIADIS, 49, both of Manteca, with conducting a mortgage fraud scheme from March 2006 through November 2007 that caused losses to lenders estimated at approximately $5 million.

***

• According to [the press release], an affidavit filed by a special agent of the FBI alleges that HELEN and IRENE SOTIRIADIS recruited as many as 25 members of the Cambodian immigrant community to purchase homes they could not afford in and around Stockton and Modesto. HELEN and IRENE SOTIRIADIS promised the Cambodians that after one initial high monthly payment, the homes would be refinanced to a payment of only $1,500 per month. After the initial monthly mortgage payments of $4,000 came due, HELEN and IRENE SOTIRIADIS refused to return phone calls to the victims, according to the affidavit. Most of the homes quickly fell into foreclosure.

For the entire U.S. Attorney press release, see Manteca Mother-Daughter Real Estate Team Arrested In Estimated $5 Million Mortgage Fraud Scam.

Scammer Stripped Of House & Vehicle, Gets 36 Months; Abused POA In $250K+ Ripoff Of Dementia-Suffering Senior

From the Office of the U.S. Attorney (Covington, Kentucky):

• The United States Attorney’s Office and the Postal Inspection Service jointly announced [...] that a Ludlow, Ky. man was sentenced yesterday to 36 months in prison for financially exploiting a wealthy elderly woman out of more than $250,000. United States District Court Judge Danny C. Reeves also ordered 45-year-old Gordon Powell to forfeit a house [...] in Fort Wright, Ky. and a Cadillac Escalade both of which Powell purchased with a portion of the proceeds from his fraud.

• Powell pleaded guilty to one count of wire fraud in May of 2009 and admitted that in 2006 he befriended an elderly Kenton County woman in her eighties who had no apparent family and suffered from dementia like symptoms. After learning she was wealthy, Powell persuaded the woman to make him her power-of-attorney which gave him the authority to make decisions on her behalf. After obtaining this authority, he liquidated hundreds of thousands of dollars of assets and transferred over $250,000 of the proceeds of the liquidation to his personal accounts. Powell then used money from these accounts to purchase the house and the car.

For the U.S. Attorney press release, see Ludlow Resident Sentenced 3 Years for Financially Exploiting a Wealthy Elderly Woman.

Blanket Receiverships Coming To Florida's Treasure Coast?

In Stuart, Florida, TC Palm reports on another financially strapped condominium association being screwed over by rent skimming, deadbeat landlords who are pocketing rents paid to them by their tenants and refusing to pay the monthly maintenance fees for their units:

• The Whitemarsh Reserve Homeowner’s Association in Martin County is now facing this grim scenario with some of its owners, who are under foreclosure by the association, owing it more than $10,000 in delinquent fees. So its members are following the lead of dozens of other associations across the state and trying a new legal approach to solve this problem.

• The Whitemarsh association is the first on the Treasure Coast to ask a judge for a court order to force delinquent landlords to turn over rent payments to the association. The association filed a petition [...] seeking what’s being dubbed as a “blanket receivership.” If approved, this would require tenants of these delinquent landlords to pay their rent to a court-approved, third-party receiver instead of the landlord. The association itself would not be in receivership, only those units that are under foreclosure by the association and occupied by a tenant paying rent.

***

• In the past, solving this problem would have been cost-prohibitive for most associations because the receivership approach was used mainly on a unit-by-unit basis, [association attorney Ben] Soloman said. But the [Miami Beach-based] Association Law Group pioneered the group, or “blanket,” approach allowing a receiver to collect rent on an ongoing basis from all owners who fail to pay maintenance fees. “It’s not a new law, but we’ve reinterpreted the existing law to get a practical remedy for our clients,” he said.

• More than 11 different lower courts across the state have approved this method, granting blanket receiverships to more than 30 associations. And one of Florida’s appellate courts also has upheld this method.(1)

For the story, see Homeowners association first in area trying to force those delinquent in paying fees to turn over rent instead.

Go here for other stories on blanket receiverships.

(1) Reportedly, the first of these receiverships was granted in March to a condo association in Miami Gardens. Officials said in the first month of the receivership program, that association more than doubled its monthly income. By 60 days, it was restored to its regular assessment receivable level.

Struggling SW Florida Condominium Association Seeks Blanket Receivership Appointment In Effort To Stay Afloat

In Naples, Florida, the Naples Daily News reports:

• Some renters and foreclosed-on squatters at South Bay Plantation in East Naples may soon find red stickers on their front doors, warning that a receiver has been appointed for the struggling property and they have 48 hours to call. If they don’t, their locks will be changed. It’s a tactic the struggling 240-unit community’s new manager, S3 Association Management LLC of Davie, plans on using if Collier Circuit Judge Cynthia Pivacek grants South Bay Plantation Condominium Association’s emergency motion to appoint a receiver.

***

• South Bay Plantation’s motion details a dire situation: Of the 240 units, only 110 sold and now only 35 diligent homeowners continue to pay monthly HOA fees. [...] The development’s monthly operating costs and expenses total about $34,039, but the association is collecting only $17,000 and is owed roughly $158,000 in delinquent assessments. “The increased burden on those unit owners who have been sharing the financial burden could result in a domino effect, forcing unit owners who have been making timely payments to potentially become delinquent and also face foreclosure proceedings,” the motion says.

For more, see South Bay Plantation residents may get locked out of homes.

Mass AG Obtains Indictments Against Foreclosure Rescue Operators Alleging Equity Stripping Ripoffs That Defrauded Homeowners, Banks, Investors

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office announces that a Worcester County Grand Jury returned indictments [...] against an Oxford man, a real estate lawyer, a real estate paralegal and a notary public for their roles in a complex scheme in which fraudulent documents were used to defraud homeowners and mortgage lenders in numerous real estate transactions involving distressed properties in the Worcester County area. Allen Seymour, age 41, of Oxford, Raymond A. Desautels III, age 43, also of Oxford, Jason Passell, age 51, of Worcester, and Judith Piette, age 44, of Worcester, are charged [...].

***

• According to authorities, Seymour targeted properties in danger of foreclosure. He personally approached the owners of these properties and presented a variety of rescue options. [...] Simultaneously, Seymour found individuals with good credit who were looking to begin investing in real estate. Many of these “investors” were told they would be helping homeowners in danger of foreclosure. [...] None of the proposals made to these “investors” matched the transactions presented to the homeowner.

According to the Massachusetts AG, Raymond Desautels, III, conducted all of the real estate closings and allegedly prepared fraudulent closing statements. Notary public Judith Piette allegedly notarized closing documents stating the homeowner had personally appeared before her and acknowledged they had signed the document voluntarily and for its intended purpose when, in fact, she never actually saw the homeowner. Jason Passell's involvement allegedly centered around the use of forged powers of attorney to facillitate the scams.

For the entire Massachusetts AG press release, see AG Coakley’s Office Announces Indictments Against Four People in Complex Mortgage Rescue Scheme.

Connecticut Law Now Bans Upfront Fees, Requires Licensing & Bonding When Offering Loan Modification Services; Maximum Mod Fee Limited To $500

In Hartford, Connecticut, The Day reports:

• For the first time in Connecticut, firms and individuals offering debt relief they negotiate with a consumer's creditors will need to be licensed and will be prohibited from charging upfront fees.(1) A new law that goes into effect Thursday is designed to stop a growing number of scams by so-called “debt negotiators” who fraudulently claim to help consumers repay household debt, or credit card or mortgage debt, but instead charge hefty upfront fees, never reduce the debt and sometimes disappear - leaving the already-burdened consumer with even more expenses, and at times an even bigger debt load.

• Attorney General Richard Blumenthal, who authored the new consumer-based legislation, said he's handled more than 100 complaints involving debt negotiators within the past year alone. And he said he's investigating as many as 10 firms for allegedly fraudulently promising to help consumers repay household or credit card debt or a delinquent home mortgage. He declined to name the companies.

For more, see Connecticut clamps down on 'debt relief' companies (Law requires licenses, bans upfront fees in effort to stop growth of scams).

In a related Connecticut Department of Banking press release, see State Banking Commissioner Howard F. Pitkin Announces Schedule of Fees for Debt Negotiators Under New Public Act:

• A debt negotiator of secured debt, including Short Sales and Foreclosure Rescue Services, may impose a fee upon the mortgagor or debtor for performing debt negotiation services not to exceed five hundred dollars ($500). Such fee shall only be collectable upon the successful completion of all services stated in the debt negotiation service contract.

(1) Among other protections and requirements are: Filing a surety bond, Not refer to state licensing or bonding as an endorsement, Disclose 10-year criminal history on license application, Evaluate likelihood of success in reducing debt or saving a home before contracting with the consumer, Sign a written agreement with the consumer, Provide complete list of services, costs and results to be achieved, Perform services outlined in contract before charging fees, Adhere to fees regulated by the state banking commissioner, Allow a 3-day right of rescission for the consumer to cancel the contract, Comply with state law or have the contract voided and subject to enforcement.

Florida Bar To Consider Review Process For Ethics Breaches By Attorneys Bringing Foreclosure Actions Filed w/ Errors, False Statements

The Sarasota Herald Tribune reports:

• The state group that disciplines lawyers is debating how to deal with reports of attorneys using errors and false statements to retake property in foreclosure cases.(1) [...] A section of The Florida Bar that seeks to give everyone equal access to the courts says stories like those prompted it to push for a special committee to review any ethical violations in foreclosure cases.

• The Equal Opportunity Law section will present its case Friday at the Board of Governor's meeting that letting the behavior go will hurt the image of attorneys. And the resolution will be reviewed and a committee that looks at attorney discipline.

For more, see Foreclosure lawyers scrutinized for ethical violations.

(1) Reportedly, a study this summer that looked at the Sarasota County civil courts system found three of four foreclosure cases that went forward without the proper paperwork. And one Sarasota judge, after the attorney for a foreclosing lender assured her everything was in order, happened to glance at foreclosure paperwork and realized the two properties were in Miami, a few hundred miles outside her jurisdiction, according to the story.

New Jersey Landlord Beats Back RICO Suit Charge That Renting To Illegal Immigrants Constitutes "Harboring"

In Plainfield, New Jersey, myCentralJersey.com reports:

• A federal judge has denied an appeal of an earlier decision to dismiss part of a landmark lawsuit that challenged the rights of landlords to rent apartments to illegal immigrants. The suit, brought last July against the city-based Connolly Properties Inc., alleged that the company systematically marketed and rented apartments to illegal immigrants and kept them generally separate from other tenants. Citing RICO (Racketeer Influenced and Corrupt Organizations) statutes, which most commonly are used to target organized crime, the suit alleged that the practice constituted "harboring" aliens or helping them avoid detection by federal authorities.(1)

***

• Presiding Judge William J. Martini, sitting in Newark, last week said in a decision letter to counsel that to be considered harboring, an entity's activities must "prevent government authorities from detecting (an) alien's unlawful presence." He said the activities alleged in the suit do not meet that description. "The only behavior that even comes close ... (is) segregating the illegal aliens from the other residents," Martini wrote, "but even this falls short of the overt types of behavior that the case law has recognized as preventing the government from detecting the presence of illegal aliens."

For more, see Appeal denied in landmark suit involving Connolly Properties.

(1) Reportedly, the case drew direct involvement from two national law groups, as the Washington, D.C.-based Immigration Reform Law Institute, or IRLI, sided with the plaintiffs in the case and the New York City-based LatinoJustice PRLDEF (formerly the Puerto Rican Legal Defense and Education Fund) sided with the defendants.