Gang Member Who Led Mortgage Fraud Racket Cops Plea In Scam That Left Lenders Holding The Bag On 100+ Homes, $20M+ In Losses

In San Diego, California, the San Diego Union Tribune reports:

• A San Diego gang member who federal authorities said was the leader of a massive mortgage fraud scam pleaded guilty yesterday to participating in a racketeering conspiracy involving bank fraud, money laundering and other crimes. Darnell Bell, 39, faces a maximum of 20 years in prison. Prosecutors said he was a chief orchestrator of a fraud and kickback scam that used straw buyers, fraudulent loan applications and bogus escrow documents on more than 100 properties in San Diego County. The scheme resulted in real estate losses between $20 million and $50 million. He’s the fourth person, and second principal, to plead guilty under an indictment naming 24 people that was unsealed last year.

***

• The ring identified properties that had been languishing on the market for months. Then, using “straw buyers,” ring members used 100 percent borrowed money and paid more than the asking price for the homes. That overage amount was put into an account for a bogus construction company that Bell set up. The money was ostensibly to be used for retrofitting homes for disabled access, but no work was ever done. The “buyers” later walked away from the homes, sending them into foreclosure and sticking the lenders with losses. [...] When the ring was broken up, the bank account Bell set up contained $9 million in proceeds.

For more, see Leader of mortgage scam pleads guilty (Gang member’s scheme caused huge bank losses).

(1) According to the story, Bell, known as “D-Bell,” is a documented member of the Lincoln Park street gang in San Diego. The indictment said he used his status in the gang to recruit other members and enforced discipline among the diverse web of conspirators.They included an appraiser, a notary, an escrow officer, a tax preparer and a real estate broker, the story states.

Insurer To Owner Of Fire-Damaged Inn Facing Foreclosure Who Filed $6M Insurance Claim: "Take A Hike!"

In Asheville, North Carolina, WRAL-TV reports:

• The company that insured a historic inn in western North Carolina is refusing to pay for damages from a fire, saying someone associated with the owners is responsible for the blaze. The Asheville Citizen-Times reported Thursday the owner is accusing former employees of the Richmond Hill Inn of setting the fire last year that destroyed the inn's centerpiece mansion as it faced a scheduled foreclosure auction.

• Harleysville Mutual Insurance Co. filed a letter with the court in January saying it wouldn't pay the claim seeking at least $6 million. In turn, owner William Gray posted a note on the inn's Web site saying he wouldn't be able to reopen because of vandalism, theft and arson by former employees.

• Harleysville's lawsuit asks a court to void an insurance claim filed by The Hammocks seeking at least $6 million. It says the company won't pay for "loss caused by or resulting from criminal, fraudulent, dishonest or illegal acts committed alone or in collusion with another." [...] The inn's foreclosure had been finalized March 16, 2009, with an auction scheduled a month later. But on March 19, an early morning fire destroyed the mansion.

For more, see Insurer: No money for damage at NC inn that burned.

Cal. AG Urged To Follow Connecticut Colleague In Hammering Lenders, Lawyers, Real Estate Agents Illegally Steamrolling Tenants Out Of Foreclosed Homes

In San Francisco, California, Dean Preston, executive director of Tenants Together, writes in Beyond Chron:

• Across our state, realtors and lawyers working on behalf of banks are violating federal law by illegally pushing renters out of their homes after foreclosure. The results are devastating, with thousands of tenants being driven into homelessness and communities left with vacancies and blight. Responding to a similar pattern of illegal evictions in Connecticut, Attorney General Richard Blumenthal recently announced a new initiative to aid tenants of foreclosed properties. Blumenthal issued cease-and-desist letters warning law firms, real estate companies, banks and loan servicers to stop illegal evictions. Here in California, tenants want to know whether Attorney General Edmund G. (“Jerry”) Brown, Jr., will follow Blumenthal’s lead and take decisive actions to protect vulnerable tenants.(1)

For more, see Brown Should Follow Connecticut AG’s Lead: Go After Banks, Realtors and Lawyers that Violate Tenant Rights.

In related stories, see:

• Connecticut AG Fires Warning Shot At Lawyers, Lenders, Real Estate Agents Using Sleazy Tactics To Illegally Drive Tenants From Foreclosed Homes,
• A Case Study In Sleazy "Tag Team" Tactics Used By Real Estate Agent & Attorney To Illegally Intimidate Family From Foreclosed Home.

(1) The Protecting Tenants At Foreclosure Act (PTFA) (go here for federal statute) allows tenants to stay in their homes after foreclosure for at least 90 days or until the end of their lease term, whichever is later. According to the story, in cities with just cause for eviction ordinances, tenants may not have to vacate at all after foreclosure. Despite these laws, real estate agents and lawyers working for banks routinely violate tenant rights, the story states. Tenants Together reportedly operates California’s only statewide hotline for tenants in foreclosure situations, receiving calls from tenants around the state who are being lied to about their rights and illegally evicted from their homes by bank lawyers and real estate agents, according to the story.

Go here for laws protecting tenants in foreclosure situations in California.

Dane County Ordinance Protects Renters From "Section 8" Discrimination

In Madison, Wisconsin, WISC-TV Channel 3 reports:

• A Dane County ordinance bans landlords from discriminating against potential tenants based on their low-income status. In 2007, Dane County enacted an ordinance that prohibits landlords from turning Section 8 renters away. But the Tenant Resource Center ["TRC"], a local renter advocacy group, said that not all landlords are aware of this ordinance. "(Section 8 renters are) a protected class, just like being a woman, or your race, or your ethnicity and all of the other protected classes. So a landlord can not make a decision to rent to you because of the fact that you receive Section 8," said Brenda Konkel of the Tenant Resource Center.

***

• The TRC said there is no provision in the county ordinance that states landlords can’t ask if someone is on Section 8. The TRC said landlords can still screen as they would with any other tenants. But the ordinance says that landlords have to accept this kind of payment of rent if the tenant meets all the other requirements. Ordinance violations range from $500 to $2,500.

For the story, see Landlords Prohibited From Denying Tenants Based On Section 8 (Group Says Some Landlords Not Aware Of County Ordinance).

Prohibitive Repair Costs May Be Cause Of Foreclosing Lenders Avoiding Taking Title To Properties Securing Delinquent Loans

In Akron, Ohio, WKYC-TV Channel 3 reports:

• Neighbors say the Hite Avenue home has set empty for more than six months, another casualty of the foreclosure epidemic that has ripped across Northeast Ohio. After Friday's sheriff's sale, the home will likely sit empty a while longer.

• Wells Fargo, the bank that foreclosed on the South Akron home, failed to show up at the auction to at least match the opening bid on the property. County rules mandate foreclosures be offered at two-thirds of the home's appraised value. The single-family home near Manchester Road is appraised at $60,000, so it was offered at auction for $40,000.

• Wells Fargo wasn't alone. Of the 60 properties offered at Friday's weekly sale, 33 went unclaimed due to banks that failed to show up. Since neither the bank holding the mortgage nor another buyer placed a bid, the properties remain in the name of the homeowner, who accumulates additional property taxes as the property often sits empty. It also means the bank is not taking steps to reclaim and sell the property, leaving vacant homes vacant for a while longer.

Source: Northeast Ohio: Banks fail to claim properties after foreclosing.

Woman Holding POA Charged In $60K Ripoff Of Elderly, Care Facility-Bound Mom; Unpaid Nursing Home Bills Trigger Probe

In Napanee, Ontario, The Canadian Press reports:

• A woman holding power of attorney for her elderly mother has been charged with stealing from her, in a community near Kingston, Ont. Angela McKenna-Cox, 38, whose last known address was in Prince Edward Island, was charged after a lengthy investigation into a complaint from a retirement home in Amherstview.

• She is charged with theft by person holding power of attorney, theft over $5,000, personation with intent to obtain property and two counts of fraud over $5,000. Police say it was reported that the cost and care of her elderly mother was neglected since 2007. McKenna-Cox is in custody and will appear in Napanee provincial court next Tuesday. The estimated value of the financial offences is about $60,000.

Source: P.E.I. woman charged with stealing from elderly mother in Ont. retirement home.

Jury Convicts Bay Area Woman Of Forging POA Used To Retake Title To Home Earlier Conveyed To Friend To Stop Foreclosure

In Alameda County, California, the San Jose Mercury News reports:

• A counselor at College of Alameda has been convicted of multiple felony charges after prosecutors said she forged a power of attorney document to secure the title of her friend's home during the height of the real estate boom. Shirley Robinson, who was convicted [] in Alameda County Superior Court, will be sentenced March 29.

• According to prosecutors, Robinson has known the victim, Alze Roberts, for 50 years. The case began in 1998, when Roberts took over the title of the college counselor's home in Oakland to prevent it from foreclosure, investigators said.

• Robinson wished to purchase the home back from Roberts in 2005, and hoped to use its equity to pay off $175,000 she owed in state and federal back taxes. But the women disagreed on a sale price, which led Robinson to create a forged power-of-attorney so she could carry out the sale without Roberts knowing, prosecutors said.

• Along with forging Roberts' name, Robinson stole the identity of three other individuals to help make the transaction appear legitimate. A jury deliberated five hours [] before convicting Robinson on 10 counts of forgery and identity theft. She was immediately remanded into custody.

Source: Alameda: College counselor convicted of forgery, identity theft.

Miami Judge Orders $9K+ In Sanctions On Lender For Purposely Delaying Foreclosure Sale On Condo

In Miami, Florida, the South Florida Sun Sentinel reports:

• Can Florida banks be held financially accountable for purposely delaying condo bank foreclosure sales? A new South Florida circuit court ruling says yes. Amid a growing clamor for Florida banks to bear more of the financial burden caused by widespread condo foreclosures, the Miami-Dade Circuit Court case settled last week shows an example of associations turning more often to courts for relief from revenue losses tied to the state's condo crisis. And it could pave the way for other South Florida condo associations faced with stalled foreclosures caused by lenders.

***

• Miami-Dade Circuit Court Judge William Thomas sanctioned Deutch [sic] Bank for not sending a representative to a foreclosure sale as required by an earlier court judgment, a move that automatically cancels a sale date, and for not publishing a public notice in a local newspaper in time for another foreclosure sale date, again causing the sale cancellation.

• Although Deutch [sic] did not offer explanations in court for the delays, its attorney argued that Florida courts are not allowed to force banks to pay condo association fees. Another recent ruling by the 3rd District Court of Appeals(1) in Florida held that a bank could not be ordered to pay monthly maintenance fees before obtaining title to a unit. Thomas' ruling, however, sanctioned Deutch for improper conduct related to the foreclosure case. The bank was ordered to pay about $7,300 in sanctions to the association and $2,000 to cover its legal fees.

For more, see Miami-Dade ruling shows banks may be fined for delays in condo foreclosure sales.

(1) U.S. Bank Nat'l Ass'n ex rel. Harborview 2005-10 Trust Fund v. Tadmore, 23 So. 3d 822; 2009 Fla. App. LEXIS 18408 (Fla. Ct. App. 3rd DCA, 2009).

Brooklyn Arson Probe Leads To Duo's Convictions In Straw Buyer Scam; Pair Pocketed $300K+

From the Office of the Brooklyn, New York District Attorney:

• Kings County District Attorney Charles J. Hynes [] announced the conviction(1) of Mavis Samuel, 41, and Carlyle Ebanks, 55, for selling the same Crown Heights building twice, to two different straw buyers. [...] The defendants first sold 1162 Pacific Street in September 2004. In that transaction, they paid a straw buyer $4,000 to buy the building. Though the straw buyer held the deed, Ebanks and Samuel maintained control of the building. While the straw buyer was recovering from a traumatic brain injury in spring 2005, Samuel convinced him to deed the property back to her.

• Then, in November 2006, Ebanks approached a friend and told him that if he bought the building, Samuel and Ebanks would make him a partner in their real estate investment company. The defendants illegally inflated the “partner’s” income and savings account balance on a $1 million mortgage application, to buy 1162 Pacific Street for that price. With that “sale”, they paid off the mortgage on the original straw purchase, pocketed between $300,000 and $400,000, and maintained ownership.

• In the time between the two sales, the building burned down. The case originated with the investigation into a string of suspected arsons in Crown Heights in early 2006.

For the Brooklyn DA press release, see Kings County District Attorney Charles J. Hynes Announces Conviction In Real Estate Fraud.

(1) They were convicted of Grand Larceny in the Second Degree and multiple counts of Falsifying Business Records in the First Degree, and face up to 15 years in prison, the press relates states.

Information On Foreclosure Mediation Programs & Mandatory Conferences Around The Country

The National Consumer Law Center provides links on its website to information that summarizes the state/local programs around the country that establish some type of foreclosure diversion program requiring lenders to engage in mediation, conciliation, or a settlement conference. Summaries include a general program description and lender and borrower obligations under the program. Links to text of enabling legislation, administrative orders, court rules, forms and other information links related to programs are also provided.

For more, see Programs for Foreclosure Mediation and Mandatory Conferences.

Florida Appeals Court Boots Another Rubber-Stamped Foreclosure Case; Docs Supporting Judgment Filed Late, Failed To Establish Legal Standing

Florida's 2nd District Court of Appeal struck again and reversed another trial judge for allowing a lender steamroll a foreclosure action against a financially strapped property owner.(1) In this case, the trial judge rubber-stamped a foreclosure judgment for a lender despite the fact that the property owner argued, among other things:

• that his response to the lender's foreclosure complaint was not yet due in accordance with the agreement for enlargement of time,(2)

• that the Bank did not timely file the necessary loan documents on which it relied in support of its motion for summary judgment,(3) and

• that the documents were insufficient to establish that the Bank was the owner and holder of the note and mortgage.(4)

For the court's ruling, see Verrizzo v. Bank of New York, Case No. 2D08-4647 (Fla. Ct. App., 2nd DCA, March 3, 2010).

(1) Last month, it kicked back another foreclosure judgment improperly allowed to go forward by a trial judge. See Florida Appeals Court "Deep-Sixes" Rubber-Stamped Foreclosure Judgment; Kicks Case Back To Trial Court For Further Proceedings.

(2) A motion to enlarge time is a request to extend the amount of time a defendant gets to respond to a lawsuit. Go here for a sample of a Motion to Enlarge Time, and here for links to other useful foreclosure defense documents.

(3) In ruling that the documents were filed late, the appeals court, applied Rule 1.510(c) of the Florida Rules of Civil Procedure and observed (alteration in the original):

• Rule 1.510(c) requires that the movant "serve the motion at least 20 days before the time fixed for the hearing[] and shall also serve at that time copies of any summary judgment evidence on which the movant relies that has not already been filed with the court." Further, cases have interpreted the rule to require that the movant also file the motion and documents with the court at least twenty days before the hearing on the motion. See Mack v. Commercial Indus. Park, Inc., 541 So. 2d 800, 800 (Fla. 4th DCA 1989); Marlar v. Quincy State Bank, 463 So. 2d 1233, 1233 (Fla. 1st DCA 1985); Coastal Caribbean Corp. v. Rawlings, 361 So. 2d 719, 721 (Fla. 4th DCA 1978). The promissory note and assignment constituted a portion of the evidence that the Bank relied on in support of its motion for summary judgment, and it is undisputed that the Bank did not attach those documents to the complaint or serve them at least twenty days before the hearing date. In fact, although the Bank's notice of filing bears a certificate of service indicating that the notice was served on August 18, 2008, the notice and the documents were not actually filed with the court until August 29, 2008, the day of the summary judgment hearing.

(4) In kiboshing the foreclosure judgment on these grounds, the appeals court stated:

• In addition to the procedural error of the late service and filing of the summary judgment evidence, those documents reflect that at least one genuine issue of material fact exists. The promissory note shows that Novastar endorsed the note to "JPMorgan Chase Bank, as Trustee." Nothing in the record reflects assignment or endorsement of the note by JPMorgan Chase Bank to the Bank of New York or MERS. Thus, there is a genuine issue of material fact as to whether the Bank of New York owns and holds the note and has standing to foreclose the mortgage. See Mortgage Electronic Registration Sys., Inc. v. Azize, 965 So. 2d 151, 153 (Fla. 2d DCA 2007) (recognizing that the owner and holder of a note and mortgage has standing to proceed with a mortgage foreclosure action); Philogene v. ABN Amro Mortgage Group, Inc., 948 So. 2d 45, 46 (Fla. 4th DCA 2006) (determining that the plaintiff "had standing to bring and maintain a mortgage foreclosure action since it demonstrated that it held the note and mortgage in question").

San Mateo Authorities Issue Arrest Warrant For Alleged Scammer Accused Of Conning 89-Year Old Woman Into Signing Loan Docs For $312K Mortgage

In San Mateo, California, The Daily Journal reports:

• County prosecutors issued an arrest warrant last week for a man accused of bilking an 89-year-old Pacifica woman out of nearly $600,000. Fetuu Tupoufutuna faces up to nine charges in the elder abuse case including elder fraud by a caretaker, forgery and a great taking allegation among others, San Mateo County Deputy District Attorney Melissa McKowan said yesterday. The victim, Pauline Reade, faced foreclosure on the Pacifica home she has lived in since 1951 after Tupoufutuna allegedly tricked the woman into signing loan documents to the tune of $312,000.

***

• Reade’s husband died in 1990 and she has little contact with any other family, [Reade's lawyer Niki] Okcu said. She is also visually impaired. Okcu, an attorney with Cotchett, Pitre and McCarthy, is taking the case pro bono with the Legal Aid Society of San Mateo.

***

• With Reade’s advanced age, Tupoufutuna must avoid arrest or a trial before the woman dies.(1) If Reade were to die before the suspect is brought to court, charges would have to be dropped. “The defendant has a right to cross-examine his accuser,” McKowan said.(2) McKowan deals with elder fraud cases regularly with entire nest eggs or home equity being devastated in many instances.(3)

For the story, see Charges filed in elder abuse case.

(1) Reportedly, Tupoufutuna has allegedly fled the country, thought to be in either New Zealand or Australia, according to Deputy District Attorney McKowan.

(2) A June 14, 2009 story in the Atlanta Journal Constitution (see Elderly victims find help to fight fraud (Many targeted by very people claiming to care. DeKalb creates task force to combat rise in crime against seniors)) reports on how one DeKalb County, Georgia prosecutor deals with the problem of the inability of elder exploitation victims to testify (ie. due to death, mental incapacity, infirmity, etc.) at the criminal trial of the alleged perpetrator:

• Once a defendant is indicted, [prosecutor Jeanne] Canavan moves quickly to secure the elderly victims’ testimony out of concern they may be unable to testify by the time the case goes to trial. She takes a novel approach, filing court motions that cite a 2004 U.S. Supreme Court precedent that requires pre-trial testimony to be admitted only if the witness had previously been subject to cross-examination.

• Canavan obtains a judge’s approval for a hastily called hearing, where the victim testifies before a prosecutor, the defendant and the defense attorney, who is allowed to cross examine the witness. The testimony, if needed, can be used later at trial.

• Canavan said she will not forget her first elderly exploitation case in 2004 involving 89-year-old widower Leonard Stewart. Stewart was dining alone at a DeKalb restaurant when he was approached by Nicholas Marks. Marks befriended the elderly man, falsely identifying himself as a lawyer. Over time, Marks got Stewart to sign over possession of his car and his home. He also charged more than $22,000 on Stewart’s credit cards.

• By the time of trial, Leonard was dead. But because he testified at a pre-trial bond hearing —- during which he was subject to cross-examination — Leonard’s testimony was admitted into evidence. Marks was convicted and sentenced to five years in prison.

For the 2004 Supreme Court precedent referred to above, see Crawford v. Washington, 541 U.S. 36; 124 S. Ct. 1354; 158 L. Ed. 2d 177 (2004). In addressing a criminal defendant's federal constitutional right to confront the witnesses against him, the court stated:

• According to our description of that right in Ohio v. Roberts, 448 U.S. 56, 65 L. Ed. 2d 597, 100 S. Ct. 2531 (1980), it does not bar admission of an unavailable witness's statement against a criminal defendant if the statement bears "adequate 'indicia of reliability.'" Id., at 66, 65 L. Ed. 2d 597, 100 S. Ct. 2531. To meet that test, evidence must either fall within a "firmly rooted hearsay exception" or bear "particularized guarantees of trustworthiness." Ibid.

(3) Reportedly, Reade hired Tupoufutuna in 2006 to do some repair work to her home. Work on the home extended for months in which time the victim and suspect developed a close fiduciary relationship, according to court documents filed with San Mateo County Superior Court. Reade eventually named Tupoufutuna her executor and sole beneficiary in her will, the story states. “Tupoufutuna was aware of Pauline Reade’s significant health problems, lack of sophistication regarding real estate matters and her vulnerability given her advanced age, and given that she had no close relatives or contacts who would look after her. Defendant Tupoufutuna abused the trust Reade placed in him, and by fraud, undue influence and forgery gained control of Pauline Reade’s financial affairs,” according to court documents.

Son Gets 30 Days In $300K Ripoff Of Dementia-Stricken Mom; Victim's Rent Went Unpaid, Left w/ $13K Tax Bill On Foreclosed Home Put In Her Name

In Ramsey County, Minnesota, the Pioneer Press reports:

• A Minneapolis man will spend 30 days in jail for financially exploiting his 95-year-old mother, who suffers from dementia, a Ramsey County judge ruled Tuesday. Joel Berntsen, 58, will serve an additional 60 days because the crime was a probation violation from a previous offense. [...] Judge Teresa Warner said she was not sure Berntsen was remorseful. "That you'd do this to your own mother is really appalling," she said. Berntsen pleaded guilty Dec. 10 to financial exploitation of a vulnerable adult.

• The criminal complaint describes it this way: Police learned of the situation when a home health worker for the mother called them. She reported that the elderly woman's bank accounts were overdrawn because of frequent withdrawals by her son. Police found that she was behind on her rent and that several checks had bounced.

• Berntsen told police he borrowed $290,000 from his mother in 2006 to buy a house in North Oaks after a previous home went into foreclosure. She also paid the $2,000-per-month mortgage. He said he invited his mother to live with him, but she chose to stay in her Roseville residence. Eventually, that home, too, was foreclosed upon, and Berntsen's mother got a letter from the IRS saying she owed nearly $13,000 in back taxes because Berntsen had put the home in her name. The bank then froze her account.

***

• Prosecutor Daniel Vlieger told the court [] that cases like Berntsen's often result in a plea deal for limited jail time because the victim "may or may not be the best witness in the world" because of dementia.

For the story, see Minneapolis man sentenced for 'borrowing' from mom with dementia (He gets 90 days in jail, admits taking $300,000).

Zombie Debt Buyer Reneges On Oral Settlement Agreement, Moves To Force Sale Of Texas Couple's Home After Already Pocketing $9K, Says Suit

In Beaumont, Texas, The Southeast Texas Record reports:

• A Jefferson County couple has filed suit against a debt purchasing company, alleging the company has reneged on an oral settlement agreement and is now attempting to sell the couple's home.

• Leonard and Beverly Randle claim they had been sued for deficiencies they owed on their credit cards. Defendant Hudson & Keyes LLC(1) obtained a judgment against the Randles for $27,895.69, according to the complaint filed Feb. 19 in Jefferson County District Court.

• The Randles entered into an oral agreement with Hudson & Keyes to settle the matter for $10,000, the suit states. The Randles agreed to make an initial $6,000 down payment, then to pay $200 every month until the debt was paid in full, the complaint says. The Randles claim they have followed the plan and have paid $9,200 of the settlement money.

• "Thus it was to Plaintiffs' great surprise and distress when they learned that Defendant, despite and contrary to the Settlement Agreement, has proceeded with a Constable's sale of property of Plaintiffs at the address commonly known as 4825 Wyatt St. in Beaumont," the suit states. "Plaintiffs are now in desperate straits. They have been notified that the sale of the Property has been scheduled for March 2, 2010."

• The Randles are seeking a temporary restraining order that will restrain Hudson and Keyes from selling their property and, after trial, a permanent order enjoining the firm from selling the property. In addition, they seek other relief the court deems just.

Source: Couple seeks TRO against debt purchasing company.

(1) According to its Web site, Hudson & Keyes is a debt buyer and reseller. zombie debt

Another "Lease To Own" Horror Story As Rent Skimming Landlord Stiffs Bank, Pockets Payments From Would-Be Buyer; Single Mom, Kids Left Facing The Boot

In Burleson, Texas, WFAA-TV reports:

• It's not her dream house, but it is Teresa Salinas' first home. Now, the single mother said she is afraid she will lose her home after learning it's in foreclosure. The Burleson house is up for public auction Tuesday at the Johnson County courthouse. "I can't afford to buy a house and my credit isn't good enough to rent an apartment," she said.

• The mother of two was renting-to-own the home from a company called Buying Homes Today TX Inc. The company is operated by Lana Smeenk, who according to bank records has been receiving mortgage payments monthly from Salinas. Those payments apparently were not used to pay down the loan, and Salinas got a foreclosure notice in late February.

***

• Smeenk has not returned calls or e-mails, her clients said. "I have nothing to say, thank you," she told WFAA from her Joshua home. She also turned down an interview request from WFAA.

For the story, see Burleson mom faces foreclosure despite monthly payments.

For story follow-up, see Eviction notices canceled by California investors.

Use Of Owner Financing, Failure To Obtain Title Insurance Lead To Purchase Of Homes w/ Undisclosed Liens By Unwitting Buyers, Says Texas AG In Lawsuit

From the Office of the Texas Attorney General:

• Texas Attorney General Greg Abbott charged a South Texas developer with defrauding first-time home buyers by unlawfully selling houses that were encumbered by undisclosed liens. The defendant, McAllen-based Grande Valley Homes LLC, which is registered to do business as Casa Linda Homes, both sells and finances residential real estate property. Its business model focuses on first-time home buyers, particularly those with poor credit histories [...]. According to the state’s enforcement action,(1) Casa Linda sold residential properties that were encumbered by one of the following liens: a lien for delinquent property taxes; a lien of a third-party lender; or a mechanic’s lien for labor or materials used to improve the property.

• Documents filed with the Cameron County District Court indicate that Casa Linda Homes did not disclose the liens when unsuspecting buyers entered into their earnest money contracts. When Casa Linda Homes subsequently failed to pay its undisclosed debt, the creditors who were owed money then instituted foreclosure proceedings or filed lawsuits against the home buyers.

• The defendant was able to perpetuate this fraud, in part, because the houses were “owner financed” by Casa Linda Homes. As a result, purchasers were not warned about the undisclosed liens by title companies, because Casa Linda did not require home buyers to purchase title insurance. Thus, the developer could sell the properties without home buyers – particularly inexperienced, first-time home buyers – realizing that their new houses were subject to undisclosed liens.

For the entire Texas AG press release, see Attorney General Abbott Charges South Texas Home Developer With Unlawfully Selling Houses (Developer charged with selling houses that had undisclosed liens; buyers face foreclosure, debt).

For more from the Texas AG on this case, see:

• Lawsuit: State of Texas v, Grande Valley Homes LLC,
• Foreclosure letter to Brownsville homeowner who was a victim,
• Notice to Weslaco homeowner who was a victim.

(1) The state AG's civil lawsuit alleges violations of the Texas Deceptive Trade Practices - Consumer Protection Act.

Foreclosure-Related Federal Lawsuits Against Lenders Skyrocket In California; Reflect Borrowers' Difficulty In Getting Loan Modifications

In San Jose, California, the San Jose Mercury News reports:

• In the last five years, the number of foreclosure lawsuits filed in federal court in California has ballooned — like an exploding adjustable-rate mortgage — from only 29 statewide in 2005 to nearly 1,400 last year. Many such lawsuits also are filed in state courts, which don't track the numbers or the outcomes.

• The striking increase in suits against lenders reflects the difficulty many with underwater mortgages are having in getting loan modifications, either through the government program or the banks themselves.

***

• Some suits contend the lender reneged on a promise of a loan modification, [...]. Others argue lenders screwed up the foreclosure process. Among the most frequent claims: During the overheated housing boom, the bank did not properly disclose the terms of the loan, the borrower never really qualified, but got a loan anyhow.

For more, see Increasing numbers of Californians are suing lenders to avoid foreclosures.

NY Bankruptcy Court Bounces Bank For Lack Of Standing, Insufficient Documentary Proof Substantiating Debt; Chase Gets 21 Days To File Proper Paperwork

A ruling this week by a New York Federal bankruptcy court bounced, without prejudice,(1) a creditor's claim filed by J.P. Morgan Chase Bank in a Chapter 13 proceeding filed by a homeowner. According to the ruling, Chase both:

• failed to present evidence necessary to demonstrate that it is either the servicer, note and mortgage holder, or assignee such that it has standing to bring the claim, and

• failed in meeting its evidentiary burden under the Bankruptcy Code and Rules to substantiate its proof of claim ("Unless a proof of claim is properly executed and filed in accordance with the rules, the proof of claim does not constitute prima facie evidence of the validity and amount of the claim." See FED. RULES. BANKR. PROCEDURE 3001(f)).

The court provides a somewhat lengthy analysis of recent bankruptcy court cases that it considered in reaching its ruling, and discusses the level of documentation required to support the prima facie validity of a mortgagee's claim. The reading is pretty technical, and recommended only for Federal bankruptcy geeks and others who are into this kind of stuff.

For the entire text of the case, see In re: Kerman J. Minbatiwalla, Case No. 09-15693 (USBC S.D. N.Y., March 1, 2010).

(1) The court ruled that the proper creditor may file an amended proof of claim within 21 days of the entry of the court's order. It said that if Chase holds the note and mortgage, it must affix documents to the proof of claim establishing that relationship. Alternatively, if Chase is not the holder, it must give the holder notice of this 21-day deadline and file a declaration with the Court that such notice has been given. The Debtor has 14 days after any amended proof of claim is filed to object.

SF Man Dodges Murder Charge; Gets Five Years For Role In Using Forged POA In Attempt To Sell Missing 74-Year Old's $1M Home, Loot Bank Accounts

In Riverside, California, The Valley News reports:

• An art dealer accused of conspiring with five other men to bilk a Palm Springs retiree -- who is missing and presumed dead -- out of his financial assets, pleaded guilty [] to fraud-related charges and was sentenced to five years in prison. Russell Herbert Manning, 68, of San Francisco, entered his plea to Riverside County Superior Court Judge Thomas Douglass over the objection of prosecutors.

• Manning and five co-defendants allegedly forged a power of attorney document to empty one of the bank accounts and sell the million-dollar home of 74-year-old Clifford Lambert, who has been missing since December 2008. Murder charges stemming from Lambert's apparent death were dropped against Manning in September, while the other men were ordered by a judge to stand trial for his slaying.

• Manning's attorney, Brenda Miller, said outside court that Manning had no part in the murder and was swindled by his co-defendants -- San Francisco attorney David Replogle, 60, Kaushal Niroula, 28, Danny Garcia, 27, Miguel Bustamante, 27, and Craig McCarthy, 30.(1)

For more, see Art dealer accused of bilking a missing Palm Springs man sentenced to five years.

(1) The men are accused of killing Lambert so that he could not contest forged power of attorney documents. Investigators believe Niroula let McCarthy and Bustamante into Lambert's home on Dec. 5, 2008, and that Bustamante stabbed the retiree to death. The three allegedly loaded Lambert's body into the trunk of his Mercedes-Benz and dumped his body in the hills in Fontana. Lambert was reported missing two days later by a friend. Detectives went to Lambert's home at 317 Camino Norte and found the mailbox full and his silver 2004 Mercedes missing. Following Lambert's death, Replogle allegedly created a false power of attorney document that allowed the co-defendants to empty his bank accounts. They also allegedly tried to complete a quick sale of his $1 million home for less than $300,000. A judge later halted the sale.

SF Man Held On $7M+ Bail In Theft Of Three Luxury Condos Using Forged Deeds; Victim Faces Long Road To Restore Title In Her Name

In San Francisco, California, KGO-TV Channel 7 reports:

• A San Francisco man accused of illegally transferring ownership of three condos to himself is being held on more than $7 million bail. It's a crime authorities say is sophisticated in its execution, yet simple in the ease it was carried out. At stake are millions of dollars in real estate on one of San Francisco's most exclusive properties.

• One Rincon Hill is one of the newest additions to San Francisco's skyline and where a penthouse lists for $14 million. It's also where a man already facing trial in a separate burglary now stands accused of stealing three condos from a real estate executive, Shirley Hwang. Winston Lum faces 16 felony counts of forgery, grand theft and identity theft. Court documents obtained by 7 On Your Side show 45-year-old is suspected of forging the owner's name onto the deeds of three of her condos, then granting to himself those properties.

***

• SFPD won't talk specifically about this case, but say it's a type of crime they're seeing more. "We've gotten quite a few in the last few years and like I said it's a relatively new crime," Lt. Jones Wong said. "I think the criminals have just gotten more sophisticated." Lieutenant Wong says if the documents are notarized, it's unlikely the forgery will be discovered when filed at the Recorder's Office.

***

• For the victim, this is a case of identity theft that could take years to unwind. "It's terrible. These poor victims have to go through a lot to show they are an innocent victim," Lt Jones Wong from SFPD said. [...] Hwang has sued Lum and his lender, DeWitt Mortgage to try to get her properties back and to get the liens removed from them. Compounding matters, Hwang must also fight a transfer tax bill of $50,000.

For the story, see SF man accused of stealing 3 luxury condos.

Brother, Sister-In-Law Forced Ailing, Now-Deceased Senior Into Granting POA, Then Looted Frail Woman's Assets, Including Home Sale Proceeds

In North Florida, The Baker County Press reports:

• A Macclenny woman believed to be the mastermind of a scheme to bilk her elderly and infirm sister-in-law out of $340,000 in cash and other assets will spend a month in county jail and be on probation for 10 years. Francis Claudette Gray, 48, who now lives in Lake City along with co-defendant and husband Jimmy, 77, will also be required to repay $227,212 back to the estate of Margarete Gray, who died last fall of cancer in a Jacksonville nursing home.(1)

***

• The Grays were not charged criminally until September, 2008, when assistant state attorney Geoff Fleck filed counts of felony grand theft and exploitation of the elderly. Sheriff’s investigators had completed an investigation two years earlier, and former prosecutor Mel Bessinger was hesitant to file because he feared there was little proof the couple coerced the elder Mrs. Gray to sign over power of attorney.

• Prosecutor Fleck contended that’s exactly what they did in a blatant grab for the ailing relative’s assets. The chain of events that immediately followed in the summer of 2006 including systematic looting of Mrs. Gray’s bank accounts, cashing in of certificates of deposit, sale of her north Jacksonville house and the theft of $37,000 cash from inside the house. The thefts coincided with purchases of vehicles, a boat and two homes in west Macclenny. The defendants have since declared bankruptcy and their home was foreclosed.

For more, see $340K theft nets defendent only 30 days in jail.

(1) According to the story, the late Mrs. Gray, of German descent and a survivor of both the Nazi and Russian occupations during and after World War II, fell into ill health following the death of her husband Fred. By the time Francis & Jimmy Gray moved her to Macclenny Nursing and Rehab in the summer of 2006, she was malnourished and near comatose. Nursing home employees became alarmed at the behavior of the defendants and their son Jimmy Jr. in forcing the patient to sign over power of attorney, which they told her was necessary to salvage the value of her home in Jacksonville. At the time, it was subject to condemnation.

Another Homeowner Gets Stiffed On Lender's Loan Modification Promises, Faces Imminent Foreclosure, Says Texas Suit

In Jefferson County, Texas, The Southeast Texas Record reports:

• A woman has filed suit against a loan servicing agency and a mortgage company after she claims they have threatened to foreclose on her home. Lisa D. Perkins claims she owns a home [...] in Port Arthur. Defendant Mortgage Electronic Registration Systems currently owns the mortgage on the home and defendant Litton Loan Servicing is the mortgage servicer for Mortgage Electronic, according to the complaint filed Feb. 17 in Jefferson County District Court.

• On Aug. 1, 2009, Perkins entered into a loan workout with Litton. Under the plan, Litton promised to modify Perkins' mortgage as long as she complied with all terms of the plan, the suit states. Perkins has complied with all the plan's terms, yet Litton still notified her of its intent to foreclose on her home on March 2, the complaint says. "Plaintiff relied on these misrepresentations by Defendants to her detriment," the suit states. By foreclosing on her home, Perkins claims Litton and Mortgage Electronic violated the Texas Deceptive Trade Practices Act and breached their contract with her.(1)

Source: Woman seeks TRO to stop foreclosure.

(1) Reportedly, Perkins seeks an ex-parte temporary and permanent injunction from the court demanding that Litton and Mortgage Electronic refrain from foreclosing on her home, the suit states. In addition, she seeks actual, consequential and statutory damages, attorney's fees, costs, pre- and post-judgment interest and other relief to which she may be entitled, the story states.

Lawsuits Alleging "HAMP" Violations By Lenders Not Following Through On Loan Modification Promises Begin To Gain Traction

In Cincinnati, Ohio, Fox News reports:

• You qualify. Those two words, from the mouth of a bank representative last October, triggered a wave of relief for Tracy Davis and her husband James. The couple had been in and out of work for three years and were struggling to pay their mortgage -- so when the Bank of America worker told them they qualified under a federal program to have their loan modified [ie. the Home Affordable Modification Program -"HAMP"], they finally saw a path to keeping their house. "We walked out thinking, great," Tracy Davis said. But weeks went by, and nobody contacted them, and they weren't able to reach anyone -- other than representatives at a call center in India. "To this day, we've not heard from someone," she said. "It's February. This goes back to October 30."

• The Davises, who live in Cincinnati, are among a slew of struggling homeowners coming forward with complaints about the way banks are operating under a federal loan modification program announced last year by the Obama administration.

***

• The complaints have a common tune. Homeowners say the banks are giving them the runaround -- either by pledging to modify loans and then not following through, as with the Davis family, or by signing them up for the trial period and then leaving them in limbo. "This is an epidemic problem," said Stuart Rossman, director of litigation with the National Consumer Law Center.

• Under the terms of the Treasury Department program, participating banks that offer new loan terms are supposed to put homeowners through a three-month trial period. If the homeowners make timely payments and meet other conditions, the terms are supposed to become permanent. But a pair of lawsuits filed in U.S. District Court in Boston [...] claimed Bank of America and Wells Fargo were violating those rules. Rossman, who is helping to represent the plaintiffs, said banks -- in Massachusetts and across the country -- are stringing homeowners along for months without sealing the deal. "That, to us, is inexcusable and a breach of contract," he said. "They are living in limbo while they are at risk of losing their home."

***

• In Ohio, the Davises were among 10 plaintiffs in a suit filed against Bank of America in early February in U.S. District Court.(1) The homeowners all say they experienced the same problem. According to the suit, they went to a Treasury-sponsored "borrower outreach" event in Cincinnati at the end of October at which bank representatives offered them modified home loans and pledged to send them the paperwork "within weeks." The documents never came, they say. [...] Mark Lawson, an attorney with the Legal Aid Society of Southwest Ohio representing the plaintiffs in the Ohio federal case, said loan modification problems are widespread. "It's pretty much everywhere," he said.

For the story, see Homeowners Say Banks Keep Them Underwater by Spurning Loan Program Rules (A slew of struggling homeowners are coming forward with complaints about the way banks are operating under a federal loan modification program announced last year by the Obama administration).

(1) For the Ohio Federal lawsuit, see Ponder et al. v. Bank of America, BAC Home Loans Servicing.

Gary Cop Cops Plea, Dodges Hard Time After Admitting To Using Bogus POA To Rip Off Title To Elderly, Now-Deceased Alzheimer's Victim's Home

In Lake County, Indiana, the Post Tribune reports:

• Gary police Lt. Joshua Wiley, who admitted under oath he stole from an elderly neighbor with dementia and Alzheimer's disease and illegally took her home, was sentenced to three years in the Lake County Community Corrections Kimbrough Work Program. Wiley, 52, was ordered to repay $116,765 in restitution and has already paid $56,255.

• Lake Superior Court Judge Diane Ross Boswell on Tuesday accepted the plea agreement submitted Sept. 21 in which Wiley pleaded guilty to theft, [...] and exploitation of an endangered adult, [...]. The agreement called for an eight-year sentence, with five years to be suspended and served on probation and three years to be served in the Kimbrough work release program.

***

• Wiley and his wife still occupy the home he took from Helen Chentnik [...] after Wiley obtained a fraudulent quit claim deed by claiming to have power of attorney from Chentnik. [...] Questioned by deputy prosecutor Robert Neumaier, Wiley admitted on the witness stand he didn't spend any of the $116,000 he stole for Chentnik's care at a nursing home, where she died in December 2006 at age 89.

For the story, see Cop sentenced to work release in neighbor scam.

Ex-Mortgage Broker Pocketed $1M+ By Acquiring, Selling Vacant Lots, Abandoned Properties Using Forged Deeds, Say Fort Worth Feds

In Fort Worth, Texas, the Star Telegram reports:

• For more than two years, authorities say, former mortgage broker Norris Lynn Fisher toured Tarrant County looking for vacant lots and properties that looked abandoned. When he found one, he would forge a deed to transfer the property to fictitious owners, repeating the process several times before selling it to one of his companies, investigators said. In that way, Fisher netted more than $1 million by fraudulently acquiring more than 100 Tarrant County properties, according to a 19-page criminal complaint unsealed Friday after Fisher was arraigned in federal court on a mail fraud charge.(1)

***

• A man told an investigator that his name had been forged on a fraudulent deed and transferred to a fictitious woman in Los Angeles and then forwarded to a Fort Worth post office box rented by Fisher. In renting the box, Fisher identified himself as secretary-treasurer of J-Tex Construction Inc. That forwarding tactic was used in many of the deed transfers, as was the use of forged signatures on notary seals affixed to the deed, investigators said. Seven notary stamps were found during a July 2009 search of Fisher's Fort Worth home, the complaint states. At least one was linked to forged notary signatures, investigators said.

• Many of the victims were elderly, including 84-year-old Margaret Jennings who learned that she no longer owned her late father's land when she tried to pay her taxes. "The lady told me two other people bought that land," Jennings said. "I said they didn't buy it lawfully, but she said they owned it. "I've been worried a lot about it. It made me sick that my daddy worked so hard for that little piece of land."

For more, see Ex-broker accused of fraudulently acquiring more than 100 Dallas-Fort Worth properties.

For the U.S. Attorney press release, see Fort Worth, Texas Man Arrested For Stealing more Than $1 Million In Real Estate From Rightful Owners (Federal Complaint Charges Norris L. Fisher with Mail Fraud).

(1) According to this story, the criminal complaint alleges that Fisher usually targeted vacant lots with unpaid back taxes or liens, and in some cases, Fisher acquired property by forging affidavits of heirship from deceased property owners.

Colorado AG Indicts Three In Alleged Fraud Scheme Designed To Rip Off Home Sellers, Lenders

From the Office of the Colorado Attorney General:

• Colorado Attorney General John Suthers announced [] that the Statewide Grand Jury has indicted Marcus Williams [], Kimberly Anderson [] and Scott Peters [] on suspicion of running an elaborate mortgage-fraud scheme under the auspices of Blackhawk Property Management. According to the 23-count indictment, Williams, Anderson and Peters diverted money from home sellers or funding companies to Blackhawk Property Management, which functioned as a shell company. During the deals, the suspects allegedly falsified loan applications to deceive lenders; used false inspections to divert money into the company’s coffers; and, manipulated closing documents to skim money off real estate purchases.

For the Colorado AG press release, see Attorney General announced indictment of three Coloradans involved in a complex, Denver-area mortgage fraud enterprise.

S. California Lender Accused Of Pushing Homeowners Into Foreclosure By Jacking Up Escrow Payments After Borrowers File Bankruptcy

In Pasadena, California, the Whittier Daily News reports:

• Allegations that OneWest Bank is systematically pushing home loan borrowers toward foreclosure has elicited concerns from two Southland lawmakers. Rep. Adam Schiff, D-Pasadena, said the claims contained in several lawsuits - if true - don't bode well for people who are trying to remain in their homes. "I personally don't know what the evidence is, but I'd be quite shocked if that was going on," he said. "I don't know how banks can unilaterally raise mortgage rates when a bankruptcy is going on."

• Rep. Linda Sanchez, D-Lakewood, also voiced concerns about the claims leveled at OneWest, or any other bank, for that matter. "I'm concerned about recent allegations that banks in Southern California may be victimizing homeowners," Sanchez said. "With the current economy, banks - especially those that received bailout funds - should be working with borrowers rather than pushing them into foreclosure."

• Sacramento attorney Peter Macaluso and Mark Wolff, another attorney from Elk Grove, recently filed several lawsuits on behalf of struggling borrowers whose mortgage loans are held by OneWest. The actions allege the bank routinely performs an escrow analysis soon after a borrower files for bankruptcy. Following that analysis, the homeowner's monthly mortgage payment is hiked - sometimes substantially.

• "They changed the mortgage payment for one of my clients eight times in eight months," Macaluso said earlier this week. The hikes place monthly mortgage payments further out of reach for financially strapped borrowers, effectively pushing them toward foreclosure, he said.

For the story, see Lawmakers concerned over OneWest lawsuits.

Chase Refused Couple's Attempts To Make Mortgage Payments, Says Texas Lawsuit

In Jefferson County, Texas, The Southeast Texas Record reports:

• A Beaumont couple claims their bank has repeatedly threatened to foreclose on their home and has refused the couple's attempts to make payments. Charles W. and Phyllis E. Turnage filed a lawsuit Feb. 19 in Jefferson County District Court against Chase Home Finance. The Turnages claim that since 2007 Chase Home Finance has repeatedly accused them of failing to make payments. In fact, Chase has filed a foreclosure suit against the couple, but later dismissed it, according to the complaint.

• Chase has refused to accept the Turnages' payments in an attempt to set them up for foreclosure, the suit states. "Plaintiffs have attempted to resolve and satisfy Defendant but Defendant has a gaggle of agents dedicated to frustrating, harassing, and tormenting the Plaintiffs attempts to resolve and satisfy Defendant and their obligations under the Home Equity Agreement," the complaint says. "The Bank has taken the Plaintiffs monies then refused to apply to the refinancing of the home so as to artificially cause forfeiture and set the stage for foreclosure of Plaintiff's home."

For the story, see Couple claims lender rejected payments, plans foreclosure.

Crooked Counselor Charged In Refi Swindle; State Lawyer Fund Coughs Up Cash To Cover Client's Mortgage On Eve Of Foreclosure; More Charges In Works

In New Haven, Connecticut, The New Haven Register reports:

• A former city lawyer has been arrested in the theft of more than $143,000 while handling the refinancing of a client’s home mortgage in 2007. Morris I. Olmer, 81, [...] was arraigned at Superior Court on a single count of first-degree larceny. He is accused of pocketing $143,530.35 instead of paying off the original lender when a Hamden client refinanced a mortgage, according to the arrest warrant affidavit.

• Olmer’s client was then on the verge of foreclosure when the mortgage was paid off by the [Connecticut Bar's] Client Security Fund.(1) All practicing lawyers pay into the state fund to aid victims of attorney misconduct.(2)

• Olmer, a former city alderman who had practiced law for more than 50 years, had his law license suspended for six months in February 2007 in an unrelated mortgage scheme. He resigned as a member of the Connecticut bar in July 2008, according to state judicial records. Olmer is accused of swindling his client in January 2007.

***

• The criminal charge came when two complaints were filed with the Statewide Grievance Committee by the owner of the Hamden home and another client. Those complaints were forwarded to the office of the chief state’s attorney for prosecution. “The essence of both cases’ complaints was that attorney Olmer had been retained by both complainants to handle refinance closing on their homes; however, Olmer kept the proceeds from the new mortgage companies and did not pay off the existing mortgages,” Gregory Zigmont, an inspector for the financial crimes bureau of the office of the chief state’s attorney wrote in the arrest warrant affidavit.

• Olmer has only been charged in one of the complaints, but a source close to the investigation said a second arrest warrant is being prepared.

For the story, see Ex-lawyer charged in $143G swindle.

See also, New Haven Independent: Ex-Lawyer Charged With Swindling Client.

In an earlier story on Olmer, see Cash Back Mortgage Fraud Allegations Mount Against Suspended Connecticut Attorney.

(1) Typically, it's the underwiter that issued the title insurance policy that forks over the dough to satisfy the unpaid mortgage and winds up holding the bag in this kind of case. No word in the story whether the Client Security Fund will now chase the title insurer to recover its money, or if it recognizes the insurer as an additional victim of the swindle eligible for damage recovery.

(2) For those ripped off by crooked counselors in other states and Canada, see:

• United States: Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• United States: Check the USA Client Protection Funds Map;
• Canada: Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

Montana Bar Again Bags, Boots Repeat Offender For Client Ripoffs As Attorney Cops Federal Plea To Wire, Bankruptcy Fraud

In Billings, Montana, the Billings Gazette reports:

• A former Billings lawyer with a felony record of stealing from clients(1) [] admitted he again stole from clients. Appearing in federal court, Marvin Earl “Toby’’ Alback, 62, pleaded guilty to wire fraud and bankruptcy fraud for misappropriating money from clients for his own personal use. In December, the Montana Supreme Court ordered disciplinary action against Alback, who resigned his license in September amid misconduct allegations.

***

• Assistant U.S. Attorney Ryan Archer said that in the bankruptcy fraud, Alback was hired by a family in March 2008 to represent them in a bankruptcy case. When the family had trouble making their mortgage payment, Alback told them to write their settlement and mortgage payments to him and he would deposit the money with the bank. Alback deposited the money into his trust account and never made the payments on the mortgage. Although he eventually paid back the money, he caused significant back payments and late fees to avoid foreclosure, Archer said. The investigation also found that Alback obtained the family’s $557 tax refund check for 2008 and deposited it into his business account. He used the money for personal expenses. The refund check belonged to the bankruptcy estate, Archer said.

• In the wire fraud, Alback represented another client in a lawsuit that was settled for $12,500 in August 2009 and a check was written to his client. While Alback was entitled to a share of the settlement, he forged his client’s name without her knowledge, deposited the $12,500 into his account and used it for his personal benefit. The client received a check for her settlement in October 2009, but it bounced and she has not received any money that was paid to settle the suit.(2)

For the story, see Ex-Billings lawyer admits fraud.

(1) According to the story, Alback was sentenced to 16 years at Montana State Prison in 1987, with 13 years suspended for felony theft. Alback admitted stealing more than $95,000 from two clients. He was disbarred and his license was reinstated in 2000. More recently, Alback was accused of violating attorney rules of conduct by failing to properly represent a Billings woman in a case filed in 2007. He also was being investigated for at least one other complaint. Even though Alback resigned his license in September, the Montana Supreme Courtsaid that did not prevent it from imposing sanctions on him for misconduct, the story states.

(2) If a Montana attorney, either in the course of representing you or acting as a fiduciary, screws you out of money or property through dishonest conduct, go to the Montana Lawyers' Fund for Client Protection for information on how to recover some or all of your losses from the fund.

For other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

Upstate NY Assembly Line F'closure Mill Law Firm Attracts Spotlight, Scorn From Various Quarters; Manufactured Mortgage Assignments Among Allegations

The New York Post reports:

• As the mortgage melt down paralyzed the economy across the US and throughout New York State, one company in the center of the storm had all the business it could handle. The little-known law firm of Steven J. Baum PC, which is based in suburban Buffalo, NY, and represents dozens of banks in matters of failed mortgages, last year filed a staggering 12,551 foreclosure lawsuits in New York City and the suburbs, which works out to about 48 a day.

• The foreclosure mill is one of a handful of super-regional law firms used by the country's banks -- and its lawyers appear to have practiced in every county courthouse and bankruptcy court from Staten Island to Plattsburgh and from Montauk to Niagara Falls. But as the volume of its workload increased, so did complaints from opposing lawyers and judges that some of the thousands of lawsuits contained questionable legal work.

***

• The complaints against Baum -- on the record during hearings, in legal pleadings and, eventually, borne out in judges' decisions -- include:

• * Not divulging mortgage payments: In the White Plains bankruptcy of Blanca Garcia, Baum's firm filed papers claiming Garcia was in arrears -- when she actually made payments and showed the court her receipts, but they were not credited to her account. When Garcia's lawyer complained, Baum's firm answered the claim but, the lawyer said in court papers, ignored the receipts and continued to claim the mortgage was in arrears.

• * Creating questionable assignments: A Suffolk County judge took it upon himself to investigate a filing by Baum's firm when it attempted to foreclose on the home of Gloria E. Marsh. "A careful review," the judge wrote in a four-page order, "reveals a number of glaring discrepancies and unexplained issues of substance." The judge found that Baum filed the action before the date it claimed its client took ownership of the mortgage.

• * Botched legal papers: In the bankruptcy of Matthew Austin, Baum's firm tried to prove that its client owned the mortgage backing Austin's house by filing an assignment of that mortgage from a Florida company signed by an executive of that company -- but it was notarized in Buffalo, NY. "To the extent assignor flew to upstate New York to appear before a notary in the law offices of Steven J. Baum, PC, defies all logic," the lawyer said in court papers. "Clearly this is a manufactured document intended to defraud the Court." The bank and Austin, in hopes of settling the matter, are discussing a mortgage modification.

***

• Judges are taking action. A few, like Justice Jeffrey Spinner in a widely reported case in Suffolk last November, are ripping up mortgages and tossing entire cases brought by Baum after it couldn't prove its case. Second, the US Trustee, the arm of the Department of Justice charged with keeping the country's bankruptcy courts free from malpractice, has had its Manhattan office monitoring cases involving the Baum firm. And just last month, a New York bankruptcy judge said he now has "probable cause" to believe that lawyers for the Baum firm acted inappropriately.

***

• Steven J. Baum, 41, took over his father's sleepy Buffalo law practice several years ago, moved it to suburban Amherst and super-sized it. It now has about 500 employees, according to an ad it placed on an online jobs site, plus has started Pillar Processing, a legal-document processing company. Pillar, too, has gotten the attention of judges. One judge blasted Baum for trying to distance himself from a bad courtroom gambit by having a non-lawyer employed by Pillar file a motion canceling the request.

***

• One bank executive told a judge during a hearing in a Poughkeepsie court hearing that the bank pays law firms $650 for every referral -- presumably just to file the foreclosure action. Additional pleadings would be extra.

For more, see Liening on NY homeowners (Chase and law firm draw scrutiny over tactics in foreclosure).

Loan Servicers Feel The Squeeze From Increased Denials Of Mortgage Insurance Claims

Housing Wire reports:

• In the face of dwindling business, with January 2010 showing fewer new policies than any month in 2009, mortgage insurance (MI) companies are increasingly denying claims for defaulted loans that allegedly do not conform to underwriting standards, increasing costs for servicers and investors.

• Historically, mortgage insurance (MI) rescission rates were low, generally around 7%, but in recent quarters, that rate has jumped to 25%, associate analyst Aleksandra Simanovsky wrote in the Moody’s Investors Service latest “ResiLandscape” commentary provided to HousingWire.

• According to Moody’s, the issue came to a head in December 2009, when Bank of America [] filed a lawsuit against MGIC [], claiming the insurer improperly denied claims from BofA’s servicer unit. While the lawsuit is still pending, mortgage insurers are becoming more confident in denying partial or whole claims from servicers and Simanovsky wrote the industry can expect continued high rescission rates for the future.

***

• MI companies are taking a harder look at expenses for property preservation and utility bills and many times, servicers’ claims are denied because the MI companies claim the expenses are not “reasonable and customary.” In addition, servicers are receiving reduced reimbursements on tax and insurance advances that result from extended holding times. "As unsold home inventories continue to build and as foreclosure and REO timelines grow longer, losses to securitized trusts are expected to increase to the extent that MI companies are not covering such expenses,” Simanovsky wrote.

For more, see Growing Trend of Mortgage Insurance Claim Denials are Costing Servicers.

"Nail & Mail" Process Service Victimizes Dead Man In Foreclosure Suit; Survivors Left To Sift Thru Parents' Personal Belongings Dumped On Front Lawn

In Douglas County, Georgia, MyFoxAtlanta reports:

• A Douglas County family is trying to figure out what went wrong and why they lost a home to foreclosure. Family members said Thursday that a court appointed conservator was supposed to pay the bills on a home belonging to a deceased relative, but the home ended up in foreclosure.

• David Brown said he heard about the foreclosure on his late father's house from a voicemail left by neighbor. "There's a lot of activity over there it looks like their throwing everything on the front lawn," said Brown.

• Brown's father, Dr. James Brown died in June. The estate was placed in the hands of a court-appointed conservator until the will could be worked out. "Larry Smith, the conservator was supposed to preserve the estate. Obviously [he] hasn't done his job," said Brown. The probate judge in the case, Hal Hamrick referred questions to Smith. Smith said he couldn't comment on the case.

• Smith's attorney said, "I have gone through Mr. Smith's files. We received no notice of the foreclosure or any hearings." The magistrate clerk said a notice of the foreclosure by SunTrust bank was tacked on the home and mailed in January [ie. "nail & mail" method of process service], but no one ever responded.(1)

• The Brown family said they spent the two days gathering up the belongings from the front lawn of the Douglas County home. "This is not the way I wanted to go through my mom and dad's personal things," Brown said. The family said they weren't sure what to do next. Smith's attorney said Brown's mail was supposed to have been forwarded to them, but claimed they never received any notices.

Source: Family Loses Home in Conservatorship.

(1) The homeowner died in June; the foreclosure notice was "nailed & mailed" over six months later in January. No word whether the process server engaged in a diligent search & inquiry for the homeowner by:

• inquiring of neighbors as to the homeowner's whereabouts,
• searching Social Security records using homeowner's Social Security number (usually found on mortgage loan application on file with lender) for any indication of his death,
• searching state drivers' license and motor vehicle records for a current address, expired driver's license, or expired/cancelled vehicle registration,
• searching county Health Department records to see if a death certificate was filed for the homeowner, and, if so, search court records for information on the appointment of the conservator.

Typically, the process server gets paid a flat fee for its rendered services, so being stuck having to do the extra leg work to detremine if the homeowner is deceased and, if so, do even more leg work to properly serve process on the deceased homeowner's heirs (assuming they can be identified and found) is not exactly in his/her financial interest. Taking a "head-in-the-sand' approach by simply relying on "nail & mail" is, ostensibly, a much easier route for the process server to go (and the easiest route to abuse), assuming the process server can go undetected and get away with it without first attempting a diligent search and inquiry for the homeowner. For a list of some of the types of activities that go towards establishing a satisfactory search by a process server for a lawsuit defendant, see Affidavit Of Diligent Search And Inquiry (found at page 14).

For a recent story of a homeowner screwed over in a similar way by faulty process service (ie. "sewer service"), see Central Florida Judge Voids Foreclosure Sale, Allowing Homeowner Victimized By Sewer Service To Recover Title To Home.

For more on the use of the "nail & mail" method of serving process on defendants in lawsuits, see NY AG Files Criminal Charges & Parallel Civil Suit Against Process Serving Firm & Its CEO Alleging Massive "Nail & Mail Sewer Service" Operation.

El Paso Man Accused Of Sale/Rental Of Homes To Would-Be Buyers Without Paying Off Existing Mortgages; One Victim Loses Home, Another Faces The Boot

In El Paso, Texas, KFOX-TV Channel 14 reports:

• An arrest warrant is issued for the owner of a local mortgage company after allegedly defrauding two women on their payments. Maria Martinez is being evicted from her Lower Valley home [...]. She claims she was defrauded by Solar of El Paso Inc. She says the company told her to make her mortgage payments to Kenneth Daniel, the owner. "I would deposit the payment into Kenneth Daniel's account," Martinez said.

• She said she got a statement from Chase bank earlier this year indicating she was facing foreclosure. The attorney for Solar of El Paso Carlos Quinonez released this written statement: "Maria Martinez breached the terms of her contract with Solar, Inc. On November 1, 2008, Maria Martinez failed to make payment as required under the terms of her contract." But Martinez showed KFOX receipts that prove she was making payments.

• Last week, the County Attorney's Office filed a deceptive business practice charge on a separate case. The alleged victim Veronica Lara also contracted with Solar of El Paso. Lara said she spent hundreds of dollars fixing up the house she bought from Daniel [...]. Last year, she was evicted from the home. "It's a feeling of desparation. We had to move everything, we didn't know where to go. It was hard on the kids, they lost their rooms. We didn't know how to explain to them."

• Currently, Daniel has an outstanding warrant for this case. "I don't want this to happen to other people," Martinez said crying. "We are left with no money. And now they're kicking us out of the house," she said.

For the story, see Warrant For Owner Of Local Mortgage Company.

Pair Held On $200K Bond For Allegedly Pocketing Proceeds On "Contract For Deed" Home Sales Without Making Payments On Existing Liens

In Midland, Texas, the Midland Reporter Telegraph reports:

• The second man allegedly involved in a real estate fraud scheme targeting homeowners around Midland turned himself in to authorities [...]. Marcus Jacob Rosenberger, 33, was charged with two counts of forgery after police said he and his business partner Jason Heath Morrison, also 33, defrauded several individuals by purchasing their residences from them and never making payments on their mortgages.

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• Morrison and Rosenberger [] signed a [purchase] contract with [one] homeowner stating they would continue making future payments on the mortgage until the home was sold, authorities said. Then after the home sold, Vanguard Properties would pay off the lien on the residence and keep the remaining funds from the sale. However, the affidavit stated that was not the case.

• Rosenberger claimed to have sold the house to a woman in July after he took possession of it from the victim on June 29, 2009. The selling price of the home was for $110,000, investigators wrote. However, Vanguard Properties never made any payments to the victim's bank or his mortgage and the $68,000 that he owed. According to police, the woman who had purchased the home had made six monthly payments to Vanguard Properties and a down payment and the money never went toward the bank for the mortgage.

• The homeowner returned home in December to find he was $13,000 behind in payments, the affidavit stated. Police believe Morrison and Rosenberger took "possession of the property fraudulently;" no contracts of the sale or deeds were ever filed or recorded through the Midland County Courthouse either. The homeowner is one of four police said were victimized by both Morrison and Rosenberger.

• Morrison was arrested [] by investigators; both men remained locked up as of press time at the Midland County Detention Center on total bonds of $200,000 each.

For more, see Second fraud suspect turns self in.