Unpaid Water Bill Leads To Another Shutoff For One S. Fla. Condo; Unpaid HOA Fees Cause Assoc's Cash Shortage; May Need To Start "Reverse F'closures"

In Lake Worth, Florida, WPEC-TV Channel 12 reports:

• Residents of a Lake Worth condo are once again without water. People who live at the Sun Home Condominium say the water went out Monday. Residents fear a repeat of what happened in June when the water was off for a week. Tuesday, the condo's bookkeeper tells us the building is again behind on its utility bills by $1,400.

• With many owners overseas, the bookkeeper says it's hard to raise the money needed. Compounding the problem, sources tell us half the units are in foreclosure and those owners are not paying the maintenance fee which pays the water bill.(1) Condo resident Tenille DeJesus says, "My boyfriend had to go to work without taking a shower. I can't cook really. I can't clean my dishes. My toilet, I can't flush." The condo's bookkeeper says she hopes to get the water back on in a few days.

Source: Condo residents left without water-again.

(1) This condo association may be a prime candidate for the process being referred to in Florida as "reverse foreclosure." See South Florida Sun Sentinel: South Florida homeowner associations get tough collecting delinquent fees.

• Homeowner associations throughout South Florida are becoming more assertive in the fight to maintain property values and their own bottom lines amid one of the worst housing collapses since the Great Depression.

• A new legal strategy and a sweeping condominium reform bill are empowering boards hit hard by budget shortfalls after a deluge of foreclosures in recent years. Associations now are attempting so-called reverse foreclosures, which force lenders to seize homes more quickly than they otherwise would. Banks often delay taking back these troubled properties to avoid having to pay past-due assessments.

37 Disabled Vets Face The Boot As Non-Profit Albuquerque Group Home Faces Foreclosure

In Albuquerque, New Mexico, KOB-TV Channel 4 reports:

• A local non-profit that provides a home for dozens of vets is behind on its mortgage payment and if money doesn’t come soon, the apartment complex could shut down leaving many of its tenants homeless. For the last five years, the local charity has been providing permanent housing in Northeast Albuquerque for mentally disabled vets who otherwise wouldn’t have a place to live. Now, the organization is $160,000 dollars behind on its mortgage and in danger of shutting down.

• Thirty-seven mentally disabled veterans call the apartments home. Some of them used to be homeless. “It’s given me a lot of security, and I’m happy here,” said Veteran Floyd Sullivan.

• But their security is at risk. Highpointe Solutions, which runs the facility, is behind on mortgage payments. And the bank intends to foreclose. “I don’t know where these people are going to have to end up going. Maybe shelters,” said Highpoint Caregiver Hanz Heredia. He says the charity need to come up with $160,000 by September 1st. “We take care of them, feeding them, giving them their medication, basically taking care of their needs,” Heredia explained.

• The non-profit operates without government help and without public donations. Rental income from the vets is the sole funding for the charity. But it’s not enough. To make up for the deficit, the charity’s founder pays some of the expenses out of her own pocket and borrows the rest from a local bank. “You got people that tend to have schizophrenic, they lose their memory, Alzheimers, you never know,” Heredia added.

***

• The charity is [] applying for grants to help pay off the mortgage. A website has been set up for donations, which is www.forourveterans.us.

For the story, see Disabled veterans facing eviction.

New Bay State Law Requires "Just Cause" Before Booting Renters From Foreclosed Properties

In Boston, Massachusetts, Harvard Law School News reports:

• Groundbreaking legislation originally drafted by students from the Harvard Legal Aid Bureau (HLAB) to protect tenants from losing their homes after foreclosure was signed into law on August 7 by Massachusetts Governor Deval Patrick ’82, former president of HLAB. [...] The new law, if applied appropriately, will be a very important tool in keeping people in their homes and protecting neighborhoods from falling into decay, says [HLAB Director and Clinical Professor of Law David] Grossman. “It provides rights to tenants that no law in Massachusetts has for years,” he says. “It could solve the problem that’s plagued our communities and cost us thousands of hours trying to solve in a less-efficient fashion, through litigating against banks in court.”

***

• HLAB students drafted what is considered the heart of the bill, a critically important “just cause” section that prohibits banks from evicting tenants from foreclosed-on properties unless the tenant fails to pay rent, harms the property, or otherwise gives “just cause” for eviction. It is believed to be the first “just cause” law in the country pertaining specifically to tenants in foreclosed-on properties.

• In addition, the bill imposes a longer pre-foreclosure period on banks that don’t make a good-faith attempt to restructure loans with homeowners, and it criminalizes mortgage fraud. It also provides property tax exemptions for purchasers of foreclosed properties.

For the story, see Massachusetts enacts landmark foreclosure protections drafted by Harvard Law School students.

Ex-Firefighter Gets Six Months For Torching Home While Facing Foreclosure; Ordered To Pay $16K In Restitution

In Waupaca, Wisconsin, WSAU Radio 550 AM / 99.9 FM reports:

• A former firefighter will spend four years on probation, including six months in jail, for deliberately setting his house on fire in September 2005. A Waupaca County judge also ordered Chris Doering to pay court costs and more than $16,000 in restitution to the holder of the land contract and an insurance agency.

• A crime lab analysis found gasoline on Doering’s shoes and blue jeans and in a bedroom closet where he first noticed the fire. A special police dog also found evidence of an accelerant in the kitchen and dining room areas, where a burn pattern analysis showed the fire likely started.

• Doering admitted that he knew his house was in foreclosure and that he set the fire a day he was notified that it would be sold at a sheriff’s sale. Doering also submitted a claim for insurance proceeds shortly after the fire.

Source: Ex-firefighter sentenced for starting house fire.

Tenant Hit w/ Civil "Pigeon-Feeding" Charges; Faces The Boot Over Health, Safety Issues; Bread-Supplying Bakeries Eyed As "Unindicted Co-Conspirators"

In Coney Island, Brooklyn, the New York Post reports:

• Coney Island is a continent away from Alcatraz, but the spirit of the "Birdman" lives on in a neighborhood woman who loves and feeds pigeons -- and it might cost her her home. Sabina Mickiewicz's landlords have taken the disabled woman to Housing Court and are trying to evict her for creating "a health and safety issue" in her apartment complex, according to legal papers.

• And it doesn't stop at birds. The landlord, Bay Park Two Co., claims she "has been observed" feeding opossums, squirrels and cats. Now Mickiewicz, 59, who says she has an inoperable brain tumor, has hired a lawyer to fight the avian eviction.

• Mickiewicz, who grew up behind the Iron Curtain, has established relationships with several of Brooklyn's large Italian and Russian factory bakeries, which give her about 20 loaves of unsold bread a day.

Source: Pigeon lover may lose nest.

Texas Woman The Latest "Blame Obama" Bandwagon Jumper; Lawsuit Claims Prez, Housing Officials Hypnotized & Abused Her, Forcing Her To Flee Home

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

• Claiming she had to flee her government sanctioned home because of psychological and sexual abuse, Amy Modica, who has filed around a dozen suits in the past three years, filed two fresh lawsuits Monday against President Barack Obama. This is the second time in two months Modica has sued a government official. In June, Modica sued Jefferson County Judge Ronald Walker claiming he and his secretary caused her personal injury when they would not allow her to fill out commitment papers on her mother.

• In her most recent lawsuits, filed July 30 in Jefferson County District Court, Modica alleges Obama, along with the Housing Authority of Beaumont and U.S. Department of Housing and Urban Development, psychologically abused her to the point that she had to flee her apartment home.

• Modica claims officials hypnotized her against her will and then performed "inappropriate actions" on her, court papers say. The suit does not give specific dates but does state that she was living at the Loree Grand Apartments and the Seville Apartments when the alleged abuse occurred. Both complexes have also been named as defendants. "All of the wantonly acts and or incompetence has pushed me to the limit and a lawsuit is definitely due deserving," the suit states. Modica is seeking punitive damages to punish the defendants. She is representing herself. Modica's previous lawsuits have been dismissed.

Source: Latest Modica suit alleges she was hypnotized by Obama, housing officials.

Bronx Tenants Target Fannie, Freddie; Bang Drums Chanting "The Bronx Is Not For Sale" In Protest Over Deteriorating Conditions In Dilapidated Bldgs

In New York City, WNYC Radio 93.9 FM/820 AM reports:

• A group of Bronx tenants rallied Thursday outside the midtown offices of Fannie Mae and Freddie Mac. They began their march at Fannie Mae's midtown offices and ended up near Grand Central Terminal, where they banged drums and chanted "the Bronx is not for sale." Police formed a line in front of the high-rise building that houses Freddie Mac.

• Tenants say their buildings were purchased during the housing boom by companies that overpaid for the properties, allowed them to fall into disrepair and ultimately ended up in foreclosure or near it. They say Fannie Mae and Freddie Mac own the loans on their buildings and they are fearful the properties will get auctioned to the highest bidders, causing the same problems all over again.

• One tenant, J. Ahleezah Sims, wants Freddie Mac to lower the debt on the dilapidated building where she lives and then sell it to a reputable owner. Last year, Fannie Mae agreed to do just that with a portfolio of 16 buildings after being pressured by elected officials and the city's Department of Housing Preservation and Development. Freddie Mac says Sims' building isn't in foreclosure yet, and it's working with the current owner to address the violations.

• Tony Perez lives at 2427 Webster Avenue and says his building has been in disrepair for years, with tenants having to deal with broken elevators and no heat and hot water in the winter. Fannie Mae ended up taking the building over and Perez says they reneged on a promise to notify the tenants association before selling to a new owner.

For the story, see Bronx Tenants Rally Against Fannie and Freddie.

See also, NY1: Bronx Tenants Call For End To Predatory Lending (Dozens of Bronx tenants who say they are being forced out of their apartments because of predatory lending to slumlords rallied Thursday in Midtown).

Thugs Hijack Condemned Apartment Building In Foreclosure After City Boots Four Dozen Residents Over Health, Safety Issues; Bank Left Holding The Bag

In Springfield, Massachusetts, The Republican reports:

• The living conditions inside two Locust Street apartment buildings, which the city condemned Thursday, had deteriorated dramatically during the past few months. Things got so bad that on Wednesday, when a number of city agencies conducted an emergency inspection of the properties at 244-252 and 258-262 Locust St., they found near-lawless environment inside, a scary free-for-all in which squatters were living rent-free or, even worse, paying rent to people who had no business collecting it.

• “Thugs took over the building and were offering units to rent,” said Geraldine McCafferty, director of the municipal Office for Housing. As a result of the condemnation, about four dozen people were evicted in Housing Court procedures and a California-based bank was ordered to put them up in a hotel for a week while they search for more permanent housing.(1)

• Although McCafferty said that corner of the city’s Forest Park neighborhood has long been depressed, the property’s most recent woes began when its owner, Riverview Apartments went into foreclosure.

***

• Over the past few months police began responding to an increasing number of 911 calls regarding the property, and complaints made to the Office of Housing started coming in as well, McCafferty said. The emergency joint inspection, in the works for about two weeks, found that property’s central fire alarm system had been ripped out of the building.

• Inspectors found a number of other code violations as well included a leaking roof, and waste oil and raw sewage in the basement, according to David H. Cotter, deputy director of the city Department of Code Enforcement. Some of the apartments were in horrible condition and could not be fully inspected due to such hazards as garbage, feces and exposed electrical wires, Cotter said.

***

• The failed properties on Locust Street and a number of others like them in the city are byproducts of the housing bubble and the mortgage crisis that unfolded with it’s puncture. During the bubble, investors from outside the area saw what were highly-inflated property values for Springfield.

For the story, see Springfield officials say conditions in Locust Street apartments has been deteriorating for months.

(1) A companion story (see Springfield condemns Locust Street apartments; Judge orders bank to put tenants up in hotel) reports:

• [City lawyer Lisa] DeSousa told [Housing Court Judge Robert G.] Fields the conditions there were the most appalling she had seen during her career as a housing lawyer. “There were collapsing ceilings, no working plumbing, no functioning stoves or refrigerators (in some units),” she said, faltering. “I’m sorry, your honor, I’m struggling because this is actually the worst I’ve ever seen.” The courtroom was packed with couples, mothers, children with pacifiers and the aged, all awaiting to hear where they would lay their heads that night.

Foreclosed Homeowner Faces Felony Theft, Criminal Mischief Charges For Stripping Fixtures Before Vacating Premises; Damages Estimated At Approx. $50K

In Baxter County, Arkansas, KAIT-TV Channel 8 reports:

• A Midway woman turns herself in on felony charges of theft of property and criminal mischief following a complaint filed April 9 by First National Bank and Trust Company of Mountain Home. According to police reports, Cathy Jo Cain, 39, of Midway turned herself in after damaging her previous home after it was foreclosed.

***

• Following the foreclosure sale, the bank representative came back to the property and found the home to be stripped of all fixtures including sink faucets, handles, doorknobs, deadbolts, floor moldings, chandeliers, cabinets, center-island and marble, appliances, all interior doors, and the back deck. Most of the carpet was pulled up and the front desk was partially dismantled. Estimated damages to the home are approximately $50,000.

For the story, see Region 8 woman turns self in after destroying own home.

Several Homeowners In Foreclosure Win Unexpected Extension In Cases As Judge Gets Trapped In Elevator, Causing Hearing Cancellations

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• A judge was stuck in an elevator at the Sarasota judicial center for more than 30 mintues Monday morning. Several foreclosure hearings scheduled for 9:30 a.m. were cancelled after Magistrate Deborah Bailey could not get off the elevator to go to her 5th floor courtroom.

• Bailey said the elevator car went up to the fifth floor, and the doors only opened slightly as she tried to go to the courtroom. Then the elevator went up to 10th floor — the building’s highest floor — before again opening only a slight amount.

• The elevator is behind the scenes and unavailable to the public, one of two that provide service from the secure judge parking to the judges offices and back doors to courtrooms. After elevator workers removed Bailey from the elevator car, they told her the problem would have to be repaired. Bailey got to court in time to hear the rest of the cases on her morning docket.

Source: Judge trapped in elevator.

23-Year Old Med School Dropout Seeks $1.7B From Lender In F'closure Defense Suit; Bank Try To Move Case To Federal Court Gets Boot Back To State Forum

In Pomona, California, the Los Angeles Times reports:

• As foreclosure fights rage in the nation's courts, the battle over Shahida and Ather Ali's house in Diamond Bar looks like a classic mismatch. In one corner, weighing in at $2.5 trillion in assets, sits Deutsche Bank, which is attempting to evict the Alis from their home of 24 years.

• In the other is Zeenat Ali, the couple's diminutive 23-year-old daughter, who dropped out of medical school and sued Deutsche Bank after it foreclosed on the property. Hoping to reclaim title for her parents, Ali has spent half a year litigating in state and federal courts without the help of a lawyer. And though she has no formal legal training, the soft-voiced, 120-pound bantam is more than holding her own.

***

• The banks have learned not to underestimate her. In a challenge to her budding legal skills, they sought in May to move her lawsuit to federal court in Los Angeles, where they thought they'd have an easier go of it. Ali responded with 170 pages of legal filings. After reviewing them, U.S. District Judge Gary Feess sided with Ali and last month sent the case back to Pomona Superior.(1)

For more, see Fighting parents' foreclosure, Diamond Bar student wins rounds against Deutsche Bank (With no legal training, Zeenat Ali, 23, has been doing battle in court, winning judgments against the bank and two other companies mainly on procedural grounds).

For a story update, see Eviction stayed 45 more days in Diamond Bar woman's foreclosure fight.

(1) For a Willamette Law Review article that addresses, among other things, the apparent abuse by some corporate defendants in civil cases of removing state court cases to Federal court (which imposes a cost in time and money on plaintiffs and the court system) in an attempt to shop for a friendlier litigation forum, see Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder (article also available at http://ssrn.com/abstract=1073402).

"Buy & Bail" Activities By "Underwater" Homeowners Continue, Despite Beefed Up Fannie, Freddie Mortgage Lending Underwriting Standards

Bloomberg News reports:

• Harvey Collier, a mortgage broker in Fort Lauderdale, Florida, says he gets as many as 10 calls a month from people planning to default on their loans. The twist: They first want financing to buy another home.

• Real estate professionals call it “buy and bail,” acquiring a new house before the buyer’s credit rating is ruined by walking away from the old one because it’s “underwater,” or worth less than the mortgage. It’s an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan.

• The practice, which constitutes fraud if borrowers lie on loan applications, is continuing even after Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, beefed up standards to prevent it, according to brokers such as Collier and Meg Burns, senior associate director for congressional affairs and communications at the Federal Housing Finance Agency.

For more, see 'Buy and Bail' Homeowners Get Past Loan Restrictions.

Victimized Homeowners Receive $125K+ Restitution For Unpaid Taxes & Insurance In Escrow Ripoff; State Loan Originators Pick Up Tab For Defunct Racket

From the Office of the Indiana Attorney General:

• Attorney General Greg Zoeller [] announced 97 financial fraud victims have received $125,679.22 in restitution for taxes and insurance bills that went unpaid by defunct American Escrow, a Chicago-based company.

• "Paying property taxes and insurance is not optional for homeowners. Escrow accounts give people a peace of mind that critical bills will be paid on time by money held in trust. That peace of mind turned into a nightmare for thousands of homeowners all over the country when they discovered their tax and insurance bills had not been paid and the money had been squandered," Zoeller said. "This restitution will not undo the stress or erase the experience of being defrauded, but it will hopefully allow them an opportunity to gain back the financial stability for which they have been fighting."

***

• Zoeller filed suit against American Escrow in June 2009 for violations of state consumer protection laws. A court judgment was ordered in January requiring the company to pay more than $600,000 in fines, attorneys' fees and consumer restitution.

• The judgment proved uncollectible because the company had no assets so the state legislature passed a new law making restitution funds available for the fraud victims. The new law, House Enrolled Act 1332, set aside $150,000 out of a loan broker account held by the securities division of Secretary of State Todd Rokita's office. The account is funded from license registration and renewal fees collected from loan brokers, mortgage loan originators, and principal managers.

For the Indiana AG press release, see Victims of escrow fraud receive $125,000 in restitution (Indiana lawmakers created unique solution to aid fraud victims).

Ex-Ski Area Operator Accuses Connecticut Town, Officials Of Wrestling Away Ownership Of 278 Acre Property; Files Suit Seeking $11M In Damages

In Middlefield, Connecticut, The Middletown Press reports:

• The former Powder Ridge operator and his family announced [last week] that they have filed a lawsuit against the town of Middlefield and several of its officials after they used “bully tactics” to take over the approximately 278 acres where the former ski area once stood.

• Ken Leavitt, who has spent the last seventeen years of his life purchasing, developing and maintaining the Powder Ridge Ski Area, said he is seeking, among other things, $9 million from the town and $2 million in damages from an investment company, Middlefield Holdings, LLC.

• “While operating Powder Ridge for ten seasons, certain town officials who had their own personal designs on the ski area, have played every devious trick in the book to obstruct our business and take over the property at the lowest possible point,” Leavitt said. Town officials mentioned in the lawsuit are First Selectman Jon Brayshaw and former Chairman of the Middlefield Board of Finance Paul Pizzo.

For more, see Former Powder Ridge owner files suit against town.

New York To Use New Law To Hammer Loan Servicers Giving Financially Strapped Homeowners Loan Modification Jerk-Around

In New York City, ProPublica reports:

• New York regulators have crafted new laws to give the state authority to punish mortgage servicers -- something the Treasury Department, in administering its struggling mortgage modification program, has so far failed to do. The new rules set clear standards for how servicers must handle homeowners seeking a modification.(1)

• "We will not hesitate to bring an enforcement action or to refer an enforcement action," said Richard Neiman, the New York superintendent of banks. "In fact, we'll be looking for that case in the event of any wrongdoing, because we know the message it will send to the entire industry."

***

• The New York laws, which go into effect Oct. 1, lay out how servicers should handle homeowners in danger of foreclosure.(2)

For more, see New York Jumps Ahead of Feds With Law Holding Mortgage Companies Accountable on Mods.

See also, Housing Wire: NY Establishes Loss Mitigation, Fair Dealing Duties for Mortgage Servicers.

(1) See ProPublica: Bankruptcy Judges, Justice Dept. Rip Mortgage Companies for the type of abuses and egregious practices by mortgage servicers that precipitated the need for this new law.

(2) Among other things, the new laws require servicers to have adequate staffing and systems to ensure that homeowners "are not required to submit multiple copies of required documents," a frequent problem, and prohibit servicers from continuing foreclosure proceedings if the homeowner is being evaluated for a modification, the story states. ProPublica has previously reported that foreclosures occurring during the modification process have been a persistent problem.

"Sovereign Citizens" Continue On Home-Snatching Binge By Using Phony Deeds To Snag Property Titles; Actions Characteristic Of Domestic Terrorist Group

In Augusta, Georgia, The Augusta Chronicle reports:

• "Richard-Terence: Jenkins" appeared to be a man of means, with deeds in his name to six Augusta houses and a seventh in Snellville, Ga., all notarized and on file with the clerk of Superior Court. He also had a mailing address at a house in Hephzibah and a car tag specifying "diplomatic corps."

• The houses -- Jenkins doesn't actually own them -- were toward the low end of a portfolio being assembled by nine "sovereign citizens" now wanted on federal racketeering charges out of DeKalb County. While his actions seemed merely strange to Augusta Realtors, whose listings Jenkins deeded to himself for "one silver dollar," they're actually characteristic of a domestic terrorist group beginning to gain ground in Georgia.

***

• Members of the group wanted in DeKalb were found actually moving into higher-valued homes around Atlanta after having the locks changed and utilities switched on.

***

• At least 100,000 Americans consider themselves "sovereign citizens" and actively practice a bizarre set of behaviors, including adding punctuation marks to their names, said lawyer Mark Potok, spokesman for the Southern Poverty Law Center. Jenkins, for example, added the colon and hyphen to his name. Sovereigns believe the U.S. government established by the Constitution was replaced during a secret, treasonous takeover, according to an article in the center's upcoming Intelligence Report.

For more, see 'Sovereignty' basis for area racketeering (Group doesn't obey statutory laws).

NH Homeowner Gets 60-Day Reprieve From Foreclosure; Bad Media PR May Have Caused BofA To Reconsider Borrower's Requested Loan Mod

In Sandown, New Hampshire, the Eagle Tribune reports:

• All Victoria Gauvin wants to do is pay her mortgage and stay in her home. But since May, she has called Bank of America repeatedly. Her attorney has called Bank of America repeatedly. Mail has been received by the bank, but has gone unanswered. And though Gauvin said she was just two months behind on her payments, the bank is asking her for more than $86,000. She doesn't have much time left to get any answers or reach any agreements: The foreclosure date on the notice she received in May is Aug. 5.

For more, see Sandown mother faces foreclosure Thursday.

For story update, see Sandown woman gets 60-day reprieve on foreclosure:

• Bank of America has postponed — for 60 days — foreclosure on her home of 14 years. Gauvin said she is talking to a bank representative about changing the terms of her mortgage. [...] On Tuesday, the bank assigned an employee to her case. Prior to that, numerous calls from Gauvin and her lawyer to the bank had gone without a response from anyone familiar with her case, compounding Gauvin's frustration as foreclosure loomed closer.

• On Tuesday, a Bank of America customer service representative called four times, Gauvin said. "It's a step in the right direction," said attorney Christopher Perry, who is representing Gauvin for free. Gauvin has a 60-day postponement while the bank reviews her file, Perry said. He said he thinks bad publicity motivated the bank's actions.

Thanks to Mike Dillon of GetDShirtz.com for the heads-up on the stories.

Another Successful Intervention For Atlanta TV Station's 11Alive Help Desk; Helps Homeowner Work Out House Payments After Getting Loan Mod Jerk-Around

In Covington, Georgia, WXIA-TV Channel 11 reports:

• For a Covington homeowner, it was a refinancing nightmare as documents could not be found and it could have meant foreclosure. Lisa Dailey was one of thousands who sat for hours at last month's Neighborhood Assistance Mortgage event in downtown Atlanta, hoping to refinance a home loan and keep her house. She sat for 19 hours, then came back a second for another 4 hours.But it was worth it. She got an assurance from Freddie Mac that she'd get a rate lower than the 6% she currently had.

• She left with the basic paperwork and awaited the final documents from Freddie Mac. "I came home ecstatic. I have this deal and everything will be okay. Then 35 days later, no one knows what I was talking about," Ms. Dailey said.

• Then, the bottom fell out. "No paperwork. Nobody remembered me being there and the promise that was given to me," she added. "My mortgage company was calling me. They kept saying I was behind and I needed to pay up arrears or I would be foreclosed in about 30 days. They have no record of me ever speaking to Freddie Mac," she said.

• The 11Alive Help Desk got right on it. We contacted Freddie Mac in Washington. They wasted no time in sorting it out. "You've got the 3.25% and it's done," we told Ms. Dailey. "Thank you so much. You did for me in a day what it took a year for me to do. Thank you so much. I am just beyond excited. My kids can breathe. I can breathe. I can breathe," Ms. Dailey said. Her home and mortgage are now secure.

Source: Homeowner Saved from Foreclosure; Refinance Found.

See Another Lender Changes Its Tune When Local Media Intervenes On Behalf Of Screwed-Over Homeowner Seeking Loan Modification for another recent successful intervention for the WXIA-TV 11Alive Help Desk.

More Journalists Sought To Report On Victimized Homeowners' Loan Modification Horror Stories

ProPublica announces:

• Earlier this year, to help shed light on problems with the federal mortgage modification program, we launched ProPublica's Reporting Matchmaker, a project designed to capture the stories of struggling homeowners by matching them with reporters in their area. To date, this partnership has generated stories like that of 65-year-old Karol Enferadi and her experience with Wells Fargo, which was published on MarketWatch last week.

• Journalists, it is not too late to join the Reporting Matchmaker network. When you do, ProPublica will connect you with homeowners in your area who want to talk with local reporters. A quick look at the Reporting Matchmaker map will show you whether there is currently a match in your area.

• Are you a homeowner who has applied for a loan modification? If so, tell us your story. And be sure to read all of ProPublica's reporting about the loan modification program.

Source: The Reporting Matchmaker Is Looking for More Loan Mod Stories.

State AG's Office: News Of Earlier Probe Into Central Florida Foreclosure Mill Triggered Flood Of Complaints Against Current Trio Under Investigation

A short excerpt from a larger story in the Sarasota Herald Tribune on the recently-announced probe into Florida foreclosure mills Law Offices of Marshall C. Watson in Fort Lauderdale, Shapiro & Fishman in Tampa, and the Law Offices of David J. Stern in Plantation:

• Another foreclosure mill, Florida Default Law Group in Tampa, is already the focus of a civil investigation by the AG's office into whether it presents faulty bank paperwork in thousands of foreclosures each month. News of that investigation led to a flood of complaints from lawyers and citizens about the three other law firms now under investigation, the attorney general's office said.(1)(2)

Source: State subpoenas records from 'foreclosure mills'.

(1) In a recent story in the St. Petersburg Times (see Attorney general investigates law firms in alleged falsified foreclosures), noted foreclosure defense attorney April Charney weighed on this probe:

• "We have fraudulent documents in each and every foreclosure case of mine and in every foreclosure case filed in this country," said lawyer April Charney, a foreclosure expert with Jacksonville Area Legal Aid. "There is layer upon layer of bogus documents in the assignments, powers of attorney, pleading, judgments, affidavits, service of process, etc., from one end to the other," she said. The largest of what Charney and other critics call "foreclosure mills" is the Stern firm.

(2) Does anyone know if Florida U.S. Senate candidate Jeff Greene has started "selling short" the corporate stock of David Stern's public-held company in order to make another billion??? See St. Peterburg Times: Jeff Greene's real estate dealings need explaining.

Appeals Court Boots Back Another Florida Trial Judge's Rubber-Stamped F'closure Ruling; "Uncontested Facts Of Record" Show "No Evidence" Of Assignment

In Northern Florida, the state's First District Court of Appeal has recently issued this short & sweet unanimous ruling in a foreclosure action, vacating and booting back a rubber-stamped judgment of Walton County Circuit Court Judge Kelvin C. Wells (bold text is my emphasis, not in the original text):

• In this mortgage foreclosure action, appellee, American Home Mortgage Servicing, Inc., obtained a final summary judgment. This judgment relies in part upon appellee's allegation that it is the assignee of the original holders of the mortgage and note executed by appellant. As all parties acknowledge, however, the uncontested facts of record do not establish that appellee is presently entitled to foreclose because the record contains no evidence of any assignment or comparable transaction.
  
  Accordingly, we VACATE the final summary judgment and REMAND this case for further proceedings.

For the ruling, see Kontos v. American Home Mortgage Servicing, Inc., Case No. 1D09-2803 (Fla. App. 1st DCA, August 10, 2010).

Attorney Matthew W. Burns, Destin, Florida represented the homeowner.

Mortgage Industry Move To Wipe Out Paperwork Maintenance Hassles Continues; Use Of Fraudulent Practices In F'closure Cases May Become Harder To Detect

Housing Wire reports:

• BNY Mellon Corporate Trust launched a new eVault service for its clients to receive, process and store electronic mortgage documents. The service is the latest in the industry to provide deliver and secure storage for electronic documents. Xerox has its own MERS-compatible eVault system, introduced earlier this year.

• BNY Mellon Corporate Trust is the corporate brand for The Bank of New York Mellon. The company said transforming paper-based processes into an all-electronic one boosts efficiency, creates transparency for participants to see data and exchange information and eliminates delays that come with physically mailing documents and manually entering data into computer systems allows faster delivery to the secondary market.

• “We’re excited to be redefining the role of a document custodian through our introduction of eVault, a service that changes how mortgage documents are generated and handled,” Rick Stanley, executive vice president and head of structured credit at BNY Mellon Corporate Trust, said in a press statement. “Documents no longer have to be printed on paper to be signed, and they don’t have to be manually shipped or physically stored. By making the mortgage process fully electronic, eVault allows lenders to reduce their costs through automation.”

• The eVault system integrates with the Mortgage Electronic Registration Systems (MERS), an industry-led initiative to identify and track individual mortgages and related information electronically. “By using electronic commerce, eVault eliminates paper and helps streamline the mortgage process, which is one of the goals of MERS,” Stanley added.

For more, see BNY Mellon Launches eVault Service for Digital Mortgage Docs.

In related stories on the ongoing move to paperless mortgage lending, see:

• Xerox Aims to Lead Originators into Paperless Mortgage World,
• 20 Years Later, DocMagic Reflects on eMortgage Evolution.

Thanks to Mike Dillon of GetDShirtz.com for the heads-up on the story.

Homeowner Facing Foreclosure Scores $45K & 2% Loan Modification Workout In Lawsuit Settlement With BofA, Countrywide, Fannie

In Northern California, the Appeal Democrat reports:

• A Linda woman who once faced eviction from her home will be paid $45,000 and have her loan modified as part of the settlement to her legal challenge to the foreclosure by a bank and a government agency. "You've got to use a big stick to get their attention," Mary Carter, 60, said of the lawsuit filed against Bank of America, Countrywide and Fannie Mae.

• Gregory Guth, the Yuba City attorney who represented Carter, said he took on the case convinced the Linda resident hadn't been dealt with fairly by the large institutions. "She had been wronged," Guth said. Her situation stemmed in part from the size and number of the institutions Carter faced in the foreclosure. "Nobody was on the same page," Guth said.

***

• Now secure in her home with the case resolved, Carter thanked Guth, who represented her after other attorneys who set up appointments with Carter told her they wouldn't take the real estate-related issue. "Without him, this would not have happened," she said. [...] Carter's loan, as part of the case settlement, will be 2 percent through 2015 and caps at 5.125 percent.

For the story, see Linda woman wins legal battle to keep her home.

Unwitting Tenant Evicted From One, Faces Boot From Another Home In F'closure w/in 6 Months; Loses Cash Paid For Home Repairs In Bogus Rent To Own Deal

In Reno , Nevada, The Reno Gazette Journal reports:

• In just six months, Stephanie Williamson was evicted from one home that she was renting, and she is about to be evicted from a second. Both of the Reno homes Williamson rented were foreclosed on. “As a single mom with two boys, I don’t exactly have all this extra income to be shelling out deposits,” Williamson said.

***

• Williamson’s first rental was a lease-to-own, and the 39-year-old thought she’d found the perfect spot for her family. She and her two sons were settled on the quiet cul-de-sac and friendly with neighbors. A garden was starting to flourish. But when she finally learned her landlord had been skipping mortgage payments for nearly a year, Williamson’s life was uprooted.

• Despite investing in multiple home repairs, Williamson was forced to pack everything up and move across town in March.(1) Her children changed schools, leaving their friends behind. She found a new home through a property management company and thought she would be safe. But she wasn’t. Just three weeks after she moved in, before everyone finished unpacking, she found a notice of default taped to her door.

***

• Though she hasn’t been formally evicted yet, Williamson said she’s “playing the waiting game” in a house that hardly looks like a home, because, “I don’t want to bother putting up pictures if I’ll just be taking them down in a few weeks.” “I’m just waiting for someone to come knock on the door and tell me to move out,” she said.

For the story, see Growing number of renters displaced (Legislation helps foreclosure victims assert their rights).

(1) While not to suggest that these methods of dealing in real estate are in any way nefarious in and of themselves, "rent to own" deals and sales pursuant to what are referred to in different parts of the country as land contracts, contracts for deed, agreements for deed (among other names) have long been used as handy ways for unscrupulous property owners to milk every last dollar out of a property with significant legal problems (ie. homes in foreclosure, homes with a defective title, building/health code violations, encroachments, improvements made without proper permits, etc., etc.) by unloading them on unsophisticated home buyers/tenants who fail to obtain title insurance or otherwise fail to check the legal status of the property being bought or rented.

Nowadays, it's gotten to the point where a prospective tenant can't even enter into a standard one-year lease without first checking the title history (and possibly obtain some evidence as to the fair market value of the property in the case of a 1 to 4 family home or condo) for the property being rented to see:

• that the prospective tenant is dealing either directly with the property owner or someone with proper authorization to act for the owner,
• that a foreclosure notice (ie. a lis pendens or a notice of default) hasn't been filed against the property, and
• if a foreclosure notice hasn't been filed against the property, how far "underwater" the landlord is on the property being rented (the more "underwater" the landlord is - the greater the chance he/she will begin pocketing the rents and stiffing the bank out of its mortgage payments in the future - assuming, of course, he/she hasn't already started doing so).

Another Novice Homebuyer Gets Screwed Over In Land Contract Deal; Sinks $15K Into Property Rehab, Now Faces The Boot Over Undisclosed Title Claim

In Racine, Wisconsin, The Journal Times reports:

• After transforming a hovel into a source of neighborhood pride, Noelia and Joaquin Raygoza have been ordered to leave. Not long after moving into a house they had agreed to buy at 1404 Buchanan St., the couple began receiving eviction notices - in someone else's name. Because of an apparent mix-up with an old foreclosure, the Raygozas and two grandchildren are the ones scheduled to be tossed out in a week.

• That's a big blow to a family that spent much of the past seven months turning it into a habitable place, upgrading plumbing, repairing sidewalks, putting in floors and more. They remember hauling out 14 loads of garbage, too, all to the relief of neighbors.

***

• In January, the couple signed paperwork to buy the property for about $26,000. A company called Original Resources Inc., based in San Jose, Calif., entered into a land contract that was supposed to transfer full ownership to the Raygozas after a two-year probationary period. Noelia and husband Joaquin, 53, moved in along with grandsons Sergio, 21, and Eric, 18. [...] Family members are skeptical that they'll get back what they put into the house. They put profits from previous sales and other savings toward the estimated $15,000 in renovations.(1)

For more, see Fixed up, then forced out? - Mix-up threatens family's eviction after extensive renovations.

For story update, see Family gets month reprieve from eviction over mix-up:

• Noelia Raygoza said someone from Original Resources Inc., the California company that sold [the couple] the house, planned to arrive here soon to help sort it out. She also plans to meet with Legal Action of Wisconsin(2) for possible legal assistance.

(1) In all likelihood, the novice homebuyer failed to either obtain a title insurance policy or otherwise check the status of the property title, including the status of any unsatisfied liens, or other clouds on title / title defects that may require the filing of a lawsuit to clear up. See generally, The Quiet Title Lawsuit; Fixing Title Defects in Real Property.

This story provides a good example of what can happen to a homebuyer who begins sinking in cash and sweat equity into a home without first getting legal advice or doing any due diligence when attempting to buy the property.

(2) According to their website, Legal Action of Wisconsin is a non-profit law firm with offices in six cities serving 39 southern Wisconsin counties providing free legal representation for low-income people.

State AG Announces Probe Into Florida Foreclosure Mills For Allegedly Manufacturing Phony Documents Used To Take Homes Away From Delinquent Borrowers

The Palm Beach Post reports:

• The Florida Attorney General's office announced this morning investigations into the state's three largest foreclosure law firms for allegations of unfair and deceptive actions. The firms, sometimes called "foreclosure mills," are the Fort Lauderdale Law Offices of Marshall C. Watson, Tampa-based Shapiro & Fishman, and the Law Offices of David J. Stern, based in Plantation.

• Last month, a lawsuit seeking class action status was filed by a Fort Lauderdale attorney against Stern claiming the firm generated fraudulent mortgage assignments when pursuing foreclosures. An assignment is held by the entity that has the right to receive mortgage payments. Stern's practice, which the lawsuit claims filed up to 7,000 foreclosure cases in Florida every month last year, also is alleged in the suit to have pursued foreclosures for lenders that didn't own the debt on the homes.

***

• A press release from Attorney General Bill McCollum's office says because many mortgages have been bought and sold by financial institutions multiple times, key paperwork involved in the process to obtain foreclosure judgments is often missing. "On numerous occasions, allegedly fabricated documents have been presented to the courts in foreclosure actions to obtain final judgments against homeowners," the press release states. "Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of the law firms under investigation."(1)

Source: State probes whether three law firms falsified foreclosure documents.

See also:

Sarasota Herald Tribune:

• Sarasota's legal community has sounded the alarm for years over shoddy or fraudulent paperwork being used to take thousands of properties from Florida homeowners in foreclosure. Local judges have reversed foreclosure sales, thrown cases out of court and created extra reviews to help ensure that attorneys for lenders follow the rules. On Tuesday, Attorney General Bill McCollum took the fight statewide, launching investigations into three of the state's largest "foreclosure mills."

South Florida Sun Sentinel: Three South Florida law firms investigated over foreclosure cases:

• The Florida attorney general issued [] subpoenas this week, requesting reams of paperwork by the end of the month from attorneys working in the foreclosure capital of the country. [...] The subpoenas request documents going back to at least Jan. 1, 2008.

Mother Jones: Florida AG Unveils Foreclosure Mills Probe:

• David J Stern AG's Subpoena,
• Marshall C Watson AG's Subpoena,
• Shapiro & Fishman AG's Subpoena.

(1) Those who have recently bought a home that had been previously foreclosed upon within the last several years better pull out and review their title insurance policy to determine that they are protected against future title claims that could arise by reason of these potentially void foreclosure judgments.

Whistleblower Lawsuit: Fannie Made Mess, Mishandled Money In Handling HAMP

The Center for Public Integrity reports:

• Fannie Mae executives bungled their stewardship of the federal government’s massive foreclosure-prevention campaign, creating a bureaucratic muddle characterized by “mismanagement and gross waste of public funds,” according to a whistleblower lawsuit by a former Fannie Mae executive and consultant.

• Caroline Herron, a former Fannie vice president who returned to the mortgage giant in 2009 as a high-level consultant, claims that the homeowner-relief effort was marred by delays, missteps and executives preoccupied with their institution’s short-term financial interests.

• “It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit.

For more, see Whistleblower: Fannie Mae Bungled HAMP Anti-Foreclosure Program.

In related stories, see:

• National Public Radio: Consultant: Federal Aid Program Failing Homeowners,
• The Wall Street Journal: Fannie Mae Critic Sues Over Firing.

For the lawsuit, see Herron v. Fannie Mae, et al.

The PSA & "The Alphabet Problem" In “Proving Up” Unbroken Chain Of “Assignments & Transfers” Of Notes, Mortgages In Foreclosure Defense Litigation

Consumer bankruptcy litigation attorney O. Max Gardner III writes:

• The Pooling and Servicing Agreement (PSA) is the document that actually creates a residential mortgage backed securitized trust and establishes the obligations and authority of the Master Servicer and the Primary Servicer. The PSA also establishes that mandatory rules and procedures for the sales and transfers of the mortgages and mortgage notes from the originators to the Trust. It is this unbroken chain of assignments and negotiations that creates what I have called “The Alphabet Problem.”

For more, see The Alphabet Problem and the Pooling and Servicing Agreement.

For 20 of the reasons you need to request through formal discovery in any mortgage-related lawsuit the PSA Agreement and why it is relevant, see Max Gardner’s Top Reasons for Wanting a Pooling & Servicing Agreement.

See Finding Investor Restrictions on Loan Modifications for some guidance on locating pooling and servicing agreements.

Indiana AG Files Three More Lawsuits Against Foreclosure Rescue Outfits For Violating State Rules; Runs String Of Legal Actions To 22 This Year

In Indianapolis, Indiana, The Indianapolis Star reports:

• Despite a two-year crackdown by his office, the state attorney general said for-profit foreclosure consultants are still ripping off Indiana homeowners by promising mortgage foreclosure relief but not providing it. Attorney General Gregory Zoeller filed three more lawsuits Friday against "foreclosure rescue" companies, using new state regulations meant to make it easier to put shady operators out of business.

***

• A new state law, effective July 1, requires for-profit foreclosure prevention companies to post a $25,000 bond with the attorney general in order to do business in the state. The three lawsuits are the first against foreclosure prevention companies under the new law.

• The new cases make 22 lawsuits that the attorney general has filed this year against foreclosure consultants. Investigations are under way on an additional 154 consumer complaints that might lead to additional lawsuits. Last year the AG filed 11 lawsuits against foreclosure consultants.

***

• The new lawsuits were filed against Foreclosure Relief Services National of Indianapolis; Home Loan Modification of San Diego; and a group of eight interrelated companies and individuals in Florida. All are charged with not paying the Indiana bond and other violations of state consumer laws.

For the story, see State warns against 'foreclosure rescues' (Attorney general files 3 new lawsuits and says rip-offs are continuing).

Woman Wins Battle To Escape Legal Grasp Of Guardianship "Kidnapping"; Now Faces Possible Loss Of Home To Satisfy $100K+ In Unpaid Guardian, Legal Fees

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:

• Isabelle Jessich went to court Friday with two goals: to regain her liberty from a court-appointed guardian and to prevent him from selling her Edina home to pay $100,000 in fees for himself and seven lawyers.

• Jessich succeeded in getting control of everything but her money, but she now faces the prospect of being sent back to a nursing home while her 17-year-old daughter could be placed in foster care.

• Jessich, 57, has been battling for 20 months to take control of her life from Joseph Vogel, a professional guardian and conservator appointed by a Hennepin County judge in December 2008 to make decisions for her. Last year, Jessich made major strides to overcome the eating disorder, neurological problems and alcoholism that had made her a ward of the court. But Vogel would not let her leave a Robbinsdale nursing home and rejoin her daughter Allison, who was left to fend for herself.

• After the Star Tribune reported on Jessich's situation in August 2009,(1) state inspectors investigated and cited Robbinsdale Rehab and Care Center for failing to release Jessich. She moved back home in December. Since then, Jessich testified Friday, she has continued with physical therapy and other recovery activities. She said she is leading a "normal life."

• But her struggle with Vogel over her finances could bring chaos back into her life. Vogel said he's owed almost $25,000, and lawyers in the case -- whose fees must be paid by Jessich -- have racked up more than $80,000 in bills.(2)

***

• [Her] house was nearly lost at a foreclosure auction, but Jessich arranged for someone to pay the back mortgage payments. Jessich refused to identify her "guardian angel," and the judge warned that failing to answer the question would hurt her position.

For more, see Edina woman gets control of life, may lose home (Isabelle Jessich got rid of her court-appointed guardian, but her house could be sold to pay legal fees).
(1) See Minneapolis Star Tribune: 'I feel like I'm in jail' (A court is keeping Isabelle Jessich in a nursing home even though a doctor says she's sane, sober and fit to leave. Is this how guardianship laws should work?).
(2) For other posts and links to other media reports on state-sanctioned, court-ordered guardianship ripoff rackets, see:

• State-Sanctioned Ripoffs Of The Elderly By Government Agencies Running Rampant On Both Sides Of The Atlantic?,
• NYC Controller Urges All Brooklyn Residents To "Make Out A Will ASAP!" To Avoid Risk Of Getting Fleeced By Public Administrator's Office,
• NYC Controller: Bronx Public Admisistrator's Office Plays Fast & Loose With Dead People's Property,
• Legalized, Court-Sanctioned Scam Allows For Vulnerable "Senior-Snatching" In Kidnapping, Ripoff Racket Of The Elderly In Arizona???,
• The BC Public Guardian's Office: A Ruthless Organization Abusing The Rights Of The Very People It Claims To Protect?,
• Estate looting 101: guarding against guardian abuse,
• Elderly Couple "Snatched" By State Of Texas Celebrate Homecoming After One Year Of Nursing Home "Captivity" - Home Went Into Foreclosure, Car Repo'd,
• No Fee For Brooklyn Attorney, Ordered To Pay Back $400K+ In Allegedly Improper Payments Taken In Guardianship Matter Of Retired Judge.

These guardianship ripoff rackets have been going on for decades, as evidenced by a New York Times story that dates back to June 29, 1988. See 3 in Surrogate's Office Charged With Thefts. granny-snatching

Massachusetts AG Concludes Civil Action Against Equity Stripping Attorney, Five Confederates For Using Sale Leaseback Racket To Rip Off Homeowners

From the Office of the Massachusetts Attorney General:

• [Last week], Attorney General Martha Coakley’s Office concluded its case against former Brockton attorney Alec G. Sohmer and five other defendants over their roles in a 2006 foreclosure rescue scheme. The judgments entered [] by Judge Thomas Connolly against Sohmer in the amount of $620,000 and against the four remaining defendants collectively in the amount of $364,000, together with the judgment obtained last May in the amount of $41,204, resolve allegations that Sohmer, with the assistance of the other defendants, orchestrated an unlawful foreclosure rescue scheme against 26 homeowners.(1)

***

• According to the complaint, Sohmer preyed on homeowners facing foreclosure by promising them that they could avoid foreclosure with refinancing through Timeless Funding. Instead, Sohmer allegedly deceived the homeowners into conveying their properties to himself or to his wife. The complaint alleges that Sohmer concealed his fraud by deceiving homeowners into signing documents purporting to allow them to stay in their homes by making monthly payments to Sohmer, and then to "repurchase" their homes from Sohmer by obtaining new financing.

• The lawsuit alleges Sohmer knew the homeowners would not be able to afford the monthly payments, or obtain the required financing to repurchase their homes because of the homeowners' financial distress and the onerous "repurchase" terms, After homeowners were unable to make the monthly payments, Sohmer then sought to evict them from their homes, and to sell their homes to new buyers. Sohmer also stripped the homeowners’ equity by charging fees, commissions and other payments.(2)

• In a related action, on July 20, 2010, the Attorney General’s Office obtained a favorable decision against Sohmer, resulting in the denial of Sohmer’s bankruptcy discharge. In October 2007, the Attorney General objected to Sohmer receiving a discharge from the Bankruptcy Court of all of his debts alleging, among other acts, that Sohmer filed false Schedules and a false Statement of Financial Affairs with the Bankruptcy Court, thereby concealing assets, and also failed to maintain adequate financial records to evaluate his financial condition. In her decision, Judge Joan Feeney found Sohmer knowingly and fraudulently made false oaths on his bankruptcy Schedules and Statement of Financial Affairs, intending to mislead the Bankruptcy Court Trustee and creditors.

• None of the attorneys involved in this scheme are currently practicing law in Massachusetts. The Supreme Judicial Court accepted Sohmer’s affidavit of resignation from the practice of law as a disciplinary sanction on September 28, 2009, suspended [Andrew] Palmer from the practice of law for 21 months on June 29, 2009, and accepted [Shaun M.] Ellis’ affidavit of resignation from the practice of law as a disciplinary sanction on other grounds, on April 28, 2009.(3)

• Two years ago, the Bankruptcy Court approved a settlement between the Attorney General’s Office and 10 mortgage lenders and servicers who funded or serviced the loans thereby facilitating Sohmer’s fraudulent foreclosure rescue transactions. With respect to the 26 properties, the agreement was designed to provide approximately $1.8 million in reduced mortgage obligations, and to return each homeowner to his or her financial position before the foreclosure rescue transaction occurred. The agreement also provided an opportunity for Sohmer’s victims to reacquire legal title to their homes.(4)

For the Massachusetts AG press release, see Attorney General Martha Coakley Obtains Judgments Against Alec Sohmer and Other Defendants in Alleged Mortgage Foreclosure Rescue Scheme (Obtains Favorable Decision In Bankruptcy Court Case Denying Discharge To Sohmer).

(1) For some of the relevant court documents and other information, see:

• Commonwealth of Massachusetts v. Sohmer - Amended Complaint,
• Motion to Approve Settlement Agreement,
• Settlement Agreement,
• Massachusetts AG press release: Bankruptcy Court Approves Settlement Between Attorney General’s Office and Ten Mortgage Lenders and Servicers Involved in Foreclosure Rescue Transactions.

See also: Foreclosure Rescue Sale Leaseback Deals Are Usurious Equitable Mortgages, Says Massachusetts AG's Civil Lawsuit.

(2) With respect to the Sohmer's confederates in this racket, the AG states that the court also entered a consent judgment for $90,000 against Sohmer’s wife, Jennifer Sohmer, who served as the purchaser and mortgage loan borrower for six properties in the foreclosure rescue scheme. Also entered were a consent judgment for $200,000 against former Norwell attorney Andrew Palmer, who served as the closing attorney for the foreclosure rescue transactions and default judgments against Timeless Funding, the corporation through which Sohmer marketed his scheme, in the amount of $130,000 in civil penalties, and against former Sandwich attorney Shaun M. Ellis, who referred distressed homeowners to Sohmer in exchange for a fee, in the amount of $34,000, to be used toward restitution and civil penalties, according to the AG's press release. A consent judgment against Edward de la Flor, a mortgage broker involved in many of the transactions, for $41,204 was entered on May 5th of this year.

(3) The victims of this scam who are owed restitution from Sohmer and the other attorneys involved in this racket might consider filing a claim with the Massachusetts Clients' Security Board of the Supreme Judicial Court, which manages and distributes the monies in the court's Clients' Security Fund to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the Massachusetts bar acting as an attorney or a fiduciary.

For similar "attorney ripoff reimbursement funds" established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in 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.

A similar fund in Minnesota that reimburses the public for ripoffs involving licensed real estate brokers, salespeople, and closing agents made a distribution to a victim of the same type of foreclosure rescue scam. See State Recovery Fund To Cough Up $116K+ To Compensate Elderly Victim Of Bogus Sale Leaseback Equity Stripping Scam Involving Licensed Real Estate Agent.

(4) See Court Approves Foreclosure Rescue Scam Settlement Between Massachusetts, Ten Lenders; Case Involved State AG Claims Of Equitable Mortgage, Usury, Etc..

NY Couple Gets 2 To 6 Years For Roles In Equity Stripping, Sale Leaseback Scam; Homeowners Who Sought Foreclosure Rescue Have Civil Suits Pending

In Westchester County, New York, The Journal News reports:

• A judge admonished a Tarrytown couple Thursday for their roles in "sham real estate transactions" that cost four Westchester County families their homes. The judge then sentenced Hubert "Phil" Hall and his wife, Doreen Swenson, to two to six years in state prison.

• "You perpetuated the complex schemes ... for your own financial benefit," acting state Supreme Court Justice Richard Molea said. Hall and Swenson had agreed to the prison term when they pleaded guilty in May to second-degree grand larceny and first-degree scheme to defraud, both felonies.

• They are among a group of eight — including four lawyers — who prosecutors say worked together to take advantage of vulnerable people in Croton-on-Hudson, Yorktown, Cortlandt and Mount Vernon who were about to lose their homes.

• The suspects are accused of promising to help save the homes, but instead draining them of their equity and leaving the owners with nothing.(1) The group also is accused of swindling two mortgage lenders out of $1.4 million. [...] At the court appearance, Swenson and Hall, both 61, each paid criminal restitution of $36,290. A civil suit against them and the other defendants is pending.

For the story, see Couple apologize for role in mortgage fraud, get 2-6 years.

(1) According to the story, prosecutors said that the group found victims through notices of public auction or foreclosure and reached out to them and gained their trust, saying they could transfer their deeds to an investor who would hold the title from 12 to 24 months so they could save money and reclaim their homes. But once the "investor" took title, phony checks were presented to the lenders for higher amounts than what the straw buyer paid for the home, the story states. Those checks allowed the group's members to get inflated mortgages, which they used to pay off the original mortgage and keep the rest for themselves.

Upstate NY Couple Left In Limbo After Refinancing Home As Closing Attorney Is Charged w/ Pocketing Payoff Proceeds Due To Existing 1st Mtg Lender

In Lake George, New York, The Post Star reports:

• When Theresa Olson-Hoffman saw Patrick Reidy in the news last summer, in police custody and heading for a Saratoga County Court Room, she immediately recognized him. He was, she remembered, the same Saratoga Springs lawyer who had acted as a closing attorney when she and her fiancé completed paperwork to refinance a home loan almost a year earlier.

• Reidy, of Gansevoort, was charged with stealing more than $400,000 from area residents who came to him for similar services. Checks from those residents, which were intended for banks, were instead kept by Reidy, police said. Olson-Hoffman thought she was fortunate to have escaped her real estate transaction unscathed. “Thank God it wasn’t me,” she remembers saying at the time.

• Less than three months later, after a car crash prompted her to seek a new car loan, she discovered she wasn’t so lucky. Her credit, it turns out, was a wreck, and she soon learned the cause: Reidy had never paid off the first mortgage on a Lake George home she built in 2001, as he was supposed to do, Olson-Hoffman said. She has no idea what Reidy, who was working on behalf of the bank, did with the $135,000 check she had given to him.

***

• [O]lson-Hoffman and her finance haven’t been able to recover any of the money Reidy is accused of stealing from them. Lawyers have told them it’s unlikely they’ll see anything unless Reidy is convicted.(1)

For more, see Fraud case leaves Lake George pair in financial limbo.

(1) The victimized homeowners and mortgage lenders left unwittingly holding 2nd mortgages due to the attorney's failure to pay off the existing mortgages in the refinancing transactions might consider filing claims with The Lawyers’ Fund For Client Protection Of the State of New York, which was established to reimburse clients who have suffered a loss due to dishonest conduct of a member of the New York Bar. According to the Fund's website:

• The Trustees may reimburse losses caused by the dishonest conduct of lawyers admitted to the practice of law in New York State, up to a maximum of $300,000 for each client loss. Dishonest conduct means the wrongful taking of clients' money or other property, in the practice of law, after June 1, 1981. Clients must apply for reimbursement within two years after they discover their loss.

• Typical losses covered include the theft of money from estates of dead clients; escrow funds in real property closing; settlements in personal injury actions; and money embezzled from clients in investment transactions.

For similar "attorney ripoff reimbursement funds" established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in 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.

C. Florida Closing Agents Cop Pleas To Looting Real Estate Escrow Accounts; Ordered To Pay $7.9M In Restitution To Title Insurer Left Holding The Bag

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [last week] announced that a Pinellas County woman pleaded guilty to stealing nearly $8 million in a real estate fraud scheme. Cheryl Wehlau, owner of Gulf Coast Title Offices, entered her plea [last week] in a case prosecuted by the Office of Statewide Prosecution.

• Cheryl Wehlau masterminded a scheme to funnel funds held in escrow for real estate closings into a business operating account, then spent the cash on a lavish lifestyle. Gulf Coast Title was placed into receivership by their underwriter Commonwealth in January 2006. Cheryl Wehlau pled guilty to 21 counts of misappropriation of $100,000 or more in funds. She will be sentenced at a future date to eight years in prison, to be followed by 15 years supervised probation. Should she violate any criminal laws or fail to show up to her sentencing at a later date, she will receive 30 years in state prison.

• John Wehlau, Cheryl Wehlau’s husband, also pleaded guilty to one count of misappropriation of escrow funds, $100,000 or more and 20 counts of petty theft of $100 or more. Restitution will be ordered against both defendants in the amount of $7.9 million, payable to Fidelity National Title Group, the victim of the scheme.

• As a condition of her plea agreement, Cheryl Wehlau may not be employed in real estate, title or mortgage services, or be directly or indirectly involved as fiduciary handling another person’s money. The Wehlaus will also have to pay $4,000 for the cost of prosecution and court costs.

Source: Pinellas County Woman Sentenced to 8 Years in Prison in Real Estate Fraud Scheme (Defendant and husband ordered to pay nearly $8 million in restitution).

City Gives Residents In 36-Unit Condo The Boot As Rotting Wood Threatens Collapse Of 6-Year Old Structure; Suit Against Developer, Others Pending

In Bradenton, Florida, the Bradenton Herald reports:

• They received their packing papers Friday night. And all day Saturday, U-Haul trailers and cars packed with personal items began trailing out of Mainstreet at Bradenton Condominiums, 210 Third St. W., after the city of Bradenton sent a letter to all 36 units, stating the 6-year-old condo was considered unsafe.

• The primary issue: the two stairwells situated on opposite sides of the building. In many areas, stucco has been cut away to reveal rotting wood. One stairwell is completely closed off. “We’ve got to believe other parts of the structure are suffering the same damage,” said Darren Inverso, an attorney representing the condo association in a lawsuit that began two years ago against developers, subcontractors and engineers. “We’re not exactly sure what the cause of the water damage is, but we know we have dry rot, which is resulting in a partial collapse of the structure.”

For more, see Bradenton tells condo residents to move out.

Florida U.S. Senate Candidate Linked To Alleged Straw Buyer Mortgage Scam That Left Banks, Taxpayers Holding The Bag On Nearly $34M Of Worthless Paper

The St. Petersburg Times reports:

• Democratic U.S. Senate candidate Jeff Greene says he had nothing to do with creating the sub-prime mortgage mess that made him fabulously wealthy. He was simply a savvy investor who "could see that the housing market was imploding" and lucky enough to make more than $500 million by betting against it.

• But he wasn't just a spectator to the housing collapse. Four years ago, Greene was party to precisely the kind of deal that decimated the market. Greene insists he did nothing wrong. Yet the way he handled the deal left an opening for massive fraud and put him uncomfortably close to a man now under federal indictment.

For more, see Calif. deal put Jeff Greene on front line of mortgage mess.

NYC "Loan Scam Busters" Hit The Streets Of South Jamaica Targeting Side-Of-The-Road "Bandit" Signs Peddling Foreclosure Rescue Programs

In South Jamaica, Queens, the Queens Tribune reports:

• Volunteers took to the streets of Southeast Queens [last week] to help the City crack down on the vultures who prey on victims of the foreclosure crisis. The City Dept. of Consumer Affairs ["DCA"], partnering with NeighborWorks America, enlisted volunteers to bike through South Jamaica on July 31 to find and report deceptive foreclosure prevention ads posted in the neighborhood.

• For several months DCA has been canvassing neighborhoods in Queens and Brooklyn on foot documenting foreclosure scam ads and talking to residents about the fraudulent foreclosure aid practices they see happening in their area. These volunteers also give information to those who are in danger of losing their homes on getting free counseling from the city.

• This event marked the first time the volunteers, known as “loan scam busters,” used bicycles donated by Bike and Roll to canvass the entire neighborhood, enabling the DCA to cover a larger area faster. Volunteers armed with cameras and DCA forms for documenting advertising information – including where the advertisement was spotted, what type of ad it was and a brief description – headed out in teams of two at 11 a.m., after a brief training session on what to look for and where to look.

• “This is a dual purpose [campaign] – to educate and document,” said Amelia Erwitt, chief of staff for the DCA Office of Financial Empowerment. [...] The NYC Distressed Property Consultant Law was recently passed in an effort to stop predatory advertisements in neighborhoods hit hardest by foreclosure. The new law, aimed at printed materials, requires that ads state certain disclaimers, including no guarantee to stop foreclosure proceedings, that consultants cannot take money up front and consultants cannot retain original loan documents.(1)

• This law will make it easier for loan scammers to be prosecuted for predatory practices and enables DCA to gather more information about the foreclosure ads and ensure they are in compliance with the law.

For the story, see Fighting Predators Door-To-Door.

(1) The law also prohibits the consultant from snagging a power of attorney from a homeowner. New York City Administrative Code - Subchap. 5 - §20-723.3(b)(1)(iii).

Another Lender Jumps Gun Against Family In Foreclosure; Wife, Kids Discover Home Interior Destroyed While Hubby Is Deployed In Afghanistan

In Tuscola County, Michigan, WJRT-TV Channel 12 reports:

• He's in Afghanistan, serving his country. Back home, his family is in a fight to preserve their home. A Tuscola County family thought they had worked out everything with their lender through a program that helps military families facing foreclosure.

• The family still has the home, or what's left of it. Benjamin Kotzian's wife and kids spent a few months with him in Texas before he was deployed to Afghanistan in June. They arrived back home on Sunday, but it's a far cry from the home sweet home they remember. "It's sad enough to have your husband leave, but then when you just want to come home and you come home to this," said Michelle Kotzian. Kotzian and her children came back home to different locks and broken door frames. "I find my carpets ruined, I find broken pipes, I have no water, I can't turn the water on," she said.

• In December, she contacted the bank which holds the mortgage on the Millington-area home she has owned for five years. Kotzian told the bank her family was going to Texas to see her husband, Benjamin, before he was deployed to Afghanistan. "I'm leaving in January," she said. "I will be back five or six months later. My husband is deploying. We intend on coming back."

• She made the call because the family had just worked out a plan with the lender to avoid foreclosure with the help of the Servicemembers Civil Relief Act, which gives some protection to military families trying to keep their homes. Shortly after she arrived in Texas, she got a call from a neighbor saying people were at her house. "They come into the home, they are taking stuff out of the home," she said.

• Afraid that her home was being foreclosed on, she called the lender. She says the company admitted a mistake was made and the house was not in foreclosure. But when she returned months later, the family's belongings were gone and the house had looked as if it had been ransacked. Water pipes were ruptured, even though the home was winterized.

• "They've already admitted that they made the mistake. I just want them to come and fix it," Kotzian said. "I just want my running water. I want my clean carpet. I want my home. That's what I want. I want my home the way I left it."

• We have made several attempts to get in touch with the bank that holds the Kotzian's mortgage, but we have not heard back from them.

Source: Soldier fights in Afghanistan while family fights to save house.

(1) See Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure for a recent court ruling which found a lender liable for $150,000 in exemplary (punitive) damages (in addition to $5,000+ in actual damages) in a trespassing case involving an improper padlocking by a foreclosing lender. In that case, the lender was found to be a bit premature in entering the premises since the delinquent borrower was still the legal owner of the property.

See Nevada High Court OKs Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure for a 2008 case in which the Nevada Supreme Court OK'd an award over over $1 million, including $968,000 in punitive damages, for a couple whose home was misidentified by a foreclosing lender and subsequently ransacked (for the actual court ruling, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008)).