Tuesday, November 02, 2010

Fannie, Freddie Dump Stern; Earlier Suspension Of Case Referrals To South Florida Foreclosure Mill Now Permanent As Loan File Removals Begin

The Wall Street Journal reports:
  • Fannie Mae and Freddie Mac have terminated their relationships with a top Florida foreclosure law firm and began taking possession of loan files on Monday afternoon from the firm, which processes evictions on behalf of the mortgage-finance giants. Fannie and Freddie had previously suspended all foreclosures that had been referred to the law offices of David J. Stern in Plantation, Fla., a suburb of Fort Lauderdale.

For more, see Fannie, Freddie Take Loan Files From Florida Law Firm.

Failure To Dismiss 100s Of Faulty Foreclosures Involving Robosigners Will Lead To Huge Problem w/ Crappy Home Titles, Says MD Non-Profit In Lawsuits

In Maryland, The Baltimore Sun reports:
  • Attorneys for Maryland homeowners are asking the courts to dismiss hundreds of foreclosure cases that depended on paperwork submitted by so-called robo-signers on behalf of mortgage servicers.

  • Civil Justice, a Baltimore nonprofit that specializes in foreclosure issues, made the request in motions filed last week in two cases. One motion asks that all Maryland foreclosure cases with documents signed by Jeffrey Stephan of GMAC Mortgage — including the Baltimore case in question — be tossed out. The other asks for the same treatment of all Maryland cases with documents signed by Xee Moua of Wells Fargo.

***

  • Phillip Robinson, an attorney and executive director of Civil Justice, believes the two employees from GMAC and Wells Fargo are each responsible for documents in hundreds of pending foreclosure cases in Maryland.

  • If the courts allowed the mortgage servicers to repossess these homes and resell them, true ownership of the properties would be thrown into question because the cases were filed with "defective" paperwork, he said.

  • The motions contend that failing to dismiss the cases "would further harm our housing recovery by allowing years and years of litigation concerning the title to properties." "We have a huge title problem that needs to be solved," Robinson said. "The only way to clear title is to dismiss cases and make [mortgage servicers] do it the right way."

For the story, see Attorneys ask courts to toss out foreclosure cases (Motions focus on 'robo-signers' with GMAC, Wells Fargo).

Wells Fargo's Moua Attracts Spotlight, National Recognition For Career As Prolific Robosigner; Claims Credit For Banging Out 500 Affidavits In 2 Hours

Bloomberg News reports:
  • A Maryland homeowner asked a court to dismiss any Wells Fargo & Co. foreclosure actions in the state that involve affidavits given by a bank employee who said she signed documents without completely checking their accuracy.

  • Susan Saidman asked a Montgomery County court to recognize as a class all defendants in Maryland cases with foreclosure papers signed by Xee Moua for Wells Fargo. In a March deposition in a Florida case, Moua said she didn’t verify all the information in filings she signed, sometimes processing as many as 500 in two hours. [...] Saidman raised the defense against members of Shapiro & Burson LLP, a law firm that she said brings foreclosure actions on behalf of Wells Fargo and other secured lenders.

***

  • Marysville, Ohio, homeowner Ann Piwinksi brought a suit today accusing Wells Fargo of violating the state’s Consumer Sales Practices Act, according to court filings. Her suit is the first civil case in the state against Wells Fargo involving the use of so-called robo-signers, according to her lawyer, John Sherrod of Dublin, Ohio. Piwinski said documents in her foreclosure case were signed by China Brown, Moua’s supervisor. She’s seeking civil penalties and punitive damages.

For the story, see Wells Fargo Foreclosure `Robo-Signer' Draws Maryland Dismissal Motion.

Investigators Use "Well-Tested Approach" In Criminal Probe Into Robosigner Scandal As They Put Squeeze On Low-Level Workers For Info To Bag Execs

The Washington Post reports:
  • [A]mid reports of shoddy and possibly fraudulent paperwork, [Jacksonville, Florida foreclosure document Processor Lender Processing Services](1) as well as a handful of other document processors and law firms are coming under scrutiny for the criminal investigations into the foreclosure debacle.

  • Law enforcement authorities on both state and federal levels are probing whether individuals at these foreclosure companies and at the banks that hired them committed an array of possible crimes - mail and wire fraud, money laundering, conspiracy and racketeering. No charges have been filed.

  • These officials say they are taking a well-tested approach in their investigations: press low-level employees to implicate higher-up executives.(2) Already, investigators have obtained in sworn testimony detailed descriptions of what took place inside the foreclosure companies.

***

  • The Justice Department's U.S. attorney in central Florida has launched a criminal probe into whether LPS manufactured fake assignments of mortgage. [...] A challenge law enforcement officials face is that LPS and other foreclosure businesses are just one part of a chain of companies that handle different aspects of a single foreclosure.

For more, see U.S. probing foreclosure processing firms.

(1) Formerly a branch of Fidelity National Financial - the nation's largest title insurer - LPS was spun off in 2008, but the outfit and its 8,900 employees are still housed in the same complex as the title company, the story states.

(2) See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observation, made in the context of drug conspiracy cases, on the so-called "race to the courthouse/prosecutor's office" that frequently takes place during the early stages of these "multi-target" criminal investigations:

  • In practical terms, drug conspiracy cases have become a race to the courthouse. When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed.

These lower-level employees may be well-advised to retain competent defense counsel and "belly up and tell what he or she knows" as the criminal investigation continues (and minimize the risk of being "thrown under the bus" by a colleague/competitor also finding himself in the same "race to the prosecutor's office." Like in any other race, the fruits to be snagged by rolling first usually goes to the swift).

State AG To Wells Fargo: Vacate Any Ohio F'closure Judgment Obtained Through Faulty Affidavits; Asks Judges For Docs Involving One Specific Robosigner

Bloomberg News reports:
  • Ohio Attorney General Richard Cordray asked judges in his state for copies of foreclosure affidavits filed in their courts that are signed by a woman he identified as a “robo-signer” for Wells Fargo Bank NA. Cordray sent a letter to 133 judges asking for information on any cases that involved Xee Moua, a Wells Fargo vice president of loan documentation. Cordray sent a separate letter to Wells Fargo & Co. asking the bank to vacate any foreclosure judgment in Ohio involving incorrect affidavits.

  • Moua gave a deposition in a Florida case in March in which she testified that “statements made by her in sworn affidavits were false,” Cordray said in the letter. Moua said she wasn’t familiar with the books and records related to the transactions an affidavit covered, according to Cordray.

  • These are crucial misstatements that are an affront to our legal system,” he wrote. “If you become aware of affidavits Ms. Moua signed in any foreclosure cases filed in your court, I would appreciate receiving copies of such affidavits.”

For more, see Ohio’s Cordray Asks for Affidavits by ‘Robo-Signer’.

State Law Forcing A Waiver Of Counterclaims In Foreclosure Actions For Failure To Pay $1,900 Fee Unconstitutional, Say 3 Florida Homeowners In Lawsuit

In Fort Myers, Florida, The Tampa Tribune reports:
  • Cash-strapped homeowners shouldn't have to pay to fight foreclosure, according to three Lee County homeowners who are suing the state. Fees of up to $1,900 to file a counter claim is unconstitutional, says the lawsuit, filed last week in the Middle District of Florida, Ft. Myers Division.

  • "This is a cruel hardship imposed on the weakest members of our society," said Marcus Viles, a Ft. Myers lawyer representing the homeowners. Viles said he seeks a class-action suit to represent hundreds of thousands of homeowners hit by foreclosure since the new rules started in June 2009.

***

  • The fees are based on a sliding scale, depending on the value of the mortgage. "Everyone I've seen is $1,900, and I don't represent rich people with really expensive homes," he said. Lenders who file foreclosures have to pay the same fees, and Viles says it was a way to build up the state's revenue. The money is used for roads, health care and education. The fees are essentially a tax now, Viles said, and it's unconstitutional to tax people for access to the court system.

  • Fees should be reasonable, and the money should go to the cash-strapped courts. But homeowners, he said, shouldn't have to pay "just to get to defend themselves in court." When homeowners are sued in a foreclosure suit, they have 20 days to respond. If they don't file a counterclaim at the same time, Viles said, they waive their right to do so.

For more, see Lawsuit seeks to end consumer foreclosure fees.

Monday, November 01, 2010

"Pick Up The Phone & Call Me Now!" Says DC AG To Local Residents Hit With Deceptive Foreclosure Notices As Non-Judicial Process Requires Quick Action

In Washington, D.C., The Washington Post reports:
  • D.C. Attorney General Peter Nickles this week created an opening for potentially tens of thousands of homeowners to challenge their foreclosures. He issued an enforcement statement emphasizing that District law requires that the assignment of a mortgage from one party to another be recorded within 30 days of the transfer.

  • This is a problem because many of the country's biggest mortgage companies list MERS, or the Mortgage Electronic Registration System, as the mortgage holder -- rather than the actual owner of the mortgage -- in local deed offices.

***

  • Nickles explicitly stated that, in the District, the requirement for recording every transfer of mortgage "is not satisfied by private tracking of mortgage interests through the Mortgage Electronic Registration Systems."

***

  • Nickles said such violations may provide a "good basis for challenging the foreclosure in court" and encouraged homeowners and advocates to contact the attorney general's office so that it "may consider bringing enforcement actions to stop foreclosure proceedings and seek restitution for consumers."(1)

For more, see An opening for D.C. foreclosure challenges.

(1) According to his enforcement statement, the DC AG is expecting homeowners who have been targeted with the use of deceptive foreclosure sale notices by foreclosing lenders to immediately call his consumer hotline at 202-442-9828. He states that when a foreclosure sale notice misrepresents to a homeowner that the foreclosing noteholder has a recorded security interest, such misrepresentation may violate the District’s Consumer Protection Procedures Act, which is enforced by him.

"They Will Suffer The Consequences" Says South Carolina Chief Justice Of 'Corner-Cutting' Foreclosing Lenders Involved In Robosigner Scandal

In South Carolina, The State reports:
  • Across courts in South Carolina, judges say they are halting more foreclosures — as many as one in four —because lawyers for banks have incomplete documents or missing paperwork. They also are starting to see the challenges to the authenticity of signatures on foreclosure documents that have made headlines in recent weeks. “Everything happening in the paper is happening across the state,” said James Spence, the Lexington County master-in-equity, the judge who oversees foreclosure cases in that county.

***

  • If enough cases get delayed for too long, S.C. Supreme Court Chief Justice Jean Toal warned in a court order that she could allow judges to dismiss them. If more cases are delayed because of challenges to so-called robo-signing of foreclosure documents and other paperwork problems, “that’s just part of the process,” Toal said in an interview.

  • This just shows the financial foolishness of all this,” the chief justice said. “To the extent that they (lenders) might have cut corners, they will suffer the consequences.”[...] Just as legal documents need to be in order when people buy homes, they need to be in order when banks foreclose on them, S.C. Chief Justice Toal said. “The same rules apply to everybody,” she said.

For more, see Paperwork woes plague S.C. foreclosures (Judges delay proceedings because of problems with documents).

Foreclosing Lender Actions In Robosigner Scam Targeted By Kentucky County Court Order; Other Bluegrass State Jurisdictions Expected To Follow Suit

In Kenton County, Kentucky, DSNews.com reports:
  • Kenton County, Kentucky, which has the third highest volume of foreclosures in the state, has enacted a general order impacting the filing of all foreclosure complaints in its courts.

***

  • Kenton County’s order(1) will have a wide ranging impact on mortgage servicing clients, including timelines relating to the filing of first legal action in Kenton County, with many other counties throughout the Commonwealth expected to follow suit.

For the story, see Kentucky County Court Order Impacts Foreclosure Complaint Filings.

(1) Reportedly, the Kenton County court order requires all foreclosure complaints filed in that county to be accompanied by:

  • an affidavit certifying that the plaintiff is the owner and holder of the note and mortgage and identifying the plaintiff as the original holder or an assignee, trustee, or successor in interest of the original holder,

  • a copy of the note and recorded mortgage with copies of all allonges, endorsements, and assignments necessary to document the chain of title to both the note and the mortgage,

  • documents establishing the plaintiff as the successor in interest if any merger, change of trustee, or other transfer issue has taken place.

Ohio Foreclosures Continue Moving Forward, Despite Obviously Problematic Paperwork

In Franklin County, Ohio, The Columbus Dispatch:
  • [A]t least 55 Franklin County homeowners will lose their houses at an auction Friday despite the fact that their foreclosure cases appear to contain mistakes, omissions of critical evidence or questionable affidavits, The Dispatch found in a review of court documents.

  • The newspaper examined the files of more than 130 homeowners whose houses are slated for auction Friday. Half of the cases had issues that consumer advocates call troubling and should have raised red flags before a judge ordered the homes sold.

  • In 13 of the 50 questionable cases, the lenders failed to produce the promissory note, as required by law. The note is the legal agreement that spells out how much is owed, how the loan will be repaid and to whom it is owed.

  • The default judgments in 19 other cases were built upon sworn affidavits by people who appear to be “robo-signers,” lending-industry employees who aren’t verifying the amounts owed or the ownership of the mortgage and note, as required by law.

***

  • Issuing a default judgment without reviewing the original note is a clear-cut error, said Douglas Whaley, an Ohio State University law professor and expert on the Uniform Commercial Code, the law that governs promissory notes. “You cannot foreclose unless you have the original promissory note,” he said. “The law is clear.”

  • For at least a dozen foreclosed homeowners whose lenders did not produce the note, it’s too late. On Friday, they will be former homeowners.

For more, see Lenders skirt foreclosure rules (Local homes going on sheriff’s auction block despite problems).

Consumer Bankruptcy Litigator Trains Attorneys In The Art Of Foreclosure Defense

In Shelby, North Carolina, msnbc.com reports:
  • In a stately 19th century mansion in the middle of this former textile mill town, a local political scion has formed a mortgage foreclosure resistance movement.

  • O. Max Gardner III, 65, pioneered techniques in preventing big banks from foreclosing on loans and has taught his methods to 559 other lawyers in the last four years. He teaches a sort of legal jiu jitsu: how to exploit opponents' large size and disorganization for the benefit of consumers who do not want to give up their homes.(1)

  • Once lawyers exit his training program, they stay on his expanding e-mail list, and are allowed access to an online document repository to share information. They work together to come up with new ways to slow down foreclosures and share strategies on other bankruptcy issues, communicating at a rate of 350 messages a day.

  • In the fragmented world of consumer bankruptcy law, where lawyers that represent consumers often work at small firms, Gardner, from his one-person law firm, is creating a sort of virtual law firm with hundreds of partners.

***

  • To his admirers, Gardner is a sort of a folk hero. "He's Atticus Finch," said April Charney, an attorney with Jacksonville Legal Aid in Florida,(2) referring to the lawyer in the novel "To Kill a Mockingbird" who is seen as a model for lawyers protecting the disadvantaged. Charney attended one of Gardner's boot camps in 2007, and she has known him since 2004.

  • Gardner has been thrust in the limelight recently thanks to what his techniques have uncovered: banks have been taking shortcuts in their efforts to foreclose on homes quickly. Banks and their lawyers have been cranking out paperwork faster than anyone could properly review it, and they are often making mistakes.

  • "He's been on top of this from the beginning. He's on the bleeding edge," said David Treywick, a Mount Pleasant, South Carolina-bankruptcy attorney who views Gardner as a leader in the field.

For more, see He’s the ‘Atticus Finch’ of home foreclosures (Lawyer trains others in techniques; demands banks show paperwork).

See also, Bloomberg News: Boot camp turns lawyers into lawyers (Litigator charges $7,775 for 4 days on foreclosure law) (if link expires, try here):

  • During days that run 10 to 12 hours, Gardner lectures on topics including “Max’s Favorite Discovery Devices,” “Strategy to Trap Opponents in Their Own Mistakes,” “Mortgage Servicing Litigation: How the Legal Network for Creditors is Organized” and “The Alphabet Problem, A to D Unlawful Transfer of Mortgages and Notes.”

***

  • The heart of Gardner’s strategy is to uncover omissions and errors in mortgage securitizations, the process in which thousands of loans are bundled into bonds and sold to investors. Securitizations are plagued by lost promissory notes and missing or inconsistent tracking of changes in loan ownership, Gardner said. Servicers processing default actions papered over the errors with improperly prepared affidavits and after-the-fact assignments of mortgages, he said.

  • One of my primary objectives is to give you enough knowledge so that you can understand more about the business structure and organization of the creditors than their own lawyers know,” he told the boot-camp class.(3)

(1) Describing the subject matter taught as a way "to exploit opponents' large size and disorganization for the benefit of consumers who do not want to give up their homes" falls woefully short in recognizing the fundamental fact that repsect for process is what gives the judicial process its integrity. It's not the consumer advocate's fault that the foreclosing lenders have somehow come up with the idea that they can conveniently rewrite the rules of court procedure on an as-needed basis.

(2) Jacksonville Area Legal Aid, a 501(c)(3) corporation, is a Florida non-profit law firm specializing in providing civil legal assistance to low-income persons.

(3) According to the story, Linda Tirelli, a consumer-bankruptcy attorney in New York and Connecticut and one of the 599 people who have gone through the program, said she feels as if she’s now part of a big law firm. Tirelli, a sole practitioner who works on contingency, said she now makes four times more from a case than she did before changing her business model. Gardner, who devotes one wall in the boot-camp classroom to framed settlement checks, tells students they can be more profitable by concentrating on a smaller number of cases. Tirelli, who accepts no more than 20 clients a month, said she has the confidence to go up against what Gardner calls “tall building law firms” because the community of graduates in 47 states functions as a unit, exchanging documents and discovering patterns of misconduct, she said. “It’s a fraternity,” Tirelli said. “We don’t see each other as competition. We want more attorneys to join because the more we have the better.”

Sunday, October 31, 2010

Florida Appeals Court Reverses Another Rubber Stamped Foreclosure As It Reminds Trial Judge That Evidence Is Required Before Granting Judgment!

In West Palm Beach, Florida, the South Florida Sun Sentinel reports:
  • Banks need to show evidence they own and hold the mortgage on a home when asking judges to foreclose on a property, according to a ruling issued in the 4th District Court of Appeal In West Palm Beach on Wednesday.

  • A three-judge appellate panel overturned an earlier summary judgment by Palm Beach Circuit Court Judge Thomas Barkdull III, that allowed US Bank National Association to repossess a Boca Raton couple's home. The foreclosure went through even though the lender did not show the original note or other acceptable proof of ownership.

  • "Some judges have been lax about the rules of evidence," said Peter Snyder, the Boca Raton lawyer representing homeowner Guiseppe Servedio. "I think that what this case says is you better have the original note."

***

  • Although the Servedios' house was sold after foreclosure, Snyder won court approval for them to continue living there during their appeal. The appellate decision is not final for 15 days, giving the lender time to respond.

  • [Foreclosure mill law firm] Shapiro & Fishman, one of four large Florida foreclosure law practices being investigated by the Florida attorney general for alleged inaccurate or false documents, is handling the Servedio case for US Bank. The firm could not be reached for comment Wednesday despite several attempts by phone and e-mail, but in the past has denied any wrongdoing.

  • In the appellate opinion, the judges said that even though US Bank later gave the courts a copy of the original note, it was insufficient because it was submitted after Barkdull finalized the foreclosure. "Without evidence demonstrating [the bank's] status as holder and owner of the note, genuine issues of material fact remain," the judges wrote.(1)

For the story, see Banks must prove they own the mortgage before foreclosing.

For the court ruling, see Servedio v. US Bank National Association, 4D10-1898 (Fla. App. 4th DCA October 27, 2010).

(1) The court made these observations with regard to a lender's obligations when bringing an action to foreclose a mortgage:

  • “The party seeking foreclosure must present evidence that it owns and holds the note and mortgage in question in order to proceed with a foreclosure action.” Lizio v. McCullom, 36 So. 3d 927, 929 (Fla. 4th DCA 2010).

  • A plaintiff must tender the original promissory note to the trial court or seek to reestablish the lost note under section 673.3091, Florida Statutes. State St. Bank & Trust Co. v. Lord, 851 So. 2d 790, 791 (Fla. 4th DCA 2003). Moreover, if the note does not name the plaintiff as the payee, the note must bear a special indorsement in favor of the plaintiff or a blank indorsement. Riggs v. Aurora Loan Servs., LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010).

  • Alternatively, the plaintiff may submit evidence of an assignment from the payee to the plaintiff or an affidavit of ownership to prove its status as a holder of the note. Verizzo v. Bank of N.Y., 28 So. 3d 976 (Fla. 2d DCA 2010); Stanley v. Wells Fargo Bank, 937 So. 2d 708 (Fla. 5th DCA 2006).

  • The record on appeal does not contain the original note, evidence of an assignment of the mortgage and note to appellee, or an affidavit of ownership by appellee. Appellee filed no other admissible “pleadings, depositions, answers to interrogatories, admissions, affidavits, and other materials” to support its contention that it owns and holds the note and mortgage. Fla. R. Civ. P. 1.510(c). “[I]t is apodictic that summary judgments may not be granted . . . absent the existenceof admissible evidence in the record. TRG-Brickell Point NE, Ltd v. Wajsblat, 34 So. 3d 53, 55 (Fla. 3d DCA 2010).

  • Without evidence demonstrating appellee’s status as holder and owner of the note and mortgage, genuine issues of material fact remain, and summary judgment was improper.

  • Appellee argues on appeal that it presented to the trial court a copy of the original note and an affidavit of ownership at the summary judgment hearing. Appellee concedes, however, that the documents were not filed with the clerk of the court until several days after the entry of summary judgment. The documents were not part of the record at the time the motion for summary judgment was granted, so we cannot determine whether the trial court considered those documents in rendering its decision. See Poteat v. Guardianship of Poteat, 771 So. 2d 569 (Fla. 4th DCA 2000) (noting that an appellate court may review only items considered by the trial court).

  • Because appellant does not stipulate that the documents were considered at the hearing, and because appellee has not sought relief in the trial court to recreate the record, we must reverse the order granting summary judgment. We cannot rely on the representations of counsel alone. Wright v. Emory, 41 So. 3d 290, 292 (Fla. 4th DCA 2010) (“[An] attorney’s unsworn, unverified statements do not establish competent evidence.”).

  • Even if the trial court considered the note and mortgage at the hearing, the documents were not authenticated, filed, and served more than twenty days before the hearing as required by Rules 1.510(c) and 1.510(e). Appellee’s failure to abide by these rules also necessitates reversing the order granting summary judgment. Verizzo, 28 So. 3d at 977-78; Mack v. Commercial Indus. Park, Inc., 541 So. 2d 800 (Fla. 4th DCA 1989).

F'closure Mill Dodges Appellate Court Reversal On Merits; Opts To 'Confess Error' Instead In Agreeing To Reversal Of Rubber-Stamped Lower Court Ruling

Florida's 4th District Court of Appeal recently rejected another foreclosure judgment - this time from a Broward County trial court. The guilty rubber stamper in this case - Circuit Court Judge Peter M. Weinstein.

The appellate court issued this one sentence reversal of the lower court ruling (bold text is my emphasis, not in the original text):

  • Based on appellee’s confession of error, we reverse the circuit court’s final summary judgment of foreclosure and remand for further proceedings.

While this case certainly represents a victory for the homeowner involved, it arguably represents something of a loss for foreclosure defense advocates in the bigger picture in that, by confessing error, the lender and its foreclosure mill law firm, arguably, skillfully dodged(1) the:

  • potentially unfavorable precedent that may have been created had the appeals court based its ruling on the merits of the case, and

  • addressing, by the court, of potentially damning facts that allegedly surrounded this foreclosure action.(2)

All of which was ably laid out by the homeowner's attorney in this appellate brief (made available online courtesy of Ice Legal). In effect, the foreclosure mill law firm may have thrown the case to avoid even more negative precedent and publicity that these faulty foreclosure cases have been generating.(3)

Representing the homeowner was foreclosure defense attorney Michael Wrubel of Michael Jay Wrubel, P.A., Davie, Florida.

The bank was represented by the notorious Florida foreclosure mill, Shapiro & Fishman, LLP, Boca Raton Florida.

For the ruling, see Frost v. LaSalle Bank, No. 4D09-2668 (Fla. App. 4th DCA October 27, 2010).

(1) Not all attempts by lenders and foreclosure mills to skillfully dodge having to answer the tough questions in court succeed. See, for example, Ohio Judge Nixes GMAC F'closure Action Withdrawl; Orders Lender To Fork Over “Proof Of Integrity Of All Docs Submitted" As State AG Files Amicus Brief, where a Cleveland, Ohio trial court judge refused to allow a lender and its attorney to withdraw a foreclosure action, and instead, ordered the attorney to provide proof that its earlier court filings are legitimate.

(2) See Appellate Brief (bold text is my emphasis, not in the original text):

  • Part IV - The Original Note with a Blank Endorsement Produced for the First Time at the Summary Judgment Hearing Was Materially Altered from the Note Attached to the Complaint and Was Provided in an Untimely Manner Precluding its Use (begins at page 21),

  • Part V - Reasonable Inferences Within the Record Support the Conclusion that the Endorsement Signature on the Original Note is an Unauthorized Forgery and that Robert T. Frost Was denied his Constitutional Right to a Trial on the Merits (begins at page 25).

(3) Note that on the very same day this ruling was issued, a different 3-judge panel of Florida's 4th District Court of Appeal issued a more extensive ruling in another faulty foreclosure case in favor of the homeowner, and in which the plaintiff-lender there (different from the one in this case) was represented by the same foreclosure mill law firm. See Servedio v. US Bank National Association, 4D10-1898 (Fla. App. 4th DCA October 27, 2010).

"Somebody Tried To Steal My House" Says Mortgage Servicing Fraud Watchdog As Campaign Continues Against "Predatory Schemes", "Sleight Of Accounting"

In Manchester, New Hampshire, msnbc.com reports:
  • How long will it take before the American nightmare of home foreclosures is over? Ask Mike Dillon, who’s been fighting to keep his New Hampshire home for most of the past decade. Though he missed two payments in 2002, Dillon then caught up and was current on his loan by later that year, he said. That’s when his mortgage problems began.

  • After the company servicing his mortgage failed to properly credit monthly payments to his account, it placed the loan in default. As he worked to straighten out the bookkeeping, with canceled checks in hand, the servicer began adding additional fees for property inspections, insurance and other charges.

  • In 2005, a New Hampshire judge agreed that the servicer’ssleight of accounting resulted in improper assessments” against Dillon and, citing a “predatory scheme of penalties,” barred the foreclosure and ordered that the loan be reinstated without penalties as of August 2005.

  • Five years later, Dillon is still in court trying to resolve the dispute. While he is no longer under threat of foreclosure, he is still fighting to get clear title to his home. “I’ve got nine years of my life tied up in this case, and it’s done a lot of financial and emotional damage to me,” said Dillon. “This isn’t about money in the long run. This is about the principle of the issue -- somebody tried to steal my house.”

For the story, see Foreclosure mess will take years to clean up (Borrowers, lenders, investors face years of red tape, legal challenges).

See 'Playing the Odds' for the transcript of an ABC News Nighline interview with national mortgage servicing fraud watchdog and victim advocate Mike Dillon of GetDShirtz.com on how some mortgage servicers go about giving homeowners a real screwing over in the handling of their house payments.

Four Face Real Estate Fraud Charges Alleging Use Of Forged Deeds, Foreclosure Scams Throughout S. California Victimizing Hundreds, Including Two Cops

From the Office of the San Bernardino County, California District Attorney:
  • On Thursday, October 20, 2010, the San Bernardino County District Attorney’s Real Estate Fraud Prosecution Unit filed numerous felony real estate fraud charges against Carlos Mendez Torres, 29, his father, Manuel Patlan Torres, 60, associates Oscar Alvarez Macias, 35, and John Anthony Zepeda, 59, all of San Bernardino.

  • The suspects were involved in a multiple-jurisdictional foreclosure scheme known as the David Zepeda Trustee Foreclosure Scam,(1) which claimed hundreds of victims in San Bernardino County.

***

  • Investigators from the San Bernardino County District Attorney’s Real Estate Fraud Prosecution Unit first became aware of the foreclosure scam in late August 2010, after receiving a call from a local realtor. During the criminal investigation, the San Bernardino County District Attorney’s Office was contacted by the San Diego District Attorney Office, as well as the Los Angeles Police Department, Commercial Crimes, Real Estate Fraud Unit regarding the scam.

  • The San Bernardino County Recorder's Office assisted investigators with the criminal investigation by identifying those quitclaim deeds that had fraudulently recorded at their office by the suspects. The investigation disclosed that two of the San Bernardino County properties belonged to law enforcement officers, who were unaware that their names had been forged on quitclaim deeds, or their properties had been rented out.

For the San Bernardino County DA press release, see Numerous Felony Charges Filed in Real Estate Scam.

For a related post on the David Zepeda Trustee Foreclosure Scam, see San Diego DA Bags Pair In Alleged Forged Deed, Bogus Bankruptcy Filing, Rent Skimming Ripoff Affecting 300+ Victims Throughout Five Counties.

Saturday, October 30, 2010

Illinois Regulator Hits 11 Outfits With Cease & Desist Orders, $275K In Fines For Allegedly Peddling Unauthorized, Crappy Loan Modification Services

In Greater Chicago, Illinois, the SouthtownStar reports:
  • With a rise in foreclosure activity in the Chicago area as a backdrop, the state said Thursday it had cracked down on firms that promised homeowners breathing room with their mortgage companies, only to charge large fees for doing little or no work.

  • The state's Department of Financial and Professional Regulation said it had fined 11 mortgage modification companies, [...] $25,000 each for illegally charging upfront fees to homeowners with the promise they would renegotiate mortgage terms with their lenders.(1)

  • The companies never sent in required paperwork or even contacted banks in some cases, according to the department.

For more, see State slams mortgage firms (Collected fees, but offered little help to struggling homeowners).

See also: Illinois Department of Financial and Professional Regulation press release: Mortgage Fraud Task Force Investigation Finds Violations by Mortgage Loan Modification Firms ($275,000 in Fines Imposed on Unlicensed Firms).

(1) The companies ordered to cease and desist offering loan modifications without a license and fined $25,000 each are (click name to see C&D order)): Opportunity Consultants, Carrey Services, American Accurate Services, Gamez & Associates Ltd., Juan Hernandez, Home Loan Modification, Homeowner’s Advocates Centers, Imperium Realty Group, Mortgage Mitigators, Mi Familia, and Loan Rescue Corp.

Kentucky Judge Chucks Foreclosure Judgment After Review Reveals That Named Mortgage Note Holder Does Not Exist

Buried at the end of a New York Times story on the ongoing frenzy attributable to faulty foreclosures is this gem:
  • Charlotte and Thomas Sexton, of Carlisle, Ky., fell behind on their mortgage payments because the payments on their adjustable-rate mortgage spiked upward and Charlotte Sexton lost her job. They tried unsuccessfully to sell the home, to refinance it and to modify their mortgage payment.

  • When the Bank of New York Mellon filed a foreclosure notice last summer, they went to a local lawyer, Brian Canupp, who, with the help of a forensic accountant, found a problem in the foreclosure filing.

  • Last month, a judge tossed out a foreclosure judgment after Canupp argued that the mortgage trust that claimed to own the Sextons' promissory note did not exist.

Source: Facing Foreclosure, Homeowners Want Legal Recourse (Lenders To Answer For Errors).

County Real Estate Fraud Unit Bags Calif. Man Allegedly Running Upfront Fee Loan Modification Racket; Victims Urged To Step Up, File Complaints

In Tulare County, California, The Fresno Bee reports:
  • In a crackdown on foreclosure fraud, the Tulare County District Attorney's Office has filed charges against three men, leading to a Visalia man's arrest [last] week. Julio Garcia Cedillo, 33, of Visalia, was arrested Wednesday and made $25,000 bail Thursday. He is the manager of Blue Pacific Financial, a business that provides loan modification services, according to a statement by the Tulare County District Attorney's Office.

  • An arrest warrant was issued for Cedillo last month after prosecutors filed charges against three people in Tulare County Superior Court.(1) Prosecutions for foreclosure fraud are a growing trend in an era of mounting home foreclosures. [...] Five years ago, the Tulare County District Attorney's Office started a real estate fraud unit.

For more, see Visalian arrested, accused of foreclosure fraud (Two others charged in Tulare County crackdown).

See also: Tulare Advance Register: Suspected foreclosure fraud victims sought:

  • The District Attorney's Office is asking that anyone who believes they have been a victim of a foreclosure fraud to contact investigator Dwayne Johnson. Information: 733-6411.

(1) Reportedly, Cedillo is charged with two felony counts of foreclosure fraud and is accused of taking money from clients whose homes were in foreclosure and who were seeking loan modifications, the Tulare County District Attorney's Office said. Also named in the complaint were Cesar Martinez, 28, and David Martinez, 30, both of Visalia, the story states.

S. Florida Family Recovers Home Lost In Foreclosure; Court Grants BofA's Request To Vacate Sale After Media Shines Light On Another Loan Mod Screw-Up

In Miramar, Florida, the South Florida Sun Sentinel reports:
  • A Miramar homeowner who was facing foreclosure, despite securing a loan modification, will be allowed to stay in his house, according to a court ruling made public Wednesday by Bank of America. With less than a week to go before he was to lose his house, Kamberali Shamji learned from bank officials that the foreclosure sale of the home has been vacated by court order.

  • "We are so thankful," said Shamji, whose case was the focus of a Sun Sentinel article on Sunday about homeowners who thought they had saved their homes by modifying their mortgages only to lose them because the foreclosure process never stopped. He had battled the bank, but he was unable to convince the lender to take action until he contacted the newspaper.

  • Bank of America said it had tried to stop the sale before it took place. In the wake of the story, the lender asked the investor who owned the loan for consent to get the sale vacated. That took place Monday, said Bank of America spokeswoman Jumana Bauwens. [... Shamji] said he intends to make his next payment and as long as he is current on the loan, Bank of America's Bauwens said the modification will continue to be in force.

For more, see Miramar man gets home back after nearly losing it to foreclosure (Foreclosure sale reversed).

For the initial Sun Sentinel report on this story, see Those with loan modifications still lose to foreclosure.

More On Allegations That Foreclosure Mill Used 'Process Service' Racket To Run Up Charges When Serving Legal Papers

The Tampa Tribune reports:
  • Internal files from a company used by Florida's largest foreclosure law firm provide more detail about recent allegations that lenders were overbilled and lawsuits were served to people who don't exist. In some cases, thousands of dollars in process fees were billed on a single property to multiple people, according to documents obtained by The Tampa Tribune.

  • Such fees for service represent the first step in the foreclosure procedure employed by the law offices of David J. Stern, one of four "foreclosure mills" under investigation by the state. Florida's attorney general is investigating the company for allegedly "fabricating" or "presenting false and misleading" documents.

  • The firm delegates the chore of serving notice to homeowners that a lender is foreclosing on their property to two companies. Miami-based Gissen & Zawyer Process Service, known as G&Z, is one of those companies.

  • Internal documents and billing records at G&Z back up sworn statements by former employees at the company and at Stern's firm that accounts were charged for notice of service to people who don't exist. Typical service fees in a foreclosure suit range from $45 to $300, industry experts say, but in some cases, G&Z's bills for service on a single property reached $1,200 to $5,000.

***

  • Internal company invoices from three days last fall show G&Z served 60 to 80 people a day for more than $30,000 each day for service for Stern's files. "There's no way they could have that many legitimate papers," said Liz Mills, a former process server for G&Z. "There were only three of us who worked the county I worked in."

For more, see Foreclosure documents back allegations of overcharging.

S. Florida Attorney Probed For Allegations Of Forging Judges' Signatures; Once Linked To Now-Shuttered Loan Modification Outfit Also Under Microscope

In South Florida, The Miami Herald reports:
  • State authorities are investigating allegations that a Coral Springs lawyer forged the signatures of Broward County judges while working with a disgraced foreclosure assistance company, court documents show.

  • The lawyer, Frank J. Ingrassia, worked with Outreach Housing,(1) which is accused of siphoning more than $2 million from desperate homeowners, according to a search warrant filed in Miami-Dade court this month. The probe is being spearheaded by the Florida Department of Law Enforcement. Also investigating is the Florida Attorney General's Office and the Office of Financial Regulation, which last year sued the company and its officers. Ingrassia, a former Florida assistant attorney general, did not return calls for comment. He has not been charged.

***

  • [T]he lawyer made headlines in June 2008 when he filed dozens of lawsuits against financial lenders alleging they fraudulently inflated the incomes of borrowers so that they could qualify for loans. Ingrassia worked for Affirmative Defense Group, which was refered most of its cases by Outreach, a now-shuttered Margate company that purportedly assisted homeowners facing foreclosures in getting legal settlements with lenders.

  • State authorities allege the company induced 961 people to fork over their mortgage payments. The "illegal revenue'' amounted to more than $2 million, and employees were paid from the money that was supposed to be held until homeowners settled with lenders, the warrant said.

  • The companies did virtually nothing to help clients stave off foreclosure, FDLE said in the warrant. Agents raided Ingrassia's Coral Springs office in July "due to allegations that Ingrassia forged the signatures of some 17th Judicial Circuit [Broward County] judges.'' He is under investigation for forgery.

  • Agents are also looking into the practices of Outreach and its founder, Blair Wright. Wright, in an interview Wednesday, insisted his company was legitimately trying to help homeowners reach foreclosure settlements with lenders. He says lawyers such as Ingrassia and Kirsten Franklin -- both of whom he is suing in Miami-Dade court -- mismanaged the cases, ignored clients and pilfered hundreds of thousands of dollars.

***

  • The Florida Supreme Court, in January, ordered Franklin barred from practicing law for three years because she abandoned hundreds of clients and allowed Wright to unduly influence her. The state's lawsuits against Ingrassia, Franklin and Wright are still ongoing.

For the story, see Foreclosure lawyer accused of forgery (A Coral Springs lawyer who worked for a troubled foreclosure rescue company is facing a criminal probe for allegedly forging court documents).

(1) Go here for earlier posts on now-shuttered loan modification outfit Outreach Housing.

Fla. County Property Apprasier's Office OKs Tax Exemption For Family Of Maine Gubernatorial Candidate In 'Double Homestead' Case

The Associated Press reports:
  • A Florida county has closed its investigation into a tax exemption claimed by the family of Maine Republican gubernatorial candidate Paul LePage on a Florida home, concluding that the $1,400 tax break was allowed under state law, a tax official ruled [].

  • In a letter to LePage's lawyer, the property appraiser in Volusia County, Fla., said the homestead exemption in 2008 and 2009 was OK because of an exception allowing the tax break on a Florida home maintained for a dependent.

***

  • According to the LePages' attorney, Ann LePage went to Florida after her father died in the fall of 2007 to care for her mother, who suffers from scleroderma, an autoimmune disorder, as well as pulmonary hypertension. Ann LePage rented a home before buying a home in December 2008.

  • After the purchase, Ann LePage listed the home as her primary residence, but she failed to change the status of the home in Waterville that she'd previously claimed as primary residence. In September, the LePages corrected the Waterville home's status and paid the $227.93 in taxes owed, the LePage campaign said.

  • Morgan Gilreath Jr., property appraiser in Volusia County, noted that the Florida situation was unusual - so unusual that there's no place on the homestead exemption form or statement of gross income to make note of the exception to Florida's law. There's also no notation on the county website, he said.(1)

  • Because of the exception, Ann LePage can list Maine as her primary residence while continuing to claim the homestead exemption in Florida as long her mother lives in the home and the LePages maintain it and provide for her, making her "naturally dependent," said her attorney, William A. Lee III of Waterville, who is licensed in Maine and Florida.(2)

For the story, see Official: LePage tax exemption allowed in Fla.

(1) Of course there's no reference to the availability of the tax exemption in 'double homestead' cases on the government forms or on the Property Appraiser's office website. They clearly want to avoid the potential havoc that may break out in their offices attributable to the additional exemption claims that will result in these permissible 'double' tax exemptions cases.

(2) The relevant applicable statute can be found at Sec. 196.031(1)(a), Florida Statutes, which states in part (bold text is my emphasis of the relevant portion of the provision, not in the original text):

  • Every person who, on January 1, has the legal title or beneficial title in equity to real property in this state and who resides thereon and in good faith makes the same his or her permanent residence, or the permanent residence of another or others legally or naturally dependent upon such person, is entitled to an exemption from all taxation, except for assessments for special benefits, [...] up to the assessed valuation of $25,000 on the residence and contiguous real property, as defined in s. 6, Art. VII of the State Constitution.

For more on the availability of 'double homestead' tax exemptions in certain cases, see:

  • Florida Administrative Code Rule 12D-7.007(7):

    "A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. If it is determined by the property appraiser that separate permanent residences and separate “family units” have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution. The fact that both residences may be owned by both husband and wife as tenants by the entireties will not defeat the grant of homestead ad valorem tax exemption to the permanent residence of each."

  • Florida Attorney General Opinion 75 Op. Att'y Gen. 146 (1975), Husband And Wife Maintaining Separate Residences May Both Qualify For Homestead Exemption;

  • Florida Attorney General Opinion 05 Op. Att'y Gen. 60 (2005), Homestead Exemption -- separate residences and homestead exemption. Art. VII, s. 6, Fla. Const.;

Friday, October 29, 2010

Suit Seeking Class Action Status Wants Foreclosure Sales Voided, Title To Homes Lost Based On Bogus Affidavits Restored To Homeowners

In Miami, Florida, a press release from The Ferraro Law Firm:
  • The Ferraro Law Firm, Daniels Kashtan and The Burton Firm filed a Class Action lawsuit yesterday against BAC Home Loans Servicing, LP, a Texas Limited Partnership, a subsidiary of Bank of America Corporation, and successor in interest to Countrywide Home Loans Servicing, LP, a Texas limited partnership; Deutsche Bank National Trust Company, a New York corporation; and U.S. Bank National Association, a Minnesota association, on behalf of all those property owners who lost title to their property in foreclosure proceedings based on false and perjurious affidavits filed by the Banks and their servicing companies. They seek to restore title to the property owners.

  • The Complaint alleges that the Defendants obtained wrongful foreclosures by abusing the court process and submitting affidavits that were false, even though sworn to under penalty of perjury, as the basis for obtaining foreclosure judgments. The property owners' due process rights were violated and the Banks used and abused the court rules and process to obtain judgments against all of the Class Members.

  • "The rule of law and due process are the cornerstone of our judicial system and we must be able to rely on the integrity of the judicial system before property rights can be taken away," said Juan Bauta, II, of The Ferraro Law Firm. The courts relied on the Banks to provide true and accurate affidavits before granting judgments and taking the property away from the property owners. "In essence, the courts were lied to and the property owners' due process rights were blatantly violated," stated Mr. Bauta, II, of The Ferraro Law Firm, one of the attorneys representing the property owners.

  • The Complaint seeks to have the judgments that the Banks obtained with fraudulent affidavits vacated and title restored to the property owners.

Source: Class Action Filed Against Banks in Foreclosure Proceedings.

Lawsuit Filings Seeking Class Action Status Against Loan Servicers Continue To Pick Up Steam

Bloomberg News reports:
  • Billionaire Wilbur Ross’s American Home Mortgage Servicing Inc., facing lawsuits by attorneys general in two states, was sued by a homeowner who accused the firm of using tactics that lead to improper foreclosures.

  • The lawsuit, filed Oct. 25 in federal court in Dallas, seeks class-action status on behalf of homeowners with mortgages serviced by American Home going back to 2006. American Home’s “illegal, unfair and deceptive business practices victimize borrowers” across the U.S., according to the complaint. American Home “routinely and systematically assesses unwarranted fees against consumers, resulting in premature default that often gives rise to unfair and improper foreclosure proceedings,” according to the complaint.(1)

-----------------------

In another story in the same media report:

  • Bank of America Corp., the largest U.S. bank by assets, was sued by a Florida borrower who accused the bank of violating the federal government’s home-loan modification program to boost its earnings.

  • The bank told customer-service representatives to mislead homeowners who ask about loan modifications, ignored completed modifications and failed to credit payments, Shari Goldman said Oct. 27 in a complaint filed in U.S. District Court in West Palm Beach, Florida. Goldman, who cited unidentified former bank employees in the complaint as the source of her information, asked the court to grant her suit class-action, or group, status.

Source: Lions Gate, American Home, Clarient, GE, Wells Fargo, BHP in Court News.

For another recent filing, see Class Action Filed Against Banks in Foreclosure Proceedings.

(1) Reportedly, American Home is facing similar allegations in other lawsuits.

  • Kay VanHauen v. American Home Mortgage Servicing Inc., 10-02146, U.S. District Court, Northern District of Texas (Dallas);
  • State of Texas v. American Home Mortgage Servicing Inc., 2010-3307, District Court of El Paso County, Texas;
  • State of Ohio v. American Home Mortgage Servicing Inc., 09-708888, Court of Common Pleas, Cuyahoga County, Ohio;
  • Michael Landi v. American Home Mortgage Servicing Inc., 10-00921, U.S. District Court, District of Maryland (Baltimore);
  • Kenneth Coplin v. American Home Mortgage Servicing Inc., 3:10-cv-01096, U.S. District Court, Southern District of California (San Diego).

State AG, AZ Feds: Pair Ran Rent-To-Own Racket Victimizing 31 Would-Be Home Buyers, Leaving Multiple Unwitting Investors/Straw Buyers Holding The Bag

From the Office of the Arizona Attorney General:

  • Zandonatti and Silverstein owned and operated AZI Rent2Own L.L.C (also known as Arizona Investments and AZI), a company claiming to “specialize” in mortgage investment and rent-to-own programs.

  • The indictment alleges that between 2006 and 2008, 25 homes were involved in either straw-buyer or investor schemes perpetuated by AZI Rent2Own, where approximately 45 lending institutions were defrauded and 31 renters were victimized. Approximately $2.9 million in foreclosure losses occurred because of the alleged result these schemes. FBI agents began investigating both Zandonatti and Silverstein approximately one year ago when numerous consumer complaints were filed against both suspects.

  • The FBI determined that the suspects were orchestrating an elaborate scheme which defrauded both investors and the renters of numerous homes in Pima County using straw-buyers or investors to flip the properties, many of which had been rented to tenants under a rent-to-own agreement.

  • This case was investigated by the Arizona Division of the FBI, and is being prosecuted by Assistant Attorney General Michael Jette.

For the Arizona AG press release, see Terry Goddard Announces Indictment in Home Investment Fraud Case.

For the indictment, see State of Arizona v. Zandonatti, et ano.

Ohio Judge Nixes GMAC F'closure Action Withdrawl; Orders Lender To Fork Over “Proof Of Integrity Of All Docs Submitted" As State AG Files Amicus Brief

From the Office of the Ohio Attorney General:
  • [A]fter filing a lawsuit against GMAC for fraud earlier this month [go here for press release, lawsuit], [Ohio Attorney General Richard] Cordray demanded that the loan servicer withdraw all pending foreclosures in which questionable affidavits were used in Ohio. Th[e] foreclosure case, U.S. Bank National Association v. James W. Renfro, was one of a handful of cases in which GMAC willingly filed a motion to withdraw.

  • However, on October 25, Judge Nancy Margaret Russo denied the motion and ordered GMAC to provide the court withproof of integrity of all documents submitted” at a pretrial set for November 8.

  • To inform the court of evidence of affidavit tampering, Cordray filed an amicus brief. Cordray’s brief focuses on testimony given by GMAC employee Jeffrey Stephan in two cases acknowledging falsification of affidavits,(1) two previous sanctions against GMAC for filing false affidavits(2) and outlines the argument that filing false affidavits is an act of fraud on the court.

For the Ohio AG press release, see Cordray Outlines Fraud in Cleveland Foreclosure Case.

Go here for:

(1) The Ohio AG's amicus brief specifically references, and attaches as Exhibits A & B of the brief, Jeffrey Stephan's:

(2) The previous incidents referenced in the AG's amicus brief are:

Foreclosure Rescue Sale Leaseback Racket That Drained Equity From Unwitting Victims' Homes Among Scams California Man Pleads Guilty To

From the Office of the U.S. Attorney (Los Angeles, California):
  • A Downey man has agreed to plead guilty to federal fraud and money laundering charges, admitting that he ran two fraudulent operations – a Ponzi scheme that took in $30 million from more than 300 victims and a mortgage fraud scheme that preyed on homeowners by stealing the equity from their homes and secretly taking title to their properties. Juan Rangel, 46, who is currently in federal custody, signed a plea agreement that was filed late Friday in United States District Court.

***

  • In the plea agreement, Rangel [] admitted that he and others operated a mortgage fraud scheme that targeted Latino homeowners at risk of losing their homes by offering them help to avoid foreclosure.

  • Rather than assisting the distressed homeowners, however, Rangel took titles to their homes and drained the remaining equity out of the properties. As part of this scheme, Rangel arranged to sell the homeowners’ properties, usually without their knowledge, to third-party straw buyers. He then applied for loans in the straw buyers’ names related to these supposed purchases, and used a variety of falsified documents to ensure that the fraudulent loans were approved. Rangel admitted that the scheme caused mortgage lenders to fund more than $10 million in fraudulent loans.

For the U.S. Attorney press release, see Downey Man Agrees To Plead Guilty In Multi-Million Dollar Fraud That Bilked Investors And Homeowners (Juan Rangel Agrees to Serve 15-Year Sentence for Targeting Spanish-Speaking Victims and Stealing Their Savings and Titles to their Homes).

Iowa Feds Indict Closing Agent For Illegally Pocketing Escrow Money From Real Estate Transactions

In Sioux City, Iowa, KMEG-TV Channel 14 reports:
  • An Emmetsburg, Iowa real estate broker is charged with fraud, identity theft, and money laundering. She allegedly committed the crimes while working as a real estate settlement agent from 2005 to 2008. Fifty-nine-year-old Jean Teresa Hoffert faces 25 counts in the case.

  • According to the U.S. Attorney's office she fraudulently kept portions of sale or mortgage loan proceeds. If convicted on all counts she could face a fine of over $6 million and over 475 years in prison followed by 81 years of supervised release.

Source: Real Estate Broker Charged with Theft, Money Laundering.

Thursday, October 28, 2010

Ohio AG Nearing Declaration Of War Against Wells Fargo, Others Over "Brazen Efforts" To Sweep Foreclosure Screw-Ups Under Rug With Affidavit Refilings

From the Office of the Ohio Attorney General:
  • In response to Wells Fargo's statement acknowledging that it "made mistakes" and that affidavits in 55,000 foreclosures filed by the bank did not "adhere" to the law, Ohio Attorney General Richard Cordray offers the following statement:

    "The big mortgage servicers and financial firms continue to demonstrate their belief that they do not need to play by the same rules as everyone else who uses our court system. The suggestion by Wells Fargo and its colleagues at several other national firms that they can cure fraudulent testimony by simply refiling new affidavits and continuing to proceed toward foreclosures shows they do not recognize the seriousness of the problem they have created. There is no simple 'do-over' for false testimony that will be likely to avoid sanctions and penalties imposed by the courts. Their brazen efforts to minimize their financial exposure by sweeping these problems under the rug are an insult to the justice system in this country. These disclosures by Wells Fargo will now become the focus for a new prong of our on-going investigation."

For the Ohio AG press release, see Cordray: Refiling Affidavits is an Insult to the Justice System.

Wells Fargo Finally Comes Clean; Backpeddles On Initial Denials Of Faulty Paperwork, Now Acknowledges Errors In 55,000 Foreclosure Actions

The Washington Post reports:
  • Wells Fargo, which has stood by its foreclosure paperwork for weeks(1) as other major lenders discovered errors and halted sales, conceded Wednesday it had discovered some flaws in its documents as well. The latest acknowledgement of problems from one of the nation's biggest lenders points out that the failure to scrupulously check legal documents before foreclosing on delinquent homeowners has been widespread in the industry.

  • Wells Fargo said it is submitting additional affidavits for roughly 55,000 foreclosures pending in 23 states, but said it does not have any plans to halt foreclosure sales.

For more, see Wells Fargo acknowledges problems in foreclosure paperwork.

(1) See, e.g., ProPublica: Wells Fargo Case Belies Claim It Always Verifies Mortgage Paperwork:

  • The new deposition is from the Chapter 13 bankruptcy case of Texas residents Frederico and Herelinda Guevara. In the deposition, a Wells Fargo employee named Tamara Savery said she twice submitted documents to the court about who owned the Guevaras’ loan without personally researching or reviewing the underlying documents. She said she relied on the “expertise of others” when signing the legal paperwork.

NJ Appeals Court Slams Shut 'Loophole' Allowing Judgment Creditors To Obtain 'Double Recoveries' When Enforcing Liens Thru Forced Property Sales

Lexology reports:
  • On August 4, 2010, the New Jersey Superior Court, Appellate Division extended equitable principles previously applied in mortgage foreclosure cases to how far an unsecured judgment creditor could go to satisfy its lien against a debtor, deciding to follow a line of cases standing for the principal that “even in the absence of express statutory authorization, a court has inherent equitable authority to allow a fair market value credit in order to prevent a double recovery by a creditor against a debtor.”

  • Moreover, in the case, MMU of New York, Inc. v. Grieser, the Appellate Division even went so far as to hold that if the unsecured judgment creditor has been compensated beyond the value of its lien, it could owe a money judgment to the debtor, in order to prevent a windfall to the creditor.

For more, see How far is too far - judgment creditors that sell a debtor’s real estate told to account for the fair market value of that property and must reimburse the debtor if they go too far (requires subscription; if no subscription, TRY HERE, then click appropriate link for the story).

For the ruling, see MMU of New York, Inc. v. Grieser, No. A-2484-08T3, 2010 BL 180436 (N.J. Super. Ct. App. Div. Aug. 04, 2010).

Fla. Appeals Court Nixes County Official's Attempt To Strip Homeowner Of Tax Exemption In 'Double Homestead' Case As Legal Non-Profit Scores Big Win

A Florida appeals court has recently affirmed longstanding state law that (contrary to popular belief), in certain circumstances, the mere fact that two people are married will not, in and of itself, preclude them from each claiming a real estate tax exemption for their Florida homesteads allowed under Article VII, Section 6 of the Florida Constitution,(1) when living in separate residences.

After receiving an unfavorable trial court ruling and despite the plain language of the applicable rules and existing Florida case law in support thereof, hard-headed Pasco County Property Appraiser Mike Wells took the improvident step of submitting Pasco County Circuit Judge Stanley R. Mills ruling to an appeals court for review, which the latter unanimously upheld.(2)

For the county property appraisers throughout the state of Florida, whose job includes the determination of qualified tax exemption claims filed by homeowners and who probably don't want word to leak out that 'double homesteads' are, in fact, warranted in certain cases, this ruling surely represents an unwelcome defeat.

Conversely, it represents good news for, among others, married people in Florida who can't stand living with each other and who split up, establish their own separate homesteads, and for whatever reason (ie. financial, religious, children, convenience, hatred for divorce attorneys, etc.) never bother to formally get a divorce.

Representing the homeowner who, with the help of a local non-profit law firm, stood up against the property appraiser for improperly stripping an apparently not well-heeled homeowner of his homestead exemption and possibly thinking he could get away with it because the homeowner might lack the savvy and financial wherewithal to get an attorney and put up a fight before the appeals court in this case was Maurice M. Feller and Richard A. Motley, of Bay Area Legal Services, Inc., New Port Richey, Florida.(3)

For the court ruling, see Wells v. Haldeos, Case No. 2D09-4250 (Fla. App. 2d DCA, October 22, 2010).

(1) Not to be confused with Article X, Section 4 of the Florida Constitution, which grants an exemption against forced sale of a state resident's Florida homestead to satisfy most, non-mortgage, debts.

(2) In affirming the lower court ruling in favor of the homeowner, the Florida appeals court made these observations (bold text is my emphasis, not in the original text):

  • Mr. Haldeos and his wife have established two separate permanent residences in good faith. Mr. Haldeos has no financial connection with his wife and they do not provide benefits, income, or support to each other. He has a Florida driver’s license and his vehicle is registered in Pasco County. At the hearing, the attorney for the Property Appraiser stated that

    "we agree in this case that if there isn't an absolute [prohibition on married couples from receiving two homestead exemptions], this case would be the outlier that would surely be entitled to a homestead. We’re not trying to say that they’re trying to disprove factually a family unit, that there’s any financial aspects involved, or that there is any relationship on-going because we have nothing to surmise that or nothing has been developed."

  • The trial court found that it would defy logic for two people "who have no contact with one another, who don’t have any connections of a financial, emotional or any other way to call them a family unit.” Based on this reasoning, the trial court ruled that Mr. Haldeos and his wife constitute separate "family units" and may obtain two separate homestead exemptions.

  • The Property Appraiser argues on appeal that this interpretation of the term "family unit" is contrary to the intent of section 196.031(5), Florida Statutes (2009), which provides as follows:

    A person who is receiving or claiming the benefit of an ad valorem tax exemption or a tax credit in another state where permanent residency is required as a basis for the granting of that ad valorem tax exemption or tax credit is not entitled to the homestead exemption provided by this section.

  • We do not agree that the trial court's ruling is at odds with section 196.031(5), as the statute clearly prohibits an individual from receiving two residency-based tax credits. If the legislature had intended, as the Property Appraiser suggests, to prohibit a married couple from receiving two such tax exemptions, it could have included married couples in the above language.

  • The Property Appraiser further argues that the statute must be strictly construed against the taxpayer where "the homestead exemption provides relief from an ad valorem tax." DeQuervain v. Desguin, 927 So. 2d 232, 236 (Fla. 2d DCA 2006). While we agree with this premise, we note that "[w]here the statute's language is clear or unambiguous, courts need not employ principles of statutory construction to determine and effectuate legislative intent." See Fla. Dep't of Children & Family Servs. v. P.E., 14 So. 3d 228, 234 (Fla. 2009). Section 196.031(5) clearly and unambiguously refers to a "person" and not a married couple or family unit.

  • Although there is no constitutional or statutory guidance on the issue at bar, the Florida Department of Revenue has enacted a rule instructing property appraisers that married couples may be considered separate "family units" in certain circumstances. Florida Administrative Code Rule 12D-7.007(7), provides as follows:

    If it is determined by the property appraiser that separate permanent residences and separate “family units” have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution. The fact that both residences may be owned by both husband and wife as tenants by the entireties will not defeat the grant of homestead ad valorem tax exemption to the permanent residence of each.

  • In determining whether Mr. Haldeos was entitled to a homestead exemption, the Property Appraiser was required to follow rule 12D-7.007(7): "The Department of Revenue shall prescribe reasonable rules and regulations for the assessing and collecting of taxes, and such rules and regulations shall be followed by the property appraisers, tax collectors, clerks of the circuit court, and value adjustment boards." § 195.027(1), Fla. Stat. (2009).

  • In a case involving the protection of a homestead from a judgment, the Fourth District held that when a married couple is separated, the husband can claim a homestead exemption for a residence in which he resides and owns, even though he still owns a home with his estranged wife for which they claim a homestead tax exemption. Law v. Law, 738 So. 2d 522, 524 (Fla. 4th DCA 1999). In that case, the argument was made that the husband's home could not be homestead because the home he owned with his wife was, as a matter of law, his homestead, and a person cannot have two homesteads. Id. The Fourth District held:

    We see nothing inconsistent with our public policy if we extend a homestead exemption to each of two people who are married, but legitimately live apart in separate residences, if they otherwise meet the requirements of the exemption. When we say “legitimately” we mean that there is no “fraudulent or otherwise egregious act” by the beneficiary of the homestead exemption.

  • Id. at 525. The court agreed that the husband could not have two homesteads and that a husband and wife in an intact marriage could not have two homesteads. However, the court held that the husband's homestead could be different from the wife's homestead "where their separation was bonafide," and it was the intent of the husband to live in his separate home. Id.; see generally Judd v. Schooley, 158 So. 2d 514, 517 (Fla. 1963) (holding that the wife could claim a permanent home in Florida and receive a homestead exemption even though her husband was legally domiciled in another state).

  • Although opinions of the Florida Attorney General are not binding on this court, we note that they have favored the granting of two separate homestead exemptions to a husband and wife where they establish separate permanent residences. 75 Op. Att'y Gen. 146 (1975); 05 Op. Att'y Gen. 60 (2005).

  • The Property Appraiser urges that if married couples can be considered separate “family units” in these circumstances, such a result would make his job in reviewing homestead exemptions virtually administratively unworkable, because no property appraiser will have the staff and available resources to verify whether a married couple is, in fact, maintaining two separate permanent residences. While we recognize that property appraisers will be required to review the financial information of separated couples in these unique circumstances, we note that the person claiming the homestead exemption has the burden of proving that he or she qualifies for such. Schooley v. Judd, 149 So. 2d 587, 590 (Fla. 2d DCA 1963), reversed on other grounds, 158 So. 2d 514 (Fla. 1963).

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Note that, in its ruling, the Florida appeals court fails to quote, in its entirety, the applicable Florida Administrative Code Rule 12D-7.007(7), which follows below (bold text is the portion of the Florida Administrative Code Rule 12D-7.007(7) which was inexplicably omitted by the appeals court):

  • (7) A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. If it is determined by the property appraiser that separate permanent residences and separate “family units” have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution. The fact that both residences may be owned by both husband and wife as tenants by the entireties will not defeat the grant of homestead ad valorem tax exemption to the permanent residence of each.

The point here simply (and obviously) is that as long as a husband and wife can demonstrate that they have, in good faith, established separate homesteads, no other reason or grounds for doing so (ie. marital instability or incompatibility, family illness/other health issues, high profile or other working professionals who work in different regions of the state or country, other uncommon circumstances, etc.) is necessary.

(3) Bay Area Legal Services is a regional, non-profit public interest law firm that provides a full range of civil legal services to individuals and non-profit groups that have limited access to legal services, with offices throughout the Tampa Bay region (operating offices in Hillsborough, Pasco, and Pinellas counties).

Inasmuch as this law firm's representation of individuals, like most non-profit law firms, is typically limited to those of low income, it's not too hard to read between the lines in this case and surmise that the Pasco County Property Appraiser may have thought he could get away with screwing over this homeowner by stripping him of his homestead real estate tax exemption, possibly figuring the homeowner didn't have the resources or savvy to challenge him. This, notwithstanding the fact that the Property Appraiser's actions flew in the face of the existing Florida case law, Florida Department of Revenue regulations, and past published opinions of the state attorney general's office, as this ruling clearly articulates.

By the way, contrast this story with the recently reported story (Miami Herald: Official: LePage tax exemption allowed in Fla.) where the Volusia County, Florida Tax Appraiser approved a homestead exemption claimed by the [presumably well-heeled] family of Maine Republican gubernatorial candidate Paul LePage on a Florida home without resorting to the kind of protracted legal battle the Pasco County Property Appraiser engaged in with a less-well-heeled homeowner:

  • Morgan Gilreath Jr., property appraiser in Volusia County, noted that the Florida situation was unusual - so unusual that there's no place on the homestead exemption form or statement of gross income to make note of the exception to Florida's law. There's also no notation on the county website, he said.

  • Because of the exception, Ann LePage can list Maine as her primary residence while continuing to claim the homestead exemption in Florida as long her mother lives in the home and the LePages maintain it and provide for her, making her "naturally dependent," said her attorney, William A. Lee III of Waterville, who is licensed in Maine and Florida.

The Lepage story was also reported by The Maine Public Broadcasting Network and the Bangor Daily News, among other media outlets.