Four Central Florida Homeowners Seek Class Action Status In Federal Lawsuit Targeting GMAC In Robosigner Scandal

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

• Four Tampa Bay area homeowners are suing what used to be GMAC, claiming the company used "robo-signers" to foreclose on their homes illegally. [...] Their $5 million lawsuit was filed Thursday in U.S. District Court in Tampa. It seeks class-action status for "tens of thousands" of Florida homeowners with mortgages serviced by GMAC, now known as Ally Financial.

• The suit accuses the company of an "abusive, fraudulent, deceptive and unfair scheme" to obtain the plaintiffs' homes "by systematically fabricating evidence in the form of fraudulent affidavits" used in foreclosure cases.

***

• In two of the foreclosures in question, the lawsuit said the affidavits were signed by GMAC executive Jeffrey Stephan, who has testified in a deposition that he signs 6,000 to 10,000 such statements a month. Stephan testified that he spends five to 10 minutes with each file, but the new lawsuit said that's impossible unless he works days 37 to 50 hours long. Rather, it contends Stephan would have to spend less than a minute on each case to keep that pace.

For more, see Tampa Bay homeowners claim GMAC 'robo-signers' drove their foreclosures.

Notorious S. Florida Foreclosure Mill Gives Hundreds Of Employees The Boot As Storm Clouds Continue To Darken Over Alleged Robosigning Racket

In Plantation, Florida, The Miami Herald reports:

• The Law Offices of David J. Stern laid off hundreds of employees on Thursday, the latest sign that a state investigation, the loss of major clients amid scandal and the incriminating testimonies of former employees are bringing the foreclosure-processing giant to its knees.

• Jeffrey Tew, a lawyer for the firm, confirmed the layoffs Thursday. [...] Tew would not say how many employees were let go on Thursday, but said the firm has shrunk to about 400 employees, a decrease of about 50 percent in the past 10 days. Earlier this year, the firm had more than 1,100 employees. An e-mail memo sent out Thursday morning advised the employees of the layoffs.

• On Thursday afternoon, an employee for a document management and shredding company was unloading hundreds of empty boxes from a truck and carting them into the office complex at 900 S. Pine Island Dr. in Plantation, where Stern's firm occupies four floors.

***

• On Monday, the stock price for DJSP [Enterprises, the public spinoff firm handling foreclosure document processing launched last year by Stern] closed below $1 for the first time. It had been trading at $13.65 in April. It closed at 77 cents on Thursday.(1)

For more, see Foreclosure law firm cuts staff (Hundreds of employees were laid off at the Law Offices of David J. Stern on Thursday, as the embattled company struggles amid the foreclosure document scandal).

See also, South Florida Sun Sentinel: Mass layoffs at Stern as foreclosure law firm loses top clients (Plantation attorney eliminates 560 jobs —70 percent of staff — citing 'recent turbulence in the mortgage industry').

(1) According to this story, a Chinese-American investment banking firm named Chardan Capital acquired a controlling interest in what is now a DJSP subsidiary on Jan. 15 for $64.8 million in cash and the assumption by the subsidiary of about $3.4 million in DJSP expenses.

Foreclosure Environment "A Total Mess" As Loan Servicers Fail To Address Allegations Of Sloppiness, Fraud

Bankrate.com reports:

• Revelations of bank errors and allegations of fraud have created a "total mess" surrounding today's foreclosures, says Walter Dees, a housing counselor for ClearPoint Credit Counseling Solutions in Los Angeles. "It's a huge paperwork problem," he says. "Banks are overwhelmed, and so are homeowners."

• Overwhelmed might be an understatement. Lawyers who work with homeowners to fight foreclosure say there are more questions than answers right now. Problems with foreclosure documents run the gamut from mistakes to outright fraud, according to Chicago attorney Joseph McCaffery.

***

• Lawyers say there are numerous other recurring issues. Bankrate spoke with nearly a dozen lawyers around the country, and they mentioned errors such as:
  
  a) Failure of the foreclosing party to show clear title to the note.
  b) Misapplication of funds submitted by homeowners.
  c) Mortgage notes without proper endorsements.
  d) Backdating of paperwork, especially with respect to assignments.
  e) Forging key documents, such as assignments and affidavits of bank officers.
  f) Filing affidavits without signatures.
  g) Inflated legal fees associated with foreclosure.
  h) Lost or missing promissory notes.(1)

• Can you spot them? While some errors are relatively simple to spot, identifying others -- especially technical deficiencies -- will require a lawyer, McCaffery says. Nonetheless, homeowners can do preliminary assessments on their own -- and in many cases, they should be able to spot egregious errors.

For more, see Fighting common foreclosure errors (Homeowners should be able to spot egregious errors; Technical deficiencies, other errors require a lawyer's help; Foreclosure delays cannot solve bigger homeowner problems).

(1) And, at least in Florida, you can add to the list promissory notes intentionally destroyed by the lender after converting them into electronic form, according to this Florida Mortgage Bankers' 'confession' to the Florida Supreme Court (at page 4). See also Naked Capitalism: FUBAR Mortgage Behavior: Florida Banks Destroyed Notes; Others Never Transferred Them.

"Produce The Note" Success Story Featured In Media Report Describing Foreclosure Scandal As "Clash Over Who Gets Stuck With $1.1 Trillion In Loss"

In Boca Raton, Florida, BusinessWeek reports:

• In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice-recognition software company, had sold shares in the publicly traded company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage.

• The loan servicer, Washington Mutual, tried to foreclose on his home in 2003 but was never able to produce Lents' promissory note, so the state circuit court for Palm Beach County dismissed the case. Next, the buyer of the loan, DLJ Mortgage Capital, stepped in with another foreclosure proceeding. DLJ claimed to have lost the promissory note in interoffice mail. Lents was dubious: "When you say you lose a $1.5 million negotiable instrument—that doesn't happen." DLJ claimed that its word was as good as paper. But at least in Palm Beach County, paper still rules. If his mortgage holder couldn't prove it held his mortgage, it couldn't foreclose.

• Eight years after defaulting, Lents still hasn't made a payment or been forced out of his house. DLJ, whose parent, Credit Suisse, declined to comment for this story, still hasn't proved its ownership to the satisfaction of the court. Lents' debt has grown to about $2.5 million, including unpaid taxes, interest, and penalties. As the stalemate grinds on, Lents has the comfort of knowing he's no longer alone. When he began demanding to see the I.O.U., he says, "I was looked upon like I had leprosy. Now, I have probably 20 to 30 people a month come to me" asking for advice. Lents is irked when people accuse him of exploiting a loophole. "It's not a loophole," he says. "It's the law."(1)

• The Lents Defense, as it might be called, doesn't work everywhere.(2) Thousands of Floridians have lost their homes in lightning-fast "rocket dockets." In 27 other states, judges don't even review foreclosures, making it harder for homeowners to fight back. Now, though, allegations of carelessness and outright fraud in foreclosures has become so widespread that attorneys general in all 50 states are investigating. So are the feds.

For more, see Mortgage Mess: Shredding the Dream (The foreclosure crisis isn't just about lost documents. It's about trust—and a clash over who gets stuck with $1.1 trillion in losses).

(1) Lents' story has also been reported in a February, 2008 Bloomberg News article. See Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

(2) Not only that, but a "produce the note" victory by another Boca Raton, Florida homeowner in State St. Bank & Trust Co. v. Lord, 851 So. 2d 790 (Fla. App. Ct. 4th Dist., 2003) (litigation in which the losing lender was represented by the foreclosure mill, Law Office of David J. Stern) led to a change in the applicable statute (section 673.3091, Florida Statutes - Enforcement of lost, destroyed, or stolen instrument) (no doubt lobbied for by the financial industry) to make it easier to foreclose in Florida without having physical possession of the promissory note.

The 1999 version of Sec. 673.3091(1)(a), Florida Statutes (the statute at the time State St. Bank was originally filed in a Palm Beach County Circuit Court) read as follows:

• (1) A person not in possession of an instrument is entitled to enforce the instrument if:
  
  (a) The person was in possession of the instrument and entitled to enforce it when loss of possession occurred.

The 2004 version of Sec. 673.3091(1)(a), Florida Statutes (after the change in the statute), read (and now read - see current section 673.3091, Florida Statutes) as follows:

• (1) A person not in possession of an instrument is entitled to enforce the instrument if:
  
  (a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.

By the way, the Florida Bankers Association appears to tacitly acknowledge their role in lobbying for the statutory change arising out of the State St. Bank case (at pages 4 thru 6 of their comments to the Florida Supreme Court made in connection with Emergency Rule and Form Proposals of the Supreme Court Task Force on Residential Mortgage Foreclosure Cases), when it "confesses" that it is common for lenders to deliberately destroy the promissory notes not long after the real estate closing, after converting them into electronic form. See also Naked Capitalism: FUBAR Mortgage Behavior: Florida Banks Destroyed Notes; Others Never Transferred Them.

Louisiana Couple To Chuck Payment Book, Scores $10K For Sloppy Citi's Harrassment In Attempting To Collect Lost Promissory Note

In Chalmette, Louisiana, The Associated Press reports:

• CitiMortgage Inc. lost its right to collect from a Chalmette couple who defaulted after Hurricane Katrina because it lost their mortgage - and must pay them $10,000 for years of harassing phone calls, a state district judge has ruled. Company phone logs and the testimony of David Michael Cefalu and Rebekah Anna Cantrell Cefalu "clearly establish a pattern of continued, persistent and excessive phone calls" even after they told CitiMortgage to call their lawyer, Judge Robert Buckley wrote.

***

• The Cefalus got the $66,462 mortgage in August 2000 from Hibernia National Bank, which transferred servicing rights on the loan to CitiMortgage on March 1, 2005, according to a post-trial memorandum filed by CitiMortgage.

• Even though the Cefalus acknowledged their debt, CitiMortgage still had to prove its case and didn't have the records needed to do that, Buckley wrote.

• Its "sloppy record keeping ... seemed to eerily presage" recent allegations about sloppy paperwork and legal procedures nationwide as mortgage lenders foreclosed on millions of homes, the Cefalus' attorney, John Redmann, wrote in an e-mail.

For more, see Judge: $10K for post-Katrina debt harassment.

Fresno Couple Among Many Alleging To Be Screwed Over By Forensic Loan Audit Outfit The Target Of $60M California AG Lawsuit, Separate Class Action

In Fresno, California, The Fresno Bee reports:

• Patty and Jody Farmer were hooked when a Rancho Cordova-based company offered to help refinance their adjustable-rate mortgage, which was about to become unaffordable. But after paying the company nearly $8,000 -- and following its advice to stop making mortgage payments -- the Farmers didn't get a new mortgage.

• Instead, their lender foreclosed on their Fresno home of 11 years, and they were forced to move out. Now the state is suing the company that authorities say scammed the Farmers.(1)

For more, see Mortgage fraud strikes Valley homeowners (But state and federal law enforcement agencies fight back with lawsuits).

(1) The company, US Loan Auditors Inc., a loan-auditing company based in Rancho Cordova, is now part of a $60 million lawsuit that the California Attorney General's Office filed Oct. 6 (go here for press release, lawsuit) in Sacramento County Superior Court on behalf of California residents to seek restitution for all victims, including the Farmers, the story states.

In the California AG's lawsuit, the defendants are accused of using non-lawyers without any attorney supervision to prepare these forensic audits, and filing "cookie-cutter" lawsuits for hundreds of clients which "have overwhelmingly been dismissed at the pleading stage, have failed to result in any favorable settlements or adjudications, and would not, in any event, entitle consumers to the sweeping relief promised by Defendants." See lawsuit, at paragraph 2. The AG's office has described the defendants' actions as having "littered both state and federal courts with hundreds of lawsuits that have little or no chance of affording consumers any meaningful relief." See lawsuit, at paragraph 7.

The company also faces a separate class action lawsuit. See Ma, etal. v. U.S. Loan Auditors, LLC, et al.

See also Cal. AG Tags Forensic Loan Audit Firm, Others w/ $60M Suit; Says Litigation Mill "Littered Courts w/ 100s Of Suits That Have Scant Chance Of Success".

"Sewer Service" Allegations Earn Process Servers Their Share Of Spotlight In Nationwide Foreclosure Scandal

The South Florida Sun Sentinel reports:

• The expanding investigation into Florida's foreclosure crisis has turned up a new problem that may involve a number of cases: Individuals hired by law firms to notify struggling homeowners when their foreclosure cases are to be heard in court may have filed faulty or false documents.

• Foreclosure defense attorneys and consumer advocates say they have documented a number of foreclosure cases where "process servers" filed questionable paperwork. State investigators who are examining foreclosure documentation problems -- involving law firms that employed "robosigners" to rapidly process claims -- are also taking a close look at process servers, court documents show.

• According to lawsuits filed on behalf of homeowners, some individuals appear to have violated the rules of process serving: the personal delivery of legal papers, required by law, notifying people that a foreclosure action has been filed against them. Like "robo-signing" -- the mass signing of foreclosure documents without review by loan servicers -- it's an alleged practice that is putting lenders, and the foreclosure law firms serving them, under fire.

For more, see New questions being raised about court filings in foreclosure cases (Individuals hired by law firms to notify homeowners of pending foreclosure cases may have filed faulty or false documents).

Go here for more on process servers & "sewer service".

Southern California Homeowner Scores TRO Stalling Foreclosure Sale; Lender Duped Borrower Into Defaulting On House Payments: Judge

In San Diego, California, Courthouse News Service reports:

• A La Jolla man can keep his home for now, after a federal judge granted his motion for a temporary restraining order blocking Washington Mutual and JP Morgan from foreclosing on his house because the banks misled him into defaulting on his mortgage. Kaveh Khast claimed the banks instructed him to stop making his mortgage payments so he could qualify for a loan modification.(1)

***

• Because the bank told him to stop making his payments and to default on his loan, [U.S. District Judge Irma] Gonzalez found that Khast was irreparably harmed and entitled to an order temporarily halting foreclosure proceedings. "If the sale of plaintiff's property proceeds as scheduled, plaintiff will lose his home," Gonzalez wrote. "Even if defendants were ultimately to prevail, a temporary restraining order will only force them to delay the sale of the property by a matter of days."

For more, see California Man Gets to Keep His House, for Now.

For the court's ruling, see Khast v. Washington Mutual Ban, et al.

(1) Earlier this year, a California appeals court applied the doctrine of promissory estoppel against a foreclosing lender in a case in which a borrower relied on the verbal promise of a bank's employee to do something he wouldn't otherwise have done in the hope of stalling a foreclosure sale. See Garcia v. World Savings FSB, 183 Cal. App. 4th 1031 (2010):

• "Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise, if injustice can be avoided only by its enforcement." (Youngman v. Nevada Irrigation Dist., supra, 70 Cal.2d at p. 249.)

• "'The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.'" (Wilson v. Bailey (1937) 8 Cal.2d 416, 423, quoting Carpy v. Dowdell (1897) 115 Cal. 677, 687.)

• "'In such a case, although no consideration or benefit accrues to the person making the promise, he is the author or promoter of the very condition of affairs which stands in his way; and when this plainly appears, it is most equitable that the court should say that they shall so stand. [Citations.]'" (Wade v. Markwell & Co. (1953) 118 Cal.App.2d 410, 420.)

See also:

• Wrongful foreclosure – verbal assurance that foreclosure sale will be postponed may be enforceable (if link expires, TRY HERE, then click link for the story).
• Court: "Promissory Estoppel" Could Make Lender’s Verbal Agreement To Halt F'closure Sale Enforceable, Even Absent Consideration For Promise To Stall.

State AG To Missouri Homeowners In Foreclosure: Seek Competent Counsel & Make Loan Servicer Produce The Proper Paperwork

From the Office of the Missouri Attorney General:

• Missouri law generally allows foreclosures to take place very quickly, relative to other states [Missouri is a non-judicial foreclosure state - no court action is needed to foreclose on a home]. It is important for homeowners to understand their rights concerning foreclosures and to recognize the need for legal representation at the earliest possible time.

• In some instances, foreclosures may be stopped because lenders have failed to comply with legal requirements. Doing so will require the assistance of competent counsel. Below are some important questions and answers to help consumers understand foreclosures in Missouri.

For more, see The Mortgage Foreclosure Crisis: What You Need To Know.

Go here for more from the Missouri AG:

• Important Definitions,
• Frequently Asked Questions,
• 7 Important Loan Documents for Consumers,
• How to Obtain Loan Documents from Your Loan Servicers (form letter to make a "Qualified Written Request" under the Federal law, Real Estate Settlement Procedures Act - "RESPA" - go here for borrower's rights and the responsibilities of the mortgage servicer under the Federal law).

Foreclosure Mill Hires Fannie Associate GC As General Counsel; Could Be Move To Snag Recently 'Orphaned' Stern's Florida Case Files?

From a recent McCalla Raymer, LLC press release:

• McCalla Raymer, LLC [] announced the appointment of [ex-Fannie Mae associate general counsel] Susan Reid as General Counsel. [...] Most recently, she concentrated on foreclosure related issues in the state of Florida including mandatory mediation and other legal strategies for managing the residential default loan portfolio in various states.

***

• [M]cCalla Raymer is Fannie Mae retained counsel in Alabama and Georgia and Freddie Mac designated counsel in Georgia.

For the press release, see Former Fannie Mae Associate General Counsel Joins McCalla Raymer, LLC (Susan Reid Named General Counsel of Mortgage Banking Firm after Fifteen Year Tenure with Fannie Mae).

MD High Court Rules Panel: "Use Of Bogus Affidavits" To Support Foreclosures "Constitutes An Assault On The Integrity Of The Judicial Process Itself"

The following gems were reported in a recent story in The Baltimore Sun on the Maryland Court of Appeals' recent action to approved emergency rules authorizing reviews of foreclosure documents througout Maryland (a non-judicial foreclosure state) in response to the national scandal involving the use of robosigner-executed affidavits, and the subsequent use of "corrective affidavits" by foreclosure mill attorneys seeking a "do-over" after being nabbed for their illicit handiwork when processing foreclosures:

• The false signings so alarmed Maryland's highest court that it passed an emergency rule last [month] authorizing wide-ranging reviews of foreclosure documents. The Court of Appeals' rules committee, which recommended the change, did not mince words.

• "In the Committee's view, the use of bogus affidavits to support actions to foreclose … constitutes an assault on the integrity of the judicial process itself," committee chairman Alan M. Wilner, a retired judge, wrote in a letter to the court.

• Mortgage servicers nationally have said repeatedly that the issue is a technicality that distracts from the fact that they're foreclosing on people who really did get behind on their loans. But regulators say that doesn't give firms a pass to circumvent state law.

***

• After the corrective affidavit [in one case] was brought to [Prince George's County Judge Thomas P.] Smith's attention, the judge went digging. When he found more in other Prince George's foreclosure cases, he called judges elsewhere in the state, who in turn discovered similar affidavits from the two attorneys — hundreds so far. The Court of Appeals quickly approved emergency rules authorizing reviews of foreclosure documents. Some courts have already begun examining cases.

For the story, see Homeowners' cases bring foreclosure irregularities to light (False signatures on foreclosure documents prompt court review).

Court Awards Florida Man Title To Home Lost In BofA Screw-Up; Foreclosure Sale Took Place Despite Homeowner Not Having A Mortgage

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

• In the second South Florida foreclosure reversal this week, a Broward County court "vacated" the sale of a Fort Lauderdale man's home that had been sold out from under him, even though he bought the house with cash and never had a mortgage. The court order, made at the request of Bank of America, reversed the foreclosure sale of Jason Grodensky's house.

• Grodensky was the subject of a Sun Sentinel article about wrongful foreclosures last month [see Lauderdale man's home sold out from under him in foreclosure mistake]. He and his father bought the house for cash and didn't owe money to Bank of America, but the lender had continued to pursue a foreclosure case that began with the previous owner. In July, Grodensky learned that his house had been sold in a foreclosure auction.

• The news comes one day after Bank of America disclosed that the court had also vacated the foreclosure sale of a Miramar homeowner's property — even though the homeowner had secured a mortgage modification.(1)

***

• Grodensky says he's not planning to go back to court to file a lawsuit against the lender to seek compensation for his four-month ordeal. "I hadn't planned on it," he said. "I'm not out to get anybody. I just want to get it fixed."(2) Grodensky bought the house for cash in December 2009 in a short sale. The seller was in foreclosure. Grodensky said he had no idea that the foreclosure process did not stop at that point.

***

• Grodensky filed a claim with his title insurance company and was working with that firm to try to resolve the issue. He hasn't yet been notified by the title insurer or Bank of America that the sale was vacated on Monday. "I'm happy it's over, but I am not holding my breath about it," he said. "I'm waiting to see if I actually get contacted."

For more, see Home returned to Fort Lauderdale man who lost property in foreclosure mistake (Wrongful foreclosure case the second in South Florida this week).

Go here for links to other reported Bank of America foreclosure screw-ups.

(1) See:

• Miramar man gets home back after nearly losing it to foreclosure (Foreclosure sale reversed),
• Those with loan modifications still lose to foreclosure.

(2) Earlier media reports reveal that at least one Massachusetts law firm is apparently going around the country taking on these illegal foreclosure & lockout cases on behalf of screwed-over homeowners. See:

• Bank admits mistake on Willcox home foreclosure (involving an Arizona homeowner) (for a copy of the resulting federal lawsuit, see Newman v. Bank of America, N.A. and go here for the attached Exhibits),

• Family's recently purchased home, gutted by property removal service (involving a Michigan homeowner) (for a copy of the resulting federal lawsuit and accompanying Exhibits , see Rought v Deutsche National Trust Company, Trustee, et al.),

• Couple: Bank Foreclosed On Wrong House (New Bedford Couple Suing Bank Of America) (involving a Massachusetts resident with a home in Florida) (for a copy of the resulting federal lawsuit, see Cardoso v. Bank of America, et al.).

For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

• Nevada High Court OKs $1M+ Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure (for the court ruling, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008)),

• Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure (for the court ruling, see Wells Fargo v. Tyson, 2010 NY Slip Op 20079 (Sup. Ct., Suffolk County, March 5, 2010)).

Zombie Debt-Buying Rackets Also Bear Blame For Flooding Court System With Robosigner Affidavits; Cheap Pens A Complaint For One "Autograph Marathoner"

The New York Times reports:

• When Michael Gazzarato took a job that required him to sign hundreds of affidavits in a single day, he had one demand for his employer: a much better pen. “They tried to get me to do it with a Bic, and I wasn’t going — I wasn’t having it,” he said. “It was bad when I had to use the plastic Papermate-type pen. It was a nightmare.”

• The complaint could have come from any of the autograph marathoners in the recent mortgage foreclosure mess. But Mr. Gazzarato was speaking at a deposition in a 2007 lawsuit against Asset Acceptance, a company that buys consumer debts and then tries to collect. His job was to sign affidavits, swearing that he had personally reviewed and verified the records of debtors — a time-consuming task when done correctly. Sound familiar?

• Banks have been under siege in recent weeks for widespread corner-cutting in the rush to process delinquent mortgages. The accusations have stirred outrage and set off investigations by attorneys general across the country, prompting several leading banks to temporarily cease foreclosures.

• But lawyers who defend consumers in debt-collection cases say the banks did not invent the headless, assembly-line approach to financial paperwork. Debt buyers, they say, have been doing it for years.

***

• Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.

***

• Lawyers for consumers, [...] contend that few debtors ever learn about the legal action until it is too late, often because the process server charged with alerting them never actually delivered a notification [ie. sewer service].

***

• “But what people don’t realize,” said Daniel Edelman, a plaintiff’s lawyer in Chicago, “is that the mortgage issue and debt collections are intimately connected. The millions of default judgments out there — you better believe that’s one reason that homeowners can’t afford their homes.”

For more, see Debt Collectors Face a Hazard: Writer’s Cramp.

PA AG: Outfit Used Notices Hand-Delivered By Faux 'Sheriff Deputies', Fake 'Courtroom' & Mock 'Hearings' To Squeeze Debtors Out Of Cash, Car Titles

In Erie, Pennsylvania, WTAE-TV Channel 4 reports:

• A sign in the front of a building on West 39th Street tells visitors that it's the Unicredit Debt Resolution Center in Erie. Once debtors got inside, they were fooled into believing they were in a courtroom with a judge, but the whole thing was a fake, according to a lawsuit filed by the Pennsylvania attorney general.

• Team 4's Jim Parsons reported that Unicredit America is accused in the lawsuit of deceiving, misleading and coercing hundreds of consumers into paying off their debts. Inside the building is a pair of locked oak doors with brass handles resembling a courtroom entrance. The company is accused in the lawsuit of building a mock courtroom complete with a judge's bench and witness stand.(1)

***

• The Attorney General's Office told Team 4 that Unicredit lured debtors to the building by sending employees who appeared to be sheriff's deputies to their homes, implying that they would be taken into custody if they failed to appear at the phony court hearings.

• "It really galls me that someone would stoop that low," Erie County Sheriff Robert Merski said. "This certainly seems to be a scam, and it upsets me that they are trying to play on the integrity of this office, the office of sheriff. We've been here since the beginning of the United States."

• The lawsuit accuses Unicredit of intimidating debtors into revealing their bank account numbers, even turning over the titles to their cars once they got them inside the building.

Source: Team 4: Debt Collectors Accused Of Fake Courtroom, Judge (Pa. Attorney General Sues Unicredit In Erie).

For the Pennsylvania AG press release, see Erie debt collection company sued; accused of using bogus "hearings" and fake "courtroom" to collect from consumers.

Thanks to Bill Roper for the heads-up on the story.

(1) According to the Pennsylvania AG press release, the fake courtroom allegedly contained furniture and decorations similar to those used in actual court offices, including a raised "bench" area where a judge would be seated; two tables and chairs in front of the "bench" for attorneys and defendants; a simulated witness stand; seating for spectators; and legal books on bookshelves. During some proceedings, an individual dressed in black was seated where observers would expect to see a judge. Consumers with complaints or questions related to Unicredit debt collection practices are urged by the Attorney General to call his Consumer Protection Hotline at 1-800-441-2555 or file an online consumer complaint.

Victim Of Chicago-Area Refinance Racket Attributes Loss Of Four Properties To Convicted Deed Scammer

In Chicago, Illinois, myFoxchicago reports:

• John Hemphill of Chicago is behind bars after a brazen attempt to swindle potential homeowners all over the South Side. Hemphill was caught on undercover cameras in a federal sting, claiming he held the deeds to homes all over the south side, and offering to sell those properties for just three or four thousand dollars apiece.

***

• Prosecutors say Hemphill falsely claimed to be a federal agent. He even misspelled the word "government" on his phony I.D. badge. But that didn't keep customers, like Sabera Iqbaluddin, from dealing with him. "Because of him, I'm losing everything," she said.

• Iqbaluddin is a postal worker who saved enough money to purchase several homes and a gas station on the south side. None of those properties were bought from Hemphill. But when times got tough, she said, Hemphill offered to help her refinance, but never passed along her payments to the lender. She lost all four properties. She's now represented by attorney Tony Peraica who says about Hemphill, "He got into their life and essentially ruined them financially."

• Hemphill hasn't been charged with anything in connection with Iqbaluddin's case. He was eventually caught and convicted, after an alert employee at the Cook County Recorder of Deeds office noticed he was filing dozens of phony deeds to suggest he had taken title to properties that were not really his.

For the story, see Chicago Man Convicted in Mortgage Scheme.

For the U.S. Attorney press release announcing Hemphill's conviction in other deed scams, see Chicago Man Convicted Of Posing As Federal Official In Scheme To Obtain And Sell Area Properties He Did Not Own.

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.

***

• Ohio Attorney General Richard Cordray last week asked judges in his state for copies of foreclosure affidavits filed in their courts and signed by Moua. He sent a separate letter to Wells Fargo asking the bank to vacate any foreclosure judgment in Ohio involving incorrect affidavits.

• 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.

"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.”

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 existence” of 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’s “sleight 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.

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.