Thursday, November 11, 2010

C. Florida Man Seeks To Recover Home By Overturning Foreclosure Sale Resulting From Sloppy Paperwork, Despite Resale By Bank To Unwitting Third Party

In Pinellas County, Florida, the St. Petersburg Times reports:

  • The problem is, Carlson's lender, Bank of America, sold it more than a year ago to another couple, who thought they had bought the foreclosed property free and clear. Legal experts say that in trying to reverse a foreclosure after the home has been sold to a third party, Carlson's case may be the first of its kind but it's unlikely to be the last.(1)

  • Whether it's robo-signed documents, falsified affidavits or failure to properly notify defendants, as claimed in the Carlson case, shortcuts by lenders' law firms could prove to be land mines in the legal system. When triggered by homeowners who feel their cases were improperly handled, such issues could raise ownership questions for years to come.

***

  • Carlson contacted Mark Stopa, a St. Petersburg foreclosure defense attorney, and his motion to vacate the foreclosure judgment, cancel the sale and regain possession of his house was filed last month. Stopa said that everyone, even a homeowner behind on his payments, has the right to defend his property from foreclosure in court. [...] Stopa bets that more foreclosures will boomerang back to the courts.

  • "This is perhaps the best example yet of the problems that transpire when foreclosures are done too hastily," he said. "You have to do things right from the very outset. If not, the cleanup will be far worse."

For more, see Dad tries to reverse foreclosure on his former Dunedin home.

See also Re-Claiming Your Home After Foreclosure – Improper Service.

For the above-referenced motion, see Verified Motion To Vacate Foreclosure Judgment, Cancel Foreclosure Sale, And Return Defendant To Possession.

(1) The initial analysis of whether a foreclosure sale of real estate can be undone after a third party acquires title to the home requires a determination as to whether the foreclosure judgment and the sale thereunder is void (also referred to as absolutely void, wholly void, void ab initio), or merely voidable (meaning that a foreclosure sale or judgment, while containing minor defects, is nevertheless valid until challenged by the injured party).

If the judgment or sale is found to be absolutely void, it is treated as a nullity (as if it never happened), and any title acquired by a subsequent purchaser, irrespective of how innocent or bona fide, will have acquired no title. A challenge to an absolutely void judgment or foreclosure sale can be brought at any time, and is not subject to any statute of limitations or other procedural time frames.

Alternatively, a finding that a foreclosure sale or judgment is merely voidable will then trigger a second analysis requiring a determination as to whether the subsequent party acquiring title to the real estate qualifies for protection as a bona fide purchaser (also referred to as a good faith purchaser or innocent purchaser). A bona fide purchaser is generally considered as one who purchases property without actual or constructive knowledge of competing interests and pays the vendor valuable consideration. A purchaser is generally considered to be on notice if he has knowledge of facts sufficient to put an ordinarily prudent man on inquiry and a reasonably diligent inquiry would lead to the discovery of title or sale defects.

Where a foreclosure sale or judgment is found to be merely voidable (as opposed to absolutely void), a subsequent 3rd party purchaser having bona fide purchaser status will be able to defeat the attempt to undo the foreclosure sale. The interest acquired by a subsequent 3rd party purchaser not having this status, however, can be defeated, subject to compliance with the applicable time frames within which a challenge to the judgment or foreclosure sale can be brought.

It is important to note here that, contrary to what the rhetoric put out by the title insurance industry may imply (see American Land Title Association: Comments regarding title insurance on foreclosed properties), bona fide purchaser status:

  • is not automatically granted to a subsequent buyer of a foreclosed property,

  • is only relevant when the foreclosure sale and/or foreclosure judgment is found to be merely voidable (there is no such thing as bona fide purchaser protection when the foreclosure judgment and/or sale pursuant thereto is found to be absolutely void), and

  • is not necessarily available to a subsequent purchaser merely because said purchaser has a complete lack of actual knowledge of any of the relevant facts surrounding the defects in the sale or judgment; being 'deemed' to 'have notice' of the relevant facts is sufficient to render bona fide purchaser protection inapplicable.

For more information on some of these points, one need not go further back than a September 28, 2010 court decision from the Washington State Court of Appeals (Division II) in which a number of the foregoing points are generally addressed.

In a nutshell, the court in Albice v. Premier Mortgage Services Of Washington, Inc. (go here for .pdf, and if these links expire, TRY HERE), No. 39265-8-II, 157 Wn. App. 912; 239 P.3d 1148; 2010 Wash. App. LEXIS 2199 (Wn. Ct. of App., Div. II, September 28, 2010) found that a technical defect in following the applicable statute rendered a foreclosure sale void, despite any claim of bona fide purchaser status made by the 3rd party foreclosure sale buyer. The court further went on to hold that, given the specific facts of the case, the 3rd party foreclosure sale buyer did not qualify as a bona fide purchaser anyway, thereby allowing the foreclosed homeowner to undo the foreclosure sale regardless.

For the briefs filed in Albice, see:

More Judges Begin To Put Heat On Foreclosure Mills To Defend Their Court Filings

The Wall Street Journal reports:
  • The push by mortgage companies to accelerate the snarled foreclosure process is running into resistance from judges who are cracking down on sloppy paperwork.

  • In Florida, a state-court judge has begun forcing lawyers to defend fees charged to borrowers by law firms. Maryland's state appeals court told judges that they can hire experts to scrutinize paperwork filed in foreclosure proceedings—and make lawyers swear that the documents are accurate.

  • Since last month, New York has threatened to use "penalties of perjury" against lawyers caught filing bad documents, even if they didn't know about the problems when the foreclosure process began. [...] In New York, lawyers representing lenders filing a foreclosure complaint are now required to sign a document verifying the paperwork in the case is accurate. The state has about 78,000 pending foreclosure cases, up nearly 60% from a year earlier.

  • "Given the serious consequences of these kinds of proceedings, it behooves the lawyer to make sure these proceedings are not frivolous or fraudulent or lacking in credibility," said Jonathan Lippman, chief judge of New York's statewide court system, in an interview.

  • In Florida last week, Judge Susan Gardner of the Sixth Judicial Court, a two-county region that includes St. Petersburg, ordered three lawyers to appear in her courtroom next month to defend fees contained in foreclosure affidavits. She threatened to lock them up if they don't show.

  • In one case, a lawyer for Florida Default Law Group in Tampa signed an affidavit that included $1,630 in fees for a process server, according to legal documents. A review of the file found that the fees incurred were $175, according to an order signed by Judge Gardner.

For the story, see Mortgage Lenders Set Back in Courts (requires subscription; if no subscription, GO HERE, then click appropriate link for the story).

Tenants In Illegal Foreclosure Evictions Organize To Combat Violators Of Their Protections Under Federal Law As Help In Enforcing Rights Hard To Find

In Merced, California, The Fresno Bee reports:
  • When Alandra Manzo moved with her family into their home in north Merced in July 2009, the 23-year-old had little idea how much trouble their yellow stucco rental on Tide Drive would bring them. Over the next year, the house would be foreclosed on and then resold. Their lease would be challenged twice, and they would be threatened with eviction several times.

  • Even though the federal Protecting Tenants at Foreclosure Act of 2009 allowed the family to stay, Manzo had a hard time finding help to fight for her rights. That may change soon in Merced with the formation of a group that hopes to organize renters against unjust evictions, among other abuses.(1)

For more, see Merced renters fight tenant abuse.

(1) See National Law Center on Homelessness & Poverty: Staying Home: The Rights of Renters Living in Foreclosed Properties.

Wednesday, November 10, 2010

Robosigner Johnson-Seck Featured Prominently In Recent "Schack" Ruling

A recent ruling by Kings County, New York Supreme Court Justice Arthur Schack in a Brooklyn foreclosure action prominently features the notorious, prolific robosigner Erica Johnson-Seck and her now-widely circulated deposition given in a separate Palm Beach County, Florida foreclosure case.

The short version of the story here is set forth in the following excerpt from Justice Schack's recent court ruling:
  • [T]he Court requires an affidavit from Erica A. Johnson-Seck, a conflicted "robo-signer," explaining her employment status. A "robo-signer" is a person who quickly signs hundreds or thousands of foreclosure documents in a month, despite swearing that he or she has personally reviewed the mortgage documents and has not done so.

  • Ms. Johnson-Seck, in a July 9, 2010 deposition taken in a Palm Beach County, Florida foreclosure case,(1) admitted that she:

    is a "robo-signer" who executes about 750 mortgage documents a week, without a notary public present;

    does not spend more than 30 seconds signing each document;

    does not read the documents before signing them; and,

    did not provide me with affidavits about her employment in two prior cases. (See Stephanie Armour, "Mistakes Widespread on Foreclosures, Lawyers Say," USA Today, Sept. 27, 2010; Ariana Eunjung Cha, "OneWest Bank Employee: Not More Than 30 Seconds' to Sign Each Foreclosure Document," Washington Post, Sept. 30, 2010).

  • In the instant action, Ms. Johnson-Seck claims to be: a Vice President of MERS in the March 16, 2009 MERS to INDYMAC assignment; a Vice President of INDYMAC in the May 14, 2009 INDYMAC to ONEWEST assignment; and, a Vice President of ONEWEST in her June 30, 2009-affidavit of merit. Ms. Johnson-Seck must explain to the Court, in her affidavit: her employment history for the past three years; and, why a conflict of interest does not exist in the instant action with her acting as a Vice President of assignor MERS, a Vice President of assignee/assignor INDYMAC, and a Vice President of assignee/plaintiff ONEWEST.

  • Further, Ms. Johnson-Seck must explain: why she was a Vice President of both assignor MERS and assignee DEUTSCHE BANK in a second case before me, Deutsche Bank v Maraj, 18 Misc 3d 1123 (A) (Sup Ct, Kings County 2008); why she was a Vice President of both assignor MERS and assignee INDYMAC in a third case before me, Indymac Bank, FSB, v Bethley, 22 Misc 3d 1119 (A) (Sup Ct, Kings County 2009); and, why she executed an affidavit of merit as a Vice President of DEUTSCHE BANK in a fourth case before me, Deutsche Bank v Harris (Sup Ct, Kings County, Feb. 5, 2008, Index No. 35549/07).

For the long version of the story, see Onewest Bank, F.S.B. v Drayton, 2010 NY Slip Op 20429 (NY Sup. Ct. Kings County, October 21, 2010).

Go here for:

all available online courtesy of 4closureFraud.org.

(1) With respect to the deposition in the Palm Beach County foreclosure action, Justice Schack points out in his ruling:

  • On July 9, 2010, nine days after executing the affidavit of merit in the instant action, Ms. Johnson-Seck was deposed in a Florida foreclosure action, Indymac Federal Bank, FSB, v Machado (Fifteenth Circuit Court in and for Palm Beach County, Florida, Case No. 50 2008 CA 037322XXXX MB AW), by defendant Machado's counsel, Thomas E. Ice, Esq.

  • Ms. Johnson-Seck admitted to being a "robo-signer," executing sworn documents outside the presence of a notary public, not reading the documents before signing them and not complying with my prior orders in the Maraj and Bethley decisions.

  • Ms. Johnson-Seck admitted in her Machado deposition testimony that she was not employed by INDYMAC on May 14, 2009, the day she assigned the subject mortgage and note to ONEWEST, even though she stated in the May 14, 2009 assignment that she was a Vice President of INDYMAC. According to her testimony she was employed on May 14, 2010 by assignee ONEWEST. The following questions were asked and then answered by Ms. Johnson Seck, at p. 4, line 11 - p. 5, line 4: [...]

***

  • [P]laintiff ONEWEST must address the tangled employment situation of "robo-signer" Erica A. Johnson-Seck. She admitted in her July 9, 2010 deposition in the Machado case that she never provided me with affidavits of her employment for the prior three years and an explanation of why she wore so-many corporate hats in Maraj and Bethley. Further, in Deutsche Bank v Harris, Ms. Johnson-Seck executed an affidavit of merit as Vice President of Deutsche Bank. If plaintiff renews its motion for an order of reference, the Court must get to the bottom of Ms. Johnson-Seck's employment status and her "robo-signing." The Court reminds plaintiff ONEWEST's counsel that Ms. Johnson-Seck, at p. 161 of the Machado deposition, volunteered, at lines 4 - 5 to "gladly show up in his court and provide him everything he wants."

Foreclosure Rulings From Downstate NY Trial Judges Not Flying Under The Radar For Big Banks

In Suffolk County, New York, The Washington Post reports:
  • A year ago, Long Island Judge Jeffrey Spinner concluded that a mortgage company's paperwork in a foreclosure case was so flawed and its behavior in negotiations with the borrower so "repugnant" that he erased the family's $292,500 debt and gave the house back for free [See Indymac Bank F.S.B. v Yano-Horoski, 2009 NY Slip Op 52333 (NY Sup. Ct. Suffolk County November 19, 2009)].

  • The judgment in favor of the homeowner, Diane Yano-Horoski, which is being appealed, has alarmed the nation's biggest lenders, who say it could establish a dramatic new legal precedent and roil the nation's foreclosure system.

  • It is not the only case that has big banks worried. Spinner and some of colleagues in the New York City area estimate they are dismissing 20 to 50 percent of foreclosure cases on the basis of sloppy or fraudulent paperwork filed by lenders.

***

  • The situation in Suffolk and Nassau counties on Long Island and Kings County in Brooklyn- which have among the highest rates of foreclosure in the state and where the 81 judges handling foreclosures have become infamous over the past few years for scrutinizing paperwork for errors - provides a window into how the crisis could unfold across in the country.

  • While the level of tolerance for document mistakes varies from judge to judge, the group as a whole has a reputation for ruling against mortgage companies when paperwork issues or other problems arise. At least one bank, J.P. Morgan Chase, requires document processors to separate foreclosures cases from these three counties from those in the rest of the country. A high-ranking executive of the company is specially assigned to sign off on the area's foreclosure filings.

  • Judge Dana Winslow of Nassau County says he's thought a lot about why judges in his area are more apt to question filings. He said it comes down to one thing: Lack of trust for Wall Street. In this region, judges have seen a lot of inaccurate filings from the financial sector.

For more, see Some judges chastise banks over foreclosure paperwork.

(1) According to the story, recent examples of lower court judges already raising questions about faulty paperwork in foreclosures include:

  • On June 17, Justice Karen Murphy of Nassau County ruled that Wachovia Bank lacked standing to foreclose on a home because the document used to prove ownership of the mortgage was incomplete;

  • On Sept. 21, Justice Peter Mayer of Suffolk County delayed a foreclosure by Ally Financial's GMAC mortgage unit after noticing that the paperwork transferring the mortgage to the bank was dated two days after the foreclosure was initiated; see Deutsche Bank Trust Ams. v McCoy, 29 Misc 3d 1202, 2010 NY Slip Op 51664 (NY Sup. Ct. Suffolk County, September 21, 2010);

  • On Oct. 21, Justice Arthur Schack of Kings County dismissed a OneWest foreclosure motion because the bank had not adequately documented how the mortgage had been sold and resold to investors. He also questioned why the employee who signed many of the documents claimed to be a vice president of several different mortgage companies at the same time; see Onewest Bank, F.S.B. v Drayton, 2010 NY Slip Op 20429 (NY Sup. Ct. Kings County, October 21, 2010);

  • On May 24, in a different case, Justice Schack dismissed a foreclosure action with prejudice because the paperwork that assigned the mortgage to HSBC from the original lender, Cambridge, was "defective." See HSBC Bank USA, N.A. v Yeasmin, 27 Misc 3d 1227, 2010 NY Slip Op 50927 (NY Sup. Ct. Kings County, May 24, 2010).

Citi Sold Home Out From Under Texas Couple Seeking "Hope Now" Loan Modification Help: Lawsuit

In Jefferson County, Texas, The Southeast Texas Record reports:
  • Two Beaumont residents have filed suit against their mortgage company, alleging it suddenly and without warning foreclosed on their property. Herbert Hoover Lee and Michelle Lee claim they only became aware of the foreclosure on their home after defendant CitiMortgage sold it on Oct. 5.

  • Before the foreclosure, the Lees had not received a notice of acceleration or a notice of foreclosure sale, in violation of the Texas Property Code, according to the complaint filed Oct. 20 in Jefferson County District Court.

***

  • Although they did not receive notices before the foreclosure on their home, the Lees realized that they were behind on their payments, the complaint says. They had believed, however, that they were in the process of sorting things out through CitiMortgage's online program called "Hope Now," a program designed to help homeowners in the Lees' position.

  • In their lawsuit, the Lees allege breach of contract and violation of deceptive trade practices against CitiMortgage. [...] In their complaint, the Lees seek an order preventing the defendants from divesting them of their title and other relief the court deems just. John Pat Parsons and Barrett Lindsay of the Lindsay Law Firm in Beaumont will be representing them.

Source: Beaumont residents claim their home was foreclosed without warning.

See Bank sued for wrongful foreclosure (A Port Arthur woman has filed suit against the bank that she claims wrongly foreclosed on her property) for another Jefferson County, Texas lawsuit alleging similar facts against foreclosing lender HSBC Bank.

Bay Area Couple Charged With Peddling Phony Loan Modification Services To Homeowners Looking To Dodge Foreclosure; Fraud, Theft Charges Pending

In Alameda County, California, KGO-TV Channel 7 reports:
  • A Los Gatos man and a Fremont woman face state and local felony charges over a foreclosure scheme. Prosecutors say Michael Young and Angeline Lizarrago targeted Spanish-speaking and Southeast Asian homeowners.

  • Investigators say they promised to prevent foreclosures be renegotiating loans. Customers were charged $1,500 to begin the process, and were promised a refund if things didn't work out.

  • Young and Lizarrago face eleven counts of fraud and theft totaling more than $50,000. The Alameda County District Attorney's Office thinks there may be more victims in the Avemos Group foreclosure scam. Those who think they may have been victimized are asked to call: 1-877-288-2882.

Source: Man, woman arrested for foreclosure scam.

Tuesday, November 09, 2010

Nationwide Title Clearing Robosigners On Parade

The Examiner reports:
  • As more and more banks, title companies, and financial institutions become exposed to the foreclosure fraud that has clogged our courts and put more than 19 million people out of their homes, insiders are coming out and providing information that shows how deep the rabbit hole goes in Foreclosuregate.

  • On November 4th, attorney Christopher Forrest of The Forrest Law Firm took a deposition from Crystal Moore of Nationwide Title Clearing. In this deposition Crystal lays out the extent of how the robo-signing of mortgage documents were handled and pushed through with little or no due diligence of the accuracy of said documents.

For more, see Legal depositions beginning around the country on foreclosure fraud.

To watch the video deposition on YouTube, see Crystal Moore Deposition Part 1, Part 2, Part 3, Part 4.

For other YouTube video depositions of Nationwide Title Clearing robosigners, see:

For more on Bryan Bly, see the St. Petersburg Times:

Loan Modification Duo Cops 'Delayed' Guilty Pleas To Illegally Pocketing Fees; Convictions To Be Dismissed Upon Payment Of $40K, Probation Completion

In Livingston County, Michigan, WHMI Radio 93.5 reports:
  • Two employees of a local mortgage company have pleaded guilty to violating foreclosure rescue regulations but would have no criminal record if they successfully complete probation.

  • Michelle Garbuschewski of Howell, also known as Michelle Justice, and Lisa Joboulian of Northville both entered guilty pleas to one count each of violating the Credit Services Protection Act. In exchange for their pleas, a second count of the same against each was dropped. Garbuschewski also pleaded guilty to two separate charges of violating the act as she was President of Hartland-based Elite Mortgage.

  • The plea deal stipulates that both women must pay a total of $40,000 in restitution to the victims involved. $25,000 of that must be paid this week, with the remainder paid within 30 days. Both women will also receive an 11-month delayed sentence on November 30th and if they successfully complete probation during that time, the convictions will be dismissed. They will also be allowed to keep their real estate licenses.

  • Garbuschewski previously admitted to WHMI that she and Joboulian had taken money up front from customers facing foreclosure, but said she thought the law applied only to mortgage companies, not loan-modification companies like Elite Mortgage, which has since closed its doors. The Attorney General’s office says they received eight complaints against Garbuschewski, Joboulian and Elite Mortgage, although only two complaints are included in the current charges.

Source: Women Charged In Local Foreclosure Rescue Scam Plead Guilty.

Prosecutor: "Slow Learner ... To Get Free Rent" As Career Scammer Gets 6 Yrs In Title-Snatching, Home-Hijacking Racket; Used Homes As Bail Collateral

In Hamilton County, Ohio, The Cincinnati Enquirer reports:
  • Do not rent a house or take a check from David Halsell. Halsell has been to Ohio prisons three times for financial chicanery, including renting out houses he didn't own. Now, he's going back to prison - this time for six years - for trying to get placed in his name other houses he never owned.

  • "He's a slow learner," Assistant Hamilton County Prosecutor Bill Anderson said. Halsell, 44, pleaded guilty Friday to five counts of tampering with records in exchange for six other charges being dropped and a promise to cooperate with authorities to unravel all of his crimes. [...] "He's going to get free rent for a while," Anderson said.(1)

***

  • Despite Halsell's extensive criminal history, Anderson allowed him a plea deal even though authorities could have pressed dozens more similar charges against him. "Let's put it this way. We only indicted him on 11 counts. We were aware of 45 others," Anderson said.

  • That's because Halsell's "home ownership" impacts other parts of the government. "He was using some of this property to bail people out [of jail]," Anderson said. When someone is jailed and a bond is set, property can sometimes be used to fund the bond - and get that person released from jail. That investigation continues.

For more, see Man rented out homes he didn't own.

(1) According to the story, Hamilton County Auditor employees grew suspicious when they noticed several Halsell-owned companies -- American Assets & Property Management, Inc., Cincinnati H&H Real Estate Services and Adam Investments -- were filing large amounts of ownership transfer requests in that office. Auditor Dusty Rhodes said there were so many transactions coming in that it looked funny, at which point prosecutors were called in to begin an investigation, the story states. Reportedly, some of the property was in foreclosure and some had deceased owners, according to Assistant Hamilton County Prosecutor Bill Anderson.

Colorado "Rule 120" Hearings Likened To A Mirage Offering Borrowers Facing Foreclosure Hope That Disappears The Closer They Come To It

The Denver Post reports:
  • Borrowers facing foreclosure in Colorado have a right to a hearing before a county judge. But consumer advocates argue the proceeding, called a Rule 120 hearing, is so narrow in scope it doesn't provide much protection or relief.

  • Public trustees or county treasurers handle foreclosures in Colorado, and they can't sell a home at auction without a judge's approval. The hearings, however, usually deal with only two issues — are borrowers delinquent on their mortgage payments or are they active-duty members of the military, which provides special consideration. That contrasts with the 23 states where judges handle foreclosures in civil courts and borrowers obtain more robust legal protections.

  • Zachary Urban, director of housing counseling with the Adams County Housing Authority, estimates that fewer than 15 percent of borrowers he works with attend their Rule 120 hearings. [...] Urban likens the hearings to a mirage offering borrowers hope that disappears the closer they come to it. "You can't go before the judge to explain how you got to that point," Urban said. "It doesn't answer a whole lot of questions, and it doesn't give them a chance to plead on a whole lot of points."

  • Borrowers who raise arguments that the Rule 120 hearing won't address can file a separate civil case. But those who go that route are quickly hamstrung by a requirement to post a "supersedeas" bond in the amount of the mortgage debt, said Mike Robinson, a Castle Rock attorney who has contested several Rule 120 hearings.

  • Finding someone to back that bond is nearly impossible, given the high risk a home in foreclosure represents, he said. And if borrowers had that much money available to them, they could fix their foreclosures in the first place, Urban added. Removing that bonding requirement via state statute would provide a big step to ensuring that Colorado borrowers get a fairer hearing in the courts, Robinson said. Absent that, Robinson said about the only other way to buy time is for a borrower to file for bankruptcy protection.

For more, see Foreclosure hearings, called Rule 120, may be too limited to help borrowers.

Monday, November 08, 2010

Despite Robosigner Scandal, Loan Servicers Still Offering Low-Pay, Low-Qualification, Lofty-Titled "Foreclosure Jobs"

ProPublica reports:
  • Prompted by a Financial Times article about banks hiring foreclosure experts, we went on a few job sites to browse the [job] listings ourselves, just to see if the qualifications for new hires have changed since the foreclosure-document scandal first surfaced.

***

  • One legal staffing agency advertised a number of foreclosure openings, including a “Supervisor of Foreclosure Department.” The listed base pay? “$10.00-$12.00/Hour.” High-school education required. When I called this agency, the Legal Group, I was told that the agency deals primarily with law firms or the legal departments of corporations.

***

  • Another staffing agency seeks college grads for “IMMEDIATE ENTRY LEVEL Foreclosure Processing opportunities with an outstanding company in the Baltimore region,” promising $12 to $13 an hour. The position requires no experience, but:

    Extraordinarily FAST and ACCURATE typing is a MUST! Ability to be WILDLY PRODUCTIVE in a fast paced DYNAMIC envionment [sic] is a MUST! Outstanding MULTI-TASKING ability is a must!

For more, see Want to Earn $10-12 an Hour? Be a ‘Foreclosure Department Supervisor’

"Fair Debt" Violations Among Allegations Facing BofA, Trustee-Affiliate, Others In Utah Suit Seeking Class Action Status

In Salt Lake City, Utah, KCSG-TV reports:
  • ReconTrust and Bank of America, along with Mortgage Electronic Registration Systems ("MERS"), Countrywide Home Loans, HSBC Bank, Wells Fargo Bank, U.S. Bank, Bank of New York/Mellon, KeyBank, and others that may have used ReconTrust as a trustee, have been named in a class action lawsuit filed in Utah federal court Friday alleging violations of the Fair Debt Collections Practices Act (FDCPA), Utah Pattern of Unlawful Activity Act, Unlawful Foreclosures, and Intentional Infliction of Emotional Distress.

***

  • The action filed in Utah District federal court by attorneys E. Craig Smay and John Christian Barlow says ReconTrust has violated the FDCPA by proceeding with non-judicial foreclosure sales. Because ReconTrust lacks the power of sale, its actions are within the definition of debt collection.

For more, see ReconTrust and Bank of America Named in Class Action Violation of Fair Debt Collection.

For the lawsuit, see Coleman, et al. v. ReconTrust Company, N.A., et al.

Homeowner Recovers House Lost In Foreclosure Sale After "Missing POA" Issue Raised In Subsequent Lawsuit Leads To Settlement With Lender

In Salem, Virginia, The Roanoke Times reports:
  • The day his house was sold at an auction on the steps of the Salem courthouse, M.T. Warden said he didn't even know he was facing foreclosure. He knew he was several months behind on his mortgage. When he called American Home Mortgage Servicing to make a payment, Warden recalled recently, "they said my home had been sold, and I didn't live there."

  • That was news to Warden, 30, who, at the time, was sitting in the kitchen of his Valleydale Road home. The next week, he found an eviction notice taped to his front door. Rather than move, Warden filed a lawsuit challenging the foreclosure.

  • After his attorneys found flaws in the paperwork leading up to the Dec. 2, 2008, auction, the case was settled last year and Warden was allowed to keep his house.

***

  • It's unknown just how many forced home sales in Virginia might have been affected [by the filings of fraudulent documents], and to what degree. Tom Domonoske, a Harrisonburg attorney who represented Warden in the disputed Salem foreclosure, said he believes the flaws uncovered in that case are common.

  • After Warden fell behind in his payments in fall of 2008, an official with Dallas-based American Home Mortgage Servicing signed a document initiating the foreclosure, asserting she had power of attorney to act for the lender, U.S. Bank. The foreclosure fell apart when the mortgage company could not produce the power of attorney -- a document that Warden's lawsuit claimed never existed. "It was just part of a shortcut they were taking," Domonoske said of the missing document.

For more, see Foreclosure system ripe for errors in Virginia (The state has one of the fastest-moving systems in the country, and one lawyer said flaws are likely common).

Some Foreclosure Defense Attorneys Begin Going Into Mortgage Lending Business?

The New York Times reports:
  • For some Florida residents, the price of getting out of foreclosure will include taking on a second mortgage — payable this time to their lawyers. The new mortgage, which takes effect only if the foreclosure is dismissed and the homeowner’s debt to the bank is reduced, is controversial among defense lawyers, some of whom call it “creepy” and “crass.” Yet even they acknowledge it offers a solution to a vexing question: How do they get paid?

  • After recent revelations that banks were sloppy in processing many foreclosures and in some cases lack standing to seize a house, potential clients seeking to challenge their lenders are flocking to lawyers. But while these distressed homeowners might have a case, they generally lack the resources to pay legal fees. Being in foreclosure usually means being broke.

For more, see Taking 2nd Mortgage to Pay the Foreclosure Lawyer.

(1) To the extent foreclosure defense attorneys in Florida are not seeking court orders directing lenders and loan servicers to pay the homeowners' "prevailing party" attorneys fees in a successfully defended case, they may be leaving themselves open to future malpractice claims from their "grateful" clients for failing to pursue their rights in recovering, from the losing lender, any attorney fees they may have paid for their legal representation.

Said prevailing party attorney fees is calculated simply by taking the number of reasonable hours the attorney puts into the case (subject to court approval), and then multiplied first by the attorneys hourly billing rate as approved by the court, and second - in contingency fee cases -multiplied again by any contingency fee "risk multiplier" granted by the court. For two Florida cases that illustrate the calculation of attorneys fee awards in this manner, and the subsequent application of a "risk multiplier", see:

By this way, this is the way experienced plaintiffs' counsel have been getting paid for years in cases brought under the Florida's Deceptive and Unfair Trade Practices Act. See The Florida Bar Journal: Entitlement to Attorney's Fees Under FDUTPA. Consumer law litigators likewise get paid in the same manner in bankruptcy cases, and cases involving the Fair Debt Collection Practices Act and Federal Truth In Lending Act, to name just a couple.

Under Florida law, where an agreement allows for an attorney fee award to one of the contracting parties (mortgage loan agreements typically allow a foreclosing lender to tack on its attorney fee to the amount owed on a loan when suing a homeowner to enforce the mortgage terms), state statute mandates an award of prevailing party attorney's fees to the other party under the reciprocity provisions of section 57.105(7), Florida Statutes; Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137 (Fla. 1st DCA 1999).

Not only might the lender and servicer be court-ordered to cough up fees to the homeowners' attorneys, it's possible that the foreclosure mill law firms representing the lenders/servicers (at least in Florida) may also be ordered to foot part of the tab as well by reason of section 57.105(1), Florida Statutes (bold text is my emphasis, not in the original text):

  • Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee, including prejudgment interest, to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:

    (a) Was not supported by the material facts necessary to establish the claim or defense; or

    (b) Would not be supported by the application of then-existing law to those material facts.

For an old (July/August, 2000) article in The Florida Bar Journal that may be of some value in providing guidance to lawyers in requesting court-ordered, prevailing party attorneys fees from losing defendants (ie. lenders, servicers, etc.), see Pleading Requirements for a Claim for Attorneys' Fees.

Sunday, November 07, 2010

St. Louis Feds Squeeze Guilty Plea From Alleged Rent Skimming, Sale Leaseback, Foreclosure Rescue Peddler Accused Of Causing $439K In Losses

In St. Louis, Missouri, the St. Louis Post Dispatch reports:
  • Jeremy Beadle, president of Network Ventures, a real estate and mortgage company in St. Charles, pleaded guilty Wednesday of defrauding lenders and homeowners who were facing foreclosure.

  • Beadle, 37, of St. Charles, admitted to one felony count of wire fraud before U.S. District Judge Rodney W. Sippel, who set sentencing for Jan. 21. Beadle faces a maximum penalty of 20 years in prison and a fine of up to $250,000. Prosecutors said the case involved 10 properties with a total loss of $439,352.(1)

  • Beadle also was manager of Premier Mortgage Funding, owned by Network Ventures, prosecutors said. In September, Rebecca J. Domecillo, an officer with Network Ventures, was sentenced to 27 months in prison for mail fraud in the schemes. Domecillo, 48, is from Lake Saint Louis. She and Beadle were indicted together in February.

Source: Mortgage broker admits fraud.

(1) According to the following excerpt from a February, 2010 FBI press release announcing the indictment, the alleged real estate fraud included bogus sale leaseback arrangements:

  • Beadle also purchased properties from homeowners who were in financial difficulty and in danger of foreclosure. He falsely represented to these sellers that they could rent the property and remain in their homes, and that the mortgage would be paid using the rent payments made by the residents of the property. [...] However, he did not apply all the rent payments to the mortgage. Beadle failed to make the mortgage payments as agreed, and these properties were foreclosed, resulting in losses to the mortgage lenders.

NY AG Squeezes Guilty Pleas From 4 For Roles In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket; 1 Awaits Trial On 23 Felony Counts

In Albany, New York, the Times Herald Record reports:
  • Members of an Albany-based company who ran a lease buyback program that cost several local homeowners their homes have admitted their roles in a mortgage-looting scheme in a deal with the state Attorney General's Office.

  • Four employees of Rivertown Financial pleaded guilty in Albany County Court last month to felony charges that included grand larceny, scheme to defraud and falsifying business records, after the Attorney General's Office filed criminal complaints. The company's lawyer, Kevin Wheatley, awaits trial after being indicted by an Albany County grand jury on 23 felony charges, including first-degree grand larceny and scheme to defraud.

  • Rivertown bought more than 100 properties, including several in Orange and Ulster counties, from homeowners threatened with foreclosure, offering to pay off their mortgages and let them remain in the homes as tenants until their credit improved. The company then took out new mortgages on the properties.

  • Most of the properties, which were in the names of Rivertown employees or other straw buyers, ended up in foreclosure and the company went bust in 2008. Here's what the four employees told investigators, according to court records:

    Rivertown CEO Geoffrey Goldman admitted he faked mortgage information, including using company money as assets for his straw buyers. His brother, company Vice President Jonathan Goldman, admitted the brothers used mortgage money for personal expenses, including cruises, casino gambling and personal trainers.

    Rivertown's sales director, Jessica Peryea, admitted she acted as a straw buyer.The company's loan officer, Jordan Laccetti, admitted he received the mortgage information from Geoffrey Goldman and knew the mortgages would never be repaid.

  • The four will have to pay restitution as part of their plea agreements, but sentencing dates haven't been set.

Source: Four guilty in scheme to profit from shaky mortgages.

Florida AG In Search Of Evidence Of Foreclosure Mill Kickbacks To Loan Servicers

The South Florida Sun Sentinel reports:
  • Follow the money. Florida Attorney General Bill McCollum's office is looking for it, in its investigation of the foreclosure law firm of David J. Stern. What's at the bottom of the AG's investigation was almost a throw-away line in a recent hearing in Fort Lauderdale. Assistant Attorney General Theresa Edwards, in her very last response to a question from Judge Eileen M. O'Conner, says that yes, the AG's office did receive thousands of documents from Stern's firm but not the documents it wanted.

  • The documents it wanted "may involve kick backs (sic) to the servicers who are hiring them, which surprisingly weren't included in the documents. So that's why we want to keep looking." Thanks to attorney Matt Weidner, who posted the transcript on his blog []. Here's a link to it.

Source: Foreclosure investigation: AG is looking for evidence of kickbacks.

Wells Fargo OKs Repo On Fully Paid Car; Cops Tell Complaining Victim To "Take A Hike"; Owner Regains Possession Only After Media Intervention

In Tacoma, Washington, KING-TV Channel 5 reports:
  • "I don't know what's going on. I thought they couldn't take my car, but it's gone!" Yes, Adlantus Newton's car is gone. Long gone. It was repossessed. Now she and her kids are parked on the porch, with no ride in sight. "This was my only car," Newton said. "We're missing out on a lot of stuff, I can't take them to choir practice."

  • This sad song gets worse. Adlantus thought she had made every payment on the car. "I paid $299 monthly, by money order every month." Even though she has a clear title to the 1999 Chrysler LHS, Wells Fargo bank still took the car and dropped it off in a Kent auction yard. "I called the police, showed them my title, and they still let them take my car," Newton said.

  • That's right, the bank was moving towards selling the ride without having the title. "And they are telling me to make a payment, no!" So Adlantus called [KING-TV Channel 5 Investigative Reporter Jesse Jones].

***

  • Wells Fargo did resolve this situation quickly once we reached out to them. Remember, the Department of Licensing may be able to sort out any title trouble. If that doesn't work, call me. We've been hearing of similar cases in the area.

For the story, see She owns the car but the bank repossessed it.

Indiana Appeals Court OKs Jury Trial For Homeowner In Foreclosure Case; Says Counterclaims Under Federal, State Statutes Are Distinct, Severable

Lexology reports:
  • The Indiana Court of Appeals recently held that a borrower is entitled to have claims based on consumer protection statutes and common law causes of action tried to a jury, even when those claims are asserted as counterclaims to a mortgage foreclosure action. Lucas v. U.S. Bank, N.A., 932 N.E.2d 239 (Ind. Ct. App. 2010).

  • In that case, the mortgage holder filed a complaint to foreclose on a mortgage executed by Mary Beth and Perry Lucas. In response, the Lucases filed an answer and counterclaims, alleging that the mortgage holder violated the Truth in Lending Act, the Real Estate Settlement and Procedures Act, and committed conversion and deception. The Lucases also filed a third-party complaint against the loan servicer alleging that it breached its contract with the Lucases, committed conversion, and violated Fair Debt Collection Practices Act and the Real Estate Settlement and Procedures Act.

  • The Lucases asked for a jury trial, but the trial court denied their request. On interlocutory appeal, the Court of Appeals reversed this decision, concluding that the Lucases had asserted legal causes of action distinct and severable from the equitable mortgage foreclosure action.

***

  • The court [] concluded that while foreclosure actions are essentially equitable, the Lucases were nonetheless entitled to a jury trial because the claims “grounded in federal and state statutory law and state common law . . . are legal causes of action.” Further, the majority of the relief the Lucases sought consisted of damages, a legal remedy.

Representing the homeowner was Christine M. Jackson, of Chris Jackson Law LLC, Indianapolis, Indiana.

For more, see Indiana Court of Appeals allows jury trial for counterclaims in foreclosure proceedings (requires subscription; if no subscription, GO HERE, then click appropriate link for story).

Saturday, November 06, 2010

Convicted Ex-Car Mogul's Girlfriend Using Foreclosure Eviction Protection Law In Attempt To "Dodge The Boot" From $1.8M Home 'Rented' From Boyfriend?

In Medina, Minnesota, the Star Tribune reports:
  • As disgraced businessman Denny Hecker sat in federal custody awaiting sentencing,(1) his girlfriend, Christi Rowan, fought eviction Thursday from the $1.8 million Medina home the two shared with her children. Palladium Holdings LLC claims that Rowan's lease deal with Hecker on the property is a sham.

***

  • [Rowan's attorney] also said Rowan is entitled to a 90-day eviction notice under her lease. [Housing Court referee Mark] Labine said, "It has to be a bona fide lease."(2)

For the story, see Hecker's girlfriend fighting eviction from Medina home (Christi Rowan claims she has a valid lease on the house; a holding company wants her out).

(1) Until he filed for bankruptcy in June 2009, listing $767 million in debt, Hecker ran an ubiquitous auto empire, the story states. Reportedly, he is now in the Sherburne County jail, facing up to 10 years in prison for fraud and conspiracy and Rowan pleaded guilty earlier this year to bank and bankruptcy fraud.

(2) The Federal Protecting Tenants at Foreclosure Act of 2009 provides important federal protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property, but applies only to bona fide tenants under any bona fide lease entered into before the notice of foreclosure. With regard to its applicability, the law make no distinction between expensive, luxury mansions and lower-cost 'non-mansions' that have been foreclosed upon.

Probe Into Alleged Atlanta-Area Loan Modification Scammer Expands Into Missouri As St. Louis Pastor Loses Church, Day Care, Home To Foreclosure

In St. Louis, Missouri, KMOV-TV Channel 4 reports:
  • A businessman who offers customers help with their mortgages, but fails to get the job done is under investigation by police in Dekalb County Georgia - and officials there say the investigation is expanding to more states, including Missouri.

  • Rev. Glen Allen of North County called Fred Lee in early 2010 looking to rework the loan on his church, home, and daycare. Allen says he paid Lee's company nearly $9,000, but still lost everything to foreclosure on September 8th. "Fred Lee has cost me my life," said Allen. Allen says he met Lee at a large African American church in St. Louis, but declined to name the church. He says Allen was offering loan modifications to church members. Allen also said he should not pay his mortgage while the loan was being reworked.

  • In Georgia DeKalb County, police say they are investigating up to 150 similiar stories, and so far they haven't located one customer who's had a successful loan modificiation with Fred Lee.(1) Lee's offices were raided by Dekalb County Police in early October. [...] If you have have dealth with Fred Lee let us know about your experience. Email Investigative Reporter Chris Nagus at cnagus@kmov.com.

For the story, see Businessman offers help with mortgages, fails to get job done.

(1) See DeKalb Cops, Feds Raid Suspected Loan Modification Scam Operation; Walk Off With Four Car Loads Of Records, Dozens Of Computers for more on Fred Lee.

Lee County Cops Probe Tenant's Rent Skimming Allegation Against Landlord In Foreclosure; Renter Booted Prematurely, Left $5K Poorer

In Lee County, Florida, The News Press reports:
  • The Lee County Sheriff’s Office is investigating a complaint a landlord collected $5,000 in rent from a tenant despite knowing the home being rented was in foreclosure and the tenant would be evicted. Joseph Harp, 56, and Karen Adams, 61, told investigators Harp leased the residence [...] in Cape Coral in July for six months.

  • Harp told investigators the rent was paid in advance in three installments of $2,800, $1,400 and $3,300. Harp and Adams were forced to leave the residence on Oct. 18, because the house was foreclosed on, according to a Lee County Sheriff’s Office report.

  • Harp told investigators he learned the landlord knew of foreclosure proceedings on June 20 but never disclosed that information to Harp. Harp said he has tried to recoup $5,000 for four months he paid for but didn’t get to reside in the home but to no avail.(1)

Source: Man accused of collecting rent from Cape tenant while house was in foreclosure.

(1) In what sounds like a similar case, DeKalb County, Georgia police this summer arrested a property owner on a charge of theft by deception for pocketing upfront rent from an unwitting tenant for renting a home two weeks before the owner lost the home to a foreclosure sale. See Arrest Warrant - State of Georgia v. Harrison. For the media report, see WXIA-TV Channel 11: Dangers of Renting a Foreclosed House.

Nevada AG: Indicted Trio Ran Upfront Fee Loan Modification Foreclosure Rescue Ripoff

From the Office of the Nevada Attorney General:
  • Three people, including a local attorney, were indicted today for allegedly operating a foreclosure rescue scam in Las Vegas during 2008 and 2009. The indictment alleges that Nevada attorney Ramon Dy-Ragos, along with his partners Jesus Baca a.k.a Jesse Baca, and Luis O. Baca operated a foreclosure rescue scam under the business name of "Save Your House."(1)

  • Save Your House is alleged to have lured customers to pay large up-front fees - ranging from $1000.00 to $3995.00. The defendants informed the victims they could prevent foreclosure by having customers stop paying their mortgage and ceasing all contact with the bank holding their mortgage. The defendants falsely claimed they would modify mortgages through negotiation with the mortgage holders or suing the mortgage holders.

For the Nevada Attorney General press release, see Nevada Attorney And Two Others Indicted In Foreclosure Scam.

(1) According to the press release, Attorney Dy-Ragos and Jesus Baca are indicted on two (2) B felony counts of Theft – Obtaining Money in Excess of $2,500 by material misrepresentation in violation of NRS 205.832(1)(c) and NRS 205.0835; (2) C felony counts of Theft – Obtaining Money of $250.00 to $2,500.00 by material misrepresentation in violation of NRS 205.832(1)(c) and NRS 205.0835 and one (1) Gross Misdemeanor count of Conspiracy in violation of NRS 199.480. Luis O. Baca is indicted on one (1) Gross Misdemeanor count of Conspiracy in violation of NRS 199.480.

Vegas "Sewer Service" Allegations Raise Concerns That Upwards Of 20,000 Court Cases May Be At Risk

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • There are new developments and a new arrest in the ongoing investigation into a process serving company and the court system. That company, On Scene Mediation, now has two employees under suspicion of falsifying court documents and putting upwards of 20,000 cases at risk. It could cost $150,000 in taxpayer money to sort through the cases involved.(1)

***

  • "This is a fraud of a wide-scale proportion," said Barbara Buckley who helps run the Legal Aid Center.(2) She says her hotline has been busy with calls from people saying they have been done wrong. She says the alleged tactics are disappointing. "Throwing the complaints down the sewer. That's what the lawyers call it -- sewer service."

For more, see I-Team: New Developments in Process Server Investigation.

(1) Reportedly, the company owner and employee are accused of saying they served papers but didn't. Maurice Carroll, a former Metro police officer, was running the company out of his North Las Vegas home, and now faces 35 felonies, the story states. Visalia Coleman, one of Carroll's employees, is also facing eight charges. Reportedly, Metro and the courts say the two and other workers at On Scene Mediation lied on court documents about serving papers.

(2) According to their website, Legal Aid Center of Southern Nevada is a private, non-profit 501 (c)(3) corporation which is a charitable organization and has been dedicated to providing free community legal services for Clark County, Nevada's low income residents since 1958.

Victim Of Sale Leaseback Foreclosure Rescue Scam Still Waiting For Installment Restitution Payments As County Falls Short In Enforcing Court Order

In Sacramento, California, The Sacramento Bee reports:
  • When he walked out of the Sacramento County courthouse nearly a year ago, Telesfor Lucero Jr. thought he'd won the battle. Three years after Lucero lost his North Highlands home through mortgage fraud, the man who defrauded him had entered a no-contest plea. Superior Court Judge Louis Mauro had ordered Timothy Hogue to pay Lucero $30,000 in restitution through the court's installment process, plus 10 percent annually in interest. "I thought, 'Wow, this is great!'" Lucero recalled.

  • But a year later, he says he is more victim than victor. "I thought that in a short time I would at least start receiving some sort of payments," Lucero said. To date, he has received only one payment, in March, for $53.12.

  • Although he has reason to believe that Hogue, who was under house arrest and on five years' probation, is gainfully employed, Lucero said county employees charged with enforcing the court order have told him their efforts are hampered by staff shortages and budget cuts.(1)

***

  • Hogue contacted him in 2006, and Lucero agreed to sign his house over to a woman, Kim Roth, who was to assume the payments and lease the house to Lucero with the understanding that he would buy it back when he received his workers' compensation. But Roth didn't make the mortgage payments and sold the title to someone else. The next thing Lucero knew, the three-bedroom house he had owned for 15 years was in foreclosure.(2)

For the story, see Three years after losing home, fraud victim waits for payment.

(1) In at least some jurisdictions, a convicted scammer out of jail on probation is typically required to make court-ordered restitution payments to his/her victim as a condition of probation. Any stiffing of the victim out of these payments should subject the convicted scammer to a revocation of his probation, and should be enough to get him thrown back into jail and face the prospect of spending the rest of his sentence in the can.

(2) Reportedly, Roth, under court order, coughed up $26,500 to the victim for her role in the ripoff.

Trump Yanks Name From Defunct Beach Tower In F'closure; Says He's Not The Developer - He Only Licensed Out His Name As Stiffed Buyers Demand Deposits

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • Real estate mogul Donald J. Trump said he's no longer affiliated with the unfinished luxury condo-hotel tower on Fort Lauderdale beach that was to carry his name and now faces foreclosure.

  • "We have nothing to do with the building. We had a licensing deal, and we terminated the licensing deal a long time ago," Trump told the Sun Sentinel late Tuesday. "We're not involved with the foreclosure."

  • The statement comes nearly eight months after the new loan holder filed to foreclose on what was to be the Trump International Hotel & Tower, a $200 million project that was supposed to bring cachet to Fort Lauderdale as one of the area's most glamorous addresses.

  • More than 100 people plunked down 20 percent deposits to buy condos in the 24-story tower, with studios and one- and two-bedroom units priced from about $500,000 to more than $3 million each. Now, most of those buyers are suing, trying to get their deposits back or place liens on the 298-unit project that was to be finished by 2009.

  • Many buyers charge that developers misrepresented Trump's involvement. Some suits name Trump personally and charge deceptive advertising. They point to promotional literature that states "Trump is committed to personal and direct involvement in everything his name represents" and describe the project as a "signature Trump development."

  • "To come and say now 'I only had a licensing agreement and wasn't the developer' is a fraud on the public," attorney Jo Altschul of Fort Lauderdale, who represents buyers of about 50 condo units, said Wednesday. "That's not what the developers said to potential purchasers to buy units at inflated prices because of Donald Trump being actively engaged in the development."

***

  • The Fort Lauderdale case is not the only headache for Donald Trump and his New York-based Trump Organization. Similar lawsuits are under way over Trump condo projects that stalled in Tampa and Mexico, with Trump claiming he only licensed his name and buyers alleging that sales materials suggested a greater role for Trump in the developments.

For more, see Trump says his name is off Fort Lauderdale condo hotel (Real estate mogul's claim of lessened role called 'fraud on the public').

Friday, November 05, 2010

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".