Trying To Unwind Or Undo A Deed Ripoff? Pleading Inconsistent Facts In Lawsuit May Be Necessary

In a recent ruling addressing various issues raised in a lawsuit filed by apparent victims of an alleged deed ripoff, a California appeals court said, among other things, that there was nothing disqualifying, as one Defendant asserted, for the Plaintiffs to plead alternative facts in an attempt to undo both the deed ripoff itself, and the mortgage that was placed on the subject properties subsequent thereto.

This appeal involved a reversal of a trial court's judgment of dismissal after sustaining one defendant's demurrer. The ruling, although unpublished, may nevertheless be instructive for those in the legal profession looking to unwind or undo a wide variety of deed ripoffs, particularly, as in this case, where the attorney representing one of the defendants attempts to trip up his/her adversary on a "pleading technicality."

In addressing multiple questions surrounding an alleged deed ripoff, the ruling may contain some valuable insight to anyone (primarily those in the legal profession or real estate business) seeking a starting point in commencing the arduous process of undoing or unwinding a deed ripoff (ie. whether it be through forged deeds & other land documents, forged or improper use of powers of attorney, sale leaseback foreclosure rescue scams, or the otherwise duping of a property owner into signing over deeds and other land documents), including the voiding of any mortgage or other encumbrance placed on the property simultaneously with, or subsequent to, the deed ripoff.

For the longer version of this post, and the link to the court ruling, see Void vs. Voidable Deeds - Actions to Undo A Deed Scam; OK To Plead Inconsistent Facts - No Need To "Gamble", Says California Appeals Court.

No Foreclosure Rubber-Stamping In This Courtroom

Over the last couple of years, Suffolk County, New York Supreme Court Justice Peter H. Mayer has demonstrated little hesitancy in holding foreclosing lenders' and other creditors feet to the fire when it comes to having all their paperwork in order when trying to take the home away from a delinquent borrower or otherwise attempting to enforce the terms of a loan in a court proceeding.

To see what I mean, here are links to a number of his rulings:

1. Aurora Loan Servs, LLC v Thomas, 10/14/2010, 2010 NYSlipOp 33023(U);
2. Bank of Am., N.A.. v Maharaj, 09/21/2010, 29 Misc 3d 1202(A), 2010 NYSlipOp 51665(U);
3. Bank of NY v Trezza, 12/08/2006, 2006 NYSlipOp 52367(U);
4. Bank of New York v Kahl, 10/30/2009, 2009 NYSlipOp 32741(U);
5. Bank of New York v Smalls, 09/28/2009, 2009 NYSlipOp 32672(U);
6. Butler Capital Corp. v Cannistra, 10/08/2009, 26 Misc 3d 598, 2009 NYSlipOp 29460;
7. Butler Capital Corp. v Cannistra, 01/06/2010, 2010 NYSlipOp 30035(U);
8. Citimortgage, Inc. v McGee, 10/26/2010, 2010 NYSlipOp 20444;
9. Countrywide Home Loans, Inc. v Bouvin, 09/28/2009, 2009 NYSlipOp 32670(U);
10. Countrywide Home Loans, Inc. v Hovanec, 02/16/2007, 15 Misc 3d 1115(A), 2007 NYSlipOp 50696(U);
11. Countrywide Home Loans, Inc. v Taylor, 09/20/2007, 17 Misc 3d 595, 2007 NYSlipOp 27383;
12. Credit Acceptance Corp. v Greve, 03/22/2007, 15 Misc 3d 1115(A), 2007 NYSlipOp 50657(U);
13. Deutsche Bank Natl. Trust Co. v Lewis, 11/29/2006, 2006 NYSlipOp 52368(U);
14. Deutsche Bank Trust Ams. v Eisenberg, 06/23/2009, 24 Misc 3d 1205(A); 2009 NYSlipOp 51271(U);
15. Deutsche Bank Trust Ams. v McCoy, 09/21/2010, 29 Misc 3d 1202(A), 2010 NYSlipOp 51664(U);
16. Deutsche Bank Trust Co. v Barbakoff, 07/13/2009, 2009 NYSlipOp 31595(U);
17. GMAC Mtge. LLC v Munoz, 09/09/2010, 28 Misc 3d 1235(A) 2010 NYSlipOp 51598(U);
18. GMAC Mtge., LLC v Ingoglia, 11/25/2009, 2009 NYSlipOp 32854(U);
19. HSBC Bank USA v Boucher, 07/17/2009, 2009 NYSlipOp 31617(U);
20. HSBC Bank USA, N.A. v Fama, 10/29/2009, 2009 NYSlipOp 32671(U);
21. HSBC Bank USA, N.A. v Olsen, 10/27/2009, 2009 NYSlipOp 32669(U);
22. IndyMac Bank F.S.B. v Garcia, 06/22/2010, 28 Misc 3d 1202(A), 2010 NYSlipOp 51127(U);
23. Indymac Fed. Bank FSB v Chappory, 10/22/2009, 2009 NYSlipOp 32511(U);
24. Indymac Fed. Bank FSB v Hamilton, 10/21/2009, 2009 NYSlipOp 32510(U);
25. JPMorgan Chase Bank, N.A. v Guevara, 08/17/2009, 2009 NYSlipOp 31892(U);
26. Novastar Mtge, Inc. v Sachse, 07/14/2009, 2009 NYSlipOp 31616(U);
27. Saxon Mtge. Servs., Inc. v Montes, 06/23/2009, 2009 NYSlipOp 31418(U);
28. U.S. Bank National Association v Maffei, 03/19/2007, 2007 NYSlipOp 30487(U);
29. U.S. Bank Natl. Assn. v Kosak, 09/04/2007, 16 Misc 3d 1133(A), 2007 NYSlipOp 51680(U);
30. U.S. Bank Natl. Assn. v Merino, 05/01/2007, 16 Misc 3d 209, 2007 NYSlipOp 27170;
31. Wells Fargo Bank Ntl. Assn. v Melgar, 10/15/2009, 2009 NYSlipOp 32442(U);
32. Wells Fargo Bank, N.A. v Davilmar, 08/15/2007, 16 Misc 3d 1133(A), 2007 NYSlipOp 51682(U);
33. Wells Fargo Bank, N.A. v Emmet, 10/21/2009, 2009 NYSlipOp 32509(U).

The Parade Of Booted Lenders In Brooklyn Foreclosures Goes On

The following 2010 table of cases involve lenders who have been denied attempts to move forward on foreclosure actions this year by Kings County Supreme Court Justice Arthur M. Schack for a variety of missteps and assorted screw-ups:

1. Lasalle Bank N.A. v Smith, 26 Misc 3d 1239, 2010 NYSlipOp 50470 (NY Sup. Ct. Kings County, March 22, 2010);
2. Wells Fargo Bank, N.A. v Hunte, 27 Misc 3d 1209, 2010 NYSlipOp 50637 (NY Sup. Ct. Kings County, April 14, 2010);
3. Flushing Sav. Bank, FSB v Chancay, 27 Misc 3d 1212, 2010 NYSlipOp 50687 (NY Sup. Ct. Kings County, April 20, 2010);
4. JP Morgan Chase Bank, N.A. v George, 27 Misc 3d 1217, 2010 NYSlipOp 50786 (NY Sup. Ct. Kings County, May 4, 2010);
5. U.S. Bank, N.A. v Emmanuel, 27 Misc 3d 1220, 2010 NYSlipOp 50819 (NY Sup. Ct. Kings County, May 11, 2010);
6. HSBC Bank USA, N.A. v Yeasmin, 27 Misc 3d 1227, 2010 NYSlipOp 50927, (NY Sup. Ct. Kings County, May 24, 2010);
7. Argent Mtge. Co., LLC v Maitland, 28 Misc 3d 1224, 2010 NYSlipOp 51482 (NY Sup. Ct. Kings County, August 19, 2010);
8. Bank of NY v Mulligan, 28 Misc 3d 1226, 2010 NYSlipOp 51509 (NY Sup. Ct. Kings County, August 25, 2010);
9. LaSalle Bank, N.A. v Bouloute, 28 Misc 3d 1227, 2010 NYSlipOp 51513 (NY Sup. Ct. Kings County, August 26, 2010);
10. OneWest Bank, F.S.B. v Drayton, 2010 NYSlipOp 20429 (NY Sup. Ct. Kings County, October 21, 2010).

For an earlier post with links to 30+ earlier cases of lenders getting the boot by Justice Schack, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced.

3.5-Pound Yorkie KOs NYC HOA In Eviction Suit; Failed Effort To Boot Pooch To Cost Unit Owners $100K As 'Underdog' Wins Reversal Of Lower Court Ruling

In Middle Village, Queens, the New York Post reports:

• A Queens condo board spent a whopping $100,000 during a three-year battle to evict a cute, 3.5-pound pooch named Charlie -- and in a stunning upset, the underdog scored a knockout. For those counting, the figure comes to nearly $28,600 per pound of pup.

• The teacup Yorkshire terrier is owned by Donna Forman, a 10-year resident of the Village View Condos -- a 24-unit development in Middle Village.

***

• A lower court had ruled against Charlie, but the decision was overturned by the Appellate Division last week, said her lawyer, Michael Mauro, who disclosed the legal cost to the condo owners -- nearly $4,200 each.

• This wasn't Forman's first dogfight with the board. It unsuccessfully tried to oust her previous pet, Rugby -- a Shih Tzu her son inherited from grandma. Rugby died in 2006.

***

• Charlie won the appeal on a TKO -- after the case turned on a technicality. The condo's bylaws say unit owners, their pets and guests shall not create a nuisance, Mauro said. By including the word "pets," he said, the rules implied that dogs that are not a nuisance are OK. The rules have since been changed to eliminate the word "pets" -- but they won't apply retroactively to Charlie, Mauro said.

For more, see Court says 'stay!' (Condo meanies waste 100G in nixed dog evict).

For the appellate court ruling, see Board of Mgrs. of Vil. View Condominium v. "Charlie the Yorkie", 2010 NY Slip Op 07877 (NY Sup. Ct., App. Div. 2nd Dept., November 3, 2010).

Bond Insurer Left Holding The Bag On $312M+ In Crappy Home Loan-Backed Mortgage Securities Sues Deutsche Affiliates To Force Buy-Back

Bloomberg News reports:

• A unit of Assured Guaranty Ltd. sued affiliates of Deutsche Bank AG over $312 million of mortgage-backed securities that the bond insurer guaranteed and says were “plagued by rampant fraud and misrepresentations.”

• Assured Guaranty Corp. is asking a judge to force the bank to repurchase the loans, on which the insurer has already paid almost $60 million in loss claims and sees the potential for tens of millions of dollars more, according to a complaint filed today in New York state Supreme Court against DB Structured Products Inc. and ACE Securities Corp. The bond insurer, backed by billionaire Wilbur Ross, is also seeking reimbursement for the claims paid and for future losses.

For more, see Assured Guaranty Sues Deutsche Bank Over Mortgages.

For the lawsuit, see Assured Guaranty Corp. v. DB Structured Products Inc., et ano. (Index #651824/2010, NY Supreme Court - New York County (Manhattan); go here for related court docket).

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

'Insurer Is Stiffing Us On Our 'Soured Loans' Claims Alleging Lack Of Proper Paperwork & Lying Borrowers,' Bellyaches BofA In Lawsuit

In Charlotte, North Carolina, The Charlotte Observer reports:

• Bank of America Corp. is suing its mortgage insurance company for denying its claims. It's the latest twist in finger-pointing over the mortgage crisis. The bank says that Old Republic Insurance Co., which Bank of America paid to insure it against losses on potential borrower defaults, is "manufacturing excuses" to deny the bank's claims.

• In a lawsuit filed last week in district court in Charlotte, it calls Old Republic's conduct "aggravating and outrageous," and says Old Republic is making "unreasonable interpretations" of the requirements in its policies.

• Old Republic says it is denying claims where borrowers misrepresented themselves or where the bank is missing paperwork, according to the lawsuit. The bank says that borrowers didn't misrepresent themselves, that Old Republic had ample access to Bank of America's loan books, and that any missing paperwork has "nothing to do" with the claims.

For more, see Bank of America sues its insurance provider over foreclosure claims.

Out-Of-Control, Rubber-Stamping Jacksonville Judge Featured In Recent Column

In a recent story in Rolling Stone, columnist Matt Taibbi writes about the foreclosure rocket docket in Jacksonville, Florida, and describes his experience observing one hour of court proceedings in one such docket presided over by Judge A.C. Soud.

Mr. Taibbi starts by observing that the rocket docket wasn't created to investigate any of the alleged fraudulent conduct underlying the making and subsequent securitization of the home mortgages that's led to the current mess, but that, according to him:

• It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork.

He addresses the "public" nature of such proceedings in the following excerpt:

• The hearings, [local foreclosure defense attorneys] said, aren't exactly public. "The judges might give you a hard time about watching," one lawyer warned. "They're not exactly anxious for people to know about this stuff." Inwardly, I laughed at this — it sounded like typical activist paranoia. The notion that a judge would try to prevent any citizen, much less a member of the media, from watching an open civil hearing sounded ridiculous. [*$%&!]-up as everyone knows the state of Florida is, it couldn't be that bad. It isn't Indonesia. Right?
  
  Well, not quite. When I went to sit in on Judge Soud's courtroom in downtown Jacksonville, I was treated to an intimate, and at times breathtaking, education in the horror of the foreclosure crisis, which is rapidly emerging as the even scarier sequel to the financial meltdown of 2008: Invasion of the Home Snatchers II.

Judge Soud, described as a clueless, out-of-control, robo-rubber-stamper who reportedly "told a local newspaper that his goal is to resolve 25 cases per hour" (Taibbi observes that "His Honor could well be throwing one ass on the street every 2.4 minutes") does not come out unscathed in this column.

For the column (sprinkled with a few "f-bombs" and other equally indelicate "terms of art"), see Matt Taibbi: Courts Helping Banks Screw Over Homeowners (Retired judges are rushing through complex cases to speed foreclosures in Florida).

Another Process Server (& Rubber-Stamping Judge's) Screw-Up, Another Void Judgment Vacated On Appeal; Foreclosed Homeowner Stalls Getting The Boot

A recent ruling by an Arizona appeals court again illustrates how a sloppy (or possibly corrupt) process server can submarine a legal action, even after a court judgment has already been granted.

The case involved an attempt by a purchaser at a foreclosure sale to boot an ex-homeowner out of a home that was auctioned off at the public sale. In serving the ex-homeowner with notice of a forcible detainer action to oust him from the property, the process server improperly attempted service of process using the "post & mail" method of service (also known by some as "nail & mail").

Despite this screw-up, the lower court judge compounded the problem by approving the use of the improper method, which required this appeal, resulting in the proper vacating of the lower court judgment.(1)

Although this ruling involved an ex-homeowner's attempt to dodge the boot after a foreclosure sale took place (as opposed to an attempt to vacate the foreclosure sale itself), it should nevertheless serve as a reminder to all those now-foreclosed, ex-homeowners in judicial foreclosure states wanting to reclaim possession of their homes to review (or have an attorney review) the affidavits of service filed by process servers in their cases to see if they committed a screw-up (or engaged in corruption) that is fatal to the foreclosure judgment, and warranting a vacating (voiding, setting aside) thereof.(2)

For the ruling, see Arizona Real Estate Inv., Inc. v. Schrader, No. 1 CA-CV 10-0038 (Az. Ct. of App. Div. 1, November 9, 2010).

(1) According to the appeals court ruling, the lower court has the authority under Arizona statute to authorize an alternative method of service when attempting service by the statutorily-mandated method proves "impracticable." Regarding said "impracticability" in this case, the appeals court ruled (at page 6, ¶¶ 11-12) (bold text is my emphasis, not in the original text; link to cited case may require free registration with FindLaw.com):

• The record here does not establish impracticability. The process server’s affidavit is silent as to whether he made more than one attempt to serve Schrader, who still resided in the home. The affidavit includes no facts attesting to any impediments to or evasion of personal service. See Barlage v. Valentine, 210 Ariz. 270, 273, ¶¶ 6-8, 110 P.3d 371, 374 (App. 2005) (affidavit of due diligence was inadequate where the affidavit merely asserted that a due diligence effort had been made without setting forth any facts showing such an effort). The process server did not testify.

• Nothing in this record establishes the "impracticability" that might justify alternative service under Rule 4.1(m). The superior court commented on "the need to make speedy and quick determinations of forcible detainer actions." Although this is a legitimate concern, it cannot be the sole basis for establishing impracticability.

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

In the above-referenced Barlage v. Valentine case, the Arizona appeals court noted the following universally-accepted truth regarding the proper service of process in a legal proceeding (bold text is my emphasis, not in the original text):

• Proper, effective service on a defendant is a prerequisite to a court's exercising personal jurisdiction over the defendant. Koven v. Saberdyne Sys., Inc., 128 Ariz. 318, 321, 625 P.2d 907, 910 (App.1980) (“Proper service of process is essential for the court to have jurisdiction over the defendant.”);  Kadota v. Hosogai, 125 Ariz. 131, 134, 608 P.2d 68, 71 (App.1980) (“[T]he law is clear that a judgment is void if the trial court did not have jurisdiction because of a lack of proper service.”).

(2) For three New York cases that illustrate how the improper use of the 'nail & mail' method of process serving can submarine a foreclosure action, see:

• Citigroup Global Markets Realty Corp. v. Bowling, 25 Misc 3d 1244; 2009 NY Slip OP 52567U (NY Sup. Ct. Kings County, December 18, 2009) (motion to proceed with foreclosure denied where process server failed to exercise due diligence in attempts to track down homeowner),
• HSBC Bank USA, N.A. v Fleurimond, 2008 NY Slip Op 52320(U) (NY Sup Ct, Kings County, November 18, 2008) (foreclosure sale set aside),
• Countrywide Home Loans, Inc. v Bouvin, 09/28/2009, 2009 NYSlipOp 32670(U) (NY Sup. Ct. Suffolk County, September 28, 2009): The court made this point regarding the exercise of due diligence by the process server when using the "nail & mail" method:
  
  The "due diligence" portion of the plaintiffs affidavit of service indicates that prior to the "nail and mail" service, the process server attempted to deliver the summons and complaint to the defendant(s) on 4/30/08 at 5:30 pm, on 5/17/08 at 10:30 am. The "nailing" was then accomplished on 6/7/08, with the '"mailing" being effectuated several days later. There is no indication that the process server attempted to inquire about or serve the defendant(s) at a place of employment. The "nail and mail" method of service pursuant to CPLR §308(4) may be used only where personal service under CPLR §308(1) and (2) cannot be made with "due diligence" (Lemberger v Khan, 18 AD3d 447, 794 NYS2d 416 [2d Dept 2005]). The due diligence requirement of CPLR §308(4) must be strictly observed, given the reduced likelihood that a summons served pursuant to that section will be received (McSorley v Spear, 50 AD3d 6152,854NYS2d 759 [2d Dept 2008]; Estate of Waterman v Jones, 46 AD3d 63, 843 NYS2d 462 [2d Dept 2007]; O'Connell v Post, 27 AD3d 630, 811 NYS2d 441 [2d Dept 2006]; Scott v Knoblock, 204 AD2d 299, 611 NYS2d 265 [2d Dept 1994]; Kaszovitz v Weiszman, 110 AD2d 117, 493 NYS2d 335 [2d Dept 1985]).
  
  What constitutes due diligence is determined on a case-by-case basis, focusing not on the quantity of the attempts at personal delivery, but on their quality (McSorley v Spear, supra; Estate of Waterman v Jones, supra). Attempting to serve a defendant at his or her residence without showing that there was a genuine inquiry about the defendant's whereabouts and place of employment is fatal to a finding of due diligence as required by CPLR §308(4) (Id.; see also, Sanders v Elie, 29 AD3d 773, 816 NYS2d 509 [2d Dept 2006]). Further, absent any evidence that the process server attempted to determine that the address where service was attempted was, in fact, the actual dwelling or usual place of abode of the defendant(s), such as by searching telephone listings or making inquiries of neighbors, the requirement of CPLR §308(4), that service under CPLR §308(1) and (2) first be attempted with "due diligence," is not met (Kurlander v A Big Stam. Corp., 267 AD2d 209, 699 NYS2d 453 [2d Dept 1999]).
  
  Since the plaintiff has failed to meet the ''due diligence" requirement for "nail and mail" service under CPLR §308(4), jurisdiction over the defendant has not been established and the plaintiffs motion must be denied (Sanders v Elie, supra; Earle v Valente, 302 AD2d 353, 754 NYS2d 364 [2d Dept 2003]; Annis v Long, 298 AD2d 340,751 NYS2d 370 [2d Dept 2002]) Earle v Valente, supra; Annis v Long, supra).

For other examples of process server screw-ups involving a failure to exercise due diligence to locate defendants in foreclosure actions or ascertain the identity of all occupants of premises under foreclosure, see:

• Lack Of Diligence Means Another Process Server Screw-Up, Another Void Foreclosure (improper use of service by publication);
• NY Court Denies Tenant Eviction After Foreclosure Sale; Failure To Name, Serve All Occupants As Parties In Foreclosure Action Fatal To Removal Attempt (failure to serve all occupants, including 12 year old child);
• Failure To Name Tenant In Home Foreclosure Action Thwarts Subsequent Eviction Attempt; Use Of "John Doe" Alias Ruled Ineffective Absent Due Diligence (improperly identifying unknown tenant as "John Doe" without first establishing that a genuine effort was made to ascertain the name of the party but has been unable to do so).

Ailing 90-Year Old Allegedly Left Homeless By Predatory Loan Fights Back

In Memphis, Tennessee, MyFoxMemphis Channel 13 reports:

• [M]emphis and Shelby County are suing Wells Fargo, alleging the mortgage company preyed on Mid-South African Americans for loans they could not afford. The company says its innocent and the lawsuit is still pending.

• 90 year old Annie Auston is one of those people who are out on the streets because of foreclosure. It’s a case the non-profit "Fair Housing Center Of Memphis" could not turn down. The attorney for Ms. Auston says it is one of the worst cases of predatory loans she has ever seen and she's filed lawsuit to try to get Ms. Auston's home back.

• 90-year old Annie Auston lived in her Cordova home since her sons built it for her in 1978. It replaced their childhood home built on the property; on land that had been in the family since the 1920's. But a few years ago, Ms. Auston found herself out on the street. "She couldn't believe what had been built for her by her sons, what had been in her family since 1926, that she had accidentally lost it. She had become homeless at that point," said Sapna Raj, attorney Fair Housing Center.

• Raj is the attorney representing Ms. Auston in a lawsuit against Home Realty of Memphis, the lender who foreclosed on Ms. Auston's home. Raj works for the non-profit Fair Housing Center, a division of Memphis Area Legal Services.(1) After finding herself homeless, Ms. Auston moved in with her daughter in Georgia, where she has been in and out of the hospital ever since.

***

• Just under a year from going to Home Realty for a car loan, Auston found all of her possessions from the house she'd spent the last three decades of her life, put in the front yard. Raj says most were stolen when Auston was put out on the street. "If you think you have an auto loan and you lose your house instead and you're suddenly homeless you could imagine what that's like," said Raj.

• In July of 2008, Raj and the Fair Housing Center filed a lawsuit against Home Realty of Memphis and the company's owner, Charles Moore. Moore did not respond to repeated calls to his business for comment. Moore's attorney, Dan Brown, also didn't respond to repeated calls for an interview.

For more, see 90-Year Old Woman Homeless, Sues Predatory Lenders (Investigation Reveals Company's Past Troubles).

(1) According to their website, Memphis Area Legal Services, Inc. is a non-profit law firm that is the principal provider of civil legal assistance to low-income individuals and the elderly in Southwestern Tennessee, anchored by Memphis, Shelby County, with three other counties, Tipton, Fayette, and Lauderdale, comprising its four-county service area. Their case acceptance priorities include issues relating to Family and Children; Housing and Real Property; Consumer Issues, Individual and Civil Rights; Health and Income Maintenance and Seniors.

Moldy Wall, Missing Owner, Faulty Paperwork Leading To F'closure Delays For Abandoned Condo Unit Leave Ailing Neighbor "Living Next Door To Hell"

In Boynton Beach, Florida, The Palm Beach Post reports:

• The mold blooming in unit L-107 at Venetian Terrace is a sickening black wallpaper of flowery-looking growths.Like thousands of homes throughout Palm Beach County, it is in foreclosure, abandoned and caught in a labyrinthine legal system that has left it to putrefy with a leaky air conditioner that leaves dark puddles in the carpet and warping drywall.

• Attorneys say L-107 is a prime example of everything that has gone wrong in real estate: a no-money-down loan on a condo now worth a fraction of its 2007 purchase price, a mortgage that went bad almost immediately, a borrower who walked away, a lost note, unclear ownership rights, and robo-signed documents handled by a foreclosure mill.

***

• But unlike the neighbor of a single-family home that can sit vacant with minor bother, June McCallion lives next door to L-107 and says she is ill from the musty odors invading her home."I've been living next door to hell," said McCallion, 64, who suffers from a degenerative neurological disorder called Charcot-Marie-Tooth disease and now has respiratory problems exacerbated by the mold. "I would please just like someone to fix this."

• But who? No one is taking responsibility for the decaying condo at Venetian Terrace, and the recent stops and starts in foreclosures as banks review and resubmit flawed court paperwork may allow L-107 to fester indefinitely.

***

• Chase Home Finance, which filed for foreclosure on the unit in April 2008, has been accruing a $250-a-day fine from the city since Sept. 30, when it skipped a code enforcement hearing and failed to clean up the unit.

For more, see Foreclosed Boynton Beach condo causing moldy misery for neighbor.

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:

• Michael D. Carlson recently filed a motion in Pinellas Circuit Court seeking to undo a foreclosure judgment against him from 2008, saying he never knew about the legal proceeding until it was over. As part of the motion, the 42-year-old divorced father of three also wants his home in Dunedin back.

• 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:

• Albice - Opening Brief,
• Albice - Respondent's Brief,
• Albice - Reply Brief.

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.

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:

• transcript of Seck's deposition in the above-referenced Palm Beach County, Florida foreclosure case,
• here for a Motion For Sanction Of Dismissal With Prejudice filed in the above-referenced Palm Beach County, Florida foreclosure case,
• here for links to other posts on Erica Johnson-Seck,

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.

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:

• Bryan Bly Deposition Part 1,
• Bryan Bly Deposition Part 2,
• Dhurata Doko Deposition Part 1,
• Dhurata Doko Deposition Part 2.

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

• Tampa Bay companies help lenders transfer home loans, foreclose (Despite the turmoil in the lending industry, Bryan Bly seems to have no trouble finding a job),

• When 'Bryan J. Bly' became 'NB,' did he know what he was signing?

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.

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:

• Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990),
• Florida Patient's Compensation v. Rowe, 472 So.2d 1145 (Fla. 1985).

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.

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].

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• 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.

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• 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).