Thursday, February 24, 2011

Fee Gouging Allegations At Center Of Lawsuit Against Loan Servicer; Multiple Late Charges For Single Late Payment Among Sleazy Practices: Complaint

In Winfield, West Virginia, The West Virginia Record reports:
  • A Putnam County man is suing Nationstar Mortgage after he claims it unlawfully charged him law payment fees that exceeded the maximum amount set forth in his loan agreement.

  • In December 2003, David J. Triplett obtained a mortgage loan from GMAC Mortgage Corporation and in December 2008, the defendant began servicing the loan, according to a complaint filed Feb. 15 in Putnam Circuit Court.

  • Triplett claims he was required to make monthly payments of $539.60 and at some point he fell behind on his payments and was charged $26.98 or more in late fees each month. The late fees exceeded the $5 maximum set forth in Triplett's loan agreement, according to the suit.

  • Triplett claims Nationstar also has a regular practice of unlawfully assessing multiple late fees for a single late payment. He claims before February 2010, he had fallen behind on his loan payments, but that month he timely made a full loan payment to the defendant.

  • Rather than apply the payment to the loan installment due in February, the defendant applied the payment to the installment due in January and then charged Triplett a late fee for both months, even though he was not late in making the February payment, according to the suit.

  • Triplett claims Nationstar has been advised repeatedly that he is being represented by counsel, but has continued to contact him directly and demand payment. He claims the defendant has also told him to fire his attorney.

For the story, see Putnam man sues mortgage company over late fees.

Appeals Court Reinstates 'Fair Debt' Suit Accusing Foreclosure Mill Of Attempted Fee Gouging In Mortgage Payoff Letters Sent To Homeowner's Attorney

A Federal Court of Appeals just reinstated a lawsuit filed by a New Jersey homeowner seeking class action status that accuses the law firm representing a foreclosing lender of sending the homeowner's attorney mortgage payoff letters that included charges that, according to the lawsuit, were unauthorized by the loan agreement and were otherwise not allowed by law.

In reinstating the lawsuit, the appeals court referred to a ruling it issued last month in which it addressed this same question of law. In Allen v. LaSalle Bank, N.A., ___ F.3d ____, No. 09-1466, 2011 WL 94420 (3d Cir. Jan 12, 2011), it decided that a communication from a debt collector to a consumer's attorney is actionable under § 1692f(1) of the Fair Debt Collection Practices Act ("FDCPA"). One of the defendants in the Allen case is the same foreclosure mill targeted in the current case (Fein, Such, Kahn, And Shepard, P.C.).(1)

The lower court in the current case ruled that the letters from the bank's attorney did not form the basis for a FDCPA lawsuit. However, based on its earlier Allen decision, the 3rd Circuit Court of Appeals disagreed and, accordingly, vacated the ruling and remanded the case back to the lower court for further proceedings.

For the recent ruling of the appeals court, see Ogbin v. Fein, Such, Kahn, And Shepard, P.C., No. 09-2829 (3d Cir. February 22, 2011) (unpublished).

Representing the homeowner in this case, as well as the homeowner in the Allen case, is Lewis G. Adler, Woodbury, New Jersey.

(1) See Federal Appeals Court Reinstates 85-Year Old Widow's 'Fair Debt' Suit Alleging Illegal Fee Gouging After Missing Final Payment On 30-Year Mortgage.

Woman Accused Of Running $50M Mortgage Fraud, Rent-To-Own Racket Extradited Back To Virginia After Fleeing To Turkey; Most Homes Ended In Foreclosure

In Loudon County, Virginia, the Washington Examiner reports:
  • An Ashburn woman who fled the United States amid accusations of running a $50 million mortgage fraud scheme has been extradited back to Virginia to face charges of money laundering and making false statements. Diane Atari, 43, is accused of inflating her clients' credit scores and incomes in order to qualify them for homes they could not afford, causing them to go into foreclosure, according to the Loudoun County Sheriff's Office.

  • The Virginia Attorney General's Office and Loudoun authorities say Atari pocketed more than $1 million from the scheme, and the total loss on the fraudulent mortgages is estimated at $50 million.

  • Authorities say Atari fled the country after she was indicted in July 2009. She was apprehended in Turkey in October 2009 and had been awaiting extradition in a Turkish prison until she was flown back to the United States on Friday night. Atari made an initial court appearance Tuesday.

***

  • According to Loudoun authorities, Atari owned and operated two businesses in the county, ACR Consulting Co. and Atari Management Co. Through those, she offered rent-to-own services for people who wanted to buy a home but didn't have enough income or strong enough credit scores to qualify for a mortgage. [...] Atari received commissions when properties sold and fees for the credit repair services, the sheriff's office said. The office said most of the homes ended up in foreclosure.

For the story, see Va. woman accused in $50m mortgage fraud scheme extradited.

GC Tagged For Grand Larceny In Alleged $50K Scam; DA Invokes NYS Lien Law, Treats Payments Pocketed For Home Improvements As Trust Fund Ripoff

From the Office of the Rockland County, New York District Attorney:
  • Rockland County District Attorney Thomas P. Zugibe [] announced that John J. DiGiacomo (DOB 08/27/58) of [...] New City, New York has been charged with one count of Grand Larceny in the Third Degree, a class "D" Felony. DiGiacomo, a general contractor who conducted business under the company name of "Olivia Rose Landscaping Contractors, Inc." is alleged to have stolen $50,000 from a homeowner with whom he had contracted to perform approximately $134,000 worth of home renovations.

***

  • According to the charges, between October and December, 2008, the victim contracted with DiGiacomo to perform major renovations on his home. The customer gave the defendant more than $50,000 as a down payment for the project. District Attorney Zugibe said that DiGiacomo and Olivia Rose Landscaping performed minimal work for the victim before abandoning the uncompleted project. The victim was forced to hire new contractors to finish the project.

  • The defendant will be prosecuted for Grand Larceny through application of the New York State Lien Law, which mandates that, upon acceptance of funds in connection with a contract for improvement of real property or home improvement, those funds become a trust, which can be used only to pay for costs incurred in the performance of that homeowner’s project.

  • The use of that money for any other purpose is a larceny under the Lien Law. Further, the contractor must maintain separate ledgers for each job for which he has contracted.

  • DiGiacomo is accused of walking away from the job and failing to provide an accounting or return of the victim’s money.

For the Rockland County DA press release, see Rockland County Home Improvement Contractor Charged In $50,000 Customer Swindle.

Cops Pinch Former Councilman On Deed Theft Charges; Allegedly Forged & Notarized Title Conveyance To Unwitting Owners' Property

In Russell County, Alabama, the Montgomery Advertiser reports:
  • Authorities say a longtime member of the Phenix City Council has turned himself in to authorities on for­gery and perjury charges. WTVM-TV reported that 70-year-old Arthur Sumbry Sr. turned himself in to the Russell County Sheriff's Office Friday after being indicted by a grand jury.

  • Russell County Sheriff Heath Taylor said the charges stem from an incident in 2008 when Sumbry was serving as a no­tary public. Authorities said Sumbry forged signatures on a deed to a house that he notarized and lat­er lied about it in court under oath. Taylor said the people whose names were forged real­ized they never signed the doc­ument.

Source: Former Phenix City councilman charged with forgery, perjury.

Wednesday, February 23, 2011

California Appeals Court: Homeowner Can't File Lawsuit To Stop Foreclosure Process Based On Claim That Noteholder Did Not Authorize It

In Southern California, Metropolitan News Enterprise reports:
  • A defaulting mortgagee may not bring a declaratory action challenging the noteholder’s right to initiate a non-judicial foreclosure through a nominee, the Fourth District Court of Appeal ruled Friday. Div. One affirmed a San Diego Superior Court judge’s ruling dismissing an action against Countrywide Home Loans, Inc., Mortgage Electronic Registration Systems, Inc., and ReconTrust Company, N.A.

***

  • Gomes sued in May 2009, accusing the defendants of “wrongful initiation of foreclosure” and violation of consumer protection laws. He asserted on information and belief that the current owner of the note did not authorize MERS to proceed with the foreclosure, and argued that the nonjudicial foreclosure statute does not preclude a prior judicial determination as to whether the party initiating foreclosure has legal authorization to do so. He asked for damages, a declaration of his right to challenge the nonjudicial foreclosure proceeding, and rescission of the notice of default.

  • Judge Steven R. Denton sustained demurrers brought on behalf of all defendants. Gomes appealed, solely with regard to his causes of action seeking damages for wrongful foreclosure and declaratory relief.

  • The Court of Appeal affirmed, saying there was no legal basis for a pre-foreclosure action, and that even if there was, the defendants would prevail because Gomes agreed, by executing the deed of trust, that MERS could initiate foreclosure if he defaulted.

  • Justice Joan Irion, writing for the appellate court, said allowing suits such as Gomes’ would “interject the courts into [the Civil Code’s] comprehensive nonjudicial scheme” governing foreclosures, something notpermitted or contemplatedby the statutory language.

  • Sec. 2924(a)(1), which expressly permits a “trustee, mortgagee, or beneficiary, or any of their authorized agents” to initiate foreclosure, she noted, makes no provision for a private action to determine whether the initiating party is so authorized.

  • The recognition of the right to bring a lawsuit to determine a nominee’s authorization to proceed with foreclosure on behalf of the noteholder would fundamentally undermine the nonjudicial nature of the process and introduce the possibility of lawsuits filed solely for the purpose of delaying valid foreclosures,” the justice wrote.

For the story, see C.A. Rejects Challenge to Nonjudicial Foreclosure Proceeding (Homeowner Cannot Use Court to Stop Process Based on Claim That Noteholder Did Not Authorize It—Panel).

For the ruling, see Gomes v. Countrywide Home Loans, Inc., (2011) ___ Cal.App.4th ___. (Certified for Publication, February 18, 2011) (when link expires, TRY HERE).

Wells Fargo Dodges Sheriff's Sale Of Its Office Furniture As Bank, Judgment-Holding Philadelphia Homeowner Resolve Legal Dispute

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:
  • Wells Fargo, the banking Goliath, apparently met its David in Philadelphia music promoter Patrick Rodgers. On Monday, Rodgers declared victory and put away his sling. When we first met Rodgers a week ago, he was a man with a complaint about Wells Fargo Home Mortgage. He'd even volunteered his own headline: "Philadelphia homeowner 'forecloses' on Wells Fargo."

  • It was a slight exaggeration, but Rodgers had indeed taken Wells Fargo to Municipal Court and won a $1,000 default judgment when the mighty bank didn't bother to have anyone show up. When Wells Fargo didn't pay, Rodgers obtained a sheriff's levy to enforce the judgment.

  • The result was a "Sheriff Sale" poster almost guaranteed to make his story go viral on the Internet: To satisfy the judgment, furniture and other contents of a Wells Fargo office on North Delaware Avenue were scheduled for sale next month.

For more, see Consumer 11.0: Borrower-bank dispute is settled; borrower wins.

Miami Trial Judge Puts Squeeze On Foot-Dragging Lenders With Old Foreclosure Cases That Clutter Judicial System

Buried in a recent Bloomberg story is this excerpt on Miami trial judge Israel Reyes:
  • Judge Israel Reyes is giving the biggest U.S. banks a choice: Wrap up the home foreclosure cases clogging his Miami court, or dismiss them and walk away. Most are walking away, Bloomberg News’ David McLaughlin reports.

  • Listen, it’s either settlement or trial today. That’s it,” Reyes, 51, a former homicide detective, said two weeks ago to one lawyer who sought an extension after the homeowner received a temporary loan modification. “This case is over a year old.”

  • Reyes, a judge for Florida’s 11th Judicial Circuit, is forcing banks to take their cases to trial to clear his backlog of almost 3,000 foreclosures. Instead of moving ahead, the companies are backing down. They’re dismissing their own cases or not showing up to trial because they’re not prepared or, according to lawyers for homeowners, they can’t come up with the evidence required to seize the properties.

Source: Cop-Turned-Judge Challenges Banks to Clear Foreclosure Backlog.

Lawsuit: Foreclosure Defense Racket Did Nothing But File An "Ill-Assembled Compilation Of Plagiarized Pleadings" That Operators Have "Bastardized"

In Marietta, Georgia, Courthouse News Service reports:
  • A homeowner claims Home Savers USA and the two people who run it defrauded him of $2,000 and one of them forged his name on an "utterly incoherent" federal complaint, which they promised would save his home from foreclosure. But neither Rawlins Hinton, Helen Hinton nor anyone else affiliated with Home Savers USA is an attorney, and the documents they filed were "nonsensical," the homeowner says.(1)

  • Donald Coleman sued the Hintons and their company for fraud, forgery, negligence, and practicing law without a license, in Cobb County Superior Court.

For more, see 'Home Savers USA' is Bogus, Client Says.

For the lawsuit, see Coleman v. Home Savers Inc., et al.

(1) According to the lawsuit:

  • "Defendants' entire business model and operation is founded on the idea of defrauding unwitting homeowners, including plaintiff, of significant sums of money for purporting to do legal work on said homeowners' behalf, when in fact the 'legal work' being done by defendants is simply the filing of an ill-assembled compilation of plagiarized pleadings which defendants bastardized in order to defraud banks of monies rightfully owed and create undue delay and expense to all parties involved in the lawsuits filed by defendants."

Stress, Nerves, Depression Caused By Foreclosing On Friends, Neighbors Forces Metro Atlanta Tax Commissioner Into Premature Retirement

In Cherokee County, Georgia, The Atlanta Journal Constitution reports:
  • Acid reflux gnawed at David Fields’ gut. Sleep came in fits. The waking hours were worse, as he battled depression with medications. Inevitably, the antidepressants failed to temper the toll taken by a job he once loved and now feared would kill him: Cherokee County tax commissioner.

  • My doctor told me, ‘If you don’t quit, you’re going to have a stroke or heart attack,' ” Fields said Monday, explaining why, after 28 years, he resigned from his post with two years left on his term.

  • Fields, 62, became a poignant reminder of the housing bust’s impact on thousands of lives across metro Atlanta, where almost 100,000 properties were foreclosed on in 2010. Property owners are not the only ones hurt; so are people, such as Fields, at the end of a ruinous process set in motion by recession.

  • I was foreclosing on the homes of people I have known my entire life,” Fields said Monday, two weeks after he walked away from his job but still carrying its burden. “I tried to do all I could to help them. But there’s only so much you can do. Your job is to collect taxes.”

***

  • Fields said he didn't feel he could do the job he was elected to do. “I felt like I was letting everybody down," he said, "the people who were losing their homes and the county I was supposed to represent."

  • Doctors, specialists, did all kinds of tests on Fields. “They checked the lining of my stomach, and it was so irritated, they did biopsies," he said. "They concluded it was a combination of stress, nerves and depression. My job was getting to me.”

  • Too many “hardworking people” he’d known his entire life, out of work and out of savings, were asking for more time to pay their property taxes, he said. “There was nothing I could do.”

For the story, see Cherokee tax chief quits to avoid foreclosing on more friends.

Tuesday, February 22, 2011

Ex-Foreclosure King's Orphaned Cases Clog Courts, Cause Chaos, Lead To Defective Public Sales

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Nearly four months after the collapse of the Law Offices of David J. Stern, orphaned foreclosure cases still clutter the courts, causing auction uncertainty and more work for an already overwhelmed system.

  • Between Jan. 1 and Feb. 17, 74 homes were sold to the highest bidder during Palm Beach County's daily online foreclosure auctions with no one representing the bank. All but three of the cases were at some point handled by Stern's office, which lost a substantial amount of its foreclosure work in the fall following allegations that cases were mishandled.

  • Many of the auctioned homes were also sold without the required advertising. By law, the auction must be advertised once a week for two consecutive weeks. With the firing of the Fort Lauderdale-based law firm Ben-Ezra & Katz this month by mortgage giant Fannie Mae, more cases may go astray. "The possibility is there," said Palm Beach County Clerk of Court Sharon Bock, whose office oversees the county's auction system.

  • In auctions where the banks are not represented, it's usually an investor who places the winning bid. They may believe they're getting a great deal because the homes often sell for a fraction of the foreclosure judgment.

  • On Jan. 5, a Jupiter home with a $817,969 judgment against it, and valued by the Palm Beach County Property Appraiser at $337,603, was sold to an investor for $30,400. But more often than not, the buyer finds out that the sale wasn't advertised properly and the clerk can't issue a certificate of sale. In the Jupiter case, the court docket shows no proof of publication filed before the sale.

  • When that happens, the buyer has to petition the court to set aside the sale, which goes to a hearing, and then the clerk issues a refund. Bock estimates it takes one hour to handle each case where a refund must be issued. With 74 cases already this year, that's nearly two weeks of work for a full-time employee.

***

  • It's not always the investor who loses out. On Jan. 5, a Lake Worth home with a $125,437 judgment against it was bought by an investor for $30,200. The bank asked the court to vacate the sale because it wasn't represented at auction and "the third party bid of $30,200 is grossly inadequate in light of the final judgment amount."

  • The judge denied the request, allowing the investor to keep the home. "If anyone has a bone to pick, it would be the plaintiffs," Bock said about the auction problems.

For more, see Foreclosed homes from collapsed law firm still clogging Palm Beach County courts.

Mediators: Lenders, Foreclosure Mills Stifle System By Pressuring Loan Modification Negotiations To End In Stalemate

The Palm Beach Post reports:
  • Florida's Supreme Court sought a foreclosure lifeline in forcing banks and borrowers to mediation. It was hoped a judicial referee could help unclog court dockets and free struggling borrowers.

  • But in documents obtained by The Palm Beach Post and described in a recent court order, mediators complain lenders and their attorneys are stifling the system by pressuring negotiations to end in a stalemate.

  • In some cases, mediators report that deals were struck for trial payment plans or to seek a loan modification, but that banks or their attorneys asked for the meeting to be recorded as an impasse. The motive for a deadlock, homeowner advocates say, is money. Declaring a different outcome stalls the process and could mean a return to mediation if an agreement falls through. At the same time, several of the state's large foreclosure law firms also run title companies, which can pick up business when a home is repossessed.

For more, see Foreclosure mediators: Banks pushed us to fail.

Houston Woman Accuses Duo Of Filing Forged Deed In Attempt To Steal Her Property

In Houston, Texas, Ultimate Aldine reports:
  • A woman is suing after, she says, two men conspired to file a forged deed with the courts. Julie Fanner filed a lawsuit on Feb. 14 in the Harris County District Court against Larry Jackson of Aldine and Hosea Harris Jr., alleging fraudulent claim against real property and conspiracy to defraud.

  • Fanner says that the defendants unlawfully conspired to forge and to file a deed regarding her property, located at 207 E. 38th St. in Houston. According to the brief, the deed filed by the defendants is void and should be set aside, clearing title for Fanner.

  • Fanner is seeking a decree quieting title in her name, actual, punitive and statutory damages, as well as attorney’s fees and court costs. She is being represented in the case by Pasadena attorney Jason Castaneda. Harris County District Court Case No. 2011-09369.

Source: Aldine resident named in cloudy title suit.

BofA Calls Off Foreclosure Of Atlanta Woman's Home As BofA Caves To Pressure From Local Media

In Atlanta, Georgia, WSB-TV Channel 2 reports:
  • Channel 2 Action News got results for a southeast Atlanta widow threatened with foreclosure even though her mortgage was nearly paid off. "They do need to call me back really quickly because like I said, Channel 2 is already here," said housing advocate Simone Griffin. She was on the phone with a vice president of Bank of America.

  • In a subsequent call, Griffin learned 64-year-old Mary Dixon's home would not be put up for sale March 1 after all. "I pray God make a way, … don't let me lose my home," Dixon said prior to the news that her home wouldn’t be put up for foreclosure.

  • Channel 2 Action News consumer investigator Jim Strickland joined counselors from HomeFree-USA, digging through paperwork on Dixon's application for a reverse mortgage. Since the program would help her turn her equity into cash, Dixon said the bank advised not to bother making any more payments. "I didn't hear anything, so I figured I'd better see what's going on with my house," she recalled. Dixon said she found out months later that the house had declined in value and that the deal was off.

  • That's when she tried to make the payments the bank had advised her to skip. "I got the money to pay my note up, but they wouldn't let me pay my note up," Dixon said. Instead, foreclosure notices came.

  • With fees and penalties, her balance of $13,300 was up to more than $16,000 by December. Weeks later, a second letter from a foreclosure attorney placed the balance at more than $19,000. "To me, they are trying to take away from me, trying to take my house," Dixon said. Strickland found a receipt for the last payment Dixon made, and overheard the bank vice president admit they had no record of it.

  • Moments later, the bank official vowed to stop the sale. Dixon's confident it will get straightened out. "I'm not nervous about it because if it's wrong, it's wrong," she said. Messages for the loan officer and bank representatives were not returned.

Source: Foreclosure Halted After Channel 2 Gets Involved.

Monday, February 21, 2011

"Revolving Door" Between Wall Street & Government Regulators; Are Suit Settlements Management's Way Of Buying Its Way Off Cheap From Victims' Pockets?

Columnist Matt Taibbi writes in Rolling Stone:
  • Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer. "Everything's [*]ucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."

  • I put down my notebook. "Just that?" "That's right," he said, signaling to the waitress for the check. "Everything's [*]ucked up, and nobody goes to jail. You can end the piece right there."

  • Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.

***

  • [F]ederal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing.

  • To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. "If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims."(1)

For more, see Why Isn't Wall Street in Jail? (Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them) (go here for the entire story on one web page).

Go here for a recent MSNBC interview with Matt Taibbi about his recent column.

Thanks to Harold for the heads-up on this story.

(1) One notable excerpt from the column:

  • "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bull[*]hit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once." But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is [*]ucked up.

Pro Se Kentucky Homeowner Scores Appeals Court Reversal Of Rubber-Stamped Foreclosure Judgment As Trial Judge Proves Unable To Apply Basic State Law

In a seemingly simple case that a lower court inexplicably screwed up, the Kentucky Court of Appeals found it necessary to vacate and remand Henry County Circuit Court Judge Karen Conrad's ruling allowing for the entry of a judgment in a foreclosure action, despite the obvious fact that the foreclosing plaintiff, by failing to acquire an interest in the loan (by assignment) until after the action was filed, did not have standing to bring the action under Kentucky law. Along with the remand, Judge Conrad has been given instructions to remove this case from her docket.

The fact that the appeals court's legal analysis of the case before it was only three paragraphs long(1) and was issued by the 3-judge panel as an unpublished ruling only highlights the fact that there is apparently nothing particularly precedent-setting in this ruling. However, the ruling does merit attention in that it shines some light on another trial judge getting snagged screwing over a pro se homeowner battling to save his home from foreclosure, apparently without regard by the judge to the existing case law and procedural rules in the state.

For the ruling, see Augenstein v. Deutsche National Trust Co., No. 2009-CA-000058-MR (Ky. App. February 18, 2011) (unpublished).

Thanks to Glenn Augenstein for the heads-up on his successful appeal.

(1) The court's 'short & sweet' analysis follows (bold text is my emphasis, not in the original text):
  • Glenn argues that the court erred by exercising particular case jurisdiction over this claim because Deutsche Bank did not have standing. He contends that the assignment of mortgage was not executed in favor of Deutsche Bank until after the complaint was filed. Thus, Glenn argues, that Deutsche Bank failed to show that it was the real party in interest at the time the action was commenced.

    CR 17.01 provides that “every action shall be prosecuted in the name of the real party in interest, but…an assignee for the benefit of creditors… may bring an action…” It follows that, where a cause of action has been assigned, the assignee becomes the real party in interest. See CR 17.01. However, “[i]n no event may an assignee maintain an action for any part of a claim which has not been assigned to him.” Works v. Winkle, 234 S.W.2d 312, 315 (Ky. App. 1950). A mere expectancy is not enough to establish standing, a party must prove apresent or substantial interest.” Plaza B.V. v. Stephens, 913 S.W.2d 319, 322 (Ky. 1996) (quoting Ashland v. Ashland F.O.P. No.3, Inc., 888 S.W.2d 667 (Ky. 1994)).

    In this case, the complaint was filed on December 17, 2007, but the assignment of mortgage was not executed until January 3, 2008. Thus, Deutsche Bank had no present interest when it filed its complaint and failed to take any steps to correct this. Allowing Deutsche Bank to commence this action at a time when it lacked standing impermissibly allowed litigation to commence based upon mere expectancy of an interest. See Plaza B.V., 913 S.W.2d at 322. Accordingly, the trial court erred when it did so; thus, it should not have entered summary judgment for Deutsche Bank. This issue being dispositive of the appeal, we decline to review the remainder of Glenn’s arguments.

    In light of our analysis, we vacate the entry of summary judgment because Deutsche Bank did not have standing to commence this action when it did. This matter is therefore remanded to the circuit court for the purpose of entering an order consistent with this opinion removing this case from its docket.

    ALL CONCUR.

Editor's Note: While it may be acceptable for the foreclosing entity to obtain the assignment after the case commences in some states, this apparently is not the case in Kentucky, based on this ruling.

Confusion Caused By Suspicious Deed Conveying Fractional Interests To Bankrupt People Recorded Day Before F'closure Enough To Void Subsequent Sale

In Fresno, California, The Fresno Bee reports:
  • A bankruptcy judge on Wednesday reversed the foreclosure of the landmark Security Bank building on Fresno's Fulton Mall, giving its owners more time to find a buyer or settle its debts. Judge Whitney Rimel agreed with the building's owners, Fresno Pacific Towers Inc., that the foreclosure by East West Bank was tainted by a forged deed of trust and proceedings in another bankruptcy case in Los Angeles.
  • Fresno Pacific Towers owes $5.2 million to East West Bank, and filed for bankruptcy on Jan. 18 to try to prevent the bank from foreclosing. But the bank held a foreclosure auction later that day for the 16-story, 86-year-old building. The bank was the only bidder, with an offer of $1.9 million. Within hours, the bank recorded a title change with the county.
  • Rimel's ruling will force East West Bank to reconvey the title back to the ownership group. In a statement Wednesday evening, building co-owner and manager Saundra King said she was grateful for the ruling.
***
  • Ravi Jain, an attorney for Fresno Pacific Towers Inc., said East West Bank received approval for the foreclosure from another bankruptcy court based on a forged second deed. That deed -- recorded in Fresno County -- assigned interest in the building to several parties who had filed for bankruptcy in Los Angeles last summer.
  • Fresno Pacific Towers president John E. King testified Wednesday that the signature on the deed was not his. He and his sister, Saundra King, both said they knew nothing about the Los Angeles bankruptcy case until after the building was foreclosed.
  • But there were earlier signs of trouble. East West Bank declared the building in default last summer, and a foreclosure sale was initially set for Nov. 18.
  • Saundra King testified that on Nov. 16, she hired a Southern California firm, ASND Inc., to try to delay the sale. She said she and her brother sought more time to find a buyer and settle their debt to East West Bank before the bank foreclosed. King said she paid ASND about $5,000 in advance.
  • On Nov. 17, a day after King hired ASND and a day before the auction, the forged deed was filed with the Fresno County Recorder's Office. The Nov. 18 auction was postponed, and an auctioneer said the delay was because of a bankruptcy filing. According to Jain, the auctioneer was referring to the Los Angeles bankruptcy case.
  • Saundra King said she didn't learn about the forged deed until later in November. But she said "it didn't click that there would be a connection" between the document and ASND. She said she soon reported the forged deed to federal law-enforcement investigators.
  • A second auction date in December was also canceled, again because of a bankruptcy which King said she knew nothing about. The Kings said it wasn't until January, after the bank took back the building, that they learned that there was a bankruptcy case in Los Angeles and a court order allowing East West Bank to foreclose.
  • East West Bank's attorney, Thomas Geher, told the court it was obvious that ASND acted as an agent for the Kings and filed the fraudulent deed as a stalling tactic. "To believe ASND is not behind this is naive," Geher said. "The deed of trust was filed when the contract was signed," he added. "That's no coincidence. ... The debtor put all this in motion."
  • Rimel, however, gave the benefit of the doubt to the Kings and said she "cannot conclude fraudulent intent by Mr. or Ms. King." She said the Kings' contract with ASND, resembles "foreclosure prevention schemes ... that have taken advantage of hundreds of thousands of people."(1) Because Fresno Pacific Towers Inc. was never notified of the Los Angeles proceedings, Rimel added, the owners were deprived of an opportunity to argue against the foreclosure order in that case.
For the story, see Fresno landmark's foreclosure reversed (Owners of Security Bank get time to find buyer or settle debt).

(1) The hiring of a foreclosure rescue operator on the eve of a foreclosure sale to stall the sale in exchange for a payment of $5,000, coupled with the almost immediate recording of a suspicious deed of trust to multiple people who are already involved in ongoing bankruptcy proceedings in another jurisdiction certainly points to a possible fractional interest deed transfer, foreclosure rescue bankruptcy scam, as Judge Rimel correctly points out.

See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure scams involving the abuse of the bankruptcy courts.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

Pressure On "Absurd" MERS' Business Model Continues In Metro NYC Cases; CEO Abandons Sinking Ship; Members Told To Stop Foreclosing In Company Name

The New York Post reports:
  • The feds are raising their scrutiny of foreclosure cases in the Metro area. The US Trustee's office, which is a division of the Justice Department, is filing briefs in individual cases asking for judges to disallow motions made by the bank or servicer, and for lenders to cough up supporting data for their filings.

  • In a recent Brooklyn case, the US Trustee asked Judge Shelley C. Chapman of the US Bankruptcy Court to disallow a motion by the alleged mortgage holder for confidentiality on the paperwork required to show the servicer had standing to bring the foreclosure action.

  • Earlier this month, US Bankruptcy Judge Robert E. Grossman of New York's Eastern District on Long Island laid a new, homeowner-friendly legal foundation for upcoming battles over the 65 million home loans -- half the consumer mortgages in the US -- the Mortgage Electronic Registration Systems, or MERS, claims it holds.

***

  • MERS tried to throw its weight around in court in the case of Westbury resident Ferrel Agard. It failed. In a 37-page decision, the judge shredded MERS' arguments, noting the court isn't going to turn a blind eye to failure to comply with the law just because MERS is an industry titan.(1)

  • Judge Grossman questioned the very core of MERS' business model, calling it "absurd at best" that MERS claims to be both a mortgagee and an agent of the mortgagee, and saying MERS has no right to transfer mortgages.

  • This legal challenge adds to a growing list of problems for MERS. R.K. Arnold, CEO, departed late last month, and MERS now plans to change its rules to require "Members to not foreclose in MERS' name," according a Feb. 16 announcement obtained by The Post.

Source: Feds step up bank probes on foreclosure.

(1) In re Agard, Case 8-10-77338-reg (Bankr. E.D.N.Y. February 10, 2011).

Sunday, February 20, 2011

Utah AG To Federal Appeals Court: BofA Sub Legally "Unqualified To Carry Out Trustee Foreclosures"

Bloomberg reports:
  • A Bank of America Corp. unit is breaking the law by foreclosing on homeowners in Utah because it doesn’t meet state requirements, the state attorney general’s office said in a federal appeals court case.

  • ReconTrust Co., a subsidiary of Bank of America, the biggest U.S. lender by assets, isn’t a member of the state bar or a title insurance company and is unqualified to carry out trustee foreclosures, Utah Attorney General Mark Shurtleff wrote in court papers filed yesterday with the U.S. Court of Appeals in Denver. “ReconTrust Co. N.A. is a non-depository national bank initiating approximately 4,000 home foreclosures in Utah each year in violation of Utah law,” the attorney general’s office said.

  • The court filing was made in a homeowner’s lawsuit against ReconTrust and Bank of America. “National banks must abide by state law,” said John Christian Barlow, an attorney for the homeowner, Peni Cox. “ReconTrust just wants to foreclose, period,” he said.

  • A Utah state judge issued an injunction last year blocking ReconTrust from trustee foreclosure sales in the state, Barlow said. A federal judge later lifted the injunction.

For more, see BofA Unit’s Utah Foreclosures Violate Law, State Says.

Homeowner Scores Judgment Against Loan Servicer In RESPA Suit, Forcing Bank Into Foreclosure

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:
  • It's not clear how this story will turn out, but right now Patrick Rodgers is living a pay-back fantasy probably shared by millions of struggling U.S. homeowners. Frustrated by a dispute with Wells Fargo Home Mortgage and by his inability to get answers to questions, the West Philadelphia homeowner took the mortgage company to court last fall.

  • When Wells Fargo still didn't respond, Rodgers got a $1,000 default judgment against it for failing to answer his formal questions, as required by a federal law called the Real Estate Settlement Procedures Act. And when the mortgage company didn't pay - does something sound familiar? - Rodgers turned to Philadelphia's sheriff.

  • The result: At least for the moment, the contents of Wells Fargo Home Mortgage, 1341 N. Delaware Ave., are scheduled for sheriff's sale on March 4 to satisfy the judgment and pay about $200 for court and sheriff's costs.

For more, see Phila. homeowner wins judgment against Wells Fargo over mortgage fees.

Texas Man Cops Guilty Plea To Real Estate Ponzi Scheme Using Bogus Liens, Deeds Of Trust To Purportedly Secure Investors' Cash

From the Office of the U.S. Attorney (Dallas, Texas):

  • David Boles, 52, of Colleyville, Texas, who owned Metro Buy Homes, LLC., pleaded guilty [...] to one count of mail fraud, announced U.S. Attorney James T. Jacks of the Northern District of Texas.

***

  • According to documents filed in the case, from January 2008 through August 2010, Boles ran a scheme to defraud a number of investors by making materially false representations to them. For instance, he advised that invested money would be used to buy real estate and that investments would be secured by real estate.

  • To further the scheme, Boles sent Deeds of Trust and Real Estate Liens that purportedly gave investors liens against specific properties in exchange for their investment. However, Boles did not own a number of the properties that were supposedly used to secure the investments, and some of the Deeds of Trust and Real Estate Lien Notes that he sent investors were fraudulent.

  • Boles also sent checks to investors, and advised them that the checks represented profits from their investments. However, in many cases the checks were simply drawn from the principal investments made by the investor. On other occasions, Boles funded checks written to one investor with money received from other investors.(1) Boles believed that telling the investors that the checks represented earnings on their investments would encourage them to invest more money.

For the U.S. Attorney press release, see Colleyville, Texas Businessman, Who Owned Metro Buys Homes, Pleads Guilty To Federal Mail Fraud Charge (Defendant Faces Up to 20 Years in Federal Prison).

(1) A classic "Ponzi Scheme."

Probe Into Title Escrow Money Ripoff Yields Guilty Plea; Suspect To Cough Up $25K In Restitution Within One Month To 'Buy Out' Of Prison Sentence

In Allen County, Indiana, The Journal Gazette reports:
  • A mortgage company manager pleaded guilty Thursday in Allen Superior Court to two Class D felony charges of loan broker fraud. Robin W. Hunt, 40, of [...] New Haven, was arrested and charged last July with six counts of loan broker fraud, two of which were Class C felonies. He and an associate, Lane Miller, were charged in connection with the investigation into title escrow scheme run by Joseph Garretson. Miller worked for Garretson, currently serving an 11-year prison sentence for misappropriating title escrow money.

  • According to the plea agreement, Hunt’s prison sentence of one year will be suspended and he will be placed on probation when he is sentenced late next month. However, he will have to pay $25,000 in restitution to Flagstar Bank before he is sentenced, according to court documents.

Source: Broker pleads guilty.

Ex-Mortgage Broker Faces 39 Counts For Allegedly Ripping Off Clients Of $1.3M Cash, Property

In Santa Cruz, California, the Santa Cruz Sentinel reports:
  • Louisa Katrina Dubinsky, the 54-year-old former real estate broker who allegedly stole more than $500,000 from clients in 2007, turned herself in to Santa Cruz police [...]. Dubinsky was wanted on 39 counts of embezzlement, financial elder abuse and writing hundreds of thousands of dollars in bad checks, according to a 2009 criminal complaint filed by the District Attorney's Office.

***

  • Dubinsky was president of Vision Lending & Investment with offices on 41st Avenue in Capitola and at the Sash Mill in Santa Cruz, authorities said. She had been a mortgage broker, and her license was revoked by state officials in 2008.

  • Among other charges, the complaint alleges that she wrote two checks she knew were fraudulent that totaled $726,564 to one person and two that totaled $375,000 to another person. Dubinsky showed a pattern of criminal conduct and stole more than $500,000, prosecutors said, and she also allegedly took property valued at more than $200,000.

For the story, see Local 'Most Wanted' broker, Louisa Dubinsky, turns herself in to Santa Cruz police.

Saturday, February 19, 2011

Stern 'Dispersal Sale Dump' About To Begin As Battered Foreclosure Mill Head Looks To Unload Pricey, High-End Assets Worth Tens Of Million$

In Plantation, Florida, the South Florida Sun Sentinel reports:
  • In yet another sign that times are tougher for Plantation foreclosure attorney David Stern, he is looking to unload luxury assets worth tens of millions, including two estate properties on Hillsboro Beach that stretch from the Intracoastal to the blue waters of the Atlantic and what is believed to be his Italian-built superyacht.

  • Stern, 50, made a fortune by building Florida's largest foreclosure legal practice, with an army of attorneys and more than 1,000 employees processing paperwork for repossessions throughout the state.

  • He received a $58.5-million payout last January when he took his paperwork operation public and the new company, DJSP Enterprises, began trading on the Nasdaq stock exchange. He collected expensive properties, Ferraris and other luxury cars, and two jets.

  • But his law firm and DJSP have been battered in recent months by reports that his firm relied on fraudulent documents generated by the paperwork processors, and the firm is one of seven currently under investigation by the Florida Attorney General's Office for alleged document irregularities.

  • Major banks stopped doing business with him, lawyers quit his firm and DJSP laid off its workers by the hundreds. The company had only approximately 50 employees remaining as of last notice.

For more, see Foreclosure attorney Stern selling Hillsboro Beach estate properties - and perhaps a superyacht.

'We're Ready To Move, Just Give Us A Fair Price' Say Homeowners Throwing In Towel After 30-Year Fight To Save Neighborhood From Airport Expansion

In Dania Beach, Florida, the South Florida Sun Sentinel reports:
  • Dania Beach homeowners who've fought for more than 30 years to protect their neighborhoods from airport expansion are sending a surprising signal to the county: They give up. They're ready to move out.

  • What had always been a discussion and a debate suddenly became a reality to them: a new runway will be built next to them. The small prop planes and little executive jets whose sounds they accepted would be replaced by roaring commercial jetliners.

  • Broward County's plans for Fort Lauderdale/Hollywood International Airport would finally come to pass. One by one they told the director of the airport at a meeting last week that the neighborhoods their tiny city spent more than $1 million defending cannot be saved.

  • They said they want Broward County to buy their homes at a fair price, and, some suggested, tear them down. Living next to a major runway that will rise six stories into the air is not an existence anyone will want, they said. "It's impossible to live there.'' "This was a formula for blight.'' "No one will buy my home.'' "It's going to be a slum area.''

  • "They want out,'' Dania City commissioner and runway foe Bob Anton said afterwards. "They're tired.''

***

  • Many of the affected residents enjoy the lifestyle of fancy Las Olas Isles' posh waterfront, but with Dania Beach prices. The canals give them ocean access, coveted in Broward. The sounds of the small general aviation runway next to them are bearable, they say. But homeowners said that with low-flying jets roaring directly over their homes, or close by, their time outdoors would be miserable.

For more, see Dania Beach homeowners ready to stop fighting airport expansion and move out.

Homeowner Loses Home To Foreclosure After Mortgage Servicer Employs "Force-Placed Escrow" Squeeze; Firm Refuses Comment, Despite Customer OK

In Dallas, Texas, Fox 4 News reports:
  • FOX 4 has been covering the mortgage mess for years. We’ve told you about angry homeowners having problems with loan modifications, endless calls to lenders with no answers, unregulated mortgage servicers, and now force-placed escrow accounts. Texas homeowners have the option of paying their own property taxes but some who selected that route are finding themselves in a tangled mess that is difficult to undo.

***

  • Bertha Andrews said she has never gotten behind on her mortgage payments. Last summer when we first met Andrews, the widow was struggling to save her home while caring for her 95-year-old mother. Andrews had a tax deferral from Dallas County because she is over 65, which means her taxes wouldn’t have to be paid until her house is sold. But her mortgage lender, Ocwen Financial Services, paid the back taxes of around $3,500 and tacked it on to her mortgage payment due.
    I didn’t understand it,” said Andrews. “I didn’t understand it.”

  • Andrews couldn’t fight anymore. She goes down as a foreclosure casualty in 2011, now living in an apartment complex for seniors. Andrews walked away from her home after paying eight years on her mortgage. “The final straw was when I had sent in all my receipts and they didn't respond to them,” said Andrews.

  • Ocwen didn’t respond to FOX 4 either, even after Andrews gave the company permission to talk to us about her mortgage. Ocwen auctioned off her house on Feb. 1.

For the story, see Forced Escrow Accounts Frustrate Homeowners.

Ohio Appeals Court Nixes "Strict" Foreclosure; Says Lower Court's Failure To Order Judicial Sale An Improper Procedure Lacking Legal Authority

Lexology reports:
  • In the case of Wells Fargo Bank v. Young (Drake Cty.), 2011-Ohio-122, 2011 Ohio App. LEXIS 102 (Froelich, J.), the Second District Court of Appeals held that the trial court erred by ordering a conveyance of the property via a Commissioner’s Deed, rather than ordering a judicial sale as requested by the bank.

  • In Young, the plaintiff-bank and the defendant-debtor entered into a loan modification agreement of the prior home loan. The defendant-debtor defaulted on the loan modification less than a year later and the plaintiff-bank filed a complaint asserting that the note was secured by the mortgage. The plaintiff-bank sought foreclosure and money damages. Specifically, the plaintiff-bank requested that the mortgage be foreclosed, that the property be sold, and that the bank be paid from the proceeds of the sale. Copies of the original note, loan modification agreement and mortgage were filed, which were all attached as exhibits to the complaint. The defendant-debtor was served with the summons, but he did not file an answer.

  • About 45 days after the filing of the foreclosure complaint, the trial court issued a Notice to Show Cause stating that the defendant-debtor had been properly served, that it had not “indicated any opposition to the transfer of the realty to the Plaintiff without judicial sale,” and that the plaintiff-bank had orally moved for a default judgment.

  • Less than a month later, the trial court ordered the conveyance of the defendant-debtor’s property to the plaintiff-bank by way of a Commissioner’s Deed. The trial court found that foreclosure proceedings were equitable proceedings and that the authority to convey by Commissioner’s Deed was within the court’s equitable powers, based on common law and R.C. 2239.34. The plaintiff-bank objected to this type of transfer, but its objections were overruled by the trial court. The plaintiff-bank appealed.

  • In reversing the trial court, the court of appeals concluded that the order conveying the real property by Commissioner’s Deed, in lieu of a judicial sale of the foreclosed property, is contrary to Ohio law. This is true even though the conveyance was not objected to and would have saved costs and time.

  • The appeals court stated that “strict foreclosurewas eliminated in Ohio, and there was no authority that permitted the trial court to employ a foreclosure procedure that excluded a judicial sale from its order.

Source: A trial court cannot use R.C. Section 2329.34(b), conveyance by commissioner's deed, to circumvent sale of the foreclosed property (requires subscription; if no subscription, GO HERE, then click appropriate link for the story).

Calif. Tenant Advocacy Group To Alert Stockton Renters w/ Landlords Who Have Recently Fallen Into F'closure In Effort To Avoid Blindsiding, Bullying

In Stockton, California, KXTV Channel 10 reports:
  • More than 1,000 Stockton tenants will get a letter in the mail this week warning them that their landlord is in trouble with the bank. The letters are coming from Tenants Together, a statewide organization for renters' rights, and are focused on Stockton because nearly half of the city's foreclosures are rentals.

  • Tenants Together scoured property records to generate a list of non-owner occupied homes that are in various stages of foreclosure. "Most tenants in foreclosure situations are blindsided by the foreclosure," program coordinator Gabe Treves said. "They pay their rent every month, and they think as a result they will continue to be able to live in their homes." [...] Treves said many real estate agents and attorneys representing banks try to bully tenants into moving out of their homes before they really have to.(1)

Source: 1,000 Stockton renters will get foreclosure warnings.

(1) Federal law requires a minimum 90 days notice following a foreclosure sale before tenants can be forced to move. Tenants with leases may continue living in a bank-owned home through the end of their lease unless the new owner intends to occupy it. See:

Any California renter is invited to call the Tenants Together hotline at 888-495-8020 to see if their landlord is facing foreclosure.

Pennsylvania Court Gives Zombie Bill Collector The Boot Over Use Of Crappy Paperwork To Collect Dubious Debt

Valparaiso University School of Law Associate Professor Alan White writes in Public Citizen's Consumer Law & Policy Blog:
  • A Pennsylvania appeals court has affirmed the dismissal of a debt buyer lawsuit on an old credit card account, because the debt buyer could not prove the debt. The credit card agreement and account history could not be admitted under the business records exception to the heresay rule. The debt buyer could not testify that the credit card account records were made contemporaneously and in the regular course of the issuing bank's business.

  • More importantly, the contract itself was not proven. The debt buyer offered a standard form cardholder agreement dated seven years after the consumer's account was allegedly opened. In addition, the interest rate charged by the debt buyer was higher than the "agreement" called for, and the "agreement" did not provide for the attorney's fees being sought.

  • As many consumer attorneys know, the lack of evidence is endemic to the debt buying industry. Pools of delinquent accounts are often sold with "media not readily available", i.e. with no account histories or signed contracts. Given that signed cardholder agreements no longer exist, collection attorneys are often hard-pressed to produce anything that could be called a contract to support their claim.

  • The Federal Trade Commission issued a report on related debt buyer practices last July, but offered only recommendations directed to state courts to discourage these practices.(1) It remains to be seen whether the CFPB will take regulatory and enforcement action under the Fair Debt Collection Practices Act, which after all, prohibits false representations of the validity or amount of a debt, including false statements that are reckless or negligent, i.e. debt buyers alleging amounts owed based on little more than a spreadsheet they purchased for 0.6 cents on the dollar.

Source: Debt Buyer Dismissed.

For the court ruling, see Commonwealth Financial Systems, Inc. v. Smith, 2011 PA Super 30 (Pa. Super. February 14, 2011).

(1) For the FTC report, see Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration. zombie debt buyer

Couple Facing Foreclosure Dodges Prison Time, Walk Away With Four Years Probation After Torching Home For Insurance Cash

In South Beloit, Illinois, WREX-TV Channel 13 reports:
  • A husband and wife in South Beloit admit to starting their own house on fire and are sentenced for it. Dean and Jaclyn Jacobson each got four years probation for burning down their house in the 800 block of Winfield Drive. In 2007, they torched their house for the insurance money. They had a foreclosure, a tight budget and three kids. Both of them pleaded guilty to arson.

Source: South Beloit couple sentenced for burning their house down.

'Reverse' Condo Conversion Leaves Dozen Unit Buyers Living In Rental Complex, Unable To Refinance, Holding The Bag

In Polk County, Iowa, the Des Moines Register reports:
  • A bank foreclosure of a Johnston condominium development originally owned by Regency Homes has resulted in 12 condominium owners allegedly losing their ability to refinance and possibly even sell their homes, a lawsuit filed Monday says.

  • "This is the classic case of individuals buying property believing what they have been told and then through no fault of their own, they must deal with a completely different situation," said Jon Hoffman, the condominium owners' lawyer. "They needed to have their rights protected."

  • The 12 owners are residents of two condominium buildings in the Providence Pointe development in Johnston. They claim in the lawsuit that officials for Two Rivers Bank and Trust and Brent Haverkamp, owner of the Ames-based Haverkamp Properties, are guilty of breach of contract and breach of fiduciary duty in their handling of the development after the collapse of Regency Homes, the development's original owner.

***

  • Providence Pointe, established in 2007 originally as a condominium development, has been converted into an apartment complex by Haverkamp. He obtained the development from Two Rivers after Regency officials defaulted on a $6 million construction and development loan in 2008, according to the lawsuit.

***

  • Hoffman said Haverkamp's ownership of most of the property surrounding the condominium buildings has placed his clients in the nightmarish position of being unable to obtain refinancing for their homes from the Federal National Mortgage Association. Since January 2009, FNMA regulations have required that mortgages for condominiums can only be approved if 70 percent of the units are sold or under a sales contract.

  • Hoffman said three clients have attempted to refinance their mortgages only to be rejected by their banks because of Federal National Home Mortgage rules."That is what really started this lawsuit," Hoffman said. "All three got the same rejection letter, and it was a form letter."

  • The lawsuit also contends that the inability to obtain financing for their homes also raises the concern that "the only possibility for a sale would be to a cash purchaser as all lenders would be precluded from extending a loan for the same reasons they cannot obtain refinancing."

  • "My clients believe the bank simply should have known that by selling this property to one individual for the purpose of turning into rental property that it was going to affect a lot of people adversely," Hoffman said.

For more, see Johnston condo owners in a tough spot, lawsuit says.

Texas Couple Sues To Stop Exploration Firm From Running Roughshod Over Home, Drilling On Nearly-Expired Mineral Leasehold Giving Only 12-Hour Notice

In Jefferson County, Texas, The Southeast Texas Record reports:
  • A Jefferson County couple has filed suit against the exploration company they claim gave them limited notice of its intent to drill on their property.

  • Douglas and Tina Almond allege they purchased property on March 26, 1998, which is subject to a drill site and drill site easement.

  • Defendant Ballard Exploration Co. owns the easement, but its lease is set to expire on Feb. 4. It was not until Jan. 27 that the Almonds heard from Ballard, according to the complaint filed Jan. 28 in Jefferson County District Court.

  • "At 8:00 p.m. on the evening of January 27, 2011, Defendants contacted the Homeowners for the very first time and leave a voice message stating: 'We know this is unreasonably short notice, but the mineral lease runs out on February 4, 2011, so we will be there first thing in the morning to start drilling,'" the suit states.

  • At the time they received the message, the Almonds were coping with the hospitalization of Tina Almond's mother, who is in the Intensive Care Unit at the hospital with a serious illness, the complaint says. Still, the Almonds claim they had to deal with Ballard Exploration, which showed up at their home Jan. 28 at around 7 a.m.

  • At about 8:23 a.m., the Almonds received correspondence from Ballard and defendant Shorthorn Resources. In the communication, the defendants told the Almonds, "Here's your notice," and "We will knock your gate down if you do not let us in," according to the complaint.

  • The Almonds are protesting the defendants' desires to drill on their property, saying they were not provided with adequate notice. "Defendants want to drive heavy equipment across the Homeowners' paved driveway to their home, without giving the homeowners any opportunity to discuss alternative routes," the suit states. "Further, Homeowners have livestock on the property that the Homeowners must make arrangements for before Defendants can have access."

  • The Almonds claim the defendants should have drilled on their property earlier than less than a month before the expiration of their lease.

  • "The Defendants failure to exercise their rights in a timely manner should not be a basis for Defendants, without reasonable or proper notice, to threaten to destroy and damage the Homeowners' homestead or allow the Homeowners' livestock to run free on the streets and roads of Beaumont, Texas," the complaint says.

  • In their complaint, the Almonds seek a temporary restraining order against the defendants preventing them from drilling on the property. The Almonds will be represented by Greg M. Dykeman and Martha R. Campbell of Strong, Pipkin, Bissell and Ledyard in Beaumont.

Source: Couple wants exploration company to stop drilling on property.

Broward Deputies Storm Local KFCs Facing Foreclosure; Serve Seizure Notices, Give Employees The Boot; South Florida Chickens Rejoice!

In South Florida, WTVJ-TV Channel 6 reports:
  • Several local KFC chains are in finger-licking foreclosure. Broward Sheriff's deputies invaded nine local franchises of the chicken-serving national chain Wednesday, serving orders that the stores must cease and desist.

  • Who knew the double-down monstrosity would cause this much harm? About 18 civilian deputies simultaneously served Writ of Replevin notices, which we gather didn't contain the Colonel's secret recipe. It's the first step in a foreclosure.

  • The shut down order was not from KFC, officials from the chain said. "KFC Corporation is not involved in this litigation which we believe is between the franchisee and one of its lenders," KFC Spokesperson Laurie Schalow said.

  • Employees were ordered to put down their chicken breasts, deep fryers and biscuit pans and leave the premises. Five franchises in Miami-Dade and others in Monroe County were also served with the foreclosure prerequisites. While chickens across South Florida rejoice, it's unclear how the Chik-fil-A cows feel about the recent development.

Source: What the Cluck! Court Forecloses on South Florida KFCs (KFC restaurants in Miami-Dade, Broward and Monroe counties set to be deep-fried).

Friday, February 18, 2011

Maine Class Action Accusing Bank Of Manufacturing Foreclosure Documents Gets The Boot; Judge Says Each Homeowner Must Pursue Claims Individually

In Portland, Maine, Bloomberg reports:
  • Ally Financial Inc.’s GMAC mortgage unit won’t have to face much of a lawsuit by Maine homeowners seeking damages over what they said were the company’s wrongful foreclosure practices.

  • U.S. District Judge D. Brock Hornby in Portland, Maine, granted GMAC’s request to dismiss two claims in the complaint, according to a decision yesterday. He will probably throw out the remaining claim, Thomas Cox, a lawyer for the homeowners, said in an interview.

***

  • If false documents are used in foreclosure cases, homeowners can seek to vacate the judgment in their particular cases, Hornby wrote. They can’t file new lawsuits, according to the decision. “A contrary ruling would mean that the outcome of every lawsuit could produce a later lawsuit by the unhappy loser, seeking damages on account of the outcome of the former lawsuit and claiming that it resulted from false testimony or false affidavits,” Hornby wrote.

  • Cox called that a “hollow remedy” because most homeowners can’t afford defense attorneys. [...] The Maine homeowners, who filed the lawsuit last year seeking class-action status, accused GMAC of filing false documents in foreclosure cases. They said a GMAC employee signed sworn affidavits without verifying the accuracy of the information. The homeowners sought damages and in December unsuccessfully tried to stop GMAC foreclosure sales in Maine.

For the story, see GMAC Won’t Face Much of Maine False Foreclosure Documents Suit.

OCC Chief To Senate Banking Committee: Most Mortgage Servicers Have Proper Documentation, Legal Standing To Foreclose

Firedoglake reports:
  • In a Senate Banking Committee hearing just now, Acting OCC head John Walsh gave an update on the investigation into servicer practices, which was the subject of several news reports today. Here, in essence, was what he said:

    • “Federal banking agencies have concluded investigations on servicers found critical deficiencies and shortcomings that violate state and local foreclosure laws.”

    • However, they found that in most cases, loans were seriously delinquent and that the servicers had the proper documentation and the legal standing to foreclose.

  • Let’s stop right there. This investigation started at the end of 2010. It would be impossible for them to look at every single delinquent loan, which number in the millions, assess the situation for all of them, assess all the documentation, and conclude that most of the cases were operating on a generally legal basis. The courts certainly haven’t found that, and they had many more months to make the assessment.

  • This is a ridiculous statement that cannot possibly be backed up with comprehensive evidence. In fact, the Wall Street Journal says that the review sample was 2,800 foreclosures. Out of millions. And bank regulators who may not be well-versed in specific real estate law in every state made the investigation.

For more, see OCC’s John Walsh Attempts Whitewash of Servicer Abuse.

Florida Couple To Pursue Foreclosure Mill For Alleged Inflated Fee Squeeze

In Central Florida, the Sarasota Herald Tribune reports:
  • A North Port couple says a Florida law firm charged them unwarranted and excessive fees as they tried to save their home from foreclosure, and their attorneys believe the firm did it to hundreds of other troubled homeowners, too.

  • Last week, David and Kayleen Keyser filed a complaint in their foreclosure case against Kahane and Associates law firm in Plantation, the latest in a string of class actions from Gulfcoast Legal Services(1) in Sarasota that target unfair collection practices in foreclosures.

  • On Wednesday, Kahane abruptly dropped the foreclosure case against the Keysers, which cancelled out the Keysers complaint. Gulfcoast attorneys say it was on the eve of the lender having to produce the underlying invoices for the fees.

  • That means the truck driver and grocery store manager can remain in their house where they raise three children without paying the mortgage, for now. The lender or firm would have to pay court costs to file foreclosure again. "I don't expect the foreclosure suit to be refiled anytime soon," Gulfcoast attorney Elizabeth Boyle said.

  • But it does not mean the Keysers will stop pursuing their class-action suit. Gulfcoast plans to refile the lawsuit as early as today in a new case, trying to discover if hundreds of other homeowners faced the same inflated and unsubstantiated fees from Kahane since 2006.

For more, see North Port pair fights fees in foreclosure skirmish.

(1) Gulfcoast Legal Services is a non-profit corporation providing free legal aid to income eligible residents of the greater Tampa Bay area. We have offices in Pinellas, Manatee, Sarasota and Hillsborough Counties.

C. Florida Man Charged For Allegedly Hijacking Title, Possession Of Vacant Homes In Foreclosure, Then Ripping Off $30K By Renting To Unwitting Tenants

In Pasco County, Florida, The Tampa Tribune reports:
  • Pasco County deputies arrested a 43-year-old man Friday and accused him of collecting $30,000 in rent money on properties he didn't own. George Allen Ola Jr., of 8831 Garden Party St., is charged with scheme to defraud. He posted a $10,000 bail and was released shortly after his arrest last week. Ola couldn't be reached for comment on Monday.

  • Investigators said Ola entered a contract with Bay Vista Realty in May to lease the properties he said he owned. Ola provided Bay Vista with notarized copies of quit claim deeds that were filed with the Pasco County clerk of court.

***

  • Neither the homeowners nor lien holders authorized the homes to be leased, according to an arrest report. The renters were told to mail their rent in the form of money orders or cashier's checks to a P.O. Box in Tampa owned by Ola, the report states.

  • The issue was first reported to the Pasco County Sheriff's Office in August, an incident report states. A Pinellas County attorney representing one of the homeowners called the office and told a deputy that a family was living in his client's home while his client was living in Brazil.

For more, see Land O' Lakes man charged with renting out homes he didn't own.

Would-Be Buyers Screwed Over In Rent-To-Own Racket Involving Homes In F'closure Complain To Local Prosecutor; Ripoff Is Treated As A Civil Matter

In Umatilla, Florida, WFTV-TV Channel 9 reports:
  • Several families claim a Central Florida company offering rent-to-own homes, never told them the properties were in foreclosure. After moving in, they say, serious repairs were ignored and they lost all their money. Dozens of signs dot Central Florida front yards reading 'Rent to own homes by Otto Beyer Enterprises' and many families who called lived to regret it.

  • "Termites came right through the walls and right into our furniture." Stephanie Hayes claims the Leesburg home fell down around her family. According to Stephanie she invested 3 thousand dollars in down payment and repairs when a bank foreclosure forced them out. Stephanie called Otto Beyer Enterprises. "We told her we put all this money into the house and never once did you tell us its in foreclosure and she said that's just too bad."

  • Courthouse records show Beyer Enterprises owns at least 70 homes but it's in bankruptcy and many of the homes are in foreclosure. Tisha Liptart invested in a home then was forced out because of a foreclosure. "You don't think people would do that to you."

  • The families told us serious repair issues were neglected. That seems minor compared to what happened at a home the company owned near Silver Springs that burned to the ground.

  • Five children died in the house last November. The state fire marshal is investigating. The agency listed a space heater, cigarettes, and the home's wiring as possible causes. Published reports quote a former tenant who claimed he had electrical problems when he lived there.

  • At it's office near Leesburg we attempted to ask company managers about it's rent to own history. The company said because of the fatal fire its been advised not to answer any questions. But later its attorney said tenants could have stayed longer, and did not pay their rent.

  • "If we didn't like it we could walk out and we lost the money," said Stephanie Hayes. Some families say they complained to the state attorney claiming the company knew they could be forced out when it took their cash. But so far it's remained a civil matter.

Source: Families Claim To Lose Thousands In Foreclosure Rental Homes.