Thursday, March 10, 2011

Laid Off Robosigner Blows Whistle On Foreclosure Mill; Describes Boiler Room Operation Allegedly Set Up To Crank Out Docs w/ Falsified Signatures

In Baltimore, Maryland, The Baltimore Sun reports:
  • Prosecutors have launched an investigation into a complaint that more than 1,000 deeds for homes foreclosed upon in Maryland were improperly executed — the latest development suggesting widespread problems in the way foreclosures have been handled in the state.

  • The complaint, filed last week by a paralegal formerly employed by the Shapiro & Burson law firm, lays out allegations that attorneys who were supposed to be signing deeds and key foreclosure paperwork for Maryland properties instead instructed others to falsify their signatures on the documents.

  • "We're looking at this case very closely," said Ramon V. Korionoff, chief of staff to the Prince George's County state's attorney, whose office is investigating. "It's very troubling."

***

  • State regulators said this week that they also have received complaints about alleged foreclosure-documentation problems at the Baltimore law firm of Friedman & MacFadyen. Four notaries employed there resigned their commissions earlier this year after inquiries from the Maryland secretary of state's office, according to the agency.

***

  • Charlene Perry, who specializes in foreclosure title work as vice president of Preferred Title Group Inc. in Baltimore, calls a deed with a false signature "a huge problem" that could come back to haunt a later homeowner if it is challenged. Most homebuyers purchase title insurance, so it would be up to the insurer to pay for their legal defense, she said.

  • "I don't think the consumer at the end of the day is going to lose. But they're going to lose sleep," said Perry, who has worked in the title industry for more than 25 years. "They're going to be on pins and needles: 'Do I own my home?' "

***

  • The complaint against Shapiro & Burson was filed by Fairfax resident Jose Portillo, 42, a notary who worked for the firm as a paralegal for nearly three years. He said he decided to file a complaint against his former employer after he and about 10 co-workers were laid off in February. He met with Civil Justice to offer information he thought would be helpful in the group's foreclosure litigation work and then prepared the affidavit last week.

***

  • He described a boiler-room atmosphere, much like that at mortgage companies during the housing bubble, in which employees were overwhelmed with work. He said his shift regularly stretched into 12- and 13-hour days. Employees in another department handling foreclosure sales sometimes stayed until 4 a.m., he said.

  • Portillo said he knows he is putting his Virginia-issued notary commission at risk by acknowledging that he improperly notarized documents. He said he decided to complain because it upset him that the firm laid off employees who followed instructions, while those who gave those instructions are still on staff. He said he hopes regulators see mitigating reasons to excuse his own notary violations.

  • "It was implied that my job was at stake," said Portillo, who had already gone through a five-month stretch of unemployment in 2007 after settlement work dried up. "I know what I saw, and I have no qualms testifying and reaffirming my affidavit."

For more, see More foreclosure irregularities alleged in Maryland (Former law firm employee says over 1,000 deeds were recorded with false signatures).

State Lawmaker To Push Legislation Requiring Banks To Record Chain Of Title Before Filing Connecticut Mortgage Foreclosure Actions

From the Office of Connecticut State Senator Anthony Musto:
  • Amidst national reports of shoddy paperwork processing that led to suspended foreclosure proceedings at many major lenders, state Senator Anthony Musto (D-Trumbull) is pushing legislation that would require banks to perfect their legal right to property before they can file a foreclosure action.

  • Under current state law, banks and other lenders are exempt from recording their mortgage assignments, and thus securing their rights to the mortgage, before foreclosing on property—in contrast to individuals, who must properly record such things as deeds, liens and easements in public land records to make them effective.

  • Our law treats banks, mortgage holders and other lending institutions different from everyone else,” said Senator Musto, who testified in support of the bill before the General Assembly’s Judiciary Committee this past Friday. “With recent fraudulent document scandals involving some of the countries biggest mortgage lenders, and with a foreclosure crisis planted at the root of our continuing economic troubles, it makes no sense to allow banks to skip a step required by everyone else to secure an interest in the land. This bill will remove an unreasonable exemption and provide an additional layer of security for homeowners. Banks simply need to play by the same set of rules everyone else uses.”

For the press release, see Musto Seeks to Change Title Rules in Foreclosure Cases (Proposal would level playing field between banks and homeowners).

Demands Continue For MERS To Cough Up The Cash For Unpaid Recording Fees

In New York City, WNBC-TV Channel 4 reports on some of the calls demanding that Mortgage Electronic Registration System begin coughing up the cash for the millions it may owe for fees it has avoided by failing to record assignments of mortgages when loans are sold between its members:
  • [Southern Essex, Massachusetts Register of Deeds John] O’Brien has officially requested that Massachusetts Attorney General Martha Coakley file suit against MERS, seeking $22 million in unpaid recording fees associated with home loans that were bought, sold, and securitized since 1998. “I have challenged them to open their books and show me how many times they have moved people’s mortgages around,” O’Brien said.

  • In [New York State's] Suffolk County, former county clerk Ed Romaine is making a similar request. Now serving as a county legislator, Romaine has asked the Suffolk County attorney explore a lawsuit against MERS that he says would claw back more than $100 million for taxpayers. Romaine unsuccessfully tried to block MERS from doing business in Suffolk County back in 2001. “I saw a problem because we would not know who would be the owner of these mortgage notes because they would be sold in a private system and not recorded in a public system,” Romaine said.

  • The prediction wasn’t far off. Mortgage industry insiders say a major reason many of the nation’s foreclosures are stalled or progressing at a slow pace is the inability of MERS to identify what parties actually hold title to distressed mortgage loans. The problem has led housing advocates to begin demanding foreclosure agents show proof of which investors actually hold legal claim on properties.

For the story, see Counties Seek Millions From Mortgage Giant (MERS under fire for unpaid fees).

Utah Federal Judge Grants TRO, Trial Request Stalling Foreclosure For Pro Se Homeowner

In Salt Lake City, Utah, the Deseret News reports:
  • A Pleasant View man is taking one of the biggest banks in the world to federal court over a failed loan modification that resulted in a foreclosure on his home. And he's doing it without an attorney.

  • I went to several attorneys and every attorney told me the same thing: ‘You are never going to go anywhere. Banks have bottomless pockets, and you are not going to win,’” recalled Michael Waters, who repairs computers by trade.

  • In what is shaping up to be a "David vs. Goliath" legal fight, Waters appears to be putting up a decent battle. He has already won a restraining order preventing the foreclosure of his home while the case is in court. And U.S. District Judge Bruce Jenkins appears to be sympathetic to Waters’ plight and has granted him a trial.

  • Waters’ legal troubles began last year after he lost his job and called Bank of America to see what he could do to keep up with his mortgage payments. The bank offered a forbearance that drastically reduced Waters’ mortgage payment and told Waters he was eligible for a trial loan modification. "I thought, 'This is like a blessing. This is wonderful,'” Waters said.

  • But before Waters had the chance to make his first payment, Bank of America sent a letter canceling the forbearance. The bank told him it was because his payment was late, but the letter was sent before the payment was due. When Waters contacted the bank, he was told a different story. The bank said it could not offer a forbearance because they did not have the note to the loan.

  • Well I said, 'Who does own the note? Maybe we could work something out' and they said, 'We can't give you that information,'” Waters said. Bank of America told Waters his February mortgage payment was due immediately and he had seven days before the March payment was due. Waters said he did not have the money because Bank of America advised him to use his savings to pay off all debt to qualify for the forbearance. The bank foreclosed three months later.

  • Instead of giving up, Waters started doing research online to see if he could find any options that may give him a fighting chance. "It probably took me 64 hours of legal research," he said. "I just went to the Internet and found copies of lawsuits that were filed, and I just typed in something similar."

  • Waters stumbled across two Supreme Court rulings (Haines v. Kerer and Platsky v. CIA) that have aided him in court. “(The rulings) said that if somebody is in court pro se, which is me — no attorney — that their case can't be rejected or thrown out on technical groundsand the judge has to help, explained Waters.(1)

For more, see Pleasant View man takes banking Goliath to court sans attorney.

For the transcript of the hearing granting the homeowner a trial in this case, see Waters v. Bank of America.

(1) For a couple of the many Federal court rulings mandating that trial judges cut pro se homeowners a considerable amount of slack when hearing their cases, see:

Haines v. Kerner, 404 U.S. 519 (1972), in which the U.S. Supreme Court reversed the rulings of two lower courts, the court stated:

  • The only issue now before us is petitioner's contention that the District Court erred in dismissing his pro se complaint without allowing him to present evidence on his claims.

    Whatever may be the limits on the scope of inquiry of courts into the internal administration of prisons, allegations such as those asserted by petitioner, however inartfully pleaded, are sufficient to call for the opportunity to offer supporting evidence. We cannot say with assurance that under the allegations of the pro se complaint, which we hold to less stringent standards than formal pleadings drafted by lawyers, it appears 'beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' Conley v. Gibson, 355 U.S. 41, 45—46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). See Dioguardi v. Durning, 139 F.2d 774 (CA2 1944).

    Accordingly, although we intimate no view whatever on the merits of petitioner's allegations, we conclude that he is entitled to an opportunity to offer proof. The judgment is reversed and the case is remanded for further proceedings consistent herewith.

Platsky v. Central Intelligence Agency, 953 F.2d 26 (2d Cir. 1991), in which a Federal Appeals Court ruled:

  • Pro se plaintiffs are often unfamiliar with the formalities of pleading requirements. Recognizing this, the Supreme Court has instructed the district courts to construe pro se complaints liberally and to apply a more flexible standard in determining the sufficiency of a pro se complaint than they would in reviewing a pleading submitted by counsel. See e.g., Hughes v. Rowe, 449 U.S. 5, 9-10, 101 S.Ct. 173, 175-76, 66 L.Ed.2d 163 (1980) (per curiam); Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 595-96, 30 L.Ed.2d 652 (1972) (per curiam); see also Elliott v. Bronson, 872 F.2d 20, 21 (2d Cir.1989) (per curiam). In order to justify the dismissal of a pro se complaint, it must be " 'beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' " Haines v. Kerner, 404 U.S. at 521, 92 S.Ct. at 594 (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957)).

    In light of these principles, we think that the district court should not have dismissed Platsky's complaints without affording him leave to replead.

***

  • The district court also dismissed the complaints for their failure to plead facts that were sufficiently specific. The district judge held that Platsky failed to allege the concrete and particularized injury required to establish standing and to state a claim upon which relief could be granted.

***

  • We think that Platsky should have a chance to state his claim more clearly. It is not "'beyond doubt that the plaintiff can prove no set of facts in support of his claim[s],' " Haines v. Kerner, 404 U.S. at 521, 92 S.Ct. at 595, and therefore we hold that the better course would have been for the district court, in dismissing Platsky's pro se complaints, to grant him leave to file amended pleadings. See Elliott v. Bronson, 872 F.2d at 22. We have instructed Platsky that his complaint must set out, with particularity and specificity, the actual harms he suffered as a result of the defendants' clearly defined acts.

    Accordingly, we vacate the judgment and order below, and remand the case to the district court with instructions to allow the plaintiff to replead.

See also Estelle v. Gamble, 429 U.S. 97 (1976), which supports the mandate that trial judges cut pro se homeowners slack when bringing their cases:

  • The handwritten pro se document is to be liberally construed. As the Court unanimously held in Haines v. Kerner, 404 U.S. 519 (1972), a pro se complaint, "however inartfully pleaded," must be held to "less stringent standards than formal pleadings drafted by lawyers" and can only be dismissed for failure to state a claim if it appears "`beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Id., at 520-521, quoting Conley v. Gibson, 355 U.S. 41, 45 -46 (1957). [429 U.S. 97, 107]

10th Circuit To Hear Appeals Of Lower Court Dismissals Of Utah Wrongful Foreclosure Cases Brought By Homeowners

In Salt Lake City, Utah, The Salt Lake Tribune reports:
  • The Utah Legislature appears poised to stifle any legislation that might help thousands of Utah homeowners facing foreclosure, punting decisions on those issues back to the courts.

  • But federal courts in Utah, where most foreclosure lawsuits end up, have been downright cold toward homeowners seeking relief from what they claim are illegal actions on behalf of banks and others. In case after case, federal judges have sided with banks and foreclosure trustees in lawsuits that raise legal questions about their ability to take property when loans become delinquent.

  • State courts, according to homeowner attorneys, have been more open to foreclosure lawsuits. Given that, banks and others seeking to foreclose are automatically moving cases filed into federal court. Homeowners have never even be allowed to gather evidence from the foreclosure entities because their cases are quickly dismissed.

***

  • Now, at least three of cases from Utah have been appealed to the 10th Circuit Court of Appeals in Denver, whose rulings could clarify whether the legal issues are serious and need more judicial consideration.

For more, see Shoulders cold when foreclosure cases hit the courts.

Wednesday, March 09, 2011

Feds Accuse South Florida Outfit Of Peddling Bogus Loan Modification Services

The Federal Trade Commission recently announced:
  • As part of the Federal Trade Commission’s continuing crackdown on scams that target homeowners behind in their mortgage payments or facing foreclosure, the FTC has charged a national operation with marketing bogus loan modification services.(1) The FTC seeks to stop the illegal practices and make the defendants pay refunds to consumers.

  • According to the FTC’s complaint, the defendants target financially distressed consumers using direct mail, the Internet, and telemarketing, and falsely promise they will get loan modifications to make consumers’ mortgages much more affordable, or fully refund their money if they fail. They make these promises even to homeowners whose lenders have denied them modifications or who have been sent foreclosure notices. The defendants charge up to $2,600 for their supposed services and typically ask for half of the fee up-front, claiming a success rate of up to 100 percent.

  • As alleged in the complaint, the defendants claim expertise that enables them to prevent foreclosure, and often mislead consumers to believe they are affiliated with, or approved by, consumers’ lenders. They tell consumers not to contact their lenders and to stop making mortgage payments, claiming that falling behind on payments will demonstrate the consumers’ hardship to lenders.

For the FTC press release, see FTC Charges Mortgage Relief Operation with Deceiving Distressed Homeowners.

For the lawsuit and related court orders, see:

  • Complaint for Permanent Injunctive and Other Equitable Relief,
  • Order Granting in Part and Denying in Part Motion for Preliminary Injunction and Asset Freeze,
  • Amended Ex Parte Temporary Restraining Order with Asset Freeze, Appointment of Receiver, Expedited Discovery, and Other Equitable Relief and Order to Show Cause Why a Preliminary Injunction Should Not Issue.

(1) The named defendants in the FTC lawsuit are: U.S. Mortgage Funding Inc., Debt Remedy Partners Inc., Lower My Debts.com LLC, David Mahler, Jamen Lachs, and John Incandela, Jr., also known as Jonathan Incandela, Jr.

Cops: Fake R/E Agent Conned Elderly Couple Facing F'closure Into Signing Over Deed, Then Pockets $45K Deposit From Would-Be Buyer In Failed Sale

In Orlando, Florida, WESH-TV Channel 2 reports:
  • One man was arrested Friday and accused of real estate fraud. Authorities with the Orange County Sheriff's Office said they believe there could be more victims. Investigators said Dave Howell, 31, had a real estate office and was taking the clients' money, but he doesn't have a real estate license.

  • Deputies said Howell contacted an elderly couple who was in foreclosure and promised he could sell their home in a short sale. Investigators said Howell had the couple sign what ended up being fake documents and also signed over the title over their house to him.

  • Authorities said Howell then contacted a buyer and said he could sell the house for $85,000, but first the buyer paid what she thought was a $45,000 escrow deposit. "The transaction never closed," Orange County Sheriff's Office spokesman William Cruz said.

  • "The bank account where the suspect deposited this escrow of $45,000 was completely depleted, misappropriated, ultimately stolen." Investigators said Howell had an office off of South Hiawassee Road called Nationwide Consultants LLC and has being doing business for about one year. He has been charged with practicing real estate without a license and grand theft.

Source: 1 Arrested In Real Estate Fraud Case (Howell Accused Of Grand Theft, Practicing Real Estate Without License).

Hidden Cost Of Buying 'Cheap' Foreclosed Home Becomes Selling Point For Builders Peddling Their Inventory

The Associated Press reports:
  • Homebuilders trying to fight off customers' attraction to cheap foreclosures are doing more to show buyers that the good deals can come with pitfalls. [...] Many national builders are using some form of marketing to try to make that point and beat back the quiet competition from lower-priced foreclosures and short sales.

***

  • Lennar Corp.'s website is fighting back with a "Buying a New Home vs. a Foreclosed Home" page that lays out the benefits of new construction — like home warranties, energy efficiency, and customization options — while highlighting the potential risks of buying a foreclosed home.

  • PulteGroup Inc. uses similar tactics in its advertising, as does Shea Homes and Phoenix-area builder Fulton Homes. Fulton and Shea both promote new homes with a "foreclosure cost calculator" on their websites that lets customers calculate potential costs.

***

  • Home builders say they're hopeful that as more customers turn to them instead of the overloaded foreclosure market, they'll be able to show the value in new construction.

For more, see Homebuilder Ads Highlight Pitfalls of Foreclosures (Homebuilders try to draw in buyers by pointing out pitfalls and risks of buying foreclosures).

Tuesday, March 08, 2011

South Florida Foreclosure Mill Throws In Towel; Will Shut Down At End Of Month

In Plantation, Florida, Reuters reports:
  • A prominent Florida lawyer accused of mishandling many foreclosure cases in that state is shutting down his foreclosure law practice at the end of the month, a regulatory filing shows.

  • The decision by the lawyer, David Stern, was announced by DJSP Enterprises Inc, a company he once ran and which calls itself the main customer of the Law Offices of David J. Stern PA. DJSP said it expects to receive no further referrals from Stern. The company, whose businesses have included processing, servicing and title operations, has already laid off much of its workforce.

  • A lawyer for Stern did not immediately respond to a request for a comment on Monday. DJSP shares traded down 7 cents, or 29.2 percent, at 17 cents in morning trading on the Nasdaq, after falling as low as 15.5 cents. They traded as high as $13.65 last April.

  • Stern's firm is among several being investigated by the office of Florida Attorney General Pam Bondi over whether documents they submitted in foreclosure cases were defective. Major mortgage companies, including Fannie Mae and Freddie Mac, stopped doing business with Stern.

  • Florida media last month said Stern was trying to sell some luxury assets, including homes and a yacht, worth millions of dollars. He resigned as chief executive of Plantation, Florida-based DJSP in November.

Source: Florida lawyer David Stern ends foreclosure law practice.

See aslo, The Palm Beach Post: Stern law firm ends foreclosure operations:

  • On Friday, Stern sent a letter to Florida judges saying his firm still needed to withdraw from 100,000 cases statewide, nearly a third of the state's court backlog of 350,615 foreclosure cases.

  • "We have been forced to drastically reduce our attorney and paralegal staff to the point where we no longer have the financial or personnel resources to continue to file Motions to Withdraw in tens of thousands of cases that we still remain as counsel of record," Stern wrote. "Therefore, it is with great regret that we will be ceasing the servicing of clients with respect to all pending foreclosure matters in the State of Florida as of March 31, 2011."

Defendants In Mortgage Payment Hijacking Scam Face New Charges Of Running Fraudulent Upfront Fee Loan Modification Ripoffs

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • Two men were arrested Friday in connection with an alleged scheme designed to steal mortgage payments from Southern Nevada homeowners, Nevada Attorney General Catherine Cortez Masto said.

  • Joseph Yorkus, who was out on bail from a February arrest in connection with a similar scheme, and James Bartczak, who was still in custody, were booked on new charges in connection with an investigation by the attorney general's Mortgage Fraud Task Force.

  • Both men had been arrested in February for setting up the business “Great Western Business Services,” which is alleged to have embezzled homeowners’ mortgage payments by sending letters to homeowners falsely stating that their loans had been transferred from Bank of America to Great Western. The letters instructed the homeowners to make their mortgage payments to Great Western rather than to Bank of America, which actually owned the loan.

  • Numerous victims missed mortgage payments that could potentially result in foreclosure, despite the fact they had actually made their payments -- albeit to the alleged scammers instead of their true loan servicer.

  • The latest arrest is based on new allegations that, in addition to fraudulently operating Great Western Business Services, Yorkus and Bartczak also ran three other fraudulent companies, BAC Collections, Fresh Start Consultants and Learn Your Rights, for the purpose of convincing homeowners to pay their mortgage through those businesses.

  • Yorkus and Bartczak allegedly misrepresented that the companies would assist homeowners in obtaining credit repair and loan modifications, as well as principal reductions. Instead of obtaining the loan modifications, the homeowners' payments were allegedly diverted by Yorkus and Bartczak for their own personal use.

  • One of the alleged victims is a senior citizen who lost more than $10,000, officials said.

Source: 2 men arrested in alleged mortgage payment scam.

Securitizations Hit Tax Lien Industry

The Center for Public Integrity reports:
  • When Florida retiree Gladys Walker fell behind in paying taxes on her modest Pompano Beach home, she had no idea one of America’s biggest banks and a major Wall Street hedge fund engaged in frenzied bidding for the right to collect her debt—all $768.25 of it. “I just couldn’t come up with the money,” said Walker, 67, a former hotel worker who makes do on a monthly Social Security check.

  • Barely more than a year after a taxpayer bailout of major financial institutions, Bank of America and the hedge fund, Fortress Investment Group, spotted a fresh money-making opportunity – collecting the tax debts of tens of thousands of people like Walker. The bank and hedge fund can add interest charges and fees, and they bundled the debts as securities for investors.

For more, see Wall Street Quietly Creates a New Way to Profit From Homeowner Distress (Large Bank, Hedge Fund Bundle Small Tax Debts Into Private Investments).

Monday, March 07, 2011

MERS Gets Hammered In Recent Oregon Federal Court Rulings As 100s Of F'closures Stall; Resulting Crappy Titles Will Be Uninsurable, Warns Underwriter

The Oregonian reports:
  • Sales of hundreds of foreclosed homes in Oregon have been halted or withdrawn in recent weeks after federal judges repeatedly questioned their legality, according to a number of real estate attorneys in the state. Lenders have withdrawn more than 300 foreclosure sales since February in Deschutes County alone, one of the Oregon area's hardest hit by the housing collapse. About 130 of those notices were filed in the past week, attorneys say.

***

  • And, in a potential deal breaker for other foreclosure cases, one of the nation's largest title-insurance companies is warning lenders that it might not guarantee title in some cases.

***

  • The legal concerns revolve around Mortgage Electronic Registration Systems Inc., a Reston, Va., corporation set up in the mid-1990s by the mortgage banking industry to rapidly record the ownership of mortgages so they could be packaged and sold as securities.

***

  • Since October, federal judges in five separate Oregon cases have halted foreclosures involving MERS, saying its participation caused lenders to violate the state's recording law.(1) Three of those decisions came last month, the key one in U.S. Bankruptcy Court in Eugene.

***

  • In response to that ruling, First American Financial Corp., one of the nation's largest title insurers, began warning lenders and buyers in title documents that it wouldn't insure titles with a cloudy public record in Oregon, company attorney Alan Brickley said. "It's simply saying we have a concern, and you should have a concern," said Brickley, who's based in Portland.

Fotr more, see Hundreds of Oregon foreclosure sales stopped after judges' rulings.

(1) For these Oregon federal court decisions, which raise questions about the legality of hundreds of foreclosures in the state, see

The Stench Left By MERS After Swallowing Your Loan

Mortgage Electronic Registration Systems, also known as MERS, "whose private mortgage registry has all but replaced the nation’s public land ownership records," takes a heavy hammering in a recent article in The New York Times for the central role it's played in creating the quagmire in the foreclosure process as it and lenders (real and purported) attempt to enforce delinquent promissory notes secured by mortgages on people's homes.

For the story, see MERS? It May Have Swallowed Your Loan.

Two Ongoing Florida Cases Show HSBC's Purported Foreclosure Moratorium May Be BS; Inquiries To Lenders' Attorneys Yield No Explanations

AOL's Daily Finance reports:
  • In HSBC's 2010 annual report, the bank asserted that it had stopped "processing foreclosures" and that it "suspended foreclosures" in December, even though the information wasn't made public until Feb. 28, when HSBC filed the report with the SEC.

  • But based on at least two cases still working their way through Florida's courts, that delay in disclosure apparently also meant that HSBC didn't tell attorneys bringing foreclosure actions in the bank's name to put their cases on hold. Indeed, if HSBC had systematically put its many pending foreclosure cases on hold in December, the news surely would have come out before now. So it's appropriate to ask: What does the moratorium announcement really mean?

***

  • In two active Florida cases, Wells Fargo is trying to foreclose as the loan servicer for HSBC, which is the plaintiff and will, if the foreclosures are successful, get the properties. The case names reflect HSBC's role: HSBC v. Harley, and HSBC v. Shinneman. Both are set for trial later this month, and as of March 3, had not been not affected by HSBC's foreclosure moratorium.

  • Jacksonville Legal Aid attorney April Charney represents Harley, while attorney Todd Allen represents Shinneman. Both reached out to their opposing counsels repeatedly after the HSBC moratorium became public. Both opposing counsels told them on Thursday that the cases were going forward. (When I contacted the attorney for HSBC in the Shinneman case, Travis Harvey, his response was "no comment." HSBC's attorney in Harley, Michael Winston, didn't reply to my email.)

For more, see What Do HSBC's Foreclosure Moratorium and Robo-Signing Claims Really Mean?

Sunday, March 06, 2011

Sacramento Feds Score Another Guilty Plea As 5th Defendant Goes Down In Foreclosure Sale Bid Rigging Conspiracy

In Sacramento, California, the San Jose Mercury News reports:
  • Federal prosecutors say a Northern California man has pleaded guilty to conspiring to rig bids at foreclosure auctions in a county among the hardest hit by the real estate bust. The U.S. Attorney's Office for the Eastern District of California says 38-year-old Yama Marifat of Pleasanton pleaded guilty Friday to the conspiracy.

  • Prosecutors say Marifat and a group of real estate speculators agreed not to bid against each other at San Joaquin County public foreclosure auctions to keep prices down. The group would then hold a private auction where the property went to the conspirator willing to pay the most above the public price. The speculators would split the difference between the prices at public and private auction as a payoff among themselves.

  • Marifat faces up to 10 years in prison for bid rigging and 30 years for mail fraud, plus fines up to at least $2 million. The U.S. Attorney's Office says Marifat is the fifth person to plead guilty in connection with the conspiracy, which was uncovered as part of an ongoing federal investigation into fraud and bid-rigging in real estate auctions in San Joaquin County.(1)

Source: Calif man pleads guilty to foreclosure bid rigging.

For the U.S. Attorney press release, see Real Estate Investor Pleads Guilty to Bid Rigging at Public Foreclosure Auctions.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm, the United States Attorney’s Office for the Eastern District of California at 916-554-2700 or the FBI’s Sacramento Division at 916-481-9110.

Attorney, Two Law Partners Admit To Bid-Rigging MD Real Estate Tax Lien Sales; Dodge Criminal Charges By Winning "Race To the Prosecutor's Office"

The Center for Public Integrity reports:
  • A key witness in a federal probe of corruption in Maryland property tax-lien sales has stated under oath that he rigged bids for years while representing a Florida bank and other firms that bought liens at annual sales auctions, newly unsealed court records show.

  • Baltimore real estate attorney John Reiff said he and two law partners helped fix bids for the purchase of “large numbers” of property tax debts, called tax liens, sold by tax assessors at auctions in Baltimore and several other Maryland counties between 2003 and 2007, according to court filings made public for the first time last month.

***

  • An investigation published in December by the Center for Public Integrity showed how lien buyers can tack on double-digit interest rates, legal fees and other costs that can add thousands of dollars to a homeowner’s bill. In some states, lien holders can seize homes from those who fail to pay. The bid rigging cost the city of Baltimore and surrounding counties money by artificially holding down bids, local officials say, although they could not determine how much.

***

  • Though the tax-lien industry has long been controversial, the Baltimore lawyer’s sworn declaration appears to be the first to mention a bank, or a tax-lien portfolio manager, in connection with allegations of criminal conduct in the bidding process.

  • Reiff stated that a firm formed with his law partners acted to “suppress competition for tax liens by refraining from full competitive bidding.” [...] U.S. District Judge J. Frederick Motz in Baltimore unsealed Reiff’s declaration and some other records at the request of the Huffington Post Investigative Fund, now part of the Center for Public Integrity.

***

  • Reiff and his partners, Anthony DeLaurentis and Richard Turer, were one of three investment groups that participated in the five-year scheme to dominate the tax lien auctions, according to prosecutors.

  • Three other participants have pleaded guilty to bid rigging in the case. In May, Baltimore County attorney Harvey M. Nusbaum, 73, was sentenced to a year-and-a-day in prison and an $800,000 fine. His partner, Jack W. Stollof, 75, was sentenced to 12 months of house arrest and an $800,000 fine. A third man, Steven L. Berman , 53, received two years probation and a $750,000 fine.

  • Bid rigging is typically a clandestine effort made to line the pockets of unscrupulous businessmen at the expense of unsuspecting consumers — in this case, at the expense of homeowners and county and city governments,” Justice Department prosecutors wrote in a sentencing memorandum about Nusbaum.

  • In principle, bid rigging is no different from any other common theft of money or property. It is criminal fraud, pure and simple.”

  • The unsealed records describe in detail how the well-financed investment groups illegally dominated the process in Maryland through collusion — and how they made millions of dollars off homeowners as a result. The three groups, according to Reiff, decided in advance which liens each would bid on.

***

  • Reiff has been a key witness in the federal probe that has resulted in three convictions. He and his two partners cooperated with the government and were not charged.(1)

  • In many cases, homeowners who owed only a few hundred dollars in taxes or municipal bills saw their debt soar into thousands because of the fees and interest. A Baltimore woman lost the home her family had owned for nearly three decades over what began as an unpaid water bill of $362, for instance.

For more, see Witness Says He Rigged Bids in Property Tax Lien Auctions in Maryland.

Go here for the recently-unsealed court filings referred to in this story.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) This is another example of how scammers in criminal conspiracies can buy their way out of jail time (and, in this case, can avoid prosecution altogether) by winning the "race to the prosecutor's office" (possibly better described as the "rat-race to the prosecutor's office"), where once they learn they are the subject of a probe, they can run to the prosecutor's office (with the best criminal defense attorney they can afford in tow) and start ratting out their friends and colleagues in exchange for the best deal available. See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observation, made in the context of drug conspiracy cases, involving the so-called "race to the courthouse/prosecutor's office" which seems equally suited to other types of major, multi-defendant felony cases:

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

Sale Of Tax Liens To Speculators & Proliferation Of Vacant, Rundown Real Estate

In Fulton County, Georgia, a recent story in The Atlanta Journal Constitution on the proliferation of vacant and rundown properties highlights the role that the sale of tax liens plays in the physical deterioration of some neighborhoods:
  • A contributing factor, [community development groups and tax officials] say, is the sale of tax liens. It burdens such properties with debt that exceeds their value and puts them in the hands of speculators who may sit on property as it deteriorates. As a result, many municipalities have stopped selling liens.

  • Fulton County, however, still relies on the sale of tax liens as its primary method of collecting delinquent county and Atlanta city taxes, despite concerns over sometimes outrageous costs for property owners, questions about whether the practice saves the county money and negative effects on community revitalization. To a much lesser extent, Gwinnett County also sells tax liens.

  • Fulton County Tax Commissioner Arthur Ferdinand continues to decline to discuss the county’s sales of tax liens or release property tax data that would support analysis of the practice. The Atlanta Journal-Constitution has sought his input since late last year. He has not returned phone calls.

  • Fulton sold a lien for 2005 taxes on 55 Chester Ave. and, since 2006, taxes totaling $2,767 have not been paid. Tax liens and overdue taxes are not the only reason Chester Avenue and similar properties remain vacant and decrepit. But community development experts say liens in private hands discourage development by adding costs and legal complications to clearing land for construction.

  • In Georgia, unless a property owner receives notice of a lien sale and settles the debt sooner, the legal process after a lien is sold drags out a year or more. Private companies may hold liens longer because they accumulate fees and interest, and once a property is sold, they can wait for a development project that needs the land. In the interim, the companies often don’t pay taxes on vacant properties or maintain them.

For the story, see In tax-lien limbo.

In a related Atlanta Journal Constitution story, see Senate bill tackles sales of tax liens:

  • Legislation introduced in the [Georgia] Senate on Friday is meant to curb abuses of the sale of property tax liens, but broad language in the bill would obstruct tax collection by counties that do not sell liens, according to tax experts.

  • Senate Majority Leader Chip Rogers, R-Woodstock, who introduced the bill, said the language will be changed to affect only the practice of selling tax liens to private companies and not the collection of taxes by the counties.

***

  • A series of stories by The Atlanta Journal-Constitution over the past two months(1) detailed how the sale of tax liens can
create outrageous costs for property owners and stall community revitalization efforts. The stories also raised questions about whether selling tax liens saves the county money as Fulton County Tax Commissioner Arthur Ferdinand has said.

(1) See:

Florida Court Sets 2,700 Foreclosure Cases Set Dismissal After Lying Dormant For A Year

AOL's Daily Finance reports:
  • If you sue someone in Florida but then stop pursuing your case for a year, the court can clear its case load by dismissing your suit for "failure to prosecute." Across Florida, courts are starting to clear their overwhelmed dockets by dismissing foreclosure cases the banks have failed to prosecute. In one division of one of Florida's 20 judicial districts, perhaps as many as 2,700 cases have been set for dismissal in one week.

  • When Allison Albert of the Jacksonville Area Legal Aid went to foreclosure court in Duval County, part of the Fourth Judicial Circuit, on Tuesday, hundreds of "failure to prosecute" cases were on the docket. While waiting for her client's case to be called, she heard the court's staff talking about how the court had sent out notices, scheduling hearings for about 2,700 foreclosure actions -- and noting that if the bank didn't take action within 60 days of the notice, the case could be dismissed at the hearing for failure to prosecute. All of the cases were scheduled to be heard over the next eight court days.

For more, see Are Banks Abandoning Foreclosures in Florida?

Judge Slams F'closure Defense Lawyer w/ $12K Fine After Refusing To Recuse Himself In Case Involving Bank From Whom He Received Three Loan Mods

In Detroit, Michigan, The Michigan Citizen reports:
  • Third District Court Judge Robert J. Colombo recently received three home loan modifications from Charter One Bank. Colombo ruled, however, he did not need to recuse himself from a mortgage foreclosure case involving the same bank. Nor did it stop him from levying a $12,000 fine on the attorney and client fighting the bank’s foreclosure when the attorney attempted to link the foreclosure case to a discrimination lawsuit now pending against Charter One.

  • Attorney Vanessa Fluker has devoted her legal career to defending victims of foreclosure and predatory lending in Detroit. On March 1, Fluker’s colleague, Jerry Goldberg, defended her against a court sanction handed down by Colombo. Colombo’s decision included the $12,000 judgment against Fluker and foreclosure victim Asha Tyson.

***

  • During opening statements, Goldberg emphasized the effects of unfairly sanctioning one of the few attorneys who defend homeowners victimized by predatory lending and subsequent evictions. “To put a damper on attorneys to even raise these issues has a negative impact on society,” Goldberg said.

For more, see Judge fines anti-foreclosure lawyer (Court sanctions attorney for linking foreclosure to Charter One discrimination case).

Saturday, March 05, 2011

Profile Of A Vacant Foreclosed Home Hijacker

In South Florida, Broward/Palm Beach New Times recently ran a lengthy story on Mark Guerette, a local real estate "entrepeneur" of sorts who recently copped a plea to a racket involving the hijacking of vacant foreclosed homes under a claim of adverse possession, and then renting them out to unwitting tenants.

For his story, and the stories of a couple of tenants who did business with him, see The Lord of Squat: Mark Guerette Got Busted for Putting Families in Foreclosed Homes (for the entire story on a single web page, go here.)

Lawsuit: Scamming Romeo Conned Texas Woman Into Borrowing Against Home Credit Line To Finance His Personal Lifetstyle

In Jefferson County, Texas, The Southeast Texas Record reports:
  • A Jefferson County woman has filed suit against the man she claims is making a living by romancing women and then borrowing money from them. Beverly Hickman claims she lent defendant Robert Horowitz tens of thousands of dollars in 2009 after he wooed her and claimed to need money for himself and for his business, defendant Senior's Choice.

  • "He (Horowitz) has developed, and utilizes, a business practice for himself and for his business, Senior's Choice, in which he romances middle-aged, single women and borrows money from them to float his business, maintain his cash flow, and maintain his personal lifestyle," the suit filed Feb. 18 in Jefferson County District Court states.

***

  • "In order to loan this money to Mr. Horowitz, Mrs. Hickman drew on a home mortgage line of credit, making herself vulnerable to foreclosure on her home and loss of her residence in the event of Mr. Horowitz's default," the suit states. Horowitz failed to repay Hickman after he developed a new romantic interest, she claims.

For the story, see Suit says man romances, rips off women.

Campground Operator Pleads No Contest, Gets 7 Years Probation For Torching Premises After Elderly, Mortgage-Holding Prior Owners Begin Foreclosure

In Susquehanna County, Pennsylvania, WNEP-TV Channel 16 reports:
  • A woman was sentenced in Susquehanna County on Thursday, accused of setting several fires at a campground. Tamara Santarelli, formerly of Wilkes-Barre and now living in New York, was sentenced to seven years probation. She will also have to pay back nearly $100,000 to insurance companies, money that was paid out after two fires at the Shady Rest Campground near Gibson.

  • The couple who used to own the campground and sold it to Santarelli said they were just glad the ordeal is over and that they were able to get that property back. [...] Arnold and Alice Manning owned the Shady Rest Campground and sold it to Tammy Santarelli and her husband, even financing the property for them.

  • The Mannings said after the Santarelli's failed to make mortgage payments, they had started the foreclosure process. That was when the second fire nearly destroyed their decades of hard work. "We've been married for 60 years and we've worked together hard for all of our lives for what we have and it just seems a shame that people like Tamara can scam away from you what you've worked all your life for," said Alice Manning. "We trusted these people. We figured they were all right and it didn't take long," added Arnold Manning.

***

  • As part of Tammy Santarelli's plea agreement, she handed over the deed to the Shady Rest Campground, giving it back to Arnold and Alice Manning. The Mannings said they now plan to keep the campground in the family.

For the story, see Owner Sentenced for Campground Arson.

Failure To Pay Mortgage On Headquarters Leaves 31,000+ Florida Boy Scouts Facing The Boot

In Palm Beach Gardens, Florida, the South Florida Business Journal reports:
  • Forget tying knots and building campfires. The Boy Scouts need to start working on their foreclosure defense. TD Bank wants to boot the Boy Scouts organization for the Palm Beaches and the Treasure Coast out of its headquarters. It filed a foreclosure lawsuit Feb. 25 against the Gulf Stream Council of Boy Scouts of America.

  • According to its website, this nonprofit serves more than 31,000 scouts and 3,100 volunteers in seven counties, including Palm Beach, Martin, St. Lucie and Indian River. Unfortunately, those scouts could get a lesson in how the legal system treats debtors unless somebody comes to their aid.

  • This could be another loss for the children of Palm Beach County. Big Brothers Big Sisters of Palm Beach County filed Chapter 7 bankruptcy last year after shuttering its operations.

  • Gulf Stream Council CEO Jeff Isaac was not immediately available for comment. The lawsuit involves a $777,000 mortgage issued in 2007 by Riverside National Bank of Florida, which later failed and had its assets acquired by TD Bank.(1) It targets the 10,368-square-foot office building at 8335 N. Military Trail, in Palm Beach Gardens.

For the story, see Bank aims to boot Boy Scouts.

(1) Another mortgage foreclosure where the loan was originated by a now-defunct bank. I wonder what the chances are that there is some paperwork screw-up that the now-foreclosing bank is going to have to address where the originating lender is no longer around.

Foreclosure Sale Buyer Finds Recent Purchase Comes Filled With Four Dumpsters Of Rotting Garbage; Stench Gives Interior Designer Vomit Attack

In Mesa, Arizona, KPHO-TV Channel 5 reports:
  • Home buyers have seen some pretty nasty foreclosed homes – but one in Mesa just might be the worst. Justin Christman makes his living buying foreclosed homes, fixing them up and selling them months later. He picked up one in Mesa on the auction steps without seeing the inside until after the deal was done. Christman now realizes he might have bitten off a little more than he could stomach.

***

  • Crews with vacant home rescue have been collecting the rotting garbage in the home for three days --- filling four industrial-size Dumpsters. "The smell is just the most rancid smell you could ever imagine," Christman said.

  • Kay Christman, Interior Designer with TDG Designs, said, "We went upstairs and it was so repulsive that I had to come back out and throw up." "Speechless is the only adequate adjective I could use to describe it," Kay added.

  • This investment might not pay out like the Christmans originally hoped, but in the end, this neighborhood just lost another distressed property. Christman paid $93,000 for the home, which was a great investment on paper compared to assessments of the other homes in the neighborhood.

For the story, see Buyer Stuck With Rancid Foreclosure Home (Garbage From 1988 Litters House; Smell Repulses Interior Designer).

Go here for video, and here for slideshow.

Nursing Home Facing Foreclosure, Company Official Found Guilty Of Illegally Dipping Into Patient's Bank Account

In Selinsgrove, Pennsylvania, WNEP-TV Channel 16 reports:
  • A nursing home has been ordered to pay a big fine after an administrator stole from patients. Now, the president of the place said another state investigation could force the nursing home out of business. A nursing home in Snyder County was found guilty for stealing from its residents. Monday the corporation learned its punishment for the crime and Newswatch 16 learned of a state investigation into the place.

  • In December Loving Care Nursing Center in Selinsgrove was found guilty of misusing one resident's bank account. The vice president of the nursing home was also found guilty of using nearly $30,000 of that resident's money for the nursing home.

  • Monday a judge ordered the company to pay $100,000 in fines and the president, Thomas Pregant, said in court the nursing home is now in jeopardy of closing. "I hope that nursing homes, personal care homes, assisted living homes will take heart that the DPW regulations in place the protection that we have for the residents actually mean something," said Snyder County District Attorney Mike Piecuch.

  • Pregant refused to speak to Newswatch 16. "We are appealing the conviction and of course we'll be appealing the sentencing," said defense attorney Ted Seeber. The president of the company said the nursing home has been in Selinsgrove since 1999 and serves about 40 residents. The property is in foreclosure and the business is up for sale.

  • District Attorney Piecuch said the business is getting what it deserves. "What they did is took advantage of the one person who had money in his bank account," Piecuch added. The vice president of the company, who, by the way, is the wife of the president, is expected to be sentenced soon. Piecuch said Loving Care Nursing Center is under investigation by the department of public welfare for violating regulations and its license could be revoked.

Source: Nursing Home Fined for Theft.

Vegas Fire Officials: Disgruntled Tenant Foiled In Attempt To Torch House After Being Told He Was Getting The Boot Because Landlord Was In Foreclosure

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • A 40-year-old Las Vegas man who was angry about being evicted from a house going into foreclosure allegedly attempted to burn the home down Saturday, fire officials said. Las Vegas Fire and Rescue spokesman Tim Szymanski said officials arrested James Edwards St. John in connection with attempted fourth-degree arson and booked him in the Clark County Detention Center.

  • The situation unfolded Saturday afternoon at a home in the 6200 block of Garwood Ave. St. John's roommates called 911 when he began dousing a room of the house in gasoline, Szymanski said. Police arrived minutes later and detained St. John before he was able to light the fire, Szymanski said. No one was injured.

  • St. John, who rented the house with several other people, had been notified by the owner that he needed to move out of the home because it was going into foreclosure, Szymanski said.

  • Officials said St. John was apparently upset about the situation, which prompted him to attempt to set the home on fire. A fire investigator arrested St. John after questioning him at the scene, Szymanski said. He is scheduled to appear in court Monday.

Source: Las Vegas man arrested for attempted arson.

Friday, March 04, 2011

West Virginia Court Voids Mortgage, Costs Bankster Over $3M+ With Punitive Damages, Legal Fees To Mom, Daughter Screwed Over By Predatory Practices

In Wheeling, West Virginia, The West Virginia Record reports:
  • An Ohio County judge has ruled against Quicken Loans in a $3 million predatory lending case. Circuit Court Judge Arthur M. Recht concluded an eight-day trial that spanned 17 months by awarding punitive damages, attorney fees and costs to mother and daughter Wheeling residents Lourie Jefferson and Monique Brown.

  • The award of more than $2.1 million in punitive damages, along with attorney fees and costs, brought the total verdict in the case against Quicken Loans to more than $3 million. Jefferson and Brown also had previously reached a settlement for a confidential amount with the loan appraiser.

  • Bordas & Bordas attorneys were representing Jefferson and Brown in foreclosure proceedings initiated by Quicken Loans, their mortgage lender. They alleged abusive and predatory conduct on Quicken Loans' part and filed a 12-count complaint on behalf of Jefferson and Brown, detailing predatory lending practices against Quicken Loans and its appraiser in Ohio Circuit Court.

  • At the first phase of the trial, the Court ruled in favor of Jefferson and Brown on numerous counts. The court found the lending practices of Quicken Loans unconscionable, based in part on Quicken's utilization of a highly inflated appraisal in making the loan.

  • The court also found that Quicken Loans defrauded the homeowners by misleading them into paying excessive loan origination fees; falsely promising to favorably refinance the loan in the near future; and concealing an enormous balloon payment from its own borrowers.

  • As a result, the court ruled the $144,800 loan that grew to $227,000 was unenforceable as a matter of law and would not have to be repaid and that Quicken Loans must return $17,000 in payments to Jefferson.

  • The second phase of the trial resulted in the punitive damage award and an order that Quicken Loans must pay Jefferson and Brown's attorney fees and costs. Jim Bordas said the major verdict was justified and that the case encapsulated much of what led to the collapse of the housing market and economy as a whole.

  • "Ms. Jefferson and Ms. Brown fought very hard for justice against a large national lender," Bordas said. Bordas said he hoped the award would send a message to other struggling homeowners.

Source: Quicken Loans on losing end of $3 million predatory lending verdict.

Go here for the court's Findings of Facts, and here for the Punitive Damages/Attorneys Fee Award.

Guilford Cnty Register Of Deeds Says MERS Is Screwing Up Chains Of Local Real Estate Titles, Stiffing It Out Of $1.3M In Recording Fees In The Process

In Greensboro, North Carolina, the News & Record reports:
  • Guilford County Register of Deeds Jeff Thigpen wants an investigation into a service used by major mortgage companies who may have made false statements to avoid fees that cost the county $1.3 million in lost revenue.

  • According to Thigpen, the Mortgage Electronic Registration System (MERS), a system established by mortgage lending heavy hitters like Wells Fargo, Countrywide Home Loans, Inc. and Bank of America, has allowed these companies to re-package and sell loans without filing with offices like his to maintain a publicly available chain of ownership. Thigpen said $1.3 million is a "conservative estimate" of what his office may have lost in recording fees since 2005.

***

  • "As register of deeds I have two primary responsibilities in land records," Thigpen wrote in the release. "A sworn durty to protect the chain of title and a fiduciary responsibility to collect recording fees. Quite frankly, MERS has undermined both. Through their own 'private-for-profit' Register of Deeds mortgage tracking office, MERS has created a dangerous centralization of power whose sole purpose is to protect and serve the interests of major banking conglomerates and undermine public recording officers."

***

  • In a Wednesday interview Thigpen said North Carolina law doesn't currently require the reassignment of mortgages to be filed in local register of deeds offices like his. But Thigpen said it has been common practice in Guilford County for 300 years and the creeping privatization of such information keeps the public from being able to see who owns what and follow a clear chain of title.

  • "Owning property is a foundational principle of our democracy," Thigpen said. "People who buy and sell property should be able to do that and have confidence that as part of living in the United States if America, the people and the laws mean something. Who really owns my property? Who am I really buying property from? For 300 years people have been able to walk into their local register of deeds office and find that out. They should be able to."

For the story, see Register of Deeds wants investigation into major mortgage companies.

Business As Usual At Chase-Owned EMC Mortgage As Banksters Refuse Comment On Possible Violations Of 2008 Court Order In Conduct Towards AZ Homeowners

In Phoeniz, Arizona, KNXV-TV Channel 15 reports on the trouble local homeowners Jason and Katherine Miller have been getting from Chase-owned EMC Mortgage in trying to work out payment arrangements on their home mortgage after initially being granted a trial modification:
  • We were ecstatic. We were happy. We (thought) this is the best thing that could happen to us,” said Jason. The deal allowed them to pay about $460 less per month. Then in about three months, EMC would decide if they could keep the lower interest rate. “We thought it was great; it was going to save us a lot of money,” said Jason.

  • But, months went by without a decision. Then last September, 15 months after submitting their application, the family got a trustee sale notice in the mail. Their house was going to be sold at auction. The next day, they received dozens of notices. Jason told ABC15 he thought, “They have set us up to fail.”

  • The ABC15 Investigators did some digging and found the Millers' mortgage company, EMC, is accused of doing the same thing to other homeowners across the country. In 2008, the Federal Trade Commission settled a lawsuit against EMC for $28 million, claiming the company violated Fair Debt Collection Practices, the Fair Credit Reporting Act and Truth in Lending Act.

  • The Millers immediately called EMC. They said the company told them they would have to repay all the money saved over the previous 15 months and bring the mortgage up to date. That would cost the Millers a total of $8,822.14. The Millers thought they could handle that until EMC said they would also have to pay $10,000 in fees. They would have to pay a total of $18,822.14 or lose the house.

***

  • The federal lawsuit specifically states EMC cannot collect fees that are not authorized. And the lawsuit states, the company can't give misleading information about the debt or services. [...] The ABC15 Investigators asked EMC for an on-camera interview. The company is now owned by Chase, which turned down our request. In an email, Chase would not address whether EMC violated the court order.

For the story, see Valley family fights back after loan modification fees pile up.