Loan Servicer Response To Recent CBS' '60 Minutes' Expose On Foreclosure Fraud
For the 'not guilty' plea, see Responses to Questions from Dan Ruetenik, 60 Minutes.
Thanks to Deontos for a copy of the letter.
Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.
For the 'not guilty' plea, see Responses to Questions from Dan Ruetenik, 60 Minutes.
Thanks to Deontos for a copy of the letter.
For the summary of the article, and link to the entire work, see Nolan Robinson: The Case Against Allowing Mortgage Electronic Registration Systems, Inc. (MERS) to Initiate Foreclosure Proceedings, Cardozo Law Review, Vol. 32, No. 4, p. 101, 2011.
After conducting a trial on March 16, 2011 in an adversary proceeding fighting a foreclosure against HomEq Servicing and Deutsche Bank National Trust Company, Judge Melvin S. Hoffman dismissed Schwartz' lawsuit on all seven counts raised in the litigation.
Refusing to accept defeat, Ms. Schwartz moved for a new trial, claiming error in the judgment, said claim involving an 'Ibanez' issue.
After reviewing the evidence, Judge Hoffman found that Ms. Schwartz presented sufficient evidence of the existence of an 'Ibanez' issue and accordingly, vacated his earlier ruling and opened the judgment with respect to this count only, and announced that he will schedule a half-day trial for the banksters to make their
For the most recent ruling, see Schwartz v. HomEq Servicing (In re Schwartz), Case No. 06-42476-MSH, Adv. Pro. No. 07-04098 (Bankr. D. Mass., Central Div. April 7, 2011).
(1) The first episode of Ms Schwartz' marathon saga in the bankruptcy court was the subject of Judge Hoffman's predecessor, Judge Joel B. Rosenthal's, landmark decision, In re Schwartz, 366 B.R. 265 (Bankr. D. Mass. 2007). At that time, Deutsche Bank had bid-in its mortgage debt and purchased Ms. Schwartz' home, a 3-family house in Worcester, at a foreclosure sale. Unsuccessful since that time in its attempts to boot her out onto the streets of Worcester, it remains the record owner of the home in which Ms. Schwartz continues to reside. Schwartz v. HomEq Servicing, footnote 2.
(2) Judge Hoffman's ruling on the 'Ibanez' issue follows (bold text is my emphasis):
The plaintiff introduced into evidence a document entitled "Assignment of Mortgage" dated May 23, 2006, which reflected the assignment of the plaintiff's mortgage from the original mortgagee, Mortgage Electronic Registration Systems, Inc., as nominee for First NCL Financial Services, LLC, to defendant Deutsche. During the plaintiff's case, all parties agreed that this assignment was dated prior to the date of the foreclosure sale. No party disputed its authenticity or validity.
Because the assignment was executed prior to the foreclosure sale and its validity was not questioned, I ruled at trial that the plaintiff had failed to carry her burden of proving that Deutsche was not the owner of the mortgage when it foreclosed.
In her motion for a new trial, the plaintiff argues that I misconstrued Massachusetts law, pointing out that the Massachusetts Supreme Judicial Court in U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 673, 941 N.E.2d 40 (2011) recently held that in order for a foreclosure sale to be valid the mortgage must have been assigned to the foreclosing entity not merely before the sale, but prior to the first publication of notice of that sale required by Mass. Gen. Laws. ch. 244, § 14. Ibanez, 458 Mass. at 647-48.
I agree with the plaintiff's interpretation of Ibanez and since the May 23, 2006 assignment was executed after the foreclosure notices had been published, I could not rely on the assignment exclusively in granting the defendants judgment on partial findings. In light of the foregoing I must determine whether and to what extent to open the March 6, 2011 judgment for the defendants.
In Count I of the complaint, the plaintiff seeks a ruling that the foreclosure sale was invalid. Not only does the March 23, 2006 assignment fail to establish the validity of the foreclosure sale, it constitutes the only evidence presented that at the time Deutsche began publishing notice of the sale, Deutsche was not the holder of the mortgage.
The defendants argue that the pooling and servicing agreement dated November 1, 2005 which is listed in the joint pretrial memorandum as a trial exhibit provides evidence that the mortgage on the plaintiff's property was assigned to Deutsche well before the foreclosure process had begun.
The excerpt of the pooling and servicing agreement that was admitted during the plaintiff's case in chief, however, provides no such evidence. The excerpt indicates that an entity defined as the "Depositor" assigned the "Trust Fund", which I presume included mortgages listed on a mortgage loan schedule not provided, to Deutsche, as Trustee for the benefit of the certificateholders of the Morgan Stanley Home Equity Loan Trust 2005-4.
In Ibanez, the Supreme Judicial Court held that where, as here, a recordable assignment was not executed prior to the first publication of a notice of a foreclosure sale, the foreclosing entity may nevertheless prove that it was the mortgagee at the relevant time. The Court observed:
[w]here a pool of mortgages is assigned to a securitized trust, the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder. However, there must be proof that the assignment was made by a party that itself held the mortgage. Ibanez, 458 Mass. at 651 (emphasis added).
None of the evidence thus far presented at trial indicated that the plaintiff's mortgage was part of the Trust Fund, or how the Depositor acquired the Trust Fund.
I find that the plaintiff has presented sufficient evidence of the chain of title of the mortgage on her property to carry her burden of persuasion that the mortgage was not owned by Deutsche before the first publication of the notice of foreclosure sale. I must, therefore, vacate and open the judgment for the defendants on Count I of the complaint.
Source: Business Owner In Trouble Shooters Report Arrested.
For story update, see Update on El Paso Woman Facing Foreclosure:
(1) For earlier story, see Unwitting Homeowner Suspects Monthly House Payments To Escrow Company Are Mysteriously Disappearing, Leaving Her Facing Imminent Foreclosure.
For more, see Banks Are Off the Hook Again.
For more, see Scottsdale Mortgage-Relief Firm Hit with $29 Million Judgment in Loan-Modification Scam.
For the Arizona Attorney General press release, see Attorney General Horne And Financial Institutions Supt. Kingry Announce Victories Against Scottsdale Mortgage Company.
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For more, see New York Subpoenas 2 Foreclosure-Related Firms.
(1) In one case, according to the story, Judge Scott Fairgrieve in Nassau County district court imposed sanctions of $5,000 on the Baum firm in a foreclosure case and required it to pay more than $14,000 in fees to the borrower’s lawyers last November. When awarding the sanctions, the judge wrote: “Bringing legal proceedings when there is no legal right to do so, due to lack of standing, stalls the efficient administration of justice in the system.” Federal Home Loan Mtge. Corp. v Raia, 29 Misc 3d 1226, 2010 NY Slip Op 52003 (Dist. Ct. Nassau Cty, 1st Dist., November 23, 2010).
For more on Baum, see:
For more, see Homeowner sues mortgage servicer over HAMP denial.
Go here for earlier posts on the ever-growing 'HAMP Parade.'
For more, see Jury awards Fort Benning Sergeant $20 million (Federal jury penalizes mortgage firm that falsely pursued loan delinquency).
See also, The Huffington Post: Jury Awards Homeowner $21 Million In Mortgage Lawsuit.
For the original lawsuit, see Brash v. PHH Mortgage Corporation.
Source: Bill collector is sued after calling individual five times each day.
(1) Adam Krohn of Krohn & Moss Ltd. recently received mention in a recent Minneapolis Star Tribune story (see Debtors in court -- suing collectors) as reportedly being the founder of this law firm that "files 15 percent of all FDCPA lawsuits in U.S. courts, according to WebRecon."
For more, see Potentially toxic fungus at troubled Fresno condo complex.
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For more, see Agent's foreclosure purchase angers potential buyer.
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For more, see Auctioneer not liable for unlawful foreclosure sale (requires paid subscription).
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For more, see Two charged in $3.5 million fraud targeting Seattle-area elderly.
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For more, see Group asks FDIC to help 34 Bronx buildings (Elected officials, housing advocates and tenants nudge feds to pressure lender to disclose details on badly-needed repairs in properties housing 800 families).
(1) According to the story, New York Community Bank has a large portfolio of distressed multi-family loans, including mortgages on 328 buildings—housing more than 6,000 families—with more than three outstanding code violations per unit that pose serious health and safety risks. Of those buildings, 34 are in foreclosure, with a total of 800 apartments. Advocates worry they will be sold to the highest bidder without vetting the buyers' ability or willingness to rehabilitate the deteriorating properties, the story states.
For more, see Tenants of apartment complex told to find new homes (More than a hundred people living in a large Lexington apartment complex are asked to leave after dozens of units were condemned a year ago).
(1) While the tenants would probably have no protections against this type of eviction if it were local city/county officials ordering the premises vacated for health and safety reasons, it appears that the landlord in this case would be bound by the Federal Protecting Tenants at Foreclosure Act of 2009, which provides important protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property and, in many cases, the right to remain for the length of the tenant's existing lease term. There is no exception in the law allowing for a landlord purchasing an occupied foreclosure property to boot tenants based on health & safety issues.
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Source: Tenants powerless after landlord doesn't pay bill.
For story update, see Tenants still powerless after landlord doesn't pay bill (Florida Legal Aid is now helping the Marinacks build a case against their landlord).
(1) Presumably, the landlord hasn't paid the water bill, either, so a water shutoff can't be far behind. At that point, the building will be 'ripe' for a local code enforcement 'vacate order' giving all the residents an immediate 'boot' because of the health and safety hazards caused by the utility shutoffs.
For more, see Widow: Bank insists on talking to my dead husband.
For more, see Justices uphold foreclosure rule (It's fine for judges to require lawyers to verify details, court ruling says).
For more, see Troubled homeowners can't reach many mortgage trustees, AG says.
For the Washington AG press release, see Washington Attorney General’s investigation turns up additional foreclosure process problems (Attorney General steps in to ensure homeowners can contact foreclosure trustees):
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(1) The next question to be addressed here, as it is in all these 'technicality' screw-up cases, in connection with those foreclosure/trustees' sales that have already taken place, and where strict compliance with the law was not met, is:
See Albice v. Premier Mortgage Services Of Washington, Inc., 157 Wn. App. 912; 239 P.3d 1148 (Wn. Ct. of App., Div. 2, September 28, 2010) for a recent Washington State case where a three-judge panel of the state Court of Appeals found that a procedural flaw in the foreclosure process rendered the trustees' sale wholly void, and thereby left an unwitting investor at the auction who bought the subject property holding the bag, despite any claim on his part of bona fide purchaser protection.
For the briefs filed in Albice, see:
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For more, see Firm says its new software ensures the soundness of foreclosure papers.
For more, see Novice investors can lose big money in online foreclosure auctions.
Feeling Bilked
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For more, see Area Landowners Claim Fraud In Oil & Gas Contracts (Mildred Lutz, 92, is suing over an oil-and-gas lease that brought her nothing).
See also, WPBN-WTOM-TV Channels 7&4: Energy company says they have done no wrong voiding oil and gas leases (Chesapeake Energy says lawsuits are without legal merit).
See NY AG Warns Consumers On Entering Natural Gas Exploration Leases for similar complaints regarding oil & gas drilling outfits operating in other parts of the country.
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For the ruling, see Bank of New York Mellon v. Elghossain (when link expires, GO HERE).
Thanks to Deontos for the heads-up on the story.
(1) This raises the question, in connection with those past foreclosure actions where strict compliance was not met, and where a judgment was obtained anyway and the property subsequently sold at auction:
Among those making this quarter's 'honor roll' for either playing fast & loose with their clients' money or trust
For the entire gossip sheet, see Supreme Court Disciplines 26 Attorneys.
(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzlement by a Florida-licensed attorney.
For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.
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For the story, see Woman on '60 Minutes' has foreclosure dismissed.
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For the press release, see Berger & Montague, P.C. Files Class Action Lawsuit Against CitiMortgage, Inc. on Behalf of Pennsylvania Homeowners.
For the lawsuit, see Whiting v. Citimortgage, Inc. (April 1, 2011).
See also, Silva v. Citimortgage, Inc. (March 11, 2011) for a similar lawsuit filed by this firm on behalf of screwed-over New Jersey homeowners.
See Parade Of HAMP Lawsuits Seeking Class Action Status Continues; Banks Accused Of Stiffing Homeowners On Loan Modifications, Despite Pocketing TARP Ca$h for links to some of the complaints filed in an ever-growing list of HAMP-related, loan modification lawsuits.
The homeowner also prevailed on various other claims as well (ie. Violations of Federal Credit Repair Organizations Act (15 U.S.C. §1679b(a)) and the Virginia Credit Services Business Act (Va. Code §59.1-335.5-8), as well as Fraud, Conspiracy, Fiduciary Duty violation, Conversion, Unjust Enrichment). (The court noted that, prior to the conclusion of this litgation, the homeowner recovered the title to her home, but that she had still suffered uncompensated monetary and emotional harm as a result of this racket).
In addition to the damages award to the homeowner, the court granted the homeowner's attorney, the Legal Aid Justice Center in Charlottesville, Virginia, prevailing party legal fees in the amount of $52,515, the tab for which is picked up by the sale leaseback peddler and the escrow agent who handled the real estate closing, who was also named as a defendant and co-conspirator in the
The court noted that the foreclosure rescue operator involved, one Nicholas McLeod, pleaded guilty to criminal charges in connection with equity-stripping scams for taking equity from homeowners in Virginia and Maryland through transactions similar, but unconnected to, the transaction at issue in this civil lawsuit. He was sentenced for those ripoffs to six years in Maryland state prison after pleading guilty to felony theft and embezzlement.
For the facts of the civil case and the court's ruling, see Kindred v. McLeod, Civ. Action No. 3:08CV00019 (W.D. Va., Charlottesville Division, November 19, 2010).
(1) The Legal Aid Justice Center provides legal representation for low-income individuals in Virginia. In awarding them $52,515 in legal fees, District Judge Norman K. Moon noted the relationship between this sum to the amount of the homeowner's damages award:
Also named in the lawsuit is Wells Fargo which, in a separate transaction, allegedly made a predatory loan.
The court described the basis for the lawsuit as follows:
As to Wells Fargo, Hughes alleges violations of CPPA and a common law negligence claim.
And as against both Abell and Wells Fargo, Hughes seeks to quiet title to his primary residence after refinancing his mortgage.
Hughes alleges that while he believed he was securing a loan to save his home from foreclosure, in fact, Abell, Baltimore, and Modern Management engaged in a scheme to defraud Hughes of his home.
Arising from a separate transaction, Hughes alleges that Wells Fargo provided him financing on unconscionable terms and misrepresented material
For the reasons discussed in its ruling, the court:
Representing the homeowner is the Legal Aid Society of the District of Columbia
For the lawsuit, see Hughes v. Abell - Amended Complaint.
Go here for earlier posts on Vincent Abell.
(1) See DC High Court Affirms Punitive Damages Award Slamming Sale Leaseback Peddlers For $3.3M In Equity Stripping Foreclosure Rescue Ripoff for an example of earlier litigation involving Vincent Abell, Calvin Baltimore, and Modern Management.
Inasmuch as "both Abell and Baltimore have done time in federal prison for property schemes" according to a 2004 CBS News' story (see Loan Scam Targets Seniors' Homes (Washington Con Artists Preyed On Elderly People In Financial Trouble) (go here to watch related CBS News' video)), nothing short of additional criminal prosecution will put these guys out of business.
(2) With regard to the alleged predatory loan involving Wells Fargo, the D.C. Consumer Protection Procedures Act, according to the court, applies to real estate finance transactions like the one in this case, citing DeBerry v. First Gov't Mortgage & Investors Corp., 743 A.2d 699, 703 (D.C. 1999).
The court further noted:
Similarly, in Johnson v. Long Beach Mortgage Loan Trust 2001-4, 451 F. Supp. 2d 16 (D.D.C. 2006), the court declined to dismiss a complaint under section 28-3904(r)(1) alleging that loan payments would require more than half of the plaintiff's income. Id. at 38.
Here, Hughes similarly alleges that Wells Fargo's terms require payment of nearly half of his income, or even more, given potential increases in the rate in the future. Hughes has satisfied his pleading burden, then, because he has alleged that Wells Fargo was aware that its terms would require approximately half of his income and that he had no prospects for increased income.
(3) The Legal Aid Society of the District of Columbia was formed in 1932 to provide civil legal aid to individuals, families and communities in the District who could not otherwise afford to hire a lawyer.
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For more, see Broward to sue for Deerfield widow's right to live in Century Village condo with Chihuahua (County takes on "prescription pet'' case against condo).
Her story starts on the day she came home from work, only to find her home boarded up and with the locks changed, and goes from there:
After spending time couch-surfing with her family across Cook County, Zabrina ultimately gave up on Chicago and moved her family to Valparaiso, Indiana in search of a new start.
For the story, see Not a Wonderful Life: The Effects of Aggressive Foreclosure.
Source: Watch ’60 Minutes’ Take On Foreclosure Crisis.
For additional '60 Minutes' video on this story, see Mortgage mess: Who really owns your mortgage? (Scott Pelley explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents).
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For the story, see Court: Chase owes $4 million for files.
Source: Woman accused of stealing from dead stepfather's estate.
For the story, see State files suit against debt firm (Collections giant is accused of "robo-signing" documents).