Another Lower Court Reversal: NY Appeals Court Slams MERS In Rejecting Standing-Lacking Suit Against Pro Se Foreclosure Defense Attorney

Forbes reports:

• A New York appeals court has thrown out a foreclosure proceeding involving MERS, the national registry for mortgages that tracks millions of individual loans behind mortgage-backed securities. The case sets a bad precedent for MERS in New York, but may not cause upheaval nationwide.
• In a 7-page ruling issued Friday, the New York appellate court threw out Bank of New York’s foreclosure suit against Stephen and Frederica Silverberg, who were allegedly behind on $479,000 in loans. Bank of New York is the trustee for the trust containing mortgages, one them presumably the Silverberg’s, that were bundled together and sold to investors as bonds. Unfortunately for the bank, the court ruled that MERS, the bookkeeping entity set up to keep track of those mortgages in land-records offices around the country, couldn’t give BONY the authority to foreclose because it didn’t possess the underlying note, or Silverberg’s promise to pay.
• “A transfer of the mortgage without the debt is a nullity, and no interest is acquired by it,” the court ruled.
• Public Citizen said the decision could have “far reaching consequences,” but not everyone agrees this is a big deal. Even the lawyer for the Silverbergs, Stephen Silverberg himself, acknowledged his was an unusual situation. Bank of New York “admitted it didn’t have the note” proving it was the rightful owner of the collateral, Silverberg told me.
• “They’ve had three years to find it and they haven’t,” he said. Without both the note and the mortgage, or legal document establishing the home as collateral for the note, the court said a lender can’t foreclose.

***

• The New York appeals court acknowledged it could be creating trouble for those investors.
  
  This Court is mindful of the impact that this decision may have on the mortgage industry in NewYork, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenienceof lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules thatgovern real property.
• Silverberg, who represents other homeowners in foreclosure actions, was similarly unapologetic. He declined to say whether he was paying his mortgage, or intended to do so.
• “The question here is some bank is coming forward saying the homeowner owes them hundreds of thousand of dollars but can’t present any evidence of ownership,” he said. “In New York, in order to evict the owner you must prove you have right to do so. This is the law and no apologies for enforcing your rights. They really pushed when they had nothing behind them.”(1)

For the story, see New York Appeals Court Rejects MERS Foreclosure.

For the appeals court ruling, see Bank of N.Y. v. Silverberg, 2011 NY Slip Op 05002 (NY Sup. Ct. App. Div. 2nd Dept. June 7, 2011).

See also:

• Naked Capitalism: New York State Appellate Court MERS Smackdown: Another Nail in the Coffin,
• Public Citizen Consumer Law & Policy Blog: MERS cannot foreclose unless it is the holder of the underlying note.

(1) For aficionados of appellate procedure, it should be noted that, until the New York Court of Appeals, the state's highest court pronounces a contrary rule on this issue, and absent any conflicting ruling by a sister intermediate appellate court, existing New York case law suggests that this ruling may be binding on all trial courts throughout the state (both inside and outside the jurisdiction of the Second Department) presiding over cases involving substantially the same legal issues. See:

• People v. Turner, 840 NE 2d 123 (NY 2005): The New York high court referenced the binding effect of an intermediate court ruling on all trial courts (both inside and outside the appeals court jurisdiction) throughout the state in this passing comment:
  
  Appellate counsel's apparent conclusion that Di Pasquale was not worth citing was not a reasonable one, even by the undemanding standard we apply in ineffective-assistance cases. Di Pasquale, though old, was still a valid precedent, binding on all trial-level courts in the state (see Mountain View Coach Lines v Storms, 102 AD2d 663, 664-665 [2d Dept 1984]) and entitled to respect by appellate courts.
• Mountain View Coach v. Storms, 102 AD 2d 663 (NY Sup Ct. App. Div. 2nd Dept. 1984):
  
  At the outset, we note that if the Third Department cases were, in fact, the only New York authorities on point, the trial court followed the correct procedural course in holding those cases to be binding authority at the nisi prius level.
  
  The Appellate Division is a single State-wide court divided into departments for administrative convenience (see Waldo v Schmidt, 200 N.Y. 199, 202; Project, The Appellate Division of the Supreme Court of New York: An Empirical Study of its Powers and Functions as an Intermediate State Court, 47 Ford L Rev 929, 941) and, therefore, the doctrine of stare decisis requires trial courts in this department to follow precedents set by the Appellate Division of another department until the Court of Appeals or this court pronounces a contrary rule (see, e.g., Kirby v Rouselle Corp., 108 Misc 2d 291, 296; Matter of Bonesteel, 38 Misc 2d 219, 222, affd 16 AD2d 324; 1 Carmody-Wait 2d, NY Prac, § 2:63, p 75).
  
  This is a general principle of appellate procedure (see, e.g., Auto Equity Sales v Superior Ct. of Santa Clara County, 57 Cal 2d 450, 455; Chapman v Pinellas County, 423 So 2d 578, 580 [Fla App]; People v Foote, 104 Ill App 3d 581), necessary to maintain uniformity and consistency (see Lee v Consolidated Edison Co., 98 Misc 2d 304, 306), and, consequently, any cases holding to the contrary (see, e.g., People v Waterman, 122 Misc 2d 489, 495, n 2) are disapproved.
• Nachbaur v. American Transit Insurance Company, 300 A.D.2d 74; 752 N.Y.S.2d 605 (NY Sup. Ct. App Div., 1st Dept. 2002):
  
  We particularly disapprove of the failure of plaintiff's attorney to cite adverse authority. The failure is especially glaring in this case since plaintiff's attorney represented the losing appellant in Bettan (supra), a Second Department case issued a matter of weeks before plaintiff's reply brief on the instant appeal was submitted, which precisely addresses five out of six of plaintiff's causes of action as well as the issue of class certification (see Amazon Coffee Co. v Trans World Airlines, 111 AD2d 776, 778) and, unless and until overruled or disagreed with by this Court, is "controlling" authority that plaintiff's attorney was obligated to bring to the attention of this Court (see Matter of Cicio v City of New York, 98 AD2d 38; Merl v Merl, 128 AD2d 685; see also Mountain View Coach Lines v Storms, 102 AD2d 663, 664-665).

See also these lower court New York rulings:

• Bush v. Cobble Hill Health Ctr., Inc., 2007 NY Slip Op 52268(U) (NY Sup. Ct. Kings County, 2007):
  
  "The rule in New York is that the trial courts must follow an Appellate Division precedent set in any department in the State until its own appellate division decides otherwise (see Mountain View Coach Lines, Inc. v. Storms, 102 AD2d 663 [2d Dept 1984])." (Stewart v. Volkswagen of America, Inc., 181 AD2d 4, 7 [2d Dept 1992]).
• In The Matter Of SS, 2007 NY Slip Op 50218, (Fam. Ct. Nassau County, 2007):
  
  Regarding decisions from an Appellate Division other than our own in the Second Department, those decisions are just as binding upon this Court as if they were Second Department cases, unless the Court of Appeals or the Second Department has decided any issue differently.
  
  This is because the Appellate Division is a single state-wide Court, which is divided into departments solely for administrative convenience. Mountain View Coach Lines v. Storms, 102 AD2d 663 (2d Dept 1984), cited approvingly in People v. Turner, 5 NY3d 476 (2005).
  
  The First Department also has the same fiat: Nachbaur v. American Transit Insurance Co., 300 AD2d 74 (1st Dept 2002), appeal den'd 99 NY2d 576 (2003), cert. den'd sub nom Moore v. American Transit Insurance Co., 538 US 987 (2003).

Go here for links to a few other cases that have applied this rule.

Fannie To Do 'End Run' Around New Hawaii F'closure Rules; Orders Dismissal Of All Non-Judicial Actions; Cases Now To Be Filed In Court; Re-Dos Needed

MortgageOrb reports:

• Fannie Mae has directed its servicers to commence all new foreclosures in the state of Hawaii as judicial foreclosures.(1) The company has also instructed servicers to dismiss all pending Fannie Mae nonjudicial foreclosures in the state that have not proceeded to sale and convert them to judicial foreclosures.
• The new policy, which is effective immediately, is the result of recent legislation that changes the state's foreclosure process and encourages third-party mediation.(2)
• According to a servicing announcement issued Friday, Fannie Mae has established a maximum allowable fee of $2,200 for Hawaii judicial foreclosures.
• The company has also indicated that, because of potential title insurance issues, it may have to undo recent real estate owned (REO) acquisitions that resulted from nonjudicial foreclosures. "Upon being notified of any eliminations, servicers must immediately restart the matters as judicial foreclosures," Fannie Mae says of the REO properties.

Source: Fannie Instructs Servicers To Convert Hawaii Foreclosures.

For Fannie Mae's servicing announcement, see Hawaii Legislative Changes Affecting Non-Judicial Foreclosures.

(1) Inasmuch as Fannie Mae, in its announcement, makes no distinction between the handling of owner-occupied and non-owner occupied homes in foreclosure, its policy apparently applies to all of its delinquent home mortgages. Contrast this policy with the policy codified in the recently-passed Hawaii foreclosure law that allows homeowners facing non-judicial foreclosure to convert the process to a judicial foreclosure. Said conversion option is limited, however, to owner-occupied homes. See New Court Rules to Convert Non-Judicial Foreclosures to Judicial Foreclosures.

(2) For more on the new Hawaii foreclosure rules, see:

• Demystifying The New Foreclosure Law,
• De Facto Temporary Moratorium For All Current Non-Judicial Foreclosures For Owner-Occupied Hawai'ian Homes,
• Option To Convert From Non-Judicial To Judicial Process Now Possible For Hawai'ian Homeowners Facing Foreclosure.

Bank Backs Down On Alleged Intimidation In Foreclosure Action; White Shoe Law Firm's Naming Of Fraud Expert's Son In Suit Viewed As Act Of Retaliation

The Huffington Post reports:

• Deutsche Bank has dropped the son of high-profile foreclosure fraud investigator Lynn Szymoniak from the foreclosure case against her, according to new court documents. The bank had added Szymoniak's son, Mark Cullen, to the foreclosure suit this May, a move that many experts saw as an act of retaliation against Szymoniak, who has publicized banks' widespread use of forged signatures in the foreclosure process to improperly give borrowers the boot. On June 8, lawyers filed a "Notice of Dropping Party" with the Florida court dismissing its previous claims against Cullen.

***

• When the bank refiled [a previously-thrown out foreclosure action against Szymoniak], her son, Mark Cullen, had been named a party to the lawsuit, creating a blight on his legal record and a major hassle for the family. Independent foreclosure attorneys accused the bank of attempting to intimidate Szymoniak's family and retaliating against Szymoniak for her public activism.

***

• [Mortgage servicer] American Home declined to comment after the new court documents were filed, but a spokesperson told HuffPost earlier that the decision to include Szymoniak's son in the refiled lawsuit was not an act of retaliation. Instead, they said at the time they believed him to be a tenant who could have a secondary claim to the home. He was named in the foreclosure suit, American Home said, to make sure that he couldn't come back and press legal claims against American Home if his mother is later evicted.
• But Szymoniak's son, Mark Cullen, has not lived there for seven years, Szymoniak said. He is a graduate student in poetry at the New School in New York, a fact that any cursory inquiry by American Home's lawyers could have detected.

***

• When Szymoniak challenged the foreclosure, the bank brought in Florida corporate law behemoth Akerman Senterfit & Eidson. It wasn't the notoriously sloppy foreclosure mill adding Szymoniak's son to the case -- it was an expensive team of corporate law experts.
• That fact reinforced the impression among Florida foreclosure attorneys that the decision to add Szymoniak's son to the mortgage was an act of intimidation. Akerman did not respond to phone calls for comment but conferred with American Home prior to the mortgage servicer's interactions with HuffPost.

For the story, see Bank Drops Legal Pressure On Foreclosure Fraud Expert's Family.

Delaware Judiciary To Zombie Debt Buyers, Collectors Coming To Court Claiming They're Owed Cash: Prove It!

From Public Citizen's Consumer Law & Policy Blog:

• The Delaware courts have posted an administrative directive setting higher standards for consumer debt collectors to plead and document their collection actions. Among other things the directive calls for debt buyers to identify the original creditor and all assignments of the debt and to attach a copy of the original contract.
• The latter requirement will be challenging for credit card debts, because the written credit card account agreement is a thing of the past; most credit card contracts are now formed (according to the card issuers anyway) when a consumer clicks an "I agree" button, and the contract terms are somewhere in the cloud. You can read and respond to comments on the directive here.

Source: Delaware Courts to Collectors: Prove It.

In related stories, see:

• In New York, Some Judges Are Now Skeptical About Debt Collectors’ Claims,
• Why the NAF Wants Courts to Lower the Burden of Proof on Debt Collectors.

Thanks to Deontos for the heads up on the CL&P Blog post.

Feds Accuse BofA Of Foot-Dragging, Providing Incomplete Information, Reluctance In Allowing Employee Interviews In Current FHA Mortgage Probe

Bloomberg reports:

• Bank of America Corp., the largest U.S. lender, “significantly hindered” a federal review of its foreclosures on loans insured by the Federal Housing Administration, the U.S. said.
• The bank was slow in providing data and offered incomplete information, according to the U.S. Department of Housing and Urban Development inspector general’s office, which conducted the review. The bank cooperated with the office, Dan Frahm, a company spokesman, said.
• “Our review was significantly hindered by Bank of America’s reluctance to allow us to interview employees or provide data and information in a timely manner,” William Nixon, an assistant regional inspector general for the agency, said in a sworn declaration.
• The declaration, dated June 1 and obtained yesterday by Bloomberg News, was filed as an exhibit in a lawsuit by the state of Arizona against the Charlotte, North Carolina-based bank. Arizona, which is seeking to interview former Bank of America employees, accuses the bank of misleading homeowners who were seeking mortgage modifications.

For more, see BofA Hindered Foreclosure Review, U.S. Says.

Chase Dumps Chief Of Beleaguered Mortgage Unit Over Illegal Foreclosure Practices That Screwed Over U.S. Servicemembers

Bloomberg reports:

• JPMorgan Chase & Co., the second- largest U.S. bank, ousted mortgage chief David Lowman after it overcharged active-duty military personnel on loans and improperly foreclosed on other borrowers.

***

• JPMorgan has been taking steps this year to repair its mortgage unit, which posted at least $3.3 billion in losses during the first quarter.

***

• [Chase CEO Jamie] Dimon said the military foreclosures were the worst mistake the bank has ever made. “We deeply apologize to the military, the veterans, anyone who’s ever served this country and we’re trying to go way beyond” what is needed to correct the errors, he said at the company’s May 17 annual shareholder meeting. “We’re sorry.”

For more, see JPMorgan Ousts Mortgage Chief Lowman After Foreclosure Lapses.

More Heat For Banksters As NY, Delaware AGs Begin Sniffing Around For Faulty Securitizations

The New York Times reports:

• Opening a new line of inquiry into the problems that have beset the mortgage loan process, two state attorneys general are investigating Wall Street’s bundling of these loans into securities to determine whether they were properly documented and valid.
• The investigation is being led by Eric T. Schneiderman, the attorney general of New York, who has teamed with Joseph R. Biden III, his counterpart from Delaware. Their effort centers on the back end of the mortgage assembly lines — where big banks serve as trustees overseeing the securities for investors — according to two people briefed on the inquiry but who were not authorized to speak publicly about it.
• The attorneys general have requested information from Bank of New York Mellon and Deutsche Bank, the two largest firms acting as trustees. Trustee banks have not been a focus of other investigations because they are administrators of the securities and did not originate the loans or service them. But as administrators they were required to ensure that the documentation was proper and complete.

***

• The stakes are potentially high. If the trustees did not follow the rules set out in the prospectus, they may be liable for breaching their duties to investors who bought the securities. That could expose the banks to costly civil litigation.

***

• The trusts were governed by the laws of the states in which they were set up. Roughly 80 percent of the trusts are governed by New York law with the rest by Delaware law. The rules governing the securitization process are labyrinthine, and there are steps required if the investment is to comply with tax laws and promises made by the issuer in its offering document. If the trusts did not comply with tax laws, for example, the beneficial treatment given to investors could be rescinded, causing taxes to be levied on the transactions.
• The terms of these mortgage deals varied, but many of them required that the trustee examine each of the loan files as soon as they came in from the Wall Street firm or bank issuing the security. For a file to be complete, it would typically have to include all of the information necessary to establish a chain of ownership through the various steps of the bundling process, as when the originator transferred it to the issuer of the security who then moved it to the trustee.
• Complete loan files were supposed to be delivered to the trusts within 90 days in most cases. If the trustee found any missing or defective documents, it was supposed to notify the loan originator so that it could either cure the deficiency or replace the loan. Such substitutions are typically allowed only in the early years of the trust.
• By asking for documents relating to this process, investigators are trying to determine if the trustees fulfilled their obligations to the investors who bought the mortgage deals, according to the people briefed on the inquiry.

For the story, see Two States Ask if Paperwork in Mortgage Bundling Was Complete.

See also, The Dylan Ratigan Show: Attorneys-General Look Into Bank Behavior In Mortgage Mess.

NJ Appeals Court: State Fair Foreclosure Act Inapplicable To Non-Owner Occupants

A recent ruling of the New Jersey appeals court serves as a reminder that the rights of New Jersey homeowners pursuant to the state Fair Foreclosure Act, (N.J.S.A. 2A:50-53 to -68) applies only to owner-occupants.

In rejecting the claims by a New Jersey couple challenging a foreclosure judgment, the court, in a nutshell, summarized thier legal analysis in this excerpt (bold text is my emphasis):

• In other words, if the debtor or his or her family does not occupy, or plan to occupy the property when the loan originated, the Act does not apply, even if the debtor or a family member later takes up residence.
  
  On the other hand, even if the debtor or the debtor's family occupied or planned to occupy the property when the loan originated, the Act may cease to apply if the debtor and his family vacate the property and convert it to a rental or investment property. That is because the mortgage would cease to be a "residential mortgage" as defined once the property is no longer "occupied, or . . . to be occupied" by the debtor or the debtor's family. Ibid.

In modifying this position, however, the court hastened to add the following, in footnote 5 of their ruling:

• One can imagine a scenario in which a mortgagor temporarily rents his or her property — for example, while taking on an extended work assignment away from home — but intends to return.
  
  Under such circumstances, the mortgage remains a "residential mortgage" because the property "is to be occupied" by the debtor. Defendants in this case presented no evidence of an intention to return to the mortgaged premises. Indeed, they apparently resided nearby on the same street in the same municipality.

For the ruling, and the court's full analysis of the New Jersey law on this point, see Aurora Loan Services, LLC v. Einhorn, No. A-5586-09T1 (NJ Sup. Ct., App. Div. June 9, 2011).

Recently-Issued Bankster Anti-Flopping Short Sale Contracts Put Real Estate Agents On Hot Seat As Brokers Bellyache

The Sarasota Herald Tribune reports:

• New short-sale contracts issued by two of the largest banks in the country are causing concern in the local real estate community.
• The contracts, which were issued by Bank of America and Wells Fargo, ask real estate agents to certify -- under penalty of perjury -- that the short sales they are conducting are "arms length" and that the properties will not be resold within 30 to 90 days of closing.
• The object of the contracts, according to Sarasota attorney Evan Berlin, is to protect banks against what has become known as "flopping" -- a form of mortgage fraud in which real estate professionals get banks to accept low-ball prices for properties in some stage of foreclosure and quickly resell them at higher prices.
• Though real estate agents acknowledge flopping is a legitimate concern for banks, they see the new contracts as another way in which banks are shifting more of the financial burden and liability of making sure mortgage fraud does not occur onto them. "The contracts put extra pressure on Realtors to do due diligence and could have a chilling effect on legitimate flip transactions," Berlin said.

For more, including contract excerpts from the Wells Fargo and Bank of America short sale documents, see New short-sale contracts upsetting Realtors.

Delinquent Debt-Buying Vultures Sighted Circling Around Yankee Stadium In Search Of Next Big Meal

In The Bronx, New York, Bloomberg reports:

• Hedge funds specializing in distressed debt are buying municipal bonds backed by parking lots and garages at the new Yankee Stadium, which face a payment default as soon as next year, according to two people familiar with the purchases.

***

• “This facility seems meaningfully impaired, but there are some potential fixes,” said Laurence Gottlieb, chief executive officer of Fundamental Advisors LP, a private-equity firm in New York that buys municipal debt. “Costs can be reduced and it could be repositioned for commuter parking.”

***

• Bronx Parking Development Co. issued the bonds through New York City’s Industrial Development Agency to build three garages, renovate two others and refurbish six lots near the 50,287-seat stadium.

***

• The garages generated $2.4 million in April, 28 percent less than assumed, according to a May 25 report available to bondholders. They hold 9,266 spaces and the average occupancy has been 43 percent since the Yankees’ home season began March 31, according to bond filings. Self-parking on game days costs $35, an increase of $12 over last year.(1)
• The facility will not have sufficient operating revenue to make an interest payment on April 1, 2012, based on current projections, according to Steven Polivy, an attorney at Akerman Senterfitt LLP in New York, which represents Bronx Parking. That payment would need to be made out of the debt service reserve fund, he said.

***

• “The Yankees continue to draw consistently strong attendance,” Morgan Stanley executive director Pete Block said in a March 18 report. The Yankees attracted 1.4 million fans to home games this season through June 9, up 16 percent from 1.2 million in the same period last year, according to the Sports Network news service. The Yankees led all Major League Baseball teams in attendance last year at 3.77 million, according to ESPN.

For more, see Hedge Funds Target Yankee Stadium Parking-Garage Muni Bonds Near Default.

(1) With the No. 4 train (East Side) and the B and D trains (West Side) continuing to make stops (after all these years) at East 161st Street and River Avenue, and the MTA Metro-North Railroad's Hudson Line stopping at the Yankees' E. 153rd Street Station, who the hell wants to get clipped for $35 in self-parking.

Further, I'm sure it doesn't help the bondholders much that the Yankees, on their own website, promote the use of mass transit in traveling to and from The Stadium "without having to deal with the hassles of parking, tolls and traffic" and give the general public this advice:

• Remember: Mass Transit is the best way to get to Yankee Stadium!

Standing-Lacking Banksters Take Another Hit In Federal Bankruptcy Appeals Ruling

In a 46-page opinion, the Bankruptcy Appellate Panel of the U.S. Court of Appeals for the 9th Circuit handed the bankster industry its latest drubbing in an Arizona case, finding that the banksters in question failed to establish that, given the facts of the case, they both:

• lacked standing to seek relief from the automatic stay, and
• lacked standing to file a proof of claim.

In addition to setting forth the facts in the case, the opinion discusses the issues as it breaks down as follows:

• A. Standing in Mortgage Cases:
  
  1. Constitutional Standing
  2. Prudential Standing
  3. Prudential Standing and the Real Party in Interest Doctrine
  4. Real Party in Interest Status and Its Policies
  
  B. The Substantive Law Related to Notes Secured by Real Property
  
  1. Applicability of UCC Articles 3 and 9
  2. Article 3 of the UCC and the Concept of a “Person Entitled to Enforce” a Note
  3. Article 9 and Transfers of Ownership and Other Interests in a Promissory Note
  
  C. Wells Fargo’s Lack of Standing to Seek Relief from the Automatic Stay
  
  1. Standing to Seek Relief from Automatic Stay
  2. Wells Fargo’s Argument Regarding Standing
  3. Wells Fargo’s Lack of a Connection to the Note
  
  D. AHMSI’s Lack of Standing To File Proof of Claim
  
  1. The Lack of Findings on Central Issues
  2. Analysis of the Record and AHMSI’s Status as a “Person Entitled to Enforce” the Note

As referenced earlier, the opinion is 46 pages, so for those who are interested in this kind of stuff, you'll need to set aside some time to digest this ruling.(1)

For the ruling, see Veal v. American Home Mortgage Servicing, Inc. (In re Veal), BAP Nos. AZ-10-1055-MkKiJu, AZ-10-1056-MkKiJu, Bk. No. 09-14808 (9th Cir. BAP June 10, 2011).

Thanks to Mike Dillon at GetDShirtz. com and Deontos for the heads-up on the ruling.

(1) In the following selected excerpt, the court identifies one of the problems that, while it may not have directly impacted on the court's ruling, exists in many cases throughout the country: an assignment of mortgage that doesn't also assign the promissory note (while, in most jurisdictions, the general rule is that a mortgage follows the note that has been assigned, the note does doesn't follow the mortgage when only the latter is assigned) (bold text is emphasis contained in the ruling):

• The purported assignment from Option One to Wells Fargo was different, however, and more limited. It purported to transfer
  
  the following described mortgage, securing the payment of a certain promissory note(s) for the sum listed below, together with all rights therein and thereto, all liens created or secured thereby, all obligations therein described, the money due and to become due thereon with interest, and all rights accrued or to accrue under such mortgage.
  
  Thus, unlike the assignment from GSF to Option One, the purported assignment from Option One to Wells Fargo does not contain language effecting an assignment of the Note. While the Note is referred to, that reference serves only to identify the Mortgage. Moreover, unlike the first assignment, the record is devoid of any indorsement of the Note from Option One to Wells Fargo. As a consequence, even had the second assignment been considered as evidence, it would not have provided any proof of the transfer of the Note to Wells Fargo. At most, it would have been proof that only the Mortgage, and all associated rights arising from it, had been assigned.7

In footnote 7 of its ruling, the court elaborated on the foregoing with this observation, one which may be helpful to those trying to convince a trial judge that a mortgage assignment doesn't operate to transfer the promissory note it secures unless the language of the assignment explicitly provides for such a transfer (bold text is my emphasis):

• One might argue that the clauses in the assignment which follow the italicized appositive phrase are broad enough to pick up the Note, and thus effect a transfer of it. They do, after all, purport to transfer “all rights therein and thereto, . . . all obligations therein described, [and] the money due and to become due thereon with interest.”
  
  But given the carve out of the Note at the beginning of the sentence, the relative pronouns “therein,” “thereto,” and “thereon” more naturally refer back to the obligations contained in the Mortgage itself, such as the obligation to insure the Property, and not to an external obligation such as the Note. It would be odd indeed if, after referring to the Note but not explicitly making it the object of the transfer (as the initial assignment from GSF did), the words were made to curl back and pick up the Note just because the Mortgage mentioned the Note among its many terms. Although the clauses might be sufficiently vague to permit parol evidence to clarify their intended meaning, no such evidence was offered or requested.

Recent Michigan Court Ruling Slamming MERS Means More Headaches For Banksters Defending Securitization Process

The Wall Street Journal reports on the recent slamming of MERS by an Ann Arbor, Michigan trial judge in ruling on a recent paperwork screw-up that will be the source of great headaches to banksters defending the flawed securitization process by which they transferred mortgage loans to investors:

• Last week, we wrote about how borrowers and courts have uncovered potential defects that could make it harder for banks to foreclose on certain homeowners whose loans were bundled together and sold as securities.
• On Monday, a Michigan judge overturned a foreclosure after concluding that the foreclosing entity couldn’t have owned the mortgage after it failed to comply with certain mortgage securitization rules.

***

• The decision is a possible setback for the securitization industry, which has argued that its transfers of mortgage loans are valid under the Uniform Commercial Code, which governs commerce across the nation. The Michigan court ruled that the specific securitization agreements didn’t comply with New York trust law, which superseded the UCC because it governs most so-called pooling and servicing agreements. (For more, see this write-up by Naked Capitalism.)

***

• Potentially more troubling is the fact that investors in the mortgage bond deal didn’t actually own the loan that it believed it did. Securitizations are governed by very specific rules to ensure that they wouldn’t run afoul of special IRS rules designed to make mortgage-backed securities investments tax exempt. The case follows a similar decision by an Alabama trial court judge in March.

For more, see In Michigan Case, Securities Trip Up Foreclosure.

In a related story, see Naked Capitalism: Michigan Court Relies on New York Trust Theory, Rules Loan Never Made it to Trust.

For the Michigan court ruling, see Hendricks v. U.S. Bank Nat'l Association, Case N. 10-849 CH (Washtenaw Cty. Trial Ct., June 6, 2011).

Unsophisticated Lender Not a "Foreclosure Consultant", Dodges Liability On '11th Hour' Usurious Loan Made To Save Homeowner Facing Foreclosure

In a recent court ruling, a California Court of Appeals recently let an unsophisticated lender off the hook for liability on a usurious loan made to save a financially strapped homeowner about to lose her home at a foreclosure sale, agreeing with the trial judge that the lender lacked a usurious intent.

The appeals court also affirmed the trial court ruling that the unsophisticated lender did not fall within the definition of a "foreclosure consultant" under the California Mortgage Foreclosure Consultant Act (Civ. Code, § 2945 et seq.) and, accordingly, that statute was inapplicable to the subject transaction.

In each case, the issue centered primarily on the fact that the lender, one Richard T. Homem, was an individual unsophisticated in real estate matters, and was unfamiliar with the formal process of making a secured loan when entering into the loan agreement with one, Lisa Charter, the homeowner facing foreclosure.

The appeals court provides this description of what happened (the reference to one, Hjerpe, is a reference to the homeowner's attorney) (bold text is my emphasis):

• At the time Homem made the loan to Charter, he was unaware of the terms of the promissory note. Those terms, including the length of the loan, the $15,000 fee, and the 8 percent interest rate, were supplied by Charter as approved terms from previous loan negotiations. Homem was unaware his loan would cover liens on Charter's property until after payment of the USDA mortgage and execution of a deed of trust in his name. Homem was told, and at all times believed, that the terms of the note were fair.
  
  Homem was not knowledgeable or experienced in loaning money. He had never loaned money for a promissory note, and was previously uninformed about the process. Homem paid Charter's defaulting mortgage before obtaining a promissory note or deed of trust to secure repayment.
  
  He is not an attorney or real estate broker, and holds no professional licenses of any kind. The promissory note was drafted by Hjerpe. Homem considered Hjerpe to serve as both his and Charter's attorney throughout the entire process, relied on his advice, and expected to be protected by him. These circumstances support the conclusion that Homem lacked a usurious intent.

Further, Homem's involvement in this matter appeared to occur innocently enough. His relationship with the homeowner that led to the transaction in question began by the latter's grandmother hiring Homem to do yard work around the house.

Upon finding out the house was in foreclosure, Homem asked the homeowner if she was interesting in selling it, to which she replied in the negative, and Homem initiated no further discussion on his inquiry. Eventually, it was the homeowner who began bugging Homem for a loan, which he was reluctant to make, after her attempts to refinance failed while the scheduled foreclosure date continued closing in on her.

According to the appeals court:

• The trial court correctly found that Homem does not qualify as a foreclosure consultant. In so concluding, the trial court cited its finding that he did not intend to enter into a usurious transaction. We have already rejected Charter's challenge to this finding. (See pt. II.B., ante).
  
  Additionally, at the time of the June 2007 loan, no agreement required Homem to perform any of the listed services for compensation for Charter. Indeed, Homem had never made a loan or obtained a deed of trust before and was unaware how to conduct secured real estate transactions. The only agreements signed between Charter and Homem were the deed of trust and the promissory note, both of which were signed after the June 2007 foreclosure sale had been halted.
  
  Further, Charter's three calls to Homem for help the day before the USDA foreclosure sale and his reluctance to make the loan supports an inference that Charter solicited his help, and not vice-versa. The record satisfies us that Homem did not act or perform in a manner consistent with the statutory definition of a foreclosure consultant.

Further, in footnote 4 of the opinion, the appeals court made this observation on the trial court's ruling:

• It also noted Homem could have denied Charter's requests for a loan and proceeded as a bidder at the June 2007 foreclosure sale. Instead, he tendered a cashier's check for the full amount of Charter's defaulted mortgage prior to the execution of documents to protect himself.

What triggered this litigation was that the homeowner ultimately went into default on the mortgage payments to Homem, at which point he foreclosed on the home and took title to it at a foreclosure sale.

For the ruling, see Charter v. Homem, No. A129519 (Cal. App. 1st Dist., Div. 4, June 8, 2011) (unpublished).

Court Slams Foreclosure Defense Attorney For $39K+ For Filing Unsupportable Affirmative Defenses To Improperly Delay Proceedings

A recent ruling by a Florida appeals court appears to be a warning shot to all attorneys involved in foreclosure litigation in Florida (both the plaintiff and defense bars) that they had better get up to speed on the workings of Section 57.105, Florida Statutes,(1) or run the risk getting slammed, as one attorney recently found out.

In it, the 4th District Court of Appeal affirmed a lower court ruling belting a foreclosure defense attorney for $18,682.99 in delay damages for filing affirmative defenses on behalf of a defendant/homeowner in a mortgage foreclosure action that the trial court said were unsupportable by the material facts and were filed primarily for the purpose of unreasonable delay (the $18,682.99 represented the amount of interest that accrued on the borrowers’ note from the day the affirmative defenses were filed and asserted until the day they were stricken).

In addition, the trial court order also awarded the foreclosing lender costs and attorney’s fees in the amount of $20,563.59, and imposed the liability for this entire amount on the foreclosure defense attorney. This portion of the trial court order was not appealed, nor was the trial court’s finding that under the inequitable conduct doctrine, the foreclosure defense attorney is responsible for the full amount of attorney’s fees as opposed to a fifty-fifty split with the borrowers as would normally be required under section 57.105(1).(2)

One interesting point in this case is that the conduct that the attorney was accused of engaging in didn't seem to rise to the level sufficient to register a blip on the 'Richter scale' of bad faith conduct, at least not compared to the kind of crap that the attorneys slaving for the foreclosure mill rackets have been getting away with.(3)

It may be that the foreclosure defense bar can consider what this ruling stands for and incorporate it into their approach in defending their clients (by filing Section 57.105 motions against the foreclosure mills for the crappy paperwork they're submitting to the courts), because it sure as hell looks like the plaintiffs bar has already done so (by the way, the law firm representing the foreclosing lender - at least in this appeal - is not one of the legal lightweights that foreclosure mills generally tend to be; it is a heavyweight firm well known in Florida and well-respected throughout the state).
For the ruling, see Korte v. US Bank National Association, 4D09-4285 (Fla. App. 4th DCA, June 8, 2011).
(1) Section 57.105 was the subject of earlier posts relating to the claim for attorneys fees entitlement when an attorney successfully fends off an attempted foreclosure. See:

• Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice,


• Fla. Appeals Ct. Nixes Prevailing Party Legal Fee Award In Foreclosure Defense; Failure To Include Request In Pleading Sinks Recovery Attempt,


• Other posts referencing Section 57.105, Florida Statutes.

(2) According to the ruling, the trial court granted the homeowners' motion seeking to have the damages paid solely by the foreclosure defense attorney (during the litigation, the homeowner in foreclosure hired a new defense attorney) based on the inequitable conduct doctrine. In footnote 2 of its ruling, the appeals court gives this tidbit on the inequitable conduct doctrine:

• "The inequitable conduct doctrine permits the award of attorney's fees where one party has exhibited egregious conduct or acted in bad faith. . . . [T]his doctrine is rarely applicable. It is reserved for those extreme cases where a party acts in bad faith, vexatiously, wantonly, or for oppressive reasons." Bitterman v. Bitterman, 714 So.2d 356, 365 (Fla. 1998) (citations and internal quotation marks omitted).
  
  In Rosenberg v. Gaballa, 1 So.3d 1149 (Fla. 4th DCA 2009), we held that the "inequitable conduct doctrine" was not rendered obsolete by the 1999 amendments to section 57.105. Id. at 1150.

See also, Moakley v. Smallwood, 826 So.2d 221 (Fla. 2002), and these links, for more on Florida's "inequitable conduct doctrine."

(3) According to the appeals court:

• The trial court's order determining U.S. Bank's entitlement to sanctions included the following findings:The Court further finds that Mr. Korte was not acting in good faith based on representations of his clients since, as to Ms. Rivero, the record before the Court established that Mr. Korte never spoke with her. The record before the Court further established that Mr. Korte made no effort to review the documentation provided by Ms. Brandon which documentation was claimed to be the sole support for the defenses raised.
  
  Finally, as to both Ms. Rivero and Ms. Brandon, the records before the Court established that Mr. Korte never provided either with a copy of the defenses that he filed on their behalf and that upon receipt of the section 57.105 motion filed in this case, Mr. Korte made no efforts to verify with them the accuracy or veracity of the facts asserted in support of the defenses.
  These factual findings are sufficient in this case to describe "the specific acts of bad faith conduct that resulted in the unnecessary incurrence of attorneys' fees." See Moakley, 826 So. 2d at 227; cf. Finol v. Finol, 912 So.2d 627 (Fla. 4th DCA 2005) (reversing an award of sanctions based on the trial court's inherent authority because the proceedings and order were inadequate to support the sanctions imposed).

Palin May Face The Boot From AZ Home After Probe Reveals Ex-Alaska Guv May Be Holding The Bag w/ Robosigner-Created Crappy Title On Recent F'closure

In Salem, Massachusetts, NECN.com reports:

• In the three years since the U.S. real-estate bubble burst, something we've learned is what a mess investment banks and mega-banks made as they took millions of shoddily documented mortgages and sliced and diced them into arcane Wall Street mortgage-backed securities in the 2000s.
• Among the millions now apparently caught in the fallout: Republican icon Sarah Palin, the former Alaska governor and 2008 vice-presidential candidate turned media celebrity.
• "The worst thing that could happen to Sarah Palin is she has a cloud on her title. She's going to have to go out, retain an attorney, and try to clean up the mess that the banks caused,'' John L. O'Brien Jr., the Salem-based Register of Deeds for Southern Essex County, sand in an interview with NECN Thursday.
• In a worst-case scenario, a prior owner could challenge whether Palin now legally holds title to the property -- or Palin could be stuck with a legal headache trying to resell the house years down the road.
• Working with forensic investigator Marie McDonnell, president of McDonnell Property Analytics Inc., O'Brien has found abundant evidence that the home a Palin trust bought in Scottsdale, Ariz., suffers from the same wretched Wall Street paper trail as millions of other U.S. homes where mortgages were converted into collateralized debt obligations and sold worldwide.
• As Wells Fargo and JPMorgan Chase processed the mortgages, foreclosed on a previous lender, and resold the house to an investor who sold it to the Palin family, McDonnell said, at least two critical documents didn't get signed and three did get signed by "robo-signers" -- people apparently using fake names who churned out thousands of purported affidavits every day vouching for the bank that all the realty and mortgage paperwork was in order.
• Two names that showed up on several documents connected to the Palin Arizona home were "Linda Green" and "Deborah Brignac," names used by multiple robo-signers purporting to be officials at multiple bank subsidiaries or business partners at Wells and Chase, O'Brien and McDonnell said.
• In the case of Brignac signatures on Chase documents, "This is a shell game where Brignac purports to be vice president of three different entities so that she can manufacture the paperwork necessary for JPMorgan Chase Bank to hijack the mortgage and then foreclose on the property,'' McDonnell said.
• "Linda Green," meanwhile, is a name O'Brien said he has found on over 6,000 documents in his registry signed in what appear to be at least 22 different hands, almost all of them easily recognizable by an average person as clearly forgeries.
• O'Brien said, "If fundamental property principles still matter in this country, Sarah Palin may have legal issues that could affect the ownership of her home. Through no fault of her own, Sarah Palin has become a victim like thousands of others across the country that have the same problem with their chain of title. I feel bad for Governor Palin and all the homeowners who have been victimized by this scheme, it just goes to show you that no one is immune from this type of fraud and irresponsible behavior that these banks participated in."
• "These banks have participated in a national epidemic of fraud that has clouded or damaged the chain of title of hundreds of thousands of American homeowners all across the country. Sadly, Sarah Palin's misfortune will however, hopefully shine the national spotlight on this issue. Given her position in the country, I am sure that she will use her influence to stand up for homeowners and their property rights".
• JPMorgan spokesman Mike Fusco said the bank would decline to comment. Wells Fargo didn't respond to requests for comment. Wells and several other banks have faced lawsuits from people facing foreclosure who argue the banks can't solidly prove they held legal possession to a mortgage when the bank moved to seize the home from delinquent borrowers.
• The big point O'Brien is trying to make is that while Sarah Palin may be among the biggest-name victims of shoddy bank paperwork, there are thousands -- if not tens of thousands -- of other people around New England facing the exact same problem as the former Alaska governor proving legal ownership of their homes. "She's experiencing the same problem that thousands of homeowners in my district are,'' O'Brien said of Palin.
• Meanwhile, as of this week O'Brien has begun refusing to record documents from banks with "the names of notorious robo signers" like Linda Green. "When I see something that I know is fraudulent, I am no longer recording it,'' O'Brien said, and he hopes more deeds officials around the country will follow suit and crank up pressure on banks -- and prosecutors -- to finally clean out hundreds of thousands of bogus realty documents infecting the nation's real-estate industry.
• Thursday afternoon, I couldn't reach an aide to Palin to see if she wanted to comment on this situation, or if she even knew about it. What's important to make perfectly clear: She hasn't done anything wrong or been accused of doing anything wrong with the Scottsdale home purchase. She's just bought a house that -- like all too many U.S. homes in 2011 -- official say has a very messed-up legal paper trail, thanks to a pair of the nation's very biggest banks and their Wall Street partners.(1)

Source: Mortgage mess victim: Sarah Palin?

Go here for a flowchart that maps out the origin of the crappy title on Palin's recent home purchase.

(1) For more on the crappy title problem in connection with improperly foreclosed homes, see:

• Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage,
• Naked Capitalism: On the Clouded Title Mess and the Difficulties of Cleaning It Up.

Gov't Oversight Committee Republican Chairman's Response To Democrat Requesting To Subpoena Servicers Over Sloppy Foreclosures: 'Hit The Road!'

Housing Wire reports:

• Rep. Darrell Issa (R-Calif.) denied a request from Rep. Elijah Cummings (D-Md.) to subpoena mortgage servicers in an investigation into possible mishandled foreclosures.
• Cummings, a ranking member of the House Committee on Oversight and Government Reform opened his investigation in February. In May, he sent a letter to Issa, chairman of the committee, formerly requesting to subpoena servicers that refused his requests for information.

For more, see Issa denies request to subpoena mortgage servicers.

Chase Begins Foreclosure Process On Active Duty Servicemember After Advising Him That Missed Payments Are Necessary To Qualify For Loan Modification

In Bend, Oregon, The Huffington Post reports:

• In August, Tim Collette's son Aaron will spend 15 days on leave from Iraq. Aaron is 20 years old, and he's been in the Army for about a year and a half. A few weeks ago, his squad was hit with an improvised explosive device. Everybody survived, but it frightened both the soldier and his family. The Army told Aaron he could go anywhere he wanted. And of all the places in the world he could visit, Aaron wants to go home.
• But Aaron might not have a home to come home to. Collette has been defending his house from foreclosure since 2008. It's currently scheduled to be auctioned off in July.

***

• Tim said negotiating with his bank, JPMorgan Chase, has been a living nightmare. When he first asked for help in 2008, he had not missed any payments. At the time, his mortgage was being handled by Washington Mutual, a subprime lending specialist Chase purchased in the fall of 2008. Collette said WaMu told him he would only qualify for a loan modification if he missed two of his $1,100 monthly mortgage payments. So he missed the payments. And the bank began trying foreclose on him.
• "They told me that you can't qualify for a loan modification without missing two payments, so I missed two payments, but I haven't gotten the modification," he said.

***

• JPMorgan Chase and its CEO, Jamie Dimon, have spent months apologizing for illegally foreclosing on the homes of active-duty military members currently fighting in Iraq and Afghanistan. Soldiers have an extra layer of legal protection in mortgage lending. Even if you miss payments, a bank cannot evict your family while you fight for your country.

***

• But that extra layer of legal protection does not apply to the parents of soldiers. Aaron wants to come home, but since the mortgage is in Collette's name, the family is left with the narrower legal protections of non-military families.

For more, see Foreclosed From Iraq: Father Seeks To Preserve Home As Son Fights Abroad.

See also, The Oregonian: Bend soldier serving in Iraq in dire need of closure, not foreclosure.

Accused Loan Modification Scammer Flees Town As Cops Tag Fugitive With 27 Felony Counts

From the Office of the Orange County, California District Attorney:

• Law enforcement is currently seeking the owner of a Costa Mesa-based mortgage refinance company and escrow business who is charged in a large fraudulent rate-lock loan modification scheme targeting mostly out-of-state and some elderly victims.
• To date, known victims are residents of California, Maryland, Minnesota, Florida, and Washington. The case was jointly investigated by the Orange County District Attorney’s Office (OCDA) and California Franchise Tax Board (CFTB).
• James Toufic Assali, 36, Irvine, is charged with 18 felony counts of grand theft, three felony counts of grand theft of an adult over 65, four felony counts of money laundering, and two felony counts of filing a false tax return with sentencing enhancements for money laundering exceeding $50,000.
• If convicted, he faces a maximum sentence of 23 years in state prison. An arrest warrant was issued May 26, 2011, for Assali, who is believed to be either in California or Vermont.
• Assali is accused of owning and being responsible for the daily operations of Meredian Financial Corporation (Meredian) and an escrow business, Fortis Title Solutions. The two businesses operated out of an office in Costa Mesa, despite having a Florida billing address.

• He is accused of targeting out-of-state victims, some elderly, by calling and soliciting Meredian’s home loan rate-lock and modification services for a fee ranging from $750 up to $10,000. [...] The defendant is accused of failing to complete a majority of home loan modifications or refinancing services retained by victims and refusing to issue refunds promised of the initial fees collected. [...]

For the Orange County DA press release, see Law Enforcement Seeks Fugitive Costa Mesa Business Owner Charged In Large Rate-Lock Loan Modification Fraud Scheme (Victims include residents of California, Maryland, Minnesota, Florida, and Washington).

Disbarred Lawyer Gets 5 Years In $600K Client Ripoff; Bar Examiner: Attorney Used Trust Account As His "Piggy Bank"

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

• A lawyer who was raised by one of Palm Beach County's most respected attorneys but is the biological son of one of its most notorious murderers was sentenced Tuesday to five years in prison for bilking clients out of more than $600,000.
• Without any show of emotion, A. Clark Cone, 56, pleaded guilty to grand theft and organized scheme to defraud. He was fingerprinted and taken into custody immediately.

***

• While Cone's wife left the courtroom in tears, one of his victims said he had no sympathy. "We put all our trust in Mr. Cone," said Anthony DePrizio, who flew in from Boston to tell Circuit Judge Stephen Rapp how Cone's dishonesty prolonged the agony of a Riviera Beach car accident that nearly cost his wife her life. Instead of helping him and his wife recover money they needed for her care, he stole it. Cone's prison sentence offered him little comfort.
• "I don't care if he serves one day. I just want my money," DePrizio said. Although ordered to make restitution, Cone appears to have no means to repay his clients.(1) He has been disbarred. His $540,000 home is in foreclosure. He was represented by a public defender.
• He took a $500,000 settlement he negotiated for the DePrizios in 2005, prosecutors said. He kept $100,000 he received in 2006 to settle a lawsuit on behalf of a Miramar man who lost his wife in a plane crash. He also kept $38,940 awarded a Boca Raton woman he represented in a slip-and-fall case.
• But the extent of his misdeeds are unknown. A paralegal who worked for him said many people, including a couple who claimed their son suffered neurological damage because he was misdiagnosed at two local medical centers, lost their ability to recover money because Cone failed to file court papers on time.
• Further, an examiner for the Florida Bar, who audited Cone's books, reported that he didn't keep records to show whose money he kept in his trust accounts. It was clear that Cone used the accounts as a piggy bank, the examiner said.

For the story, see Attorney A. Clark Cone sentenced to 5 years for bilking law clients (Son of a notorious murderer is sentenced to five years in prison for bilking clients out of more than $600,000).

(1) The Florida Bar's Clients' Security Fund compensates people who have been victims of of misappropriation or embezzlement of cash or property by a Florida-licensed attorney. For those ripped off by dishonest attorneys in other states and Canada, see:

• United States: Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• United States: Check the USA Client Protection Funds Map;
• Canada: Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

Phoenix Cops Sound Alert On Scammers Hijacking Possession Of Vacant Homes In Foreclosure, Then Pocketing Cash From Duped Renters

In Phoenix, Arizona, The Arizona Republic reports:

• Phoenix police are investigating a scam that has people pay a deposit on a rental home that turns out to be in foreclosure and not available for renting, Phoenix police said Thursday. The scammers are targeting people throughout the Valley, Phoenix police Sgt. Trent Crump said at a Thursday news conference.
• One arrest has already been made in connection to four of these scams in Phoenix, Glendale and Avondale. Raul Juarez, 35, was arrested on April 16 in connection with the case.
• Crump said the scam works like this: After breaking into foreclosed homes and switching the locks on the doors, scammers use the Internet to target potential home renters. They place ads on websites such as Craigslist and mostly involve month-to-month rentals with no credit checks. These scams also target people who have recently had homes foreclosed, Crump said.

***

• There have been six known scams of this sort in Phoenix, Crump said. Other victims have reportedly lost between $800 to $1,900 per incident. Like the scammers, police used the Internet to track down Juarez. "If you put (ads) up there, it might be police that are responding to check or to verify now," Crump said.
• Crump also warned renters to be aware of "red flags," [...]. These include supposed proprietors only accepting cash, not wanting a contract or having abnormally small deposits. Some scammers also might not have a vehicle around in case someone takes note of the license plate, Crump said.

For the story, see Phoenix police warn about foreclosure rental scam.

Go here for other posts on real estate-related hijacking scams. hijack

Insanity Finding For 'Dad-Killer' Could Salvage Son's Share Of Home, Inheritance From Dead Father's Estate

In Pinellas County, Florida, The Tampa Tribune reports:

• In a murder case that gained national notoriety with its "Red Bull" defense, Thomas Coffeen now says it wasn't the energy drink that drove his brother to kill their father. [...] Coffeen doesn't believe his brother Stephen was sleep-deprived from energy drinks when he suffocated their father with a couch pillow in St. Petersburg two years ago.
• He doesn't believe Stephen was legally insane at the time, either, though five doctors have concluded he was. The question will be decided [] by Pinellas Circuit Judge Nancy Moate Ley. Ley will rule on a plea deal worked out by attorneys for the defense and prosecution in which Stephen Coffeen, 42, would spend time in a state mental hospital rather than stand trial on a murder charge.
• Thomas Coffeen is waging an eleventh hour campaign to persuade the judge to let a jury decide the case. Others also say Stephen Coffeen was sane when he killed his father, retired college professor Robert Coffeen, 83. [...] Thomas Coffeen says he believes his brother killed his father out of jealousy and thinks his brother planned the murder before coming here for a rare family visit from his home in California.

***

• But others suggest justice for his father may not be the only reason Thomas Coffeen is pushing for prison instead of commitment to a state mental hospital for his brother. If Stephen Coffeen is convicted at trial, he won't get to split his father's inheritance of about $385,000 and a house.
• If he is found not guilty by reason of insanity, on the other hand, he could walk away with his share.

For more, see Inheritance rides on whether father killer was insane.

For story update, see Son who suffocated St. Petersburg father judged insane:

• A Pinellas County judge ruled [] that a man who suffocated his father with a pillow is not guilty by reason of insanity. Stephen Coffeen, 42, will be sent to the Florida State Hospital in Chattahoochee for the slaying in December 2009 of his 83-year-old father, Robert Coffeen, a World War II veteran who used a walker.
• Stephen Coffeen will never stand trial in the slaying because of the ruling by Pinellas Circuit Judge Nancy Moate Ley. A court hearing on whether he should be released from the state hospital could be scheduled in six to seven months.

Foreclosure Defense Attorney Shakes Another $3K Out Of BofA For Add'l Legal Fees & Costs Over Attempted Bogus Foreclosure On Home Without Mortgage

In Naples, Florida, The News Press reports:

• Bank of America is caught up at last on its account with a Golden Gate couple who were sued by the bank for foreclosure even though they never had a mortgage, the couple’s attorney said today.
• The bank cut a check [last week] for $5,772.88 to cover Naples-based attorney Todd Allen’s(1) $2,534 fee for defending retired Bay Village, Ohio, police Sgt. Warren Nyerges and his wife, Maureen, who were being foreclosed on by the bank.
• That check also covers the expenses of the Collier County Sheriff’s Office. Two deputies showed up Friday at the bank’s Davis Boulevard branch in Naples with Allen and a court order authorizing them to remove property such as furniture from the bank for public auction if the debt wasn’t paid.
• On Wednesday, Allen said the bank agreed to pay him $3,000 more for the expenses he incurred collecting the original attorney’s fees. “So BOA spent approximately $9,000 to solve a $2,500 problem,” he said in an e-mail.
• Warren and Maureen Nyerges bought a house from Bank of America for $165,000 in 2009, paid cash and never had a mortgage. Somehow, the bank and its former attorney in the case, the David J. Stern law firm, believed the couple had a mortgage and was behind in the payments, Allen said.

Source: Bank of America settles up with Golden Gate couple's attorney, Collier sheriff's office.

See also, Naples Daily News: Attorney gets another $3,000 from Bank of America for bad foreclosure.

(1) Allen is associated with The Law Office of Conrad Willkomm, P.A., Naples, Florida.

Booted Foreclosed Homeowner Attempts To Fight Off Multiple Jail Threats Over Now-Dilapidated Former Home That Bank No Longer Wants

In Paulding County, Georgia, WXIA-TV Channel 11 reports:

• It is 95 degrees in the shade, but 46-year-old Curtis Neeley, with high blood pressure and heart trouble, doesn't have time to rest. His old yard had to be cut by the close of business Wednesday or he could have gone to jail. Even now that it's done, he could still end up behind bars.
• "Cutting the grass today is keeping me out of jail," he said, sweating in the oppressive heat. "But if the house doesn't get demolished in 14 days, I'm going anyway."
• It's all part of an apparent snafu with the bank that Curtis and his attorney say took possession of the property during a foreclosure and bankruptcy two years ago. "I left the house two years ago," Neeley said. "The mortgage company came in and changed all the locks on the door so I couldn't get in."
• After taking the Paulding County house -- and maintaining it -- the bank is now trying to foist it back on him, Neeley claimed, saddling him with the cost to tear it down; something he doesn't have the money to do.

***

• The county says its goal is simply to get the property cleaned up, and unfortunately for Neeley, marshals consider him to be the owner. After trying to track him down for months, they finally located him on Facebook.
• However, officials will likely now hold off on any further threat of arrest, at least until their lawyers can cut through the blur of the bank's role with Neeley's property.

For the story, see Facing arrest, man cleans up home he says isn't his.

War Against BofA Bank Branches Continues As Court Threatens To Throw Local Manager In Jail Over Lender's Refusal To Demolish Vacant Foreclosure

In Riverdale, Georgia, The Atlanta Journal Constitution reports:

• A Bank of America branch manager in Riverdale faces jail time if the banking giant continues to ignore city orders to demolish a vacant, fire-damaged home. The bank, however, says it can’t comply because it doesn’t own the home.
• Riverdale city officials have tried for more than six months to get the bank to tear down the dilapidated property, and the bank has ignored requests to appear in court, city attorney Deana Johnson said. “We’ve cited and served them with legal process and they’ve not come,” Johnson said.

***

• On Wednesday, the bank hired the Atlanta law firm of McGuire Woods to handle the case. Meanwhile, the bank has racked up nearly $20,000 in fines, including a $500-a-day fine imposed several months ago.
• A Riverdale City Court judge earlier this week ordered a June 28 hearing for the bank to show cause why the local branch manager should not be arrested for contempt, Johnson said, adding that the bank failed to appear in court in May despite city efforts to keep the branch manager apprised of the situation. [...] The house at 6878 Cedar Hill Court in Riverdale caught fire in December 2008, forcing the homeowners to move. The house ended up in foreclosure and was eventually taken over by Bank of America. (1)

For the story, see Vacant Riverdale home spurs court threats.

(1) Earlier this month, a branch manager in Naples, Florida was reportedly visibly shaken when local cops showed up to execute an asset seizure over the bank's failure to comply with a court order awarding a homeowner/couple payment of legal fees paid in connection with a failed BofA foreclosure action. See BofA's Refusal To Pay Court-Ordered Attorney Fees In Failed Foreclosure Leads To Bank Branch 'Raid' By Cops Seeking Asset Seizure To Satisfy Judgment.

Political Pamphlets Disguised As Eviction Notices Create Chaos Among Some Detroit Residents

In Detroit, Michigan, CBS News reports:

• Residents in a Detroit neighborhood received a scare this week when they found what appeared to be eviction notices on their doors. The flyers, however, turned out to be political pamphlets in opposition to the construction of a controversial new bridge.
• The fake eviction notices were posted by a local chapter of Americans for Prosperity, the conservative political advocacy group backed by Charles and David Koch, the billionaire brothers who run Koch Industries and are longtime libertarians. Local political leaders and columnists are condemning the group for scaring residents -- whose homes sit in the epicenter of the nation's foreclosure crisis -- while refusing to disclose which of its corporate backers are funding the flyers.
• At the center of the flyer in question, in large print, reads: "Eviction Notice." In medium print, the top of the flyer reads, "This property is subject to seizure by the Michigan Department of Transportation."
• Only in small print does the flyer say the property in question could be seized if legislation approving the bridge is passed.

***

• Still, fake eviction notices had residents on edge. Resident Steve Toth told the Free Press his elderly mother saw the flyer and "damn near keeled over," while one of his neighbors was "beside himself." Scott Hagerstrom, American for Prosperity's Michigan state director, told the Free Press the group had no apologies for the flyer.

For more, see Koch-backed group's fake eviction notices rile up Detroit.

Go here for the fake eviction notice.

Tragedy Involving Deadly Bronx Firetrap That Lingered For Years In Foreclosure Spurs Crackdown On Illegally Converted Rooming Houses Throughout City

In New York City, Bronx News Network reports:

• Mayor Bloomberg and the City Council announced yesterday that the city will be taking a new, more aggressive approach in identifying and inspecting apartment buildings suspected of being divided illegally.


• At the end of April, a fire tore through an apartment building in Belmont and killed three family members who had been living there--Christina Garcia, 43, Juan Lopez, 36, and their 12-year-old son Christian Garcia.(1)


• The early morning blaze broke out on the top floor of a multi-family building at 2321 Prospect Ave., a space that had been subdivided into several rooms using partitions, according to FDNY spokesman Frank Dwyer.


• The tragedy has shined a spotlight on the proliferation of dangerous housing conditions in the Bronx, and across the city. Experts and elected officials say practices like illegal divisions, erected by both tenants and landlords alike, are frighteningly common and growing in number.

***

• Sally Dunford, of the West Bronx Housing and Neighborhood Resource Center, called the problem “endemic.” She described some of what she’s seen in the community in recent years:
  
  1- already small apartments portioned off into even smaller ones, blocking access to the fire escape or stationed dangerously close to the building’s heating source;
  
  2- five people living in a basement with no bathroom or kitchen;
  
  3- an elderly couple living in a closet;
  
  4- tenants moving back into a property immediately after the city ordered them to vacate.


• "People are more willing to do than to go to a shelter,” she said.


• Landlords, meanwhile, who are struggling to make mortgage payments on the city’s ever-growing number of financially unstable properties can collect more rents if they can fit more tenants into a given space—even if it’s a fire hazard. People who are going under are much more likely to do stupid things,” Dunford explained.


• The last known owner of the Prospect Avenue building where the fire took place, a used car salesman named Domingo Cedano, told the New York Times that he’d lost the building to foreclosure years ago.

For more, see Deadly Belmont Fire Points to Illegal Housing Dangers; City Launches Crackdown. subdivided
For the City press release, see Mayor Bloomberg And Speaker Quinn Announce New Approach To Target Most Dangerous Illegally Converted Apartments (Task Force Developed New Method Using Risk Analysis Model to Identify Properties Most at Risk for FireIn Pilot Test, 40 Percent of Targeted Properties Required Vacate Orders, Compared to Typical Rate of Three Percent).
(1) See Early Morning Bronx Fire In Illegally Converted Rooming House Leaves 3 Dead, 8 Injured; Firetrap Lingered In Foreclosure Since 2008.

Dubious Dealings Leave Nursing Home Chain Under Threat Of Collapse; 31,000 Elderly Residents Could Face The Boot

The New York Post reports:

• Don't tell Blackstone Group chief executive Stephen Schwarzman that lightning doesn't strike twice. The New York billionaire private-equity kingpin has become the subject of a blistering attack in the British media after the country's No. 1 nursing home chain, formerly owned by Blackstone, has run into a financial iceberg -- possibly putting its 31,000 residents in danger of being booted from their homes.
• The reports have blamed Blackstone for putting the chain, the 750-unit Southern Cross, in financial straits. "Former Southern Cross tycoon owns five houses worth $125.9M while 31,000 residents may have to leave their care homes," trumpeted a headline on the Daily Mail site on Sunday, referring to Schwarzman.

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• Private-equity firms that invested in Southern Cross split off the company's real estate from its actual nursing homes. This doomed the company as landlords increased rents and said they will not give the chain, which is losing money, a break.
• This comes after the British government cut reimbursement for nursing home services, leading to the Southern Cross cash crunch. If the landlord and Southern Cross do not reach a compromise in about one month, there is a danger that the chain could collapse.

For more, see Don't kill granny (Schwarzman under fire in UK over retirees).