Suit: Loan Servicer Used Deceptive Correspondence, Illegal Demands In Effort To Intimidate Tenants Out Of Foreclosed Homes In Violation Of Federal Law

In Brownsville, Texas, Foreclosure Buzz reports:

• Loan servicers and their henchmen (attorneys and real estate brokers) continue to ignore the requirements of the Protecting Tenants at Foreclosure Act. Many take the position that tenants’ leases do not have to be honored, and instead only provide a 90 day notice to vacate. Some decide to advise tenants of their “rights” expressly.



• On October 28, 2011, American Home Mortgage Servicing, Inc. (AHMSI) was sued for issuing a letter to a tenant that said as much, and refusing to change its letter in the future despite numerous requests. Without any basis in the law, AHMSI’s representatives also demand extensive documentation within a short time frame in order to get the 90 days.



• AHMSI even said for the tenant to not be concerned with an eviction. It appears that loan servicers hope to take advantage of tenants as much as possible and hope the law is not extended past December 2014.

Texas Housing Justice League, a Texas non-profit corporation and membership organization that is operated under the Texas Non-Profit Corporation Act to serve the housing interests of low-income Texans, is a co-plaintiff in this case.(1)

For more, see AHMSI Sued for Misleading Tenants per PTAF.

For the lawsuit, see Davis v. AHMSI et al., Civil Action No. 1:11-cv-219, US District Court, S.D. Tex., Brownsville Division.

Thanks to Deontos for the heads-up on the story.

(1) According to their website, Texas Housing Justice League was formed to address housing problems associated with:

• abusive homeowner association rules,
• improper eminent domain efforts,
• oppressive property tax schemes,
• severe housing conditions,
• predatory lending practices,
• improper evictions,
• illegal foreclosures,
• lease-to-own scams,
• defective titles from contracts for deed, and
• a host of other housing problems.

Rent Skimming Suspected As New Haven Landlords Allegedly Pocket Section 8 Rent Subsidies While Stiffing Banks On Mortgage Payments

In New Haven, Connecticut, the New Haven Independent reports:

• Poverty landlords Janet Dawson and Michael Steinbach found a way to make money in the recession—stop paying the bank, let properties deteriorate, but continue collecting tens of thousands of dollars a month in checks from New Haven’s housing authority.



• The Housing Authority of New Haven (HANH) is sending Section 8 federal rent subsidy checks to Dawson’s and Steinbach’s various corporate entities for at least 73 rental apartments, according to HANH. That amounted to nearly $80,000 paid out by HANH to the two for the month of October alone.



• Meanwhile, lenders are foreclosing on their homes across town. And even though Dawson and Steinbach stopped paying their mortgages on the properties, that hasn’t stopped New Haven’s housing authority from continuing to send them rent checks.

For more, see Slumlords Stiff Banks—& Rake In Sec. 8 Bucks.

Recently Widowed Woman Fleeced For $500K, Loses Home After Falling For Lonely Hearts Ripoff; Scammer Said He Was Military Man

In Castle Rock, Colorado, the Daily Mail reports:

• A grieving widow has lost $500,000 of her life savings and her home after being taken in by an Internet dating scam. Esther Ortiz-Rodeghero, 55, decided to look for love online after she lost her husband and thought she had hit the jackpot with a suave military man on the website, seniorpeoplemeet.com.



• Instead it was a fraudster who convinced her to continually fork out money which Mrs Ortiz-Rodeghero wired all over the world from her home in Castle Rock, Colorado.



• She had started to look for love online last October after her husband David Rodeghero died of pancreatic cancer at the age of 52. She told ABCNews.com: 'After seeing a therapist I was advised maybe I should go on a dating website and meet new people ... because I was depressed.'

For more, see 'I was blinded by his romantic emails': Widow loses $500,000 after falling for fake 'military lover' in internet dating scam.

Bronx Landlord Vows Appeal Of Ruling To Cough Up $33K In Refunds, Punitive Damages For Squeezing Single Mom With Illegal Rent Overcharges

In The Bronx, New York, the New York Daily News reports:

• A Bronx single mother could soon be collecting more than $33,000 from her landlord, after the state Department of Housing and Community Renewal found that she was charged excessive rent for her Norwood apartment. Iris Vega-Ortiz, 41, was charged $400 more every month for her one-bedroom apartment, according to a ruling.

***

• Meanwhile, local housing advocates said it’s the largest award they've ever seen by the state for an individual tenant in the neighborhood. “In the years that I’ve been doing this work, I’ve never seen a settlement, a ruling this high,” said Sally Dunford of the nonprofit West Bronx Housing and Neighborhood Resource Center. “It was just really good to see the system work the way it’s supposed to work.”

***

• The state HCR department told Vega-Ortiz that the rent for her apartment was supposed to be $554.75 a month, not $975. According to the state, Vega-Ortiz is owed more than $33,000, including more than $10,000 in overpaid rent and nearly $22,000 in punitive charges for intentionally jacking up the rent. According to city records, there are 31 open violations for [the buliding], including six severe hazards.

For the story, see Bronx mom awarded $33,000 from landlord after state agency rules she was overcharged for rent (Landlord vows appeal of HCR ruling).

Unwitting Homeowner Finds Tenant In Former Home After Signing Away Deed Three Days Before Auction To Outfit Promising Relief From Foreclosure Issues

In Ione, California, news10.net reports:

• A homeowner who tried a creative approach to avoid a foreclosure on his credit report was surprised to see a tenant in his house complaining about the pending auction. "It seems kind of weird," said Phil Scantling, who sold his house in September for $10 to a "walk away" company with the understanding the company would attempt to negotiate a settlement with the lender, GMAC.



• The new owner, Home Advocate Trustees, placed a tenant in the Lake Camanche home in October, three days before an auction notice was posted on the door. Tenant Stephanie Swisher paid more than $1,200 to Home Advocate Trustees for a deposit and pro-rated October rent, and contacted News10 because she was worried the foreclosure auction would lead to her eviction.



• Scantling saw the story and called to say he had been unable to get any information from Home Advocate Trustees on the status of the negotiations, and was concerned the company was more interested in collecting rent than resolving his mortgage problem.



• "They pitched it as this would pretty much fix your foreclosure issues," Scantling said. According to the company's website, Home Advocate Trustees uses "aggressive legal tactics" to achieve high quality results for sellers.



• Home Advocate Trustees obtains houses from distressed homeowners through its sister website, walkawaytoday.org.

For more, see Foreclosed homeowner surprised to see house on TV.

S. Fla. Town Mayor Faces Probe Into Homestead Exemption Claim On Condo She Didn't Reside In; Prosecutors Mull Grand Theft, Scheme To Defraud Charges

In Miami, Florida, SunPost Weekly.com reports:

• North Bay Village Mayor Corina Esquijarosa is once again in trouble, this time via a criminal investigation started by Miami-Dade prosecutors. According to records, Esquijarosa claimed a homeowner’s tax break on a condominium where she did not reside.



• Prosecutors have filed a search warrant and are looking into charges of grand theft and scheme to defraud, but as of today, no charges have been filed.



• Esquijarosa’s problems stem from a 2009 and 2010 claim of a 50,000 homestead exemption for a condominium. She was however not living in the property in Miami, but was living in North Bay Village.



• Last week, her records were seized from the Miami-Dade property appraiser’s office and she was also hit with a $500 fine by Miami-Dade’s Commission on Ethics and Public Trust for not publicly disclosing her income on her campaign disclosure forms.(1)

For more, see Prosecutors Open Investigation on North Bay Village Mayor Corina Esquijarosa.

(1) I guess possibly from rental income from the condo she claimed as her homestead that she may have been renting out to a tenant.

Future Bright For Bronx Hip-Hop Birthplace As Housing Group Takes Over F'closed 102-Unit Complex Victimized By Wall Street/Predatory Equity 'Geniuses'

In The Bronx, New York, The New York Times reports:

• After a long struggle, ownership of a Bronx building known as the birthplace of hip-hop, which had fallen into neglect and foreclosure, was taken over on Monday by a group that specializes in preserving working-class housing.



• The building at 1520 Sedgwick Avenue in the Morris Heights neighborhood was, in the early 1970s, the home of D.J. Kool Herc, whose community room parties were pivotal to the early development of hip-hop.



• But in recent years, the 102-unit complex had become a symbol for aggressive investment practices and property neglect, so much so that Senator Charles E. Schumer recently called it “the birthplace of predatory equity.” It was sold in 2008 before the real estate bubble burst to a real estate group that defaulted on the building’s mortgage within two years. The building fell into disrepair and foreclosure.



• On Monday, Workforce Housing Advisors, a group focused on salvaging working-class housing in buildings that have been overleveraged, became the building’s owner. In 2010, it bought the building’s mortgage for $6.2 million, with help from the city, and because no bidders came forward on Monday, it will keep the building. A bid of at least $7.9 million at the auction would have been required for another party to take control.



• Several residents, accompanied by an advocacy group that supported them through a long struggle, were at State Supreme Court in the Bronx on Monday and broke into cheers and “hallelujahs” when the auctioneer announced that no bidders had registered.



• Geraldine Davis, 72, a resident of the building for 37 years, hugged her neighbors and dried a few tears. “I always thought positive,” she said. “We prayed so hard and worked so much to save this building.”

For more, see For Birthplace of Hip-Hop, New Life.

See also:

• Crain's New York Business: Sold! Birthplace of hip-hop beats the rap (A Bronx building famed for its role in the origins of the musical phenomenon escapes the clutches of a “predatory equity” scourge that tenants feared would lead to its demise).



• New York Daily News: Birthplace of hip-hop in Bronx gets new landlord after battle to keep building affordable (DJ Kool Herc celebrates at 1520 Sedgwick Ave.).

BofA Bagged For Charging $39 Interest On $0 Balance; Insists It Was Right, But Refunds Cash Anyway "As A Courtesy" After Media Begins Asking Questions

In Jacksonville, Illinois, the Chicago Tribune reports:

• Roger Greenwood thought he had heard of every conceivable bank fee. Then he received his September credit card bill.



• Bank of America charged the Jacksonville, Ill., man $39.23 in interest — on a $0 balance. Greenwood was convinced it was a mistake. In August, he charged a vacation rental to his credit card, resulting in a $5,734.13 balance. Weeks later, he received $1,450 in credits from two merchants, lowering his balance to $4,284.13.



• He paid the remainder of what he owed with an electronic transfer Sept. 6, three days before it was due, bringing his balance to zero. His statement clearly showed that between the credits and his payment, Greenwood paid off the entire $5,734.13. So why, he wondered, had he been charged interest?



• Greenwood emailed Bank of America, and quickly received a response. An online representative agreed that between the credits and his Sept. 6 payment, Greenwood had paid his balance in full.



• "However, we need to inform you that credits are not considered as payments on credit accounts," the representative wrote. "Therefore, the credits (of $1,450) were not considered as payments on this account, and the interest charges were applied correctly."



• The representative told Greenwood Bank of America would not erase the $39.23 in interest. "We regret we are unable to remove the interest charges at this time," the representative said. "Therefore, this transaction will remain part of your account balance."



• Greenwood emailed Bank of America again and received the same reply from a different representative — the $1,450 in credits weren't considered payments, and thus he was charged interest on that amount.



• Flummoxed, Greenwood emailed What's Your Problem?

For more, see Problem Solver: Numbers don't add up on credit card charge (Jacksonville, Ill., man charged interest even though he showed zero balance).

Foreclosure Surplus Snatching Rackets Extending To Local Gov'ts? "City Of Brotherly Love" Stiffs Hapless Homeowners, Makes Major Move At Greedy Grab

In Philadelphia, Pennsylvania, The Philly Post reports:

• The news that nearly $56 million had been recovered from the bowels of the sheriff’s office’s sloppy bookkeeping was welcomed by government officials. However, the former owners of properties sold at sheriff sale—who are due much of that money—continue to be victimized by government ineptitude.



• City officials announced that the funds–including unclaimed proceeds of sheriff sales over the last dozen years when property sales generated more than the amounts owed for past-due mortgages, taxes, and utilities–would be transferred to the City’s General Fund and State Treasury.



• But, that money was not just misplaced, it was misappropriated; taken from those who were lawfully due the funds. Unless they act deliberately and quickly to return the money to the rightful recipients, the sheriff, controller and the mayor are working to benefit government balance sheets instead of helpless property owners.(1)

For more, see "Misplaced" Funds From Sheriff's Office Legally Belong to Victimized Property Owners in Philadelphia (The mayor, sheriff and city controller have no right to give this money to the government).

(1) The City of Philadelphia is not the first government entity suspected of getting funny ideas when it comes to handling the surplus loot, which represents some of the foreclosed owner's home equity, that was commonly generated by foreclosure/sheriff's sales during the boom real estate market. See, for example, Colorado Law Incentivizes Foot Dragging By County Officials When Returning Surplus Sale Proceeds To Foreclosed Homeowners After Public Auctions.

Maryland Ground Rent System Continues Drawing Attention As Investors, State AG Wrangle Over Process That Allows Locals To Lose Homes Over Minimal Sums

In Baltimore, Maryland, The Baltimore Sun reports:

• Another challenge by ground rent holders to Maryland's 2007 reform laws has been revived, with lease holders claiming that a state law unconstitutionally diminished the value of their property by making collection of payments costly and difficult to enforce.



• Attorneys for ground rent holders in a pending class action lawsuit say that a recent ruling by the Maryland Court of Appeals(1) dooms the law being challenged, according to a recent motion. They are asking a judge in Anne Arundel County Circuit Court to invalidate the law.



• But in a newly filed motion, the attorney general's office says otherwise. It contends that the recent ruling strengthens its position that laws for enforcing collections are valid. State lawyers maintain that because the laws provide ground rent holders with ways to collect past-due payments, the new law should be upheld.

***

• [L]ast month, the state's highest court delivered a significant blow to the legislative reforms, which called for ground rents to be registered. Even as the court upheld the registry that was created in 2007 — and that has about 85,000 properties — it said unregistered ground rents could not be canceled, or extinguished. That revived an estimated 30,000 to 40,000 unregistered ground rents.



• In the pending challenge, ground rent owners argue in court papers that the new process is "a costly and complicated lien and foreclosure process, forcing ground lease holders to spend thousands of dollars in an effort to collect at most a couple hundred dollars of delinquent ground rent."



• That, they contend, is unconstitutional for the same reasons the Court of Appeals decided to erase the cancellations of the thousands of unregistered ground rents. In asking the judge to uphold the law, the Attorney General's Office maintains that lease holders have "at least two remedies" for seeking past-due ground rents. In addition to the lien and foreclosure, they can sue the renter.



• In about two weeks, lawyers for lease holders and the attorney general's office are expected to meet with Anne Arundel County Circuit Judge Paul F. Harris Jr., who halted the case while waiting for the appeals court to rule on unregistered ground rents.



• However, the case may not be resolved in a courthouse. State legislators plan to meet in about two weeks with an eye toward new ground rent laws, addressing concerns raised in the Court of Appeals decision and in the Anne Arundel case.

For the story, see Ground lease holders challenge state law (Issue in class action suit focuses on payment collection).

(1) Muskin v. State Department of Assessments and Taxation, No. 140, September Term, 2010, ___ Md. ___, 141, ___ A.2d ___ (Md. October 25, 2011).

Rogue 'Sovereign Citizen' Homeowner Strikes Back After Adverse Foreclosure Ruling; Tags Judge w/ Bogus $350K Lien, Then Gets 179 Days For Contempt

In Daytona Beach, Florida, The Daytona Beach News Journal reports:

• Senior Judge Pope Hamrick handled a foreclosure case back in June, one of dozens. The veteran jurist, a member of The Florida Bar for more than 40 years, ruled in favor of a bank in a foreclosure. Hamrick never expected that the person foreclosed upon, Patricio E. Sanchez, would file a lien and judgment against him in court. But that's just what happened. Patricio E. Sanchez.



• Hamrick was shocked to learn the lien -- claiming a debt of $350,000 -- was even recorded against him. The man who filed it, Sanchez, 58, of Deltona is a registered sexual offender. Sanchez was immediately summoned back to court to explain why he "willfully filed and recorded the false and fraudulent liens and judgment." The judgments were filed against Hamrick and two attorneys who had represented Chase Home Finance in the foreclosure. Sanchez was jailed for 179 days for contempt of court.



• Although Sanchez became known by local court officials as the "sovereign citizen case," he never uttered the phrase. His case -- the second time the sovereign citizen movement has come up locally in court this year -- highlights the growth of ideology that has been around for more than 20 years.



• The sovereign citizen movement is a loosely organized collection of groups and individuals who have adopted an ideology considered "right-wing" by the Anti-Defamation League. Its adherents believe that virtually all government in the United States is illegitimate. Sometimes, the sovereign citizen movement has been blamed on acts of extremism and violence.



• Earlier this year, police said a 5-year-old boy was kidnapped by his grandmother in Port Orange. When police caught up with Laurine Arnold and recovered the child, she told them she was a sovereign citizen.



• Starting in the 1980s, anti-government extremists began pushing theories that claimed people could avoid debt and claim riches under an interpretation of common law. In 1996, members of a sovereign citizen group known as the American National Freemen were indicted in Tampa on charges including conspiracy and jury tampering. Three of the members were sentenced to prison for filing $22.8 million in bogus liens against federal officials and citizens.



• Since then, information on the Internet has spread the word. Motivational speakers offer seminars to teach people how to file documents in court, claiming they will be free of debts and government interference.



• Sanchez was less than cooperative when he appeared before Circuit Judge Robert Rouse. He refused to acknowledge his identity. He claimed he was a "representative" of Sanchez. In court documents, Sanchez wrote his name in all capital letters, and referred to the term "UCC-1."



• The use of that phrase, according to the Southern Poverty Law Center, is sometimes used as an effort to distinguish the "flesh and blood" person from his "corporate shell." The technique is used to avoid paying debt. According to the Anti-Defamation league, sovereign citizens use "paper terrorism," by filing documents against public officials.



• When Rouse asked Sanchez to explain the liens and judgments he filed against Hamrick and the others, Sanchez insisted "they don't have the authority to deal with the private business of Patricio Sanchez." Judge Rouse found Sanchez committed contempt of court by filing the liens. Rouse gave him 179 days in jail -- significantly less than the one-year maximum allowed.



• Sovereign citizen activity has been reported in 26 states and their numbers are estimated in the hundreds of thousands. Because of the potential for harm to credit reports and court records, many people who are familiar with the sovereign citizens are weary of speaking publicly about the movement.



• Among them was Judge Hamrick, who expressed some concerns about further attacks on paper. "You won't print my address, will you?" he said.

Source: Judge in Daytona targeted by man in foreclosure case.

Go here for other posts on sovereign citizens and "paper terrorists."

Steven J. Baum - "Worst Person In The World"

On a recent edition of the program Countdown with Keith Olbermann, upstate New York foreclosure mill sweatshop operator Steven J. Baum was recognized for his less-than-meritorious service in his efforts to allegedly boot homeowners illegally (mocking Baum's now well-known Halloween party that belittled financially distressed homeowners) and was named by Olbermann as the winner of his nightly award "Worst Person In the World."

For the YouTube Video, see Olbermann Wears Guy Fawkes Mask & Discloses Steven J. Baum Addresses (1:47).

Lawsuits: Missouri Homeowners Facing Foreclosure Squeezed By Lenders For Illegal Attorney Fees; Complaints Seek Class Action Status

In Clayton, Missouri, Courthouse News Service reports:

• Four companies, including GMAC Mortgage and BAC Home Loans charge illegal attorneys fees during foreclosures, according to two class actions in St. Louis County Court. Lead plaintiff Mimi Fowler filed both class actions, one against BAC Home Loans Servicing, Kozeny & McCubbin LC and Kozeny Lenders, the other against GMAC Mortgage, South & Associates PC and South Lenders.



• Fowler says Missouri law limits compensation for a trustee's services to a commission on the amount of sale: 2 percent of the first $1,000, 1 percent of the next $4,000 and 0.5 percent of any amount over $5,000.



• She says the defendants charged attorney's fees for legal work connected with the foreclosures. She says she paid $650 in attorney's fees in November 2009 and another $520 in attorney's fees in December 2010 to reinstate her mortgage.



• The class consists of all Missourians who reinstated their mortgage loan and paid attorney's fees in foreclosure proceedings for Missouri real estate from Nov. 7, 2006 to the present. Fowler seeks actual damages and $3,000 in punitive damages for each class member. She estimates that both classes number in the thousands.

For the story, see Classes Claim Illegal Fees in Foreclosures.

For lawsuits, see:

• Fowler v. BAC Home Loans Servicing, L.P., et al.,
• Fowler v. GMAC Mortgage, LLC, et al.

Another Criminal Prosecution In Equity Stripping Racket Ends w/ Conviction As Pennsylvania Sale Leaseback Peddler Defrauded 34 Homeowners, 14 Lenders

In Harrisburg, Pennsylvania, WHTM-TV Channel 27 reports:

• A former East Berlin woman has been convicted of defrauding 14 mortgage lenders and 34 homeowners in Cumberland, Dauphin, York and Adams counties out of more than $6.2 million.



• Joanne Seeley, 41, was found guilty in federal court Monday on four counts each of wire fraud and money laundering, according to U.S. Attorney Peter Smith. Each count is punishable by up to 20 years in prison and a $500,000 fine. Seeley was released pending a sentencing hearing which was not immediately scheduled.



• Smith said Seeley, who now lives in Texas, was a Pennsylvania licensed real estate agent until December 2006, when she permanently surrendered her license in lieu of disciplinary action. She then became the primary owner and operator of a business in East Berlin known as S&D Property Solutions.



• Smith said Seeley devised a foreclosure rescue scheme in which she would identify homes scheduled for sheriff's sale and advise homeowners they could avoid foreclosure by selling the home to her or one of her investors.



• Seeley assured homeowners the homes would be leased back to them after the sale, and the sales would allow them to pay off personal debts, rebuild their credit ratings, and allow them to qualify for a new mortgage when they bought back the homes a year later, Smith said. She also promised homeowners that any equity they had in the house would be held in escrow after the sale as a down payment, Smith said.



• Smith said Seeley either charged homeowners an extremely high commission or had them sign over their entire sales proceeds to S&D Property Solutions. No homeowner was ever able to buy back their home and no funds were escrowed because Seeley instead spent the money on her personal expenses, Smith said.



• Seeley also submitted false documents to induce lenders into making more than $6.2 million in loans, but converted about $2.3 million from the loans to her own use., Smith said.(1)

Source: Former real estate agent convicted of money laundering, wire fraud.

(1) For more on sale leaseback equity stripping ripoffs, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Miami Sale Leaseback Equity Stripping Victim Reaches End Of The Road In Fight To Keep Home As Scammer Awaits Trial On RICO, Grand Theft, Etc. Charges

In Miami, Florida, The Miami Herald reports:

• On Friday, Imogene Hall fought against tears as she boxed up her belongings and shut the door at her Miami Gardens home for the last time, closing the chapter on a five-year homeownership nightmare.



• Hall’s account of her housing experience involves a harrowing combination of mortgage fraud, foreclosure rescue scams, title fraud, predatory lending and unscrupulous foreclosure attorneys.

***

• Hall’s ordeal began in 2006, when she lost her job as a home health nursing aide and looked to tap into the equity in her home to help pay the bills while she looked for work. Her plan was to take out a home equity loan for about $50,000 on the three-bedroom home, which had nearly doubled in value since she purchased it for $80,000 in 1997.



• As her bills began to pile up, a well-dressed man showed up on her doorstep unannounced, pitching just what she thought she needed: a no-stress cash-out refinance. What Hall didn’t know was that the man, Johnson Cuffy, was a convicted felon who investigators say was running an elaborate mortgage fraud scheme. Through his Tamarac-based company BlueKap Financial, Cuffy allegedly duped Hall into signing over the property to a straw buyer who later took out an outsized mortgage on the property, according to court documents and Hall’s account.



• Unlicensed title agents helped Cuffy and his associates siphon off more than $180,000 from the mortgage loan, leaving Hall with $50,000 and what she thought was a simple second mortgage. In reality, she had sold the home to a straw buyer, wiping out her equity.



• Subprime lender Argent Mortgage approved a $230,000 mortgage loan to the straw buyer, even though he listed employment at a non-existent video store in New York, and a county property appraiser valued the home at only about $140,000.



• “The more we learn about this the more incredibly amazing it is that mortgage servicers and banks allowed this to happen,” state mortgage fraud investigator R. Scott Palmer told The Miami Herald when briefed about Hall’s case last year.



• Hall began making monthly mortgage payments of $1,500 to Cuffy’s BlueKap Financial firm. The money — about $12,000 — never made it to the lender, and the home went into default.



• Hall’s house fell into foreclosure in 2006, sparking a five-year court battle that involved allegations of mortgage fraud and predatory lending. The case began to shift against Hall last year when it was transferred to Miami-Dade’s Section 50 court, a so-called “rocket docket” created to quickly dispose of old foreclosure cases. In a matter of weeks, the bank foreclosure was approved.



• While Hall, 50, has been living rent-free during the legal ordeal, she said much of her limited income went to attorneys who charged her more than $20,000 while assuring her they would save the home.



• Court records show that many of the attorneys did not follow through on their promises, failing to show up at court hearings, avoiding her phone calls and collecting thousands of dollars in fees. One lawyer billed her $2,800 for work he did trying to withdraw himself from the case. Another is being investigated by the attorney general for foreclosure rescue fraud.



• “None of the attorneys did anything for me but take my money,” said Hall, who had heart surgery during the foreclosure process and now lives on a disability check.



• Deutsche Bank, a trustee for Argent Mortgage, took title to the home on the Tuesday before Christmas last year. After several attempts by pro-bono lawyers to stave off eviction and work out a mortgage modification, a judge in October ordered Hall to vacate her house within 30 days.



• John Spittler, an attorney that took over Hall’s case on a pro-bono basis earlier this year, said he tried to halt the bank foreclosure, but the case had gone too far by the time he came along. “Everything was exhausted that we could possibly do to keep her in the home,” he said. “We kept her in there another seven months.”



• Cuffy is currently serving an 11-year sentence for grand theft in an unrelated case and is charged with defrauding unsuspecting homeowners like Hall. His trial is set to begin in January, said John Swope, a Department of Financial Services agent who has been investigating Cuffy for the last four years. Cuffy faces charges for violating the Racketeer Influenced and Corrupt Organizations Act, grand theft and scheme to defraud.



• “He’s refused to take a plea agreement,” Swope said. “He’s being charged under the Habitual Offender Act and he [faces] 65 years.”(1)

***

• The mortgage scheme stripped her of the equity she had built in her home, tarnished her credit and forced her out of the humble Miami Gardens neighborhood where she raised her four children and three grandkids.



• In what she describes as a final effort to save a bit of dignity, Hall decided to move out a week before the court-ordered eviction date. “I don’t want them to throw me out,” she said. “I want to take my time and move out.”(2)

For the story, see Mortgage fraud victim ends up losing her house.

(1) At one time, many in state and local law enforcement (particularly those with untrained eyes and who were otherwise clueless in handling 'semi-sophisticated' white collar crimes - for some, anything more complex than investigating a 'rubber check' case is 'semi-sophisticated') once passed on prosecuting these sale leaseback equity stripping ripoffs that under the flimsy pretense that these cases were merely 'civil matters.' Over the last couple of years, it's been primarily the Feds (U.S. Attorneys, FBI, Secret Service, etc.) that have been bringing prosecutions in these equity stripping ripoffs. However, more and more local (state court) prosecutors now appear to be stepping up to the plate and showing some guts by bringing criminal charges against these scammers. See, for example:

• Sale Leaseback Equity Stripping Peddler 'Scores' Guilty Verdict In Equity Stripping Ripoff; Grand Larceny, Scheme To Defraud, Conspiracy, Says Jury (Prosecuted by the Westchester County, NY District Attorney, a scammer who swindled four local families out of their homes was convicted after a jury trial of four felony counts of second-degree grand larceny and one each of first-degree scheme to defraud and fourth-degree conspiracy),



• Convicted Foreclosure Rescue Scammer Could Face Life Sentence On New Charges In Alleged Sale Leaseback, Equity Stripping Ripoff That Fleeced 5 Victims (Los Angeles District Attorney charged alleged scammer with 23 felonies — including theft from the elderly, identity theft and real estate fraud — for allegedly tricking five people into unknowingly granting him title to their homes, and charged him under California's 'three-strikes' law),



• Foreclosure Rescue Scam Mastermind Found Guilty Of Dozens Of Felonies; Ran Upfront Fee Land Grant Scheme, Sale Leaseback Rent Skimming Racket (After an eight-week trial, and through the efforts of the San Diego District Attorney, a scammer was found guilty of 160 counts of conspiracy to commit grand theft, grand theft, rent skimming and deceitful practices by a foreclosure consultant),



• Delaware AG Levels 21-Count Indictment Against Alleged Foreclosure Rescue Racket Using "Divine" Cover In Sale Leaseback, Equity Stripping Ripoff (The Delaware Attorney General obtained an indictment alleging that the scammer ran a criminal enterprise involving theft, money laundering, and forgery in which he preyed on vulnerable homeowners who faced imminent foreclosure),



• Central Florida Sale Leaseback Peddler Linked To 50 Ripoff Deals Gets 10 Years On Racketeering Charge; Targeted Cash-Strapped, High-Equity Homeowners (A joint prosecution by the Orange County, Florida and the state attorney general (under former AG Bill McCollum) led to the scammer copping a plea to a single count of felony racketeering after initially being charged with 12 first-degree felony counts, including racketeering, conspiracy to commit racketeering and numerous counts of grand theft),



• NY AG Squeezes Guilty Pleas From 4 For Roles In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket; 1 Awaits Trial On 23 Felony Counts (After a New York Attorney General prosecution, four employees of a sale leaseback racket pleaded guilty in Albany County to felony charges that included grand larceny, scheme to defraud and falsifying business records, after the Attorney General's Office filed criminal complaints),



• Queens DA Bags Seventeen Suspects In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket (Queens County, NY DA (joined in the probe by the office of the New York State Banking Department and the New York State Police) variously charged the defendants with first- and second-degree grand larceny, first degree criminal possession of stolen property, first-degree money laundering, first-degree identity theft, second-degree forgery, second-degree criminal possession of a forged instrument, first-degree falsifying business records, first-degree offering a false instrument for filing, first-degree scheme to defraud and fourth-degree criminal facilitation.).

See generally:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

(2) One may wonder why the homeowner/victim of this ripoff was forced out of her home before the criminal prosecution of the scammer was completed. After all, if the ripoff of the title to the homeowner's residence was perpetrated as a result of an act that is determined to be a crime, it is at least arguable that any contract founded upon such act is absolutely void. The case law, at least in the State of Florida, appears to support this view, as the Florida Supreme Court appears to make pretty clear in one case. See:

• Town of Boca Raton v. Raulerson, 146 So. 576, 577 (Fla. 1933):
  
  "where a statute pronounces a penalty for an act, a contract founded upon such act is void, although the statute does not pronounce it void or expressly prohibit it."

See also:

Chen v. Whitney National Bank, 65 So. 3d 1170 (Fla. App. 1st DCA, July 22, 2011) ([alteration added] - not in the original text):

• [T]he Florida Supreme Court has expressed that "where a statute pronounces a penalty for an act, a contract founded upon such act is void, although the statute does not pronounce it void or expressly prohibit it." Town of Boca Raton v. Raulerson, 146 So. 576, 577 (Fla. 1933).

Hooten v. Lake County, 177 So. 2d 696 (Fla. App. 2nd DCA, 1965):

• As we have indicated, the supreme court in the Town of Boca Raton case approved the principle that where a statute pronounces a penalty for an act, a contract founded on such act is void, although the statute does not pronounce it void nor expressly prohibit it.

Jaylene, Inc. v. Steuer, 22 So. 3d 711 (Fla. App. 2nd DCA, 2009) (Northcutt, J. concurring):

• One well-established defense to the enforcement of a contract is that the contract violates public policy. See E. Allan Farnsworth, Unenforceability on Grounds of Public Policy, in Contracts ch. 5 (2d ed. 1990).
  
  This defense is firmly rooted in common law, and because it protects the interests of society at large as well as—and sometimes contrary to—those of the contracting parties, it is an important aspect of the courts' authority. As far back as 1775, Lord Mansfield was expressing the view that an agreement may be void on grounds of public policy, stating: "No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." Id. § 5.1 at 347 (quoting Holman v. Johnson, 1 Cowp. 341, 343, 98 Eng. Rep. 1120, 1121 (1775)).
  
  An early Florida case recognized this defense to contract enforcement, citing the principle "ex turpi causa non oritur actio" to explain the law's reluctance to enforce contracts in violation of public policy. Town of Boca Raton v. Raulerson, 146 So. 576, 577 (Fla. 1933). Translated, the maxim means "`from an immoral consideration an action does not arise,'" which "expresses the principle that a party does not have a right to enforce performance of an agreement founded on a consideration that is contrary to the public interest." Black's Law Dictionary 607 (7th ed. 1999).

Who knows, but it may very well be that if the lowlife who perpetrated the ripoff is convicted of a crime, said conviction could give rise to a cause of action for the victimized homeowner (ie. possibly a quiet title action) in an effort to reclaim the title to her home on the basis that the contract entered into as part of perpetrating the ripoff, and every contract, conveyance, etc. subsequently made in connection therewith (or devolving therefrom) is absolutely void/void ab initio.

Player In Upfront Fee Loan Modification & Foreclosure Rescue Racket Cops Felony Grand Theft Plea; Restitution Could Amount To $150K

In Monterey County, California, The Salinas Californian reports:

• A Gonzales woman pleaded guilty to felony grand theft on Monday in connection with a foreclosure rescue scam that targeted Latino homeowners. Maria Ponce, 55, will be sentenced in January and could serve one year in jail as well serving five years probation and paying about $150,000 in restitution, said a news release from Monterey County District Attorney Dean Flippo.



• Ponce convinced homeowners that she could have their mortgage payments lowered or their foreclosures reversed and she was paid as much as $4,500 but none of her clients ever got a refund or reduced loan payments.



• The investigation began in 2008 after Gonzales police started getting complaints. Victims told authorities that Ponce and Melissa Garcia hosted sales meetings in Ponce's home, according to the release.



• The rescue scam unraveled in June 2008 after Garcia was arrested on felony elder abuse and grand theft charges in Santa Cruz County, the news release said. Garcia previously pleaded guilty to felony conspiracy and awaits sentencing, according to the release.

Source: Woman pleads guilty in foreclosure scam.

BofA Coughs Up $1.3B To Freddie, Fannie Over Delays In Crappy F'closure Paperwork Filings; Bleeding To Continue As Affidavit Revisions Remain Ongoing

Housing Wire reports:

• Bank of America will spend at least the remainder of 2011 revising affidavit filings in foreclosure cases around the country.



• In October 2010, BofA and other major servicers froze the foreclosure process nationwide when evidence of improperly signed affidavits surfaced in many state courthouses. BofA had to pay $1.3 billion in penalties to Fannie Mae and Freddie Mac in the first nine months of 2011 because of the delays, the bank disclosed in a Securities and Exchange Commission filing.

For more, see BofA pays $1.3 billion to Fannie, Freddie for foreclosure delays.

Sudden Drop In Nevada Foreclosure Filings May Be Attributable To New State Anti-Robosigner Statute; Law Contains Threat Of Criminal Prosecution

The Wall Street Journal reports:

• Foreclosure filings in Nevada plunged in October during the first month of a new state law stiffening foreclosure-processing requirements. [...] Nevada’s state Assembly passed a measure that took effect on Oct. 1 designed to crack down on “robo-signing,” where bank employees signed off on huge numbers of legal filings while falsely claiming to have personally reviewed each case.

***

• Among other steps, the Nevada law makes it a felony—and threatens to hold individuals criminally liable—for making false representations concerning real estate title. Individuals are also subject to civil penalties of $5,000 for each violation.



• Foreclosures have slowed sharply over the past year in many states where banks are required to foreclose on homeowners through courts. But slowdowns haven’t yet been as pronounced in non-judicial states such as Nevada, where foreclosures are conducted by an administrative process.



• To foreclose on homeowners in Nevada and most other non-judicial states, banks hire a “trustee” that notifies borrowers that they are in default and then carries out the foreclosure sale in accordance with state law if the borrower doesn’t become current on the debt.



• The Nevada law makes an important technical change to those rules by forbidding trustees from handling foreclosures if the trustee is a subsidiary of foreclosing bank. That change appears to strike a blow for Bank of America Corp., which uses a wholly owned subsidiary, ReconTrust, as its trustee for foreclosures in Nevada and other western states.

***

• [A]dvocates of the bill say the measure will put the real-estate market on sound footing by ensuring that title defects don’t later lead judges to invalidate foreclosures—a step that has already happened in Michigan and Massachusetts.



• “This is not at all about preventing foreclosures. It is about helping end users,” says Tisha Black Chernine, a real-estate lawyer in Las Vegas who was part of a working group that helped draft the bill. In order to truly heal housing markets, “we need to make sure foreclosures are done properly,” she said. “People taking title pursuant to a bad foreclosure run the risk of having no title at all.”

For the story, see Nevada Foreclosure Filings Dry Up After ‘Robo-Signing’ Law.

Judge To F'closure Mill: “We All Assumed You Took Your Ethics Rules Seriously When You Started...We No Longer Have A Presumption That We Can Rely On!”

In Buffalo, New York, The Buffalo News reports:

• Attorneys for New York State and a delinquent Buffalo borrower facing the loss of her home squared off in court Monday against Steven J. Baum PC, as the state’s biggest foreclosure law firm sought to have a new court mandate for accuracy of documents declared unconstitutional.



• The Baum firm wants a state court in Buffalo to overturn a statewide administrative rule, which the firm contends is impeding the rights of its bank and mortgage servicing clients, and intruding on the power of the local court.



• The Amherst firm’s attorneys describe a “procedural” but illegal regulation as the only remaining barrier to having the Black Rock home of Shauna M. Foster seized and sold at public auction to satisfy a debt.



• “This creates a procedural hurdle [that] prevents them from going to sale,” said Baum attorney Tracy M. Fourtner. “My client’s statutory remedy is being impaired. . . . The only thing that is holding up the plaintiff’s right is this order.”



• The firm doesn’t say why it can’t or won’t comply with the rule. But Baum’s attorneys contend that the state’s chief administrative judge exceeded her legal authority when she issued the rule in October 2010. They cite a February 2011 decision by a state judge in Suffolk County who found the rule unconstitutional.



• However, the state Attorney General’s Office, intervening in the private case because of the constitutionality issue, said the rule is needed to protect the integrity of the legal system, by guaranteeing factual papers.



• Lawyers for the state insist that Chief Administrative Judge Ann T. Pfau was well within her right under the State Constitution and laws when she issued her regulation “to curb documented widespread abuses in mortgage foreclosure proceedings,” according to a legal brief by Laura Etlinger, the state’s assistant solicitor general. She said identical or similar rules are in effect in other states. “There is authority for the order and rule,” Etlinger said. “The existing requirements weren’t sufficient. Information was being relied upon that wasn’t checked for accuracy.”



• The lawyers for both sides faced pointed questioning by State Supreme Court Justice Timothy J. Walker, who said he was also on a statewide judicial committee that helped draft the rule. “Are the courts supposed to rubber-stamp the filings, to . . . just sign off?” Walker asked. “How can the court rely on good faith, knowing what the court knows of robo-signing?”



• He noted that lawyers have long had an obligation to bring problems with documentation to the court’s attention when they discover it in a pending case. But he said that never happened in New York with foreclosures.



• “We all assumed you took your ethics rules seriously when you started,” Walker said to Fourtner, representing Baum. “But now you the lawyer are on notice, and we’re going to actually hold you to that.” Walker said he would issue a decision within 20 days.



• At stake is the future of a year-old effort by the state’s top judges to reassert control over a well-established but recently troubled legal system. That system, which underlies how foreclosures are handled in New York State, relies on the presumption that court documents submitted by lawyers on behalf of clients are correct and truthful, Walker noted. But there have been revelations nationwide that false or improper documents have been submitted to courts to support foreclosures.



• “We no longer have a presumption that we can rely on,” Walker said. “It’s a reasonable exercise of the court’s authority.”



• Pfau, directed by State Chief Judge Jonathan Lippman, issued the order “to protect the integrity of the foreclosure process and prevent wrongful foreclosures” and ensure “the documents judges rely on will be thoroughly examined, accurate and error-free before any judge is asked to take the drastic step.”



• Under the rule, banks’ attorneys in each foreclosure must affirm in writing that they communicated with their clients, that the client reviewed the documents and that the documents are accurate. The attorneys must also affirm, under penalty of perjury, that the papers are correct. Otherwise, the foreclosure can’t proceed.



• But Fourtner and colleague Amy L. Rohe-Kipp, a Baum lawyer who submitted the motion to the court, asked Walker to allow their client to proceed with foreclosure, without filing the affirmation.



• The Baum attorneys argue that Pfau, who recently stepped down to take a new court position, only had authority to issue rules governing the “orderly transaction of business” and administration of the courts, such as involving the finances, hours, education and training, law libraries and court records.



• Instead, they say, the rule creates a new procedural burden of proof, preventing the lender from exercising its rights to the property and interfering with the authority of the local court and the foreclosure referee, whose job is to carry out the sale.



• Attorneys for Foster and the state, however, argued that the new rule reinforces rules of conduct and ethics that are already expected of lawyers, and is not a new requirement. It also doesn’t mandate new evidence to prove the case, but is just an affirmation that the documents have been reviewed for accuracy, they said. In addition, they said the rule doesn’t change the power or authority of the local court.



• Finally, they asserted that the rule is administrative and ensures efficiency in the court system because judges would only have to deal with cases in which the lenders and their attorneys have all the facts and paperwork in order. That, in turn, saves time and resources that otherwise might be wasted. “We don’t believe it’s an additional requirement or affects the burden of proof,” Etlinger said.

Source: Foreclosure law firm is battling rule on accuracy (N. Y. ‘procedural hurdle’ called unconstitutional).

Desperate Bankster Turns To Facebook To Salvage What's Left Of Reputation From Toilet

CBS News reports:

• Bank of America has a reputation problem the way Bernie Madoff does, in the sense that the injury was entirely self-inflicted. Whether robosigning illegal or questionable mortgage foreclosures, performing so poorly that Warren Buffett dumped his holdings in the company, charging consumers a $5 monthly fee to use their debit cards, or turning to a hefty federal bailout to get themselves out of the trouble they themselves created, BofA should have found it difficult to make itself look worse.



• However, difficult is not the same as impossible. BofA has decided to redeem itself through the power of Facebook. It has been running ads asking people to agree that "community is important in America." However, the ads don't show the name of the company, even though clicking like supports "an official Bank of America Facebook page." Yup, BofA has just invented robo-liking.

For more, see BofA turns to Facebook to win back public.

NJ Appeals Court Ruling Goes Far To Gum Up Garden State Foreclosures As Lenders' Lawyers Show Reluctance To Sign Required Certification

In Bergen County, New Jersey, The Record reports:

• [S]heriff's auctions are among the most visible symbols of the housing crisis, which left many homeowners saddled with mortgages they couldn't afford. But foreclosure auctions have slowed dramatically since questions arose more than a year ago about "robo-signing" — that is, sloppy paperwork by mortgage lenders and servicers.



• Though lenders were given the go-ahead in August to start foreclosing again in New Jersey after showing a judge they were following the rules, they have been slow to resume activity.



• The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state's Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn't properly identify itself in a notice sent to the troubled homeowners.



• Under new state court rules, lawyers working for foreclosing plaintiffs have to personally certify that they have checked the facts behind a foreclosure filing with an employee of the lender or the lender's servicer. Many have indicated to Wolfe that they are reluctant to sign such a certification, because they're concerned that the lender's paperwork may not meet the requirements set out in the Laks decision.

***

• In the Laks case, for example, Sarah Laks' mortgage was serviced by Countrywide Home Loans, but the actual owner was a trust managed by the Bank of New York. When Laks, of Lakewood, defaulted on the loan, she got a notice of intention to foreclose from Countrywide, but it did not mention the real owner, as required by the state's 1995 Fair Foreclosure Act.



• A lender's attorney who spoke on condition of anonymity said that in the years since the Fair Foreclosure Act was passed, it's been very common for these notices to name only the servicer, not the actual holder of the loan, as required by the Laks decision.

For more, see Legal issues slow foreclosures.

Recent Foreclosed Home Purchaser Discovers Title To Wooden Shed On Property Belongs To Another; Judge Says Cough Up $1,800 Or Kiss It Goodbye!

In Bristol, Virginia, TriCities.com reports:

• The property seemed ideal: a tidy white house with blue trim, complete with a small yard, garage and wooden shed. A bank had foreclosed on the house, which sat empty for a few months in late 2010, until Linda Shelton bought it and happily settled into her new home on Nevada Street in December. That new-home bliss was short-lived, however.



• Shelton soon found herself at the business end of a lawsuit: A company claimed ownership of the wooden shed in her yard, which Shelton believed to be hers.
  
  A side effect
  
  
• Unfortunately, law professors said, issues like this – disputes over ownership of property either attached to or sitting on a foreclosed piece of land – are not uncommon, and, are likely to increase as more homeowners lose their properties to foreclosure.



• The question of whether sheds, trailers or aboveground pools are real or personal property is a common one, said George Kuney, the W.P. Toms Professor of Law and Director of the Clayton Center for Entrepreneurial Law at the University of Tennessee in Knoxville.
  
  Real vs. personal
  
  
• The debate at Shelton’s home, and similar disputes, hinges on this: Is the shed real property or personal property? “It comes up the most with trailers,” Kuney said. “If you just plop it on the land it doesn’t become part of the property.”



• The problem with Shelton’s shed is that it is on cinderblocks, and therefore considered portable. “If she or her predecessor had bolted it to the ground or mounted it to a foundation it would become part of the real estate,” Kuney said.



• But her predecessor hadn’t bolted it to the ground, because that action would have interfered with his agreement with the leasing company, the same company currently suing Shelton over ownership.

***

• Shelton said she doesn’t understand why the shed issue wasn’t settled long before she bought the property. [...] She said no liens against the house or the property were found before she bought the land. Her granddaughters had already started decorating the inside for a playhouse, she said.



• Shelton’s real estate agent, Mike Mumpower, went to court with her the first three of the six times she’s been there over the shed. The judge ruled the building was the personal property of the management group, and gave the company an indefinite amount of time to pick it up. Or, Shelton was to pay the company $1,800 for the shed. The management company immediately filed a judgment of $1,800 on Shelton’s credit report, she said.



• Mumpower said he thought the judge’s ruling might set a precedent regarding personal property ownership, and he had never heard of such a situation. Shelton just thinks the whole thing is unfair.

For the story, see Buyer beware has new meaning in foreclosure flood.

F'closed Home Found Missing So Bankster Improperly Snactches House Next Door Instead, Changing Locks & Removing $14K In Owners' Belongings In Process

In Effingham, New Hampshire, The Conway Daily Sun reports:

• A major Wall Street bank is apologizing to a Maine couple who allege that the bank wrongfully claimed ownership of their second home on Green Mountain Road in Effingham. But the apology rings hollow for the Drew family.



• Apparently, J.P. Morgan Chase & Co. confused a little red house, owned by Travis and Paula Drew, at 529 Green Mountain Road, for a no-longer-existent mobile home at 519 Green Mountain Road.



• The structures were owned by different people even though they once shared the same lot. The confusion led the bank's agents to change the locks on the Drews' home and remove $14,000 worth of belongings from the property. The Drews don't live in the Effingham house. They live in Stow, Maine.



• Another entity, called EMC Mortgage, had foreclosed on a mobile home in 2002. The bank-owned mobile home burned down in 2007. EMC Mortgage became a part of Chase when Chase acquired Bear Stearns in 2008.



• The bank, which was apparently under the impression it owned the mortgage on the Drew house, sent a contractor to maintain the property. "We apologize for the error and have reached out to the homeowner to resolve the issue," said Chase spokesman Michael Fusco to The Conway Daily Sun on Wednesday. Fuscos' written statement doesn't specifically state what the error was or how it happened.



• The Drews aren't impressed with Chase's admission of an error. As of Wednesday afternoon, Chase still hadn't explained itself to them. Bank employees told the Drews that a representative named Michelle would be in contact with them when the bank's investigation is complete.

For more, see Bank admits error after couple claims home was illegally taken.

Ohio Court: Improperly Notarized Mortgage Does Not Attach As Lien To Property, Leaving Earlier-Recording Lender In Lien Priority Dispute Holding Bag

Lexology reports:

• The mortgage was not properly executed because the borrower / mortgagor’s signature was not notarized as required by Ohio Revised Code Section 5301.01. The mortgage was appropriately recorded despite the deficiency. With record notice of the current mortgage (and possibly actual notice too), a second lender advanced money to the same borrower and recorded a properly executed mortgage. The latter mortgage was recorded about two years after the first, improperly executed, mortgage was recorded.



• When the owner of the mortgage recorded second filed for foreclosure and the two lienors decided to dispute priority, Lucas County Judge Frederick H. McDonald had to determine if Ohio Revised Code Section 5321.23 (the first-in-time is first-in-right statute) was applicable.



• In OneWest Bank v. Dorner, 164 Ohio Misc.2d 63 (Lucas County 2011), he decided that the statute did not apply because the first filed mortgage was defectively executed.



• Judge McDonald based that decision on: (i) an Ohio Supreme Court case which he said holds that a defectively executed deed does not transfer property such that a later creditor of the transferor cannot get that property, National Bank v. Denison, 165 Ohio St. 89 (1956); and (ii) an Ohio Appellate case that he said holds that a defectively executed mortgage does not create a lien on property that has priority over the subsequent lienor, MERS v. Odita, 159 Ohio App.3d. 1 (2004) (“Although a defectively executed mortgage is not entitled to record, even if it is recorded, the defective mortgage is treated as though it has not been recorded.”)



• The holder of the first filed but defectively executed mortgage was an assignee. Asserting that the situation was not its fault and that fairness should place in first position the true first lienor, especially since the true second lienor had knowledge of the first lien, the first mortgagee asked Judge McDonald to do equity.



• Judge McDonald declined the opportunity to apply equitable principals to correct the error made by the original should-have-been-first mortgagee despite the lament that the plaintiff / holder of the mortgage recorded second was allegedly unjustly enriched.

For the story, see Improperly executed but properly recorded mortgage isn't a lien (may require subscription; if no subscription, GO HERE; or TRY HERE - then click appropriate link for the story).

For the trial court ruling, see OneWest Bank v. Dorner, 164 Ohio Misc.2d 63 (Lucas County 2011).

Texas Homeowner, Chase Settle Suit Over Improperly-Filed Mortgage Lien Release That May Have Led To 'Free House'

In San Antonio, Texas, the San Antonio Express News reports:

• Chase bank has dropped its lawsuit against a San Antonio couple who in 2002 were mistakenly released from having to make any more house payments. The bank and Ramiro and Delia Guerrero Jr. have reached a settlement that will require the couple to pay a portion of their $86,750 mortgage note. Stephen Cochran, the couple's lawyer, declined to disclose the amount.



• The Guerreros will not have to pay any late fees, penalties or taxes, he added. “What we're going to do is renew, extend and modify that original note and lien so it will be a different number (with) longer terms,” Cochran said.



• Chase sued the couple on Sept. 16 in U.S. District Court in San Antonio seeking to rescind the mortgage-lien release that was recorded in error nine years ago. The bank voluntarily dismissed the suit last week.

***

• In an Oct. 11 Express-News story, Cochran said the couple stopped making their payments after a 2001 refinancing.(1) He cited the lender apparently losing the note at the time and the couple's confusion over where to send their payments as reasons why they stopped making payments.



• Nevertheless, Cochran said, a lawsuit seeking to rescind the mortgage-lien release needed to be filed within four years of the recording of the release under the statute of limitations.



• Cochran said he believed he had a strong case, but he said fighting Chase's suit would be “kind of like betting the farm.” “If you win, you win, but if you lose, you lose big,” he said.



• He added that a judge could have ruled in Chase's favor and declared the Guerreros owed the money, raising the prospects of a possible foreclosure. Plus, he said, it was never the Guerreros' intent to try to get a “free house.”

For the story, see Settlement reached in mortgage case.

(1) See Chase Sues To Collect On Erroneously-Released M'tgage; Homeowner Admits Owing Money, But Leans On Statute Of Limitations To Tell Bankster To Get Lost.

BofA 'Coding Error' Leads To Flap Over $1 That Wrecked Former Borrower's Credit; Media Spotlight Needed To Spur Corrective Action

In Vernal, Utah, KUTV-TV Channel 2 reports:

• In August, 2010, Shantell Curtis sold her Vernal, Utah house. But months later, when Shantell sat down to do her taxes, her accountant noticed a problem. She still owns that Vernal house. And worse, Shantell's credit score says she is now months behind on the payments.



• Shantell says she called her former bank, Bank of America and they quickly noticed the error; a really small error. "They said, oh it's over one dollar," Shantell says. But for as quickly as Bank of America noticed they error, they have spent months not fixing it. For five months Shantell says the bank has promised to close the account and send her a letter. But it's never happened.



• "They said that they had to keep reprocessing it and this has been game we've been playing ever since," Shantell says. "They just say they need to reprocess papers."



• So, after months of fighting this battle with no results, Shantell called Get Gephardt. 2 News contacted Bank of America on Shantell's behalf and that got things moving. In an email the Senior Vice President of Media Relations writes it was "a coding error led to this issue." And she says that coding error has now been fixed.



• Bank of America says they will also remove the negative report from Shantell's credit. But that could take up to 90 days. Shantell says she still has never received any communication from Bank of America.

Source: Get Gephardt: Home Foreclosure Over Missing $1.

Atlanta Woman Gets 3+ Years For Using Forged Deeds, Phony 'Gift' Letter, Inflated Property Value To Fraudulently Obtain Reverse Mortgage

From the Office of the U.S. Attorney (Atlanta, Georgia):

• GIA JOY GLASSE-HARRIS, 27, of Atlanta, Georgia, was sentenced to prison early this evening by United States District Judge Amy Totenberg on charges of conspiring to commit mortgage fraud.(1)

***

• According to United States Attorney Yates, the charges and other information presented in court: From May 2009 through February 2010, GLASSE-HARRIS engaged in a conspiracy to defraud that involved reverse mortgages.

***

• GLASSE-HARRIS, who is not a senior citizen, attempted to take advantage of the reverse mortgage program by using forged deeds to transfer property into the name of a senior citizen, while fraudulently inflating the value of the property by more than five times the true value.



• GLASSE-HARRIS then attempted to “sell” the property at the inflated value to a second senior citizen, using fraudulent “gift” letters to create a down payment, so that the senior citizen would appear to have equity in the property. GLASSE-HARRIS’ attempt to obtain this reverse mortgage was declined by the lender, and her subsequent efforts at additional reverse loan fraud in the name of another senior citizen were thwarted by a government sting that implicated GLASSE-HARRIS and others.

For the U.S. Attorney press release, see Atlanta Woman Sentenced for Committing Mortgage Fraud (Gia Joy Glasse-Harris Tried to Profit from Reverse Mortgages Intended to Benefit Senior Citizens).

(1) GLASSE-HARRIS was sentenced to three years and one month in prison, to include the final six months in home confinement, to be followed by three years of supervised release, and ordered to pay restitution in the amount of $174,000. GLASSE-HARRIS pleaded guilty to the charges on August 24, 2011.

Blown Title Work Leaves Missouri Couple Facing Possible Foreclosure On Purchase Of Lot Subsequently Improved With New Home

In Boone County, Missouri, the Columbia Daily Tribune reports:

• Darrel and Mellony Melson bought the lot in the Brookfield Estates where they would build their home in May 2003. They built a house in the higher-end Southern Boone County subdivision that Boone County Assessor records value at $275,000. Four years later, they found out someone else had a right to it.



• A decision handed down Tuesday in the Missouri Court of Appeals Western District ruled that an owner of the property who sold it in 2000 had the right to foreclose on it. The decision overturns a local court’s decision and marks the next step in a complicated suit over an unusual circumstance.



• Before the Melsons built their home, Keith and Chastity Samuel owned it as part of a 94-acre tract. They bought it in 2000 from Carl and Martha Traxler. As part of the transaction, the Traxlers provided $388,180 in seller financing to cover the remaining purchase price of the land, putting a lien on it in their favor.



• The Samuels then set about developing it, taking out a loan from Boone County National Bank. That gave the bank a lien against the land, too. From December 2001 to September 2004, the Samuels sold at least 14 residential lots to various buyers, court documents state. All the while, they were making loan payments to their two creditors — the bank and the Traxlers. As the lots were sold, the bank and the Traxlers issued partial deeds of release to the people who bought the lots.



• When the Melsons bought their lot in 2003, they hired Boone-Central Title Company to locate existing liens against the property. Boone-Central obtained a partial release from the bank. For some reason, it didn’t get one from the Traxlers.

***

• “Unfortunately we’re human and sometimes mistakes are made,” said Karen Brown, president of Boone-Central Title Company, who added that title insurance will cover damages to the Melsons.(1)

For more, see Title firm error leaves family in limbo.

For the court ruling, see Melson v. Traxler, No. WD72795 (Mo. App. W.D. November 1, 2011).

(1) Title insurance will only indemnify for damages limited to the face amount of the title policy. It may be that, while obtaining an owner's title policy for the purchase price of the lot, the Melsons failed to subsequently update the policy to reflect the value of the improved premises, which would include the value of their new home after it was built. In that case, the title insurer will only be on the hook for the lesser value of the unimproved lot, leaving the Melsons in deep $#!t.

Sentencing Begins For S. Florida Quartet Convicted In Mortgage Fraud Scam Involving Bogus Docs & Appraisals, Escrow Cash Ripoffs, Phony Short Sales

From the Office of the U.S. Attorney (Miami, Florida):

• Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, [and a cast of others] announce that defendants Kimberly Mackey, 46, of Pittsburgh, Pennsylvania, and Marcos Echevarria, 29, of Palm Beach, Florida, were sentenced [] before U.S. District Court Judge William P. Dimitrouleas. Defendants Louis Gendason, 42, of Delray Beach, Florida, and John Incandela, 24, of Palm Beach, Florida, will be sentenced on December 16, 2011.

***

• According to the Information and statements made in court, from May 2009 through November 2010, the defendants engaged in a reverse mortgage scheme that defrauded unwitting borrowers, Genworth Financial Home Equity Access, Inc. (Genworth), and the Federal Housing Administration (FHA).

***

• To qualify the borrowers for the loans, Gendason altered real estate appraisals to fraudulently inflate the value of the borrowers properties. In fact, however, none of the borrowers had sufficient equity in their properties to qualify for a reverse mortgage.

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• As a further part of the conspiracy, defendant Kimberly Mackey, a licensed title agent and proprietor of Real Estate One Land Services, Inc. (REO), located in Pittsburgh, Pennsylvania, fraudulently closed the Genworth loans, failing to pay off the borrowers existing mortgage loans.

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• Between May 2009 and November 2010, Mackey received loan proceeds from Genworth totaling $2,572,813.19. Mackey fraudulently diverted at least $988,086.33 to a bank account controlled by Incandela and Gendason, who used this money for their personal benefit.



• Thereafter, to perpetuate the fraud, the defendants engaged in a loan modification scheme to conceal the existence of the Genworth reverse mortgage transactions from the original mortgage lenders, whose loans remained unpaid.



• To this end, Gendason, Incandela, and Mackey conspired to create fictitious offers to buy some of the borrowers properties, in the form of short sales. [...] In other instances, to hide the existence of the Genworth reverse mortgage loan from the original lenders, the defendants made monthly mortgage payments to the borrowers original lenders.

For the U.S. Attorney press release, see Loan Officer And Title Agent Sentenced For $2.5 Million Reverse Mortgage And Loan Modification Scheme.

(1) Defendant Echevarria was sentenced to 24 months in prison, to be followed by five years of supervised release. Defendant Mackey was sentenced to 60 months in prison, to be followed by five years of supervised release. Restitution was ordered in the amount of $1,654,805.36.

All of the defendants, including Louis Gendason, 42, of Delray Beach, FL, previously pled guilty to a Criminal Information charging them with one count of conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, for their participation in a $2.5 million Home Equity Conversion Mortgage (a.k.a. reverse mortgage) fraud scheme. Sentencing for Gendason has been scheduled for December 16, 2011 at 1:45 PM before U.S. District Court Judge William P. Dimitrouleas.

Boston Feds Pinch Closing Attorney For Allegedly Pocketing $400K+ In Real Estate Escrow Cash; Closing Proceeds Meant To Pay Off Existing Mortgages

In Boston, Massachusetts, the Eagle Tribune reports:

• Attorney Daniel S. Braese, who once aspired to be a town selectman, misappropriated more than $400,000 that was supposed to pay off mortgage payments in real estate closings he handled, federal prosecutors allege in court documents filed this week.



• Braese, 47, [...] faces two counts of bank fraud and one count of making a false statement in a Federal Housing Administration transaction — charges stemming from an investigation by several agencies into his alleged mortgage loan fraud. U.S. Attorney Carmen M. Ortiz's office filed the charges against Braese Wednesday in Federal District Court in Boston.

For more, see Feds say attorney obtained more than $400,000 illegally.

For the U.S. Attorney press release, see Woburn Attorney Charged With Fraud In Real Estate Closings.

Florida AG Takes Active Role In Vacant Home Hijacking Prosecutions As 'Adverse Possession' Rackets Span Multiple Counties

In Central Florida, the St. Petersburg Times reports:

• Without permission, he went into vacant homes, changed the locks and rented out properties, authorities say. And in a odd twist, the Plant City man claimed what he was doing was allowed by an obscure legal concept called adverse possession.



• Until now, authorities have battled this unusual practice with local prosecution, but on Thursday — for the first time — the Attorney General's Office announced plans to prosecute two of these cases, both in the Tampa Bay area. In a statement, Attorney General Pam Bondi called the practice "shameful."



• Chris McDonald, 47, of Plant City was charged Thursday with organized scheme to defraud and booked into jail. He owned a company named Chateau-Lan Property Solutions.

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• Deputies also arrested Demetrius Lewis, 37, of Land O'Lakes, on a charge of organized scheme to defraud. His business — named Help is Here Foreclosure Prevention and Credit Repair — ran a little differently than McDonald's.



• Lewis would gather the addresses of vacant homes and for $1,000 teach anyone how to occupy them using adverse possession, according to the Florida Department of Law Enforcement.

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• Because their dealings spread across five counties, the Attorney General's Office of Statewide Prosecution will try these cases. But McDonald and Lewis are not the first two to be arrested in connection with adverse possession.



• George Williams, 41, faces organized fraud, burglary and grand theft charges in connection with several Hillsborough properties he rented. He has pleaded not guilty. Also, Joel McNair, the Sarasota man who told the St. Petersburg Times that it was his idea to take over empty houses and rent them out, was under investigation until he committed suicide in May.

For more, see Florida Attorney General's Office steps into prosecution of bay area adverse possession schemes.

Probe By Tarrant County Cops Into Over A Dozen Vacant Home Hijacking Complaints Ongoing As Adverse Possession Rackets Continue Proliferating

In Tarrant County, Texas, the Star Telegram reports:

• Traveling nurse Agnes Edede was shocked in September to find a stranger living in her Mansfield home after she was away at work for three days. The man, Anthony L. Brown, had changed her locks, entered her house without permission and took two TVs and a lawn mower, she told police. Brown told her that the house was now his. To get it back, she'd have to pay him $2,000, police records say.



• Similar seizures may be taking place all over Tarrant County, Mansfield Deputy Constable D. Garnett said. He said his office is investigating more than a dozen similar cases of people claiming ownership of what they say are abandoned homes. "It's an elaborate sham," Garnett said Friday. "These people just go to an empty house, change the locks, put up no-trespassing signs and move in.

For more, see Cases of people claiming squatter's rights in Tarrant County under inquiry.

Vacant Home Hijackers Keep Georgia Cops Busy As Three Cobb Men Get Pinched On Burglary, Forgery, Theft By Deception Charges In Rental Scam

In Marietta, Georgia, The Marietta Daily Journal reports:

• Three Cobb men are accused of leasing out homes that they didn’t own, with nearly 20 people claiming to have been duped by just one suspect. Officer Mike Bowman with Cobb Police said 19 people have told police that Johnny Eugene Harris, 44, of Acworth rented them property he did not own.



• According to a warrant issued Oct. 5, Harris removed the front and back door locks from a $220,000 home that was up for sale [...] in Mableton. He forged a lease agreement with a woman wanting to rent the home around Aug. 15 and allowed her to move in, police said.



• The real homeowner told police he later went to check on his home and saw people living in it. When the homeowner asked the woman what she was doing in the house, she showed him the lease agreement she had signed with Harris and the keys he gave her.



• Harris is also accused of taking $5,000 from the woman: $3,000 for a security deposit and two $1,000 rent payments. He remains in the Cobb County Jail on a $200,000 bond on charges of burglary, two counts of theft by deception and first-degree forgery, all felonies.



• Two Powder Springs men accused of charges similar to Harris’ also remain in the Cobb County Jail on $35,000 bonds. According to warrants, the father and son team of Rodger Dudley Mason, 53, and Taylor Martin Mason, 19, are accused of changing the locks at a home [...] in Powder Springs. They hooked up utilities in their name, sold items in the house and rented a room to a man for $400 a month, police said.

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• The pair were arrested on Oct. 13 and each charged with three counts of burglary and theft by taking, both felonies, and theft by deception, a misdemeanor.

For the story, see 3 accused of renting out houses they didn’t own.