County Employees' 9-Year Screw-Up Over State Tax Exemption For Homesteads Leaves Couple Residing Part-Time In Florida With Big Bill For Unpaid Charges

In Lakeland, Florida, The Tampa Tribune reports:

• Bethel and Rex Root have always paid their property taxes as soon as the bill arrived in their mailbox. For nine years, there has been no problem.



• But now, the Hillsborough County Property Appraiser's Office says it miscalculated how much they owed all those years. The mistake means the Roots received exemptions they weren't entitled to of more than $367,000 in their home's value. "I was quite flabbergasted," Bethel Root said.



• Making matters worse, the county placed a lien on the home, and the only way to remove it was to pay $5,000 in back taxes. So the Roots, retired and on a fixed income, sent in the money last month. But then, a few weeks later, the county called with another mistake. Now they owe $3,000 more. "They change the totals all the time," Root said. "It depends on what day it is there, I think."



• How could this happen? Jim Glaros, assistant chief deputy for the Hillsborough County Property Appraiser's Office, said the Root's case is the perfect storm of a clerical error mixed with the homeowners' misunderstanding of the homestead exemption.



• "We've tried so many times to educate homeowners, but many people just pay their bill without paying attention to the exemptions, and I do get that," Glaros said.



• The Roots' situation is an extreme example, he said. Mistakes typically don't go nine years before they are discovered. Still, Glaros said he hopes this case will spur renewed diligence on the part of his office and homeowners in checking assessments.



• It turns out there were actually two mistakes that led to the shortfall in taxes collected from the Roots. First, the property appraiser's office didn't assess the property correctly. And then the tax collector didn't charge enough.



• When the Roots bought their home in 2001, the property appraiser's office failed to remove the $25,000 homestead exemption the previous owner had on the home. Florida law allows homeowners a break on their taxes for their primary home.



• The Roots live here part of the year, but their primary residence is in Michigan, so they're not entitled to the exemption. But they didn't apply for it and say they didn't even know they had it.



• The home at 5311 Sharon Trail is so close to the Polk County line it has a Lakeland postal address. What's more, garbage and other services are provided by Polk County under a commonly used intercounty arrangement.



• Glaros said he doesn't know why it took so many years for his office to figure out the mistake. Now that's it's caught, though, the office can't just look the other way, he said. "We're only asking that they pay what they should have already paid. That's all we're asking."



• The information was turned over to the Hillsborough County tax collector, where another mistake occurred. Dana Dove, from the tax office, said an employee who no longer is with the county, "for obvious reasons," estimated the taxes incorrectly and forgot to tally $3,100. That's why the couple were asked to pay just $5,000 at first, she said.



• The $25,000 homestead exemption is only part of the problem. The exemption also caps the assessed value of a home at 3 percent a year no matter how much its market value increases.

For more, see Hillsborough errs on homestead exemption, wants couple to pay.

Homeowner Barely Dodges Foreclosure Sale As Chase Fails To Remove Residence With Recently-Approved/Modified Mortgage Loan From Auction List

In Redwood City, California, The Daily Journal reports:

• Redwood City resident Gloria Takla’s Easter Sunday turned sour when she got a call saying her home would be sold in an auction Monday. So, she spent all morning Monday, before the 1 p.m. auction time, on the phone with bank officials trying to figure out why the home would be sold considering JP Morgan Chase Bank just approved a trial modification on her $585,000 loan last month.

***

• “We’ve been in constant contact with her,” said Eileen Leveckis, spokeswoman for JPMorgan Chase. “We worked out a good deal for her.” The confusion about the sale of her home was because the trial loan modification was approved after the list of foreclosed properties that will be put up for auction was made, Leveckis said. The disconnect “had nothing to do with Chase,” Leveckis said.



• Takla had real estate brokers knocking on her door before yesterday’s auction asking to see the property. “How can I stop people from coming over and asking to see my property?” she asked Jaime Gonzalez, a real estate broker with Re/Max in Redwood City. Gonzalez had a foreclosure profile report in his hand when he visited Takla’s C Street home early yesterday afternoon. He wanted to see if the home would be worth making a bid on.



• The visit did not sit well with Takla, an artist by trade. “This has been two years of stress,” she said.

For more, see Home mistakenly put on auction list.

Cops Seek Suspect Accused Of Pocketing Upfront Rent Deposits From Unwitting Would-Be Tenants For Vacant Homes In Foreclosure

In Porterville, California, KGPE-TV Channel 47 reports:

• Kerri Dunning is out of a thousand dollars and the house she thought she was moving her family into. "Gave him a thousand dollars, he gave us the keys," said Dunning.



• She was excited about moving in to her new home, but delight turned to bitter disappointment when Dunning went to check on the house and the keys didn't work. "We were going to make it a home for a while and my daughter was like this is great, this is great," said Dunning.



• Porterville Police are looking for 39-year-old Scott Crowder. Police know of one other victim who paid Crowder $3,000 to rent the same home and also got fake keys. Now they believe there may be more victims.



• "He is posing as a homeowner/property manager and accepting cash to rent a home that is in foreclosure," said Sgt. Rick Carrillo with the Porterville Police Department. Police believe the home used to belong to Crowder's family and that's how he gains access, even though the bank is about to take possession.



• Terry Fox, owner of Fox Property Management says sadly this is becoming a growing problem. "It's a combination of things with the internet it's somewhat easier to scam people, and the economy is down so people are looking for easy ways to make a buck," said Fox.



• In both cases the victims found the house along with pictures on Craigslist, the same internet site Fox Property Management uses to post listings. Fox says it's important to always make sure the property manager is legit by checking references, business cards and never pay with cash.



• "I would like to know where he is just so he doesn't scam anyone else, that's the basic thing," said Dunning. If you believe you're a victim call Porterville Police at 559-782-7400.

Source: House Rental Scam; May Be More Victims.

Failure To Disclose To Client That Cash Borrowed Was For Strip Joint Nearing Foreclosure Among Issues Landing Pennsylvania Lawyer With Bar Boot

The ABA Journal reports:

• A lawyer who obtained a $25,000 loan from a matrimonial client has been disbarred after the Pennsylvania Supreme Court determined that he failed to reveal a number of pertinent issues as required under attorney ethics rules.



• Among them, Glenn D. McGogney didn't tell the client that the restaurant business for which he required the loan had accumulated a "staggering" amount of debt and was nearing foreclosure, explains a disciplinary board report and recommendation. It is attached to a Supreme Court order (PDF) on Wednesday that adopts the board's recommendation that he be disbarred.



• McGogney also didn't reveal that the business was a strip club and had licensing issues, the disciplinary board says.



• And his client, instead of being advised to seek independent counsel concerning the business transaction, thought McGogney was acting as his attorney in the loan matter.



• Additionally, McGogney failed to diligently pursue another client's personal injury matter, resulting in the dismissal of her claim which is now likely barred by the statute of limitations, the disciplinary board found.
  
  Hat tip: Legal Profession Blog.

Source: Disbarred Lawyer Took Client’s $25K for Business Loan, Didn’t Reveal Debt or Say It Was a Strip Club.

Section 8 Ripoff Leads To Jury Conviction For Local Housing Official Who Pocketed Rent Subsidies For Two Units In Her Home Leased To Hubby, Daughter

In Boston, Massachusetts, the Dorchester Reporter reports:

• A federal jury this week convicted a Department of Neighborhood Development program manager of defrauding the government in two separate scams related to her house on Dix Street.



• Celia Thomas, 49, of 10 Dix St., faces up to 30 years in prison when sentenced on July 11, the FBI reports. She was terminated from her city job last year. According to an affidavit by the FBI agent who investigated the case, Thomas made some money on the side by making up a fictitious identity and using that to get federal Section 8 payments from the BHA for two alleged rental units in her home [...], supposedly rented to her real husband and daughter.



• Specifically: "To support this falsehood, in January, 2004, Thomas used the fax machine at her place of employment, The Department of Neighborhood Development, to fax a copy of a deed for 10 Dix St. to the BHA which purported to show that 'Fitzgeral Thomas' had acquired 10 Dix Street in May 2003. In fact, Thomas had acquired 10 Dix Street in May, 2003. The deed she sent to the BHA by fax had been fraudulently altered to substitute the name 'Fitzgeral' for 'Celia.' "



• The FBI says Thomas made $69,704 over four years. In 2009, Thomas made nearly $67,000 as a DND program manager, according to the Boston Herald's municipal salary database for that year. Despite the extra income, however, Thomas spent nearly five years fending off foreclosure on 10 Dix St.



• In 2008, the FBI discovered, she found a solution: Find some straw buyers who would pretend to buy the property, then secretly let her continue to live there. Thomas paid these buyers $8,000 for their trouble, the FBI agent said. She made payments for them for awhile, then just stopped sending money in and the property went into foreclosure proceedings again, according to the FBI.

Source: Former city program manager convicted of Section 8, mortgage scams.

Cops To Foreclosed Couple Facing Felonies For Filching Fixtures They Paid For From Former Home: 'You Should've Dealt With Ownership Issue In Court'

In Gwinnett County, Georgia, The Atlanta Journal Constitution reports:

• A Gwinnett County couple has been charged with felonies after they allegedly stole more than $70,000 worth of appliances and cabinets from a foreclosed home one of them once owned, Channel 2 Action News reported.



• The investigation began March 16, when a real estate agent interrupted Jeremy Brown and Dawn Nolan as they removed items from a vacant Walton County home once owned by Nolan and her former husband, Walton County Sheriff’s Capt. Chris Cannon told Channel 2.



• In a phone interview with the AJC Wednesday, Cannon said, "They were going back and forth to the once-marital home," on Calumet Lane in unincorporated Walton County near Monroe, "and removing items from that home and taking it to their current marital home." "This happened on at least five occasions -- in October, December, January, February and March," Cannon said.



• Authorities executed a search warrant at the couple's Gwinnett home on March 22 and recovered custom cabinets, high-end appliances, granite counter tops and wrought iron.



• Brown was charged with five counts of burglary, and Nolan, with theft by receiving stolen property, Cannon said. Both initially were booked into Walton County jail and have since been released on bond.



• When interviewed by Channel 2, the couple denied stealing and said the felony charges were overblown. "The police came over here and charged me with five counts of burglary for going to a house and stealing cabinets that was previously purchased by my wife," Brown said. Nolan said, “We did pay for those things out of our pocket. It was not wrapped up in the mortgage."



• Cannon said the couple had no authority to go into the house and remove things. It had been foreclosed, it is now owned by a bank, and a real estate agent has been working to sell the property, he said.



• Cannon said that while the case is still under investigation, the issue of who owned what in the dwelling "should have been dealt with in the courts during foreclosure, and I guess [the couple] opted not to. Our detectives are working to gather further information regarding that as well."

Source: Couple charged with stealing from woman's own former home.

Motor City Rebirth Slowed By Big Chunk Of Foreclosed Homes Succumbing To City Wrecking Ball As Soured Debt Leaves Motown Riddled With Reposessions

In Detroit, Michigan, The Associated Press reports:

• An analysis finds more than a quarter of Detroit homes with loans that failed during the foreclosure crisis in 2006 and 2007 have been razed or are on the demolition list.



• The Detroit News reported [] that foreclosures are a huge obstacle to the city's revitalization efforts, with properties being stripped of valuable metal and fixtures quickly after owners are evicted.



• Amid its population decline, Detroit has struggled with an increasing number of vacant homes. The newspaper reports that foreclosures from 2006 and 2007 alone added 7,600 homes to the demolition list, and an estimated 38,000 homes currently are in some stage of demolition. Karla Henderson, Detroit's group executive of planning and facilities, said the city is working to find ways to keep people in their homes.

Source: Report: More than 25 percent of foreclosed Detroit homes now razed or on demolition list.

See also, The Detroit News: Foreclosures slow Detroit's rebirth (Detroit riddled with repossessions from height of housing meltdown).

Florida Bar At Risk Of 'Drowning' By Complaints Against Attorneys Accused Of/Associated With Loan Modification Ripoffs?

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

• The Florida Bar has fielded nearly 1,400 complaints against attorneys relating to the housing crisis, an unprecedented amount that has buried investigators and forced the group to rethink how it will handle widespread grievances in the future.



• Beginning in the fall of 2010, as foreclosures receded because of robo-signing revelations, a wave of consumer complaints alleging attorney misconduct began to hit the Bar.



• The complaint categories - mortgage fraud, foreclosure fraud, loan modification misconduct - didn't even exist three years ago, said Ken Marvin, director of lawyer regulation for the Florida Bar. His first recorded loan modification complaint was in November 2010. Today, 793 cases have been opened.



• "They just started coming in and the numbers were incredible," Marvin said. "We never even had a loan modification category or mortgage fraud or foreclosure fraud, and we had to create all of this because we wanted to track these reliably."

For more, see 'Tsunami' of foreclosure complaints swamps Fla. Bar.

See ETHICS ALERT: Lawyers should be very wary of loan modifiers: for a Florida Bar Ethics Alert to its members providing guidance on the "do's & don'ts" when dealing with potentially fraudulent loan modifications rackets.

Paperwork Submitted By Homeowners Seeking Loan Mods That Servicer Said Wasn't Sent Suspected To Be Floating Around Somewhere In India

Investigative reporter Paul Keil with ProPublica writes:

• In 2009, during the first few months of its participation in the program, Litton put tens of thousands of homeowners into trial modifications. That was easy, because nothing had to be documented. Under the agreements, if the borrower made the lowered payments for the three-month trial period, they'd receive permanent modifications.



• The hard part was for Litton to collect the borrowers' papers and crunch the numbers to verify the terms of the permanent modifications. That, he says, "turned out to be a total disaster."



• Wyatt led Litton's "Executive Response Team," which was charged with handling customer complaints. Litton employees, overwhelmed and undertrained, frequently made basic errors when calculating a homeowner's income, he says. HAMP guidelines often weren't followed, because Litton was "way understaffed" and couldn't keep up, he recalls. But the worst part was the way Litton dealt with homeowners' documents, he says.



• When homeowners faxed their documents, they didn't go to Litton, Wyatt says. They went to India, where a low-cost company scanned and filed the documents — but often misfiled or lost them.



• Wyatt says Litton routinely denied modifications because homeowners had not sent their documents when, in fact, they had. In a process internally referred to as a "denial sweep," Litton's computers would automatically generate denial letters for every homeowner who, according to Litton's records, hadn't sent their documents.



• But untold numbers of those documents had been lost on another continent. Wyatt complained about the practice in multiple meetings with senior management, he says, but managers were chiefly worried about reducing the overwhelming backlog.

For more, see At Goldman Sachs Servicer, ‘Total Disaster’

See also The Great American Foreclosure Story: The Struggle for Justice and a Place to Call Home.

Criminal Interference With Another's Housing Rights Among Charges Landing Perpetrator 15-Year Jail Stay For Firebombing Interracial Couple's Residence

From the U.S. Department of Justice:

• The Department of Justice announced [] that Gary Dodson, 33, of Waldron, Ark., was sentenced in Little Rock for his involvement in firebombing the residence of an interracial couple.



• On Dec. 7, 2011, Dodson pleaded guilty to conspiring to violate the civil rights, criminal interference with housing rights due to race and possession of an unregistered firearm/destructive device. District Judge Billy Roy Wilson sentenced Dodson to 15 years in prison and 3 years of supervised release for the three counts of conviction.



• During his plea, Dodson admitted that on the night of Jan. 14, 2011, he attended a party where he and three other men, Jake Murphy, Dustin Hammond and Jason Barnwell, devised a plan to firebomb the victims’ house. Dodson then drove the other men to purchase gas for the firebomb and then Dodson drove everyone to the victims’ house in Hardy, Ark. When they arrived, Barnwell, Murphy and Hammond constructed three Molotov cocktails and threw them at the house. They damaged the victims’ house; however, no one was injured.



• Murphy and Hammond previously pleaded guilty to conspiring to and violating the civil rights of the victim. Both received sentences of 54 months incarceration and three years of supervised release.



• In June 2011, Wendy Treybig, who co-hosted the party on Jan. 14, 2011, with Barnwell, pleaded guilty to obstructing justice. She was sentenced on Dec. 13, 2011, to 21 months incarceration and three years of supervised release. Jason Barnwell pleaded guilty on Aug. 26, 2011, and was sentenced on Jan. 27, 2012 to 20 years incarceration.

For the DOJ press release, see Arkansas Man Sentenced for His Role in Firebombing Residence of Interracial Couple.

Feds Score $3.89M Judgment Against Loan Mod Scammer For Clipping Homeowners For Upfront Fees In Exchange For Phony Promises To Ease Mortgage Payments

From the Federal Trade Commission:

• At the request of the Federal Trade Commission, a federal court has imposed a court order with a $3.89 million judgment against defendant Samuel Paul Bain and three of his companies for their role in an allegedly fraudulent mortgage modification and foreclosure relief scheme.



• The court order also bans Bain and his firms from telemarketing, and from providing, or claiming to provide, debt relief and mortgage relief services to consumers. It also bars the defendants from making any unsupported claims about the benefits, performance, and efficacy of financial products, and from misrepresenting any relevant fact about a product or service, or about the terms and conditions of a sale.



• This default judgment concludes the FTC’s case against the U.S. Homeowners Relief defendants, six of which have already agreed to settle FTC charges. The settlement orders against those defendants require the payment of millions of dollars in ill-gotten gains, and permanently ban all six from selling any mortgage assistance or debt relief products or services.



• The action against the U.S. Homeowners Relief defendants is part of the agency’s ongoing crackdown on frauds targeting consumers in financial distress.



• The scheme allegedly charged consumers up to $4,250 for a promise to reduce their mortgage payments, interest rates, and sometimes even their loan balances.

For the FTC press release, and links to court documents, see FTC Action Leads to Court Order Banning Final "U.S. Homeowners Relief" Defendants from Debt and Mortgage Relief Business.

Property Management Owners Head To Prison For $2M Ripoff From HOAs Affecting 700+ Condo Owners; Some Lost Homes To Foreclosure

In Chicago, Illinois, the Chicago Tribune reports:

• The former co-owner of a Chicago property management company was sentenced Tuesday to three years in federal prison for stealing about $2 million from condominium associations.



• Jay Strauss, 76, pleaded guilty to one count of fraud in November after his business partner, Donald Doering, 64, agreed to a 51-month sentence as part of a deal to cooperate with prosecutors. A date for Doering's sentencing hearing has yet to be scheduled.



• The two men started Regent Realty Group Inc. in 1988, and it grew to manage 48 condo properties, mostly on Chicago's North Side. From 2005 until January 2008, when they closed the company, Strauss and Doering took assessment fees meant for the maintenance of the properties to pay off personal debt they had accumulated on a real estate project, according to the plea agreement.



• They covered up their theft by creating false monthly financial reports for the accounts of each property managed, court papers said. The U.S. attorney's office in Chicago said in court documents that more than 700 condo owners were hurt and that some victims lost their homes to foreclosure.

For more, see Man gets 3 years for defrauding condo associations (Jay Strauss, who co-owned Regent Realty Group, will go to federal prison for stealing about $2 million from 48 condo associations, mostly on Chicago's North Side).

Non-Profit Files Formal Fair Housing Complaint Accusing Wells Fargo Of Neglecting REOs In Minority Neighborhoods

The Baltimore Sun reports:

• The National Fair Housing Alliance said Tuesday that it has filed a federal housing discrimination complaint against Wells Fargo, alleging that the bank is doing a better job maintaining foreclosed homes in white neighborhoods than foreclosures in minority neighborhoods.



• The alliance said last week that it scored the condition of foreclosed homes in nine regions, including Baltimore, and found disparities based on the racial makeup of neighborhoods. (The Baltimore metro area was an outlier in the alliance's report: Though staffers found differences by neighborhood, the overall scores were basically equally lousy.)



• That report didn't name names. But this week's complaint, filed with the U.S. Department of Housing and Urban Development, singles out Wells Fargo.

***

• HUD said Tuesday that it had received the complaint and would review it. The agency's complaint process is outlined here. "Administrative complaints can lead to a formal civil rights investigation led by HUD or similar state agencies," Shantae Goodloe, a HUD spokeswoman, said in an email.

For more, see Fair housing group files foreclosure maintenance complaint against Wells Fargo.

NYC Feds Put Squeeze On Mortgage Banker In Civil Suit Alleging Fair Housing, ECOA Violations In Lending To Black, Hispanic Home Loan Borrowers

From the Office of the U.S. Attorney (Manhattan):

• Preet Bharara, the United States Attorney for the Southern District of New York, [and others] announced [] that the United States has filed a civil rights lawsuit against GFI MORTGAGE BANKERS alleging violations of the Fair Housing Act and the Equal Credit Opportunity Act.



• The Complaint alleges that GFI engaged in a pattern or practice of discrimination on the basis of race and national origin in making hundreds of loans from 2005 through 2009. The Complaint, which was filed [] in Manhattan federal court, seeks a declaration that GFI’s practices were illegal, an injunction against further discrimination, compensatory damages to benefit the victims of GFI’s discrimination, and civil penalties.



• Manhattan U.S. Attorney Preet Bharara said: “As the lawsuit we filed today alleges, discrimination still exists in certain quarters and it has profound consequences for the victims. At a time when so many American homeowners of all races and nationalities are struggling to make their mortgage payments, it is unacceptable that, as we allege, the impact of GFI Mortgage’s business practices resulted in its African-American and Hispanic customers paying higher fees and interest rates for their residential mortgages. As today’s suit demonstrates, this type of discriminatory action will not be tolerated. We will continue to work to ensure that fair lending laws are enforced throughout the district.”

For the U.S. Attorney press release, see Manhattan U.S. Attorney Sues Mortgage Banker For Engaging In Discriminatory Lending Practices Against African-American And Hispanic Borrowers.

Nevada Regulator Targets F'closure Rescue Operator w/ 'Cease & Desist' Order For Allegedly Clipping Homeowners For Upfront Fees, Unlicensed Activity

In Carson City, Nevada, the Las Vegas Sun reports:

• The state has filed a complaint against an unlicensed company that provides mortgage advice and advertises it can “stop a foreclosure within 48-72 hours.”



• The state Division of Mortgage Lending has issued an order against Sierra Foreclosure Solutions to “cease and desist” operating and to pay a maximum $25,000 fine. The complaint says the Sparks company and its officers Lawrence Day and Edmond M. Hodges conduct business as a covered service provider, which includes being consultants in foreclosures and loan modifications.



• Division Commissioner James Westrin said an investigation shows the company and its principals have never been licensed by the state. The investigation, Westrin said, showed the company charged homeowners an initial fee of $5,000 for its help. The company advertises it can help stop a trustee sale of a home in foreclosure and it can cut mortgage payments in half.



• A man who answered the phone at Sierra Foreclosure Solutions refused to identify himself and would not say if Day or Hodges were available to comment. Sierra Foreclosure, Day and Hodges have 20 days to contest the disciplinary action. Sierra is under Nationwide Lending LLC. The state also wants the company to pay $420 to cover the cost of its investigation.

Source: State orders company that advertises it can stop foreclosures to quit operating.

State High Court Issues Order To Banksters On Document Requirements Needed When Initiating Foreclosure Actions In New Jersey

In Trenton, New Jersey, The Star Ledger reports:

• The state’s chief justice has given financial institutions that are foreclosing on homeowners more direction about how to file proper foreclosure paperwork. The judicial order, signed [earlier this month] by New Jersey Supreme Court Chief Justice Stuart Rabner, comes six weeks after the high court ruled unanimously that a mortgage lender must list its own name and contact information, as well as that of the loan’s servicer, on the document that initiates the foreclosure process, known as the notice of intent to foreclose.



• Because many loans have been bundled and sold to investors, financial institutions have often only listed the servicer, a third party that collects monthly payments.



• Any filing that only lists the servicer is now considered deficient, and the court order said the loan holder must submit additional information for uncontested foreclosure filings so a judge can make a decision. Nearly 95 percent of foreclosures in New Jersey are uncontested, the court has said. The lender must also send a copy of the updated paperwork to the homeowner.



• Thousands of cases pending in the court will be affected by this order in the so-called Guillaume case, a court spokesman said. The case involved Maryse and Emilio Guillaume, homeowners from East Orange, who charged that their lender, U.S. Bank National Association, did not supply sufficient information when it moved to foreclose on their house in 2008. Only the name of America’s Servicing Company, which serviced the loan, was provided.

Source: N.J. Supreme Court order clarifies foreclosure paperwork for mortgage lenders.

Lawmaker/Sale-Leaseback Peddler Slips Provision Into Pending Law Enabling Him To Recover R/E License w/out 1st Fully Paying Off Damages From Ripoffs

In Annapolis, Maryland, The Washington Post reports:

• First, a Maryland senator was put on trial for helping a grocer who paid him consulting fees. Then, another co-sponsored a bill to fund a horse-racing track where his employer helped build a casino. Now, a Maryland delegate who sells homes in the District is close to making a law that could help him more than anyone else.



• Even as ethics reform has been among the legislature’s bigger concerns this year, Del. Tony McConkey this week authored, voted for and saw passage by the House of Delegates of a measure that could help re­instate his Maryland real estate license, which he lost in 2010 after the state determined that he had preyed on homeowners in foreclosure.(1)



• McConkey, an Anne Arundel County Republican, was ordered to pay $75,000 for what an administrative law judge called “fraudulent and unethical” behavior in real estate transactions. In one instance, the state found McConkey promised to help a woman keep her home, then didn’t return her calls, bought her property in foreclosure and sought to evict her.



• Under a measure inserted into a bill this week by McConkey, he and others could enter long-term payment plans to replenish a state fund used to compensate consumers who suffer financial losses as a result of actions by Maryland real estate professionals.(2) Three of McConkey’s clients were paid a combined $75,000 from the fund in 2010, making his debt to the state fund the largest of any real estate licensee in the past five years.(3)



• The Maryland Real Estate Commission says it has no evidence McConkey has paid any of the balance due. Under an agreement with the state, his license to sell homes in Maryland was suspended for one year. But commission officials said he would need to pay the entire amount due before seeking reinstatement of his license. McConkey is still a licensed real estate broker with Re/Max Supreme Properties in the District. He has a property listed for sale in Northeast.



• In an interview Thursday — after the bill with McConkey’s little-noticed provision passed the House by a vote of 138-0 — the three-term lawmaker said he wasn’t sure if the measure would affect his case. “I don’t know if it’s retroactive or proactive or, I’m not sure,” McConkey said. “I’m not sure what the particulars are. . . . I’d have to look at it closer.”



• Asked why he added the language to the bill, McConkey said it was to make the administration of the so-called Guaranty Fund clearer. “The code doesn’t really define the operation of the fund,” he said. He said the change also was intended to “encourage people to repay the fund.” He repeatedly declined to say whether he still owes the state.



• In recent days, state lawyers testifying about other pending legislation have said that laws often apply retroactively unless stated otherwise. Given that, it is unclear if McCon­key should have voted for the measure, since it could affect how quickly he could seek to reinstate his license. “There is always an appearance of a conflict when lawmakers have dealings with legislation that affects their livelihoods,” said William G. Somerville, the legislature’s chief ethics counsel.



• Somerville said he could not comment directly on McConkey’s amendment. In general, he said, the difference between the appearance of a conflict and an actual one often comes down to whether legislation could benefit a lawmaker’s employer, or a small group of people that includes the lawmaker.



• In each of the past five years, fewer than 40 real estate professionals annually have been ordered to pay into the fund, and only three besides McConkey have been ordered to pay $25,000 or more.



• With less than four days remaining in the General Assembly session, McConkey’s amendment has complicated the path of a bill that lawmakers say must pass. Without it, the RealEstate Commission, which licenses the state’s 41,000 real estate brokers and other industry professionals, would cease to exist July 1.



• The commission opposed an earlier bill to let licensees set up repayment plans that was sponsored by one of McConkey’s Republican colleagues. Commission Executive Director Kathie Connelly said state regulators have viewed the requirement to pay debts in full before reapplying for a real estate license as a strong deterrent.



• “Those who have injured Maryland buyers and sellers and caused financial loss to them should bear the full burden of their misconduct,” she said. The bill must now go to a conference committee with the Senate. The legislature is scheduled to adjourn Monday night. The McConkey amendment came in a week when legislation that would tighten ethics requirements for lawmakers in Annapolis stagnated.(4)

Source: Delegate’s measure may help him get back real estate license.

(1) See The Annapolis Capital: Local delegate may have conflict of interest (McConkey amendment could help him pay penalty, restore real estate license).

• In 2006 and 2007, according to Maryland Real Estate Commission records, McConkey contacted three women who lived in Annapolis, Baltimore and Pasadena, and offered to help them avoid foreclosure. He ended up taking their property or their money, according to the commission.



• McConkey lost his license, which was the second time his real estate license had been revoked. He also was disbarred as an attorney in 1995.

For more specifics on the ripoffs of the three homeowners, see Maryland Real Estate Commission: Final Order - February 4, 2011.

(2) The Maryland Real Estate Commission Guaranty Fund is a special fund that, with limitations, compensates victims of ripoffs committed by Maryland-licensed real estate professionals.

(3) This is not the first time a state recovery fund covering the unscrupulous conduct of licensed real estate professionals was asked to cough up cash to compensate the victim of a sale leaseback foreclosure rescue ripoff perpetrated by a real estate agent. See: State Recovery Fund To Cough Up $116K+ To Compensate Elderly Victim Of Bogus Sale Leaseback Equity Stripping Scam Involving Licensed Real Estate Agent, where an 87-year-old woman who was cheated out of her home of 50 years was granted $116,972 from the State of Minnesota, reportedly the largest pay-out in recent memory from a fund for victims of unscrupulous real estate professionals in that state. In this case, a real estate agent licensed by the state of Minnesota played a significant role in the sale leaseback ripoff.

(4) For more on McConkey, the reportedly twice-suspended real estate agent, once-disbarred lawyer, sale leaseback peddler and current member of the Maryland state legislature (presumably in good standing), see:

• MD Lawmaker Takes 1-Year R/E License Loss To Resolve Claims Arising From Running Sale Leaseback Racket; Victims Seek Recovery From State Guaranty Fund,
• Maryland Lawmaker Accused In Equity Stripping Foreclosure Rescue Scam Tells Jury He Was "Doing The Lord's Work",
• Maryland Lawmaker To Cough Up $109K For Violating State Law Regulating Sale Leaseback Foreclosure Rescue Scams ("You have to be remarkably self-centered - virtually delusional - to see a $109,000 judgment as a vindication," the victim's attorney Michael Morin reportedly said in response to McConkey's apparent victory declaration in this case, according to an article in the Capital Gazette),
• Maryland Lawmaker Accused Of Scamming Homeowner In Foreclosure Dodges Bullet As Unfavorable Jury Verdict Limits Liability To $11K,
• Maryland State Lawmaker's Bankruptcy Filing Stalls Completion Of Sale Leaseback, Foreclosure Rescue Court Case.

Feds Target Payday Lenders Claiming Affiliation With Tribes, Asserting Immunuity From Legal Action, Suing Borrowers In Local Tribal Courts

The Federal Trade Commission recently announced:

• The Federal Trade Commission has taken action against a payday lending operation that allegedly piled on undisclosed and inflated fees, and collected on loans illegally by threatening borrowers with arrest and lawsuits. The FTC has asked a federal court to stop the allegedly illegal business tactics while the agency pursues its case against the defendants.



• Like other payday lenders in recent years, this operation has claimed in state legal proceedings that it is affiliated with Native American tribes, and therefore immune from legal action. However, the FTC alleges that the defendants’ claims of tribal affiliation do not exempt them from complying with federal law.



• This is the second time in seven months that the FTC has brought suit against a payday lender that has used a tribal affiliation defense against actions by state authorities. The FTC recently expanded its first such case, against Payday Financial, LLC, adding charges that the operation illegally sued debt-burdened consumers in a South Dakota tribal court that did not have jurisdiction over their cases.

***

• According to documents filed by the FTC, over the last five years, the defendants’ deceptive and illegal tactics have generated more than 7,500 complaints to law enforcement authorities. In many cases, the defendants’ inflated fees left borrowers with supposed debts of more than triple the amount they had borrowed. In one typical example, the defendants allegedly told consumer Eric Barboza that a $500 loan would cost him $650 to repay. But the defendants attempted to charge him $1,925 to pay off the $500 loan, and threatened him with arrest when he balked at paying that amount.

For the FTC press release, and links to available court documents, see FTC Charges Payday Lending Scheme with Piling Inflated Fees on Borrowers and Making Unlawful Threats when Collecting (Defendants Charged Many Consumers More than Three Times the Amount Borrowed).

Foreclosing Lender's Failure To Serve Junior Lienholder Now OK In Indiana; New Law Reverses State High Court Ruling, Now Permits Lawsuit 'Do-Overs'

The effect of a 2011 ruling by the Indiana Supreme Court allowing for a junior lienholder to score a major windfall when it is omitted in a foreclosure action by a senior lienholder(1) has now been nullified for future similar cases by state lawmakers by their passage of a new law.

This new law (Senate Enrolled Act No. 298) will, in effect, permit the foreclosing lender to file another lawsuit, a "foreclosure do-over," to include the omitted junior lienholder in a lawsuit that gives said lienholder an opportunity to redeem the property interest before suffering a 'cut off' of its lienholder's interest therein.

It has been reported by the Northwest Indiana Times that retiring Indiana Supreme Court Justice Frank Sullivan, Jr.'s lone dissent in the case (a 4-1 ruling), Citizens State Bank of New Castle v. Countrywide Home Loans, Inc. 949 N.E.2d 1195 (2011), formed the basis of Senate Enrolled Act 298,(2) thereby illustrating another example that when appellate level judges write dissenting opinions, Beware! They do not do so simply for the intellectual exercise.

This story also serves as another illustration that, when foreclosing banksters (and, possibly in this case, the Indiana Land Title Association, which submitted a friend of the court brief in the case - presumably arguing against the position that ultimately prevailed in court) don't get favorable rulings in court, they can simply have their paid lackeys (ie. lobbyists, etc.) 'grease' lawmakers (through indirect means, of course, like stuffing their campaign coffers with cash, implicit promises of future employment for them and theirs, for two examples) to get the rules changed.

Source: Northwest Indiana Times: New laws overturning Ind. Supreme Court decisions demonstrate balance of power.

(1) See Foreclosing Lender's Failure To Serve Junior Lienholder Leaves Latter With Major Windfall.

(2) See Citizens State Bank of New Castle v. Countrywide Home Loans, Inc. 949 N.E.2d 1195 (2011) (Sullivan, J., dissenting with separate opinion) (bold text is my emphasis, not in the original text):

• Unfortunately, the "junior lienholder" was not joined in the foreclosure proceeding and so also became an "omitted party." As such, its interest in the property was not foreclosed. Holmes v. Bybee, 34 Ind. 262, 270 (1870). What should happen here is that the senior lienholder and the omitted party get the practical equivalent of a "do-over" — a second foreclosure — in which the omitted party would be entitled to redeem its (subordinate) interest in the property and if it does not redeem, have its interest foreclosed.
  
  This was the result reached by the trial court. But instead, the Court allows the omitted party to maintain its lien on the property (now owned by Fannie Mae) but provides that the omitted party's lien is no longer subordinate to any senior lien. That is, the Court promotes the omitted party from a junior to the senior lienholder without having to pay anything to redeem its interest.
  
  The trial court correctly followed long-standing precedent in this regard and, furthermore, the Court's result produces an unconscionable windfall for the junior lienholder.

Attorney Gets Five Years For Snatching $500K+ In Foreclosure Surplus Funds Generated From Forced Sales Of Former Owners' Homes

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:

• A Brookfield lawyer who scammed more than $500,000 from the Milwaukee County clerk of courts was sentenced Wednesday to five years in prison, but the question of how much restitution he might pay, and who'll get it if he does, remains partly unanswered.



• Thomas Bielinski, 52, was charged in August with a scheme stretching back years in which he purported to represent the rightful owners of unclaimed money kept by the clerk. He falsified notarizations, created fake companies, stole identities and forged altered court records. Though prosecutors said he committed dozens of crimes, they agreed to charge him with a single count of theft by fraud of more than $10,000 saying all the illegal acts were part of the single overarching crime.



• Milwaukee County Circuit Judge J.D. Watts said the enormity, length and complexity of the fraud, and the fact that it relied on the trust extended to lawyers within the system, called for the maximum penalty, despite Bielinski's lack of prior crimes and solid record as a father of six. He ordered five years of extended supervision to follow Bielinski's prison term.



• Watts also ruled that the county was Bielinski's primary victim, and the many people who had claims to the surplus funds were only secondary, though he did let three of them speak at the hearing.



• Michael Krueger said the $83,000 could have provided more accommodations for his son, who endured several reconstructive surgeries after being wounded in Iraq during military service.



• John Slomanski said the $36,000 his father had coming might have saved his business back in 2003, and kept him out of the depression that led to further health complications and his death last year.



• Janice Echols said she wanted Bielinski to know that she has a face and a name, and that it took her 17 years to build up the credit he destroyed by stealing her identity to take $2,000 she had coming.



• Watts read briefly from written statements he received from several other victims, many of whom were in desperate straits, even homeless, after losing their homes to foreclosure. All the unclaimed funds Bielinski stole were surplus funds from foreclosures.



• After the hearing, Slomanski said he doubts any of the individual victims will ever see a penny of their money. He also wondered how many of the victims would have agreed to spend five years in prison later if they could have had $542,000 to address their family's needs over four years. "I'd take that deal," he said. Tina Wood, who lost $4,500 to Bielinski, called his sentence "a slap on the hand."

For more, see Lawyer gets 5 years for defrauding county.

Closing Agent Gets 12 Months For Failure To Pay Income Tax On Loot Embezzled From Real Estate Escrow Account; Missing Cash Meant For Lien Payoffs

From the Office of the U.S. Attorney (Baltimore, Maryland):

• U.S. District Judge Catherine C. Blake sentenced Collette Snyder, age 42, of Timonium, Maryland, [] to one year and one day in prison, followed by one year of supervised release, for filing false tax returns in 2007 and 2008, after she did not claim over $382,000 she embezzled from her employer, Maple Leaf Title. Judge Blake also ordered Snyder to pay $115,529 in restitution to the IRS.

***

• Because of the embezzlement from MLT’s escrow account by Snyder and by Anthony Weis, MLT’s president, MLT did not have sufficient funds to pay off existing mortgage loan notes on properties for which MLT had performed settlement services.



• As a result, Weis directed MLT employees in 13 real estate closings conducted in 2009 to withhold the payoff checks from institutions that held the existing mortgage loan notes on the properties.



• Because the existing mortgages had not been paid off, clear title could not be passed to the new lender and borrower. An insurance company that had issued title insurance policies to the borrowers guaranteeing clear title ultimately paid out $3.9 million to financial institutions that held mortgage notes.



• Weis pleaded guilty to wire fraud, was sentenced to 78 months in prison and was ordered to pay restitution of $4,007,705, which includes the loss to the title insurance company and the expenses of the individual victims.

For the U.S. Attorney press release, see Former Towson Title Company Employee Sentenced to Prison for Filing False Tax Returns.

State Appeals Courts Unrelenting In Screw-Up Reversals Of Florida Trial Judges' Rulings In Foreclosure Cases; Slams Brakes On Standing-Lacking Lender

Broward County, Florida Circuit Court Judge Miette K. Burnstein is among the latest scofflaws nabbed by a state appeals court for a incorrect ruling unfavorable to a homeowner in foreclosure. (One wonders if these trial judges simply figure that most homeowners simply do not have the personal resources to fund an appeal of these crappy rulings, and figure they can simply get away with their seemingly blatant conduct in granting judgments in favor of the foreclosing bankster in these cases).

The screw-up was on an issue so basic, it didn't require to extensive an explanation by the appeals court as to why Judge Bernstein was wrong (the shorter the ruling on reversal, the more fundamental the issue of law was).

The rule operative in this case was simply that "A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing." Apparently, this rule was beyond the scope of the trial judge's knowledge and understanding and, consequently, required reversal on appeal.

The appeals court reversal follows below, in its entirety:

• This appeal stems from a complaint of foreclosure filed an the appellee, Wells Fargo Bank, N.A., as trustee ("Bank"), against the appellants David Rigby and Kathlyn Rigby. The trial court entered final summary judgment. Because Bank failed to meet its burden on summary judgment, we reverse.
  
  The Bank filed its complaint on May 21, 2008, and attached a mortgage that named Option One Mortgage Corporation ("Option One") as the lender. Subsequently, the Bank filed an assignment of mortgage, from Option One to Bank, dated May 22, 2008, as well as the undated original note containing a special endorsement in favor of Bank. The parties proceeded to discovery and Bank sought an admission from the Rigbys acknowledging that they had previously received notice that the note and mortgage had been transferred to Bank. The Rigbys failed to respond to this request. Bank then filed a motion for summary judgment, attaching an affidavit wherein the affiant swore that Bank was holder and owner of the mortgage. Based on this record, the trial court entered summary judgment. A trial court's entry of summary judgment is reviewed de novo. See Frost v. Regions Bank, 15 So.3d 905, 906 (Fla. 4th DCA 2009).
  
  The Bank failed to establish that it had standing to foreclosure upon the note. "A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose." McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So.3d 170, 173 (Fla. 4th DCA 2012).
  
  To establish standing, the plaintiff must submit the note bearing a special endorsement in favor of the plaintiff, an assignment from payee to the plaintiff or an affidavit of ownership proving its status as holder of the note. Servedio v. U.S. Bank Nat'l Ass'n, 46 So.3d 1105, 1107 (Fla. 4th DCA 2010).
  
  "A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing." Venture Holdings & Acquisitions Grp., LLC v. A.I.M. Funding Grp., LLC, 75 So.3d 773, 776 (Fla. 4th DCA 2011).
  
  The Bank has not shown that it was holder of the note at the time the complaint was filed. The note containing a special endorsement in favor of Bank was not dated. The assignment of mortgage, dated May 22, 2008, indicates that Bank did not acquire the mortgage until the day after the complaint was filed.
  
  Finally, neither the affidavit, nor the technical admissions made by the Rigbys, establishes the date on which Bank acquired possession of the note and there is no evidence in the record establishing that an equitable transfer of the mortgage occurred prior to the date the complaint was filed. See McLean, 79 So. 3d at 174 (reversing final summary judgment of foreclosure because appellee bank failed to establish standing where mortgage was assigned to bank three days after lawsuit was filed; note contained undated special endorsement in favor of bank; and affidavit in support of summary judgment failed to indicate that bank became equitable owner of note and mortgage prior to date lawsuit was filed).
  
  Reversed.
  WARNER and CONNER, JJ., concur.

For the ruling, see Rigby v. Wells Fargo Bank, 4D10-3587 (Fla. 4th DCA April 5, 2012).

Bankruptcy Judge To Wells Fargo: 'Pay Homeowner $3,171,154 In Punitive Damages For Your Stubborn Refusal To Cut Out The Sleazy Practices!'

U.S. Bankruptcy Judge Elizabeth W. Magner recently ordered Wells Fargo to cough up over $3 million to a homeowner over its blatant refusal to correct its practices used in improperly clipping homeowners for fees and costs incurred during the course of the bankruptcy proceeding.

Judge Magner had, several years earlier in the litigation, described such practices below:

1. Wells Fargo applied payments first to fees and costs assessed on mortgage loans, then to outstanding principal, accrued interest, and escrowed costs. This application method was directly contrary to the terms of Jones’ note and mortgage, as well as, Wells Fargo’s standard form mortgages and notes. Those forms required the application of payments first to outstanding principal, accrued interest, and escrowed charges, then fees and costs. The improper application method resulted in an incorrect amortization of loans when fees or costs were assessed. The improper amortization resulted in the assessment of additional interest, default fees and costs against the loan. The evidence established the utilization of this application method for every mortgage loan in Wells Fargo’s portfolio.



2. Wells Fargo applied payments received from a bankruptcy debtor or trustee to the oldest charges outstanding on the mortgage loan rather than as directed by confirmed plans and confirmation orders. This resulted in the incorrect amortization of mortgage loans postpetition. Again, the improper amortization resulted in additional interest, default fees and costs to the loan. The evidence established the utilization of this application method for every mortgage loan administered by Wells Fargo in bankruptcy.



3. When postpetition fees or costs were assessed on a loan in bankruptcy, Wells Fargo applied payments received from the bankruptcy debtor to those fees and charges without disclosing the assessments or requesting authority. The payments were property of the estate, they were applied contrary to the terms of plans and confirmation orders, and in violation of the automatic stay. This practice resulted in the incorrect amortization of mortgage loans postpetition. Again, the improper amortization resulted in the addition of increased interest, default fees and costs to the loan balance. The evidence established the utilization of this application method for every Wells Fargo mortgage loan in bankruptcy.

In this case, Judge Magner imposed a punitive damage award of $3,171,154 not so much for the conduct described above, but for Wells Fargo's subsequent stubborn refusal to engage in corrective action to eliminate thses practices, and its refusal to comply with the terms of earlier court orders, Chapter 13 confirmation plans and the automatic stay.(1)

For the ruling, see In re Jones, Case 03-16518, Adversary Case 06-01093 (E.D.La. April 5, 2012).

Thanks to Deontos for the heads-up on this ruling.

(1) In justification for the slamming Wells Fargo for $3,171,154 in punitive damages, Judge Magner made the following points (footnotes omitted):

• Wells Fargo has taken the position that every debtor in the district should be made to challenge, by separate suit, the proofs of claim or motions for relief from the automatic stay it files. It has steadfastly refused to audit its pleadings or proofs of claim for errors and has refused to voluntarily correct any errors that come to light except through threat of litigation.
  
  Although its own representatives have admitted that it routinely misapplied payments on loans and improperly charged fees, they have refused to correct past errors. They stubbornly insist on limiting any change in their conduct prospectively, even as they seek to collect on loans in other cases for amounts owed in error.
  
  Wells Fargo’s conduct is clandestine. Rather than provide Jones with a complete history of his debt on an ongoing basis, Wells Fargo simply stopped communicating with Jones once it deemed him in default. At that point in time, fees and costs were assessed against his account and satisfied with postpetition payments intended for other debt without notice. Only through litigation was this practice discovered. Wells Fargo admitted to the same practices for all other loans in bankruptcy or default. As a result, it is unlikely that most debtors will be able to discern problems with their accounts without extensive discovery.
  
  Unfortunately, the threat of future litigation is a poor motivator for honesty in practice. Because litigation with Wells Fargo has already cost this and other plaintiffs considerable time and expense, the Court can only assume that others who challenge Wells Fargo’s claims will meet a similar fate.
  
  Over eighty (80%) of the chapter 13 debtors in this district have incomes of less than $40,000.00 per year. The burden of extensive discovery and delay is particularly overwhelming. In this Court’s experience, it takes four (4) to six (6) months for Wells Fargo to produce a simple accounting of a loan’s history and over four (4) court hearings. Most debtors simply do not have the personal resources to demand the production of a simple accounting for their loans, much less verify its accuracy, through a litigation process.
  
  Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed. But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.
  
  Wells Fargo’s conduct was a breach of its contractual obligations to its borrowers. More importantly, when exposed, it revealed its true corporate character by denying any obligation to correct its past transgressions and mounting a legal assault ensure it never had to. Society requires that those in business conduct themselves with honestly and fair dealing. Thus, there is a strong societal interest in deterring such future conduct through the imposition of punitive relief.
  
  Both parties agree that a legal remedy to address stay violations exists under section 362 (k)(1), which provides that “an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.”
  
  Wells Fargo argues that the Court has already imposed an adequate legal remedy because Debtor has been reimbursed for his actual damages, i.e. his attorney fees. “Punitive damages may be recovered when the creditor acts with actual knowledge of the violation or with reckless disregard of the protected right.” It has also been held that “where an arrogant defiance of federal law is demonstrated, punitive damages are appropriate.” Either standard justifies the assessment of punitive damages in this case. Due to the prevalence and seriousness of Wells Fargo’s actions, punitive damages are warranted.
  
  ***
  
  After considering the compensatory damages of $24,441.65 awarded in this case, along with the litigation costs of $292,673.84; awards against Wells Fargo in other cases for the same behavior which did not deter its conduct; and the previous judgments in this case none of which deterred its actions; the Court finds that a punitive damage award of $3,171,154.00 is warranted to deter Wells Fargo from similar conduct in the future.
  
  This Court hopes that the relief granted will finally motivate Wells Fargo to rectify its practices and comply with the terms of court orders, plans and the automatic stay.

Couple Faced Foreclosure Threat When $45K Payoff Was Applied To Escrow Account, Leaving Debt Unpaid; Sleazy Servicer: 'It Was Just A Mistake!'

In Aripeka, Florida, The Tampa Tribune reports:

• Joe Manzo and Lisa Stowell paid off their mortgage – in full – late last year. But their lender threatened to foreclose anyway. "There was no doubt that it was paid off," Manzo said. "I just assumed that the bank was lagging behind and maybe the system was running every 30 days and it would be corrected."



• But that didn't happen. Instead, they say, West Palm Beach-based Ocwen Loan Servicing charged them about $2,000 in penalties because they stopped monthly mortgage payments. "We stopped because we had already paid off the loan," Manzo explained. "They say we're in default, and now I'm worried we're going to lose our home."



• All the while, the couple's money – enough to pay the balance – is sitting in the bank's account. Mistakes happen, but the scenario described by Manzo and Stowell shows the challenge homeowners can face just trying to get through to their lenders. When loans are sold and resold, to companies farther away, as they are in the current housing market, it becomes even more difficult.



• In the case of Manzo and Stowell, the money they sent was deposited in an escrow account set up for flood insurance. "They applied $44,493 to a balance of $423, leaving a $44,000 overage," Manzo said. "I could have flood insurance until the second coming."



• Asked what went wrong, Ocwen executive vice president Paul Koches told the Tribune his employees made a mistake. He said Ocwen services thousands of loans and a problem like this one is rare. "We'll go ahead and correct that mistake, and as the homeowner intended, we will apply the full amount of those proceeds to pay off the loan," Koches said.

For more, see Pasco couple stymied in trying to fix lender's mistake.

California Man Gets 15 Years In Equity Stripping, Refinance Ripoff That Screwed 31 People Out Of $2M

In San Francisco, California, KGO-TV Channel 7 reports:

• A man who posed as a minister and a real estate savior was sentenced Friday after scamming 31 different people in San Francisco. Edward Parada, 33, will serve 15 years in state prison. Authorities say Parada targeted Spanish-speaking homeowners in the city's Ingleside District.



• He would persuade the homeowner to refinance, then take the equity, let the house fall into foreclosure and then buy it back at a lower price at a foreclosure sale.



• "So it illustrates, this illustrates really how callous and how vicious this individual was in the way that he treated people and that's why we feel very strongly that the 15-year sentence is very appropriate here," said San Francisco District Attorney George Gascon. Parada stole over $2 million from his victims. He pleaded guilty to 24 felony counts.

Source: Man sentenced for scamming 31 people in SF.