Wednesday, September 12, 2012

Arizona AG, Out-Of-State Law Firm Settle Suit Alleging Upfront Fee Ripoffs In Racket That Peddled Loan Mods, Legal Services To Strapped Homeowners

From the Office of the Arizona Attorney General:
  • Arizona Attorney General Tom Horne has reached a settlement with The Mortgage Law Group a/k/a Macey Aleman & Searns, a Chicago-based law firm that the State accused, in a consumer fraud lawsuit, of participating in a deceptive scheme designed to collect advance fees from consumers looking for assistance in obtaining mortgage loan modifications. In nearly all cases, it is illegal for businesses to charge consumers upfront fees for loan modifications.
***
  • The State alleged that, along with co-defendant, Scottsdale, Arizona- based Underwater Property Solutions, The Mortgage Law Group (“TMLG”) marketed mortgage modification services to consumers as legal services that they represented would be performed by TMLG’s attorneys, including local "partners" in the states where TMLG's clients resided.

    The State alleged that Underwater Property Solutions’ non-lawyer employees did nearly all of the substantive work for consumers who paid "retainer fees" to TMLG.
***
  • The settlement permanently prohibits TMLG from engaging in any consumer debt or loan modification activities in Arizona or on behalf of Arizona consumers and requires TMLG to pay $39,280 in restitution and $60,000 in attorney's fees.

    In entering into the settlement with the State, TMLG did not admit that it violated the law nor did the court make findings that it did so. A consent judgment with co-defendant Underwater Property Solutions was approved in May, 2012.

Some City Residents Accuse Key West Of Giving 'Bailout' To Greedy Bankster In Code Compliance Dispute

In Key West, Florida, the Florida Keys Keynoter reports:
  • After rejecting a $20,000 code compliance settlement from the Bank of New York Mellon, the Key West City Commission on Wednesday agreed to take $30,000.

    Mellon bank via foreclosure bought the house at 923 Eaton Street from the mortgage holder, JP Morgan Chase in 2009. The property fell into disrepair, eventually becoming the subject of action from the city's Code Compliance Department, leading to a $186,750 accrued fine.

    Although commissioners on Aug. 21 voted 5-2 to reject the $20,000 offer, City Attorney Shawn Smith said this week he had done more research on the property and found the city's lien on the property could be invalidated.

    "The current offer of $30,000 is something the city should accept given the fact there are questions to the validity of the lien," Smith said. "$30,000 certainly is far in excess of the actual cost the city has in this particular issue."

    Smith also pointed out that the $30,000 figure equates to the fines related to the 120 days that Mellon owned the house and it was not in compliance with municipal code.

    Residents opposing continued to frame their objection in terms of little Key West giving a bailout to a greedy financial giant.

Discharging Student Loan In Bankruptcy: Proving "Certainty Of Hopelessness" May Be Hopeless Cause

The New York Times reports:
  • It isn’t easy to stand up in an open courtroom and bear witness to the abject wretchedness of your financial situation, but by the time Doug Wallace Jr. was 31 years old, he had little to lose by trying.

    Diabetes had rendered him legally blind and unemployed just a few years after graduating from Eastern Kentucky University. He filed for bankruptcy protection and quickly got rid of thousands of dollars of medical and other debt.

    But his $89,000 in student loans were another story. Federal bankruptcy law requires those who wish to erase that debt to prove that repaying it will cause an “undue hardship.” And one component of that test is often convincing a federal judge that there is a “certainty of hopelessness” to their financial lives for much of the repayment period.

    It’s like you’re not worth much in society,” Mr. Wallace said.

    Nevertheless, Mr. Wallace made his case. And on Wednesday, nearly six years after he first filed for bankruptcy, he may finally get a signal as to whether his situation is sufficiently bleak to merit the cancellation of his loans.

    The gantlet he has run so far is so forbidding that a large majority of bankrupt people do not attempt it. Yet for a small number of debtors like Mr. Wallace who persist, some academic research shows there may be a reasonable shot at shedding at least part of their debt. So they try.

    Before the mid-1970s, debtors were able to get rid of student loans in bankruptcy court just as they could credit card debt or auto loans. But after scattered reports of new doctors and lawyers filing for bankruptcy and wiping away their student debt, resentful members of Congress changed the law in 1976.

    In an effort to protect the taxpayer money that is on the line every time a student or parent signs for a new federal loan, Congress toughened the law again in 1990 and again in 1998. In 2005, for-profit companies that lend money to students persuaded Congress to extend the same rules to their private loans.

    But with each change, lawmakers never defined what debtors had to do to prove that their financial hardship was “undue.” Instead, federal bankruptcy judges have spent years struggling to do it themselves.

    Most have settled on something called the Brunner test, named after a case that laid out a three-pronged standard for judges to use when determining whether they should discharge someone’s student loan debt [see Brunner v. New York State Higher Educ. Services, 831 F. 2d 395 (2d Cir., 1987].

    It calls on judges to examine whether debtors have made a good-faith effort to repay their debt by trying to find a job, earning as much as they can and minimizing expenses. Then comes an examination of a debtor’s budget, with an allowance for a “minimal” standard of living that generally does not allow for much beyond basics like food, shelter and health insurance, and some inexpensive recreation.

    The third prong, which looks at a debtor’s future prospects during the loan repayment period, has proved to be especially squirm-inducing for bankruptcy judges because it puts them in the prediction business. This has only been complicated by the fact that many federal judicial circuits have established the “certainty of hopelessness” test that Mr. Wallace must pass in Ohio.

Tuesday, September 11, 2012

More On Banksters' Big Win In Foreclosure Fraud Mess

David Dayen at Firedoglake writes:
  • I don’t need a source to tell me that there will be no criminal charges arising from the Residential Mortgage Backed Securities working group, the task force set up to “hold accountable” those financial institutions who crashed the economy through misdeeds in the securitization process.

    Take only this piece of evidence: all of the subpoenas so far issued by the RMBS working group have been civil in nature, not criminal. That’s about all the evidence I need.

Possible Influx Of Section 8 Renters Into High-End Community Has One HOA, Some Neighbors 'Running Around With Their Hair On Fire'

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • Here's an odd side effect of South Florida's foreclosure crisis: Some immense homes with pools and three-car garages in gated communities are being rented out to unlikely tenants — poor people paying with Section 8 aid.

    Among the properties are homes with up to 4,500 square feet of space in private communities with guardhouses and regal names such as "Monarch Lakes" and "Bellagio at Vizcaya."

    Some of the owners are teetering on foreclosure and gambling they can earn enough money from the federal housing vouchers to stave off the banks. Others bought the properties cheap in foreclosure auctions and want the guaranteed rental income.

    Housing advocates and the government view the turnabout as a win-win for homeowners and the poor, who have access to safer communities and better schools.

    But some neighbors are aghast.

    After a single mother and her nine children rented a house in the exclusive Isles neighborhood of Coral Springs, the homeowners association adopted an amendment to its governing documents stating: "No Section 8 or government leasing assistance is permitted."

    The association is threatening eviction.

    Federal law does not expressly outlaw such bans. But the prohibition can't be used as a pretext for other illegal acts, such as denying housing to people because of their race, gender, national origin, disability or number of children.

    The owner of the Coral Springs house, Henri-Claude Marcellus, has hired a lawyer to challenge the restriction, claiming his mostly white neighbors are discriminating against him because he is Haitian and his tenants are African-American.

    A retired software engineer, real estate investor and radio show host, Marcellus said he confronted the association's officers, demanding to know: "What do you have against blacks?" "I hit a very sensitive nerve," he said in a recent interview.

    The association's lawyer and directors did not respond to requests for comment.(1)

(1) While Federal law may not prohibit it, the state law of at least one state, Massachusetts, prohibits discrimination against prospective renters on the basis of their receiving public assistance. See, for example:

Now-Disbarred Lawyer Agrees To Cough Up $32K+ In Restitution For Pocketing Upfront Fees, Then Failing Provide Services In Nine Loan Mod-Related Cases

From the California Bar Journal (August 2012):
  • Kent C. Wilson [#58652], 66, of San Diego was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

    Wilson stipulated to 30 counts of misconduct in nine cases. Most of the cases involved loan modifications or potential lawsuits against lenders. He did not do the work he was hired to do, closed his office without notifying his clients and did not account for or refund their unearned fees.
***
  • In mitigation, Wilson has no prior discipline record, cooperated with the bar and tried to resign from practice when he was overwhelmed by work. He agreed to make restitution totaling $32,600.

Monday, September 10, 2012

NJ Man Gets 66 Months For Role In Mortgage Fraud Scam That Included Targeting Homeowners Facing Foreclosure

From the Office of the U.S. Attorney (Newark, New Jersey):
  • A Newark, N.J., man was sentenced [] to 66 months in prison for his role in a $40.8 million mortgage fraud conspiracy, recruiting “straw buyers” to purchase real estate properties in New Jersey, South Carolina, and Georgia and causing lenders to release more than $18 million based on fraudulent mortgage loan applications, U.S. Attorney Paul J. Fishman announced.

    William Brown, 60, previously pleaded guilty before U.S. District Judge Joseph E. Irenas to an Information charging him with conspiracy to commit wire fraud and conspiracy to commit money laundering. Judge Irenas imposed the sentence [] in Camden federal court.

    According to documents filed in this case and statements made in court:

    Brown recruited “straw buyers” for his co-conspirators to purchase oceanfront condominiums overbuilt by financially distressed developers in Wildwood Crest, N.J., premier real estate in vacation destinations in Georgia and South Carolina, and properties in New Jersey owned by financially distressed homeowners facing foreclosure.

    Brown’s co-conspirators caused fraudulent mortgage loan applications and supporting documents to be submitted to mortgage lenders in the straw buyers’ names, attributing to them inflated income and assets in order to induce the mortgage lenders to approve the loans.

    Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with the real estate closings on the properties, Brown’s co-conspirators took a portion of the proceeds from the fraudulent mortgage loans. Brown also admitted that he and his co-conspirators laundered the proceeds of the mortgage fraud by having some of those proceeds transferred to the recruiters and straw buyers. Brown received $96,000 for his role.

Loan Mod Scammer Pleads Guilty To Ripping Off 48 Known Victims Out Of Upfront Fees, Monthly Mortgage Payments

From the Maryland Department of Labor, Licensing and Regulation:
  • Rodney Getlan, age 45, of Owings Mills, entered a guilty plea to nine counts of mortgage fraud and faces up to 90 years in prison. Pursuant to the plea, the State is requesting 40 years with 10 years suspended and 30 years of incarceration to serve as well as restitution to all 48 known victims in the area of $400,000.

    Judge Ballou-Watts scheduled sentencing for December 3, 2012. Getlan was charged earlier this year with felony theft, operating as a credit service business without a license, mortgage fraud, and related charges.

    An investigation by the Maryland Department of Labor, Licensing & Regulation’s (DLLR) Office of the Commissioner of Financial Regulation and the Baltimore County Police Department led to Getlan’s arrest in March for defrauding homeowners of considerable upfront fees for mortgage modifications and stealing their monthly mortgage payments.
***
  • Getlan’s 46-count charging document stated that Getlan offered loan modification services from January 2009 through January 2012. The charges specifically referred to nine separate homeowners who fell victim to Getlan’s scheme, in which he forged documents to support his claim that lenders of the homeowners had approved their loan modifications.

    Homeowners believed that their monthly payments were going to their lenders; however, the investigation determined that Getlan deposited those payments into his own accounts.
For the Maryland DLLR press release, see Mortgage Fraud Schemer Convicted (Getlan found guilty of defrauding Maryland homeowners).

Adverse Possession-Claiming Squatter Hijacks Vacant Home, Refuses To Budge Days After Homeowner Takes Bank's 'Cash For Keys' Offer & Moves Out

In Houston, Texas, KTRK-TV Channel 13 reports:
  • One local woman is locked in a real estate headache. She moved out of her home to avoid foreclosure and now she says someone is squatting in her former house. That's causing big problems with the mortgage company.

    Days after she moved out, Katrina Collins says she got a call from her mortgage company, questioning her as to who she let move into her home. She had no idea what they where talking about. Now she knows. They're squatters refusing to leave.

    Collins moved out of her home of 14 years last month. Days later, she discovered a squatter had settled in and refused to leave.

    "She said, 'I'm not going to argue with you, but I'm not going anywhere. If you want me out you need to evict me.' That's what she said to me," Collins told Eyewitness News.

    Collins was in a financial bind and to avoid foreclosure she agreed to a "deed in lieu." The mortgage company paid her $2,000 to relocate and they took possession of the home. After she moved out, the mortgage company learned someone else moved in, and even brought the family pet.

    "I got a call from the mortgage company asking me had I leased out the property because there was someone living here that said that they were leasing the property from me," said Collins.

    The squatter wouldn't come to the door, but claimed to Collins she filed adverse possession on the home. It's a real law, but doesn't allow for someone to just move in.

Sunday, September 09, 2012

Another Home Mistakenly Trashed-Out By Bankster's Contractor; Wells Fargo Offers No Help To Victims To Mitigate Screw-Up Until Media Begins Calling

In Twentynine Palms, California, KABC-TV Channel 7 reports:
  • A local couple's dreams have been shattered by a foreclosure mistake that left their retirement home in ruins.

    When banks take over foreclosed homes, they often try to salvage the contents inside to recoup their losses. But what if they have no right to those contents in the first place? Alvin Tjosaas says that scenario is all too real for him.

    Back in 1961, a 14-year-old Tjosaas literally helped his father build a vacation home in Twentynine Palms. He's taken his family there ever since, sharing unforgettable moments.

    "I put my whole life into this place, building it for my mom and dad," said Tjosaas.

    The house recently had valuables stored in the garage, including decades worth of family heirlooms. But the house was in ruins after Tjosaas says subcontractors hired by Wells Fargo entered the property with a foreclosure notice in hand. The notice had the name Stephen A. Janosik on it, but the address for the Tjosaas family home.

    "It's the wrong house, simple as that. It's a big mistake, but sort of a simple mistake," said Tjosaas.

    Tjosaas says the subcontractors broke down doors, smashed windows, tore down walls, taking anything of value to sell later on.

    He says they took three tractor mowers and three golf carts. Their camper trailer was badly damaged. His wife, Patricia, couldn't believe her eyes.

    "We had all of his masonry tools, all of his carpenter tools, all of his plumbing tools, everything that he owned," she said.

    Tjosaas said his dad's WWI uniform and flag were also gone. The Tjosaas say they've tried to reach out to Wells Fargo for answers, but to no avail.

    "The way it's been going, I don't think they really care. That's the way it's been for the three months. Now, all of a sudden, it's you guys. Now, all of sudden, they call me," said Tjosaas.

    After repeated calls from Eyewitness News, Wells Fargo released a statement, saying, "We are deeply sorry for the very personal losses the Tjosaas family suffered as a result of their home being mistakenly secured and entered by an outside party hired to address a different nearby property. We are moving quickly to reach out to the Tjosaas family to resolve this unfortunate situation in an attempt to right this wrong."

    Tjosaas says because of the media calls, a Wells Fargo representative asked to meet with him in person on Thursday to apologize. He hired a lawyer, who will be at that meeting. They hope they can reach an agreement and avoid legal action.

Wells Fargo OKs Loan Modification, Then Forecloses On Home Anyway Without Telling Homeowner; Screw-Up Discovered When Latter Finds Prospective Buyer

In Moreno Valley, California, KCBS-TV Channel 2 reports:
  • A Moreno Valley woman tried to sell her home, only to find out the bank mistakenly foreclosed it.

    Real estate agent Lisa Duarte had been showing Lily Diaz’s home in Riverside County. The house, priced at $235,000, got two quick offers. However, a title search showed Wells Fargo, not Diaz, owned the home.

    The property was actually foreclosed on in January of this year and when I found that out, I called my client and let her know,” said Duarte.

    Diaz said she was shocked because she has the paperwork that shows she completed a loan modification with Wells Fargo in January. She said she made every monthly payment on time since it was approved.

    Wells Fargo apparently didn’t let title know the modification was accepted and they let the foreclosure proceedings continue,” said Duarte. “Wells Fargo knows they made the mistake. They don’t know how to fix it.”

    As it stands now, the home can’t be sold. “As far as I’m concerned, we lost two good offers because of (the situation),” said Diaz. Wells Fargo called Diaz to work out the mix up.

Misconduct In Connection With Bankruptcy, Loan Modification Cases Leads To License Revocation For California Attorney

From the California Bar Journal (August 2012):
  • Zachary Ian Gonzalez [#259663], 32, of West Covina was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

    Gonzalez stipulated to 43 counts of misconduct in 14 cases involving his failures to provide competent legal services in bankruptcy and loan modification matters.

    In 12 matters, he became ineligible to practice law and as a result could not complete his clients’ cases. However, he did not refund unearned fees and in some cases the clients’ bankruptcies were dismissed. Two matters were dismissed because Gonzalez didn’t file 13 required documents. In two other cases, he was not permitted to prepare and file the required documents. He also violated California law by twice agreeing to negotiate a loan modification and collecting advance fees before the work was completed. Gonzalez also did not return his clients’ files.

    He was suspended and placed on probation in 2011 for failing to refund unearned fees or account for advance fees, forming a partnership with a person who is not a lawyer, splitting legal fees with a non-lawyer, soliciting prospective clients with whom he had no family or professional relationship and committing acts of moral turpitude. In mitigation, he stipulated to disbarment.

    He agreed to make restitution totaling $60,855 to the clients in the 14 disciplinary matters.

Saturday, September 08, 2012

MTA Stiffs Tenant On $65K Promise After She Was Booted From Rent Controlled Apartment Resulting From 2nd Ave. Subway Construction-Related Condemnation

In New York City, the New York Post reports:
  • She famously wiped out her husband’s “ring around the collar” — but now, she says, she’s getting taken to the cleaners by the MTA [Metropolitan Transit Authority]. Sally Ardrey — the actress who appeared in the 1970s Wisk commercial featuring that catch phrase — was booted from her rent-controlled apartment during Second Avenue Subway construction and is now battling the agency for financial assistance because it wants her to take an apartment she can’t afford.

    Ardrey, who is 74 and has four grandchildren, says she can’t make ends meet on her fixed income and has hired a lawyer to take on the MTA. “I’m frightened of what’s going to happen,” said Ardrey, whose commercial featured a suitcase flying open and taunting her bout collar stains on her husband’s shirts — ads she denounced years later as sexist.

    I can’t tell you how jittery and sad it makes me feel. This is a terrible thing,” she said. Ardrey says the MTA ran her through the wringer, at first negotiating with her and her lawyer before suddenly backing out. “I don’t feel it’s fair . . . I just don’t understand,” Ardrey said. “Why string us along?

    In 2009, she was forced to leave her $1,726-per-month, rent-controlled apartment at 257 E. 73rd St. — where she’d lived for more than two decades — because the building was condemned due to the subway line.

    The MTA helped Ardrey got a new place to live — an offer made to the 57 others dislocated by the project — eventually finding a $2,195-per-month pad that was not rent stabilized. “The MTA told Sally that if she moved into the comparable apartment, it would give her a [one-time] rental assistance payment of $65,553.01,” said her lawyer, Joshua Colangelo-Bryan.

    But Ardrey, whose income is less than $40,000 per year, crunched the rent numbers and realized the MTA was trying to whitewash a bad situation. The new apartment rate amounted to a $5,600 rent increase per year, and she would be exposed to big increases.

    To avoid breaking the bank, Ardrey in 2009 instead moved into an apartment on East 91st Street that cost $1,600 per month and was not rent stabilized — and asked the MTA to honor its $65,500 rent-assistance offer.

    But “the MTA told Sally that because the rent in this new apartment was, at that time, less than the rent in her [old] apartment, it would not give her any rental assistance payments,” said Colangelo-Bryan.

    Over time, the new, nonstabilized, apartment would become more expensive, and, in fact, it already has,” Colangelo-Bryan, said, adding that Ardrey’s rent has now increased to $1,756.

    Ardrey and her lawyer negotiated with the MTA — which was initially receptive — until it abruptly pulled out of the talks. “We eventually traded settlement proposals that actually would have had Sally getting the full $65,553.01,” and they were near a deal, Colangelo-Bryan said.

    But, suddenly, “there is no offer on the table and no willingness to negotiate.” “Ultimately, the MTA has punished Sally for being frugal,” the lawyer said.

    MTA spokesman Aaron Donovan said, “We are sympathetic to Ms. Ardrey’s situation, and we are considering a settlement of her appeal.”

City Slams Brakes On NYC Bus Driver, Wife Accused Of Clipping Government Out Of $94K In Housing Subsidies, Other Public Assistance

In Staten Island, New York, the New York Post reports:
  • Authorities have charged a Staten Island bus driver and his wife with cheating the government out of $94,000 in housing subsidies and other benefits. City Department of Investigation Commissioner Rose Gil Hearn announced the arrests of David Vale and Maria Almanzar yesterday.

    A criminal complaint accuses the couple of collecting $60,000 in housing subsidies by falsely claiming she was living alone in a home they shared on Staten Island. It says Vale was making about $104,000 a year as a bus driver at the time.

    Authorities also charged Almanzar with fraudulently obtaining another $34,000 in food stamp and Medicaid benefits. The husband and wife each face up to 10 years in prison if convicted.

Senior Homeowners The Target Of Phone Campaign By Outfit Seeking Personal Info By Implying They May Be Eligible For Property Tax Refunds

From the Clark County, Washington Assessor's Office:
  • The Clark County Assessor’s Office is warning county residents of a telephone marketing campaign that seeks personal information from older residents, implying they could receive property tax refunds or relief.

    Seniors in several Washington counties have received calls from telephone solicitors who are marketing reverse home mortgages. The callers identify themselves as agents of “Seniors First.”

    The callers ask residents for personal information such as income, age and employment status. Callers say they are trying to help residents determine whether they qualify for the state’s property tax relief programs or assistance to veterans. The solicitors imply they are calling on behalf of the state Department of Revenue.

    Confused taxpayers in Clark, Lewis and Thurston counties have contacted the state regarding the calls. The Department of Revenue has alerted counties statewide to the telephone campaign.
For the Clark County Assessor press release, see Confusing, inaccurate phone calls target older property owners (State, county officials warn of reverse mortgage sales pitch).

Rich Divorcée Hit With $4.7M 'Hotel Bill' & Faces Add'l $3M Tack On For Seller's Legal Fees For Backing Out Of Deal To Buy $18.75M Residential Suite

In New York City, the New York Post reports:
  • That’s one heck of a hotel bill. A well-heeled divorcée who lost $4.7 million when she backed out of buying a swank Upper East Side co-op now faces more than $3 million in legal bills from the developer.

    Defense lawyers say they spent more than 5,000 hours battling Roberta Campbell after she filed suit in 2009 to recoup her deposit on a residential suite in The recently renovated Mark hotel on East 77th Street.

    In particular, this lawsuit was difficult and hard-fought, with plaintiff’s counsel raising numerous issues in an effort to excuse plaintiff’s failure to close her purchase,” according to papers filed in Manhattan federal court.

    And while admitting that their fees “are large in comparison with the down payments at issue,” the hotel’s lawyers insist that the amounts — including $1,025 an hour for lawyer Michael Korotkin — “are reasonable under all of the facts and circumstances.”

    Campbell, the ex-wife of Intuit software chair Bill Campbell, walked away from her planned $18.75 million purchase after inspecting the pad and noting a laundry list of problems, including no heat or hot water, unstained floors and missing hanger rods in the closets.

    But a judge ruled that Roberta wasn’t entitled to break the deal, saying Con Ed was ready to turn on the gas and that most of her complaints were easily fixed “punch list” items.

    Judge William Pauley III also noted that Roberta wasn’t exactly hurting, having moved into 15 Central Park West, “one of the most desirable addresses in Manhattan.” Campbell reportedly paid $17.5 million in cash for that apartment, which has four bedrooms and views to both the east and west.

    Her lawyer declined to comment.

Attorney Gets Bar Boot For Ripping Off $80K In Client Funds From Family Trust

From the California Bar Journal (August 2012):
  • Luann Marie Kelley [#131841], 61, of San Diego was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

    Kelley stipulated that she failed to account for client funds and misappropriated thousands of dollars from a family trust. Kelley represented the trustee, who transferred $80,000 of trust assets to Kelley, who in turn deposited the money in her client trust account. The balance the account dropped to $3,950.75 and later to zero.

    Although Kelley believes she is entitled to $27,123 of the $80,000 for attorney fees and costs, she did not obtain a required order concerning fees and costs from the probate court. The court ordered her to refund $80,000 to the trust, along with an additional $115,752.98 in damages, by May 13, 2010. Kelley contends the issue of her claim to attorney fees and costs remains open with the probate court.

    In mitigation, she had no prior discipline record, provided evidence of her good character, suffered from depression and cooperated with the bar’s investigation.

Friday, September 07, 2012

NYT On Banksters' Big Win In Nationwide Foreclosure Fraud Settlement

From an op-ed piece in The New York Times:
  • It has been six months since the big banks settled with state and federal officials over evidence of widespread foreclosure fraud, promising to provide $25 billion in mortgage relief in exchange for not being sued over past foreclosure abuses.

    At the time, it looked like a sweet deal for the banks. The fines were paltry compared with the damage done to homeowners and the economy. And much of the relief the banks were obliged to provide could be met by continuing more or less with business as usual.

    It still looks like a sweet deal.

    The Office of Mortgage Settlement Oversight, the monitor of the settlement, released a preliminary report last week showing that 138,000 homeowners had received some form of relief from March 1 through June 30. That is roughly the number that would have been expected under various aid programs in effect before the settlement.

    Worse, with some three million borrowers now in or near foreclosure, according to Moody’s Analytics, it is nowhere near the level of relief needed to fix the housing market.

NYC Home Lender To Cough Up $3.55M To Settle Fair Housing Allegations That It Clipped Blacks, Latinos For Higher Loan Prices Than Non-Hispanic Whites

From the U.S. Department of Justice (Washington, D.C.):
  • GFI Mortgage Bankers Inc., a large independent home mortgage firm that concentrates on the New York, New Jersey, and Florida markets, will pay $3.555 million to resolve a lending discrimination lawsuit filed by the Department of Justice and the U.S. Attorney’s Office for the Southern District of New York.

    The lawsuit alleges that GFI engaged in a pattern or practice of discrimination by pricing residential mortgage loans for qualified African-American and Hispanic borrowers higher than for similarly-qualified non-Hispanic white borrowers between 2005 and 2009.

    The settlement provides $3.5 million in compensation to approximately 600 African-American and Hispanic GFI borrowers identified by the United States as paying more for a loan based on their race or national origin, and it requires GFI to pay the maximum $55,000 civil penalty allowed by the Fair Housing Act.

    The settlement also requires GFI to develop and implement new policies that limit the pricing discretion of its loan officers, require documentation of loan pricing decisions, and monitor loan prices for race and national origin disparities not justified by objective borrower credit characteristics or loan features.
***
  • The settlement came after the United States had filed its opposition to GFI’s motion to dismiss the case and the court had stated it was “skeptical” of GFI’s argument that federal law allows lenders to price loans in a way that produces such disparate impacts on minority borrowers.

    The settlement, which was entered by the court, was filed in federal court in Manhattan, where GFI is headquartered.

Lawsuit: Latino Influx Into Eastern Long Island Town Making Locals Antsy; Officials Allegedly Target Landlords Renting To Hispanics w/ Code Violations

In East Hampton, New York, the New York Post reports:
  • They forced him to clean dirty toilets while everyone else lazed on four-hour lunches. They left him notes such as “Now just why in the hell do I have to press ‘1’ for English?” with a picture of John Wayne. Then they denied him leave to care for his dying mother-in-law.

    It’s hell being Hispanic in the Hamptons.

    Chilean immigrant Jorge Kusanovic, 67, has lived among the rich of East Hampton for 36 years. But now he’s suing the town for $3 million for back pay he says he is owed — as well as his dignity.

    The park worker filed a suit this month that alleges a decade of toil, where white supervisors threatened to fire him at every turn. “Because I’m Spanish, I have to pay a price the rest of my life to live here,” Kusanovic said. “You start to think this is normal.”

    Tension over Hispanic residents in the Town of East Hampton, population 21,457, is nothing new. But the conflict has gotten hotter this summer, as residents have complained about new immigrants, and Kusanovic has bared his case in court.

    This spring, residents packed town board meetings during public sessions, demanding officials enforce East Hampton’s housing code to stop people from living in town illegally. Some residents, particularly in the hamlet of Springs, say large immigrant families are packed into single-family homes.

    They brought photos of their neighbors’ homes to town board hearings — saying their multiple satellite dishes and car-covered lawns were ruining property values.

    Deputy town supervisor Theresa Quigley blasted the complainers for targeting “Latino” families. During one meeting, she was overheard calling the complainers “Nazis.” “I’m telling you, this is disgusting,” she said. “I don’t want to be in this town.”

    Census data shows that the number of Hispanic residents in East Hampton has skyrocketed 94%, with 5,660 in 2010, compared to 2,914 a decade earlier.

    Lawrence Kelly, an attorney for Kusanovic, says the feuding has gotten so bad that the town is targeting landlords who rent to Latinos — issuing building violations just to coerce them into changing tenants.

    It’s pitted neighbor against neighbor, with longtime resident Tina Piette calling some people’s efforts to spy on newcomers “disgusting.” “People move to East Hampton or retire there and don’t expect to see Ecuadorians next door, or someone who speaks Spanish and is a permanent resident,” she said.

    Still, Kusanovic says such unwelcome treatment of Latinos in the Hamptons is the norm. He purchased his home in Montauk during a housing lottery in the ’70s. At the time, more than a dozen minority families signed up for two homes, but Kusanovic was told he’d win because he has light skin, light eyes and a European-sounding last name.

    Those attributes never proved helpful again, as residents made clear he would never be one of them.
For more, see Hamptons race rift (Hispanic influx, lawsuit roil the East End).

Thursday, September 06, 2012

"Legal, Non-Conforming Use" Zoning Status Throws Monkey Wrench Into Couple's Effort To Sell Home

In Deltona, Florida, The Daytona Beach News Journal reports:
  • The moving boxes speak to Lynne and Earl Hoisington's intentions.

    But two closings this week -- the one where they planned to buy a new house in DeLand and the one where they would turn in the keys to their three-bedroom, two-bath Deltona home -- are off.

    The Hoisingtons and the real-estate agents involved in their deal say a city ordinance, an eagle-eyed appraiser and the square-footage of the Deltona house are to blame. They suggest the city's rules, if not changed, could slow the sale of homes in a city that continues to be in the throes of the foreclosure crisis.
***
  • [A]n appraiser reviewing their Giovanni Street home found its dimensions, 1,068 square feet, fell short of the Deltona requirement for single-family homes in its residential zoning. He checked a box marked "legal nonconforming (grandfathered use)."

    The nonconforming tag means if the home were to be destroyed by fire or a natural disaster, it would have to be rebuilt at the current standard, 1,200 square feet, or more. That clause meant the buyer could not obtain financing, according to Matt Gurnow, a loan originator with Watson Mortgage Corp., DeLand.

    Gurnow wrote Deltona Mayor John Masiarczyk last week explaining that the loan for a nonconforming house is "not sellable on the secondary market and therefore not a loan we can close and fund. ... Our investors (JP Morgan Chase, Wells Fargo, Bank of America, B&T) will not purchase a loan on a home that is nonconforming, knowing that if their collateral for the loan is destroyed, it cannot be rebuilt as it sits."

California Attorney Agrees To Disbarment After Ripping Off $66K+ In Fees From Three Clients For Promised Mortgage-Related Litigation Never Pursued

From the California Bar Journal (August 2012):
  • Thomas Craig Nelson [#82506], 58, of San Diego was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.
    Nelson stipulated to nine counts of misconduct in three matters.

    He represented two couples who had disputes with their mortgage lenders, agreed to file chapter 13 bankruptcy petitions to stop pending trustee sales of their homes and then to initiate litigation against the mortgage lenders.

    One couple paid Nelson $20,700 in advance fees and the other gave him $25,500. Although he filed bankruptcy petitions for both couples, they were dismissed and Nelson never initiated litigation. He stipulated that in both matters he failed to perform legal services competently, account for client funds or refund unearned fees.

    He represented another couple, who paid an advance fee of $20,000, to pursue a loan modification and to sue their lender if unsuccessful. Nelson did little to secure a loan modification, never filed a lawsuit and eventually filed a chapter 13 bankruptcy petition that was dismissed. The clients hired a new lawyer after their lender sued them. Nelson admitted he provided no legal services of value to the couple, nor did he account for or refund their advance fee.

    Nelson was suspended and placed on probation in 2011 for failing to perform legal services competently, refund unearned fees or cooperate with the bar’s investigation, and he committed acts of moral turpitude. He also was disciplined in 2002 for failing to maintain entrusted funds in a trust account and misappropriating $38,000 in client funds, an act of moral turpitude.

    In mitigation, he stipulated to disbarment.

State Bar Pulls Attorney's License, Orders Restitution After Admitting To Ripping Off $50K+ From Three Clients Seeking Loan Modification Help

From the California Bar Journal (August 2012):
  • Moses Sheldon Hall [#153759], 56, of Fullerton was disbarred June 21, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court. Hall stipulated to nine counts of misconduct in three loan modification matters.

    In each case, he advised his clients to stop making mortgage payments and they lost their homes to foreclosure. All the clients were current on their mortgage payments when they hired Hall.

    He instructed one client, who paid him a flat fee of $3,495, to stop making payments on her mortgages because lenders were only approving loan modifications on mortgages of delinquent borrowers. Instead, he told her to send monthly payments that he calculated at $779.42 — based on a presumed loan modification — and he would hold the money in his client trust account. The client followed his advice and her home was sold at foreclosure. Hall did not refund any of the $11,507.46 he was supposed to hold in trust.

    He calculated monthly payments of $1,987.93 for another client, who also sent the money to him instead of her lender. Her home also was sold in foreclosure and Hall misappropriated the $15,903.44 the client gave him. That client also paid Hall a $3,000 fee.

    A couple who paid $1,500 of a flat fee gave Hall monthly payments he calculated at $2,023.82; their house was sold at foreclosure. He misappropriated the $22,262.02 the couple gave him to hold in trust.

    Hall stipulated in each matter that he failed to perform legal services competently or maintain client funds in trust and he misappropriated client funds, committing acts of moral turpitude. Hall was publicly reproved in 1993.