Indictment Returned Against Local Resident For Allegedly Filing Bogus Liens Asserting Monetary Claims In The Billion$ Against Chicago Federal Judges, Prosecutors, Agents

From the Office of the U.S. Attorney (Fairview Heights, Illinois):

• A federal grand jury sitting in Chicago, Illinois, has returned a 12-count felony indictment against Chicago resident Cherron Marie Phillips for filing false liens against the real property of a dozen federal employees in the Northern District of Illinois, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced [].
  
  Phillips, 42, also known as “River Tali,” is accused of knowingly filing false liens against two federal prosecutors, five federal agents, a federal court clerk, and four federal judges, including the Chief Judge of the United States District Court for the Northern District of Illinois – all on account of the performance of their official duties.
  
  The indictment further alleges that each lien contained a materially false, fictitious, and fraudulent statement and representation, including a false claim that the victims each owed Phillips’ brother (who was separately convicted in an unrelated proceeding) one hundred billion dollars.

***

• “We take these cases very seriously.” United States Attorney Wigginton stated. “We will continue to prosecute to the fullest extent of the law all who seek to intimidate, harass, and retaliate against federal judges and employees by filing false liens against their property. Federal workers, and all workers, should be able to fairly do their jobs without fear of this kind of harassment.”

***

• This case is being brought by the United States Attorney’s Office for the Southern District of Illinois in order to prevent any claims of bias or favoritism, since some of the Counts deal with employees of the United States Attorney’s Office for the Northern District of Illinois.

For the U.S. Attorney press release, see Chicago Resident Indicted For Filing False Liens Against Federal Officials.

More On People Losing Their Homes To Foreclosure Over Unpaid Water Bills & Inflated Tack-On Charges

In Baltimore, Maryland, ABC News reports:

• Actor and musician Richard Burton is facing foreclosure on his Baltimore home, but not because he didn't pay his mortgage on time. In his case, he says it all began with an overdue $1,037.42 water bill.
  
  Burton lost his job playing "Shamrock" McGinty on HBO's "The Wire" when the show went off the air. He couldn't afford the bill and claims it was incorrectly inflated to begin with.
  
  However, the cash-strapped city of Baltimore turned to a controversial way to collect. The city sold his unpaid debt to a private company that also inherited a lien on Burton's home. Then, the company tacked on 18 percent interest and more than $2,000 in legal charges.
  
  "You have no choice but to pay or you lose your home, that can't be right," Burton said.
  
  A Colorado Springs-based company called LienLogic is trying to foreclose on Burton's home if he doesn't pay. [...] LienLogic, the company that bought Richard Burton's debt, makes $100 million a year from its lien business, which it operates in multiple states.
  
  The company initially declined an interview with ABC News, forwarding us to the National Tax Lien Association for comment. The executive director of that organization agreed to an interview, and then backed out.

***

• Not all cities sell unpaid debts to private companies. In Houston if you don't pay your water bill, the city will shut your water off and try to get you help. Officials there would never give someone the potential right to take your home away if you don't pay.(1)

For more, see Unpaid Water Bills Leading to Foreclosed Homes.

See also, Losing It All: American families losing their homes because they didn't pay their utility bill for the ABC News video on this story.

(1) See The Other Foreclosure Crisis: Property Tax Lien Sales, a report from the National Consumer Law Center on state laws that permit local governments to sell property through a tax lien foreclosure process if the owner falls behind on their property taxes, water and sewer bills, etc.

NM Judge Slams Fastbucks For Locking Borrowers Into Recurring Inescapable High-Cost Consumer Loans; 'Star' Employee Testifies: "We Just Basically Don’t Let Anybody Pay Off!"

Law Professor Nathalie Martin writes on Credit Slips:

• [T]he New Mexico Attorney General’s office has sued Fastbucks for providing unconscionable loans to New Mexico citizens, both under the common law unconscionability doctrine and the state’s Unfair Practices Act’s unconscionability provision.(1) Read the short, pithy opinion Download Fastbucks decision.
  
  The court’s opinion, karmatically handed down on Yom Kippur 2012, found that FastBuck steered borrowers into loans that subjected them to higher interest rates and kept them locked into recurring cycles of debt, that the FastBucks entities were experts in the loan products they created, and that these experts demonstrated their superior knowledge of these alternative loan products through their explicit actions to maneuver around the regulation of payday loans.
  
  The court also found that defendants provided incentives to their representatives for steering borrowers into the more expensive installment loan products and away from less expensive loan products, and for promoting and prolonging recurring inescapable indebtedness.
  
  One FastBucks employee testified in court that “[w]e just basically don’t let anybody pay off [a loan]…. we tell them how their tax refund is better used at Wal-Mart . . . than at FastBucks, and we basically talk them into making a payment and continuing to be our customer.”
  
  She said she was congratulated for her approach and used as an example for how other employees of FastBucks could conduct themselves to earn the conspicuous financial rewards.

***

• In another karmatic turn, the judge who decided the case won the New Mexico lottery a week later.(2)

For more, see New Mexico Court Finds FastBucks Loans to be Unconscionable.

For the ruling, see State of New Mexico v. Fastbucks Holding Corporation.

(1) The Unfair Trade Practices Act (UPA) is New Mexico's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes).

For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

(2) See Santa Fe New Mexican: Judge Vigil, just retired, wins $1 million lottery.

Federal Appeals Court: Minnesota Homeowners' Quiet Title Action Claiming F'closing Banksters' Mortgage Assignments Either Were Unrecorded Or Executed By Those Lacking Legal Authority May Have Legs; Lower Court Dismissal Overruled

Law 360 reports:

• The Eighth Circuit in a published opinion Thursday revived a quiet title action by foreclosed-upon homeowners who say assignments of the titles to their properties were faulty, distinguishing their claims from a discredited theory requiring a foreclosing party to hold an original promissory note [ie. "show-me-the note theory"].
  
  In its eight-page opinion, the three-judge panel said Minnesota borrowers had advanced a pair of arguments that might have legs.(1)

For more, see 8th Circ. Revives Foreclosure Suit Over Faulty Assignments.

For the ruling, see Murphy v. Aurora Loan Services LLC, 699 F.3d 1027 (8th Cir. November 8, 2012).

See Homeowners Have Standing To Challenge Faulty Mortgage Assignments From One Bankster To Another, But Only Where Defects Render Conveyance Absolutely Void, Not Merely Voidable for another recent federal case where banksters again failed in a move to nullify a homeowner challenge to the validity of mortgage assignments by dismissively attempting to associate said challenge with the "show-me-the-note" theory.

(1) The appeals court addressed these two arguments in this excerpt:

• However, because two of the quiet-title theories do not rely on the failure of the foreclosing party to produce the note, see Compl. ¶ 57(f), (g), we conclude that the district court erred in its wholesale dismissal of the quiet-title claim pursuant to Jackson.
  
  Under these two theories, assignments from MERS to Aurora of legal title to the mortgages either were unrecorded or executed by individuals lacking the legal authority to do so.
  
  The resulting defect in  the chain of title of the mortgages, according to Homeowners, deprives Aurora of the authority to foreclose on their properties. In contrast to the complaint in Butler, these theories do not rely on the discredited “show-me-the-note” theory.
  
  Neither party provided briefing specific to the two remaining quiet-title theories. For instance, it is not clear whether the Homeowners still have any interest in the properties. Minnesota’s foreclosure-by-advertisement statute explains that once a sale is recorded and the time period for redemption has passed, “all the right, title, and interest of the mortgagor in and to the premises” is conveyed to the purchaser. Minn. Stat. § 580.12 (2012); see also Herber v. Christopherson, 15 N.W. 676, 677 (Minn. 1883).
  
  Furthermore, no party has discussed whether the Homeowners’ interest is “adverse” to the interest held by MERS or Aurora for purposes of the quiet-title statute, as Aurora claims essentially a security interest in the properties and the Homeowners’ complaint concedes that valid security interests in the properties were created and transferred out of the Homeowners’ bundle of property rights.
  
  Although we may affirm a dismissal on grounds not relied upon by the district court, where the parties did not adequately develop an issue, remanding to allow the district court to address the matter in the first instance is appropriate. See Reeder v. Kan. City Bd. of Police Com’rs, 733 F.2d 543, 548 (8th Cir. 1984). We leave these and any other issues surrounding the two remaining quiet-title theories for the district court to address.

Bar Boot Urged For California Attorney Who Peddled Law License To Loan Modification, Forensic Audit Racket For $250/Month Per Client

In San Francisco, California, the San Francisco Chronicle reports:

• A State Bar judge has recommended disbarment for a Marin County lawyer who made $177,000 while representing homeowners who were falsely told they could prevent foreclosure by withholding their mortgage payments and suing their lenders.
  
  Greenbrae attorney Sharon Lapin insists she was unaware of the wrongdoing by US Legal Services, which contacted thousands of distressed homeowners and promised to protect them from foreclosure. She was a contract attorney with the company from August 2009 to November 2010 and represented 130 of its clients.
  
  But Lapin "caused significant harm to vulnerable, desperate clients, the public and the administration of justice," Judge Lucy Armendariz of the State Bar Court said in a ruling made public Friday.
  
  The bar immediately suspended Lapin, 57, who has practiced law since 1993. She can seek review from a panel of the court or appeal directly to the state Supreme Court, which must approve all disbarments.
  
  Meanwhile, the state attorney general's office has shut down US Legal and is suing the company, its owners and Lapin for damages.
  
  Armendariz said US Legal told owners they could save their homes by suing lenders for predatory practices. Owners were persuaded to pay thousands of dollars for worthless loan "audits" and were often told to stop paying their mortgage and send half of their usual payment to US Legal to underwrite the meritless lawsuits, the judge said.
  
  The company assigned clients to Lapin and paid her $250 a month per client. But she allowed US Legal to handle the lawsuits, took no action to prevent dismissal of the suits and did not return clients' phone calls, Armendariz said.
  
  Attorney Richard Lubetzky, who represents Lapin in the disciplinary proceedings, said she filed legitimate suits, did not mislead clients and was unaware that US Legal was advising them to withhold mortgage payments. "She got caught up and became a victim," Lubetzky said.

Source: Disbarment urged for Greenbrae lawyer.

More Spotlight For Online Tribal Payday Lenders & Their Ripoffs

Law Professor Nathalie Martin writes in Credit Slips:

• As reported on Turtle Talk [...], Oregon and Washington are none too pleased about tribal payday lenders making loans to citizens of their state, in contravention of their state usury laws.
  
  Online tribal payday lenders are setting up shop on Native land in order to get the benefits of sovereign immunity, as Josh Schwartz and I wrote about in our Washington and Lee Law Review article.
  
  According to a story posted on a Portland Oregon tv web site, tribal loans are now at the center of a legal battle at the highest levels of the U.S. Government. An Oregon senator is now trying to push a bill that he authored through the U.S. Senate, which would provide that lenders may not operate out of a tribal reservation or overseas, or anywhere else, if the resulting loans violate of state laws.
  
  If this federal bill became law, the Consumer Fraud Protection Bureau would have the power to stop the lending.The turtle talk post also linked to a warning to consumers posted by the Oregon Division of Finance and Corporate Securities. This link contains a partial list of the tribal payday lenders.

Source: Oregon Warns Tribal Payday Lenders to Back Off.

Ex-TARP IG: It "Goes Beyond Irony" That Exec In Charge Of Chase' Independent Foreclosure Review Was Named By Feds In Suit As Alleged Facilitator Of Scheme To Defraud Fannie, Freddie While Working At Countrywide/BofA

Investigative Reporter Paul Kiel writes in ProPublica:

• An executive who the Justice Department says facilitated a scheme to defraud Fannie Mae and Freddie Mac is now spearheading JPMorgan Chase's role in the government's program to compensate victims of the big banks' abusive foreclosure practices.
  
  The executive, Rebecca Mairone, worked at Countrywide and Bank of America from 2006 until earlier this year, when she left for JPMorgan Chase, according to her LinkedIn profile.
  
  In a lawsuit filed last month in federal court in New York, Justice Department attorneys allege that Countrywide, which was bought by Bank of America in 2008, perpetrated a two-year scam to foist shoddy home loans on Fannie and Freddie.
  
  Neither Mairone nor any other individuals are named as defendants in the civil suit, and no criminal charges have been filed against her or anyone else in connection with the alleged misconduct. But Mairone is one of two bank officials cited in the suit as having repeatedly ignored warnings about the "Hustle," as the alleged scheme was called inside the company, and she prohibited employees from circulating some of those warnings outside their division.
  
  Mairone was chief operating officer of the Countrywide lending division that allegedly carried out the "Hustle." She took the helm of JPMorgan Chase's involvement in the Independent Foreclosure Review this summer, according to a former Chase employee.
  
  The review, overseen by federal banking regulators, requires the nation's biggest banks to compensate victims for harm they inflicted on borrowers. Victims can receive up to $125,000 in cash or, in some cases, get their homes back. But the review has already been marred by evidence that the banks themselves play a major role in identifying the victims of their own abuses, raising the question of whether the review is compromised by a central conflict of interest.
  
  Mairone's role raises additional questions about the Independent Foreclosure Review.
  
  The review "never seemed designed to place first the interests of those who were supposed to be helped — victimized homeowners," said Neil Barofsky, the former federal prosecutor who served as the special inspector general for the Troubled Asset Relief Program, better known as the bank bailout.
  
  "Finding out that the person running it for JPMorgan Chase is a person whose conduct in the run-up to financial crisis was allegedly so egregious that she somehow managed to be one of the only people actually named in a case brought by the Department of Justice goes beyond irony," he continued. "It speaks volumes to the banks' true intent and lack of concern for homeowners when addressing the harm that they caused during the foreclosure crisis."

For more, see Exec Who Allegedly Enabled Fraud Runs Chase’s Effort to Compensate Foreclosure Victim.

Recent Ohio High Court Ruling Could Effect Thousands Of Closed Foreclosure Cases Across State

In Dayton, Ohio, the Dayton Daily News reports:

• A unanimous Ohio Supreme Court ruling that invalidated the foreclosure of a Xenia couple’s home could have broader implications, effecting hundreds, if not thousands of closed cases across the Dayton region, according to local real estate attorneys.
  
  “I think it’s going to be monumental,” said Randall Smith, staff attorney for the Miami Valley Fair Housing Center. “It’s now going to require lenders to be responsible.”
  
  For years, the standard practice across Ohio and other states has allowed lenders to file foreclosures even if they don’t have the proper paperwork in order — and can’t show that they own the property, according MVFHC Executive director Jim McCarthy. With mortgages being repackaged and resold repeatedly, the process has become sloppier and harder to track. But local courts have allowed the lawsuits to go forward, with the understanding that the proper paperwork will eventually catch up with those lawsuits.
  
  “We, as consumer advocates, have been arguing that its improper, all along,” McCarthy said. “Just fundamentally, that sounds wrong.”
  
  On Oct. 31, the Ohio Supreme Court agreed, ruling that a party’s standing to initiate a mortgage foreclosure lawsuit is determined at the time of the filing — meaning that if the lender did not have proper paperwork to show ownership at the time of filing, that lawsuit can be voided.
  
  It’s unclear what the exact impact will be, and attorneys are trying to determine that. McCarthy called that “the multi-million dollar question.”

***

• “Here, it is undisputed that Federal Home Loan did not have standing at the time it commenced this foreclosure action,” Justice Terrence O’Donnell wrote in the Oct. 31 decision, which over-ruled the appeals court and caused dismissal of Freddie Mac’s case.
  
  “This is kind of ‘first-year law school stuff,’” said attorney Andrew Engel, who represented the [homeowners], who said the lenders took a “file first, clean up the paperwork later” approach unheard of in other civil actions.

For more, see Court ruling could have broad impact on foreclosures.

For the ruling, see Fed. Home Loan Mtge. Corp. v. Schwartzwald, 2012-Ohio-5017 (Oh. October 31, 2012).

California Appeals Court: OK For Trust Deed Beneficiary To Contract Away Its Right To Foreclose To Loan Servicer

Law 360 reports:

• In a recent decision, the California Court of Appeal for the Fourth District held, in the absence of any clear statutory authority, that the beneficiary of a deed of trust may contract its right to judicially foreclose to its loan servicer, which may then validly pursue a judicial foreclosure.

For more, see Arabia v. BAC — More Leverage For Calif. Loan Servicers.

For the ruling, see Arabia v. BAC Home Loan Servicing, LP., No. D060923 (Cal. App. 4th Dist. Div. 1, August 13, 2012).

Minnesota Couple Who Recovered Home After Being Victimized In Sale Leaseback Equity Stripping Scam Attend Scammers' Sentencing

In Minneapolis, Minnesota, the Star Tribune reports:

• Kevin and Kris Brown's trip to federal court began on their wedding day, Dec. 28, 2002. That's the day that they and their six children were evicted from their home in Hastings by Jim Hoffman in an equity-stripping scheme.(1)
  
  On Thursday, they sat quietly in a Minneapolis federal courtroom to see Hoffman and his wife, Teresa Gay Hoffman, sent to federal prison. "We've been waiting for this day for a long time," Kevin Brown said afterward. "It's amazing it's taken 10 years," Kris Brown added. "And he's kept hurting people."
  
  Jim Hoffman, 53, pleaded guilty in February to money laundering and tax evasion, and Teresa Hoffman, also 53, pleaded guilty to tax evasion.
  
  U.S. District Judge David Doty sentenced Jim Hoffman to 6 1/2 years in prison -- the top of the advisory guidelines' range -- followed by three years of supervised release. He sentenced Teresa Hoffman to a year -- six months below the minimum in the sentencing guidelines -- followed by two years of supervised release.
  
  The charges in the plea agreement fail to illustrate Jim Hoffman's trail of crimes, Assistant U.S. Attorney David MacLaughlin argued.
  
  "He is a true fraudster," MacLaughlin said, arguing for the stiff sentence. Unlike some people who resort to fraud because of economic hardship, he argued, "fraud is all that he has done since the 1990s."

***

• The Browns attended the sentencing hearing along with a representative of the state attorney general's office, which helped them get back into their home seven months after Hoffman evicted them. They seemed satisfied with Jim Hoffman's sentence, but said Teresa Hoffman got off too easily.
  
  "I think she could've gotten more," Kris Brown said. "My kids have learned great lessons from what we've been through. Their kids have learned nothing."

For the story, see 10 years later, justice in fraud scheme.

For the U.S. Attorney press release, see Stillwater Couple Sentenced For Orchestrating $5 Million Mortgage Fraud Scheme.

(1) For more on this type of foreclosure rescue ripoff, see:

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

Foreclosed Borrower Accuses Hard Money Lender Of Pocketing Her $2M In Surplus Sale Proceeds In Excess Of Outstanding Debt Owed After Public Auction

In Paulding County, Georgia, WGCL-TV Channel 46 reports:

• A widow from Paulding County is continuing a decade-long fight for her children's inheritance that she says was taken by a hard money lender.
  
  Linda Bullock, of Dallas, said Ronald Lipsitz, owner of Capital Mortgage Corp. and Realty Resources Corp. on Hammond Drive in Sandy Springs, made $2 million from foreclosing on Bullock's land in 2001. Bullock said that by law, that money is hers.
  
  "The worst part about it is the way it happened," said Bullock, who took out two loans with Lipsitz totaling $585,000 in 1997 and 2000. Bullock said she borrowed the money to build rental properties that would help her and her husband pay rising taxes. But the Bullocks got behind in payments and Lipsitz foreclosed on 300 acres of land they used as collateral. The land is a portion of property that had been passed down in the Bullock family for generations.
  
  After foreclosing on three plots of land, Lipsitz filed three court documents known as deed under power that showed he paid $938,655.91 for each piece, for a total of $2.8 million.
  
  "He's only entitled to what's owed to him - less than $800,000; but he kept the $2 million which is illegal," said Bullock.
  
  According to Georgia foreclosure law, if the foreclosure sale price is more than the unpaid debt, the surplus must be paid back to the original property owner.
  
  "It's devastated her financially and emotionally," said consumer attorney Chuck Pekor. Bullock hired Pekor, a former federal prosecutor, to investigate her case after she lost a lengthy court battle with Lipsitz.
  
  "The official foreclosure sale was for considerably more than the face amount of what she was owed. They just ignored that. Never paid anything back," said Pekor.
  
  Documents filed in Paulding County court show Lipsitz sold some of the property for $2.2 million. According to his website, he's actively working to sell the rest of the property.
  
  "Those conclusions are completely wrong and we have sent you adequate proof," said Lipsitz when questioned by CBS Atlanta outside his office. Lipsitz repeatedly declined to be interviewed on camera. In documents provided by his spokesperson, Lipsitz insisted there was no surplus to pay Bullock and that he paid $938,655 for all three pieces of land – not each one.
  
  Lipsitz declined to provide tax records to CBS Atlanta News which could clear up how much he paid for the land. One thing is for sure: Lipsitz profited nicely from Bullock's valuable land.
  
  Bullock said she plans to continue fighting for the $2 million she intended to leave for her children. "You're just not going to get away with this. It's just too bad. Too horrible," said Bullock.

Source: Widow's fight for children's $2 million inheritance lasts 11 years.

Probe Into Raleigh-Area Foreclosure Sale Bid-Rigging Conspiracy Begins To Pick Up Steam As Antitrust Feds Score 2nd Guilty Plea; Suspect Agrees To Sing

From the U.S. Department of Justice (Washington, D.C.):

• A real estate investor pleaded guilty [] to conspiring to commit mail fraud at public real estate foreclosure auctions held in Raleigh, N.C., and surrounding areas, the Department of Justice announced. This is the second charge in the department’s ongoing investigation into real estate foreclosure auctions in eastern North Carolina.
  
  According to the one-count felony charge filed on Oct. 4, 2012, in the U.S. District Court for the Eastern District of North Carolina, in Greenville, real estate investor, Darren K. Phillips, conspired with a group of real estate speculators to participate in a scheme to defraud financial institutions, homeowners and others with a legal interest in select properties, and to obtain money and property from financial institutions, homeowners and others with a legal interest in rigged properties through false and fraudulent pretenses or representations. According to the plea agreement, Phillips has agreed to cooperate with the department’s ongoing investigation.
  
  The primary purpose of the conspiracy was to fraudulently acquire title to rigged foreclosure properties offered through public auctions at artificially suppressed prices, to make and receive payoffs from co-conspirators and to divert money away from financial institutions, homeowners and others with a legal interest in the rigged foreclosure properties, the department said in court papers.

***

• Phillips is the second person to be charged in this investigation. In September 2010, Christopher Deans, a real estate speculator from Raleigh, pleaded guilty in the U.S. District Court in Greenville in connection with the investigation.
  
  T[his] plea arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate foreclosure auctions in the Eastern District of North Carolina. The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Atlanta Field Office, with assistance from the U.S. Attorney’s Office for the Eastern District of North Carolina.
  
  Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100, or visit www.justice.gov/atr/contact/newcase.htm.

For the Justice Department press release, see North Carolina Real Estate Investor Pleads Guilty to Mail Fraud Scheme for the Purchase of Real Estate at Public Foreclosure Auctions.

Wells' Whistleblower Claims Foreclosure Retaliation After Providing Negative Testimony Against Outfit In Suit; Says Feds Used Her Affidavit To Score Big, Then Left Her Out To Dry

In Baltimore, Maryland, Baltimore City Paper reports:

• A former Wells Fargo loan officer whose affidavit about company practices played a key roll in multiple lawsuits against the bank says her former employer is retaliating by illegally trying to take her Eastern Shore house in foreclosure.
  
  Elizabeth Jacobson has written to Federal Housing Finance Agency and other regulators, claiming that Wells Fargo, which services the loan on the $529,000 house she bought in 2007, returned all seven of the payments she made under a government-sponsored loan workout. She was scheduled to face a foreclosure hearing on Nov. 5.
  
  “I was denied [a loan modification] five days after the president of Wells Fargo testified before Congress that he had read my affidavit,” Jacobson says. “I contend they singled me out by returning the payments.”

***

• Jacobson’s affidavit—made part of Baltimore City’s landmark suit against Wells Fargo—said the company paid her and others bonuses for targeting high-interest loans to African-Americans and Hispanics. Wells Fargo settled the case last summer for an estimated $175 million (“Bank Payback,” Mobtown Beat, July 18). The company admitted no wrongdoing. It has always said that Jacobson’s charges were false.
  
  When she worked for Wells, Jacobson said she earned six figures routinely, clearing $700,000 in 2004. After she left the company and blew the whistle, her financial status changed. Today she and a partner operate a foreclosure consultancy company from the Eastern Shore.
  
  “We’re admitted as bank foreclosure examiners and loan securitization auditors,” Jacobson says by phone from the passenger seat of her partner’s car. “In six or seven circuit courts in Maryland we’re admitted as experts.”

***

• Armed with knowledge of sloppy foreclosure practices, Jacobson says she plans to fight her former employer on every front. “I want the foreclosure to be dismissed, then I want to go after Wells Fargo under the civil rights laws,” she says. “The DOJ [Department of Justice] used my affidavit to settle that big lawsuit . . . [then] they left me out to dry.”

For more, see Whistleblower Blowback (Wells Fargo employee who exposed questionable practices faces foreclosure).

Fracking: Study Suggests Home Values For Property Using Local Groundwater For Drinking Are Taking Hit In Areas Near Shale Gas Wells

In Washington County, Pennsylvania, McClatchy Tribune  reports:

• Property owners near shale gas wells are liable to suffer a major loss in value because of worries over water contamination, according to economists from Duke University and the nonprofit research organization Resources for the Future.
  
  Their study found Pennsylvania homeowners who use local groundwater for drinking lost up to 24 percent of their property value if they are within a mile and a quarter of a shale gas well.
  
  But the news was far better for neighbors who get their water piped in. They saw values rise by nearly 11 percent, likely because of lease money from gas drillers and no worries about polluted water, the researchers found.
  
  The study is among the first attempts to measure the impact on property owners of the shale gas boom sweeping the nation. It comes as the need for new regulations is being hotly debated and shale gas critics allege people are getting sick from hydraulic fracturing, or fracking, the process in which high-pressure water and chemicals are injected underground to free up the natural gas in shale rock.
  
  There has been no scientific consensus determining that fracking pollutes groundwater. But the fear is enough to drive down property values, suggests the study, which was recently released by the nonpartisan National Bureau of Economic Research after being completed this summer. The researchers said the 24 percent drop in home values was driven by public perception instead of any actual data showing contamination.
  
  "The perception of how much risk there is of groundwater contamination from fracking is tremendous," said Lucija Muehlenbachs of the nonpartisan Resources for the Future, who conducted the study with colleague Elisheba Spiller and Chris Timmins, an economics professor at Duke University.
  
  The researchers looked at property values of all homes in Washington County, Pa., near Pittsburgh. It's an area at the heart of the shale gas revolution. They found just over 200 homes within a mile and a quarter of a shale gas well.
  
  About half the homes were on piped water. Researchers saw an increase in value in those homes. The other half relied on water wells that drew from local groundwater, and they had a significant loss in value. The researchers suggested that loss could lead to an increase in the likelihood of foreclosure in areas experiencing the rapid growth of hydraulic fracturing.

For more, see Study: Fracking can hurt property values of homes with wells.

Out-Of-State Landlord Facing Foreclosure Tagged With Arrest Warrant Over Building Health/Safety Issues; Court-Ordered Receivership, Demolition Possible As Renters Wallow In Mire, Legal Limbo

In Lynn, Massachusetts, The Daily Item reports:

• A New York woman faces arrest for failing to appear in District Court to address what a city attorney described as "significant fire concerns" and other problems in the Marianna Street apartment building she owns.
  
  The building's fire protection system "remains inoperable" and raw sewage in 122-126 Marianna St. is "endangering tenants," according to a city inspection report filed in court.
  
  "The biggest concern is significant fire concerns; they need to be attended to immediately," said city attorney Vincent Phelan.
  
  Phelan said Helen Doss, the Utica, N.Y. woman listed in court records as the building's owner, was served with an order last month to address problems in the building outlined in an Oct. 18 city complaint. District Court Judge Stacy Fortes issued a warrant for Doss' arrest last Thursday after she failed to attend a court hearing on a city failing to abate a private health nuisance complaint.
  
  "She's ignored orders from the Health Department," Phelan said. Attempts to locate and contact Doss on Monday were unsuccessful, but Phelan said Doss received a copy of the city cleanup order in person last month from city inspector Andrew Young.
  
  City Inspectional Services Department records detail an Oct. 17 complaint about no heat, mice, roaches and "many code issues" in 122-126 Marianna. Inspectors confirmed the complaints that day and a week later when Young outlined 14 violations in a letter listing Doss as the building's trustee.
  
  In addition to raw sewage, the letter noted missing smoke and carbon monoxide detectors, hanging and exposed wires, "excessive rodent feces in basement" and no current certificates of inspection for building apartments.
  
  Code violations carry a $1,000 fine and possible imprisonment, according to Young's letter.
  
  Phelan and Ward 3 City Councilor Darren Cyr said 122-126 Marianna faces foreclosure, and said the building and its owners are well known to the city.
  
  "Every few months I've got to call the Health Department because the neighbors call me. It's a blight on the neighborhood," Cyr said.
  
  He said the city has "several options" for dealing with the building and its problems. The building will be razed if the council passes a demolition order, and the city will take it over and collect rent from the tenants if officials seek court approval to take the property by receivership.

Source: Warrant issued for landlord in Lynn court.

S. California Trio Bagged, Face 22 Felony Charges In Home Improvement Ripoff; Allegedly 'Rented' Legit Licenses From Contractors To Dupe Victims Into Scam That Performed Incomplete, Substandard Work

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

• District Attorney Gregory D. Totten announced [] the completion of an 18-month investigation and filing of a felony complaint against Los Angeles residents Avi Hviv Gozlan (DOB 10/3/64), Ely Kavon (DOB 8/1/82) and Debra Lyn Mabrie (DOB 3/22/57). All three individuals are charged with 22 felonies, including grand theft, money laundering, elder abuse, conspiracy to contract without a license, and the aggravated white collar crime enhancement.
  
  The charges arise out of a fraudulent remodeling and home improvement scheme operating across Southern California under the names Amco, Inc., Liberty Construction, Universal Remodeling, VIP Home Design, Inc. and Vista Home Improvement, Inc.
  
  The defendants misled consumers into believing these companies were properly licensed with the Contractors State License Board by renting legitimate licenses from other contractors for a monthly fee. Gozlan's prior contractor's license was revoked by the Contractors State License Board in 2000. In reality, licensed contractors were not overseeing or participating in these contracting businesses.
  
  Through VIP Home Design, Inc. and the other companies identified above, Gozlan, Kavon and Mabrie are accused of selling home improvement services to consumers. They utilized a sophisticated network of telemarketers who were each required to make hundreds of telephone calls each day seeking out customers. Investigators have interviewed five victims to date who reside in Ventura County, three of whom are elders. Their losses exceed $145,000.
  
  Salespeople and telemarketers from these businesses proposed home improvement work that they never intended to complete, or offered services they ultimately failed to provide. Much of the work performed was substandard or resulted in overbilling for tasks that were never done.

Go here for the Ventura County DA press release.

Scammer Gets Three Years For Role In Conspiracy That Ripped Off Snoozing City Housing Authority Of $1.4M

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

• U.S. District Judge William D. Quarles, Jr. sentenced Tyeast Brown, a/k/a Peaches, age 41, of Washington, D.C., [] to three years in prison followed by four years of supervised release for conspiring to commit bank fraud in connection with a scheme to steal over $1.399 million from a Housing Authority of Baltimore City (HABC) bank account in just a few months. Judge Quarles also entered an order requiring Brown to forfeit and pay restitution of at least $1,399,700.
  
  The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.
  
  According to her guilty plea, Brown conspired with others in a scheme to steal money from the HABC. With Brown’s knowledge, in May of 2010, co-defendant William Darden used co-defendant Keith Daughtry’s identity to obtain a fraudulent driver’s license in Daughtry’s name, but bearing Darden’s photograph. The fraudulent driver’s license was made so that if law enforcement were to locate Daughtry through the fraudulent license’s use, Daughtry could claim that his identity had been stolen.
  
  On May 25, 2010, Darden used the fraudulent driver’s license to open a bank account for an entity called Keith Daughtry Contracting LLC. Shortly thereafter, substantial amounts of funds illegally diverted by Brown’s conspirators from a HABC bank account were electronically transferred into the Daughtry LLC bank account, even though Daughtry LLC had never provided any services to the HABC requiring compensation.
  
  Investigators have determined that the conspirators were responsible for transferring at least $1,399,700 stolen from HABC’s account into Daughtry LLC’s account between July and September 2010.

***

• Brown recruited a number of individuals, mostly young women, who during the summer of 2010 opened debit cards in their own names. Several hundreds of thousands of dollars in stolen HABC funds were transferred from the Daughtry LLC account onto these debit cards. Brown then directed her recruits to withdraw most of these funds off the debit cards through cash withdrawals, and demanded that the recruits provide her with this cash, though she permitted them to keep amounts for themselves.
  
  Brown, in turn, divided the cash with her conspirators. Brown periodically checked the account balances on the debit cards in her recruits’ names.. Brown admits that she is responsible for over $1 million in losses as a result of her participation in the conspiracy.
  
  Keith Eugene Daughtry, age 50, and William Darden, age 45, both of Washington, D.C., pleaded guilty to their role in the scheme. Daughtry was sentenced to 41 months in prison and ordered to forfeit and pay restitution of $1,399,700. Darden is awaiting sentencing.

For the U.S. Attorney press release, see Second Conspirator Sentenced in Scheme to Fraudulently Obtain over $1.399 Million from Baltimore Housing Authority Account.

California Jury Belts Loan Modification Scammer With 14 Felony Convictions That Include Grand Theft, Filing Forged Instrument, Foreclosure Consulting Fraud, Money Laundering

In Ventura, California, the Ventura County Star reports:

• A jury [] found a 66-year-old woman guilty of felonies stemming from a loan modification scheme in which Ventura County homeowners were tricked out of thousands of dollars, according to prosecutors.
  
  Laura Cecilia Carlson, of Hacienda Heights, faces more than 11 years behind bars. Bailiffs took her into custody after the verdicts were read. In an interview, prosecutor Dominic Kardum said Carlson was convicted of 14 felonies that included foreclosure consulting fraud, grand theft, filing a forged instrument and money laundering.
  
  Carlson showed no emotion as she stood by her lawyer while the verdicts were read. Carlson, who is a licensed real estate agent, and others were arrested in January 2011.
  
  Carlson ran the business as Global Team Consulting. She trained employees and collected thousands of dollars in upfront fees from clients after promising to reduce the principal and monthly mortgage payments. Prosecutors say the clients got no services and lost thousands of dollars and their homes.
  
  Kardum said co-defendant Victoria Santos, of Oxnard, advertised on Spanish-language radio stations to target predominantly Spanish-speaking immigrants.
  
  There were eight victims, and most lost their homes to foreclosures as a result of the scheme, he said.
  
  "One victim in particular worked in the strawberry fields in Oxnard, picked strawberries and saved for years and years," Kardum said. "She saved thousands of dollars, bought a home and was actually current in her mortgage payment when she met these defendants, the criminals."
  
  Victims were told to stop making mortgage payments and pay the fraudulent company. These payments went into Carlson's bank account, from which she withdrew hundreds of thousands of dollars, Kardum said.

***

• Three co-defendants have been convicted of felonies, Kardum said. They are Santos; Juan Alvarado Cervantes, of Los Angeles; and Felipe Carlos Segovia Castro, of Los Angeles. Margie Joanna Vargas, of Orange, pleaded guilty to a misdemeanor.

For the story, see Woman convicted of loan scam that conned Ventura County homeowners.

Nevada Litigation Continues To Escalate In Controversy Around Aggressive HOA Tactics When Filing Liens For Unpaid Assessments & Allegedly Inflated 'Collection Costs' On Foreclosed Homes

In Las Vegas, Nevada, Vegas Inc. reports:

• The Nevada Supreme Court may soon be asked to weigh in again on the issue of past-due homeowner association assessments and fees levied against buyers of foreclosed homes.
  
  Attorneys for the Southern Highlands Community Association, in a bid to short-circuit an existing class-action lawsuit over those fees, last week told Clark County District Court Judge Susan Scann that they will appeal one of her rulings in the suit.
  
  The ruling at issue was favorable to investors in foreclosed homes and homebuyers suing the HOA over the fees.
  
  The investors, represented by Las Vegas attorneys James Adams and Puoy Premsrirut, in recent years have sued hundreds of Nevada HOAs and their collection agencies in state and federal court and before the state Real Estate Division.
  
  The investors’ attorneys claim HOAs and their collection agencies regularly file inflated liens against foreclosed homes to recover not just excessive past-due monthly HOA assessments that accumulate while the homes sit vacant, but unauthorized collection costs for those assessments as well.
  
  The liens must be paid off for the investors and other buyers to obtain titles to the homes.
  
  The investors claim state law and sometimes HOA governing documents limit the liens to an amount equaling six or nine months of assessments depending on the circumstances.
  
  In one recent suit, for instance, the investors said a party purchased a home in Spring Mountain Ranch and was required to pay off an HOA lien against the home of $5,895. They said state law limited the HOA’s lien authority in that instance to $357, with the remainder representing an "unlawful lien amount."
  
  The investors say this pattern of alleged overcharging has been repeated thousands of times at scores of HOAs, potentially subjecting the HOAs to significant damages.

For more, see HOA fee issue likely headed back to Nevada Supreme Court.

In a related story, see B of A sues 28 Nevada HOAs, collection agencies in lien dispute:

• Bank of America is suing 28 Nevada homeowner associations and their collection agencies in the continuing dispute over charges that HOAs have been hitting homeowners and buyers of foreclosed homes with inflated bills for past-due assessments and collection costs.

HOAs Feel Budget Squeeze As Foot-Dragging Foreclosing Banksters Play 'Waiting Game' When Recording Deeds On Repossessed Homes

In Charlotte, North Carolina, WSOC-TV Channel 9 reports:

• Since the recession hit, thousands of area homes have fallen into foreclosure and disrepair. Yards have been left overgrown; houses have been left abandoned. But there's another unexpected kind of fallout that's causing big problems for homeowners associations across the Charlotte area.
  
  “It's pervasive,” said Tim Sellers, a real estate attorney. “It's happening with such frequency that it’s becoming a common practice.”
  
  Sellers, who represents hundreds of homeowners associations, is talking about chronic delays in recording deeds after a foreclosure sale.
  
  Under North Carolina law, a foreclosure trustee is supposed to officially record the names of banks or federal agencies like HUD when they take back homes. And it's supposed to be done right after the final report of the foreclosure. Too often, that's not happening.
  
  A house in the Waterlyn neighborhood in south Charlotte was sold in foreclosure in April 2010. But when Eyewitness News searched county records with Register of Deeds David Granberry, we found the deed wasn’t recorded until August 2012, more than two years after the foreclosure sale was final.
  
  At a house in north Mecklenburg County, it's even worse. The foreclosure sale was final in August 2010, but a new deed still hasn't been recorded.
  
  “We're talking months and years in some cases,” Sellers said. “It's ridiculous.” "And HOAs are getting caught in the middle?” Eyewitness News asked. “Absolutely in the middle,” he said.
  
  When Eyewitness News began our investigation six months ago, we talked with Jeannie Welch with the Becton Park HOA. “Together it's over $16,000,” she said.
  
  It took Welch's Becton Park neighborhood two years to collect that much in unpaid HOA fees related to foreclosures, which delayed projects like new roofs and fences. “Is there a big impact for communities?” Eyewitness News asked. “Yes, I would say so, especially for us -- a moderate-income community,” Welch said. “We have to set our budget based on the theory that everyone will pay their dues.”

For more, see 9 Investigates: Lawmaker wants change to legal loophole that’s affecting neighborhoods.

Fla. Appeals Court: F'closing Lender Must Prove Note Ownership As Of Filing Date; Nixes Retroactive Mortgage Assignments; Says One Year TILA Limitations Statute Inapplicable When Recoupment, Setoff Raised As Defense

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

• A foreclosure sale isn’t necessarily the end for some homeowners, as one South Florida couple has found.
  
  An appeals court last week sided with Cesar and Ruth Vidal, who appealed a Broward County Circuit Court ruling granting a lender’s right to repossess their North Lauderdale home.
  
  The home was sold to a third party at a foreclosure auction in April 2011, but the Fourth District Court of Appeal ruling means that the foreclosure must be overturned, said John H. Ruiz, the couple’s Miami lawyer.
  
  The appeals court also ruled that the Vidals could continue to seek damages and try to have the mortgage canceled on the grounds that the lender, Liquidation Properties Inc., allegedly violated the federal Truth in Lending Act, Ruiz said.(1)
  
  He said both rulings could be precedent-setting and have the potential to affect thousands of other foreclosures in Florida. “This is a victory for homeowners in a huge way,” he said.

***

• In late 2010, several big lenders temporarily stopped filing thousands of foreclosures nationwide while they investigated possible paperwork errors. Bank employees admitted to signing foreclosure affidavits without reviewing them.
  
  In the furor that followed, homeowners and their lawyers accused lenders and judges of rubber-stamping foreclosures and compromising defendants’ rights to due process.
  
  Some homeowners say banks lost the mortgages and improperly submitted back-dated paperwork in an effort to show ownership.
  
  In the Vidal case, the Broward court ruled that Liquidation Services proved its right to foreclose. But the Fourth District Court of Appeal disagreed, saying the lender didn’t produce an affidavit showing it owned the mortgage prior to filing the foreclosure, as required by law.(2) Lawyers for Liquidation Services could not be reached for comment.
  
  “In filing a mortgage foreclosure suit ... it is incumbent on the plaintiff to be in a position to prove he, she, or it owns and holds the note as of the date suit is filed,” the appeals court wrote.
  

For the story, see Broward couple wins appeal after house is foreclosed.

For the ruling, see Vidal v. Liquidation Properties, Inc., No. 4D10-3358 (Fla. App. 4th DCA October 31, 2012).

(1) In connection with the alleged violations of the federal Truth in Lending Act, the central point was whether the statute's one year statute of limitations applied when the issue of recoupment was raised by the homeowner. According to the Florida appeals court:

• The trial court held the affirmative defense of violations of the Truth in Lending Act was legally insufficient because the statute of limitations under that Act had run.
  
  Federal law imposes a three-year statute of limitations from the consummation of the transaction on any action for rescission under the Truth in Lending Act. 15 U.S.C. § 1635(f) (2006); Dove v. McCormick, 698 So. 2d 585, 587 (Fla. 5th DCA 1997).
  
  A one-year statute of limitation from the date of violation of the Act applies to actions for recoupment. 15 U.S.C. § 1640(e). However, when recoupment and setoff are raised as a defense, the one-year statute of limitations does not apply. Title 15 U.S.C. 1640(e) states:
  
  'This subsection does not bar a person from asserting a violation of this subchapter in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State law."
  
  The Vidals' affirmative defense seeking recoupment damages and set-off for Truth in Lending violations was not barred an the statute of limitations set forth in the Truth in Lending Act. Liquidation filed no sworn statements showing the defense was not valid. The failure to rebut a properly raised affirmative defense precludes the entry of summary judgment in favor of Liquidation. Servedio v. US Bank Nat'l Ass'n, 46 So. 3d 1105, 1107 (Fla. 4th DCA 2010).

(2) The court addressed this point in the following excerpt:

• While Liquidation filed the original note and an allonge to the note endorsed in blank, the allonge is not dated, and Liquidation did not file an affidavit demonstrating that the note was transferred prior to the filing of the complaint.
  
  The assignment of mortgage reflects transfer of only the mortgage, not the note. Although the Assignment of Mortgage was sworn to on February 6, 2009, and states "ASSIGNMENT EFFECTIVE AS OF 01/15/2009," two inferences can be drawn from the effective date language. One could infer that ownership of the note and mortgage were equitably transferred to Liquidation on January 15, 2009, but one could also infer that the parties to the transfer were attempting to backdate an event to their benefit.
  
  Because the language yields two possible inferences, proof is needed as to the meaning of the language, and a disputed fact exists. Soncoast Cmty. Church of Boca Raton, Inc. v. Travis Boating Ctr. of Fla., Inc., 981 So. 2d 654, 655 (Fla. 4th DCA 2008).

In a footnote, the court briefly addressed the possible use of backdated assignments by foreclosing lenders to cover up their screwups:

• Allowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.

Closing Agent Gets Two Years After Admitting To $680K+ Escrow Account Ripoff Of Cash Intended To Pay Off Existing Mortgage Liens

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

• U.S. District Judge Ellen L. Hollander sentenced Sandy P. Kim, age 43, of Ellicott City, Maryland, [] to two years in prison followed by three years of supervised release for wire fraud. Judge Hollander also entered an order that Kim forfeit $684,283, the amount Kim stole from mortgage escrow accounts.

***

• According to her plea, from 2005 to 2008, Kim was an agent for a title insurance company, and was the owner and chief operating officer of EK Settlements. Kim was required to maintain an escrow account for EK Settlements in order to receive real estate settlement funds from buyers and pay off mortgage lenders.
  
  Starting in 2006, Kim stole money from the escrow accounts to pay her personal bills, including taxes and private school tuition for her children. She also used the stolen funds to pay prior loans she had failed to pay off, in order to forestall discovery of her theft.
  
  On August 20, 2007 Kim performed a closing for a client and caused $175,136 to be wired to an account she controlled. Instead of paying off the client’s prior mortgage, Kim used the money for her own purposes. To conceal the theft, she made several monthly mortgage payments to the prior mortgage lender.
  
  In 2008 when the title insurance company began to suspect problems and sought to audit her accounts, Kim submitted fraudulently altered bank records. When subsequently interviewed by law enforcement, she admitted to the scheme.
  
  Kim stole a total of $684,283 from the escrow accounts which were intended to pay off mortgage lenders.

For the U.S. Attorney press release, see Ellicott City Title Agent Sentenced to 2 Years in Prison for Stealing over $684,283 from Mortgage Escrows.

Ohio AG Targets Outfit In Lawsuit Alleging Loan Modification Ripoffs In Response To Complaints Received From Approx. 150 Consumers Nationwide

From the Office of the Ohio Attorney General:

• Ohio Attorney General Mike DeWine [] announced a lawsuit against Ryan Zimmerman, Consumer Advocates Group Experts, LLC, and Advocates for Consumer Affairs Experts, LLC for violations of Ohio's consumer laws, including failure to deliver and failure to provide refunds for home loan modification assistance. DeWine seeks consumer restitution, injunctive relief, and civil penalties.

***

• Ryan Zimmerman, previously of Culver City, Calif., operates Consumer Advocates Group Experts and Advocates for Consumer Affairs Experts. Through online advertising and telephone and mail solicitations, the businesses offered to help consumers avoid foreclosure by working with the consumers' lenders to negotiate a loan modification or otherwise adjust their debt. After accepting the payments, the businesses did little or no work to help consumers. The businesses also failed to provide refunds.
  
  The Ohio Attorney General's Office, the Better Business Bureau, and Consumer Sentinel have received approximately 150 consumer complaints nationwide against the businesses. In their complaints, consumers state they paid up-front fees for the loan modifications ranging from $1,875 to $2,700.
  
  The Ohio Attorney General's lawsuit charges the defendants with multiple violations of the Consumer Sales Practices Act, including failure to deliver and failure to provide refunds. Additionally, it charges the defendants with violating the Debt Adjusters Act and the Telephone Solicitation Sales Act.

For the Ohio AG press release, see Attorney General DeWine Seeks Consumer Restitution from Out-of-State Foreclosure Rescue Operation.