Wanna-Be Real Estate 'Moguls' Continue Getting Their Heads Handed To Them When Trying To Buy 'Profitable' Foreclosure Steals & Deals Online

In Miami Shores, Florida, The Miami Herald reports:

• Billy Makedonsky thought he’d found the perfect retirement home for his 75-year-old mother. Better yet, buying it required just a few mouse clicks.
  
  His only concern about the bank-owned house with the terracotta driveway and barrel-tiled roof — other than the fact he’d never bought a home online before — was this caveat on GoHoming, the site auctioning off the property as is: “Please DO NOT DISTURB the occupant.”
  
  Turns out he had good reason to be worried.
  
  For $159,000, what Makedonsky got was a house wrapped up in multiple bankruptcies, foreclosed in protested proceedings, and shrouded by allegations of fraud. The home is also the residence of El Portal’s former mayor, Joyce A. Davis, who said she wasn’t about to leave it in the middle of her comeback campaign.
  
  “There were signs up all over El Portal: ‘Elect Joyce Davis for Mayor,’ and she was squatting in my home,” marveled Makedonsky, a 41-year-old flight attendant.
  
  Makedonsky’s tale is just one buyer-beware among many in the digital age, when reams of distressed and bank-owned properties are added daily to online auction sites, making the business of vulturing real estate cheaper and more accessible.
  
  The flipside: Establishing clear title and control of the home, which some cash buyers have never set foot in, can mean sorting through a thicket of foreclosure filings, fraud allegations, bankruptcies, other mortgages, association liens, creditors and combative tenants.
  
  “People don’t realize there’s a lot more to it than ponying up some money,” said Dennis Donet, a Miami foreclosure defense attorney.

***

• While Makedonsky bought his home on a private auction, attorneys say more horror stories come from the clerk’s foreclosure auction in Miami-Dade, a county where there is a backlog of 53,000 foreclosure cases.
  
  Nearly 100,000 properties have been listed on the clerk’s online auction since it opened three years ago. Last year, an average of 100 properties were sent to auction each day.
  
  Properties can be pulled off of auction or purchased at the last minute by the distressed home’s owner, so not every property listed was auctioned. But Donet, the foreclosure attorney, said the vast new real estate frontier is attracting a new clientele, many of whom haven’t done the proper research on the properties they’re trying to buy.
  
  “There are riches for sure,” he said. “But you may be opening up a can of worms that’s very expensive to get out of.”
  
  Attorney Ferrer Shane said the most common mistake buyers make is not understanding what it is they’re buying. Many clients drop thousands on a home thinking they’re buying a foreclosed mortgage when they’re actually buying an association lien that will be trumped by the lender when the bank finally forecloses.
  
  That’s what happened to Maria Alonso, who spent $9,100 in May on a 2,600-square-foot home in The Hammocks. The home was at auction because of a $7,482 judgment held by the Panache Homeowners Association over unpaid assessments by the previous owner.
  
  Alonso, however, thought she’d bought the home outright and after fighting for three months to evict the previous tenants, she leased the home out, according to daughter-in-law Dayana De Latorre. And then they got a notice that their new property was to be auctioned again on Dec. 13, this time due to a judgment held by Wells Fargo.
  
  De Latorre said her in-laws, who bought the house with settlement money from a personal injury claim, have challenged the sale and have a court date set for Wednesday. But they’re not sure what will happen next.
  
  “It’s been very confusing. There’s not a lot of help out there,” she said.

For more, see The perils of buying a foreclosed home online (It could go fine. Or the ex-mayor could live in the property and refuse to vacate, as happened to Billy Makedonsky).

Slick Real Estate Operators Peddling Crappy Houses Using 'Contract For Deed' Conveyances Lead To Continuing Horror Stories For Unwitting Homebuyers

In Minneapolis/St. Paul, Minnesota, the Star Tribune reports:

• A year after moving into her white brick house in suburban Robbinsdale, Jennifer Gaines got a letter that turned her life upside down.
  
  She was facing foreclosure -- even though she was current on her monthly payments. She was also about to lose the $25,000 she paid on the home because the seller, who was responsible for paying the mortgage, had gone bankrupt.
  
  Gaines bought the property through an unusual, but increasingly common, option known as "contract for deed." Unlike a traditional home sale, the transactions typically take place with no bank, no Realtor, no appraisal -- and little government oversight.
  
  Instead, the seller finances the sale and then collects monthly payments, much like a landlord.
  
  Across the Twin Cities, many homes sold through contract for deed have been beset by inflated prices, high interest rates and other terms that almost guarantee the buyer will default, according to a Star Tribune investigation of 1,330 such deals dating back to 2007.
  
  In hundreds of cases, records show, sellers failed to provide mandated home inspections that would have revealed code violations and safety hazards. Some buyers said they were misled about outstanding debts attached to the properties. Others thought they were signing a lease.(1)
  
  "This is the first place that ever felt like home to me, and now I have to move," Gaines said. "I was so naive."
  
  In the aftermath of the housing market crash, contract-for-deed sales in the metro area have soared more than 50 percent in the past five years, as families with low income or bad credit are lured by the promise of homeownership.
  
  "There is a lot of abuse out there," said Connie Sandberg, who oversees St. Paul's housing sale inspections. "People are being victimized."
  
  Regulators in several cities said they are alarmed by the Star Tribune's findings and frustrated by their inability to do more to protect buyers. Local officials are vowing to push state legislators this year to require greater disclosure from sellers.
  
  "They are clearly taking advantage of a certain segment of the population that needs housing," said Kellie Jones, manager of Minneapolis' problem properties unit.
  
  The purchase price can be twice what the property is worth, records show. On average, contract-for-deed sales were about 10 percent above the estimated market value as set by county assessors.
  
  To get a handle on the growing business, Minneapolis officials recently began their own examination of contract sales. They believe many rental property owners are using contracts for deed as a way to avoid maintenance rules, shifting the cost of expensive repairs onto their buyers. Indeed, hundreds of contract sales in the Twin Cities involve former rental properties, many with a history of problems.
  
  "People are signing a contract for deed and thinking it is a synonym for a lease, and they don't recognize the seriousness of what they are agreeing to," said Henry Reimer, assistant director of regulatory services for Minneapolis.
  
  Many properties were sold again after buyers defaulted, allowing sellers to pocket down payments ranging from $1,000 to $25,000, plus any monthly payments already collected.

***

• For rent or for sale?
  
  In the past five years, nobody sold more former rental properties on contracts for deed in the Twin Cities than Brooklyn Park homebuilder Leslie Reynolds.
  
  But Reynolds' online advertisements continue to promote the properties as rentals, not homes for sale. Reynolds acknowledged the bait-and-switch tactic during a recent interview.
  
  "We put them in 'houses for sale' and we never got a call," Reynolds said.
  
  Several people who responded to the ads said they didn't find out Reynolds wanted to sell them a home until they walked into his office to sign what they thought was a lease. By then, the buyers said, they had already toured the properties and agreed on the size of the monthly payment, not realizing other financial obligations would follow.
  
  Natasha Osborn said she didn't know how much she agreed to pay for her property until she moved in and the contract arrived in the mail. She thought she was renting a house for $900 a month with an option to buy. Instead, she must pay $145,000 by 2014.
  
  "I kind of lost my mind," Osborne said. "My house is not worth $145,000."

***

• So far, not one of Reynolds' 160 buyers has been able to refinance their deals, which typically require six-figure balloon payments in three years. Many walked away, allowing Reynolds to retain ownership. In the past three years, 40 of Reynolds' former rental properties have sold more than once through contract for deed.

***

• Many of Reynolds' buyers went to Brooklyn Park officials for help, said Curt Raymond, who handles enforcement for the city's building department. City officials believed Reynolds may have violated laws against deceptive marketing, so they contacted state, local and federal prosecutors, Raymond said.
  
  "We've run this past everybody we can -- including the FBI -- to see if there is something predatory here, but we couldn't find anything criminal to go after him on," Raymond said. "There is nothing much we can do."(2)

For more, see Contract for deed can be house of horror for buyers (High-risk housing often is sold on such contracts, with little or no oversight).

(1) See Detroit Feds Pinch Notorious Area R/E Operator Suspected Of Screwing Over Naive Homebuyers With Land Contracts On Homes In Some Stage Of Foreclosure for a post on a Detroit-area real estate operator who got bagged in June, 2012 on federal wire fraud charges for allegedly engaging in a similar pattern of unloading crappy houses to naive homebuyers using 'land contracts', a form of deferred title transfer used in Michigan that is essentially the same as the 'contract for deed' form of deferred title transfer used in Minnesota (and not unlike two other forms of transfer often favored by ripoff artists, the 'rent-to-own racket' and the 'lease/option' deal).

See also Co-Owner Of Racket That Ran 'Contract For Deed' Scam Cops Guilty Pleas To Multiple Charges Of Securities Fraud, Unlawful Merchandising Practices for a post on a Missouri case where the ripoff artists failed to advise their gullible homebuyers when their homes were in danger of foreclosure.

Go here for other posts on:

• contract for deed ripoffs,
• land contract scams, and
• rent-to-own/lease option rackets.

(2) Make no mistake - if prosecutors (either the feds, or state prosecutors) were motivated enough to bring criminal charges against these real estate operators, they can find something to slam them with, even if they bring charges for something basic, like theft by deception/ false pretenses, obtaining property by deception/false pretenses, securing writings/execution of documents by deception, engaging in a pattern of corrupt activity, organized scheme to defraud, theft/exploitation of the elderly/vulnerable adults, unlawful merchandising, etc., etc. depending on the specific facts of each scam and the laws of the jurisdiction in which the ripoffs are taking place (to the extent the scammers use the U.S. mail, UPS, Federal Express, etc. or telephone when pulling off any of these scams, federal jurisdiction may be triggered through the mail fraud & wire fraud statutes).

As a reminder to those who mistakenly assume that these apparent ripoff deals are nothing more than civil cases, it is clear that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) isn't enough to permit scammers to insulate themselves from criminal prosecution when they target their victims with legitimate-looking business propositions when screwing their victims over. Criminal prosecutors have the authority to "pierce through" such attempts to disguise a blatant criminal real estate ripoff as a common, legitimate business deal.

Clear precedent exists for such a "pierce through" approach to overcome any objections that will certainly arise when the scammers make the argument that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See, for example:

• People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:
  
  The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)


• People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:
  
  Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.
  
  [***]
  
  Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.
  
  The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

Video: Mortgage Crisis In A Nutshell

From the video Mortgage Crisis In A Nutshell:

• In this one-hour video, Attorney John E. Campbell explains the main aspects of the mortgage crisis that has devastated the U.S. housing market and the economy.
  
  This video was produced by John Campbell and Erich Vieth, who are both attorneys with the Simon Law Firm in St. Louis, Missouri. A substantial part of their law practice concerns issues pertaining to mortgage fraud and unlawful foreclosures. They have filed numerous individual and class action lawsuits on behalf of behalf of homeowners.

For the video, see Mortgage Crisis in a Nutshell.

Widows/Widowers Who Are Not Named In Now-Deceased Spouse's Reverse Mortgage Score Big Appeals Court Win In Effort To Dodge Foreclosure Boot; HUD Regs That Seem Contrary To Statute Leave 3-Judge Panel "Somewhat Puzzled"

In Washington, D.C., Bloomberg reports:

• A federal appeals court revived a lawsuit accusing the U.S. Department of Housing and Urban Development of setting up its reverse-mortgage program in a way that makes it more likely a surviving spouse will end up in foreclosure.
  
  A three-judge panel of the U.S. Court of Appeals in Washington [] ruled that a case brought by two widowers challenging HUD regulations on reverse-mortgage loans may proceed. The widowers claim that HUD rules on when loans become due and payable conflict with language in the law aimed at protecting surviving spouses from foreclosure.(1)
  
  “We admit to being somewhat puzzled as to how HUD can justify a regulation that seems contrary to the governing statute,” U.S. Circuit Judge Laurence Silberman wrote in the 13-page opinion.
  
  Lemar Wooley, a spokesman for HUD, declined to comment on the decision. Reverse-mortgage loans pay out a home’s equity to the homeowner, often in installments, and are usually repaid when the borrower dies or moves out of the house. Borrowers are considered in arrears if they don’t keep current on their property taxes and insurance.
  
  The loans are available only to borrowers who are at least 62 and who have significant equity in their homes.
  
  ‘Surviving Mortgagor’
  
  The lawsuit involves changes to the program that were mandated by Congress in 1987 in authorizing HUD to administer a mortgage-insurance program. Congress, in the law, said the loan obligation was deferred until the homeowner’s death, specifically stating that the term “homeowner” includes the spouse of the homeowner.
  
  The language HUD crafted when implementing the law states that the balance of the loan is due and payable in full “if a mortgagor dies and the property is not the principal residence of at least one surviving mortgagor.”
  
  HUD said in its response to the lawsuit that it was concerned a homeowner, after taking out a reverse mortgage, might marry a young spouse, which would increase a lender’s risk.
  
  The lawsuit had been dismissed by a lower court judge who found that because the widowers weren’t borrowers on the loans at issue, winning the lawsuit wouldn’t save their homes because it was the lender’s decision on to whether to foreclose.
  
  HUD Remedy
  
  In establishing that the widowers have the authority to sue, the appeals court said today that HUD could come up with a remedy that would allow them to keep their homes. “HUD could accept assignment of the mortgage, pay off the balance of the loans to the lenders, and then decline to foreclose,” Silberman said.
  
  Craig Briskin, one of the lawyers for the plaintiffs, said he’s “thrilled with the decision.”
  
  “The ball is really in HUD’s court right now,” Briskin, of Mehri & Skalet PLLC in Washington, said in an interview. “The D.C. Circuit clearly told HUD it made a mistake.”

Source: Reverse-Mortgage Suit Against HUD Revived on Appeal.

For the ruling, see Bennett v. Donovan, 11-5288 (D.C. Cir. January 4, 2013) .

(1) According to the facts of the case:

• Robert Bennett and Leila Joseph are the surviving spouses of reverse-mortgage borrowers whose mortgage contracts were executed pursuant to HUD’s insurance program. Only their spouses, not the appellants themselves, were legal borrowers under the mortgage contract. Appellants allege that they were assured by their brokers that they would be protected from displacement after their spouses died, and that in reliance on this protection, they quitclaimed interest in the homes they had owned jointly with their spouses when their mortgages were originated.

In a footnote, the court added some context as to the possible reason why the surviving spouses had been talked into signing away their respective ownership interests in their homes by the brokers peddling the reverse mortgages:

• Both Bennett and Joseph were younger than their respective spouses, and because loan limits depend on the age of the youngest borrower, quitclaiming interest in their homes likely allowed the banks to provide appellants more favorable loan terms than if they had been parties to the contract as well. Pricing of reverse mortgages is like the inverse of life-insurance policies — older borrowers are expected to live for a shorter period of time, and thus draw fewer payments over the life of the mortgage, so the magnitude of those payments can be greater for a given amount of equity.

Michigan Trial Court OKs Homeowner Challenge To Validity Of Mortgage Assignment Where Assignee's Lack Of Title Is Raised As A Defense

From the National Consumer Rights Bankruptcy Center:

• A Michigan state court found that a debtor may oppose foreclosure on the basis that the assignment of the mortgage to the foreclosing party was in violation of the Pooling and Service Agreement and, therefore, ineffective. HSBC Bank, USA v. Young, No. 11-693 (Cir. Ct. Mich. Oct. 16, 2012).
  
  HSBC conducted a foreclosure by advertisement and bought the property at the foreclosure sale. When it moved the court for possession of the property the debtor challenged the legitimacy of the foreclosure on the basis that the assignment of the note and mortgage from Wells Fargo to HSBC took place after the note was in default in violation of the terms of the PSA.
  
  The court began by finding that the debtor challenged HSBC’s ownership of both the note and the mortgage and Michigan law does not allow foreclosure by a party who owns neither the note nor the mortgage. Residential Funding Co. v. Saurman, 490 Mich 909, 805 NW2d 183 (2011).
  
  The court then turned to the question of whether the debtor had standing to challenge the assignment of the mortgage and note on the basis that it did not conform to the requirements of the PSA. The court found that she did.
  
  Citing Livonia Property Hldgs v. 12840-12976 Farmington Rd. Hldgs, 717 F.Supp. 2 724, 746 (E.D. Mich 2010), the court recognized an exception under Michigan law, to the rule that only a party or third party beneficiary to a contract may enforce its terms.
  
  Under that case, a debtor may protect herself from the threat of having to pay the same debt twice by raising as a defense the assignee’s lack of title.
  
  The court distinguished the holdings of others courts that found that mortgagors lack standing to enforce the terms of the PSA on the basis that those cases relied on state law that did not permit a debtor to challenge an assignment. Michigan, by contrast, does not preclude that challenge and because the debtor suffered an injury from the allegedly invalid assignment, she had standing under state law to raise failure to comply with the PSA as a defense to the foreclosure.
  
  While the court framed the issue as one involving the borrower’s right to challenge compliance with the PSA, in fact the debtor is not, in most cases, attempting to enforce the PSA.
  
  Instead the PSA provides the road map that tells the world who is supposed to own the loan and how the transfer of ownership was supposed to be accomplished. Failure to comply with the terms of the PSA potentially means that the party claiming ownership of a loan may not in fact have obtained those rights.
  
  Certainly, borrowers have standing to challenge the legitimacy of a party seeking to foreclose on their home. The PSA is an important piece of evidence that describes the conditions under which one party or another owns the loan.

Source: Debtor Has Standing to Argue Failure to Comply with Terms of PSA.

For the ruling, see HSBC Bank, USA v. Young, No. 11-693 (Cir. Ct. Mich. Oct. 16, 2012). (Representing the successful homeowner was the non-profit law firm Legal Services of South Central Michigan).(1)

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 a post involving a recent Texas case that allowed for a homeowner challenge to a faulty mortgage assignment in certain limited circumstances.

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

(1) Legal Services of South Central Michigan (LSSCM) provides free legal advice and representation in certain civil cases to approximately 10,000 low income persons and senior citizens (regardless of income) each year in over a dozen counties in the state.

Void vs. Voidable: The Difference Is Subtle, But Significant

From a recent client alert from the law firm Miller Canfield:

• Shortly before the end of 2012, the Michigan Supreme Court issued its first opinion in a calendar case on Michigan's foreclosure statute in nearly 20 years. In Kim v JPMorgan Chase Bank, N.A., --- Mich ----; --- NW2d ---- (Mich Dec 21, 2012) (No 144690), the Court was unanimous in upholding long-standing Michigan case law stating that deficiencies in the foreclosure process make a foreclosure sale voidable, not void ab initio.
  
  The difference is subtle, but significant.
  
  Voidable sales may be set aside, but only if the mortgagor can show it was prejudiced by any alleged deficiencies.
  
  Sales that are void ab initio are simply invalid, whether the mortgagor was harmed or not – and even if the foreclosed property has since been sold to one or more innocent purchasers.
  
  The Kim decision comes in response to a growing number of Michigan Court of Appeals decisions following the Court of Appeals’ 2007 ruling in Davenport v HSBC Bank USA, which held that at least certain types of deficiencies made a foreclosure sale void ab initio. 275 Mich App 344; 739 NW2d 383 (2007). By rejecting Davenport and its progeny, Kim gives a great deal more certainty to foreclosing mortgagees, purchasers of foreclosed property and the title companies insuring those sales alike.
  
  Despite the full Michigan Supreme Court agreeing on this point, the Court split 4-3 on the actual merits of the Kim case. At issue was whether a transfer by the FDIC of a closed bank’s assets was a transfer by operation of law, or a more typical asset sale.
  
  Justice Marilyn Kelly, writing for the majority, explained that this transfer was a sale of assets and not a transfer by operation of law. Because it was not a transfer by operation of law, the majority held that the mortgagee of the Kim’s property was unquestionably required to record an assignment before the sheriff’s sale under MCL 600.3204(3). Since the mortgagee failed to do so, the sheriff’s sale is voidable. The Court remanded for determination of whether the mortgagor was prejudiced.
  

Source: Michigan Supreme Court Issues Opinion on State’s Foreclosure Statute.

Texas Homeowner Seeks To Invoke State Homestead Law To Invalidate Mortgage Obtained When Refinancing Family Home On 11+ Acres Of Land

In Jefferson County, Texas, The Southeast Texas Record reports:

• A man claims a mortgage company is attempting to wrongfully foreclose on his home, despite its failure to provide him with notice of its intent.
  
  Todd David Bryson filed a lawsuit Dec. 28 in Jefferson County District Court against Wells Fargo Bank.
  
  In his complaint, Bryson alleges he stumbled upon a foreclosure notice for his home, which sits on 11.37 acres of land.
  
  Bryson had previously granted a lien to Wells Fargo in an attempt to guarantee a $700,000 promissory. The interest in the lien was Bryson’s home, according to the complaint.
  
  If Bryson was to become delinquent on his loan, Wells Fargo agreed to provide him with a 21-day advanced notice of its posting of the foreclosure of his home, the suit states. However, Bryson claims he was never given the required notice and only recently discovered Wells Fargo’s intent to foreclose on it on Jan. 1, the complaint says.
  
  In fact, Bryson is now questioning whether the lien on his home is even valid.
  
  “This property was known by all parties to constitute the plaintiff’s homestead and as such, any acquisition of the lien upon said property would have to comply, clearly and completely, with the provisions not only of the Texas Property Code, but also the Texas Constitution,” the suit states.
  
  “Notwithstanding the foregoing, Wells’s predecessor in interest, Wachovia Bank, induced plaintiff to execute loan documentation related to acquisition of financing from said bank even though loan officers of Wachovia Bank were aware of the fact that (i) the property constituted plaintiff’s homestead and (ii) plaintiff had already completed construction of the improvements constituting his homestead before the bank presented documentation to plaintiff purporting to create the lien upon the property.”
  
  In a telephone conversation with the Record, Alfredo Padilla, a spokesman for Wells Fargo Mortgage, said the company is “looking into the matter.”
  
  If Wells Fargo forecloses on Bryson’s home, he claims he will lose out on $200,000 worth of equity in the property.
  
  Bryson seeks an order that would determine the lien as invalid, plus unspecified damages, attorney’s fees, court costs and other relief the court deems just.
  
  James Wimberley of McPherson, Hughes, Bradley, Wimberley, Steele and Chatelain in Port Arthur will be representing him.

Source: Man fears losing $200,000 worth of equity in home.

Texas Residents' Lawsuit: Oil Company Is Screwing Us Out Of Million$ In Royalties For Our Mineral Interests In Land

In Jefferson County, Texas, The Southeast Texas Record reports:

• Texas residents allege a major gas company is denying them the rights to substantial amounts of money they should be making from the production of oil.
  
  Donna L. Davis as trustee of the Rhonda Lee Davis Irrevocable Trust, Glenna Lee Satterfield, Leah McCurry, Robert A. Garbrecht co-trustee of the Faustine M. Garbrecht Revocable Trust, Glenn H. McCarthy Jr. and Legacy Royalties filed a lawsuit Dec. 19 in Jefferson County District Court against BP America Production Co. and Cimarex Energy.
  
  In their complaint, the plaintiffs claim they are entitled to 1/16 of the more than $100 million worth of oil drilled on a tract of Jefferson County land.
  
  According to the complaint, the plaintiffs’ predecessors owned a mineral interest in land where BP and Cimarex are currently drilling wells.
  
  Under the deeds signed in 1933, the plaintiffs’ predecessors were entitled to a non-participating royalty interest, the suit states. This meant that they would receive 1/16 of the value of any oil produced on the land, the complaint says. The deeds are still in effect and are now owned by the plaintiffs, they claim.
  
  “Cimarex Energy has now drilled several producing wells in the units that include the BP/Cimarex Leases and the plaintiff’s NPRI (non-participating royalty interest),” the suit states.
  
  “Although BP and Cimarex have collectively realized payments for the production from the wells that exceed $100 million, much of which results from the sale of oil, they have refused to pay plaintiffs their just and due royalty interest and deny that plaintiffs are entitled to payment of any future royalty.”
  
  In their complaint, the plaintiffs want the court to declare that they, and not BP, are entitled to the royalty payments.
  
  The plaintiffs allege breach of contract against the defendants.
  
  They are asking the court to quiet their title and are seeking declaratory relief, damages within the jurisdictional limits of Jefferson County District Court, attorney’s fees, pre- and post-judgment interest, costs and other relief the court deems just.

Source: Texas residents sue for millions of allegedly unpaid oil revenues.

Texas Bar Moves To Pull Attorney's Ticket To Practice Law Over Alleged $1M+ Trust Account Ripoff

In Jefferson County, Texas, The Southeast Texas Record reports:

• The Commission for Lawyer Discipline, an arm of the State Bar of Texas, has filed a second petition to suspend the practice of Beaumont attorney Kip Lamb.
  
  The first petition was filed July 10 in Jefferson County District Court. The second was filed Dec. 17.
  
  According to the petitions, on April 14, 2008, Lamb received $1,094,611.02 into his trust account as his client’s (New Life Tabernacle Church) portion of a settlement.
  
  Lamb later transferred the funds to other bank accounts for his own personal use and his law firm’s use, the petition states.
  
  The Bar is asking that the court suspend or disbar Lamb.

Source: State Bar files second suit against Beaumont attorney Kip Lamb.

Jeans Company Moguls Look To Boost Multi-Billion $ R/E Holdings By Foreclosing On $25M Defaulted Note Bought For $15M Secured By Versace Mansion, Boutique Hotel Currently For Sale At $100M

In Miami Beach, Florida, The New York Times reports:

• FOR $100 million, the buyers of Casa Casuarina, the mansion that once belonged to the fashion icon Gianni Versace, will get a 23,000-square-foot spread in Miami Beach with a 54-foot-long pool lined with mosaic tiles and 24-karat gold. They will acquire millions of dollars’ worth of Italian furniture — one room’s windows alone are framed by $250,000 in silk-and-velvet drapes, the current owner said.
  
  The mansion also comes with a boutique hotel with 10 suites, British-trained butlers and a restaurant that serves cocktails in Versace martini glasses.
  
  That hotel will come in handy, because whoever buys Casa Casuarina may need at least half those rooms for lawyers.
  
  The mansion — Mr. Versace was gunned down at its entrance gate in 1997 — is embroiled in a particularly complicated legal battle, taking some of the shine off this trophy home for any prospective buyers.
  
  The mortgage on the property is in default, and the owners of the debt, an entity affiliated with the Nakash family of New York, are battling in Miami courts to foreclose on the mansion.
  
  The Nakashes, owners of Jordache Enterprises, the jeans company, are outraged at the high listing price for Casa Casuarina. The mansion’s current owner, telecom mogul Peter T. Loftin, put the residence on the market for $125 million in June and lowered it to $100 million in November.
  
  The Nakashes want the court case to play out expeditiously so they can take the property over in foreclosure, said Jonathan Bennett, who manages the family’s multibillion-dollar real estate holdings, which include three hotels in Miami Beach, all on Ocean Drive.
  
  “The Versace mansion has been listed for an outrageously inflated price,” the family said in a statement, “for the main purpose of trying to gain some tactical advantage in ongoing litigation.”
  
  Mr. Loftin denied that he was trying to stall the legal case in order to sell the property on the open market for more.
  
  “Absolutely not,” he said. “It is a good time for me to sell it. Properties are selling now for large amounts.”
  
  For some New Yorkers, a $100 million price tag may not induce sticker shock . But in Miami, Casa Casuarina’s list price is more than twice the highest recorded sale — of a 10-bedroom home on Indian Creek that sold for $47 million last year.
  
  The only other property in Florida to draw such a lofty asking price was a Palm Beach home that Donald Trump sold for $100 million in 2008 to a trust linked to Dmitry Rybolovlev, a Russian billionaire.
  
  VM South Beach, the entity affiliated with Jordache, filed a federal foreclosure lawsuit in December 2011 against Casa Casuarina and Mr. Loftin for failure to pay a $25 million mortgage bought by the Nakash family for $15 million from WestLB, a German bank.
  
  Mr. Loftin said he had stopped paying his mortgage after 2010 when he realized the loan documents at closing did not reflect his final agreement with WestLB. He has alleged a conspiracy involving the Nakashes and the German bank.
  
  “They bought a fraudulent note,” he said of the Nakashes. “They knew it was fraudulent.”
  
  Mr. Bennett, the Jordache representative, called the allegations “completely ridiculous,” noting that Mr. Loftin “signed the documents.”
  
  Taxes, too, were not paid for three years, and Mr. Loftin is in a dispute with his tenant, the hotelier Barton G. Weiss, over who is responsible for the payment. (Mr. Weiss, who was out of the country this week, did not respond to e-mailed questions sent through an assistant.)

***

• But even if the new owner was willing to pay a premium to acquire the mansion free of legal encumbrances — which one lawyer estimated could cost around $40 million — its current tenant, Mr. Weiss, would have to be persuaded to leave. He operates the boutique hotel, the Villa by Barton G., on the property, which rents one-bedroom suites with “custom” king-size beds for $2,250 a night.
  
  Mr. Weiss has a lease stretching to 2020, with an option to renew for 10 more after that.
  
  “There are always ways to get out of leases,” Mr. Loftin said. He suggested the buyer share the mansion with Barton G. and “take the whole top floor for himself.”

For more, see $100 Million Buys More Than You Think.

See also, Versace mansion update: Will judge throw out Jordache family’s foreclosure?:

• [A]dding to the intrigue is a claim related to Ponzi schemer Scott Rothstein of Fort Lauderdale. Rothstein had invested in the mansion, and now a bankruptcy trustee overseeing Rothstein’s defunct law firm – Rothstein Rosenfeldt Adler or RRA – is demanding that money back.
  
  The trustee alleges that the company related to the Nakash family, VM South Beach, shouldn’t receive rent income from the property until the disputes are cleared up.
  
  “Before receiving the assignment of the Loan Documents, VM South Beach had access to information showing that RRA monies were transferred to Casa and used by it… Consequently, VM South Beach did not receive the assignment of the note for value or in good faith, and is not a holder in due course,” the trustee, Hebert Stettin, said in a recent motion.

Homeowner Allegedly Affiliated With Sovereign Citizens & Facing Foreclosure Cited For Contempt, Carted Off To Holding Tank For Courtroom Shenanigans

In Stillwater, Oklahoma, the Stillwater NewsPress reports:

• A courtroom full of attorneys scoffed, snickered and looked puzzled when a foreclosure case Thursday took a bizarre turn.
  
  Defendant Steven Bryan Miller constantly interrupted District Judge Phillip Corley and refused to let attorneys representing Bank of America speak. After many warnings and a series of outbursts, Miller was found in contempt of court and taken into custody.
  
  When addressed by the judge as “Mr. Miller” or “Steven Miller” the defendant said that wasn’t his proper name and his name is Steven Ryan of the family of Millers. Miller interrupted Bank of America’s attorney’s arguing that they were not witnesses and could not enter any evidence into the record. After repeatedly being told to let the other side speak and to stop interrupting the judge and the attorneys, Corley found Miller in contempt of court. Deputies took him into custody.
  
  Miller’s wife, Christina, was left before the judge who asked if she wished to proceed without her husband.
  
  “You’re not God,” she said to Corley, protesting her husband’s arrest and questioning Corley’s authority. She said she did not wish to continue. Corley said the hearing was the beginning of what would likely be a long case and strongly urged her to hire an attorney.
  
  Attorneys in the room waiting for their cases to come up on the docket appeared bemused by the strange outburst.
  
  The court had expect some sort of scene. Seven Payne County deputies, and Sheriff R.B. Hauf lined the courtroom.
  
  “We received information that this particular person is affiliated with sovereign citizens,” Hauf said.
  
  According to the Federal Bureau of Investigation, the sovereign citizens movement is a group of people who believe various conspiracy theories but at their core do not recognize federal, state or local laws, policies or regulations.

Source: Foreclosure case defendant cited for contempt after courtroom shenanigans.

Recently-Constructed Outdoor Staircase Built Without Prior HOA Approval Leaves Clueless Homeowner In Losing Legal Battle

In Raleigh, North Carolina, WRAL-TV Channel 5 reports:

• A Raleigh woman could be climbing the stairway to foreclosure in a battle with her neighborhood's homeowners association.
  
  Gloria Daniel received a city permit to build the two-story staircase at the back of her Karlbrook Lane home in the Stowecroft neighborhood off Buffaloe Road. But she didn't follow the subdivision's covenants, which required her to get approval from the HOA first.
  
  The Stowecroft Owners Association Inc. sent Daniel letter after letter telling her to tear the staircase down. She refused, saying she spent thousands of dollars on it.
  
  "They say they're going to fine me $100 every day, and if I don't pay, they're going to foreclose on my home," she said recently. "When they say 'foreclosure,' I was so sad. These people are going to foreclose on my home just for building some steps."
  
  Michael Ganley, an attorney for the HOA, sent a letter Monday to WRAL News to defend the association's stance.
  
  "This is not the case of a homeowner building a flower garden or porch swing without approval," Ganley said. "Ms. Daniel has constructed an enormous and unsightly staircase edifice to provide exterior access directly from the ground level to the second floor of her home."
  
  What's more, he said, she has consistently misled the HOA about the reason for the staircase.
  
  "Even following construction, Stowecroft was still willing to give Ms. Daniel permission to maintain the staircase, but Ms. Daniel has not provided any truthful or reasonable justification for the necessity of such a structure," he said.

For more, see Raleigh woman, HOA in stare-down over backyard staircase.

Outgoing Utah AG Creates Appearance Of Selling Out To BofA By Settling Major Foreclosure Litigation Bankster Appeared To Be Losing; Will Now Join Law Firm That Regularly Represents Notorious Lender; Actions Leave Staff Members Blind-Sided

In Salt Lake City, Utah, The Salt Lake Tribune reports:

• Just days before leaving office, Attorney General Mark Shurtleff has reversed the state’s position and personally signed on to a settlement in a foreclosure lawsuit that Bank of America appeared to be losing.
  
  The practical effect of Shurtleff’s move, according to an attorney who filed the lawsuit, is to weaken Utah’s ability to enforce state law. It also weakens the state’s position in other lawsuits challenging foreclosures carried out by ReconTrust Co., Bank of America’s foreclosure arm, Abraham Bates said.
  
  Members of the Attorney General’s Office said Shurtleff’s actions blind-sided them, but they declined to comment publicly. The office had previously successfully intervened in the case as a plaintiff and argued that ReconTrust had violated state law in foreclosing on Utah homeowners Timothy and Jennifer Bell.
  
  U.S. District Judge Bruce Jenkins, who presides over the case, issued a strong ruling in favor of the homeowners’ and the state’s position. The assistant attorneys general conducting the state’s case hoped to keep it alive for a final ruling by Jenkins before a likely appeal to the 10th Circuit Court of Appeals for a definitive decision that would guide other similar lawsuits.
  
  Shurtleff leaves office on Monday and has announced he’ll join the international law firm of Troutman Sanders LLP. On its website, the firm says it “regularly represents Bank of America.”
  
  A combative Shurtleff said Wednesday there was no connection between his action in the Utah foreclosure case and the clients of his new law firm. He portrayed his decision as one that saved state resources by not pursuing a case in which the original plaintiffs had settled.
  
  Shurtleff acknowledged that assistant attorneys general who work on foreclosure matters disagreed with his decision. He said he made the decision and signed the document so they wouldn’t have to take an action they disagreed with.

***

• “To me this appears to be some type of a midnight pardon,” Bates said. “It certainly sends a confusing message to the public and to the courts and the 10th Circuit as to why the chief law enforcement agency in the state is dismissing its claims in defense of the laws of the state.”
  
  By signing the settlement, Shurtleff has weakened the state’s legal position on foreclosures by ReconTrust because the state was an actual plaintiff in the case where in other active cases it has merely filed “friend of the court” briefs that don’t carry the same weight, Bates said.

For more, see Lawyers question Shurtleff’s 180 in foreclosure case (Outgoing Utah A.G. says there’s no link between his support of BofA settlement and his new firm having bank as client).

Pennsylvania Appeals Court: OK To Screw Over Unwitting Homebuyers By Knowingly Failing To Disclose House Was Site Of Ex-Owner's Bloody Murder-Suicide; Economic Loss To Purchaser Of Nearly $100K Of No Consequence

Courthouse News Service reports:

• Pennsylvania realtors have no obligation to warn buyers if a murder occurred in the property they are selling, the state superior court ruled.
  
  In February 2006, 50-year-old Konstantinos Koumboulis allegedly shot his 34-year-old wife and then killed himself in his West Chester, Pa., home. The house was sold at a real estate auction to the Jacono family, who in turn commissioned local Re/Max agents to sell it.
  
  The Jaconos and Re/Max confirmed with both the Pennsylvania Real Estate Commission and the Pennsylvania Association of Realtors that they were not obligated to report the murder-suicide to buyers.
  
  One year later, a woman named Janet Milliken purchased the home for $600,000. Unaware of the Koumboulis history, Milliken believed that the home had gone into foreclosure. She learned of the tragedy three weeks after moving in and sued the Jaconos, Re/Max and her own realtor for fraud and misrepresentation.
  
  The trial judge granted summary judgment to the defendants, finding that Pennsylvania law does not require realtors to disclose that a murder occurred in the home.
  
  A divided panel of the appeals court affirmed last week.
  
  "If the murder/suicide cannot be considered a defect legally, or if the Sellers were under no legal obligation to reveal this alleged defect, there can be no liability predicated upon the failure to so inform," President Judge Emeritus Kate Ford Elliott wrote for the six-member majority.
  
  "Today, we find that psychological damage to a property cannot be considered a material defect in the property which must be revealed by the seller to the buyer. Thus, each of Buyer's issues on appeal must fail."
  
  Though the state Legislature requires realtors to disclose any material defects of the property to buyers, they do not have to report "psychological damage" to the property or its reputation, according to the ruling.
  
  Ford Elliott pointed out three main concerns with requiring such disclosure.
  
  First, "this sort of psychological damage to a house will obviously decrease over time as the memory of the murder recedes from public knowledge," Elliott wrote. "Requiring a seller to reveal this information may force the seller to sell the house under market value and allow the buyer to realize a windfall when the house is resold 10 years later and memories have faded."
  
  Such a result would be nonsensical, she argued.
  
  "Second, how can a monetary value possibly be assigned to the psychological damage to a house caused by a murder?" Elliott asked. "The psychological effect will vary greatly from person to person. There are persons for whom no amount of money would induce them to live in such a house, while others may not care at all, or even find it adventurous."
  
  And finally, requiring disclosure of nonmaterial damage could lead to a slippery slope, the court found.
  
  "If psychological defects must be disclosed then we are not far from requiring sellers to reveal that a next-door neighbor is loud and obnoxious, or on some days you can smell a nearby sewage plant, or that the house was built on an old Indian burial ground," Elliott wrote. "Indeed, one could identify numerous psychological problems with any house."
  
  The state Legislature, rather than the courts, must decide whether such an extension would be appropriate, according to the ruling.
  
  Milliken also failed to allege negligent representation because the seller did not owe her special duty.
  
  "Sellers simply did not engage in any deceptive conduct. Sellers merely declined to inform Buyer about a factor of which they were under no obligation to disclose," Elliott wrote.
  
  Judge John Bender penned a dissenting opinion joined by Judges Sallie Mundy and David Wecht.
  
  "The single certainty that permeates every aspect of this case is that Janet Milliken, who has now suffered a six-figure economic loss (and untold aggravation), was destined to discern the occurrence of a murder/suicide in her new home either before consummating her purchase or - as fate would have it - afterward," Bender wrote.(1)
  
  "The majority's ruling, which deprives Milliken of any legal remedy, rewards those sellers and short-circuits the legislative intent of the Real Estate Seller Disclosure Law." ["ie. RESDL](2)
  
  The definition of a "material defect" under RESDL could be read to include psychological damage, Bender pointed out.
  
  "A 'material defect' is 'a problem with a residential real property or any portion of it that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property,'" he quoted.
  
  "Whereas the majority would consign the stigma of murder/suicide to the ethereal realm of 'psychological damage,' the statute recognizes it for what it is - documented economic loss - and a 'material defect' that must be disclosed."
  
  The dissent pointed to a ruling by the California Court of Appeals, which held that undisclosed information must be analyzed to determine the "gravity of the harm inflicted by nondisclosure; the fairness of imposing a duty of discovery on the buyer ... and its impact on the stability of contracts if rescission is permitted."(3)

Source: Realtors Can Keep Mum on Home's Bloody Past.

For the ruling, see Milliken v. Jacono, 2011 PA Super 254 (November 29, 2012).

(1) The dissenting judges added:

• [T]he financial penalty Mrs. Milliken has suffered was entirely avoidable had the sellers from whom she bought her home merely exercised a little more integrity and a little less greed.

(2) The dissenting judges highlight the problem of possible big losses by unwitting homebuyers if sellers are not required to disclose facts that, while not affecting the physical structure of the premises, can nevertheless impact on a buyer's wallet (RESDL refers to the Pennsylvania Real Estate Seller Disclosure Law):

• Not surprisingly, it also truncates the ability of homebuyers across this Commonwealth to avoid potentially catastrophic losses in purchasing a home. The RESDL-on its face—does not countenance such an untoward result, notwithstanding the Majority's speculation about unproven consequences in scenarios not before us. In my opinion, the circumstances of record in this case, considered through the prism of the RESDL and the causes of action Mrs. Milliken avers, raise questions of fact that must be resolved at trial.

***

• In this case, the adverse impact of the murder/ suicide on the value of Milliken's home is documented in the reports of two expert real estate appraisers, one of whom opined that the attendant stigma reduced the value of the property by ten to fifteen percent of its $610,000 sale price, and the other of whom attested that the value of the home did not exceed $525,000. To the extent that a reduction of almost $100,000 in value can be deemed a “significant adverse impact on the value of the property,” the RRETL, considered in conjunction with RESDL, mandates that the cause of the stigma be disclosed. Thus, whereas the Majority would consign the stigma of murder/suicide to the ethereal realm of “psychological damage,” Majority Slip Op. at 9, the statute recognizes it for what it is—documented economic loss—and a “material defect” that must be disclosed.

(3) See Reed v. King, (1983) 145 Cal.App.3d 261, 193 Cal. Rptr. 130. The dissenting judges quoted from the California appellate court in this excerpt:

• The murder of innocents is highly unusual in its potential for so disturbing buyers they may be unable to reside in a home where it has occurred. This fact may foreseeably deprive a buyer of the intended use of the purchase. Murder is not such a common occurrence that buyers should be charged with anticipating and discovering this disquieting possibility. Accordingly, the fact is not one for which a duty of inquiry and discovery can sensibly be imposed upon the buyer.

***

• If information known or accessible only to the seller has a significant and measureable effect on market value and, as is alleged here, the seller is aware of this effect, we see no principled basis for making the duty to disclose turn upon the character of the information. Physical usefulness is not and never has been the sole criterion of valuation. Stamp collections and gold speculation would be insane activities if utilitarian considerations were the sole measure of value.
  
  Reputation and history can have a significant effect on the value of realty. “George Washington slept here” is worth something, however physically inconsequential that consideration may be. Ill-repute or “bad will” conversely may depress the value of property.

The diseenting judges then added:

• Of course, the Court's decision in Reed does not bind us.
  
  Nevertheless, its analysis offers a valuable perspective that should cause the Majority pause in its insistence that pragmatic considerations militate against the conclusion that damage to the reputation of a property poses a quantifiable economic loss. As the Court in Reed has amply demonstrated, the truth is quite the contrary.
  
  Moreover, to the extent that the cause of loss can be proven by expert testimony, it imposes “significant adverse impact on the value of the property,” and must be recognized as a “material defect” under the RESDL. Pursuant to the language of RESDL section 7303, disclosure of such defects by the seller should be deemed mandatory, and a seller who fails in this regard should answer for his conduct in damages.
  
  Consistent with this rationale, I would vacate the trial court's award of summary judgment and remand this matter for trial. Inasmuch as the Majority declines this course, I must respectfully dissent.

Facing Foreclosure, Hubby, Wife, Daughter Pinched On Suspicion Of Torching Their Home To Pocket Insurance Proceeds

In Fountain Inn, South Carolina, WSPA-TV Channel 7 reports:

• A father, mother and their daughter have been arrested after sheriff's deputies say they were involved in a suspicious fire at a home in Fountain Inn.
  
  The Laurens County Sheriff's Office and South Carolina Law Enforcement Division Arson Unit investigated the December 14 fire at a home at 13 Hunter Road.
  
  Robert D. Pike, 64, Yvonne L. Pike, 63, and Yvonne M. Pike, 21, were arrested on Tuesday. LCSO investigators say all three suspects live at that address in Fountain Inn.
  
  LCSO investigators say the home was in foreclosure and they believe the three set the home on fire to collect insurance money. All three suspects have been released from the Johnson Detention Center on $8,000 bonds.

Source: Dad, Mom, Daughter Arrested In "Suspicious" Home Fire In Fountain Inn.

Ponzi Scheme Operator Cops Guilty Plea; Also Admits To Ripping Off His Own Parents By Taking Out $493K Loan Against Their Home

From the Office of the U.S. Attorney (Los Angeles, California):

• A Glendale man has agreed to plead guilty to federal fraud charges, admitting that he ran three separate scams, including a Ponzi scheme that defrauded 30 families out of more than $8 million.
  
  Kaveh Vahedi has also admitted his role in a mortgage fraud scheme that submitted hundreds of falsified loan applications to banks through his brokerage firm, Countywide Financial. Vahedi has also acknowledged stealing more than $700,000 from his parents by draining their bank account and taking out a loan on their home.

***

• In addition to [Ponzi scheme] crimes, Vahedi also agreed to plead guilty to one bank fraud count in a pending indictment against him related to a fraud he perpetrated against his own family. In his plea agreement, Vahedi admits that he posed as his father in order to withdraw approximately $250,000 from his parents’ bank account. He also impersonated his father and took out a $493,000 home equity loan against his parents’ home.

For the U.S. Attorney press release, see Con Man Agrees To Plead Guilty In Three Fraud Schemes, Including Multi-Million Dollar Ponzi And Separate Mortgage Fraud Scheme.

NY AG: Watch Out For Scammers Targeting NYC Tenant-Beneficiaries Of Recent $69M Stuyvesant Town/Peter Cooper Village Rent Rebate Settlement

From the Office of the New York Attorney General:

• Attorney General Eric T. Schneiderman [] issued an open letter to tenants of Stuyvesant Town and Peter Cooper Village in Manhattan warning them of a possible scam related to a recently announced multi-million rent-rebate settlement. Last week, several tenants reported receiving what appear to be scam calls about the settlement, and in which they were asked to provide personal information. The Attorney General warned residents about providing information to unknown callers and encouraged tenants to contact his office with information that may assist the investigation.

***

• On December 11, New York City Councilmember Daniel Garodnick reached out to the Attorney General’s office to report that several tenants of the complexes had received telephone calls from individuals claiming to be the claims administrator of the Settlement. The callers attempted to solicit personal information from the tenants on the pretext that this information is required for the tenants to recover on the Settlement. The Attorney General’s office determined that these calls were not from the Settlement claims administrator or anybody else legitimately affiliated with the Settlement. Instead, the calls were a scam apparently designed to deceive tenants of the complexes into disclosing highly personal information to fraudsters who will use this information for their own personal gain.
  
  The Roberts v. Tishman Speyer case was settled on November 30th and will result in nearly $69 million being returned to tenants overcharged for rent between 2003 and 2011. The case was initially filed in 2007 by Stuyvesant Town residents against Tishman Speyer and Met Life, the former owner of the East Village building complex, claiming that units had been illegally deregulated while the development was receiving a J-51 tax abatement. The state’s top court, ruled in favor of the tenants in October 2009 and a settlement was reached this fall. The case involved the status of 4,311 apartments and will impact approximately 22,000 current and former residents.

For the New York AG press release, see A.G. Schneiderman Warns Against Stuyvesant Town Settlement Scam (Tenants Should Beware of Scam Calls Asking For Private Information; A.G. Schneiderman: Be Careful of Scammers Preying On Tenants).

County Sheriff Sits On Over $100K In Foreclosure Sale Surplus Proceeds Belonging To Booted Homeowners That Can't Be Found

In New Casstle County, Delaware, The News Journal reports:

• The New Castle County Sheriff’s Office has more than $100,000 that belongs to the owners of eight homes that were sold earlier this year because of tax delinquencies and a foreclosure.
  
  The government, however, can’t find the people to give them the money.
  
  The money is excess proceeds from the sales, which took place over the past six months, Sheriff Trinidad Navarro said. He suspects the owners of the homes have no idea they are entitled to the difference between what was owed the government or mortgage company and the amount of the tax sales.
  
  In most cases, homes lost at sheriff sales are sold for less than what is owed. But that’s not the case for the eight property owners Navarro is trying to find.
  
  “They assumed the sale meant a total loss of their home,” Navarro said. “In these cases, there was money left over and I want to get it to them, because it’s not the government’s money. It’s theirs.”
  
  The sheriff’s office has returned more than $60,000 to people since Navarro took office last year. In March, he found Lamarr Cannon, whose home in Garfield Park was sold at sheriff sale in October 2011 because he owed about $8,000 in county and school taxes. Cannon’s dad gave him the house and the mortgage had been paid off years before.
  
  The house sold for $34,000, so Navarro handed Cannon a check for almost $26,000.
  
  Before Navarro took office, the county would simply transfer excess proceeds from sheriff sales to Delaware Superior Court, which operates Project Rightful Owner, a project that tries to get the excess money from the sales to the people who are entitled to it. The court program has disbursed nearly $4.9 million since 2005, Superior Court officials said earlier this year.

***

• Navarro said many people are skeptical that he’s telling the truth. He’s actually found some people who are owed money, told them to come to his office to start the process of getting it back and they’ve never shown up.
  
  “I understand why,” he said. “We warn people to be alert for scams all the time and it’s not very often that someone calls you telling them they are owed money.”

For more, see Funds sit, wait to be returned (County sheriff hopes to distribute $100,000).

Banking Regulators Near $10B Settlement With 14 Banks Over Foreclosure Abuses; Deal Could Be More Generous To Booted Homeowners Than 49-State AG Deal Made Last Year

The New York Times reports:

• Banking regulators are close to a $10 billion settlement with 14 banks that would end the government’s efforts to hold lenders responsible for foreclosure abuses like faulty paperwork and excessive fees that may have led to evictions, according to people with knowledge of the discussions.
  
  Under the settlement, a significant amount of the money, $3.75 billion, would go to people who have already lost their homes, making it potentially more generous to former homeowners than a broad-reaching pact in February between state attorneys general and five large banks. That set aside $1.5 billion in cash relief for Americans.
  
  Most of the relief in both agreements is meant for people who are struggling to stay in their homes and need the banks to reduce their payments or lower the amount of principal they owe.
  
  The $10 billion pact would be the latest in a series of settlements that regulators and law enforcement officials have reached with banks to hold them accountable for their role in the 2008 financial crisis that sent the housing market into the deepest slump since the Great Depression. As of early 2012, four million Americans had been foreclosed upon since the beginning of 2007, and a huge amount of abandoned homes swamped many states, including California, Florida and Arizona.
  
  Federal agencies like the Securities and Exchange Commission and the Justice Department are continuing to pursue the banks for their packaging and sale of troubled mortgage securities that imploded during the financial crisis.
  
  Housing advocates were largely unaware of the latest rounds of secret talks, which have been occurring for roughly a month. But some have criticized the government for not dealing more harshly with bankers in light of their lax standards for making loans and packaging them as investments, as well as their problems with modifying troubled loans and processing foreclosures.
  
  A deal could be reached by the end of the week between the 14 banks and the nation’s top banking regulators, led by the Office of the Comptroller of the Currency, four people with knowledge of the negotiations said. It was unclear how many current and former homeowners would receive money or when it would be distributed.
  
  Told on Sunday night of the imminent settlement, Lynn Drysdale, a lawyer at Jacksonville Area Legal Aid and a former co-chairwoman of the National Association of Consumer Advocates, said: “It’s certainly a victory for consumers and could help entire neighborhoods. But the devil, as they say, is in the details, and for those people who have had to totally uproot their lives because of eviction it may still not be enough.”
  
  In recent weeks within the upper echelons of the comptroller’s office, pressure was mounting to negotiate a banner settlement with the banks, according to people with knowledge of the matter. The reason was that some within the agency had started to realize that a mandatory review of millions of bank loans was not yielding meaningful examples of the banks’ wrongfully evicting homeowners who were current on their payments or making partial payments, according to the people.
  
  Representative of banking regulators did not return calls for comment on Sunday.
  
  The biggest action against the banks for foreclosure-related abuses has been the $26 billion settlement between the five largest mortgage servicers and the state attorneys general, Justice Department and the Department of Housing and Urban Development after allegations arose in 2010 that bank employees were churning daily through hundreds of documents used in foreclosure proceedings without properly reviewing them for accuracy.
  
  The same banks in that settlement — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial — are included in the current negotiations.

For more, see Settlement Expected on Past Abuses in Home Loans.

Federal Racketeering Suit Targeting Banksters Moves On After Two Attempts To Quash Litigation Fail

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• Self-help author Liz Coursen was not looking to set a precedent when she decided to go after the big Wall Street investment bank that foreclosed on her Sarasota home. She just wanted her house back.
  
  But JPMorgan Chase and Washington Mutual have tried to quash her federal racketeering lawsuit twice, so far without success, putting the Sarasota resident in the unlikely position of potential giant killer. If the suit proceeds and Coursen prevails, her case might serve as a legal roadmap for other borrowers.
  
  Wall Street firms — targeted in reams of litigation after they handed out billions of dollars during the real estate boom only to grab assets back during the recession — have blocked most individual plaintiffs.
  
  But not the 53-year-old author.
  
  At least part of that is because of Coursen herself, who spent five lonely years acting as her own counsel in court. Her case, which alleges conspiracy and corporate deceit, gained more traction in recent months, thanks to Sarasota attorney Jacqulyn Mack, who specializes in consumer law and took the case last November.

For more, see Sarasota author suing biggest U.S. bank over foreclosure.

Protecting Tenants At Foreclosure Act: Collection Of Cases

The following court cases, collected by the National Housing Law Project, may be of some guidance to those representing tenants in enforcing their rights under the federal Protecting Tenants at Foreclosure Act:

• Bank of N.Y. Mellon v. De Meo, 254 P.3d 1138 (Ariz. App. 2011)
  
  In a case of first impression, the appellate court held that the Protecting Tenants at Foreclosure Act requires post-foreclosure owners to serve a tenant with an unambiguous 90-day written notice before it may move forward with an eviction action.
  
  Bank of Am. N.A. v. Owens, 903 N.Y.S.2d 667 (City Ct. 2010)
  
  A post-foreclosure owner may not require tenants to prove bona fide tenancy within five days to avoid its obligation to provide 90-day notice under the PTFA. If the owner has not provided the required 90-day notice, the burden is then on the owner to demonstrate that a property resident is not a bona fide tenant.
  
  Southland Home Mortg. v. Valle (In re Valle), No. 10-15196, 2011 WL 722388 (Bankr. S.D. Cal. Feb. 16, 2011)
  
  In this case, the bankruptcy court denied the bank's motion for relief from the automatic stay because the tenant's lease remained valid under the Protecting Tenants at Foreclosure Act as amended by the Dodd-Frank Act.
  
  RWW Properties v. Stepanoff, No. N10-0072 (Cal. Super. Ct. App. Div. May 25, 2010)
  
  The decision of a California Superior Court judge who allowed a tenant to be evicted after only 30 days notice after foreclosure on the basis that the PTFA only applied to federally related mortgages was reversed on appeal.
  
  Alta Cmty. Invs. III v. Ottoboni, No. 1370195 (Cal. Super. Ct. July 29, 2010)
  
  In this tentative ruling, an eviction based on a 3/30/60/90 day was dismissed for failing to give proper notice. The court ruled that the notice is equivocal/ambiguous and thus was not effective to terminate the tenancy.
  
  E Trade Bank v. Salter, No. 1372298 (Cal. Super. Ct. Jan. 20, 2011)
  
  In this tentative ruling, the court dismissed the eviction based on a 3/60/90 day notice because the notice required any tenants to provide proof of tenancy within three days. The court held the notice to be equivocal because the notice period would vary depending on what steps an occupant takes in response to the notice.
  
  PD Realty, LLC v. Azevedo, No. 11H84SP000071, 2011 WL 481489 (Mass. Hous. Ct. Feb. 3, 2011)
  
  In this case, the court held that a tenant occupying an illegal unit may still be a bona fide tenant under the PTFA.
  
  Fed. Nat'l Mortg. Ass'n v. Vidal, No. 11H84SP004364, 2012 WL 597929 (Mass. Hous. Ct. Feb 17, 2012)
  
  In this decision, the court found that Fannie Mae must serve bona fide tenants a 90-day notice under the PTFA, even if the eviction is based on non-payment of rent (which required only a 14-day notice under state law).
  
  PNMAC Mortg. v. Stanko, No. 11U04495, 2012 WL 845508 (Cal. Super. Ct. Mar. 7, 2012)
  
  In this case, the court granted the Delta motion and found that the bank must serve bona fide tenants a 90-day notice under the PTFA, even if the eviction is based on non-payment of rent (which required only a 3-day notice under state law).
  
  Fed. Nat'l Mortgage Assoc. v. Dobson, No. 10-CVG-02140 (Ohio Mun. Ct. Mar. 1, 2010)
  
  Unless proven otherwise, an existing tenant is presumed to be a bona fide tenant protected under the PTFA.

Source: The Foreclosure Crisis and Its Impact on Tenants.