NC AG's Efforts Lead To Shutdown Of Loan Modification Racket For Allegedly Clipping Homeowners For Upfront Fees, Failing To Providing Meaningful Help

From the Office of the North Carolina Attorney General:

• A Charlotte loan modification company that claimed to help people lower their mortgage payments and save their homes from foreclosure but actually did little or nothing to help them is permanently out of business in North Carolina, Attorney General Roy Cooper announced [].

***

• Cooper filed suit in September 2012 against Lender Exchange for charging consumers illegal advance fees for mortgage loan modification services and then failing to provide them with meaningful help. Under North Carolina law, it’s illegal to charge an upfront fee for foreclosure assistance or loan modification services.
  
  Wake County Superior Court Judge Donald Stephens signed off on a consent judgment which permanently bans Lender Exchange and its owners, Kenneth Carl McCurd and Tanya Louisa Wilson, from conducting any loan modification, foreclosure assistance or debt relief services in the state. The owners will also pay refunds of $4,000 to consumers who complained to Cooper’s office about their company. If the defendants violate the judgment, they will have to pay an additional $58,000.
  
  According to Cooper’s complaint, Lender Exchange falsely claimed that no homeowner who used its services had ever lost their home to foreclosure and promised prospective customers a full refund if it wasn’t able to obtain a loan modification for them. However, homeowners who paid Lender Exchange its fee of one month’s mortgage payment and did not get meaningful help have had a hard time getting their money back.
  

For the North Carolina AG press release, see Charlotte loan modification business shuttered, AG Cooper says.

Acting On Homeowner's Complaint, Local Cops Bag Pair For Allegedly Using Forged Affidavit To Hijack Possession Of Vacant Home In Foreclosure, Then Pocketing Thousand$ By Duping Local Couple Into Renting It Out

In St. Louis, Missouri, KMOV-TV Channel 4 reports:

• Two thieves are accused of stealing a house in north St. Louis, then collecting thousands of dollars after renting it out to a couple. Dwayne Ellis and Bertha Williams had no idea anything was fishy when they agreed to rent the house for $650 per month until the real owner returned six months into their “lease."
  
  The actual owner of the north St. Louis house was living out of town following the foreclosure of this home earlier in the year.
  
  “She went to the house and found, while it was supposed to be vacant, there as another family living there, so she contacted county police," Detective Andrew Soll said.
  
  Police believe Clay Winston and Todd Edwards noticed the home was vacant and took over the occupancy. They allegedly forged an affidavit stating the actual owner granted them possession of the house. They then listed the house for rent and collected thousands that they had no right to legally receive.
  
  Winston and Edwards were charged with forgery and stealing. “They broke in, changed the locks to locks they provided and since they had keys to the house, they were able to dupe the other woman and her family,” Soll added.

For the story, see Thieves collect thousands in rent after stealing, leasing north St. Louis home.

Homeowner Facing Foreclosure Now Also Faces Two Forgery Counts For Allegedly Manufacturing Phony Court Orders Purportedly Allowing Him To Dodge Boot

In Plainfield, Illinois, the Plainfield Patch reports:

• A Plainfield man facing foreclosure is also facing some legal troubles after he allegedly forged court orders to stay in his home longer.
  
  Marc Franzen, 46, of the 25000 block of Michele Drive, was arrested July 8 and booked into the Will County jail on two counts of forgery.
  
  Will County Sheriff's Department spokeswoman Kathy Hoffmeyer said an attorney for Bank of America brought the alleged fraud to light during a June 10 meeting with sheriff's detectives.
  
  An attorney representing the bank, which now owns the Michele Drive home, told detectives that the bank had been in the process of foreclosing on Franzen's home and evicting him for several years, according to Hoffmeyer.
  
  Last year, Franzen obtained a Will County court order granting him an extension on the eviction process, police said.
  
  "In 2012, he was given an eviction/extension order but that time had since come and gone," Hoffmeyer said. The bank attorney told police that no further extensions were granted to Franzen in 2013 — but that the Plainfield man was in possession of three Will County orders from February, March and June of 2013.
  
  Investigators believe Franzen fraudulently obtained the the orders, including the judge's and attorneys' signatures. A warrant for his arrest was issued June 28, Hoffmeyer said.

For more, see Plainfield Man Accused of Forging Court Orders to Stall Eviction Process (Marc Franzen also faces identity theft charges stemming from a Naperville investigation).

World's Largest Bill Collection Racket Agrees To Fork Over $3.2M Civil Penalty To Settle Charges Of Harassing Consumers With Illegal Dunning Practices

From the Federal Trade Commission:

• The world’s largest debt collection operation, Expert Global Solutions and its subsidiaries, has agreed to stop harassing consumers with allegedly illegal debt collection calls and to pay a $3.2 million civil penalty – the largest ever obtained by the Federal Trade Commission against a third-party debt collector.
  
  In its complaint, the FTC charged that the companies violated the Fair Debt Collection Practices Act and the FTC Act by using tactics such as calling consumers multiple times per day, calling even after being asked to stop, calling early in the morning or late at night, calling consumers’ workplaces despite knowing that the employers prohibited such calls, and leaving phone messages that disclosed the debtor’s name, and the existence of the debt, to third parties. According to the FTC’s complaint, the companies also continued collection efforts without verifying the debt, even after consumers said they did not owe it.
  
  Under the proposed order, whenever a consumer disputes the validity or the amount of the debt, the defendants must either close the account and end collection efforts, or suspend collection until they have conducted a reasonable investigation and verified that their information about the debt is accurate and complete. The proposed order also restricts situations in which the defendants can leave voicemails that disclose the alleged debtor’s name and the fact that he or she may owe a debt.
  
  Also under the proposed order, the defendants must: stop falsely representing that they will not call a number to collect a debt; not harass, oppress, or abuse a consumer while attempting to collect a debt; not communicate with third parties about a consumer’s debt; not communicate with a consumer at his or her workplace if it is clearly inconvenient or prohibited by the consumer’s employer; except in limited circumstances, cease communications if a consumer has requested no further contact or if a consumer refuses to pay a debt; and not violate any provision of the Fair Debt Collection Practices Act. The defendants also are required to record at least 75 percent of all their debt collection calls beginning one year after the date of the order, and retain the recordings for 90 days after they are made.
  
  With more than 32,000 employees and revenues in 2011 of more than $1.2 billion, the Texas-based Expert Global Solutions and its subsidiaries – ALW Sourcing, LLC; NCO Financial Systems, Inc.; and Transworld Systems, Inc., which also does business as North Shore Agency, Inc. – collectively are the largest debt collector in the world. In addition to their U.S. offices, the companies operate in Canada, Barbados, India, the Philippines, and Panama.

For the FTC press release, see World's Largest Debt Collection Operation Settles FTC Charges, Will Pay $3.2 Million Penalty (Largest Civil Penalty Ever Obtained by the FTC Against a Third-party Debt Collector).

Jail Time Expected For Pair In Recent Unrelated Cases Involving Use Of Bogus Recorded Documents To Dodge, Delay Foreclosure

In Modesto, California, The Modesto Bee reports:

• Several industry insiders charged in real estate scams have reached plea deals in recent weeks with prosecutors who say the spate of convictions is coincidence.
  
  Most will produce jail or prison sentences, rare for white collar crime in this area.
  
  "There is an emphasis on real estate professionals because of higher standards and the trust people place in them," said Jeff Mangar, a prosecutor with the Stanislaus County district attorney's real estate fraud unit.
  
  Chronologically, working backward:
  
  • Phil Sotelo agreed [] to a six-month jail sentence for filing phony documents with the county recorder's office in an effort to avoid foreclosure on his north Modesto home. He had owned Realty Executives Sotelo & Associates when arrested two years ago and had worked with other Modesto firms since 1989.
  
  Documents indicate he owed $1.4 million on his Papillon Drive home in a gated community and posed as a representative of his lender while deeding the property to a corporation he owned.

***

• Gabriel Albor, who once owned Fidelity First Mortgage in Escalon, pleaded May 15 to a felony count of filing a bogus document to postpone losing his wife's property. He is expected to receive a six-month term when sentenced Aug. 7.

For the story, see Several Modesto real estate scams end in plea deals.

New Florida Law Puts End To Squatting Crackpots Who Use Bogus Adverse Possession Claims As Free Housing Vouchers; Procedures Enacted Leave Cops Without Excuses When Asked To Conduct Trespassing Probes Into Deadbeats Who Purportedly Hijack Possession Of Vacant Homes

In Tallahassee, Florida, the South Florida Sun Sentinel reports:

• A squatter justifying his existence in a multi-million dollar home in Boca Raton went viral earlier this year, but it wasn't a laughing matter for the neighbors in Golden Harbour.
  
  Andre "Loki Boy" Barbosa occupied the house around Christmas and wasn't locked out until early February. The home at 580 Golden Harbour Drive was subsequently sold on May 6 for $2,229,900.
  
  "We felt it was important that no other neighborhood go through this," said Christine Cherepy, president of the Golden Harbour Homeowners Association.
  
  The community of 106 homes came together when this happened, Cherepy said. Led by 30 neighbors, "we contacted multiple representatives to try and change the law."
  
  That effort worked. Co-sponsored by State Reps. Jim Waldman, D-Coconut Creek, and Daniel Davis, R-Jacksonville, House Bill 903 was signed into law by Gov. Rick Scott on June 28 and went into effect on July 1.
  
  The state law prevents "acquiring title to real property by possession," according to the summary. The occupant would have to pay all taxes for seven years, file a return of the land for taxes, protect the property with an enclosure or cultivate it, and maintain and occupy the land.

For more, see No more adverse squatters as new law kicks in.

Operator Of Alleged Loan Modification Scam Faces 15+ Counts Of Grand Theft, Burglary For Allegedly Ripping Off $35K+ From Homeowners Facing Foreclosure

In Tulare County, California, the Visalia Times Delta reports:

• A Tulare County man accused of swindling more than $35,000 from people at risk of losing their homes was arrested last week in southern California.
  
  Five years after Ricardo Melgoza began a scheme to defraud homeowners in default of their mortgage loan, according to police, he was charged with more than 15 counts of grand theft and burglary.
  
  “There is probable cause to believe that from July 2008 to July 2010, Melgoza and additional agents, associates, affiliates and/or co-conspirators, engaged in a scheme to defraud homeowners for financial gain, and that the loss was in excess of $35,000,” stated Special Agent Cesar Sanchez in an arrest warrant.
  
  Melgoza, 43, is said to have swindled homeowners throughout Tulare, Fresno and Kern counties. According to police, Melgoza and at least five associates were operating under the business KNC Financiera. The group would target the Spanish-speaking community and aired numerous commercials with Spanish language media outlets.
  
  Melgoza, who’s being held in Tulare County’s Pretrial Facility, doesn’t have a valid Social Security number or driver’s license. He is also being held on an immigration hold, according to the arrest warrant.
  
  Police say Melgoza and associates would promise to obtain a home loan modification for the homeowners, in exchange for a fee anywhere between $1,500 and $3,400. Typically, Melgoza required an upfront cash payment for the fee.
  
  “It is currently illegal to accept fees for a loan modification,” said Lisa Stratton, a spokeswoman for the Department of Consumer Affairs. “The mortgage crisis brought a lot of fraud with it.”
  
  After the payment had been made, according to police, Melgoza would inform the homeowner that he was unable to obtain a loan modification. Instead, he referred them to one of two attorneys working in conjunction with Melgoza, police said.
  
  At times, he would refund the money back to homeowners, but used checks from an account with no available money, police added.
  
  Both lawyers, David Robinson and Mark Shoemaker, were disbarred by the state. In Robinson’s case, he was disbarred a year before the schemes began, the arrest warrant states.

For more, see Tulare County man arrested in foreclosure scam (Ricardo Melgoza to face 15 counts related to defrauding people in Tulare, Kern and Fresno counties).

Colorado AG Begins Probe Into Accusations That High-Volume Foreclosure Mills Are Artificially Padding Their Costs When Processing Foreclosures

In Denver, Colorado, The Denver Post reports:

• The Colorado attorney general is investigating whether law firms specializing in foreclosures regularly inflate the fees that homeowners must reimburse them in order to avoid losing their house, according to court records detailing the scope of the inquiry.
  
  Law firms pay as little as $25 for someone to post official notices on a property advising homeowners of their rights, but some then charge as much as $150 in the bills they file with the public trustee overseeing the foreclosure case, according to details contained in four lawsuits the attorney general's office filed against the law firms.
  
  In two cases, the law firms hired companies, known as process servers, owned by family members and friends, investigators say.
  
  The fees are allowed by law but are limited to the amount a lawyer actually paid or was billed for a service or expense such as mailing costs, property inspections, title searches and court docketing charges. The charges are tacked on to the overall cost of a foreclosure and the unpaid mortgage amount, then paid by the homeowner facing foreclosure, the foreclosing bank or investors who buy the property at public auction.

For more, see Colorado foreclosure lawyers target of probe into billing practices.

Colorado Judge Gives Preliminary Green-Light To Probe Into Alleged Inflated Costs Scam Targeting Foreclosure Mills, Ordering Attorney To Fork Over Paperwork Requested By State AG

In Denver, Colorado, The Denver Post reports:

• With a handful of foreclosure lawyers listening intently from the back of the courtroom, a Denver District Court judge Thursday ordered one of their colleagues to comply with a state investigation into their billing practices — after denying efforts to close the case from the public.
  
  Judge Edward Bronfin said lawyer Robert Hopp Jr. must gather the paperwork subpoenaed by Attorney General John Suthers' office in its investigation of lawyers specializing in foreclosures and provide it within 60 days.
  
  Before that, Bronfin denied Hopp's request to keep the case from the public, saying the investigation had an "overriding public interest" that superseded Hopp's privacy rights.
  
  Hopp had complied somewhat with attorney general subpoenas issued months ago but has held back some of the most critical documents investigators said they need to determine whether the lawyer was padding his bills, Assistant Attorney General Erik Neusch said in court. Hopp said the investigation covers "about 10,000 files" going back at least five years.
  
  "The scope of the investigation is very simple: why (attorneys) charge more than their actual costs," Neusch told Bronfin. "Yet we can't get any of these law firms to give an answer to that."
  
  The investigation extends to at least a half-dozen law firms that have filed foreclosures in several Front Range counties, according to people familiar with the probe. The Hopp Law Firm was one of the state's most prolific in filing foreclosures.
  
  Hopp filed for personal bankruptcy in June after closing his law firm in April.
  
  Investigators are poring over the bills that lawyers submit in a foreclosure case that outline expenses for which they are entitled to be reimbursed.
  
  Investigators say in court documents they found records indicating those expenses — particularly the costs to post a pair of required notices advising homeowners of their rights — were inflated, sometimes by nearly 10 times the amount actually spent.
  
  The costs are paid by homeowners looking to keep their house from foreclosure, by the foreclosing bank or by the buyer of the property, usually an investor, at public auction.

Source: Denver judge orders foreclosure lawyer to comply with investigation.

Foreclosure Defense Attorney's Court Sanctions Now Total $300K+ For Improper Practices Engaged In During Course Of Representing Homeowners

In Minneapolis, Minnesota, the Star Tribune reports:

• The chief federal judge in Minnesota has taken the rare step of ordering an investigation of a Minneapolis foreclosure lawyer who has been slapped with sanctions at least nine times since 2011.
  
  The sanctions imposed by federal district judges against William B. Butler total $323,307, according to Star Tribune calculations. The self-described Libertarian openly defies the judges on his website, Butler Liberty Law, reveling in their attacks and declaring he won’t pay. In an interview, he said he believes their criticisms are “illegitimate and unfounded.”
  
  Chief Minnesota federal Judge Michael Davis filed court documents last week appointing former chief federal Judge James Rosenbaum “to investigate [Butler’s] fitness to appear before this court, and to make a recommendation regarding appropriate disciplinary actions or sanctions.”
  
  Martin Cole, who heads the Minnesota Lawyers Professional Responsibility Board, said it’s “quite rare” for the federal judiciary to investigate a lawyer. It usually relies on the state board to conduct inquiries and supports their discipline.
  
  U.S. District Judge Patrick Schiltz announced last year that he was asking the state board to investigate Butler. Cole acknowledged last week that such a probe was underway. Now it appears that the local federal judiciary decided it was not going to wait for the state board’s conclusions.
  
  Butler has had cases in front of most, if not all, local judges, and several have publicly expressed exasperation.
  
  In a March 2012 memorandum, Schiltz hit Butler with a $50,000 sanction and another $7,500 in legal fees for the entities he’d sued, saying Butler had filed “nearly 30 frivolous lawsuits.” He called Butler’s arguments “evasive and often absurd,” said he misrepresents the facts with “constantly shifting and contradictory arguments.”
  
  Butler responded to those sanctions in a video on his website. “I haven’t paid it and I never will pay it and I don’t have the resources to pay it,” he said.
  
  In another case, in June 2012, U.S. District Judge Ann Montgomery ordered Butler to pay a $75,000 sanction, plus $17,068 in attorneys’ fees.
  
  “Butler’s insistence on re-litigating losing arguments is staggering, and it comes with a cost, because it multiplies the expense of litigation and monopolizes scarce judicial resources,” she wrote. “Moreover, no one, not even Butler, can reasonably or competently believe in the merits of any of these arguments.”
  
  In August 2012, U.S. District Judge Donovan Frank hit Butler with $45,451 in sanctions. He said Butler’s “baseless” arguments had been “consistently rejected” by other courts. He also noted that Butler had defaulted on his mortgage and had “been living in his house for more than three years without making any payments.”
  
  A few days later, the 8th Circuit Court of Appeals affirmed an earlier Frank decision upholding the 2010 foreclosure on Butler’s house, which Butler and his wife, Mary, purchased in 2006 for $280,000. The Appeals Court labeled Butler’s reasoning “deficient” and having “no merit.”
  
  Butler said he remains in his home, having started a second action against Fannie Mae. U.S. District Judge Susan Richard Nelson threw that case out, but Butler said it is on appeal.

For more, see Exasperated courts order investigation into foreclosure attorney William Butler.

Florida Appeals Court To Foreclosure Defense Firm: Quality Of Legal Work In One Case "Disturbing" & "Resulted In A Waste Of Judicial Resources &, Perhaps, An Injustice To The Litigants"

In Orlando, Florida, the Orlando Sentinel reports:

• When Emmett B. Hagood III's foreclosure case came before a judge last year, his Orlando lawyers were nowhere to be found. The judge promptly ruled against Hagood, and his home was eventually auctioned off by Wells Fargo & Co.
  
  Now an appeals court has fined KEL law firm partner Craig Lynd and staff lawyers Richard W. Withers and Angela Domenech, citing them for "multiple acts of professional negligence," according to a recent ruling from the Fifth District Court of Appeal.
  
  Though it found no intentional misconduct, the court's order on June 28 stated the lawyers had shown "systemic flaws in internal procedures, a lack of understanding of substantive law and rules of procedure, and a lack of supervision by senior lawyers."
  
  They were fined a combined $1,000.
  
  "The quality of the legal work performed by KEL's attorneys in this case is disturbing," the court said in a preliminary opinion in May. "It resulted in a waste of judicial resources and, perhaps, an injustice to the litigants."
  
  It was the latest legal snag for the Kaufman, Englett & Lynd law firm, known for its high-volume foreclosure defense, bankruptcy and loan-modification practices. The firm has been the target of a number of client complaints to the Florida Bar alleging impropriety or ethical violations. Some have been resolved in the firm's favor, while others are still being investigated.
  
  The Hagood case, however, was an embarrassment and "one of those 'perfect storm' circumstances not likely to be repeated," said KEL attorney Richard Withers, the case's lead counsel.
  
  "The fine was, fortunately, modest. I've practiced for 40-plus years without being criticized or sanctioned by a court," he said in an email. "So it still stung. We learn from it and keep working."
  
  The errors in Hagood's case began with a clerical scheduling mistake that caused KEL's lawyers to miss the final foreclosure hearing, according to court records. After the trial judge ruled for Wells Fargo, KEL argued "excusable neglect" in a motion to dismiss the judgment. The trial court rejected KEL's motion, setting the stage for the appeal.
  
  Things got worse at the appellate court, where KEL argued its lawyers had never even received notice of the final foreclosure hearing – a point refuted by the record, according to the court. Though KEL later realized its mistake, the lawyers failed to acknowledge that to the appellate judges and instead launched a new set arguments against the lower court ruling.
  
  Withers said the situation was caused by a communications breakdown between himself and Domenech, who was working remotely at the time. Lynd's name was added to the appeal only as a formality and he was not directly engaged in the case, though that drew the judges' criticism as well.
  
  Withers said the firm has now established new protocols to prevent the mistakes from happening again.

Source: KEL lawyers fined in foreclosure case.

For the court ruling, see Hagood v. Wells Fargo, N.A., Case No. 5D12-2016 (Fla: App. 5th DCA, May 17, 2013).

Condo Developer, Engineering Firm To Cough Up $5.05M In Compensatory, Punitive Damages For Failing To Disclose Certain Construction Defects When Peddling Units To Homebuying Customers

From a client alert from the law firm Fox Rothschild LP:

• A jury awarded $5.05 million to the Belgravia Condominium Association, after finding the developer, 1811 Belgravia Associated and PMC/Belgravia Associates, along with engineering firm O'Donnell & Nacaarato failed to disclose certain property defects to the buyers.
  
  "By awarding the association significant compensatory damages to repair the Belgravia building and, by further awarding punitive damages, the jury in this case sent a very resounding message to the developer that conduct like that engaged in by the developer and its representatives should not have occurred and would not go unpunished," said Robert Tintner, the association's attorney.
  
  According to the pretrial memorandum filed by the plaintiff, "The defendant and the developer compounded this fraud by failing to attach several subcontractor reports to the final report that was published to consumers in Belgravia's public offering statement, and by 'lowballing' the building's initial budget and reserves."
  
  "To purchase a condo unit in Pennsylvania, you should not have to hire an engineer and an attorney," Tinter said."

Source: Condo Association Awarded $5 Million Over Building Defects.

Foreclosures Of Mom & Pop, Neighborhood Elder Assistance Residences Lead To Unpleasant Surprises, Unwanted Shuffling From Home To Home For Some Care-Seeking Seniors

In Northern California, The Huffington Post reports:

• Richard Miller had been living in his second-floor San Francisco apartment for 23 years when, one day in 2010, he fell down the stairs. His doctor recommended he move into a residential care facility for the elderly, where residents have meals provided and, if needed, get help with dressing, eating and bathing. Miller wasn’t eager to make the move, and three years later, he has had plenty of reasons to regret it.
  
  Miller, who is now 77, suffers from several health problems. He has sleep apnea and congestive heart failure, which causes him to get winded easily and pause every 10 or so steps to catch his breath. A large man with a thick swatch of white hair and a booming tenor voice, he calls his cane a "kind of a security blanket" because he's had two knee operations, and one of his legs sometimes gives out.
  
  Miller’s fall and subsequent move led him to two different elder care facilities -- both of which, he discovered later, were in foreclosure.
  
  He now lives in a third facility called Morning Glory Care Home, a four-bedroom elder care house on a cul-de-sac in Vallejo, a city of roughly 117,000 that's 35 minutes northeast of San Francisco. But only a few months after moving in, he noticed some unusual visitors passing through the home. "Two women came through with clipboards and were kind of looking around,” he said. "When you're 76 years old and it's your third place, you get a little bit scared."
  
  His fears turned out to be justified. He asked the home’s administrator about the women and was told they were relatives. But Miller didn’t believe him. As more strangers floated in and out, he felt an uneasy sense of foreboding. "So I Googled the property,” he said, "and was blown away to find that it had been in foreclosure since December 2010."
  
  Most disturbing to Miller was the lack of warning that his home was foreclosed. Despite a law put into force in January 2012 that expressly requires the people operating the homes to inform residents about the change, those in charge did not tell him that Morning Glory was in foreclosure. Nor had he been given any warning about his previous two residences. "The first home was bank-owned and being put up for auction,” he said. "The second one -- there was a notice on the door -- and [the owner] yanked it off so we couldn't see it."
  
  Miller’s experience of moving to three different facilities in just over a year's time -- and the possibility that he’ll have to move to a fourth -- may be extreme. But the elderly having to shuffle from home to home is certainly not a rarity in boom-and-bust California, where about 170,000 individuals live in residential care facilities that in some areas face alarming foreclosure rates. A state law requiring owners and administrators of these homes to inform authorities and residents if they miss a mortgage payment seems little more than words on paper. In many cases, the authorities are as much in the dark about a home’s financial troubles as the residents and their families.

For more, see Elder Care Homes Ensnared By Foreclosure Crisis In California.

Chicago Tenants In Foreclosed Homes To Get Either $10.6K 'Walking Money' Or Annual 12-Month Lease Renewals Until Premises Is Sold To Bona Fide 3rd Party Purchaser Under New Ordinance

From a client alert from the law firm Holland & Knight:

• In early June, the City of Chicago passed the "Keep Chicago Renting" ordinance (SO2012-5127), which requires that the owner of foreclosed properties offer existing tenants renewal of their lease or pay expenses to the tenant for relocation. (The ordinance amends Chicago Municipal Code §2-25-050.)
  
  "Keep Chicago Renting" Ordinance
  
  The directive applies to any owner of a foreclosed property, defining an "owner" as someone who acquires title by a foreclosure sale or deed in lieu/consent foreclosure.
  
  Relocation or Renewal
  
  The ordinance requires that the owner post and deliver notices in four languages (English, Spanish, Polish and Chinese) no later than 21 days after becoming the owner, offering tenants either of the following:
  
  * 12-month renewal or extension of the tenant's existing lease (with a rent increase of no greater than 2 percent above the current rent)
  
  ** a relocation payment of $10,600 (per unit), paid by certified funds or cashier's check within seven days after the tenant vacates.
  
  The offer to extend or renew for 12-month periods (at a rate that is not greater than 2 percent above the current rent) continues until the property is sold to a bona fide third-party purchaser.

***

• Scope of Ordinance and Prohibitions
  
  The ordinance applies to all dwelling units that are rented, not just rental buildings, but it does exclude the borrower, the borrower's family members, and others with below-market leases from its reach. It also prohibits a non-complying owner from collecting any rent until the owner complies.

***

• Effective Date
  
  The ordinance is effective 90 days from passage — on September 3, 2013 — so lenders should be prepared to comply or challenge its validity.

For more, see Chicago Continues To Aggressively Regulate Foreclosed Properties With New Requirements On Tenant Leases.

Attorney Pinched For Allegedly Stealing Couple's Insurance Settlement Check, Forging Their Signatures, & Pocketing The Cash; Faces Larceny, Fraud Charges

In Boynton Beach, Florida, the South Florida Sun Sentinel reports:

• When a Boynton Beach couple's car was stolen, their insurance company cut them a check to cover it.
  
  But police say the woman's attorney stole the $6,300 check, forging their signatures and depositing it in her personal bank account, which at the time carried a negative balance.
  
  Kathleen Plunkett, who had represented the woman as the couple sought a divorce last year, was arrested [] by Lantana Police. She was booked into the Palm Beach County Jail on larceny and fraud charges, and released later that day on $3,000 bail.
  
  The 45-year-old family law attorney, who goes by Kathleen Davis professionally and owned the Law Offices of Kathleen M. P. Davis in Greenacres, declined to talk about her arrest. "Unfortunately, despite my First Amendment rights, as an attorney I cannot comment," she said on Thursday.
  
  Christian Desiderio said he knew something was wrong when he repeatedly asked Plunkett for the check, which was mailed in March 2012, and she repeatedly put him off. It was made out to Desiderio and his ex-wife and mailed to Plunkett because the couple was still married at the time, he said.
  
  Eventually, Desiderio called GEICO and found out someone cashed the check. He asked for a copy.
  
  "Here comes back the check with my and ex's names signed on the back," said Desiderio, who called police in June 2012. "I just lost it. I could not believe it. I couldn't believe that somebody signed my name."
  
  He said he's never seen a cent of the money and doesn't know what happened to it.
  
  "I'd like for her to tell me," Desiderio said. "I'd like for her to repay everybody."
  
  When officers first met with Plunkett, she admitted to signing the Desiderios names on the check and depositing it in her account, according to her arrest report. She said that was "normal business" when dealing with two-party checks.
  
  A review of Plunkett's bank account showed it had a balance of -$414.57 before the deposit, the report states. In the next few weeks, she wrote four checks for a total of more than $3,000, including one for $900 that she cashed herself.
  
  It wasn't the first time Plunkett's firm ran into trouble. Florida Bar records show her license to practice law was suspended May 30, after she failed to respond to multiple Bar inquiries about a complaint filed against her in February 2012.
  
  In March 2010, she was publically reprimanded by the Bar, placed on a one-year probation and ordered to repay two former clients. The clients filed complaints after paying thousands of dollars to Plunkett for her services, then learning she never filed a single document on their behalf.
  
  Desiderio said he's still angry about the stolen money, which he'd planned to spend on a new car for his daughter.
  
  "I'm just glad they got her," Desiderio said of Plunkett. "And I hope she gets what she gets, because that was just low."(1)

Source: Greenacres attorney accused of stealing clients' check, forging signatures.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes Canadian recovery funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

'Prescription Pooch' Feds Tag Landlord In Fair Housing Suit Alleging Refusal To Waive 'Pet Deposit' Requirement For Low-Income Tenant With Mental Disability Who Needed Emotional Support Animal, Followed By Subsequent Retaliation, Harassment That Forced Tenant To Move After She Filed HUD Complaint

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

• The Justice Department [] filed a lawsuit against the owners and managers of rental homes in and near Kelso and Longview, Wash., for violating the Fair Housing Act by discriminating against persons with disabilities.
  
  The lawsuit, filed in the U.S. District Court for the Western District of Washington, alleges that Linda Barber, Bert Barber and Lori Thompson engaged in a pattern or practice of violating the Fair Housing Act or denied rights protected by the Act.
  
  Specifically, the lawsuit asserts that the defendants established and implemented a discriminatory policy that allowed waiver of the defendants’ mandatory $1,000 “pet deposit” for service animals with specialized training, but not for other assistance animals, including emotional support animals. The suit also alleges that, by refusing a tenant’s requests for a reasonable accommodation to waive the $1,000 pet deposit for her assistance animal, the defendants violated the Fair Housing Act.
  
  “The Fair Housing Act ensures that individuals with disabilities who live with and benefit from assistance animals have equal access to housing,” said Eric Halperin, Senior Counsel and Special Counsel for Fair Lending in the Civil Rights Division. “The Justice Department will continue its vigorous enforcement of fair housing laws that protect the rights of persons with disabilities.”
  
  “The rights of our disabled citizens need to be protected and landlords should not engage in conduct that makes their lives more difficult,” said U.S. Attorney Jenny A. Durkan for the Western District of Washington. “A tenant should not have to repeatedly prove they need a service animal or other accommodation, and should not face retaliation when they make a complaint to those tasked with protecting their civil rights.”
  
  This lawsuit arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD). A low-income tenant with a mental disability repeatedly asked the defendants to waive the $1,000 pet deposit for her assistance animal and provided numerous notes from medical professionals to support her request.
  
  As a result of the defendants’ policy and their failure to grant her request, she waited for over two and a half years to obtain an assistance animal and then began to pay the deposit in monthly installments at great financial hardship.
  
  After filing her HUD complaint, she was subjected to retaliation and harassment by the defendants, and she eventually moved out of the defendants’ unit. After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.

For the Justice Department press release, see Justice Department Files Fair Housing Lawsuit Against Owners and Managers of Rental Homes in Washington State for Discrimination Against Persons with Disabilities.

Mobile Home Park Operator To Cough Up $35K To Settle Fair Housing Feds' Suit Alleging Refusal To Rent Lot To Black Family Was Based On Race, Forcing Them To Pick Up Their Recently-Purchased Home From Private Owner & Move It; Probe Triggered After Ex-Property Manager Tracked Victims Down & Spilled Beans On Outfit's Anti-African American Policy

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

• The Justice Department announced [] that Lawrence Properties Inc., Lawrence at Lakewood LLC, Michael Lawrence, and Williams Bounds have agreed to pay $35,000 to settle a lawsuit involving violations of the Fair Housing Act. The lawsuit alleged that the defendants denied housing to an African American woman and her family because of race. The lawsuit also alleged that the owner and the regional manager of Lawrence Properties communicated to employees a company policy of not renting to African Americans.(1)
  
  Under the consent order, which was approved [] by the U.S. District Court for the Middle District of Alabama, the defendants will pay $25,000 to the family who was denied housing and $10,000 to the United States as a civil penalty. In addition, the order prohibits the defendants from discriminating in the future against prospective tenants based on race, mandates the implementation of a non-discriminatory rental policy, and requires the defendants and their employees to receive training on the Fair Housing Act.

***

• The lawsuit, filed in September 2012, arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD). After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.
  
  The lawsuit alleged that the defendants violated the Fair Housing Act by refusing to rent a lot at a mobile home park to the HUD complainant and her family due to a discriminatory policy against renting to African Americans. The suit also alleged that, as a result of the discriminatory policy, the defendants engaged in a pattern or practice of discrimination or denied rights protected by the Fair Housing Act to a group of persons.

For the Justice Department press release, see Justice Department Settles Race Discrimination Lawsuit Against Owners and Managers of Mobile Home Parks in Alabama and Georgia.

For the lawsuit, see U.S. v. Lawrence Properties, Inc., et al.

(1) According to the lawsuit, the alleged victim actually purchased, directly from a private homeowner, a mobile home located on a lot that the private owner rented from the mobile home park operator.

Apparently, the mobile home purchase was not contingent on obtaining approval from the park operator to take over the existing lease on the lot. After a bit of alleged jerking around by the park operator's employees, the alleged victim was advised that her rental application for the lot upon which her just-purchased mobile home sat on was rejected.

Consequently, not only was the alleged victim and her family unable to move into the mobile home, she was forced to pick up the mobile home and move it off the lot and out of the park, which she did, bearing the attendant costs of the move, according to the complaint.

By the way, these allegations came to light some seven months after the alleged victim's application was rejected.

According to the complaint, the then-property manager at the mobile home park, who now was no longer employed there, tracked down the alleged victim and informed her that her application to rent the lot had never been processed because the mobile home park owner did not want to rent to black people. Two other now-former employees have since come forward to assert that the company's policy was to limit rentals to black people, according to the complaint.

Non-Profit Law Firm Scores Permanent Injunction On Behalf Of Low-Income Farmworker Who Nearly Lost His Home To Foreclosure After Being Screwed Over By Loan Modification Racket

In Fresno, California, The Fresno Bee reports:

• A judge has signed a court order that prevents a Fresno foreclosure consulting business from engaging in unlawful and deceptive practices.
  
  The permanent injunction names Legal Foreclosure Services, Inc. which operates at 135 W. Shaw Ave. and once did business as Foreclosure Counseling, Inc., and Foreclosure Professionals, Inc.
  
  Edward Anguiano, Raul Pelcastre, Brenda Alvarez and Frank Gutierrez -- who owned or worked for the companies -- also are named as defendants.
  
  The court order stems from a March 2011 civil lawsuit filed in Fresno County Superior Court by farmworker Florentino Salazar who nearly lost his Firebaugh home to foreclosure after he hired the consulting business.
  
  Salazar was able to save his home after the Central California Legal Services, Inc., in Fresno intervened on his behalf.(1)
  
  CCLS staff attorney Ofra Pleban said Friday that the defendants targeted Spanish-speaking people by advertising on television and through their web site.
  
  "The defendants operated as loan modification and foreclosure avoidance consultants in violation of the law," Pleban said. "They operated without the required licenses and bonds, and unlawfully charged advance fees, and misrepresented the type and scope of their services."
  
  Pleban said Anguiano is the principal owner of the three businesses. Efforts to reach him and his attorney Bruce Neilson were unsuccessful.
  
  Salazar, who is married and has three children, purchased his home in Firebaugh in 1996. He got behind on payments after he needed surgery and had to pay costly medical bills, Pleban said.
  
  In 2010, Salazar hired the defendants and paid them $2,400, Pleban said. In return, they promised to modify his home loan. But instead of refinancing the loan, the defendants advised Salazar to quit making payments, which put his home on the brink of foreclosure, Pleban said.
  
  Judge M. Bruce Smith signed the permanent injunction on June 26.
  
  Pleban said the defendants' unlawful activities were not limited to their transactions with Salazar, but rather "it was their business model."
  
  "They have failed to provide the promised services, failed to obtain any benefits to their clients, and many times were the direct cause of the eventual foreclosure of their clients' homes," she said.
  
  In addition, the California Department of Real Estate issued an order in March 2010, informing the defendants quit "these same unlawful activities," Pleban said. "Nevertheless they continued with their unlawful practices in complete disregard to the order," she said.
  
  If the defendants violate the judge's order, Pleban said CCLS will seek immediate enforcement "to make certain that homeowners are protected."
  
  "We applaud Mr. Salazar for standing up to defend his family and in doing so won protection for countless other families who otherwise could fall victim to these defendants," Pleban said.

Source: Judge prohibits Fresno foreclosure consultants from committing unlawful acts.

(1) Central California Legal Services is a non-profit law firm providing free legal assistance to low income families and individuals in the following counties in the state: Fresno, Kings, Mariposa, Merced, Tulare, and Tuolumne.