City Of Buffalo v. ABN Amro Mortgage Group Inc.

For those of you who have recently been looking for a copy of the lawsuit brought by the City of Buffalo, New York against a host of lenders on account of the blight caused by abandoned houses in foreclosure in that city, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; available online courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP).

I recently discovered an expired link that appeared in several earlier posts referencing this lawsuit that I have since corrected. If any of you have a problem with this link in the future, simply email me at HomeEquityTheft@yahoo.com and I'll email the lawsuit to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Sorry for any inconvenience the expired link may have caused.

For other "blight-related" and public nuisance lawsuits brought by municipalities and others, see:

• Lawsuit - Commonwealth of Massachusetts v. Doherty,
• Lawsuit - City of Cleveland v. Deutsche Bank Trust Company, et al. (if you have a problem with this link, drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail it to you - be sure and put "City of Cleveland v. Deutsche Bank" in "subject" line),
• Media report - Cleveland sues 21 investment banks over subprime mess,
• Media report - St. Paul threatens legal action against banks that own vacant houses,
• Media report - Cities sue home lenders (Civic group, City of Minneapolis initiate legal action taking banks, lenders to court for failing to fix up foreclosed homes) (Go here for entire story on one web page),
• Media report - Empty Homes Spur Cities' Suits (Banks, lenders sued to recover costs),
• Blog entry - Cleveland Housing Court Judge Hammering Foreclosing Lenders With Fines, Code Violations.

City Of Buffalo Suit Over Vacant Abandoned Foreclosures The First In What May Be A Wave Of Legal Actions Against Lenders

In New York, The Buffalo News reports:

• The city is suing 28 national lenders and servicers — including two local banks — to recoup between $1 million and $2 million it estimates it will have to spend on securing and demolishing 58 vacant properties. In doing so, it’s trying to address the problem caused when no one takes care of a house. The lawsuit seeks to hold the lenders responsible, and accuses them of allowing the houses to “become so dilapidated, deteriorated, abandoned and/or decayed so as to present a danger to the health, safety and welfare of the public.”

• The lawsuit says the servicers “have failed to take appropriate action to protect or dispose of these properties,” and it says the conditions of the houses violate both city and state laws. And it asserts that the city now “has a duty to abate these nuisances by demolishing the abandoned and blighted structures.”

• “This is the first lawsuit that I would expect in a series. It’s our first strike in a wave that would obviously focus on more,” said Alisa A. Lukasiewicz, Buffalo’s corporation counsel. “This is our attempt to have banks take responsibility without walking away from properties.” The lawsuit covers a small fraction of the total number of vacant properties citywide, but sought to include a broad swath of the mortgage servicing industry among the defendants. “We considered these to be some of the most severe properties,” Lukasiewicz said. “To the extent that there are more properties, we will definitely be naming those as defendants in further actions.”

For more, see Buffalo sues lenders over abandoned houses in foreclosure (City wants them to pay for demolition when owners are forced out after foreclosure) (if link expires, try here).

To view the lawsuit, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; lawsuit also available here, courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP). If there's a problem with this link, email me at HomeEquityTheft@yahoo.com and I'll email it to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Go here for other posts on the City of Buffalo lawsuit against lenders abandoning foreclosed properties.

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

St. Paul "To Turn The Screws On Lenders" For Blight Caused By Vacant Foreclosures

In St. Paul, Minnesota, the Pioneer Press reports:

• The city of St. Paul, grappling with a growing list of abandoned buildings now 1,700 homes long, is taking a swing at national lenders in a stepped-up effort to tackle the foreclosure crisis. A highlight of the city's game plan, announced Wednesday, is hiring a lawyer from the St. Paul-based Foreclosure Relief Law Project to advise on legal strategies to turn the screws on lenders such as Wells Fargo & Co., U.S. Bancorp and Deutsche Bank AG. The city said a small group of large lenders is responsible for many of the abandoned properties St. Paul is struggling with, neglecting the buildings and leaving them to deteriorate. "We want to be clear: If they don't come to the table, we're going to go after them," St. Paul Mayor Chris Coleman told reporters.

***

• St. Paul appears to be borrowing a page from the foreclosure playbook used by the cities of Cleveland and Buffalo, N.Y. Those cities have sued major lenders and servicers in recent months, accusing them of failing to take care of properties after foreclosure.

For more, see St. Paul goes after national lenders in effort to battle foreclosure blight.

See also:

• Minneapolis Star Tribune: St. Paul looks hard at fallout of foreclosure (The city announced strategies to get owners of foreclosed and vacant properties to take responsibility for them),
• KARE-TV Channel 11: St. Paul to get tough with lenders in foreclosure crisis (According to police, many vacant homes have been the target of arsonists. Thieves have been known to break in and take out copper piping and appliances. Vandals have broken in and used them as sites for parties where the home is left trashed and full of graffiti),
• Minnesota Public Radio: St. Paul threatens legal action against banks that own vacant houses.

Go here for posts on the approach taken by the City of Buffalo, NY towards foreclosing lenders and its vacant houses.

To view Buffalo's lawsuit against a host of lenders on account of the blight caused by the abandoned houses in foreclosure, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; available online courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP). If there's a problem with this link, email me at HomeEquityTheft@yahoo.com and I'll email it to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Go here for posts on Cleveland's lawsuit against 21 investment banks involving neighborhoods blighted by vacant foreclosures.

Go here and go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures zach

Buffalo Mayor Vows Action On Foreclosing Lenders Who Saddle City With Demolition Costs On Vacant Homes; Announces Suit Against 36 Banks To Recover $2M

In Buffalo, New York, The Buffalo News reports on Mayor Byron W. Brown and his State of the City speech last Thursday. Buried in the story is this highlight from the mayor's speech:

• A crackdown on banks that hold mortgages on vacant properties that are in foreclosure and saddle the city with demolition costs and other expenses. Brown said the city filed a lawsuit Thursday seeking to recover up to $2 million in costs from 36 banks that have mortgages on 57 properties.

For the entire story, see Mayor Brown paints the picture of a city on the upswing ($4.5 billion in projects completed or now under way).

To view Buffalo's lawsuit against a host of lenders on account of the blight caused by the abandoned houses in foreclosure, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; available online courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP). If there's a problem with this link, email me at HomeEquityTheft@yahoo.com and I'll email it to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Go here for other posts on the City of Buffalo lawsuit against lenders abandoning foreclosed properties.

Inflated Fees, Force-Placed Insurance, Robosigning Among MBS Investor Concerns In Suit Demanding Bankster Accounting Over Loan Servicing Costs

In New York City, Reuters reports:

• The Knights of Columbus, a 129-year-old Catholic charitable organization, is suing Bank of New York Mellon to obtain information about residential mortgage loans the former lending giant Countrywide funneled into some of the Knights' investments.
• The Knights, who have a $17-billion investment portfolio, invested in two residential-mortgage-backed security trusts. The organization is questioning how Countrywide handled foreclosures as the "master servicer" of the loans, according to the complaint filed Thursday in New York Supreme Court in Manhattan. BNY Mellon is the trustee.
• The complaint pointed to "recent revelations" that Countrywide may have been "acting for its own benefit rather than for the benefit of investors," and thereby "damaging the borrowers" whose loans make up the trusts.
• Kevin Heine, a spokesman for BNY Mellon, said, "The complaint does not assert any claims against BNY Mellon or seek damages. The complaint merely seeks an accounting."

***

• The complaint says courts around the country have responded to the loan servicers' "notoriously flawed paperwork" by instituting new procedures, such as allowing the courts to pass on the cost of scrutinizing the documentation to the foreclosing firms.
• The Knights are requesting an accounting of the "extra fees and costs associated with robo-signing," to assure that those costs are borne by the loan servicers and not passed on to the beneficiaries of the trusts.
• The complaint also cites problems with Bank of America failing to promptly pursue valid foreclosures or dispose of real-estate-owned properties, practices that can increase the severity of losses associated with defaulted loans, according to the Knights' complaint. The complaint requests an accounting of these losses as well.(1)

For the story, see Knights of Columbus sue for Countrywide loan information.

For the lawsuit, see Knights of Columbus v. The Bank of New York Mellon, New York Supreme Court, New York County, No. 651442-2011.

Go here for links to other filed court documents.

(1) Paragraph 1 of the lawsuit summarizes the complaint:

• This action requests the Court to order an immediate accounting of two trusts known as CWALT 2005-6CB and CWALT 2006-6CB (the “Trusts”). The Trusts hold residential mortgage loans for the benefit of investors such as Plaintiff.
  
  An accounting is required because one or more of the Trust administrators have:
  
  (1) been examined by the Office of Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, which “found critical deficiencies and shortcomings in foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third party law firms and vendors”;
  
  (2) been accused by the City of Buffalo, among others, for failing to properly care for and dispose of unoccupied properties, contributing to the deterioration of neighborhoods and increasing losses to the Trusts’ beneficiaries;
  
  (3) been found by the Office of the Comptroller of the Currency to have “engaged in unsafe or unsound banking practices” “[i]n connection with certain foreclosures of loans in its residential mortgage servicing portfolio”, which is subjecting each Trust to unknown costs and expenses;
  
  (4) been accused by the Federal Trade Commission of engaging in a deliberate strategy to “mark up” the actual cost of services that are ultimately paid by each Trust;
  
  (5) been exposed by the AMERICAN BANKER for using affiliates to place on homes insurance costing up to ten times the price of regular policies, which premiums are ultimately charged to the beneficiaries of each Trust; and
  
  (6) had a court find that a practice that an employee of a Trust administrator testified under oath was “customary” precluded a similar trust from enforcing its rights under a mortgage.

For the City of Buffalo accusations, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al.

For the American Banker stories, see

• Ties to Insurers Could Land Mortgage Servicers in More Trouble (Force-placed policies impose costs on both homeowner, investor),
• Losses from Force-Placed Insurance Are Beginning to Rankle Investors,
• New Questions about Banks' Force-Placed Insurance Deals (QBE, carrier used by Wells Fargo and SunTrust, avoids oversight through 'surplus lines' structure).

City Of San Diego The Latest To Jump On Bandwagon In Targeting Lenders For Loose, Predatory Practices

A story reported last week in the San Diego Union Tribune reminds us that the recent lawsuit filed against Countrywide Financial by City Attorney Michael Aguirre on behalf of the City of San Diego is the latest suit brought by a city where it has decided to hold a mortgage lender accountable for the problems arguably caused by the loose and/or predatory lending standards used in making certain home loans.

• [A]guirre noted that cities such as Baltimore, Buffalo and Cleveland have filed lawsuits related to the foreclosure issue, but have used varying legal theories. In San Diego's suit, Aguirre is arguing that the city has the authority to go after lenders under the California business and professions code governing fraudulent and unlawful business practices.
  In Cleveland, the legal basis was the public nuisance law.

The Buffalo suit is based primarily on violations of the New York State Property Maintenance Code; the Baltimore suit is based on violations of the Federal Fair Housing Act of 1968.

For the lawsuits filed by the above-referenced cities, see:

1. People (City of San Diego) v. Countrywide Financial Corp., et al.,
2. City of Buffalo v. ABN Amro Mortgage Group Inc., et al.,
3. City of Cleveland v. Deutsche Bank Trust Company, et al. (if you have a problem with this link, drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail it to you - be sure and put "City of Cleveland v. Deutsche Bank" in "subject" line),
4. Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al.

See also:

• The National Law Journal: Empty Homes Spur Cities' Suits,
• ABC News: Cities sue home lenders (Communities Take Banks, Lenders to Court for Failing to Fix Up Foreclosed Homes).

Lenders Abandoning Foreclosure Actions In Some Markets; Dilapidated Collateral Not Worth Repossessing; Homeowners Left On The Hook For Code Violations

In South Bend, Indiana, The New York Times reports:

• [C]ity officials and housing advocates here and in cities as varied as Buffalo,(1) Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.(2)

• The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan.(3) The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.(4)

For more, see Banks Starting to Walk Away on Foreclosures.

Go here for other posts on code violation & other problems associated with homes in legal limbo.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this story.

(1) According to the story, in Buffalo, where officials said the problem had reached “epidemic” proportions in recent months, the city sued 37 banks last year (see City of Buffalo v. ABN Amro Mortgage Group Inc., et al.), claiming they were responsible for the deterioration of at least 57 abandoned homes; the city chose a sampling of houses to include in the lawsuit, even though the banks had walked away from many more foreclosures. So far, five banks have settled.

(2) Reportedly, Chuck Leone, the South Bend city attorney, made this observation on the foreclosing lender walk-aways: “We see it one of two ways. One is that the bank will simply dismiss the foreclosure complaint. The other is that the mortgage holder will follow through and take a judgment of foreclosure, but then not schedule the property for sheriff’s sale.”

(3) The article highlights the story of one local property owner who though she lost a two-family rental home to foreclosure, which fell victim to looters after her tenants moved out. The City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name. Reportedly, the home is now so worthless the city plans to demolish it — another bill for which she will be liable.

(4) One recent story (see National Public Radio: Banks Refusing To Take Back Foreclosed Properties) reported that Cleveland, Ohio Housing Court officials said they are now seeing homeowners take matters into their own hands when dealing with the abandonment of foreclosure lawsuits by lenders. One instance is cited involving a foreclosing lender that was reluctant to complete the foreclosure process and repossess a dilapidated property. In that case, the homeowner simply deeded back the property to the lender by preparing a deed, naming the lender as grantee, and recording it.

Such a conveyance may ultimately be found to be ineffective because the mortgage lender surely would assert that it never "accepted" the deed conveyed by the owner of the dilapidated wreck collateralizing its loan (ie. to be effective, a deed must be both "delivered" by the grantor-owner, and "accepted" by the grantee-lender; in other words, no acceptance = no conveyance). However, recording a deed in the name of the unwitting lender may, under state law, create a legal presumption that it has been "accepted" by the lender (see Janian v. Barnes, 284 A.D.2d 717, 718; 727 N.Y.S.2d 182 (N.Y. App. Div. 3d Dep't 2001)) until such time that it straightens out the mess by going into court, presenting evidence to a judge that there was no actual acceptance, and obtaining a judgment declaring the deed to be void. Unless and until it does so, it could arguably be treated as the legal owner of (and find itself legally responsible for the code violations on) its abandoned dilapidated loan collateral. Inasmuch as many mortgage holders, their loan servicers, and their assembly line foreclosure mill attorneys have proven themselves to be quite clumsy when handling the paperwork relating to their mortgages, it could be quite some time before they discover that title to the loan collateral has been put in their name - probably when they start getting tagged with the code violations - and possibly even longer before they figure out what to do. responsibility code violations foreclosure