California DA Dropping Ball On Mortgage Fraud?

In Bakersfield, California, KGET-TV Channel 17 reports:

• The fight over real estate fraud spilled onto the editorial pages and airwaves of local talk radio shows Friday. On Thursday, local appraiser Gary Crabtree wrote an opinion piece in the Bakersfield Californian newspaper accusing District Attorney Ed Jagels of dropping the ball on mortgage fraud. Crabtree said he presented a major case of mortgage fraud to Jagels a year ago, but Jagels never followed through. So, in an opinion article published Thursday, Crabtree said he had to turn to the FBI for help. [...] Meantime, bloggers have speculated for weeks about Jagels' motives for declining to take on the case. On Friday, Jagels confirmed he is friends with one of the people the FBI is investigating for mortgage fraud. Agents raided the office of Mark Newton of San Joaquin Appraisals as part of their investigation into local real estate agents David Crisp and Carl Cole.

For more, see DA accused of dropping ball on mortgage fraud; or go here to watch the KGET-TV Channel 17 report.

For a contrary opinion, see Ed Jagels is right: Fraud unit not needed (The Bakersfield Californian - 10-12-07).

For a related post, see California DA Denies Need For Fraud Unit.

For a story update, see County creates trust fund to crack down on real estate fraud (Concerned that the continuing rise of foreclosures in Kern County could be fraud related, Supervisors unanimously adopted a resolution establishing a trust fund to investigate and prosecute real estate fraud).

Go here for other posts on this story.

Suit: BofA Harassed Widow w/ Repeated Calls To Speaker Phone During Hubby's Wake To Collect Debt, Failing To Give Her 30 Days To Sort Out Affairs

In Honolulu, Hawaii, Courthouse News Service reports:

• A widow says Bank of America cruelly harassed her during her husband's wake, making repeated dunning calls to a speaker phone set up for condolences, though the bank knew her husband had just died, and that it would get its money as soon as she received her life insurance check.



• Deborah Crabtree sued Bank of America Home Loans Servicing, Bank of America, and Countrywide Home Loans on 16 counts, including unconscionability, bad faith, outrage, misrepresentation, unjust enrichment and violations of state laws.



• She says the bank called her "incessantly every day" after her husband died. During the wake at their home, she says, she and her children had set up a speaker phone to receive condolence calls. She says the bank called "every 15 minutes during the wake," broadcasting "throughout the house, stating, 'This is Bank of America, and we are calling to collect with regards to a debt.'"



• Crabtree says that other companies granted her requests for 30 days to get her husband's business affairs in order, and her life insurance money - but not Bank of America.



• She says the bank's collectors called throughout the wake, "every 15 minutes, forcing plaintiff, her son, Daniel, or her daughter, Tracy, to rush to the phone to hang it up before the message was broadcast throughout the house again."

For more, see Widow Says BofA Dunned Her at Wake.

For the lawsuit, see Crabtree v. Bank of America Home Loans Servicing, L.P., et al.

California Real Estate Appraiser Fights Mortgage Fraud

KGET-TV Channel 17 in Bakersfield, California and The Bakersfield Californian report that local real estate appraiser Gary Crabtree, President of Affiliated Appraisers is conduting his own battle against mortgage fraud by compiling and submitting to the California Department of Real Estate and the FBI documented evidence of suspicious activities in over 30 cases of suspected mortgage fraud, involving inflated appraisals, shaky lending practices, and cash kickbacks to buyers, sellers and real estate agents in Bakersfield. Reportedly, Mr. Crabtree said:

• "he began tracking the questionable transactions so he wouldn’t use them as comparable properties when doing appraisals"
• "word is out in local real estate circles that he has provided information to agencies about potential improprieties"
• "he has lost business as a result and others in the industry have stopped talking to him for fear of being implicated."

For more, see:

• Appraiser: local fraud rampant (Authorities alerted about suspicious mortgage cases), and
• Local appraiser leads charge against mortgage fraud
• Go here for Channel 17 Video.

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Debt Collector's Use Of 1st Amendment To Get Default Judgment Against Mentally Disabled Debtor Without Giving Proper Notice Slammed By Alaska Supremes

Public Citizen, a national, nonprofit consumer advocacy organization, recently announced:

• The Alaska Supreme Court ruled [last month] that debt collectors who employ unfair or deceptive tactics during collection lawsuits are not shielded by the First Amendment.(1)

***

• The case arose out of an attempt by a collection agency to sue Robin Pepper, a mentally disabled woman, without providing her with proper notice. The agency sent papers to a nonexistent address, misrepresented to the court that Pepper was competent, and tried to get a default judgment against her.

• Pepper, represented by Alaska Legal Services,(2) then brought a separate lawsuit, alleging that the collection agency’s practices violated the Unfair Trade Practices Act. The collection agency asked the court to dismiss Pepper’s case on the theory that its litigation conduct was protected by the First Amendment, which provides a right of access to the courts. The lower court agreed and dismissed Pepper’s case. Alaska Legal Services asked Public Citizen to handle the case on appeal.(3)

• The Alaska Supreme Court broadly rejected the debt collector’s immunity defense, ruling that the First Amendment’s petition clause does not extend to conduct that was unfair, deceptive, and in violation of the Unfair Trade Practices Act. Quoting Public Citizen’s brief, the court ruled that debt collectors have “no legitimate interest in pursuing collection litigation without notifying debtors, or in seeking to default incompetent debtors without notice to their lawyers or guardians.”(4)(5)

For Public Citizen's press release, see Debt collectors drubbed by Alaska high court (Constitution Does Not Shield Abusive Tactics by Debt Collectors, Alaska Supreme Court Rules).

For the ruling of the Alaska Supreme Court, see Pepper v. Routh Crabtree, APC, Supreme Court No. S-13042, No. 6437, 2009 Alas. LEXIS 160 (November 20, 2009).

(1) According to the press release, this case is the first ruling on the issue by any court nationwide. Debt collection firms have raised a constitutional defense, based on the right to petition the courts, in a series of consumer cases. This ruling overturns a lower-court decision that had ruled in favor of a collection agency.

(2) Alaska Legal Services is a private, nonprofit law firm that provides free civil legal assistance to low-income Alaskans.

(3) Also appearing in this lawsuit, as "friends of the court" on behalf of the consumer, were the National Association of Consumer Advocates and the National Consumer Law Center.

(4) “The Alaska Supreme Court’s ruling sends the message that debt collection companies can’t get away with abusive tactics simply by hiring lawyers,” said Deepak Gupta, the Public Citizen attorney who argued the case. “The court rejected a dangerous new immunity defense that would have created a gaping hole in consumer protection law.”

(5) Had the court ruled in the debt collection agency's favor, collectors would be in a position to slap judgment liens against any real estate owned by defaulting debtors and force the sale of those properties (subject to any applicable state or federal homestead exemption protections), as well as garnish the wages and seize the bank accounts belonging to these unwitting victims. For more on debt collectors and their attorneys obtaining default judgments against unwitting consumers by failing to serve proper notice of the lawsuit on them (ie. "sewer service"), see Justice Disserved: A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York.

Fire Problems In Homes Facing Foreclosure Continue

The following stories report fires in foreclosed homes from around the country:

• Marion, Ohio: A firefighter was injured when responding to a fire in a vacant home on the north side of the city Sunday evening. Firefighter Mike Crabtree was injured and taken to the Marion General Hospital Emergency Room for a neck injury when part of the ceiling fell on him. He was treated and released. The home was believed to be in foreclosure and listed CitiMortgage as the owner. Damage is estimated at $50,000. "We've had more than our share [of vacant house fires," Fire Chief Al Gruber] said. See Firefighter injured from collapsed ceiling.

• New Haven, Connecticut: A powerful explosion and fire destroyed a Fair Haven home overnight Thursday, the third fire in the neighborhood in just over a week. Fire officials are calling all three suspicious. [...] All three houses that burned since last week were in various states of foreclosure. [...] Heat from the fire was so intense it melted vinyl siding on two nearby houses, including one across the street and about 40 feet away. See Blast, fire destroys 3rd foreclosed home in just over a week.

• Sedona, Arizona: A house fire in Sedona is being treated as a crime scene after flames broke out twice in the empty house this weekend. The home at 200 El Camino Drive was valued at $1.2 million, but had been foreclosed upon. See Arson suspected in foreclosure house fire.

• Flint, Michigan: [Gordon] Yoesting had been squatting inside the house with his cat Mustard for the past 10 months but he had hopes it would soon be his. But that dream went up in flames Wednesday morning when fire engulfed the small home near Lewis Street, trapping Yoesting inside. Yoesting had been living in the home since December after the owner [...] decided it was too costly and let it slip into foreclosure. See Flint fire kills Gordan Yoesting, squatter in foreclosed home.

• Fort Wayne, Indiana: A 36-year-old Fort Wayne man admitted Tuesday to setting his foreclosed home on fire. [...] The house was to have been sold April 17 because of the foreclosure, according to court documents. [The fire was set April 15]. See Homeowner admits to arson.

For other stories on fires & foreclosures, go here, go here, go here, go here, and go here. ArsonForeclosureAlpha

Five Hawaii Suits Charge Banksters, Foreclosure Mills Of Illegally Depressing Prices At Foreclosure Sales

In Honolulu, Hawaii, the Honolulu Star Advertiser reports:

• Hundreds of Hawaii residents should have received higher prices for their properties sold through nonjudicial foreclosure auctions during the past four years, according to lawsuits recently filed on behalf of borrowers who allege unfair and deceptive practices by four major banks.
  
  A fifth lawsuit alleges that a Washington law firm, Routh Crabtree Olsen (RCO), and others that assisted in the auctions committed multiple violations of the state nonjudicial foreclosure laws during those years and interfered with the residents getting the highest price for their properties.

***

• The amount of losses for the residents in the five suits totals in the millions of dollars, their lawyers said. The lawsuits are fallouts from the state nonjudicial foreclosure system aimed at allowing lenders a quicker, less costly alternative to foreclosures handled by state courts.
  
  The suits against the banks, however, allege a widespread practice that they advertised and conducted nonjudicial foreclosure auctions for quitclaim deeds but provided the winning bidders more valuable limited warranty deeds.
  
  The banks allegedly advertised auctions for quitclaim deeds, which means the properties are sold "as is" and clear title is not guaranteed. The winning bidders, however, received limited warranty deeds, which are considered more valuable and help ensure fee-simple title, according to the suits.
  
  The practice of advertising quitclaim auctions discouraged bidders, lowered the amount of winning bids and left the borrowers with higher deficits, the suits said.
  
  "Shame on them," said Barabara-Ann Delizo-Lima, whose Pearl City high-rise apartment went through a nonjudicial foreclosure auction in 2009. "We could have been in a better place if they did their job." Her lawyers estimate she and her husband would have gotten at least $50,000 more if the sale had been for a limited warranty deed. "It's like they came to my house and took money away from my wallet," husband Lionel Lima Jr. said.
  
  The couple are the named plaintiffs in a lawsuit against Deutsche Bank National Trust Co. It seeks certification as a class action suit to represent hundreds of other borrowers whose property went through nonjudicial foreclosure by the bank.
  
  Three similar lawsuits were filed against Bank of America, U.S. Bank N.A. and Wells Fargo Bank N.A. The fifth suit alleges RCO and other plaintiffs who assisted in the auctions also violated the unfair and deceptive practices law as well as the nonjudicial foreclosure law.

***

• The five lawsuits are limited to nonjudicial foreclosure sales dating four years from the filing of the complaints from May to July because of the four-year statute of limitations.
  
  The five suits seek millions of dollars in damages, which, if the residents prevail, would be tripled under the state's unfair and deceptive practices law.

For more, see Borrowers lost out to banks, suits say (Homeowners should have seen their properties sold for higher prices, according to the plaintiffs' court filings).

California DA Denies Need For Fraud Unit

The Bakersfield Californian reports:

• [Kern County, California] District Attorney Ed Jagels said Tuesday that, despite recent headlines, he is not convinced real estate fraud is a big enough problem to warrant a special prosecuting unit in Kern County. "We have had remarkably few real estate fraud cases over the years," Jagels said. Jagels was responding to a proposal made Monday by Sen. Dean Florez, D-Shafter, asking the county Board of Supervisors to create a specialized fraud unit within the District Attorney's Office.

• At least 14 other California counties have enacted similar programs, according to a Florez news release. "We absolutely need this," Florez said in a news conference Tuesday. The delicate, hidden nature of real estate fraud calls for more resources to halt the crimes, Florez said.

Reportedly, Bakersfield real estate appraiser Gary Crabtree has approached DA Jagels with several fraud cases in the past and all of them have been turned down, citing lack of resources in the DA's office as the reason.

(I suspect that robbery and theft at gunpoint or knifepoint is something this DA feels more comfortable prosecuting; the same crimes committed at "pen point" - the way real estate fraud typically goes down, is something this DA seemingly is shying away from.)

For more, see D.A.: Fraud unit not necessary.

For a related story, see Florez calls Kern 'hotbed' of mortgage meltdown (Forum gives victims chance to vent fears).

Go here for other posts on this story.

Another California Appraiser Fighting Mortgage Fraud

In Southern California, the North Country Times reports the story of one local real estate appraiser's efforts to combat mortgage fraud. According to the article:

• "Real estate appraiser Todd R. Lackner's second job as mortgage fraud investigator began when he stumbled onto a suspicious-looking transaction while online one day last March, he said last week. Within weeks, he was chest-deep in dozens of investigations of suspected mortgage fraud, and was helping federal investigators get the goods on real estate scammers who commit what are known as inflated-sale and-crash schemes, Lackner said."

For more, including how he went about compiling the information on the suspicious transactions for authorities, see Real estate scam emerges -- 'Crash and inflate' method generally leads to foreclosure.

Go here for prior posts on Northern California real estate appraiser Gary Crabtree's efforts to compile and provide authorities with information on suspicious real estate transactions.

More On California Appraiser Fighting Mortgage Fraud

The Bakersfield Californian reports:

• "Last week, local appraiser Gary Crabtree told The Californian that he has documented about 20 suspicious local home sale transactions in the last year -- and that the number has since grown to more than 50 as news of his allegations spread. He has referred some of them to the FBI, California Department of Real Estate and California Office of Real Estate Appraisers."

According to Detective Frank Wooldridge, who handles real estate fraud cases and other financial and white-collar crimes for the Bakersfield Police Department, "It is very prevalent and it will become more prevalent. There is real estate and mortgage fraud going on in this town. To say it is not, you are just missing the boat."

For more, see Loan fraud cases rising (Officials confirm that mortgage scams occur in Bakersfield market). Click here for other posts on this story.

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Attorney Suspected Of Moving Nearly $200K Of Client's Cash Into Firm's Bank Account Now Facing Felony Charges

In Raleigh, North Carolina, The News & Observer reports:

• A Raleigh lawyer faces embezzlement and forgery charges after prosecutors say he took more than $30,000 that belonged to his clients. Nicholas Andrew Stratas Jr. was released from the Wake County jail Friday on $20,000 bond.
  
  
• The felony charges aren’t the only problem facing Stratas, 54. The North Carolina State Bar has also filed a complaint against Stratas, saying he took clients’ money held in trust. A hearing later this year could result in Stratas losing his law license.

***

• Last week, a Wake County grand jury accused Stratas of taking more than $30,000 from two clients between March 2010 and June 2011. One of the cases involves Laura Candes, who hired Stratas to pursue an injury settlement after her car was rear-ended on Interstate 440 near Crabtree Valley Mall.
  
  
• The collision left Candes, 69, with persistent back pain, according to her husband, Chris. The bar’s complaint against Stratas says the attorney settled the case without the family’s permission. A $24,000 insurance check was deposited into the firm’s bank account, and the family has not received any money, the complaint says.
  
  
• Stratas cashed the check and kept the money after the couple refused to accept the settlement offer, said Chris Candes, former owner of the well-known Two Guys Italian restaurant on Hillsborough Street. “I’ve known him for 25 years,” Chris Candes said in an interview Wednesday. “I felt betrayed. I considered him a friend.”
  
  
• A disciplinary hearing on the Candes case and others has been set by the state bar for Sept. 6 and 7. Stratas has been prohibited from being involved in any financial matters related to his practice since the bar began its investigation in December. The bar alleges that Stratas moved nearly $200,000 of clients’ money into the firm’s account.(1)

For the story, see Raleigh lawyer charged with embezzlement.

(1) The North Carolina State Bar Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a North Carolina-licensed attorney. Request for possible reimbursement can be made with this reimbursement application form.

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.

County Trust Fund Established To Fight Mortgage Fraud, Despite DA's Claim That Local Mortgage Fraud Is Non-Existent

In Bakersfield, California, CBS 29 / FOX 58 reports:

• Concerned that the continuing rise of foreclosures in Kern County could be fraud related, [the County Board of] Supervisors unanimously adopted a resolution establishing a trust fund to investigate and prosecute real estate fraud. The plan calls for imposing a $2 fee on certain public real estate filingswith the County Recorder's office. It is expected it would raise between $230,000 and $280,000 a year.

A mortgage fraud battle in Kern County appears to be currently fought, not by local law enforcement against the bad guys, but by State Senator Dean Florez and local real estate appraiser Gary Crabtree (who say that local mortgage fraud is running rampant) against Kern County District Attorney Ed Jagels (who believes local mortgage fraud is practically non-existent). While Jagels is reported to be in favor of establishing the trust fund from which money can be drawn as fraud cases are investigated and filed, he recently expressed his position against forming a specialized real estate fraud-fighting unit within his office, reportedly saying "There is nothing more poisonous to morale [among prosecutors] than having what is in effect a grant-funded unit with nothing to do." For more, see County creates trust fund to crack down on real estate fraud.

Go here for other posts on this story.