Saturday, July 12, 2008

Termites Gaining Stranglehold In Vacant Florida Homes, Say Local Exterminators

On the west coast of Florida, the Sarasota Herald Tribune reports:
  • If anyone is getting fat from the downturn in the housing market, it might be drywood termites. Exterminators are witnessing larger and more active swarms of the pasty monsters than they have seen in years. The problem is bad enough that some exterminators have waiting lists of up to six weeks for infested homes from Tampa to Charlotte County, the area where swarms seem to be centered.


  • The evidence points to the fact that termites have been ignored in homes that are bound for foreclosure or where tight budgets have left no room for home inspections. The life cycle for termite colonies to get big enough to swarm and move on to different houses coincides with what has been happening in the local market, which has been in its current malaise for going on three years.

For more, see We see more empty homes. The termite sees a buffet (Exterminators say the hungry insects are gaining a stronghold in the area's unoccupied houses).

More On The Squeezing Of Homeowner / Condo Associations By Bank Foreclosures

The following links are to recent stories on homeowner & condo associations that are taking big hits in terms of uncollected maintenance payments due to unit owners facing bank foreclosures:

Tenants In 17-Unit Complex Face Foreclosure Eviction; Offered $1,000 To Leave Or Face The Boot

In Grand Rapids, Michigan, The Grand Rapids Press reports:

  • A group of Northeast Side renters were shocked this week when they were given eight days to move out of their homes after a mortgage company foreclosed on their building. Housing advocates say the case, a growing problem, demonstrates what little protection renters have in another side to the national mortgage crisis. Renters in 17 duplex-style apartments [...] received notice Monday to vacate their homes by July 16, the tenants said.


  • Residents on Monday were offered $1,000 reimbursement if they signed before Wednesday a paper agreeing to move by July 16. But some residents said money after the fact would not help those who had no money or ability to move in eight days.


  • Some of the residents are young mothers with children and no transportation, others are working single women, some are families and all could be homeless, advocates say, through no fault of their own. "The clients I work with are living paycheck to paycheck. It really puts the tenants in a tough position and makes the working poor struggle that much harder," said Legal Aid of Western Michigan attorney Cavan Berry. The organization is investigating.
For more, see Foreclosure leaves tenants on the street.

For story update, see Evictions on hold at foreclosed apartment units (7-16-08).

For other posts involving the problems tenants face in rented homes in foreclosure, go here, go here, go here, go here, go here, and go here. equity skimming unwittingly digamma

Self Help Guide Available For Massachusetts Tenants Renting From A Landlord In Foreclosure

For Massachusetts tenants who find themselves renting from a landlord facing foreclosure, provides some self-help legal information that may be helpful. For more, see:

Ohio Lawyer Gets One Year Suspension For Forging Signatures On Deed

In Akron, Ohio, the Akron Beacon Journal reports:
  • Akron defense lawyer Donald L. ''Doc'' Walker was suspended from practicing law for one year for violations of state disciplinary rules, Ohio Supreme Court officials announced Tuesday. [...] According to the justices' decision, Walker's law license was suspended because he forged the signatures of a client's son and two witnesses on a property deed, [...].

One of the mitigating factors in the justices' decision was that "the forgery did not result in personal gain by Walker. He paid all of the money owed to the client's son whose signature he forged, the justices said."

For more, see Lawyer's license suspended for year.

False Expense Reports, Sarcastic & Angry Tones, Crude Remarks Get Judges In Hot Water

This blog's never ending search for media reports on our robed members of the judicial branch of government getting themselves into hot water yields the following two stories:
  • California: Los Angeles Times: Orange County judge is removed from bench (Kelly MacEachern is removed from her duties in Newport Beach after a judicial commission finds that she filed false expense claims for a legal conference. She plans to appeal).

For other posts on the questionable judgment exercised by some of the members of our esteemed judiciary, go here and go here. knuckleheaded judges zeta

Friday, July 11, 2008

"Florida Attorneys Saving Homes" Sets Up Hotline To Place Homeowners Struggling With House Payments With Free Lawyers

The Florida Bar News reports:
  • [A]s of June, an estimated 77,000 Floridians were in foreclosure and a recent report indicated that 11.6 percent of Florida property owners were more than 30 days past due on a mortgage payment or in foreclosure, suggesting more trouble ahead, said Kent Spuhler, executive director of Florida Legal Services, Inc. In response FLASH [Florida Attorneys Saving Homes] has launch a toll-free hotline — (866) 607-2187 — to take calls weekdays from 8 a.m. to 4 p.m. from those who fear they may soon be unable to make their mortgage payments or have already missed payments.

For more, see Hotline to assist Floridians facing foreclosure (Florida lawyers are now available to assist homeowners facing forclosure).

FLASH — Florida Attorneys Saving Homes — is a collaborative effort of The Florida Bar, The Florida Bar Foundation, Florida Legal Services, and the Real Property Probate and Trust Law Section designed to provide pro bono assistance to distressed homeowers.

Go here for some of the materials for volunteer attorneys working on the FLASH program and go here for welcome letter (re: malpractice insurance, training & materials).

Maryland AG Files Civil Suit Against Baltimore/DC-Area Foreclosure Rescue Operators; Seeks Return Of Homes To Victims

In Baltimore, Maryland, the Maryland Attorney General's office announced yesterday:
  • Attorney General Douglas F. Gansler announced [Thursday] that the Consumer Protection Division has filed a complaint in Baltimore City Circuit Court against a group of individuals and companies(1) alleging they took the equity in consumers’ homes under the guise of providing them with assistance to stop foreclosures.


  • The complaint alleges the defendants offered to help homeowners avoid foreclosure and repair their credit history and financial situations while remaining in their homes. According to the Complaint, the defendants set up fictitious sales of homeowners’ houses throughout the Baltimore-Washington Metropolitan area to investors who, along with the consultants, obtained large fees for participation in the deal. As a consequence of these transactions, the homeowners lost the equity they built up in these properties.

  • The Attorney General’s Office has asked the court to stop the defendants’ unlawful practices, restore property to the injured homeowners and impose fines for violations of the Protection of Homeowners in Foreclosure Act, the Maryland Credit Services Business Act and the Consumer Protection Act. This is the third lawsuit that Attorney General Gansler has brought against alleged foreclosure rescue scams.

Source: Maryland AG Press Release: Attorney General Gansler Announces Consumer Protection Division Files Complaint Against Operators of Alleged Foreclosure Rescue Scam.

See also: The Baltimore Sun: Nine tied to finance fraud (Md. says scheme targeted distressed homeowners) (no longer available online).

(1) The complaint names Rodney Spellen, Jemel Lyles, Brian Boyd, Mid Atlantic Consulting Firm LLC, Absoloot Ventures, Inc., Phillip George, Certified Title & Escrow, Inc., First Choice Property Management Firm, Inc., First Choice Property Management Firm, Sahar Begun Ali, Reggie Simmons, Alan Muniu, Jason Ford and Thuy Thu Nguyan as defendants.

One South Florida Homeowner Among Many Fighting Back Against Subprime Lenders

In Broward County, Florida, a story in the Daily Business Review (appearing on recently reported on a disabled woman who recently refinanced her home and subsequently discovered, much to her chagrin, that she might have been given a mortgage loan different from the one she thought she was getting.
  • [C]onfined to a wheelchair, she already is struggling to make her monthly payments. So instead of waiting for the sword of Damocles to fall in the form of foreclosure, [homeowner Denise] Bennett is fighting back. She sued her lender, Countrywide Home Loans, on June 26 alleging fraud in a case assigned to U.S. District Judge William Zloch in Fort Lauderdale. Bennett is a plaintiff in one of several suits filed against the troubled lender by the Affirmative Defense Group in Margate, Fla. Her attorney, Frank Ingrassia, said he has filed about 70 such suits against a variety of lenders.

  • "It's an industrywide problem," Ingrassia said. "Some of the clients tried to do workouts and weren't able to do that, and when you are faced with foreclosure it's an issue of striking first or not." He said the litigation is a "new approach for dealing with unprecedented levels of foreclosures."

  • Nearly all of the lawsuits involve adjustable rate subprime mortgages to high-risk customers. Ingrassia said some of his clients were offered "teaser rates" as low as 1.5 percent that adjusted up within 30 days. The lawsuits also allege Calabasas, Calif.-based Countrywide and the other lenders falsified paperwork that exaggerated the income of the customers to qualify for the loan.


[Editor's Note: Washington State has also recently taken action against against Countrywide.]

For more, see Saying They Were Tricked, Borrowers Fight Back With Lawsuits.

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. undo mortgage loans TILA batallion

Fannie Cracks Down On Homeowners Buying 2nd Home Before Walking Away From 1st Home

In San Diego County, California, North County Times reports:
  • One of the nation's largest lenders is cracking down on borrowers who let their homes enter foreclosure ---- a phenomenon that has spawned several North County businesses catering to homeowners who want to "walk away."

  • Fannie Mae, a government-chartered lender, instituted guidelines June 25 that limit the loans a homeonwer can secure when purchasing a second home. As home prices plummet in San Diego County, local real estate agents say more homeowners are looking to purchase similar homes for hundreds of thousands less and then let their original home fall into foreclosure.

  • "It's the duck and weave," said Christopher Thornberg, an economist with Beacon Economics. "You're looking at (a similar house) down the block listed at half of what you bought (your house) for, so obviously the best move financially is to move from your house to that one."


  • [L]ocal real estate agents say an increasing number of their clients are asking about buying another home for cheap with no intention of keeping the first home. Agents said the homeowners typically do not intend for the first home to enter foreclosure, but instead hope to short sell the home, or sell it for less than the balance on the mortgage with the bank's approval. If the home cannot sell, it will then fall into foreclosure.

For more, see Fannie Mae cracking down on 'walk aways' (New guidelines make it more difficult to purchase a second home).

In a related story on "Buy and Bail" home purchases, see:

Local Cop Helps Northern California Widow Snagged In High Pressure Lending Scheme Dodge Foreclosure

In Redding, California, the Redding Record Searchlight reports:
  • There's nothing like a call or two from a police financial crimes investigator to persuade a mortgage company to rethink a loan that left an ill widow teetering close to foreclosure after she was conned in a high-pressure lending scheme. "I kept imagining, What if they had done that to my mom,'" said Redding police investigator Matt Zalesny. "I'd be so enraged." Zalesny's efforts to help Joyce Atwood, 58, keep her Redding home began this spring.

For more, see Police help woman escape foreclosure after predatory loan.

For story update, see Redding police pounce on case of lending scam.

Cincinnati-Area Group Sues Deutsche Bank; Blames Institution For Abandoned Homes, Spreading Blight

In Cincinnati, Ohio, WKRC-TV Channel 12 reports:

  • Neighbors who live in Price Hill are taking on one of the world's largest banks. Price Hill Will is suing Deutsche Bank, accusing it of not taking care of the homes it has in foreclosure. The group blames the bank for virtually abandoning hundreds of homes, spreading blight in Price Hill. The suit asks the court to force Deutsche Bank to maintain its properties in accordance with local housing and health codes.

Source: Price Hill Group Sues Deutsche Bank.

See also:

Thursday, July 10, 2008

Florida Hotline Helps Placing Homeowners Facing Foreclosure With Pro Bono Attorneys

In Tallahasse, Florida, the Pensacola News Journal reports:

  • Florida Agriculture and Consumer Services Commissioner Charles H. Bronson encourages homeowners who are threatened with foreclosure, or fearful that their lending institution may foreclose on their property, to contact the Florida Bar Association to obtain free legal assistance.


  • Florida Legal Services and the Florida Bar Association have partnered in establishing a toll-free hotline -- 1-866-607-2187 -- that consumers can call to answer a few initial questions about their situation to ensure accurate placement with a free attorney. The attorney will then negotiate with the lender on behalf of the client to keep the home from being foreclosed. "I applaud Florida Legal Services and the Florida Bar for offering this public service," Bronson said. [...] More than 10,000 Florida attorneys have volunteered their services in the program, according to Florida Legal Services Inc.

The hotline is for those Florida homeowners (1) who fear they may soon be unable to make their mortgage payments, or (2) who have already missed payments.

For more, see Free legal aid for troubled homeowners.

Go here for more on FLASH - Florida Attorneys Saving Homes, a collaborative effort of The Florida Bar, The Florida Bar Foundation, Florida Legal Services, and the Real Property Probate and Trust Law Section designed to provide pro bono assistance to distressed homeowers.

  • The concept for the project began with the announcement from the banking industry of their HOPE NOW and Project Lifeline Projects,” [executive director of Florida Legal Services, Inc. Kent] Spuhler said. “We felt homeowners having trouble with their mortgage would have better success negotiating with their lender if they had the assistance of an attorney.”

Naples-Area Task Force To Offer Free Pro Bono Foreclosure Law Clinic

In Naples, Florida, the Marco Eagle reports:

  • The clinic will feature over 20 pro bono attorneys and other volunteers, and will be conducted from 9 a.m. - 4 p.m. The event is open to the public, and will provide opportunities for individual advice and counsel sessions with a pro bono attorney to address foreclosure related legal issues.

For more, see Seminar to offer advice on handling foreclosure-related legal issues.

According to their website, the Collier County Foreclosure Task Force is a cooperative effort between the Legal Aid Service of Collier County and the Collier County Bar Association formed to promote foreclosure prevention.

South Florida Feds Tag Seven Suspects In Another Alleged Straw Buyer Fraud Scam; Involves 18 Homes & $10M In Mortgages, Say Prosecutors

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • Federal prosecutors announced mortgage fraud charges Wednesday against seven residents of Broward and Palm Beach counties accused of fraudulently obtaining home loans worth $10 million to buy area properties. Between January 2003 and August 2006, Anthony Dehaney, 56, used straw buyers and false documents to purchase more than 18 Broward homes — including a $1.4 million Coral Springs home and three properties on 26th Street in Wilton Manors, prosecutors allege in an indictment unsealed this week. Authorities arrested Dehaney and his wife, Andrea Dehaney, 42, both of Coral Springs, late Tuesday afternoon, in the latest of a string of arrests in a federal crackdown on mortgage fraud.(1)

For more, see 7 South Floridians charged with mortgage fraud.

From the U.S. Attorney's Office, Southern District of Florida:

(1) Also charged in the 60-page, 28-count indictment are defendants Howard Gaines, 57, of Delray Beach, FL; Marcia Mestre, 51, of Lauderhill, FL; Beverly Ireland, 51, of Plantation, FL; Donna Patricia Grant, 49, of Wilton Manors, FL; and Angela Manalaysay, 37, of Plantation, FL.

Memphis-Area Victims Of High Cost Home Improvement Loans Reach Legal Settlement

In Memphis, Tennessee, Memphis Commercial Appeal reports on a story on Equity Title, a now-defunct local title & escrow company that reportedly specialized in closing high-fee, high-interest mortgages, most marketed to the African-American community. The company, in which a local law firm reportedly owned an indirect 50% interest in it, and a number of alleged predatory lenders became the targets of lawsuits claiming unfair practices. An excerpt from the story:
  • Memphis Area Legal Services, representing 17 Memphians against Equity Title and a host of other alleged predatory lenders, alleged in federal court that Equity Title deceived loan applicants by piling on charges and backdating closing documents, among other claims.


  • The last of the plaintiffs settled their claims out of court in June. Hawkins and the others received a settlement of $1.3 million in money damages and $1.7 million in mortgage restructuring. As a result of that lawsuit and others, Equity Title has gone out of business.

For more, see Predatory Lending: Boom and Bust (Clients fought back over subprime loans; Firm targeted high-cost notes to black borrowers).

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

Disabled Man Scammed Out Of Home Equity By Gypsy Scammers; Lifelong Home Now Faces Foreclosure

In Long Beach, California, the Press Telegram reports:
  • Stephen was born and raised in Long Beach, grew up in the home owned by his parents, and thought he would live there until the end of his days. That was before a local Gypsy family lured him into their fold, stripped his property of every stick of furniture and everything of value, and mortgaged his house beyond salvage, police said.

  • Now Stephen, whose full name is being withheld to protect his identity, has his childhood home in foreclosure and is left to rebuild his life at the age of 51. The three people who scammed him were later convicted.

  • "Like a lot of people, I used to think Gypsies danced with tambourines ... and told people's fortunes," said [Long Beach Police Department Forgery and Fraud Unit's David] Lanier. "(After joining the National Association of Bunco Investigators) I learned (that many of them) are part of a criminal organization." "They're like the Mafia," Detective Stacey Holdredge added.

For the details of how the scam group gained their victim's confidence, and the Long Beach Police Department's investigation that led to the bust of the group, see Fraud shatters disabled man's life.

South Florida Mortgage Fraud Suspects Face New Charges Of Improper Use Of Another's ID To Obtain Mortgage

In Miami, Florida, WPLG-TV Channel 10 reports:
  • Three family members, all real estate professionals and investors named in a sprawling mortgage fraud investigation, returned to court Tuesday to face new charges. Mariana Navarrete, husband Jose Rodriguez and 22-year-old Luis Navarrete were booked on three additional charges of grand theft and organized fraud. The latest charges stem from an investigation involving their handyman, whom they helped obtain a mortgage and a home equity loan.

  • Detectives said the couple then used Mauricio Vaca’s identity, without his knowledge or permission, to obtain a mortgage for a home in Kendall. They then allegedly falsified papers to sell that home to themselves, pocketed the profit and abandoned the home. Vaca, who had no idea a home had been purchased in his name, learned something was amiss when he began receiving foreclosure notices on the home he didn’t know he owned. He has given statements against his former employers to detectives.

  • Last October, Navarrete was arrested in the first sweep of Miami-Dade County’s new task force targeting mortgage fraud. Investigators named her as a ringleader in what they dubbed a “family affair.” They also arrested her ex-husband and two sons for grand theft and fraud. Mother and son Navarrete and husband Jose Rodriguez are accused of profiting from more than $6 million in mortgage fraud crimes.

Source: 'Family Affair' Suspects Face New Charges In Alleged $6 Million Mortgage Fraud Crimes.

Nine Straw Buyers Among 11 Suspects Sentenced To Prison In Mortgage Fraud Scam

In Texas, KEYETV Channel 42 reports:
  • A federal judge gave hefty prison sentences to 11 Central Texans involved in a mortgage fraud scheme. U.S. Attorney Johnny Sutton said Tuesday 16 people in all were part of the scheme. It involved at least 33 properties, 19 financial institutions and more than $4.5 million in losses. Beginning in September 1999, the defendants were defrauding mortgage lenders in the Austin and San Antonio area.

For more, see Austin Federal Judge Sentences 11 In Housing Fraud Scheme.

Atlanta Code Enforcers Begin Clipping Listing Agents For Building Violations On Run-Down Homes For Sale

In Atlanta, Georgia, The Atlanta Journal Constitution reports:
  • Atlanta real estate agents trying to weather the slumping market by selling foreclosures have run into an unexpected problem with a city government tired of neighborhoods overrun with derelict properties. City code inspectors have begun ticketing some listing agents, holding them liable for code violations on run-down properties they are selling, often for out-of-state institutions.

  • Several agents with similar properties have been hauled into court over the past few weeks — yet another offshoot of a foreclosure crisis that's spread across the region but hit certain intown neighborhoods especially hard. Agents, already under pressure from declining sales, say the city's unfairly picking on them because they are easy targets. The city, they say, should be applauding their efforts to get foreclosed properties into the hands of new owners who will properly care for them. City officials say they just want some of the blight cleaned up.

Reportedly, the City of Atlanta nailed one local agent with $3300+ in fines last month in connection with one of his real estate listings.

For more, see Atlanta ticketing real estate agents for run-down properties. neighborhood destruction from foreclosures kappa

Wednesday, July 09, 2008

Brooklyn Judge Presides Over A Corporate "Kansas City Shuffle" In Foreclosure Action?

In a Brooklyn, New York foreclosure action decided in January, 2008, certain actions involving the acquisition of a mortgage in default and the subsequent execution of the assignment documents by the mortgage "entities" IndyMac Bank, Deutsche Bank and Mortgage Electronic Registration Systems left one Brooklyn trial judge scratching his head. In denying foreclosure (with a right to refile the action) against a local homeowner, Brooklyn Supreme Court Justice Arthur M. Schack (wondering if he was presiding over a corporate "Kansas City Shuffle"- explained below) writes:
  • With the assignor MERS and assignee DEUTSCHE BANK appearing to be engaged in possible fraudulent activity by: having the same person execute the assignment and then the affidavit of facts in support of the instant application; DEUTSCHE BANK's purchase of a non-performing loan from INDYMAC; and, the sharing of office space in Suite 400/500 in Kansas City, the Court wonders if the instant foreclosure action is a corporate "Kansas City Shuffle," a complex confidence game. In the 2006 film, Lucky Number Slevin, Mr. Goodkat, (a hitman played by Bruce Willis), explains (in memorable quotes from Lucky Number Slevin, at

  • "A Kansas City Shuffle is when everybody looks right, you go left . . . It's not something people hear about. Falls on deaf ears mostly . . . No small matter. Requires a lot of planning. Involves a lot of people. People connected by the slightest of events. Like whispers in the night, in that place that never forgets, even when those people do."

  • In this foreclosure action is plaintiff DEUTSCHE BANK, with its "principal place of business" in Kansas City attempting to make the Court look right while it goes left?

For more, see Deutsche Bank Natl. Trust Co. v Maraj; 2008 NY Slip Op 50176(U) [18 Misc 3d 1123(A)]; Decided on January 31, 2008, Supreme Court, Kings County.

For an article containing some observations on this case, see New Rules Toughen Servicers' Foreclosure Procedures.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs gamma

Public Citizen Gets Another Foreclosure Overturned Due To Lack Of Proper Notice To Homeowner; Michigan High Court Overturns Two Lower Court Decisions

In Washington, D.C., Public Citizen Litigation Group recently announced:
  • In an important victory for consumers, the Michigan Supreme Court unanimously ruled [last] Wednesday that the Wayne County Treasurer violated a 75-year-old woman’s constitutional right to due process by foreclosing on her house without notifying her first.

  • In overturning a lower court ruling, the justices noted that the county treasurer did not send a notice to Stella Sidun’s Birmingham, Mich. home, despite having her address readily on hand on the deed to the property. Instead, the county sent notices to the old address of Sidun’s late mother, who had been a co-owner of the property. Public Citizen and local counsel John Hermann had argued that the return of the certified-mail notices should have been a red flag that the notice had failed.

  • Especially during the current foreclosure crisis, consumers should be able to trust that government agencies and banks will make a good faith effort to contact them before attempting to foreclose on their property,” said Public Citizen attorney Deepak Gupta, who argued on Sidun’s behalf before the Michigan Supreme Court. “The lack of effort to track down Ms. Sidun was appalling. We applaud the high court for sending a strong message to those who might take a homeowner’s right to due process lightly.”


  • After she lost the property, which had provided her retirement income, Sidun sued the county. The trial court ruled against her, as did the appellate court. In reversing the lower court decision, the Michigan Supreme Court found that the lower court’s ruling conflicted with the U.S. Supreme Court’s 2006 decision in Jones v. Flowers, another case in which Public Citizen lawyers successfully challenged the lack of notice of a home foreclosure. Sidun’s case now goes back to the circuit court, where she has the option of seeking compensation or reclaiming her home.

For more, see Michigan Supreme Court Overturns Foreclosure, Rules Owner Not Given Proper Notice (Public Citizen Argued That Woman’s Right to Due Process Violated).

For links to the related court documents (brief, reply brief, and Michigan Supreme Court decision), see Sidun v. Wayne County Treasurer.

Go here and go here for other posts on foreclosures involving faulty notifications to property owners. SidunFaultyForecloseNotice

Alleged Mortgage Scam "Identified" By Rejected Borrower's ID Theft Report

In San Diego, California, the San Diego Union Tribune reports:
  • Last year, an Orange County man was rejected for a personal loan at his credit union. To his surprise, his credit report had been red-flagged because he was six months behind on mortgage payments on a $660,000 home in Oceanside. That was news to him. He had never bought a house in Oceanside. So he contacted police, who uncovered that his identity had been stolen to make the purchase in October 2006.

  • Now the home on Overlook Drive is in foreclosure. The real estate agent involved in the deal, Robert Hugh Decker, is in custody in San Diego. Prosecutors allege that Decker's company was paid nearly $37,000 in commissions and that he was collecting $1,800 per month in rent from tenants.

For more, see Foreclosures bringing cases of alleged fraud to light (Alleged Scams include ID theft and cash kickbacks).

Kansas Appeals Court Jams Judgment Creditors In Failed Attempt To Circumvent State Homestead Law

In Kansas, The Kansas City Star reported last month:
  • From the time it entered the union in 1861, Kansas has had a constitutionally enshrined homestead exemption, barring [judgment] creditors from forcing the sale of a family’s home. That means that court judgments, which typically attach to real estate, don’t attach to the family homestead. That’s been the law since 1869, when the Kansas [Supreme Court] ruled to that effect in a case called Morris v. Ward.

  • Two judgment creditors recently tried to circumvent that principle of Kansas law. They argued that the homestead exemption only prevented them from enforcing their judgment liens as long as the property remained a homestead or until the mortgage holder instituted foreclosure proceedings against the property.


  • The trial court disagreed, citing the homestead exemption, [...] and last [month] the Kansas Court of Appeals ruled that the 139-year-old Morris case remains good law in Kansas.

For more, see Kansas homes remain safe from court judgments (if link expires, try here or try here).

For last month's decision of the Kansas Court of Appeals, see Deutsche Bank Nat'l Trust Co. V. Rooney, et al. (Kansas Court of Appeals; June 20, 2008).

For a recent failed attempt by a judgment creditor to circumvent the Florida Homestead law, see Homestead Waiver Declared Invalid; Big Win For Florida Homeowners As State Exemption From Forced Sale Dodges Bullet.

IndyMac: A Case Study In Rise & Fall Of America’s Mortgage Market?

A June 30, 2008 report issued by the Center for Responsible Lending ("CRL") states that an investigation they have conducted "has uncovered substantial evidence that IndyMac Bank and its parent, IndyMac Bancorp, engaged in unsound and abusive lending during the mortgage boom, routinely making loans without regard to borrowers’ ability to repay. These practices left many deep in debt and struggling to avoid foreclosure."

Their report begins with the following introduction:

  • IndyMac’s story offers a body of evidence that discredits the notion that the mortgage crisis was caused by rogue brokers or by borrowers who lied to bankroll the purchase of bigger homes or investment properties. CRL’s investigation indicates many of the problems at IndyMac were spawned by top-down pressures that valued short-term growth over protecting borrowers and shareholders’ interests over the long haul.

For the CRL report, see IndyMac: What Went Wrong? (How an "Alt-A" Leader Fueled its Growth with Unsound and Abusive Mortgage Lending).

For two examples of homeowner lawsuits IndyMac faces as a result of their alleged lending practices (available online courtesy of the Center for Responsible Lending):

  • Simeon Ferguson v. IndyMac Bank, U.S. District Court for the Eastern District of New York, filed February 14, 2008 (His attorneys claim a mortgage broker steered 86-year old Mr. Ferguson, who was suffering from dementia, into an IndyMac "stated income" loan program for retirees. IndyMac made no effort to verify retirees’ income, attempting to duck accountability "by deliberately remaining ignorant of the borrower’s ability to pay the mortgage," his lawsuit says ),

  • Elouise Manuel v. American Residential Financing, Inc., et al, Superior Court of Gwinnett County, State of Georgia, April 3, 2008 (In the case of Elouise Manuel, a 68-year-old Decatur, Georgia retiree, IndyMac instructed the mortgage broker to send copies of her Social Security award letters with the dollar amounts expunged: "Need copy of SSI letter blacked out for the last 2 yrs w/no ref to income", according to the lawsuit),

  • Willie Lee Howard v. Countrywide Home Loans Inc. et al., U.S. District Court for the District of Columbia, March 25, 2008 (According to CRL, Mr. Howard’s allegations echo those in other legal claims against IndyMac. Lawsuits accuse IndyMac of working with independent mortgage brokers to land borrowers into predatory loans. Several of the lawsuits claim that borrowers were bamboozled by brokers who promised low, low rates that would last a year or even five years. Instead, the lawsuits say, the teaser rate evaporated within one or two months. Along with IndyMac and Countrywide, other lenders named as defendants include Washington Mutual Bank and WMC Mortgage Corporation).

The following class action lawsuit attempts to take IndyMac to task with respect to their allegedly deficient lending practices:

Tuesday, July 08, 2008

Maryland Statewide Foreclosure Prevention Pro Bono Initiative Begins This Week

The Baltimore Sun reports:

  • As foreclosure cases continue to mount unabated, Maryland nonprofit groups, elected officials and the courts are joining forces to urge attorneys to help residents in danger of losing their homes. Called the Foreclosure Prevention Pro Bono Project, the effort will train lawyers to take on cases, advise homeowners or assist housing counseling agencies. Training sessions begin this Thursday in Baltimore and are scheduled throughout the state over the summer.


  • [Baltimore nonprofit legal services network] Civil Justice says it [...] intends to show attorneys that there are opportunities to make money through court-awarded fees. "While they're helping and doing good, they may be able to do well," said Civil Justice's [Phillip] Robinson, who won attorney fees last week for a foreclosure case in Montgomery County Circuit Court as well as damages for the homeowner.

For more, see A cry to help save homes in Maryland (Top judge seeks to stop foreclosures).

Go here for registration and for schedule of attorney training sessions.

Go here for other posts referencing legal fee awards in pro bono cases. legal fee pro bono

Restructuring Home Loans Foremost In Mass AG's Mind When Zero-ing In On Lawsuit Targets

In Boston, Massachusetts, Reuters reports:
  • From suing one subprime-mortgage lender for unfairly targeting blacks to ordering another to halt all foreclosures, Massachusetts is at the heart of a state-led assault on America's predatory lenders.

  • At the center of the first-in-the-nation litigation is a career prosecutor sworn in last year as the state's first female attorney general, Martha Coakley, who said she was considering more lawsuits aimed at holding subprime lenders accountable.

  • But as subprime lenders face growing anger and litigation across the United States, she cautioned that courts are not always the answer. "One of the things we keep in mind is: Do we sue or do we try and negotiate something in the meantime? Because the biggest problem right now is trying to get the attention of the lenders and brokers to try and restructure as many mortgages as possible," she told Reuters in an interview.

For more, see To sue or not to sue? Top attorney eyes banks.

Questionable Colorado Springs Home Sales Get Closer Look

In Colorado Springs, Colorado, The Gazette reports:

  • The Colorado Real Estate Commission has subpoenaed a Colorado Springs title company's files related to a series of house sales on Balsam Street that resulted in five foreclosures. [...] The subpoena ordered Legacy Title Group to turn over all documents related to the sale of houses at 5134, 5144, 5164, 5174 and 5184 Balsam Street.


  • On April 15, [El Paso County Assessor Mark] Lowderman asked [Colorado Division of Real Estate director Erin] Toll to look into allegations and admissions made by Colorado Springs landscaper Andrew C. Aranda, who bought all five of the houses within a 48-hour period in November 2006, using $1.9 million obtained from five lenders.


  • The five houses ended up in foreclosure; four have resold, each for about $100,000 less than the price Aranda paid.

For more, see Title company’s files subpoenaed (Possible kickback scheme investigated).

For more from The Gazette on this story, see:

Court OKs Stiffing Of Lender On Fire Loss Claim; Servicer's Failure To Notify Insurer Of Commencement Of Foreclosure Action Voids Coverage

Insurance companies looking to get out of having to pay out on a hazard insurance claim when a home in foreclosure goes up in smoke is the subject of this post.

Back in March, Tennessee & Arkansas attorney Toney Brasuell, with the law firm of Wilson & Associates, P.L.L.C. reported at Housing Wire that a Tennessee appeals court ruled that an insurance company properly rejected a fire loss claim submitted by a mortgage lender when the servicer failed to notify the insurer of the commencement of foreclosure proceedings on a home that subsequently caught fire and was destroyed.

Reportedly, the decision is currently on appeal to the Tennessee Supreme Court.

For more, see Insurers, Lenders Fight Over Foreclosure’s Policy Impact.

For the court decision, see U.S. Bank v. Tennessee Farmers Mutual Insurance Company (Tenn. App. Ct.; Case No. W2006-02536-COA-R3-CV - December 21, 2007).


For another post where a foreclosing lender was left holding the bag on a home in foreclosure that went up in smoke, see Judge Jams Foreclosing Lender's Improper Grab For Excess Insurance Cash On Fire-Destroyed Home.

For other stories on fires & foreclosures, go here, go here, go here, and go here. foreclosure arson whale

Florida Federal Jury Convicts Six Straw Buyers In Alleged Scam Involving $15M+ In Fraudulently Obtained Loans; $5M+ In Lender Losses

Th U.S. Attorney for the Southern District of Florida, jointly with several other law enforcement officials, recently announced that:
  • [A] jury convicted the remaining six defendants, Jaqueline Perez-Castillo, Yanny Cruz Pavon, Lizabeth Perez, Erick Clavijo, Aurora Ramentol, and Ester Crespo of fraud in the matter of United States v. Juan Torrens, et al, [...]. The six defendants convicted were straw buyers in a mortgage fraud scheme in South Florida that resulted in more than $15,000,000 in fraudulent loans, and losses of more than $5,000,000 to lenders. With [last Thursday's] convictions, all 31 of the defendants originally charged have been adjudged guilty.(1)

For more, see Jury Convicts Last Six defendants Involved In Multi-Million Dollar Mortgage Fraud Scheme.

For a copy of the original indictment, see United States of America vs. Torrens, et al.

(1) According to the U.S. Attorney's press release, "this case revolves around defendants Juan Torrens, the de facto owner of Amsouth Trust & Investment Corp. (“Amsouth”) and president of Countryside Land & Development, Inc., Rachael Torrens, president of 1st Choice Realty of South Florida, Inc. and de facto owner of First United Mortgage USA Corp., Daniel Ramos, Alfonso A. Muxo, a State of Florida certified real estate appraiser and owner of Palm Bay Real Estate Appraisals, Inc., and Katherine Harris, former president and part owner of Floridian Home Title Corporation, all of whom were charged with conspiracy to commit wire fraud and/or wire fraud for their participation in a massive mortgage fraud scheme. Their scheme involved fraudulent mortgage loans obtained for the purchase of 28 properties located in Miami-Dade and Broward Counties, and in the City of Marco Island. All those charged in the conspiracy pled guilty, and are awaiting sentence."

The press release continues: "Also charged in the Indictment were defendants Mario E. Diaz, Aurelio Pozo, Oscar Barreiro, Lellany Rodriguez, Jose Asensi, Carlos Morales, Damaris Jimenez, Lizabeth Perez, Mario Blanco, Rene Rodriguez, Tamaris Angulo, Alicia Loaiza, Ester Crespo, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Erick Clavijo, Luis DeJesus Planas, Moises Llorens, Milva Roque, Aurora Ramentol, Gladys Lens, Nancy Fundora, Yanny Cruz Pavon, Roger Rosario and Jacqueline Perez-Castillo (“the straw buyer defendants”). These defendants were charged with wire fraud for their participation in this mortgage fraud scheme."

Consumer Guide On New Maryland Foreclosure Law Now Out

In Baltimore, Maryland, the Maryland State Bar Association recently announced:
  • [I]n light of new state foreclosure laws, the Maryland State Bar Association (MSBA) has just released a newly revised foreclosure proceeding legal information guide and is giving it away free to Maryland consumers as a public service.

  • MSBA’s Foreclosure Proceedings in Maryland public awareness brochure offers assistance to consumers facing or fearing a foreclosure. This free pamphlet provides legal information to help the public better understand the new foreclosure law, effect April 4, 2008, which offers new protections for homeowners. It explains the new law in basic terms and outlines the steps of the revised foreclosure process, including new notice requirements and extended time periods for foreclosure sales, so consumers know what to expect when facing a foreclosure situation.

For more, see:

Monday, July 07, 2008

Legal Services Firm Helps Newark Man Succeed In Keeping Home After Being Snagged In Alleged Equity Stripping Scam

In Newark, New Jersey, The Star Ledger reports:
  • [Aleem] Morris was the victim of a mortgage rescue scam that promised to help get him out of debt and keep the Newark home on North Munn Avenue out of foreclosure. Instead, the so-called foreclosure specialist stripped the home of equity, had someone take the deed and borrow as much as possible against the value of the home. [...] With the help of Abbott Gorin, an attorney with Essex-Newark Legal Services, a Superior Court judge stopped the foreclosure and Morris obtained a reverse mortgage.


  • He filed a complaint with Superior Court Judge Kenneth Levy, who stopped the foreclosure, rescinded the second mortgage and allowed Essex-Newark Legal Services to intervene and help Morris. [The foreclosure rescue operator] and the straw buyer were subpoenaed but never showed up in court.

For more, see One man's relentless fight for his home. foreclosure rescue

Two Financially Strapped Boston-Area Homeowners Get Mired In Foreclosure Rescue Deals Gone Sour

In Boston, Massachusetts, WBZ-TV ran a story on the experiences two local homeowners reportedly had with a local foreclosure rescue operator:
  • He says he's trying to help people take back their lives and save their homes from foreclosure. He says he'll pray for you and your family. But the I-Team looked into John Seigler's business deals and discovered Seigler and his associates aren't praying for people -- they're preying on poor people and taking their homes. There's no stopping Marie Magny, one of the associates of Blue Hills Investors Group, as she's out for a walk. We wanted to ask her why some say she's working with John Seigler and swindling people's homes, but when she saw our camera she picked up the pace.


  • These homeowners say Seigler and Magny led them down a dead end headed for foreclosure and took their homes along the way. According to court documents obtained by the I-Team, they were told to stop paying their mortgages and to sign their deeds over to Magny to stop the foreclosure. [...] The civil suits against Seigler also name the banks and mortgage companies involved in these deals.

For more, see Foreclosure Rescue Scheme Preys On Poor (read story) (watch video).

In a related story, see WBZ-TV: I-Team: Alleged Home Swindler Preyed On His Family.

Massachusetts Man Fights To Keep Home Lost In Alleged Unwitting Title Transfer

In Boston, Massachusetts, the Boston Herald reports:

  • A disabled Navy veteran who’d hoped to save his Dorchester triple-decker from foreclosure has launched a legal battle accusing the man who now owns the house of duping him out of it, according to court records and interviews. But the purchaser, David A. Ouellette, 28, of South Boston, says far from deceiving the plaintiff, 60-year-old Calvin L. Morris, he helped Morris get out from under a money-losing property and cleared the vet’s debts in a fair deal.


  • Calvin Morris said he ended up homeless after signing documents he says he thought would pave the way for him to pocket $475,000 to $525,000 from his triple-decker’s sale. “It’s devastating,” said Morris, who bought the home at 124 Selden St. with his brother, Primas, 68, in 1971. “This has really taken a lot out of me. Things were promised to me that did not happen.”


  • Between May 23, 2006, and June 18, 2007, Calvin Morris signed 13 documents that put the real-estate sale in motion, placed 124 Selden St. into the proposed trust and eventually relinquished his interest in that trust to Ouellette. “Ouellette, in the mountain of paperwork, also tucked in another document that Mr. Morris signed within three seconds of the trust document which transferred the beneficial interest in 124 Selden St. to himself,” Morris’ attorneys, Linda G. Champion and Douglas T. Babcock, alleged in a May 12 memorandum filed in Massachusetts Land Court, where the case is before Judge Alexander H. Sands.

For more, see 1 house plus 2 owners equals big mess. foreclosure rescue

Missing Loan Docs, Lender Implosion Key To One Homeowner's Initial Success At Fending Off Foreclosure

Consumer Affairs recently ran a story on a financially strapped Independence, Missouri homeowner who has reportedly been having success at fending off a foreclosing mortgage company by, according to the story, "[c]ontesting the foreclosure on the grounds that between the implosion of the lender, the lack of a paper trail, and the bad terms of the loan, they were essentially defrauded and couldn't be held liable." An excerpt from the story:
  • "She [the homeowner] has been able to stop foreclosure three times, maybe four by demanding that the servicer attempting to foreclose show proof that they own the mortgage and they can't," [one consumer advocate] told "Because mortgages were sold again and again and then to Wall Street where they were securitized and sold all over the world, I wonder how many homeowners have been foreclosed by a company that couldn't even show proof that they owned the mortgage."

  • [The homeowner] says that more homeowners should challenge foreclosures by lenders who can't prove they legitimately hold the loan, and that many innocent buyers are the victims of "very unscrupulous activity" propagated by lenders and investors who are motivated by "nothing but greed."

For more, see Fighting Foreclosure: One Family's Story (How fighting back enabled a family to keep its home).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs beta

Attorney Fee Awards Imposed On Losing Lenders May Be Available In Successful Foreclosure Defense In Florida

Attorneys in Florida who are considering taking on the pro bono representation of a homeowner facing foreclosure may be interested in the possibility of converting their pro bono opportunity into a fee-paying, contingency fee case.

A 1999 court decision by a Florida appeals court illustrates how attorneys representing Florida homeowner/defendants in a foreclosure action can, if successful in their defense, request and may be granted court awarded legal fees, the liability for which will be imposed on the losing foreclosing plaintiff, the mortgage lender.

For more, see Attorney Fee Awards For Successful Foreclosure Defense In Florida, posted on the companion blog.

Go here for other posts referencing legal fee awards in pro bono (contingent fee) cases. legal fee pro bono

Sunday, July 06, 2008

Breaking A Lease-Option Contract? Some Considerations For Landlords

A recent Q&A columnn at notes some considerations for landlords seeking to terminate a lease-option arrangement with a tenant:

  • [T]here could be serious complications to breaking a lease-option before the tenant's option term expires. If the renters/buyers had the foresight to file a Memorandum of Agreement with the county clerk, indicating the tenants have an interest in the property, it may place a cloud -- though not a lien -- on your home's title. Further down the line, a prospective buyer may see this notation and demand the matter be resolved before moving forward with a sale.

  • Some lease-option tenants will fight eviction and claim in court they have an "equitable interest" in the property. The more "equity" the tenant has amassed, the more likely it is a judge will rule the arrangement an equitable mortgage, forcing you to go the foreclosure route. In some cases, the IRS has identified lease-option payments as installment-sale payments and made the original owner pay tax and penalties on them.

  • You didn't say whether the renters/buyers have lived up to their end of the agreement. If the tenant has stopped paying rent but the total option money you received thus far exceeds 5 percent of the agreed-upon purchase price, you may indeed be required to go through the foreclosure process.

For more, see Breaking a lease-option contract.

Editorial Note:

Any tenant entering into a real estate transaction involving a lease with an option to buy, lease-purchase, or other similar type of "deferred conveyance" home purchase would be well advised to go down to the local county government office where deeds and mortgages are recorded and record a memorandum of agreement showing the tenant's interest in the property.

Further, a prospective tenant may also want to make sure that the landlord holding him/herself out as the property owner is, in fact, the current title holder of the home.

If the prospective tenant has to ante up a significant cash deposit, it may be a good protective measure to obtain a title search of the subject property and possibly even a title insurance policy insuring the leasehold interest being acquired by the tenant, making sure the landlord is the true owner, and is not in foreclosure or is otherwise setting up the tenant for a rent skimming scam (where the landlord pockets the rent, fails to make the mortgage payments, and allows the home to go into foreclosure; for posts where tenants entering into these types of rent to own arrangements have gotten screwed over by the landlord, go here).

Finally, as noted in the article, if a landlord tries to terminate the lease-option early against the tenant's wishes (or if the tenant otherwise thinks he/she is getting screwed over by the landlord - like in a foreclosure rescue scam), the tenant might be able assert an equitable mortgage claim in court. If a judge agrees that an equitable mortgage claim is valid, the landlord will be unable to oust the tenant through eviction proceedings, but rather, will have to initiate a foreclosure action, treating the tenant as the actual owner and the landlord as a mortgage lender.

(For those looking to begin research on the case law on equitable mortgages and don't know where to start, try here, and then scroll down and click any of the "equitable mortgage posts by state" links in the sidebar on the left side of the page).

Florida Attorney Faces Discipline For Allegedly Pocketing Surplus Foreclosure Cash Belonging To Clients

In Central Florida, the Ocala Star Banner reports:

  • A Florida Bar referee will recommend that Orlando attorney Norman Sanders Moss be permanently disbarred for allegedly stealing money owed his clients, including a Marion County man. Referee Alan A. Dickey, who conducted the disciplinary proceedings in June, found Moss guilty of violating the Bar's rules regulating trust accounts. The matter now goes before the Bar's Board of Governors' July 23 to 27.

  • Moss, a 64-year-old retired Orlando attorney, allegedly absconded with a total of $107,000 of surplus foreclosure money owed to five clients, including $31,453.10 belonging to Nicolas Cabrera, Jr. of Marion County.

Surplus foreclosure money is simply the excess of the proceeds paid by a buyer for property sold at a foreclosure sale over the amount necessary to pay off the amount owed to the foreclosing lender. These overages were quite common in foreclosure sales during the recent real estate boom period; they're a lot less common now.

For more, see Lawyer may be disbarred for role in foreclosures.

No Fee For Brooklyn Attorney, Ordered To Pay Back $400K+ In Allegedly Improper Payments Taken In Guardianship Matter Of Retired Judge

In New York City, the ABA Journal reports:
  • Attorney Emani Taylor apparently was hoping to get $853,000 for three years of work as a guardian for a former New York judge. Instead, the New York lawyer got a lecture on legal ethics from Acting Supreme Court Justice Michael Ambrosio and a $403,000 surcharge for improper payments she had earlier made to herself from selling real estate owned by former Civil Court Judge John Phillips, reports the New York Law Journal. The article was reprinted by New York Lawyer (reg. req.).
  • [Judge] Phillips, who suffered from Alzheimer's, died in February at age 83. At one point he reportedly held real estate worth some $10 million. Taylor has been suspended from the practice of law by the Appellate Division, First Department, for, as Ambrosio puts it, "at best, withdrawing funds from the guardianship account for legal fees without court permission, or, at worst, intentionally converting guardianship funds."
For more, see No $853K Guardian Payday for N.Y. Lawyer; Also Hit With $403K Surcharge.
For a more detailed account of this story, see New York Lawyer: NY Lawyer Must Pay Back $403,000, Denied All of $853,000 Fee Request (free registration required).
  • Justice Ambrosio lacerated Ms. Taylor's performance, calling her conduct "egregious" and reflecting "a fundamental lack of understanding of what her role as a guardian entailed." At one point, he called her explanation for not producing time sheets and other records a "dog ate my homework excuse."
For earlier posts on this story, see:

L.A. City Attorney Steps In To Stop Attempted Illegal Foreclosure Evictions

In Los Angeles, California, KABC-TV Channel 7 reports:

  • [W]hat was once an eviction letter is now in shreds. City officials said the tenants at one South L.A. duplex and four other homes were illegally targeted for eviction by Countrywide after their landlords lost the buildings in foreclosures. "The brokerage house that represents Countrywide and sent that letter has agreed to rescind the letter today on this property by 2 o'clock," said L.A. City Attorney Rocky Delgadillo.

  • The problem is the building is rent-stabilized, which means the tenants, under city law, would be entitled to $6,800, all the way up to $17,000, if they were to be evicted. But the city says Countrywide is trying to skirt those payments.

  • The letter sent to the renters offered just $1,000 if they cleaned up their apartments and left by August 1, 2008. "This letter was in violation of city laws which forbid eviction just because a property changes ownership due to foreclosure," said L.A. City Councilman Eric Garcetti. [...] Countrywide issued a statement [...] saying the eviction letters were the result of a mix-up by a real estate agent working with the Calabasas-based mortgage lender [...].


  • The City Attorney's office [...] has opened an investigation into Countrywide's dealings with renters and wants to hear from others who may have faced the same kind of illegal eviction that [one tenant feature in the story] narrowly escaped.

For more, see Eviction notices wrongly sent to renters. countrywide consumer problems equity skimming unwittingly digamma