Saturday, March 21, 2009

Real Estate Agent Finds Two Starved Dogs In Foreclosed Marijuana Grow House

In Richmond, British Columbia, Richmond News reports:
  • The SPCA is looking for the owner or owners of two German shepherds abandoned in a former marijuana grow operation, with the prospect of laying animal cruelty charges. A real estate agent found the dogs -- one dead, the other starving -- on Monday when she went to change the locks on a house that had been handed back to the bank in a foreclosure.


  • The house had been the subject of a search in January by Richmond RCMP, who found a marijuana grow operation. Two males were arrested, but it appears no charges have yet been approved by the Crown. They therefore cannot be identified. The two men who were arrested in connection with the grow operation did not own the house, said Richmond RCMP Cpl. Jennifer Pound.


  • Pound said police officers who conducted the search were aware that there were dogs in the house, but did not remove them from the house or follow up to make sure they were OK because the two men who were arrested were released. It appears the [...] house was simply abandoned, along with the dogs.

For more, see Two dogs left to starve in grow-op. pot grow ops beta

The Evictors: A Day In The Life

The following assorted links are to stories covering those tasked with the job of conducting evictions:
  • Orlando, Florida: A day in the life...the ‘eviction lady’. Most residents of Orange County know Peggy Leonard as the “eviction lady.” She starts her days early, armed with dog biscuits for abandoned canines, hand sanitizer and flea spray for the grimy, foul-smelling homes she often encounters, and weapons including a gun and mace in case things get out of control. “It actually is a pretty dangerous job,” she said standing to the side of a door she is about to break into. “You never know if there is someone waiting on the other side with a gun.”

  • Abingdon, Virginia: Evictors say economy making already-tough job even harder. It’s the hardest part of his job: Telling those who’ve fallen on hard times they’ve got 72 hours to get out of their house. Washington County Sheriff’s Lt. Mike Olinger does it 75 to 80 times a year, normally. But at the current pace, he said, that number will be higher this year.

  • Las Vegas, Nevada: Henderson officer sees families grieve over evictions. In their Henderson office an hour before going out on the eviction, [Henderson County Constable Earl] Mitchell, [his deputy director Steve] Kilgore and Deputy Constable Dan McKeaney said they never know how people are going to react when faced with losing their home. "It can get highly emotional," Kilgore said. "I could see one of these situations blowing up and many people getting hurt."

  • Chicago, Illinois: A Personal Look at Foreclosures, By the Sheriff Who Won’t Do Them. At Newsweek, Sheriff Thomas Dart of Cook County in Chicago offers an unusually personal look at the process of throwing someone out of their home in a foreclosure eviction, something he still often refuses to do. Dart stopped doing evictions after discovering too many instances of owners with no notification by the courts or renters with no idea an eviction was coming. That problem was supposed to be addressed by a ban on evicting renters, enacted by Fannie Mae and Freddie Mac in January. The problem, Dart says, is that the ban isn’t always followed as of yet. Also, not everyone has a Fannie or Freddie loan.

  • Lucas County, Ohio: Lucas County Sheriff's Deputy sees human side of foreclosure evictions. A self-described optimist with a cheery smile and a voice that can border on perky, Deputy Sherry Stearns, 45, is the lone sheriff's deputy assigned to oversee foreclosure evictions. Deputy Stearns has encountered lots of eye-openers in the 10 months she's dislodged people from their homes. Among them: A suicidal homeowner; an elderly widow, unfamiliar with bill-paying, whose soldier son returned home from Iraq the day of her eviction; an older couple shocked to learn of a son's failed promise to make their mortgage payments, and far too many abandoned pets.

  • Miwaukee, Wisconsin: Foreclosure Detectives Clear Out Local Homes (After Multiple Warnings, Detectives Come To Clean House). It happens every day in the Milwaukee area; homes are foreclosed and families have to move out and cannot come back.
    Foreclosed families eventually get a final warning from the bank, but they have to move, and by law, the sheriff moves in with legal muscle and a moving truck. It's a day detectives don't look forward to.

Go here and go here for other posts on the encounters of police and sheriff's deputies carrying out home evictions. DeputyEvictionTheta

Wyoming Man Who Threatened Federal Judge, IRS In Defense Of Home In Tax Lien Foreclosure Gets 27 Months

In Gillette, Wyoming, The Associated Press reports:
  • A 60-year-old Gillette man has been sentenced to over two years in prison for threatening a federal judge and the Internal Revenue Service over the seizure of his home. Laurence E. Wolff was sentenced Friday by U.S. District Judge Alan B. Johnson, who ordered three years of supervised release after the 27-month prison term.

  • Wolff was convicted in December 2008 of mailing threatening communications to numerous government employees, including IRS employees, which stated that he would defend his property. In the letters, he threatened to kill any person who attempted to enforce the foreclosure. Prosecutors say Wolff barricaded himself in his house on Aug. 18, 2008, refusing to leave his foreclosed property. He was arrested on Aug. 29, 2008.

Source: Gillette man sentenced for threatening letters. DeputyEvictionTheta

Foreclosure Rescue - Criminal Indictments

In an attempt at doing a little housekeeping, I have placed links to the following indictments involving alleged foreclosure rescue scams on this post. I need them all in one place for future reference, and as I find more, they will end up on this page.

For those of you working in prosecutors' offices and law enforcement, feel free to use these indictments as templates when making your own cases.

For those homeowners who feel like they have been screwed over in an equity stripping or loan modification foreclosure rescue deal, and are told by law enforcement that there's nothing they can do because the situation is a civil, and not criminal, case, feel free to give the prosecutor or law enforcement investigator these indictments and ask them to explain what the difference is between your case and the cases descibed in these indictments.

Equity stripping, sale leaseback foreclosure rescue Federal indictments:


Upfront fee loan modification foreclosure rescue Federal indictments:


Equity stripping foreclosure rescue State felony complaints and indictments:


Upfront fee loan modification foreclosure rescue State felony complaints and indictments:

For other posts on criminal prosecutions of deed and mortgage scams generally, see:

Bride-To-Be's Wedding Plans, $6,700 Deposit Blown Out Of The Water By Reception Hall Facing Foreclosure

In Fall River, Massachusetts, WPRI-TV Channel 12 reports:

  • Most women dream of the perfect wedding. But, for one Fairhaven woman, her nuptials turned into a nightmare after she learned her reception hall is in foreclosure. The Abbey Grill, located at 100 Rock Street in Fall River, is scheduled to be auctioned off March 26. That's three months to the day when Breanna Levesque's wedding was scheduled to take place at the venue.

  • "This perfect dream wedding I worked on for 12 months to plan, I envisioned everything around, I bought my dress around this place, linens, everything," Levesque said.
    Levesque has already put down a $6,700 dollar deposit for the reception hall. Money she fears she will not get back. Employees said they were left high and dry as well.

For more, see Bride jilted by foreclosed venue (Reception hall closed just months before nuptials).

For the story of another couple left hanging with their wedding plans by the foreclosure of the Abbey Grill, and who face losing upward of $10,000 already paid, see Couple says Abbey left them stranded.

For a similar story in Oregon, see Gorge hotel's closure puts lovebirds, creditors in limbo.

Friday, March 20, 2009

New Hampshire Renter Scammed Out Of $1,000 By Phony Landlord

In Bow, New Hampshire, reports:
  • According to local business owner Ted Severance, desperate times have led some to very desperate – and illegal – measures. Severance, owner of Coastal Forest Products lumber yards in Bow and Bedford, recently said that a scam artist successfully tricked an unsuspecting woman out of a $1,000 money order by pretending to rent her a property that Severance’s company owns. The house, located on Dunklee Road in Bow, is currently without a tenant and sits adjacent to the lumber yard on property that Severance owns.

For more, see Bow woman loses $1,000 to scam artist.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

Ohio Renter Taken For $1,100 By Phony Landlord; Responded To Scam Ad Posted On Craigslist

In Columbus, Ohio, WBNS-TV Channel 10 reports:
  • The foreclosure crisis is drumming up business for criminals looking to scam people out of money, and 10 Investigates has uncovered a new scam where thieves pose as landlords and rent property that does not belong to them. Tim Dodge and his family fell victim to the scheme.

  • According to Dodge, the trouble started when he logged onto the Web site Craigslist to look for new home to rent. He browsed through listings and found a three-bedroom house in Grove City for $550 a month. "When I first pulled into the driveway, I looked around and said, 'It looks kind of cheap,'" Dodge said.

  • A short time later he met with the woman who listed the property, signed a lease, and handed over cash to cover the rent, 10 Investigates' Paul Aker reported. "I paid her $1,100 up front for the first two months rent," Dodge said. Then, on the same day that Dodge and his family were moving into the home, he learned that he had been duped. That's when the home's owner [...] showed up.

For more, see Scammers Evolve, Use Craigslist To Pose As Landlords.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

Loan Modification Firms Masquerading As Non-Profits?

In a story on loan modification scams, Minnesota Public Radio describes one way that some firms are using to circumvent state law prohibitions on collecting upfront fees:
  • [I]n Minnesota, it's illegal for so-called foreclosure consultants to demand money in advance for a loan modification. But a loophole allows nonprofits to charge fees upfront. Officials say that loophole has allowed scammers to masquerade as nonprofits, and take money from unsuspecting homeowners.

For the story, see New scam threatens struggling homeowners.

California Feds, State Law Enforcement Agencies Form Task Force Targeting Foreclosure Scams

Buried in a recent story by KFSN-TV Channel 30 in Fresno, California is this excerpt on the initiative led by the Feds in central California to combat foreclosure rescue scams:
  • [U.S. Attorney's office representative Kirk] Sheriff believes it's impossible to know how many homeowners have fallen victim to foreclosure rescue offers because some are too ashamed to report it. But people who do come forward with foreclosure rescue problems have a powerful new task force going after the scam artists.

  • FBI Special Agent in Charge Harriet Dugal said, "It's outrageous that things like that happen to others, it's extremely sad that's why we decided to join forces." The FBI and the US Attorney's office are working with local, state and other federal agencies from Stockton to Bakersfield specifically going after foreclosure con artists.

For the story, see Foreclosure Victims Fight Back.

Daughter Steals Deed To Dead Mom's Home, Then Attempts To Evict Siblings, Say Cops

In Livermore, California, the Contra Costa Times reports:
  • A woman who investigators say fraudulently changed the deed to her dead mother's house was arrested after she tried to evict several other family members who lived there, police said [last week]. Donna May Dennis, 47, of Livermore, and 56-year-old Mariefe San Juan Bago, of Fresno, have been in custody at Santa Rita Jail in Dublin since their arrests Feb. 27, Livermore police Lt. Matthew Sarsfield said. "They both conspired to commit these crimes," he said.


  • Dennis forged her mother's signature on the "quit claim" deed and Bago notarized it, authorities have said. After she became the owner of the home, she tried to evict several siblings, who immediately suspected her of forging the documents, police said.

For more, see Altered deed leads to 2 arrests, police say.

Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedGammaTheft

Fighting Foreclosure & Winning In Miami

The Today Show on NBC ran a story Thursday on homeowners in foreclosure in Miami, Florida who are fighting back against their mortgage lenders. Among the highlights of the story was coverage of a recent seminar conducted in Miami in which 50 local attorneys volunteered their advice to some 300 homeowners who showed up for the gathering. Also, one homeowner who was interviewed reportedly not only fought back and beat the bank, but she got back her home free of the mortgage loan.

For more (video only, approx 3 minutes), see Fighting Foreclosure.

State AGs Opting For Civil Lawsuits In Lieu Of Criminal Prosecutions In Combatting Foreclosure Scams

A recent Associated Press story reports on how some state attorneys general are pursuing loan modification scams:
  • [W]hile some states have recently toughened penalties for perpetrating the booming business of foreclosure scams, and some prosecutors have used existing fraud statutes to bring criminal charges, the reaction of many state prosecutors are civil actions designed to recover a victim's money.


  • Florida Attorney General Bill McCollum has filed several civil lawsuits, including one against a company with an estimated 600 clients. So have attorneys general in at least a dozen states.

  • In Maryland, state criminal prosecutors have filed no charges under that state's new foreclosure-rescue statute. Ditto in Massachusetts, which recently barred for-profit mortgage-foreclosure rescues entirely. "We found these cases are more appropriately brought in civil court, where we can get better remedies for the victims,"' said Amie Breton, a spokeswoman for Massachusetts Attorney General Martha Coakley.

  • In Alabama, the attorney general's office usually reaches out to the foreclosure-relief firms first to find out if there is any money to recover before seeking criminal charges, said Rushing Payne, chief of the office's Consumer Protection Division. "It depends on the nature (of the allegations) and what we're able to prove," Payne said, adding there had been no convictions for foreclosure rescue scams in the past year.

  • In several states, attorneys general can only bring a criminal case when asked by a local district attorney. In others, they lack the jurisdiction entirely. There are some attorneys general making criminal cases.

  • In Arizona, Attorney General Terry Goddard has brought three cases this year on felony theft, fraud or money-laundering charges. Two defendants pleaded guilty, and the third case is pending. In California, the attorney general's office busted a fraud ring last November that had collected upfront fees ranging from $1,500 to $5,000, stealing more than $700,000 from homeowners in all. Three people have pleaded guilty to grand theft charges and received sentences ranging from probation to 6 years in prison.

  • Lawmakers in Nevada, which has one of the highest rates of foreclosure rates in the country, took steps last fall to make foreclosure fraud a criminal offense. So far, five people have been charged under the new statute, none have yet gone to trial. The new law there makes defrauding a homeowner in foreclosure a felony punishable by up to 20 years in prison and a $50,000 fine.

For the story, see It's boom time for foreclosure scam artists (Only in a few states are attorneys general offices willing and able to seek criminal charges and jail time against foreclosure con artists) (if link expires, try here).

As Builders Of Partially Built Projects Take A Hike, Some Lenders Find Themselves Reluctantly Becoming Real Estate Developers

In South Florida, the Daily Business Review reports:
  • When lenders threw millions of dollars at residential projects throughout South Florida, they probably didn’t expect that one day they’d take on the role of developers and begin running projects themselves. To their dismay, that day has come. From finishing construction of incomplete projects to forming real estate units to manage foreclosed properties, lenders have become deeply involved in the development process.

For more, see Condo Meltdown: Some lenders forced to take role of developers.

Thursday, March 19, 2009

Another Homeowner Curent On His Mortgage Payments Gets Hit With Foreclosure Notice

In Woodland, Washington, KPTV Channel 12 reports:
  • An unwarranted foreclosure notice gave a southwest Washington man a big scare [recently]. Kraig Neet said he was baffled when he returned to his Woodland, Wash., home on [...] and found a notice of default posted on his house. The notice said he had to come up with $290,000 to stop the foreclosure and reinstate his mortgage.


  • Over the next three days, Neet tried to find out why he was served with the foreclosure notice. On Monday afternoon, he finally received an answer -- an attorney had simply made a mistake.

For more, see Foreclosure Notice Wrongly Posted On Home ('How In The World Can This Happen To Us?' Woodland Man Says).

Go here and go here for other posts on foreclosure screw ups involving improperly changed locks, removal of belongings, etc. ScrewUpsLockOutsInForeclosure

Mistake By Auction Firm In Identifying Foreclosed Home Results In Break-In; Authorities Refuse To Prosecute

In Mansfield, Ohio, the Mansfield News Journal reports:
  • Carolyn Holland is not behind on her mortgage payments, nor is she facing foreclosure. But last September, her Lucas property was listed, with accompanying photos, on an auction Web site as a foreclosed home. In a case of mistaken identity, Holland's pottery shop at 24 N. Union St. was taken for the property actually in foreclosure, at 24 S. Union St. She said the mistake was avoidable and could have put someone's life in jeopardy.


  • One day an interested buyer told her husband, Larry, the property had been foreclosed on, which surprised Carolyn. Days later, Holland went to her business and noticed the back door had been forced open. A new door knob and lock box had been attached to the door. She could tell the property had been altered because all the cabinets, doors and closets were open.


  • Holland called the sheriff's department and filed a criminal complaint for breaking and entering and informed them of the foreclosure. [...] She was told by the Richland County prosecutor's office the matter is civil, not criminal so pressing charges is out of the question.

For more, see Foreclosure: Auction company mistake causing homeowner woes.

Go here and go here for other posts on foreclosure screw ups involving improperly changed locks, removal of belongings, etc. ScrewUpsLockOutsInForeclosure

Utah Feds Bust 3 In Alleged Straw Buyer Mortgage Scam Leading To Slew Of Foreclosures; Case Is "Tip Of The Iceberg" Say Prosecutors

In Salt Lake County, Utah, KSL-TV Channel 5 reports:

  • Three Utah men have been indicted in a mortgage fraud scam that netted millions of dollars and left a trail of foreclosures and falling home values in its wake. The scam allegedly involved a dozen homes in Utah, Davis and Salt Lake counties. According to the U.S. Attorney for Utah, the plan was to buy houses in distress, inflate the appraisals and sell them fast, but the economy took a downturn.


  • A grand jury indictment handed down [Wednesday] alleges Ronald Haycock Sr., Lyle Smith and Jamis Johnson were in on a scam that recruited "straw buyers," or people with good credit willing to take out loans for homes they normally couldn't afford. "The defendants then would do one or all of the following: Falsify loan application information, inflate appraisals, [or] inflate straw buyers' income -- sometimes as much as 400 to 500 percent inflation," said U.S. Attorney Brett Tolman. The scammers would then siphon excess proceeds from the loans -- an amount investigators believe today totals $2.8 million. The U.S. Attorney's office says this is just the tip of the iceberg in a number or mortgage fraud cases in the state right now.(1)

For the story, see Grand jury indicts 3 Utahns in mortgage scam.

(1) According to the story, several lenders are listed as victims in the scheme, as are the straw buyers who were paid between $7,000 and $20,000 for their participation. However, Tolman doesn't believe they all fall into that category. "We have seen sophisticated straw buyers very aware of what they were doing," he said.

Florida AG Files Civil Charges Against Orlando-Area Loan Modification Firm; Accused Of Taking Upront Fees, Deceptive & Unfair Advertising Practices

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [Tuesday] announced that his office has filed a lawsuit against a Central Florida company for allegedly charging up-front fees for loan modification services to homeowners facing foreclosure. According to the lawsuit, Winberg, Lopez, & Rodriguez Company, also known as Wineberg, Lopez & Rodriguez, P.A., and its owners are in violation of Florida’s new Foreclosure Rescue Fraud Prevention law.(1) The company has offices in Orlando, Winter Garden and St Petersburg and advertises using numerous websites.

  • An investigation conducted by the Attorney General’s Economic Crimes Division revealed that Winberg, Lopez, & Rodriguez allegedly charged as much as $1,995 up-front to homeowners seeking loan modification services related to foreclosures. The lawsuit also alleges other deceptive and unfair trade practices including issues relating to the company’s advertising practices.

For the Florida AG's press release, see Orlando Company Sued for Violations of Foreclosure Rescue Fraud Prevention Law.

For the Florida AG's lawsuit, see State of Florida v. Winberg, Lopez, & Rodriguez Company, et al.

(1) Other defendants named are Freddy W. Lopez, Sr., and William R. Rodriguez, Jr. They face civil charges of violating:

  • Chapter 501, Part II, Florida Deceptive and Unfair Trade Practices Act, Fla. Statutes (2008),
  • §501.1377(3)(b), Florida Statutes, (2008), Violations Involving Homeowners during the Course of Residential Foreclosure Proceedings; and
  • §865.09(3), Florida Statutes (2008), Fictitious Name Act.

Scores Of Consumer Lawsuits Flowing Thru Court Systems Throughout Country

Inter Press Service reports:
  • Many of the biggest mortgage lenders in the U.S. have engaged in widespread, systematic schemes that ripped off hundreds of thousands of families seeking to buy a home, refinance or foreclose, according to lawsuits filed on behalf of consumers. Scores of class-action lawsuits, from the 1990s and up to today, detail the illegal and questionable practices used by mortgage-lending companies that pushed millions into bad mortgages, then into bad refinancing loans and then into foreclosures with unfair fees. The lawsuits have been filed by private attorneys and state attorneys general, and on behalf of NGOs.

For more, see Homeowner Rip-Offs Spark Scores of Lawsuits.

Feds Caution Against "Fake" HUD Website

The Buffalo News reports:
  • An Internet Web site that looks like a federal Housing and Urban Development operation providing financial help for homeowners facing foreclosure actually is a “phishing scam” seeking personal information, HUD officials said Friday. Stephen T. Banko III, HUD’s Buffalo field office director, said the site,, has no legitimate connection with HUD or a federal program known as “Home Affordable Modification Program.”

  • The scent of stimulus money is in the air, and the devious are circling like vultures,” Banko said. “People are going to have to be more vigilant than ever in separating the legitimate companies from the fly-by-nights.”

  • Banko said the official looking site — which features a look-alike federal emblem and the American flag with a tiny word stating “advertisement” — illustrates the extraordinary measures scammers are willing to take to confuse the public.

For more, see Property owners warned about fake Web site (if link expires, try here).

Unable To Sell, Some Condo Owners May Be Squeezed Into Foreclosure By Rental Restrictions In Association Rules

In Atlanta, Georgia, the Atlanta Journal Constitution reports on the story of a local resident who owns a condo apartment that she can't unloaded, and who is hamstrung in her attempts to rent out the place because of rent restrictions contained in the condo association's rules:
  • [A]tlanta has a glut of condos and few are selling, so owners want to rent them but cannot because of limits designed to protect condo values. “A lot of these buildings have three- to four-year waiting lists” of prospective landlords, said Steve Cooper, a Midtown condo resident and co-founder of Cooper Brown Real Estate, which manages residential property.

  • After trying to sell her condo, [Shawni] Mozaffari leased it and was fined $25 a day by the condo association for exceeding the 25 percent rental cap. Then the tenant left after the building’s staff prevented his business associates from entering the unit. Without a renter, Mozaffari said, she might lose the condo to foreclosure. She already has lost a lake home to foreclosure.


  • Mozaffari sought an exemption to the limit but was not approved. Such requests pose a dilemma for condo associations. Allowing waivers will help homeowners weather the recession and might curb foreclosures. But lenders and mortgage buyers, such as Fannie Mae and Freddie Mac, worry too many rentals will hurt a community’s stability.

For more, see Would-be condo renters feel boxed in (Rules to limit tenants push some owners closer to foreclosure).

Squeezed Homeowners In South Florida "Country Club" Communities Fight Back

In Boca Raton, Florida, the South Florida Daily Business Review reports:
  • Almost a decade after Howard Cohan moved into Devon Place, a neighborhood within Boca’s Woodfield Country Club, he was told he would be required to establish a social membership in the golf and tennis club and pay annual dues of more than $10,000 to continue living in the community.

  • He also was told he would be required to spend a minimum of $2,500 per year in food and beverages at the club. That was in 2003, and despite his displeasure with the homeowners association, Cohan paid his dues each year.

  • Finally, Cohan had enough and recently filed a lawsuit challenging the club’s mandatory membership. Cohan’s attorney, Andrew Bray, is seeking class action status for the suit against the Woodfield Country Club Homeowners’ Association.

  • And Cohan isn’t the only homeowner fighting mandatory fees.(1)

For more, see Country club living putting squeeze on some homeowners.

For Mr. Cohan's lawsuit, see Cohan v. Woodfield Country Club Homeowners Association Inc.

For another similar lawsuit by a homeowner against a homeowner association offering "country club living," see:

(1) In another similar lawsuit, Palm Beach Circuit Judge David French late last year ruled the membership fee requirement was “unreasonable” and “unenforceable” for new buyers. The suit is before the 4th District Court of Appeal. The appeal claims French should not have ruled in the case because he lives in a country club community. Go here for Judge French's ruling.

Wednesday, March 18, 2009

State Officials Yank Tax Benefit Derived From Bogus Homestead Claim By Bronx Congressman On Maryland House

The New York Post reports:

  • Maryland officials have yanked a tax credit from Bronx Rep. Eliot Engel, who has avoided thousands in taxes on his nearly $1 million home there by improperly claiming it as his primary residence. The officials told Engel he doesn't qualify for the homestead exemption, a tax credit only state residents can apply for, because he and his wife Patricia's primary residence is in The Bronx.


  • State officials say Engel won't be required to pay back any savings accumulated over past years because the family's homestead exemption was approved - even if erroneously.


Maine Chief Justice: Task Force To Develop Foreclosure Diversion Program

The Maine Public Broadcasting Network reports:
  • [C]hief Justice [Leigh] Saufley told a joint session of the House and Senate that that the court system will create a task force to develop what she calls a foreclosure diversion program "aimed at helping Maine people who are facing the loss of their homes. I'm pleased to report that the Justice Action Group and Maine banks and credit unions are working with us in this effort, giving us reason to hope for real effective solutions." The project will be led by Supreme Court Justice John Levy. Levy chairs the Justice Action Group, a coalition that includes the judicial branch, the bar association, the University of Maine Law School, and legal aid providers, including Pine Tree Legal Assistance.

For more, see State Supreme Court Backs Program to Reduce Foreclosures.

More On Forensic Loan Audits In Connection With Loan Modifications

A recent story in the San Francisco Chronicle contained the following excerpt describing how one company involved in the loan modification process operates:
  • Nasim Pakmanesh, production manager at Help-U-Mod in Walnut Creek, said his company's business model is to provide "forensic loan audits" for $1,500, then to refer clients to affiliated attorneys who charge about $1,000 to pursue a loan modification. He said the audit looks through the original loan documents to discover errors made when the loan was originated.

  • With the audit, "the attorney has more ammo to work with to negotiate for their clients," he said. "Instead of going in and saying, 'My clients can't afford the home and have a hardship,' they're saying, 'You guys approved a loan you shouldn't have - so what can you do for my clients?' Our audit will definitely increase the chances" of getting a loan modification.

For the story, see Desperate homeowners easy prey for scammers.


It may be a good idea for The State Bar of California (as well as state bar associations in other states) to issue an advisory that specifically addresses whether the marketing and performing of a forensic loan audit by a non-attorney directly to and for a consumer-homeowner constitutes the unauthorized practice of law.(1)

Currently, the Florida Attorney General has a civil lawsuit pending against a loan modification firm alleging, among other things, that this precise conduct constitutes the unauthorized practice of law under Florida law. See Florida AG lawsuit (paragraphs 27-28).

Likewise, the Tennessee Attorney General filed a civil suit in November against a loan modification firm in which he alleges, among other things, that the firm engaged in the unauthorized practice of law. See Tennessee AG lawsuit (paragraphs 78-81).(2)


(1) However, The State Bar's professional responsibility committee has recently issued an alert offering guidance to California lawyers thinking about signing up and working with loan modification firms.

(2) Last week, a Nevada couple filed a class action lawsuit against a loan modification firm in which they assert that the firm engaged in the unauthorized practice of law in violation of Section 7.285, Nevada Revised Statutes. See class action lawsuit (paragraph 23).

Chico Homeowner's Foreclosure Eviction Stopped; Files Suit Requesting Cancellation Of Alleged Predatory Loan

In Chico, California, the Chico Enterprise Record reports:
  • To prevent a Chico woman from losing her home, several lawyers filed suit against three firms they accused of engaging in a "predatory lending scheme." "We're hoping this is going to help this woman out. She certainly deserves it after what she's been through," said Evanne O'Donnell, managing attorney of Legal Services of Northern California.

  • Jan Poythress, 53, was within days of being evicted from her northeast Chico home last month when the attorneys intervened. The eviction was put on hold, and Poythress remains in the house while a new trial is scheduled to decide the legality of requiring her to move.

  • In a separate case, the lawyers, on March 5, sued Instant Mortgage Lending Corp. of San Diego, ForeclosureLink of Fair Oaks and Expedia Home Loan of San Diego, demanding, among other things, that Poythress' loan and the foreclosure on her home be canceled. "When you read this complaint, you see how sinister this is," O'Donnell said in a phone interview.


  • O'Donnell said she was grateful for the help of several attorneys — experts on foreclosures and evictions — who donated their time free of charge. They include Doug Jacobs of Chico, Wayne Silver of Sunnyvale and Maeve Elise Brown of Oakland.

For more, see Lawsuit filed to save disabled Chicoan's home.

For earlier Chico Enterprise Record articles on this story, see:

For other posts on homeowners using state & federal law to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. UndoMortgageLoans TILAdelta

Scammer Convicted Of Elder Expoitation Now Accused Of Swiping Mom's Home Equity, Resulting In Foreclosure; Other Victims Come Forward

In Great Falls, Montana, the Great Falls Tribune reports:
  • When Tina Palagi was sentenced in court on charges of elder exploitation in December, she got a suspended sentence and a strong warning to stay out of trouble.(1) Now the Great Falls woman is accused of stealing from her own mother while her mother was ill, causing the elderly woman to lose her home to foreclosure just months before it should have been paid off.(2)


  • According to charging documents, [a Great Falls Police] detective learned Palagi had been trusted to manage her mother's finances while her mother was seriously ill. The older woman bought her house in 1973 and should have made the last payment in 2003. Instead, she learned her home was in foreclosure when sheriff's deputies told her she was being evicted and had 30 minutes to vacate the house, according to court documents.

  • The charges say Palagi took out a loan against the house in 2000 and failed to pay back the loan, causing the house to go into foreclosure. Palagi had been authorized to govern her mother's affairs, but her mother did not know about the loan, according to the charges. Palagi also is accused of stealing her mother's retirement benefits while her mother was sick.

For more, see Woman convicted of elder exploitation now charged with bilking mom.

For story update (April 3, 2009), see Parole violations land woman in state prison:

  • A woman convicted of at least two financial scams and accused of many more will spend at least 10 years in Montana Women's Prison. [...] Judge Dirk Sandefur handed down the prison sentence Thursday after determining Palagi had violated the conditions of two previous suspended sentences.

Go here, here, here, here, here, and here for other posts on elder financial abuse.

(1) According to the story, Palagi was given an eight-year suspended sentence in December for borrowing $54,000 from a 78-year-old family friend and failing to repay the money. District Judge Dirk Sandefur said he only let Palagi stay out of prison so she could pay the woman back. "I want you to understand very, very clearly that this is the end of the line for you," Sandefur said at the time. Palagi also reportedly has a previous conviction for a scam involving phony money orders.

(2) Palagi, 42, made her initial appearance Monday in Cascade County District Court on the newest charge of elder exploitation. That charge comes on the heels of a host of other new charges filed last week, accusing Palagi of other counts of elder exploitation and felony theft, according to the story. DeedGammaTheft FinancialAbuseOfElderlyAlpha

Dozens Of Tennessee Mobile Home Owners Face The Boot As Landowner Faces Foreclosure

In Catoosa County, Tennessee, WTVC-TV Channel 9 reports:
  • Dozens of people in Catoosa County are wondering if they will lose their homes after seeing a foreclosure notice this week. They live in the Pine Forest Mobile Home Park who's owners, David and Sandra Ott of California, are facing foreclosure. Right now it's a waiting game because on one hand the property is scheduled to be auctioned in less than a month from now.


  • It's home to dozens of families, retirees and people with disabilities. Wednesday [resident Anthony] Lance saw in the Catoosa County local paper's foreclosure section a notice that the nearly 40.85-acre property is about to be foreclosed with a public auction scheduled for April 7 at the Catoosa County Courthouse.


  • Many residents own their mobile home but pay $170 a month to rent property with water and trash services. Residents say it costs $2,500 to $4,000 to move their home to another park plus they have to get a $500 permit. "I'm retired and it would be impossible for me to move my trailer, I'd have to lose it and it's paid for," Jerry Doss said.

For more, see Dozens Unsure If They'll Keep Homes.

Massachusetts Loan Modification Firm Accused Of Scamming Homeowner Out Of $995

In Boston, Massachusetts, WCVB-TV Channel 5 reports:
  • As the foreclosure crisis grows so does a cottage industry of loan modification companies that promise to work with lenders and lower monthly mortgage rates. But Team 5 Investigates found the practices of many of these companies are not only unethical, they are illegal.

  • Donna Warren's back injury forced her to stop working. Before too long, she fell behind on her mortgage payments. She went online and found Oceanview Investments. "Oceanview did nothing. They took my money and did nothing," said Warren. Donna paid Oceanview $995 to work with her lender on her behalf. "They promised that I wouldn't have to deal with my mortgage company at all, and to ignore any calls I got from them," said Warren.


  • The company's Web site says they are no longer accepting clients. Florida's attorney general has launched an investigation after getting 40 complaints in less than a year. [...] Glenn Russell is a mortgage attorney who has seen loan modification companies popping up more frequently. "They promise we'll cut your mortgage in half, or we'll knock that interest rate down," said Russell. "They are targeting people that are the most vulnerable."

For more, see Mortgage Predators Take Money and Run (Many Companies Charge Up-Front Fees Illegally).

In a related story, see The Associated Press: It's boom time for foreclosure scam artists (Only in a few states are attorneys general offices willing and able to seek criminal charges and jail time against foreclosure con artists) (If link expires, try here).

Florida Attorney General vs. Outreach Housing - A Different View

Regarding the pending lawsuit by the Florida Attorney General's Office against loan modification firm Outreach Housing, the company has one or more supporters who have started blogs in which they paint a picture that is much different than the one described in the AG's lawsuit.

For those blogs, go here and go here.

Tuesday, March 17, 2009

Locksmith Takes A Bullet From Renter While Changing Locks At A Foreclosed Home

In Phoenix, Arizona, KTVK-TV Channel 3 reports:
  • The Valley foreclosure problem turns violent when police say a man shot a person who was sent by the bank to change the locks. The man living in the home was renting and authorities say the owner did not tell him the home was under foreclosure. Jeffrey Harrison, 40, was arrested on charges of aggravated assault.

For more, see Renter shoots locksmith changing locks on foreclosed home. DeputyEvictionTheta

Queens Widow Fights Off Lender's Attempt To Foreclose Predatory Loan With Help From ACORN "Home Defender" Campaign

Writer and producer Joseph Huff-Hannon reports:
  • The community organization ACORN launched its nation-wide "Home Defender" Campaign on February 19 with a series of actions across the country. In New York the campaign was kicked-off with a rally at the house of Myrna Millington of Laurelton, Queens. Millington, a 74-year-old retiree and widow, currently faces eviction from her home of 38 years after falling victim to predatory lending. The property went into foreclosure in September 2008, but ACORN has thus far been able to stay the auction.

For more, including a video of the rally at Ms. Millington's home, see Home Defense 101: Home defenders save homes from foreclosure.

Loan Officer Wins Race To Prosecutor's Office In Equity Stripping Foreclosure Rescue Case; Cuts Deal w/ Feds, Will Sing Against Now-Former Associates

In Honolulu, Hawaii, the Honolulu Star Bulletin reports:
  • A former loan officer with a local mortgage brokerage company is cooperating with the government in its prosecution of his former boss. Vance Yukio Inouye, 31, pleaded guilty yesterday in federal court to one count each of wire fraud and conspiring to make false statements on loan applications and commit wire and mail fraud.


  • Inouye pleaded guilty as part of a plea deal with the government. The agreement requires him to pay restitution and testify for the prosecution against other defendants. In exchange, the government promises not to prosecute him for various other crimes and to recommend a sentence lighter than what he would qualify for. In U.S. District Court, in front of U.S. Magistrate Judge Barry Kurren, Inouye said, "John Dimitrion approached me with a foreclosure bailout deal I thought was legitimate."

  • Dimitrion is the owner and principal broker of Mortgage Alliance. A federal grand jury returned an indictment last month charging him, his wife, Julie Ann Baldueza Dimitrion, and employees Rick Kealoha Pa Jr. and Benjamin Yoshito Thompson with mortgage fraud crimes involving three homes. Their trial is scheduled for next month.

For more, see Former mortgage officer pleads guilty, makes deal.

To view the indictment, see U.S. v. Dimitrion, et al.

Go here for other posts on this case.

Clipping Homeowners For Improper, Unexplained Fees A Common Practice For Some In Mortgage Servicing Industry

In St. Cloud, Minnesota, the St. Cloud Times reports:
  • Charging improper or unexplained fees is a common practice for some mortgage servicing companies and is a larger part of the national foreclosure crisis than most people realize, experts say. Questionable property inspections, late fees when payments aren’t late, forcing homeowners to buy insurance even when they already have it — all occur nationwide and often go unchallenged by consumers, they say.

  • A mortgage servicer is responsible for collecting monthly loan payments and crediting the homeowner’s account. The servicer also handles escrow accounts for taxes and insurance. The servicing companies don’t actually own the loan, so they may not have a strong interest in providing good customer service. In fact, they may have an incentive to force a homeowner into foreclosure. “The more defaults they have, the more fees they collect, the more money they make,” said David P. Leibowitz, a Chicago-based foreclosure defense attorney.

For more, see Experts: Improper fees play part in crisis (Servicers may benefit from loans in default).

In a related story, see Couple blames fees in loss of home (Residents say dream of raising a family in their first home drowned in a flood of questionable mortgage charges).

For earlier posts on the alleged mortgage servicing practice of padding fees with phony charges, see:

Go here, go here, go here, and go here for posts on questionable mortgage servicing practices. QuestionableServicingTacticsSigma

Jacksonville Foreclosure Rescue Operator Dodges Another Bullet As Prosecutors Drop Criminal Charges

In Jacksonville, Florida, The Florida Times Union reports:
  • Prosecutors have dropped mortgage fraud charges against a man accused of skimming home equity from distressed homeowners. The case against Thomas Cuomo could not stand in the wake of an e-mail and paper trail showing the mortgage company he was working with wasn't the victim of fraud - but instead the possible cause of it.

  • Cuomo, who once was a housing counselor for the Jacksonville Urban League, bought homes from people in foreclosure. At one time, he was suspected of skimming out what equity had been built up and renting them back to the original owners, promising them a chance to buy the houses back.(1)


  • April Charney, an attorney at Jacksonville Area Legal Aid and one of the nation's experts in foreclosure law, is defending one of the foreclosures on behalf of the tenant, Lester Thomas, who sold his house to Cuomo. Thomas still lives there because the bank has not been able to prove it has the right to foreclose on it.

For more, see Charges against man accused of fraud dismissed (He was suspected of skimming equity from distressed homeowners).

(1) Reportedly, he was first charged in 2007 with money laundering and mortgage fraud after state investigators found similar stories from nearly a dozen people in Duval and Clay counties. That case was dismissed on a technicality. In 2008, he was charged again, this time accused of taking out fraudulent loans.

Kansas AG Probes Firm's Activities For Possible Deception In Buying Up Redemption Rights From Foreclosed Homeowners

In Witchita, Kansas, The Witchita Eagle reports:
  • The Kansas Attorney General's Office is investigating complaints alleging "unconscionable business practices" by a Wichita company that buys and sells homes in foreclosure. Attorney general spokeswoman Ashley Anstaett said she couldn't say more about the complaints against Liberty Asset Management. But Liberty's critics, including some of its competitors, accuse it of taking advantage of people in foreclosure.

  • One instance they cite involves Liberty buying property rights for $10, allowing it to claim almost $20,000 in equity that would have gone to a deceased resident's heirs. The issue centers on Liberty's methods in getting people to sell so-called redemption rights to their property.

For more, see Kansas attorney general investigates home buyer-seller's foreclosure practices.

Washington State Officials Shut Down Adult Home; Accuse Owner Of Leaving Country While Facility Faced Foreclosure; Residents Left "In Imminent Danger"

In Kent, Washington, the Kent Reporter reports:
  • The Washington State Department of Social and Health Services has announced the suspension of the license of a Kent Adult Family Home due to "numerous violations that jeopardized the safety and well-being of residents," according to paperwork from the state agency.

  • The suspension means the home [...] must stop admitting residents and that the residents living at the home must be moved to other "settings," or care facilities. Those residents have been moved, according to dshs officials. The suspension went into effect March 5.

  • According to a letter sent to home operator Stevan Bachici, a Feb. 18 inspection of the facility determined that "residents are in imminent danger." The Feb. 20 DSHS letter outlined three "serious deficiencies" as well as seven "significant deficiencies." At the top of the state's "serious deficiencies" was the ability of the facility to provide care and service. According to the letter, Bachici left the country while the home was in foreclosure, and the staff in charge did not have the "skills, ability or authority to ensure residents remained safe."

For more, see Safety violations: DSHS suspends license of Kent adult home.

Landlord's Financial Distress Causing Stress, Confusion For Tenants Around The Country reports on Irvine, California-based landlord Bethany Holdings Group, which is reported to have abandoned a dozen apartment complex in the Phoenix, Arizona area as well as a number of buildings in other states after defaulting on hundreds of millions of dollars in loans.

Reportedly, Bethany complexes have been threatened with gas or electricity shut-offs due to non-payment of bills; and employees at many of the Phoenix area properties say they have been stiffed out of their paychecks for a month or more before courts began appointing receivers to assume control of the complexes. Tenants are also facing a loss of their security deposits.

Courts in Arizona, California, Colorado and Florida are said to have become involved in the appointment of receivers to maintain and preserve Bethany's holdings which serve as collateral for the delinquent loans.

For more on the story, see Corporate meltdown leaves renters in limbo (Large apartment complexes abandoned to receivership and unruly weeds).

For other media reports on Bethany Group complexes in foreclosure in other states, see:

Go here for other posts on Bethany Group buildings in foreclosure.

Monday, March 16, 2009

Possible Victim Of Alleged New Jersey Loan Modification Scam Found In Wisconsin

In Green Bay, Wisconsin, WGBA-TV Channel 26 reports:
  • On[e] viewer [...] emailed NBC26 saying she sent "New Hope Modifications", a company based out of New Jersey, $1,500 so they could help with a mortgage payment she was falling beyond on. "They made it sound like they could help us out by re-modifying the loan, or getting a lower payment," said Tina. The company didn't help Tina make her payment, and now not only is she out the money, but her house is going up for foreclosure sale in June.

  • On Thursday, the New Jersey Attorney General filed a lawsuit again New Hope Modifications of Bellmawr saying the company took inflated fees from homeowners who expected them to help with their mortgage payments. Attorney General Ann Milgram says New Hope scammed 80 people out of $98,000.

For more, see Foreclosure "Help" Scams on the Rise.

For more from the New Jersey Attorney General's Office on its legal action against New Hope Modifications, see:

Alarm Bells Warn Of New Wave Of Mortgage Fraud As "Quick Defaults" On FHA Loans Begin To Spike

The Washington Post reports:
  • [T]his decade's housing boom rendered the agency irrelevant. Americans raced to aggressive lenders, seduced by easy credit and loans with no upfront costs. But the subprime mortgage market has crashed and borrowers are flocking back to the FHA, which has become the only option for those who lack hefty down payments or stellar credit. The agency's historic role in backing mortgages is more crucial now than at any time since its founding.

  • With the surge in new loans, however, comes a new threat. Many borrowers are defaulting as quickly as they take out the loans. In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency's overall growth in new loans, according to a Washington Post analysis of federal data.

  • Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers and most notably, foul play among unscrupulous lenders looking to make a quick buck.

  • If a loan "is going into default immediately, it clearly suggests impropriety and fraudulent activity," said Kenneth Donohue, the inspector general of the Department of Housing and Urban Development, which includes the FHA.(1)

For more, see The Next Hit: Quick Defaults (More FHA-Backed Mortgages Go Bad Without a Single Payment).

(1) According to the story, the Palm Hill Condominiums project near West Palm Beach, Fla., exemplifies the problem. The two-story stucco apartments built 28 years ago on former Everglades swampland were converted to condominiums three years ago. The complex had the same owner as an FHA-approved mortgage company Great Country Mortgage of Coral Gables, whose brokers pushed no-money-down, no-closing-cost loans to prospective buyers of the condos, according to Michael Tanner, who is identified on a company Web site as a senior loan officer. Eighty percent of the Great Country loans at the project have defaulted, a dozen after no payment or one. With 64 percent of all its loans gone bad, Great Country has the highest default rate of any FHA lender, according to the agency's database. It also has the highest instant default rate.

Watch Out For Loan Modification Scams Using Forged Documents Simulating The Letterhead Of Lenders, Government Agencies

From the Office of the California Attorney General:
  • California Attorney General Edmund G. Brown Jr. [Thursday] warned that scam artists have "sunk to a new low" and have used the forged letterhead of major lenders to con worried Californians into paying thousands of dollars for non-existent loan modification services.

  • "Scam artists have sunk to a new low and are using the forged letterhead of lenders to con worried Californians into handing over their hard-earned money," Attorney General Brown said. "Californians should be deeply skeptical of anyone who demands money up front and makes extravagant promises that they can save their home."


  • [Thursday]'s warning comes on the heels of the arrest Wednesday of Anna Santos, 22, of North Hills - a key player in a loan modification scam using forged letterhead - on charges of money-laundering, conspiracy, and four-counts of grand theft. Ms. Santos joined with members of the defunct First Gov loan modification ring in a separate criminal enterprise with a disturbing twist. They used forged mail and envelopes that appeared to be from victims' lenders.

  • Ms. Santos obtained a fictitious business permit through the City of Los Angeles for "Payment Processing Department." She opened several bank accounts and two post office boxes under that name. She and other members of the ring mailed flyers that appeared to be from victims' lenders or a government entity. The flyer used a large, bold header that read "Final Notice" and advised homeowners that they qualified for a special program to save their home from foreclosure.

For more, see Brown Warns Homeowners that Scam Artists are Using Forged Letterhead of Lenders to Con Californians.

Go here for more on the alleged First Gov loan modification scam.

For more from the California AG on its criminal action against the First Gov group, see:

NAACP Targets Wells Fargo, HSBC In Separate Class Actions Alleging Violations Of Fair Housing, Civil Rights, Equal Credit Opportunity Acts

The NAACP announces:
  • [Friday], the NAACP filed separate lawsuits in U.S. District Court in California against two of the country’s largest lenders, Wells Fargo, and HSBC. These lawsuits allege systematic, institutionalized racism in sub-prime home mortgage lending.(1) The remedies being asked for in the lawsuit include measures for increased accountability and transparency.

For more, see NAACP Files Landmark Lawsuit Today Against Wells Fargo and HSBC (Remedies would benefit millions of potential borrowers).

For the lawsuits, see:

Go here, Go here, and Go here for other posts on alleged discrimination in real estate transactions.

(1) According to the NAACP press release, these two new lawsuits raise the same claims as pending litigation by the NAACP against other mortgage industry leaders. Lenders named in this pending litigation include Accredited Home Lenders, Inc., Ameriquest Mortgage Co., Bear Sterns Residential Mortgage Corp. d/b/a Encore Credit, Chase Bank USA, Citimortgage, First Franklin Financial Corp., First Tennessee Bank d/b/a First Horizon National Corp., Fremont Investment & Loan, GMAC Mortgage Group, LLC, GMAC ResCap, Long Beach Mortgage and SunTrust Mortgage. DiscriminationPredatoryLendingAlpha

Loan Modification Issue Has State Bar's Phone Lines Burning; Lawyers Seek Ethics Guidance As Homeowners' Complaints Flood In

Buried in an article in the March, 2009 issue of the California Bar Journal was this excerpt on how the phone lines over at the State Bar offices are burning up due to the loan modification issue:
  • [T]he bar’s Ethics Hotline, a free confidential research service for attorneys, has been receiving between one and two dozen calls a day for the last six months dealing with the residential mortgage crisis and loan modification — about 15 to 25 percent of its daily call volume.(1)

  • Scott Drexel, the bar’s chief prosecutor, says that for the last three months, the bar has received 50 complaints each day — about 950 complaints a month — about lawyers involved in some way with the foreclosure crisis. While the complaints run the gamut, Drexel said the most common concerns lawyers who lend their name to a loan modification operation but non-lawyers do most of the work. The non-lawyers get fees upfront through the lawyer and either do not complete the modification or do it incompetently. As a result, he said, the client loses his or her money.(2)

  • Calling the number of complaints “shockingly high,” Drexel said his office is “quite concerned. We’re especially concerned with attorneys allowing their names to be used by non-attorneys in some of these loan modification schemes or scams.”(3)

  • The Department of Real Estate reports complaints about lawyers involved in loan modification programs who act as fronts or work inhouse. “We’re not certain if they are practicing law or just lending their names,” said chief counsel Wayne Bell.(4)

For more, see Bar issues foreclosure ethics alert.

(1) Reportedly, so many have contacted the State Bar for ethics advice that its professional responsibility committee issued an alert last month offering guidance to lawyers thinking about signing up with loan modification firms. “The most important thing is for lawyers to understand this area is fraught with danger from an ethics point of view,” said Jon Rewinski, a Los Angeles litigator who drafted the ethics alert.

(2) California's malpractice lawyers should have a field day with this issue, at least those who have no problem suing their wayward colleagues.

(3) For an example of a recent action by The State Bar of California involving an attorney allegedly providing a front for non-attorneys who were accused of practicing law involving the handling and settling of personal injury cases, see State Bar Uses Authority To Prosecute Non-Attorneys Running Law Office And Settling Cases.

(4) According to the article, Bell said when consumers who are in desperate financial straits see the word lawyer, “they somehow believe they’re going to get a higher level of care.”

NH Couple Beats Back Debt Scavenger's Attempt To Collect On Zombie Debt From Old Foreclosed Mortgage

In Manchester, New Hampshire, the New Hampshire Sunday News reports:
  • [S]even years after they lost their home to foreclosure in 1994 -- during the last recession -- Daniel and Diane Lessard started getting calls from a company they'd never heard of, telling them they owed thousands of dollars. "I thought it was a scam," said Diane Lessard, who said she hung up each time.


  • Over the years, the calls from Cadle representatives continued sporadically, according to the Lessards. "They would call maybe once a year and harass us, and we would tell them we didn't owe them any money," Diane Lessard, Dan's wife of 21 years, said. Then, in mid-2001, they got a letter from the company, stating they owed approximately $28,000. That led them to call St. Mary's Bank, where they had taken out their 1989 mortgage, but they were told they didn't owe the bank anything.

  • Then in 2007 came the lawsuit from Cadle Company, which 13 years earlier had purchased a bundle of bad debts from St. Mary's, including the Lessards' loan deficiency, according to court documents.


  • It turned out that Cadle had purchased the original note from St. Mary's Bank in 1994, but had not been assigned the mortgage until 2006. As a result, [director of clinical programs at Franklin Pierce Law Center Peter] Wright successfully argued that the loan was unsecured debt and thus the pertinent statute of limitations was only six years, not 20 years as is the case with mortgage debt. [...] In addition to dismissing the case against the Lessards, Judge Gillian Abramson also awarded them legal fees and $1,200 in damages.


  • The judge also agreed with Wright's argument, under a legal doctrine known as a "Laches" defense, that Cadle had waited to try to collect the debt so that interest and late fees would pile up. The original loan deficiency on the Lessards' note was about $14,000, but Cadle was trying to collect nearly $30,000 by the time the lawsuit was filed.

For more, see NH foreclosure victims may still face trouble.

Go here for other posts on zombie debt. zeta

Distressed Owner Transactions: Common Questions

Thomas A. Glatthaar, senior vice president and senior underwriting counsel with Fidelity National Title Insurance Company, recently wrote in The New York Law Journal and addressed eight common questions, the answers, and the justification for these answers that attorneys may have when dealing with financially distressed real estate located in New York.

For more, see Distressed Owner Transactions: Common Questions.

Sunday, March 15, 2009

Countrywide To Argue In NH Lawsuit That It Has No Legal Obligation To Modify Loans Despite Assurances To The Contrary

In Merrimack County, New Hampshire, the New Hampshire Sunday News reports:
  • With more and more folks hoping for loan modifications to save their homes, what obligation does a lender have to work with borrowers in good faith? That's the crux of a case coming up in Merrimack County Superior Court tomorrow. Gary and Jessica Raymond have sued Countrywide Home Loans Inc., alleging the company "violated the implied covenant of good faith and fair dealing by failing, refusing or neglecting to provide workout assistance."


  • Countrywide's lawyers are asking the court to dismiss the case, arguing the company has no contractual obligation to modify loan agreements.(1) But that's not the point, Jessica Raymond told the New Hampshire Sunday News. "We're not saying they owed us a loan modification," she said. "Our lawsuit is saying, when they entered into the whole loan-modification process with us, then at that point they should least have treated us fairly, instead of roping us around for eight months."

For more, see Granite Staters suing Countrywide over mortgage woes.

(1) In an earlier story, Countrywide attorneys reportedly described the lender's publicly-made loan modification assurances as “mere commercial puffery.” For an earlier post on this story, see Attorneys For Major Lender In New Hampshire Lawsuit Admit Company's Loan Modification Assurances Are "Mere Commercial BS."

New York Chief Judge To Give State Civil Legal Services High Priority

In an op-ed article in The Journal News (New York's Lower Hudson Valley), Anne Erickson, president and CEO of the Empire Justice Center, writes:
  • Re "Lippman has long list of reforms to pursue," (March 4 story), it's quite refreshing to see newly appointed Chief Judge Jonathan Lippman has put civil legal services funding as a top priority. Lippman is quoted as saying he wants to "reconfigure the indigent defense system and raise money for civil legal services."

For more, see Civil legal services funding lacking.

Attorneys: Are You Current On Your Malpractice Insurance Premiums???

An article in Texas Lawyer cautions attorneys on the increased risk of legal malpractice suits during tough economic times:
  • Economic downturns often increase the risk that lawyers will face unhappy clients complaining of legal malpractice. While some lawyers may think they have nothing to fear since their practices do not involve areas of law many blame for the economic collapse, such a belief is unfounded. Some legal malpractice risks are not tied to any one specialized practice area but simply become more common when the economy goes bad.


  • Some legal malpractice issues are simply an inevitable outcome of activity occurring more frequently in a bad economy. A spike in the number of foreclosures often means more people are unhappy with related legal services. People often sue lawyers who act as trustees in foreclosures, alleging failure to conduct the sale in a proper manner, though the more likely scenario is a suit to enjoin foreclosure.

  • As collection activities rise, more people will seek relief under the Fair Debt Collection Practices Act. Various state and federal fair debt collection practices laws may apply to lawyers involved in collection activities, including foreclosures and collection litigation, so all such lawyers should understand and abide by these laws' requirements if there is any doubt as to their application.

For more, see In Tough Times, Look Out for Legal Malpractice Claims.

Class Action Lawsuit Filed Against Owner Of Loan Modification Firm Currently Facing Felony Theft Charges

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • A nine-page class action lawsuit was filed [Thursday] against a former Las Vegas talk show host who was arrested in connection with an alleged mortgage rescue scam. Las Vegas attorney James Stout filed the lawsuit on behalf of Ana and Hilpolito Villafuerte and other unnamed plaintiffs. The lawsuit alleges fraud, breach of contract claiming damages to the plaintiffs of more than $50,000, and negligence.

  • Attorney General Catherine Cortez Masto announced Wednesday that Jack Ferm was arrested on two counts of felony theft and related charges in connection with an alleged mortgage rescue scam. Ferm is president and owner of U.S. Justice Foundation, a business that led customers to believe that Ferm would prepare legal documents to stop ongoing foreclosures on their homes without the need for them to hire an attorney, Masto said.(1)

For more, see Class-action suit filed against former LV radio host.

Go here for other posts on U.S. Justice Foundation.

For a copy of the lawsuit, see Villafuerta v. U.S. Justice Foundation, et al.

(1) In the class action complaint (at paragraph 23), the plaintiffs assert the belief that Ferm engaged in the unauthorized practice of law in violation of Section 7.285, Nevada Revised Statutes.