Saturday, August 15, 2009

Lender Reposseses 500+ Units In Failed Condo Conversion Complex, Leaving Remaining Struggling Unit Owners With Uncertain Future

In Tampa, Florida, The Tampa Tribune reports:
  • The future is uncertain for another big Tampa Bay area condominium project that was foreclosed on Wednesday. Corus Bank, the lender for the $74.8 million Lansbrook Village Condominiums in Palm Harbor, took back the property after its Atlanta-based developer defaulted on payments, online Pinellas County court records show.

  • Condo owner Desmond Fowles said he thinks it's a good sign that the bank reclaimed the 509 units because the developer had failed to give the condominium owners association's board recent financial reports. "We feel it's a little positive," he said. "The bank is subject to more scrutiny than the developer." Developer Vista Properties also didn't replenish the board's reserves of $4 million. "The condos are 10 years old," said Fowles, who was at the Pinellas courthouse today to monitor the sale. "They're going to need new roofs in a couple of years. We don't have any resources." Fowles said he and other condo owners don't know whether the bank is going to raise unit dues for the reserve fund. Other owners are struggling, too, and in danger of foreclosure, Fowles said. "We don't know what is going to happen next," he said.

  • Lansbrook Village was converted from apartments to luxury condos when the real estate market was booming. Lansbrook's spiral has put it in the company of several other big condo or development projects to fold since the market crashed.

For the story, see Bank reclaims condo complex.

Aging Buildings, Developer Disputes, High Rate Of Absentee Landlords, Underwater Owners, Scarce Buyers Leave Condo Conversions In Deep Trouble

In South Florida, The Miami Herald reports:
  • Since 2003, when housing prices took off, more than 74,000 rental apartments were converted into condominiums in Miami-Dade and Broward counties, twice as many as the previous 50 years combined, according to state records of condo conversion applications. As the fallout from the housing collapse continues, the conversion market - largely a collection of aging garden-style complexes and dowdy mid-rise buildings - is shaping up as one of the biggest losers of the downturn. Most real estate analysts predict it will be the last submarket to recover since it is competing for scarce buyers with the swanky supply of new condos being marketed at cut-rate prices.


  • While almost all condos have faced plunging values, abysmal sales, high foreclosure rates and cash-strapped condo associations since the market took a dive two years ago, condo conversions have all those problems in the extreme, analysts said. Adding to their woes are aging buildings, developer disputes, high rates of absentee landlords and foreclosures of entire projects.


  • Grant Stern, a mortgage consultant in Bay Harbor Islands, who joined partners in converting an apartment building during the boom, estimates that between 10,000 and 20,000 units are severely underwater and at risk of being reverted to rentals. [One unit owner], for example, paid about $174,000 for a condo at the Mirassou conversion in Northwest Miami-Dade when the market was at its peak. Now similar units are being listed for about $50,000, he said.

For more, see Condo conversion values plummet farthest in housing bust.

High Cost Of Maintenance Has Struggling HOAs Looking Into Unloading Private Streets Onto Cities

In Riverside County, California, The Press Enterprise reports:
  • A Corona homeowners association has made a simple plea to the city: Take our street. Parkview Estates' struggle to come up with more than $10,000 a year to maintain the private 2 ½-block Ruth Circle that runs through its modest 17-home tract is symbolic of trouble faced by homeowners associations everywhere: They are losing hundreds of thousands of dollars because residents crippled by the economy are not paying monthly dues. Foreclosures are sitting vacant and some banks required to pay the monthly maintenance fees are not.


  • Lately, as the delinquency rate on dues doubles or even triples, [president of the California Association of Homeowners Associations Richard] Monson has been fielding similar calls from associations across the state asking if they can give their streets to local governments. His answer: They can ask, but it's up to the local governments to decide. He said he has not heard whether any city has accepted any association's street.

For more, see Corona homeowners association, suffering like others, wants to give away street.

Townhome Buyer Sues Developer For Refund As Crime, Foreclosures, Questionable Sales, Unwanted Renters Plague Failed Complex

In Riviera Beach, Florida, the South Florida Daily Business Review reports:
  • When Pamela Hart paid $275,000 for a townhouse in one of Cornerstone Group’s new developments in Riviera Beach, she thought she was making a great purchase. The 59-year-old county employee said she received a $10,000 discount when she bought what she believed was the last unit for sale in Sonoma Bay. But in 2007 soon after moving in, she said she learned that most of the units were vacant and that she had moved into a development plagued by crime, foreclosures, questionable sales and some unwanted renters.

  • After trying to get out of what she describes as a “living hell” that makes her fear for her safety and unable to sell her unit, she recently filed a lawsuit in Palm Beach Circuit Court against Cornerstone’s Sonoma Bay Inc. seeking to return the unit and unspecified punitive damages. Hart claims the developer marketed the property as an owner-occupied community but turned it into a rental community that is poorly maintained and is dangerous to live in.


  • According to the lawsuit, Sonoma Bay has rented some of the 60 developer-owned units in the 302-unit community to low-income renters under the federal Section 8 program. The city of Riviera Beach has an ordinance that prohibits developers from renting to recipients of Section 8 vouchers, the lawsuit said.

For more, see Buyer wants money back for townhome ‘hell’.

For the lawsuit, see Hart v. Sonoma Bay, Inc.

Couple Lets Home Go To Foreclosure After Dispute With Condo Association Over Source Of Mold Problem

In Golden Valley, Minnesota, the Minneapolis Star Tribune reports:
  • On July 15, at the roll call of heartbreaks known as the Hennepin County sheriff's mortgage foreclosure sale, a deputy called out the names of Denise Martineau and Mark Bufkin. It was the couple's last chance to pay up before the lender took their condo in Golden Valley. Martineau and Bufkin weren't there to answer. Martineau said they gave up on saving their home in the Villa on Bassett Creek after fleeing an outbreak of mold that rendered their unit "uninhabitable." From May through September 2008, the couple wrangled with their homeowner's association over the origin of the mold and who should pay to clean it up.

For the rest of the story, see An unwelcome tenant (When mold moved in, a couple decided it was time to move out.).

Countrywide Fights City To Stop Demolition Of Moldy Foreclosed Home

In Oshkosh, Wisconsin, The Northwestern reports:
  • A court will decide if an 11-year-old house in the city of Oshkosh that is filled with mold must be razed. [...] The city has issued raze or repair orders for the single-story home, but Countrywide Home Loans Inc., the Fort Worth, Texas mortgage company that owns the house, is seeking a court ordered injunction to stop the city from razing it. Countrywide, which obtained the house through foreclosure last year, claims it would be irreparably harmed should the city go through with the raze order, according to documents filed in Winnebago County Circuit Court.


  • Power to the house was shut off [during] the [foreclosure] process, resulting in a flooded basement and damage throughout the house. "There was eight inches of water in the basement, and it had been even higher judging from the mark on a door," said Allyn Dannhoff, the city's chief building inspector. Photographs of the home's interior at the inspector's office show extensive mold throughout. Michelle Staskiewicz lives next to the derelict house. [...] She'd like to see the mold-infested house next to hers razed if it could be done safely. She worries that a bulldozer would rile up mold spores and jeopardize her health and that of her neighbors.

For the story, see Owner of foreclosed home seeks injunction to stop demolition.

Suspect In Looting Of Unoccupied Home In Foreclosure Accidentally Busted By Victim; Found Peddling Ripped Off Items At Neighborhood Yard Sale

In Severn, Maryland, The Baltimore Sun reports:
  • A woman whose home was burglarized as she stayed with her daughter was shocked to spot her belongings offered at a neighbor's yard sale, Anne Arundel County police say. [...] Police said they found $25,000 worth of her clothes, furnishings and other possessions - even a fur coat - on the property.

  • The victim, who has been living with her daughter for several months while her home is in foreclosure, discovered Thursday that her house had been burglarized. On Saturday, she and her daughter were on the way to the house [...] in Severn to inventory the missing items before calling police. When they spotted the yard sale nearby, they "were shocked to realize that every item" came from the victim's house, according to charging documents. Stunned, the women stopped and told the seller he was peddling the woman's stolen goods. He admitted that the merchandise was hers, not his, and she called police, court papers say.


  • The seller told police that he bought the woman's belongings for $100 from a man who came by a few times, most recently about three weeks ago, in an aqua-colored pickup truck, according to charging documents. The officer, however, suspected that the seller had looted what he thought was an abandoned home. [...] The woman's belongings were returned to her. Police charged David Anthony Perticone, 46, [...] with burglary and theft. He was out of jail in lieu of $80,000 bail, according to court records.

For more, see Yard sale a shock for woman (Neighbor was selling her stolen goods, police say).

See also, United Press International: Woman finds her stolen goods for sale.

Friday, August 14, 2009

MERS Scores Big Win As Minnesota High Court Says Sale Of Note Not An “Assignment Of The Mortgage” Which Must Be Recorded Before Initiating Foreclosure

In St. Paul, Minnesota, the Star Tribune reports:
  • Minnesota's Supreme Court on Thursday handed a small victory to the battered mortgage industry. In a 6-1 decision, the court ruled that state law does allow the name of a widely used electronic registry of home mortgages, Mortgage Electronic Registration Systems Inc. (MERS),(1) to be listed as the mortgagee of record in thousands of foreclosures. [...] It decided that Minnesota law does not require the actual name of the note's owner -- the lender -- to be listed in records every time a loan changes hands, and that a "nominee's" name is enough.


  • Justice Alan Page(2) issued a dissenting opinion saying state law clearly requires that "all assignments" of the mortgage must be recorded. "It is apparent with the benefit of hindsight that the ability of lenders to freely and anonymously transfer notes among themselves facilitated, if not created, the financial and banking crisis in which our country currently finds itself," Page wrote. "As a result of our court's holding, namely, that the mortgage transfers between MERS members need not be recorded before a mortgage can be foreclosed by advertisement, neither borrowers nor lenders will ever be able to hold anyone in the chain of transfers accountable. That is not sound public policy."

For more, see Court ruling: Mortgage holders needn't be named (A Minnesota Supreme Court ruling means loan documents will remain hard to trace for those facing foreclosure).

See also, Minnesota Public Radio: High court upholds mortgage lenders' registry.

For the court ruling, see Jackson v. Mortgage Electronic Registration Systems, Inc., Case #A08-397 (August 13, 2009).

(1) The story describes MERS as a tracking system and doesn't own the loans. The registry attracted national attention as foreclosures began sweeping the country and it began representing lenders. MERS tracks some 60 million home loans across the country as they change hands, and during the boom, they were rapidly bundled and sold to bond investors on the secondary mortgage market. It's run by Merscorp Inc., a company based in Reston, Va., owned by an industry group including Countrywide Home Loans, Wells Fargo Bank and Fannie Mae.

(2) In a prior life, Justice Page played defensive end for the Minnesota Vikings of the National Football League and was inducted into the Pro Football Hall of Fame in 1988. EpsilonMissingDocsMtg

California Bar Obtains Attorney Resignations From Two, Files Charges Against Another In Connection With Alleged Loan Modification Scams

From The State Bar of California:
  • Continuing its aggressive pursuit of lawyers who commit professional misconduct by taking advantage of vulnerable homeowners, The State Bar of California announced [Thursday] that it has obtained the resignations of two lawyers and filed charges against a third for their loan modification activities. The State Bar's special team on loan modification complaints coninues to investigate more than four hundred active complaints from consumers about lawyers' roles in loan modification scams.


Among the State Bar's recent results:

  • On August 3, State Bar prosecutors obtained attorney Christian Dillon's (Bar No. 89376) resignation with charges pending. At that time, Dillon was under investigation for consumer complaints received by the bar regarding his affiliation with USMAC Law Group.

  • On August 4, State Bar prosecutors obtained attorney Nabile Anz's (Bar No. 183324) resignation with charges pending. Anz ran the Federal Loan Modification Law Center in Irvine.(1)

  • On August 5, State Bar prosecutors filed an application against attorney Christopher Diener (Bar No. 187890) who was affiliated with Home Relief Services, to have Diener enrolled involuntarily inactive. Bar prosecutors allege that Diener misrepresented the scope of his services to clients, collected advanced fees from clients under false pretenses, and failed to perform any services to obtain a loan modification on behalf of his clients. A hearing on that application is scheduled for August 28 in State Bar Court.(2)

The State Bar's Interim Chief Trial Counsel Russell Weiner issued this statement:

  • "The State Bar of California is firmly committed to its mission of protecting the public. As long as the need exists, this office will continue to devote substantial resources to the investigation and prosecution of attorneys who lose sight of their ethical responsibilities and take undue advantage of desperate homeowners under the pretense of helping them with mortgage loan modifications."(3)

For The State Bar of California press release, see State Bar Continues Pursuit Of Attorney Loan Modification Fraud.

(1) The Federal Trade Commission recently filed suit against this outfit. See FTC v. Federal Loan Modification Law Center LLP, et al. Go here for links to the FTC press release and some of the relevant court documents filed against this operation.

(2) California Attorney General Jerry Brown recently filed suit against this outfit. See People v. Home Relief Services, et al. (go here for California AG press release). Go here for Orange County Register story on the local D.A. raid of homes tied to this outfit's operators.

(3) Attorneys involved in the for-profit, loan modification racket may want to read over ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications, a California State Bar advisory addressing the relationship between attorneys and non-attorney loan modification operators. UnauthPractOfLawTheta

Cops Seek Ohio Foreclosure Rescue Operator For Allegedly Screwing Homeowners In Foreclosure; Charges Of Theft, Securing Writings By Deception Pending

In Columbus, Ohio, WBNS-TV Channel 10 reports:
  • The alleged ringleader of an organization devoted to defrauding homeowners threatened by foreclosure was named to Crime Stoppers' most wanted list on Wednesday. Paul Hairston Jr. is being charged with theft, tampering and securing writings by deceptions, according to Crime Stoppers.

Source: Man Accused Of Defrauding Homeowners Threatened By Foreclosure.

Arrest Warrant Issued For Colorado Foreclosure Rescue Operator Accused Of Selling Houses Out From Under Financially Distressed Homeowners

In Denver, Colorado, the Denver Daily News reports:
  • A 31-year-old mortgage broker has been charged with multiple felonies after he was accused of scamming thousands of dollars from borrowers, investors and financial institutions. Kedrick McDuffie is accused of promising homeowners he could save their homes from foreclosure by having their original loans refinanced or taken over by another person. McDuffie allegedly sold the borrowers’ homes without their knowledge to private investors he worked with, collected brokerage fees from the sales, and stopped making payments on the loans, thereby allowing the properties to go into foreclosure. An arrest warrant has been issued for McDuffie, who is currently at large. His bond is set at $100,000.

Source: Man Charged In Brokerage Scam (2nd blurb from the top). DeedContraTheft

NY AG Sues Loan Modification Firm; Outfit Runs Illegal Upfront Fee Racket Engaging In Deceptive Practices That Fails To Deliver On Promises, Says Suit

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [Thursday] announced that his office has filed a lawsuit against New York-based American Modification Agency, Inc. (“Amerimod”), one of the largest foreclosure rescue companies in the country, and its owner Salvatore Pane, Jr. for engaging in a wide variety of deceptive business practices and false advertising to induce beleaguered homeowners on the brink of foreclosure to sign up for their services.(1) [Thursday's] lawsuit is part of Cuomo’s ongoing investigation into foreclosure rescue scams that target New York homeowners.

For the entire press release, see Cuomo Announces Lawsuit Against “Amerimod” Loan Modification Company To Protect Distressed Homeowners Facing Foreclosure (Long Island-Based Company Charged Illegal Up Front Fees and Failed To Obtain Promised Help for Homeowners; Suit Seeks Refunds for Thousands of Customers and Court Order Shutting Down Company).

(1) The lawsuit asserts that Amerimod:

  • Fails to obtain loan modifications for the vast majority of its customers, many of whom end up in foreclosure or negotiate loan modifications on their own;

  • Illegally charges thousands of dollars in up-front fees, and fails to refund these fees as promised when loan modifications are not obtained;

  • Engages in deceptive and misleading practices by grossly exaggerating its success rate, making false promises about its ability to save customers’ homes, underestimating the amount of time it takes to achieve a loan modification, and misrepresenting that the company is a law office and that lawyers will work on customers’ files;

  • Makes false guarantees of 100% customer service when, in fact, once Amerimod has collected its up-front fees, its representatives often fail to return calls of customers facing imminent foreclosure who are desperately seeking a status update on their files;

  • Makes false and misleading statements on its website, in newspaper advertisements, and in radio advertisements;

  • Fails to include legally required disclosures and notices in its customer contracts, including notice of a customer’s right to cancel a contract within five business days;

  • Provides detrimental advice to customers, such as recommending that they stop making monthly mortgage payments, ignore communications from their lenders and avoid consulting with non-profit housing counseling agencies;

  • Targets Spanish-speaking consumers who are signed up by Spanish-speaking representatives, and then fails to provide the consumers Spanish-language contracts as required by law.

Florida Man Charged With Conning "Fiance" Into Selling Her Home, Then Bilking Her Of $300K In Sale Proceeds

In Broward County, Florida, The Miami Herald reports:
  • Rose Marie Anglade thought she was building a life with the man of her dreams. After meeting him during a visit to Florida, she sold her home in Queens, moved her family to Miramar and began planning a wedding. She had no idea he was making the same plans with another woman -- at the same time. Now, the 49-year-old mother of two has an empty bank account, letters from collection agencies, no husband and lives in a home she knows could be taken from her tomorrow. "Any day now I could be chased from my house,'' Anglade said Wednesday.

  • Anglade's hopes for redemption now lie with the Broward Circuit Court. Her former fiancée, alleged "Gentleman Bandit'' Paul Francois, was arrested Wednesday and charged with two counts of grand theft and running an organized scheme to defraud. Francois, according to his arrest warrant, swindled Anglade and at least one other New York woman, Sheila Brissault, out of nearly $400,000 during the last two years. He promised to marry each woman if she sold her home and moved in with him in South Florida. Investigators say Francois charmed both women into either giving him checks or creating joint bank accounts with him. Then he took off with all the money. When they told him to return it, he threatened their lives and their families, according to his arrest affidavit.

  • For Brissault, the relationship resulted in a loss of more than $100,000. She never sold her home and did move to South Florida, but she did give Francois the money to use to buy a home for them, according to the affidavit. For Anglade, Francois' alleged scam stole not just the nearly $300,000 she made when she sold her Astoria[, Queens] home, but her pride, freedom and possibly her shelter. Now she buys her groceries with borrowed money or cash made from pawned jewelry and television sets.

For more, see `Gentleman Bandit' from Davie may have stolen more than hearts (A `Gentleman Bandit' is accused of convincing two women to sell their New York homes and move in with him -- only to leave them empty-handed).

See also, Fiancée Fraudster Bilked Would-Be Brides (Scoundrel duped two South Florida women out of hundreds of thousands).

Thursday, August 13, 2009

California AG Orders 386 Loan Modification Outfits To Immediately Register & Post $100K Bond Or Face Prosecution

From the Office of the California Attorney General:
  • Threatening possible criminal and civil prosecution, Attorney General Edmund G. Brown Jr. [Wednesday] ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office. He also ordered more than two dozen companies to justify suspicious loan modification claims made in "slick advertising," online and through the mail. "Hoping to lower their mortgage payments, thousands of homeowners were instead duped by slick advertising and money-back guarantees," Brown said. "The time for accountability is at hand, and this rogue industry must clean itself up or face legal action," Brown added. Brown also unveiled a new website ( that provides homeowners tips to avoid loan modification fraud, allows them to determine if a company is registered with his office and makes it easier to file complaints.

  • Brown [Wednesday] joined with the California Department of Real Estate and the State Bar of California in a new partnership to combat loan modification and foreclosure fraud. Brown has sent letters directing 386 mortgage foreclosure consultants to register with his office within 10 days and post $100,000 bond, or demonstrate why they are not required to. If the consultants are required to register and have failed to do so, they are subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. [...] Additionally, Brown sent letters [Wednesday] demanding that 27 loan consultants substantiate suspect claims made on the internet and in direct mail advertising.

For the entire press release, see Brown Orders Mortgage Foreclosure Consultants to Post $100,000 Bond or Face Prosecution.

For copies of the seemingly idiotic claims that 27 of these loan modification rackets are making in their advertising to the general public in marketing their services, along with the California AG's formal written demand under Section 17508 of the California Business and Professions Code (relating to prohibitions against false advertising) to each of these outfits to substantiate their claims within 20 days, see California AG's August 12, 2009 "Prove It" Letters.

For more from the California Attorney General on this matter:

Maryland Co-Conspirator Gets 54 Months For Role In Bogus Sale Leaseback, Foreclosure Rescue Scam; To Forfeit $2.25M In Proceeds From Criminal Acts

From the Office of the U.S. Attorney (Maryland):
  • U.S. District Judge Deborah K. Chasanow sentenced Earnest Lewis, age 52, of Takoma Park, Maryland, [Wednesday] to 54 months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud arising from a scheme in which the conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.(1) Lewis previously agreed to forfeit $2,228,878, generated as proceeds of the criminal activity [...].


  • According to Earnest Lewis’ plea agreement, from at least 2004 until May 2008, Michael Lewis aired television advertisements that targeted financially vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. [...] Together with Michael Lewis, Earnest Lewis and Winston Thomas specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The co-conspirators fraudulently represented to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes.

For the entire press release, see Conspirator Sentenced to over 4 Years in Jail in Mortgage Fraud Scheme.

See also, WBAL-TV Channel 11: Man Gets 4 Years In Jail For Mortgage Fraud (Earnest Lewis, Brother Convicted Of Conning Homeowners).

Go here for earlier posts on this prosecution.

(1) Cheryl Brooke, age 52, of Upper Marlboro, Maryland, and Winston Thomas, age 43, of New Carrollton, Maryland pleaded guilty to their participation in the scheme; sentencing is scheduled for Brooke and Thomas on September 11, 2009 and September 21, 2009, respectively. Michael K. Lewis, age 57, of Takoma Park, Maryland pleaded guilty to conspiracy and bankruptcy fraud in connection with the scheme and is scheduled to be sentenced on September 3, 2009. financial diet

D.C. Resident Victimized By Bogus Sale Leaseback Foreclosure Rescue; Family Home For Over A Century Lost In Scam

In Washington, D.C., Washington City Paper reports:
  • There’s long been an O’Brien on Acker Place, and Anita O’Brien wants to keep it that way. Her great-grandfather, Lewis, purchased the redbrick rowhouse at 660 Acker—a one-block street with narrow brick sidewalks and thin trees—in 1902. The Capitol Hill property drifted among relatives until her grandfather bought it during the Great Depression. Her father grew up there, traveling up its well-worn wooden staircase to the three small bedrooms above. And nearly 25 years ago, Anita O’Brien moved in herself with her three children. Unfortunately, right now, she’s not sure who owns it—but she knows it’s not her. O’Brien is the target of a foreclosure “rescue.”

  • In 2004, she defaulted on a refinancing loan. After the bank began foreclosure proceedings on her house, the 59-year-old was approached by a woman who said she would take the title of the house, pay O’Brien’s mortgage, then sell the home back to her later. In the meantime, she could keep living there and pay a more reasonable rent. O’Brien agreed. But four years later the home went into foreclosure again—and this time, she had no legal rights to it.(1)


  • These kinds of cases have been around a long time,” says Wendy Weinberg, a lawyer with the Legal Aid Society of the District of Columbia. “They’ve just gotten a lot worse.” "The profile is mixed,” says Weinberg. The schemes range from highly organized operations involving hundreds of properties, many individuals, and millions in equity, to one-time, opportunistic deals. “On the smaller scale, you sometimes see family members doing it to each other,” says Weinberg. “Particularly you sometimes have grandchildren or children stealing title of the home from an olderperson, either from getting power of attorney or misrepresenting what the documents are.”(2)(3)

For more, see Title Wave: Where Not to Turn for Foreclosure Assistance.

(1) According to the story, when the transfer occurred on October 18, 2004, O'Brien had an outstanding loan of $149,001, according to foreclosure filings. For the next few years, O’Brien paid rent to India Rogers and Taofik Gbadomosi, up to $1,500 a month. They, in turn, were supposed to be paying her mortgage. But in September of last year, yet another foreclosure notice on the property was filed, saying that $416,075 was owed. O’Brien was stunned—there was nearly $267,000 more tacked onto her outstanding loan. It appeared Gbadomosi and Rogers had borrowed against the value of her house.

(2) In similar Washington, D.C. home equity ripoffs, see:

In addition, a 1988 ruling of the District of Columbia Court of Appeals supports the proposition that a home equity ripoff involving a sale of real estate with a contemporaneous leaseback of the premises to the seller, coupled with a right to buy back the property is nothing more than an usurious equitable mortgage. In Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988), the D.C. high court made the following observation on the foreclosure rescue, equity stripping sale leaseback arrangements it considered:

  • Moreover, if the transactions were in fact sales, as [the foreclosure rescue operators] contend, they were surely most extraordinary ones. When a homeowner sells his home, which is usually his most valuable possession, one would expect at least some measure of bargaining over the sales price. Here, there was none. In each instance, what the [foreclosure rescue operators] characterize as the "sales" price bore no relation whatever to the value of the equity. It is absurd to suggest that Mrs. Carroll would knowingly sell her home, in which she had an equity of more than $36,500.00, for $8,100.00. None of the "sellers" had placed his or her home on the market or expressed the slightest interest in selling it. Each "seller" remained in possession after the purported sale, and [the foreclosure rescue operators] were indeed depicting their service as one that would enable their clients to "save" their homes from foreclosure. Although the transaction also lacked one of the common characteristics of a loan -- an evaluation of the borrower's credit -- no such investigation was needed because the home itself, which in each case was worth far more than the amount expended by the [foreclosure rescue operators], served as their security. It was therefore altogether reasonable for the trial judge to find that the depiction of each of these transactions as a sale and lease back was a transparent sham which masked an unlawful loan.

See also, Sale Leaseback Recharacterization As Loan Results In Criminal Conviction.

(3) Inasmuch as Ms. O'Brien never relinquished and continues to maintain possession of her home, it may be that a successful attempt on her part to establish either that:

  • she was defrauded out of her home, or
  • the sale leaseback was nothing more than an equitable mortgage

could result in defeating the rights of any subsequent purchaser and mortgage lender on the basis that neither qualify for status as bona fide purchasers. Generally, when property is either sold or mortgaged subject to the occupancy and possession by another, the purchaser/lender is charged with a duty to inquire of the occupants as to the nature of their possession. Where such an inquiry would have uncovered the fraud by a foreclosure rescue operator, the purchaser's (or lender's) failure to make such an inquiry legally places it on notice of the fraud, thereby disqualifying it from the protection of the recording statutes as a bona fide purchaser. The bottom line in such an event would be that, after an adjudication in court that the transaction constituted a fraud or equitable mortgage, the ownership in Ms. O'Brien's home could likely be reinstated in her name, and the subsequent conveyances, and any subsequent mortgages, would be voided.

See, for example, Martinez v. Affordable Hous. Network, Inc., Case No. 04SC421, 123 P.3d 1201; 2005 Colo. LEXIS 1075 (Colo. 2005) (may require free regestration to

For case law addressing the effect of possession of real estate by an occupant other than the vendor and a real estate purchaser's duty to investigate when seeking the protection of the recording statutes as a bona fide purchaser, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

See also, Ownership Interest Under Equitable Mortgage Defeats Interest Of Subsequent Buyer; Lack Of Knowledge Not Enough To Sustain Bona Fide Purchaser Status.

Housing Discrimination Rampant on Internet?

From a press release from the National Fair Housing Alliance:
  • In a report released [Tuesday], the National Fair Housing Alliance (NFHA) documents how thousands of illegal housing advertisements appear with impunity on the Internet every day. "FOR RENT: NO KIDS! How Internet Advertisements Perpetuate Discrimination" calls upon Congress to stop the flood of discriminatory housing advertisements on the Internet by amending the Communications Decency Act of 1996.


  • Although newspapers have been held liable under the Fair Housing Act for publishing discriminatory housing advertisements with statements such as "no kids," or "couples only," the publishers of similar ads on the Internet have not. A loophole in the Communications Decency Act of 1996 has allowed Internet advertising providers to escape liability under the Fair Housing Act by holding them to a different standard than print media.


  • [Tuesday's] report follows a lawsuit NFHA filed last month [press release, lawsuit] against American Classifieds, LLC, the nation's largest classified advertisement publisher, for publishing housing ads in 17 states saying that children are not allowed.

For the entire press release, see Housing Discrimination Rampant on Internet (National Fair Housing Alliance Report Urges Congress to Stop Online Discrimination).

For the report, see FOR RENT: NO KIDS! (How Internet Housing Advertisements Perpetuate Discrimination).

Wednesday, August 12, 2009

Foreclosure Rescue Operators Using New Tenant Protection Law, Bogus Sale Leaseback Arrangements To Gum Up Foreclosure Process???

The Florida Asset Protection Blog reports:
  • To better protect tenants victimized by foreclosures against their landlords Congress passed a law which required the non-occupant purchasers at foreclosure sales (such as banks) to honor existing leases on the foreclosed property provided that the lease was bona fide and the tenants were not in default.(1) Some "foreclosure defense" companies are using this new law to delay foreclosure lawsuits. These homeowners are creating bogus lease arrangements to prevent the lenders takeover of property and gain negotiating leverage for the homeowner.

  • Here’s how a typical defense scheme could work- I am omitting some details and issues for sake of the example. Assume Joe Homeowner has ceased making mortgage payments and the bank is threatening foreclosure. Joe creates a revocable trust which he calls "the Save My Home Trust"; Joe is the sole beneficiary of the trust, and Joe names a friend or business associate as trustee. Joe sells his home to the trust for nominal consideration over the mortgage balance. The trust leases the property to Joe for a below-market rent for a five year term - a sale and leaseback arrangement. When the bank sues for foreclosure the trust asserts typical foreclosure defenses, and Joe intervenes as the tenant arguing that the bank must honor his five year lease.

  • Obviously, a court will eventually rule that the lease is not bona fide and is not a valid defense. However, the additional defense frustrates the bank’s foreclosure suit and gives Joe more power to either live in his house for free or negotiate a favorable settlement. I have never defended a homeowner in a foreclosure suit. However, based on conversations with asset protection clients I have learned that mortgage defense attorneys and non-lawyer companies are using varieties of this lease defense which was designed to protect bona fide tenants in foreclosed properties.

Source: Mortgage Foreclosure Defenses Using New Tenant Protection Laws.

(1) The new federal law (see Protecting Tenants at Foreclosure Act of 2009, which is found at Title VII of the Helping Families Save Their Homes Act of 2009) requires banks or other buyers in foreclosure situations to allow tenants in the properties at least 90 days from the date of the foreclosure auction to move, if the tenants had month-to-month rental terms; and tenants with a bona fide lease (as opposed to a "sham" lease) can stay until the lease expires — six months or a year or longer — with a single exception. If the purchaser of the property intends to use the property as a primary residence, the renter must go after 90 days.

Schizophrenic Employee Says In Suit Town Stiffed Him On Five Years Back Pay, Then Seized His $200K Property For $11K In Delinquent Real Estate Taxes

In Lewisboro, New York, the Lewisboro Ledger reports:
  • Depending on which side you believe, Richard Egloff is either a tax scofflaw whose problems are his own fault or a schizophrenic persecuted by town officials and forced to turn over a $200,000 property to pay for $11,000 in back taxes. Earlier this summer, Mr. Egloff sued the town, Deputy Supervisor Joann Vasi, and the town’s former lawyers for their actions in foreclosing on his lakefront home.

  • According to the complaint,(1) Mr. Egloff is a resident and a former employee of the town. In 2005, the town allegedly foreclosed on his property, and in 2008, seized the land because Mr. Egloff had not paid about $11,000 in back taxes. However, Mr. Egloff alleges that he would have paid back taxes except that the town had not paid him for five years. He was given his back pay earlier this year.


  • Lewisboro is wasting the taxpayers’ money,” said Mr. Egloff’s attorney, Thomas Decea of Danzig, Fishman & Decea. “[Mr. Egloff] has got the money in escrow to pay all of the alleged past due amounts plus interest, yet the town persists in going after his property.”

  • Town Supervisor Edward Brancati told The Ledger that the town would have paid Mr. Egloff, except that he had never submitted time sheets until recently. “The town followed the law the way it’s laid out,” Mr. Brancati said. “I don’t think anybody can expect the town to pay somebody when there’s no time sheets.”

For more, see Resident sues town over property seizure.

For the lawsuit, see Egloff v. Town of Lewisboro, et al.

For story update, see Town disputes lawsuit's allegations (go here for Town of Lewisboro's response to complaint).

(1) In his lawsuit, the property owner:

  • alleges the premises was transferred to the Town in violation of lawful procedure, was affected by an error of law, was arbitrary and capricious and was an abuse of discretion on defendants’ part, and accordingly, seeks to void the property transfer;

  • seeks a declaratory judgment adjudicating that the Town and its law firm each had both actual and constructive knowledge of Egloff’s mental incompetence and took steps to foreclose on his Premises without the procedural safeguards required by law;

  • alleges the Town, under the color of state law, willfully and without justification deprived property owner of his rights, privileges and immunities secured by Federal law under 42 U.S.C. § 1983 by their conduct, including, among other alleged actions, commencement of the Action while simultaneously withholding the very wages that would have paid for Egloff’s tax liability;

  • alleges the Town willfully and without justification deprived Egloff of his rights, privileges and immunities secured the Fifth and Fourteenth Amendments of the United States Constitution, by their conduct, including, among other alleged actions, commencement of the Action while simultaneously withholding the very wages that would have paid for Egloff’s tax liability.

Ex-Michigan Resident Charged With Five Felonies In Alleged Foreclosure Rescue Racket Nabbed In Texas

In Lansing, Michigan, WLAJ-TV Channel 3 reports:
  • A former Lansing resident faced fraud charges Monday. State police and Attorney General Mike Cox said he's part of a half million dollar mortgage scheme. Officials say Jeffrey Barry was arrested today in Texas, where he's now living. They say Barry offers to buy homes in danger of foreclosure, and offers to sell the home back to the owners under a land contract. Officials say he would give the homeowner a check for the down payment, and then make up an excuse and demand it back. He would then use that down payment as proof to get a mortgage. Barry is facing five counts, each worth a ten year felony.

Source: Former Lansing Resident Facing Fraud Charges.

Las Vegas Man Charged With Forging Quit Claim Deed To Home Into His Own Name; Transfer Dated Nine Months After Owner's Death

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • [Calvin] Wynn proclaims he is innocent of six felony charges relating to a real estate transaction in 2006. According to records, Morris Rozet, the 30-year resident of a southeast Las Vegas home, quit claimed his property to Wynn. Trouble is, Rozet's signature is dated a full nine months after his death.

For more, see I-Team: Alleged Scammer Back in Court. DeedContraTheft

Damage To Credit Rating A Consideration For High-Score, Non-Delinquent Homeowners When Seeking Loan Modifications

Homeowners who are current on their mortgage loan but nevertheless are seeking to modify their loans to lower their house payments may wish to consider the prospect of how badly their credit scores will be creamed if they go through with a loan modification, based on a recent story on
  • A recent Bloomberg article [...] addresses a topic that deserves serious follow up. The article accurately identifies that loan modifications could damage your FICO credit scores, if they are reported to the credit bureaus using the new reporting guidelines set up by the credit bureaus and their trade organization, the Consumer Data Industry Association (CDIA).


  • The issue at hand is how very large mortgage lenders, namely Citigroup, Chase, and Bank of America, may report mortgage loan modifications to the credit reporting agencies and, secondly, how that credit reporting impacts the consumers’ FICO® credit scores. According to the Consumer Data Industry Association, the credit bureaus have agreed to guidelines that loan modifications will be reported as a “Partial Payment Plan.”

  • The problem with this decision is that FICO credit scores interpret the notation of a “Partial Payment Plan” as negative. [...] How much [consumers] scores decrease will depend on from where their scores started. A score of 550 isn’t going to plummet the same number of points as a score of 750. [...] This Partial Payment Plan classification appears to box in tens of millions of consumers who are stuck in upside-down mortgages.

For more, see Credit Reporting Industry's Decision on Loan Modifications Boxes in Consumers.

For the Bloomberg News article, see Cheaper Mortgages Trigger Lower FICO Scores for On-Time Payers.

Tuesday, August 11, 2009

Connecticut AG Accuses Two Outfits Of "Lawyer Renting" While Peddling Loan Modifications; Group May Also Have Operations In Florida, Six Other States

From the Office of the Connecticut Attorney General:
  • Attorney General Richard Blumenthal [Monday] issued an urgent warning to consumers about two foreclosure rescue companies allegedly masquerading as a law firm in Connecticut. Blumenthal's office is investigating and preparing action against the companies and coordinating with the Office of the Chief Disciplinary Counsel (OCDC),(1) which has filed a lawsuit seeking a temporary restraining order and other legal remedies against the firms and associated individuals, including Kent Gross, Hazen Sturtevant and Nicola L. Zagarolo.

  • The OCDC alleges that these individuals -- doing business as First Legal Group, P.A., and Nationwide Home Relief Law Group, P.A. -- operated a law office in East Berlin without a Connecticut law license. The operators allegedly hired Connecticut lawyers who did virtually no work for consumers. They appear to have been operating in Florida, Connecticut and six or more other states. Blumenthal said, "These legal imposters may have taken $750,000 or more from at least 200 Connecticut homeowners in distress -- providing virtually no legal help. Our message about these fakes: forewarned is forearmed."(2)

For the entire press release, see Attorney General Warns Consumers About Foreclosure Rescue Company Masquerading As Law Firm.

(1) The State of Connecticut Office of Chief Disciplinary Counsel is a part of the state's judicial branch of government and was created with the mission of pursuing grievance complaints relating to violations of the rules governing lawyer conduct within the state.

(2) AG Blumenthal added: "This bogus law firm operating nationwide took money from Connecticut consumers to do foreclosure mediation -- a service already provided free of charge by the [Connecticut] courts. Mediation can be critically important in saving homeowners from foreclosure, but no one should be charged for it under the false guise of legal services by non-lawyers." UnauthPractOfLawTheta

Collapsing Short Sales Contribute To Continuing Flow Of Foreclosures

USA Today reports:
  • Scores of homeowners who thought they'd cut a deal with their banks to sell their houses for less than their unpaid mortgages are seeing those agreements fall apart months later, contributing to the mounting foreclosures that threaten the housing market's recovery. The sales of homes for less than the amount owed the bank, known as "short sales," have been widely viewed as an alternative that could help slow the foreclosure epidemic. In theory, delinquent homeowners escape a mortgage they cannot afford, and lenders, although taking a loss, avoid the even costlier process of completing a foreclosure.

  • Instead, many homeowners are watching potential buyers walk away as months pass while they deal with lenders' lengthy delays, lost documents and unreturned calls, according to the National Association of Realtors (NAR). Not all the snafus are lenders' fault; inexperienced real estate agents who fail to turn in complete paperwork also are causing holdups, as are severely underpriced homes.

For more, see Long waits for short sales (Home sellers frustrated as short-sale deals collapse).

Seller's Failure To Resolve Foreclosure Spells Disaster For Would-Be Rent To Own Homebuyer; Family Booted Despite Making Repairs, Prompt Rent Payments

In Syracuse, New York, The Post Standard reports:
  • When they moved in last fall, April and Boliver Marshall thought their family had found the American Dream. "Everyone had been saying, no, you'll never be a homeowner -- and then, finally, I was," April Marshall recalled. "Just that one time, finally, a piece of the pie." So it seemed. Though they didn't know it, the Marshalls were chasing an illusion, seeking to buy a property fated for foreclosure. After spending nearly $6,800 in rent and investments, they were evicted last month, feeling angry and betrayed.


  • In some ways, they stand as victims of the national home mortgage crisis, the one economists say generally missed Central New York. But the Marshalls represent a secondary wave, one likely to grow if the recession lingers. Hard times will increase the number of people who cannot qualify for home loans, sending those buyers into the arms of real estate dealers with unconventional offers that involve more risks and fewer protections.

  • "This is how you make lots of money in real estate with no money down, like they teach on late night TV," said Gary Pieples, a Syracuse University law professor who is representing the Marshalls. "You get somebody else to move into a house and buy it for you."

For more, see A rent-to-buy disaster: How the American Dream turned into a nightmare for a Syracuse family. rent to own lease purchase option scams yellowstone

Foreclosure Eviction Forces Couple, Four Kids, Two Elderly Foster Care Clients From Rented Home; Out $2.5K Security Deposit, Cost Of Home Improvements

In Eugene, Oregon, The Register Guard reports:
  • Three months into a year long lease, renters Al and Rene Ako had to pack up their children and two elderly foster care clients and move. They had to move out of a house in the Ferry Street Bridge area of Eugene even through they had paid their rent on schedule and otherwise held up their end of the landlord-tenant bargain.

  • Additionally, they paid for a fence around the backyard pool and a new window on a downstairs bedroom so the house could meet state foster care license requirements. They had planned to stay at least five years, Rene Ako said. But, instead, they were out in a matter of months. “I have four children, so it’s a big deal to me,” Ako said. “It was extremely stressful. I was crying and just really upset and nervous about it.”


  • Rene Ako said the family still needs the return of the [$2,500 security deposit] money to cover the deposits on the family’s new rental house and for moving expenses. “I had to call Senior Services and explain to them what had happened, and I had to call all the family members [of the two elderly foster care clients] and explain and tell them we had to move again.(1)

For the story, see Foreclosures Hit Renters, Too (Some lose their homes when landlords default on mortgages; new laws aim to protect tenants’ rights) (if link expires, try here).

(1) Both Congress and the Oregon Legislature passed laws this spring to protect renters during foreclosure of the house they occupy. The new federal law (see Protecting Tenants at Foreclosure Act of 2009, which is found at Title VII of the Helping Families Save Their Homes Act of 2009) requires banks or other buyers in foreclosure situations to allow tenants in the properties at least 90 days from the date of the foreclosure auction to move, if the tenants had month-to-month rental terms; and tenants with a lease can stay until the lease expires — six months or a year or longer — with a single exception. If the purchaser of the property intends to use the property as a primary residence, the renter must go after 90 days.

The new Oregon law, effective August 23, 2009, allows tenants to choose to apply their deposit and other prepaid rental sums to their final months in the house, after they formally notify the landlord of their intention to do so. The new Oregon law requires the bank, investor group or other foreclosing entity to notify the tenant as well as the landlord when it begins foreclosure proceedings. Tenants are required to give the bank or other foreclosing entity a copy of their rental agreement at least 30 days before the scheduled foreclosure auction to secure the protections. RentSigmaSkimming assisted living

Foreclosure Forces Four Washington Seniors From Assisted Living Adult Home

In Marysville, Washington, reports:
  • One adult family home has been closed by foreclosure and the state Department of Social and Health Services has warned residents at a second nearby adult family home that theirs could face a similar fate. Both homes are owned by the same couple, Dean and Shirley Wicka of Everett, who say they plan to appeal the state’s actions.


  • The two men and two women who were being cared for at the adult family home ranged in age from their late 70s to their 90s, [Department of Social and Health Services spokesperson Pat] Jennings said. Last week, they and their family members were notified that they had several days to move and all four have now left, she said. When the house was foreclosed on last month, a sheriff’s deputy was sent to the house with an order of eviction effective Aug. 3, she said. He discovered that it was an adult family home and called DSHS. Dean Wicka said the patients cried when they were forced to leave. Five staff members lost their jobs, he said.

For more, see State closes Marysville adult family home after foreclosure.

Go here for other posts on foreclosures of assisted living adult homes.

Monday, August 10, 2009

Monkees' Wife Cops Plea In NYC Rent Subsidy Ripoff; Pays 137,000 "Bananas" For "Get Out Of Jail Free Card" After Initially Hit w/ Grand Larceny Charge

In New York City, the New York Post reports:
  • Hey, hey, I'm a housing cheat! The wife of Monkees drummer Micky Dolenz was arrested [Thursday] on charges she ripped off an affordable housing program. Investigators said Donna Quinter, 54, had illegally gotten her paws on $136,866 in government rental subsidies aimed at providing affordable housing for the middle class over a five-year period.


  • The deal Quinter had been getting for the two bedroom in the Ruppert Yorkville Towers on the Upper East Side would have flabbergasted even a daydream believer -- she was paying $817 a month for the spacious pad, which had a market value of $3,600 a month. The former flight attendant was able to snag the deal by filing an affidavit in 2001 saying she lived there alone and earned less than $33,120.


  • Quinter was charged with grand larceny, which could have landed her behind bars for 15 years. [...] But Quinter doesn't have to worry about taking the last train to Otisville(1) for a prison stint -- she pleaded guilty yesterday to a reduced charge after turning herself in at the Manhattan District Attorney's office. As part of her no-jail deal, she repaid the entire $136,866, plus a $200 court surcharge, and agreed to do five days of community service.


(1) Otisville, New York is the home of the fine Federal Correctional Institution - Otisville, as well as the equally fine state prison, Otisville Correctional Facility, both located in Orange County, New York.

Maryland Homeowner Accuses Wells Of "Unclean Hands" In Federal Suit Seeking To Undo Toxic Mortgage Loan

In Greenbelt, Maryland, The Business Gazette reports:
  • A Bowie couple is suing Wells Fargo bank, alleging the bank should have known they could not afford the second mortgage they agreed to for their home. [...] According to court documents, the Bahs have asked for "legal and equitable relief as may be appropriate," though lawyers hope that will include a chance to renegotiate with the lender. The lawsuit is the latest of hundreds in the region that homeowners have filed in the past year to put off losing their homes, legal aid lawyers said.


  • In court papers, the couple's lawyer, Mary Goulet, argues that Wells Fargo knowingly approved the second loan knowing it would push them over their ability to pay and lead them to foreclosure. "It's clear to me and it would be clear to any bank that's underwriting a loan that the Bahs did not win the lottery in 2000. They didn't suddenly have this extra money to take out a second mortgage."

  • The argument is known in legal circles as the "unclean hands" doctrine. Under Maryland law, contracts can be changed or nullified if one group negotiated a deal in bad faith, which Goulet is alleging. "If you, as a bank, create a situation where you have pushed their finances into foreclosure, then you have unclean hands," said Goulet, who is representing the couple for free. Goulet said her office took on the pro bono case at the request of state officials, who have been urging lawyers to take on clients facing foreclosure for the last two years.

  • The argument has been used frequently by pro-bono attorneys in the region since foreclosures began to increase in 2006. The lawsuits generally are filed in local district courts, but in the case of the Bahs, the lawsuit was filed in federal court because Wells Fargo's headquarters is not located in Maryland. In most cases, it has led banks to renegotiate with homeowners, said Vicki Taitano, a lawyer for the Riverdale office of the Maryland Legal Aid Bureau in Prince George's County. "We've filed several in Prince George's County, but they've never gotten before a judge," said Taitano, who said banks usually choose to renegotiate with owners before a case goes to court and avoid foreclosure.

  • Legal experts said the lawsuits are being used to get people to the table because often homeowners and banks cannot seem to get together. [...] In papers filed July 16, Wells Fargo attorney Elizabeth Finberg said the complaint by Goulet "lack[s] factual and legal support and was filed in bad faith for the purpose of harassment." Finberg asked the court to fine Goulet $5,000.

For the story, see Struggling homeowners take banks to court (Residents facing foreclosure allege lenders have ‘unclean hands').

For the lawsuit, see Bah v. Wells Fargo Bank, N.A., et al. UndoMortgageLoans TILAdelta

Fannie Backs Down On Plans To Use Online Auction To Dump $29M Mortgage Portfolio Secured By Rundown Bronx Bldgs; Will Search For Responsible Landlord

In The Bronx, New York, Crain's New York Business reports:
  • In the face of pressure from Sen. Charles Schumer, city housing officials and tenant advocates, Fannie Mae decided to cancel an online auction of 19 Bronx apartment buildings that had fallen into foreclosure. Ocelot Capital had bought the buildings in 2007 for a hefty $36 million, and officials worried that the auction would attract another owner who would overpay. The buildings have fallen into disrepair, racking up code violations, and forcing the city to spend nearly $1 million on repairs.


  • Fannie Mae had bought the $29 million mortgage portfolio from Deutsche Bank Berkshire Mortgage in 2007 and had proposed auctioning it off through a website called DebtX. The buildings, located in the Crotona section of the Bronx, are rundown, including 10 which have made the city’s list of worst-maintained buildings. The buildings are home to 520 families.(1)

For more, see Fannie Mae backs off auction of Bronx apartments (Public officials had worried that the sale of 19 buildings would attract speculators and raise rents).

(1) "Fannie Mae is committed to selling the Ocelot notes to a responsible buyer who will deal fairly and appropriately with tenants," said Ken Bacon, executive vice president of housing and community development at Fannie Mae. Overleveraged NYC Buildings

Florida Suit Claiming Homeowner Facing Foreclosure Paid Inflated Fees To Reinstate Mortgage Certified As Class Action

In West Palm Beach, Florida, the Palm Beach Post reports:
  • Circuit Judge Thomas Barkdull [Thursday] certified as a class action a lawsuit against an attorney, along with his law firm, who collected foreclosure-related fees from Wells Fargo mortgage holders. The suit was filed by Loren Banner, an electrician from Palm Springs, who claims Plantation attorney David J. Stern charged fees for services he did not perform or that were excessive after Wells Fargo foreclosed on his property and Banner sought to pay what he owed the bank and get his mortgage reinstated.

  • With the case certified as a class action, potentially 2,500 Wells Fargo mortgage holders around Florida who received mortgage reinstatement letters between Jan. 18, 2003 and February 19, 2009, could qualify to be part of the class. Those letters set forth money due to Wells Fargo, including various fees. The ruling was a victory for West Palm Beach attorney Louis Silber, who launched the effort on behalf of Banner in 2007. Silber's lawsuit claims that Banner paid too much to get his mortgage reinstated. [...] Banner paid a host of fees to be able to reinstate his mortgage, which ultimately was reinstated. Those fees included charges for title searches, property inspections, filing fees and Stern's attorney fees.

For more, see Lawsuit against Wells Fargo and Broward attorney certified as class action.

Failure To Establish Chain Of Title, Prove Debt Sinks Creditor As Consumer Challenges Credit Card Claim In Collection Lawsuit

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:
  • Jenny Vo of South Philadelphia ekes by as a manicurist and single mother raising two sons. So when a debt collector told her in February 2008 she owed $14,237.38 on her credit card, she was stunned. he knew she had charged purchases of food, clothing, and household supplies, and she knew she was behind in payments. But Vo, 37, thought she owed just a "couple of thousand dollars" on the card.

  • So she got a lawyer to challenge Unifund CCR Partners' claim in Philadelphia's Court of Common Pleas - and the company could not provide credit card bills itemizing her purchases. The most it was able to document was $5,738.33.

  • Frustrated with a lack of evidence presented by Unifund, Judge Idee Fox dismissed the case Feb. 17, which stripped Unifund of the right to demand payment from Vo. Vo's case reflects a problem in the credit card industry as defaults rise during hard economic times. The increasing complexity of lending in recent years has made it more difficult for creditors to document what they say they are owed.


  • Citigroup Inc. and Unifund did not respond to requests for comment. Philadelphia lawyer Frederic Weinberg, representing Unifund, said he had provided 34 pages of documents. But Judge Fox ruled that Unifund failed to establish the chain of ownership, as well as the amount owed. If Vo had not asked for proof, Unifund might have automatically won the right to take a lien against her house. [... W]hen borrowers [...] get legal help, the collectors typically withdraw cases, said Vo's attorney, Peter Schneider of Community Legal Services, adding, "They don't have the proof."(1)

For the story, see Creditors face documentation woes.

(1) According to the story, the Municipal Court of Philadelphia in late February tightened the procedure for filing credit cards claims against consumers. For example, a collection firm can no longer win its claim just because a cardholder fails to show up for a hearing. It still must have adequate proof to support its claim. And in Western Pennsylvania, Blair County formed a Credit Card Court in January that encourages conferences before trial, similar to Philadelphia's mortgage-foreclosure program, created last year during the housing crisis. In the seven months since then, 75 percent of the cases in which the borrowers showed up have been resolved in conference. EpsilonMissingDocsMtg

Sunday, August 09, 2009

Minnesota Suit Seeks To Slam Brakes On Foreclosures Until Feds Implement Better Procedures In Program Borrowers Claim Violates Due Process Rights

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:
  • Across the state and the nation, struggling homeowners [...] are growing frustrated with a $75 billion federal program that was supposed to ease the housing crisis by preventing so-called "avoidable foreclosures" by cutting borrowers' monthly mortgage payments. But, according to a U.S. Treasury report released Tuesday, only a very small percentage of people who qualify for relief under the program are actually getting it. In many cases, borrowers have been strung along for months, only to be told in the end that they don't qualify. And when borrowers are denied, they often are not told why.


  • Last week, the Foreclosure Relief Law Project, a nonprofit law firm in St. Paul, filed a lawsuit on behalf of [Brooklyn Park homeowner Nichole] Williams and Johnson Sendolo, a Woodbury homeowner, who both claim they qualify for federal relief but were turned down by lenders without being given a reason. The lawsuit, which seeks to stop the lenders from foreclosing on more homes until better procedures are put in place, accuses the U.S. Treasury of violating borrowers' due process rights by denying them access to a federal program without proper notice or explanation.

  • "The smart thing to do for everyone is to press the pause button, to stop the foreclosure factory, and figure out what's wrong," said Mark Ireland, supervising attorney for the Foreclosure Relief Law Project.

For the story, see Federal mortgage program defaulting on a pledge? (A federal program that promised relief to millions of struggling homeowners has fallen far short of expectations).

See also, Homeowners File Lawsuit To Stop Foreclosures In Minnesota (Alleges Federal Modification Program Violates Constitutional Protections).

For the lawsuit, see Williams, et al. v. Geithner, et al.

For more information on this lawsuit or to read the filed documents, click here.

Mortgage Servicer Forecloses On Home Despite On-Time Payments On Loan Mod Agreement, Says Texas Woman In Suit

In Galveston, Texas, The Southeast Texas Record reports:
  • A Kemah woman alleges a mortgage processing and servicing company foreclosed her residence even though she was on time with her payments, recent court documents say. Christina Melinder accuses Ocwen Loan Servicing of breaching a loan modification agreement she entered with the Florida-based business back in February. Melinder explains in her lawsuit that Ocwen neglected to properly apply and account for her loan payments [...] and assessed improper charges and default-related fees which were not authorized by the loan's terms prior to formalizing the deal in question.


  • [The suit] insists that Melinder strictly complied with the terms of acceptance set forth in the Ocwen's offer, but the defendant - through the Brown & Shapiro law firm in Pasadena - improperly and illegally initiated legal proceedings for foreclosure because of alleged non-payment. [...] Ocwen is ultimately faulted for violating state law while Brown & Shapiro was named a co-defendant.

For the story, see Kemah woman says mortgage company foreclosed despite payments. QuestionableServicingTacticsSigma

Plea-Copping Suspect Agrees To Testify Against Confederates In Criminal Fraud Prosecution Of Alleged Loan Modification Scammers

In Monterey County, California, The Monterey Herald reports:
  • A preliminary hearing began Friday for a Gonzales woman and her nephew who are charged with fraud. They were arrested in August 2008 on suspicion of taking money from 55 people with empty promises of renegotiating their mortgages to avoid foreclosure.

  • Defense attorneys for Maria de Lourdes Ponce, 51, and Fabian Olivarez Casillas, age unknown, said prosecutors are basing their case on the word of the real culprit in the case, a cocaine-addicted co-defendant who pleaded guilty and agreed to testify against her alleged co-conspirators.

  • Melissa Dawn Garcia, 28, of Watsonville is serving a four-year prison sentence for similar offenses in Santa Cruz County. Her sentencing in the Monterey County case has been delayed until after she testifies against Ponce and Casillas.

For more, see Investigator testifies in fraud case (Two accused in mortgage renegotiation scheme).

Go here for other posts on this alleged scam.

California Men Sentenced For Using Others' I.D. To Obtain Loans, Cars; Victimized Owners Had Home Of 30+ Years Sold Out From Under Them

From the Office of the San Bernardino County, California District Attorney:
  • Howard Edwards and John Foster were sentenced to prison for real estate fraud related crimes. Howard Edwards was sentenced to 20 years, four months and John Foster was sentenced to 10 years, four months. The two defendants were found guilty on felony counts ranging from forgery, grand theft, filing of false instruments, identity theft, conspiracy, and money laundering.

  • In 2005/06, the two defendants, formerly of Rancho Cucamonga, befriended unsuspecting victims on an Internet chat line. Their personal information was used to obtain loans on luxury cars and real estate in Fontana. The victims were then liable for these loans. The loan proceeds were transferred to a phony escrow company. The defendants falsified several real estate deeds and forged the signatures and stamps of several notary publics. The false deeds were later recorded at the San Bernardino County Recorder's Office.

  • In July 2007, the defendants sold a house in the city of Gardena, Ca. for an additional $560,000. The house was sold without the owner's permission and knowledge. The victims first found out about it when a lending institution attempted to foreclose on the property. The rightful owners had been living at the residence since 1971. The defendants utilized the personal information of a man living in Massachusetts to obtain the loans. $538,000 was transferred to the phony escrow company and later dispersed to the defendants other bank accounts.

For the DA's press release, see Two Men Sentenced for Real Estate Fraud. DeedContraTheft

Attorney Suspended For Taking, Failing To Return $308K In Client Trust Funds After Failed Foreclosure Sale Bid

In Tampa, Florida, The Tampa Tribune reports on some of the local attorneys recently sanctioned by the Florida Supreme Court for their bad behavior, including:
  • Andrew Stuart Forman of Tampa was suspended until further order. An emergency suspension order states that Forman took $308,000 in trust to be used to bid at a foreclosure sale. The client was not the successful bidder, but Forman removed the money from the trust account and failed to return the funds.

For more, see 4 Bay area lawyers disciplined by high court (Four Tampa Bay area lawyers were among the 47 attorneys disciplined recently by the Florida Supreme Court).

For the most recent issue of The Florida Bar's "gossip sheet," see Supreme Court Disciplines 47 Attorneys (a significant number of whom were hammered for screwing around with trust/escrow funds belonging to their clients). EscrowRipOffKappa