Saturday, May 22, 2010

Condo Converter Accused Of Unloading Sub-Par Structure On Unwitting Apartment Buyers As Rampant Unit Foreclosures Now Threaten To Sink 96-Unit Complex

In Largo, Florida, The St. Petersburg Times reports:
  • To most people, Brittany's Place in Largo looked no different than the hundreds of other blandly attractive apartment complexes built in Florida in the 1970s and '80s. To four Miami men, it looked like gold.

  • As the condominium boom neared a frenzied peak in 2005, they hit on a plan: buy the 96-unit complex, spend a few thousand dollars per apartment on showy upgrades, then sell the units as condos at a tidy profit. It seemed like a fine idea, one that had enraptured developers all over the state.

  • Now, five years later, buyers like Peggy Bodine have discovered just how wrong a condo conversion can go. So many units are in foreclosure that Bodine is one of the few owners still paying maintenance fees. There is no money in the budget to repaint the outside walls, to repair the cracked pool deck, to pay the insurance premium due this month. The clubhouse has been stripped of most of its furnishings.

  • Worst of all, Bodine says, "they dumped the association on us.'' On April 30, the developers washed their hands of Brittany's Place. They transferred control to a condo association board made up of owners like Bodine, a math teacher who acknowledges she knows little about condo law or the duties of a condo board.

For more, see Rampant foreclosures leave condo owners stuck with fees.

City Council To Enforce Ban On "Mother-In-Law" Vacation Rentals, Cutting Source Of Income For Some Homeowners During Area's Busiest Time Of Year

In Port Townsend, Washington, the Olympic Peninsula Daily News reports:
  • The City Council directed its staff to enforce a ban on the use of so-called mother-in-law units as short-term vacation rentals, even though it will cause many of these operations to cancel reservations during the busiest time of the year. "I understand this action is causing some inconvenience," said council member Mark Welch. "But it shouldn't be a surprise that we are enforcing a law that has been on the books for some time." On May 4, the city sent out 21 notices to what it calls accessory dwelling unit, or ADU, rentals which were in violation of the ban. City Hall discovered the ADUs via their online advertising as short-term rentals.


  • A dozen people weighed in about the issue during the public comment of Monday night's City Council meeting. Most of them favored a re-evaluation or repeal of the ban, which would cause them to lose projected income or issue refunds. "If I am forced to comply with this, my house will go into foreclosure," said Barbara Morey, who rents a portion of her property at vacation rates. [...] Several of those testifying said that canceling reservations made for the August to October time frame would cause an inconvenience for her guests that will give them a bad taste about the town.


  • Not all of the public testimony opposed the ban, as two bed-and-breakfast owners spoke in its favor. Mary Ann DeLong said licensed bed and breakfast operations pay more taxes and have to comply with a number of stringent insurance regulations. And Janet Allen said it was difficult to compete with the "bootleg properties" that have fewer restrictions and can charge less money."I think this should be enforced," DeLong said of the ban. "To do otherwise is unfair to those of us who have complied with all aspects of the law for many years."

For the story, see Council not budging, but operators of mother-in-law units want Port Townsend to re-evaluate code.

Landlord Allegedly Facing Foreclosure Fatally Shoots Tenant For Non-Payment Of Rent, Cops Suspect

In North Miami Beach, Florida, WFOR-TV Channel 4 reports:
  • A North Miami Beach man was shot to death Monday afternoon when he didn't pay his rent, police say. The alleged murderer is the man's landlord, Julian Gonzalez. The victim is 25-year-old Vladimir Santos. His family told CBS4 News that the house was in foreclosure and the bank had told Vladimir not to pay rent. [...] As family and friends remember Vladimir Santos, crime scene investigators continue searching for answers, wondering why a landlord would allegedly kill a tenant over rent.

For the story, see NMB Landlord-Tenant Dispute Ends In Death.(1)

(1) See also, Miami New Times: Vladimir Santos Shot By Landlord for Not Paying Rent, Leaves Behind Three Kids and Pregnant Wife:

  • Twenty-five-year-old Vladimir Santos has been with his wife, Maria, since they were 13. Together the couple already had three sons under the age of five, with their first little girl on the way. [...] Neighbors tried to help Santos after the shooting, but he died in the hands of a neighbor. Witnesses say that the three sons saw Santos laying dead in his own blood. [...] Gonzalez was caught later in the day, arrested, and is being charged with second degree murder.

Report: Over 200,000 California Tenants Affected By Foreclosure In 2009

In San Francisco, California, Beyond Chron reports:
  • Tenants Together, California's statewide organization for renters' rights, released its new 2010 Report: California Tenants in the Foreclosure Crisis []. The report, a follow-up to Tenants Together's 2009 tenant foreclosure report, highlights recent foreclosure-related developments affecting tenants, quantifies the impact of home foreclosures on tenants in 2009 at the state and county level, and makes recommendations to strengthen protections for tenants in foreclosure situations.

  • Tenants Together conservatively estimates that at least 37% of residential units in foreclosure in California were rentals, directly affecting over 200,000 tenants- most of whom were displaced. The report quantifies the impact of the foreclosure crisis on a county-by-county level. The report’s research is based on California property records for every foreclosure in 2009.

For more, see Over 200,000 California Tenants Directly Affected By Foreclosure.

Woman Gets 4 Years For Forging Checks That Left Unwitting Elderly Landlord Facing Foreclosure

In Vista, California, KGTV-TV Channel 10 reports:
  • A woman who wrote checks to herself from her landlord's account, temporarily forcing the victim's two homes into foreclosure, was sentenced Monday to four years in state prison. Jacqueline Mastrodimos, 39, pleaded guilty last October to four counts of passing forged checks.


  • Authorities said Mastrodimos rented a room in 2005 in Johansen's Carlsbad home and soon became involved in the 60-something victim's finances. The mortgage on the Dehesa Court home went unpaid from January to August 2008, and Johansen didn't realize there was a problem until she saw a notice on her front gate that the property would be sold at auction in three weeks, prosecutors said. A Carmel Valley condominium was in foreclosure for the same reason. Johansen was able to keep the properties but had to pay substantial penalties.

  • Investigators said Mastrodimos took the victim's bills to a post office and picked up her mail each day. During that time, she wrote checks to herself from the victim's account, took out credit cards in Johansen's name and used her automated-teller machine card at casinos.

Source: Woman Sentenced For Forging Checks (Jacqueline Mastrodimos To Spend 4 Years In Prison).

(1) Reportedly, Vista Superior Court Judge Daniel Goldstein ordered the defendant to pay $105,000 in restitution to Julie Johansen and $19,000 to American Express for opening up a credit card in the victim's name.

Bronx DA Charges Pair With Pocketing $30K In Rent From Building In City Program Enabling Tenants To Buy Their Units In Co-Op Conversion

In The Bronx, New York, The Village Voice reports:
  • Two tenant leaders of a city-owned Bronx building were charged by the Bronx DA [] with stealing thousands of dollars from the building's bank account. Arlether Middleton and Twana Rose served as the president and secretary of a tenants' association in a building that was part of a city program that enables low-income tenants to buy their apartments and eventually convert the building into a co-op.

  • The tenants' association is supposed to manage the building during the conversion process. Instead of doing that, the two tenant leaders -- a father-daughter team -- stole more than $30,000 in rent that was intended for the upkeep of the building, 783 East 168th Street. They then tried to defraud the city by submitting false bank statements and financial reports to city officials, says the city's Department of Investigation.

  • This wasn't the first time Rose had attempted to defraud the city and her fellow tenants. In 2001, Rose pleaded guilty to charges that she illegally cashed the tenants' association's checks and kept the money for herself. She stole $7,000 and was sentenced to five years' probation.

Source: Tenant Leaders Accused of Stealing From Association Account.

Tenants Deal With Uncertainty In Chicago Apartment Buildings Facing Foreclosure; Residents In 20,000+ Rental Units Affected In 2009: Report

In Chicago, Illinois, the Chicago Tribune reports:
  • More than 125 apartment buildings in Chicago on average went into foreclosure each week of 2009, affecting tenants living in almost 21,000 rental units, according to a new report. The study, by the nonprofit Lawyers' Committee for Better Housing, found that lenders began foreclosure proceedings against owners of 6,560 multiunit rental buildings last year. The problems were particularly dire for renters in nine city neighborhoods, where foreclosure actions were filed against more than 200 buildings during the year.


  • Authors of the report voiced concern that tenants, owners, receivers, lenders and real estate agents are unaware of the laws affecting renters who live in buildings on which foreclosure proceedings have been initiated.

  • Some tenants don't think they have to pay rent, according to the report. And some property managers, lenders and new owners wrongly believe they don't have to maintain the property and can force tenants to move because of foreclosure actions.

For more, see Foreclosures hit 6,560 Chicago rental buildings in 2009 (Tenants living in almost 21,000 apartments were affected, report says).

Lenders Now Liable For Refunding Chicago Renters' Security Deposits On Tenant-Occupied Foreclosures

In Chicago, Illinois, Chicago Breaking News Center reports:
  • Thousands of apartment dwellers who stand to lose security deposits because of building foreclosures would get their money back under an ordinance the City Council approved [earlier this month].

  • Aldermen voted 47-0 to approve Mayor Richard Daley's proposal to require all lien holders -- typically banks -- in foreclosure cases to pay back security deposits to tenants who are pushed out of their homes. Under current city law, the landlord and not the lien holder is responsible for paying back the security deposit. That often doesn't happen, city officials have said.

  • Last year, more than 8,500 rental units were affected by foreclosures, according to city statistics. With an average security deposit of $860, up to $7.3 million was lost, the city has said.

Source: Renters will get security deposits back in foreclosures.

Residents In 50%+ Empty, 500-Unit High-Rise Complex Look Forward To Desperately Needed Repairs As Developer Agrees To Unload Title Onto F'closing Bank

In Cherry Hill, New Jersey, KYW Newsradio 1060 reports:
  • Residents of a high-rise apartment complex in Cherry Hill, NJ are hoping that an out-of-court agreement will jump-start renovations that have been left half-done for years. A foreclosure hearing [...] became a moot point when the developer of the twin-tower Grand Apartments, formerly the Landmark Apartments, on Route 70 near I-295, agreed to allow lenders to take over the property. That's according to the head of the tenants' association, Rae Haltzman.

  • Haltzman says the lenders will now hire a management company to resume repairs to the exposed wiring and dangling smoke detectors [...]. More than half of the 500 units are currently vacant. Haltzman says the lenders have agreed to start work immediately to fix exposed pipes and wiring in the unfinished hallways, and then they'll prepare a plan to renovate individual units.

For the story, see Cherry Hill Apartment Complex May Be Out of Renovation Limbo.

See also, WPVI-TV Channel 6: NJ high-rise highly frustrating for tenants.

Friday, May 21, 2010

"Bogus Assignee" & "Bad Bene" Used As Innocent Placeholders, Regrets Error, Says LPS CEO In Response To Media Report; Addresses Dubious Notarizations

Jeff Carbiener, president and CEO of Lender Processing Services in Jacksonville , Florida writes in The Florida Times Union:
  • LPS is very involved in the Jacksonville community and highly values its role and reputation as a good corporate citizen. Therefore, I believe it is vitally important to provide clarification to the May 14 article in The Florida Times-Union, "Florida Investigating 'Bogus' Foreclosure Records."

  • The article discusses LPS' subsidiary, Docx LLC, which provided a document preparation service to its customers and/or their attorneys from 2008 to 2009. [...] When preparing the documents, if specific pieces of information were not provided by the customer or attorney, Docx used the phrases "Bogus Assignee" and "Bad Bene" as highly visible placeholders that would then be replaced when the missing information was provided to Docx.

  • Unfortunately, on a few occasions, documents containing the placeholder phrases were inadvertently recorded before the field was updated. While to our knowledge, none of these documents have been used in actual court proceedings, LPS deeply regrets this error.

For more, see Reply: Mortgage documents: Placeholder items were innocent.

Media Heat Continues For The Alleged Foreclosure Mill Rackets In Florida

On Florida's Treasure Coast, TC Palm weighs in with their story on the recent announcement by the office of Florida Attorney General Bill McCollum of their probe into one of the state’s largest assembly line, foreclosure mill law firms for allegedly cranking out fabricated legal papers on an "as needed" basis used to speed up foreclosures. A couple of local foreclosure defense attorneys chime in with their observations on the alleged shenanigans of the foreclosure mill operators.

For the story, see Attorneys: Forged signatures, sloppy paperwork on many foreclosure documents.

Mother/Daughter Duo Face Charges In Alleged Rent Skimming Racket Screwing 30+ Now-F'closed Homeowners & Would-Be Buyers Under Bogus Rent-To-Own Deals

In Bakersfield, California, The Bakersfield Californian reports:
  • A mother and daughter charged with a major scam that bilked at least 32 people out of 18 homes valued at more than $2.3 million are in jail in lieu of posting $1 million bail each, according to records in Kern County Superior Court.

  • The daughter, Dawn Marie Kantin, 37, came into court Monday afternoon where she grinned at a friend in the audience. She pleaded not guilty to 44 counts of conspiracy, embezzlement, theft, notary fraud and forgery. Her mother, 69-year-old Alice Kantin, the reported owner of Desert Air Real Estate Investments, Inc. in Bakersfield, will be arraigned on the same charges Tuesday, court and jail records say.


  • Victims of the reported scam, which operated in Bakersfield between August 2007 and June 2009, were financially devastated after entrusting their homes to the Kantins, according to a sworn declaration filed by Gordon Isen of the Kern County District Attorney's Real Estate Fraud Unit.

  • One listed victim, Priscilla Acosta of Bakersfield, said Monday, "I'm relieved" to hear about the arrests. "The ordeal we've been through because of her (Alice Kantin) still makes me cry. We lost our home to foreclosure which we didn't find out about until it was too late." And that's what Isen's declaration said happened to distressed homeowners of 18 houses who contracted with Kantin to take over their payments but lost their home due to foreclosure. In addition, rents paid by 14 tenants with rent-to-buy agreements evaporated when they suddenly learned the homes were in foreclosure, the declaration says.(1)

For more, see Mother, daughter face charges in alleged real estate scam.

In a related story, see KGET-TV Channel 17: Real estate fraud victim says she lost $18,000:

  • A victim of the mother-daughter real estate scam run by Alice Kantin and her daughter Dawn Kantin contacted 17 News saying she was scammed out of $18,000. Janice Rios says the Kantins pocketed monthly payments and down payments for more than a year that were meant to go toward her mortgage payments.

(1) Reportedly, some tenants made downpayments toward purchase of the home, according to court reports. In one case reported by KBAK-TV, Channel 29, Jennifer Hollet and Anthony King paid $30,000 toward the purchase of a home. Hollet told Channel 29 last summer that a month after they moved in, default notices began to arrive and she and King were evicted and lost their downpayment. Assistant DA Isen asked for and received $1 million bail on each defendant, and obtained an order that prevents fraudulently obtained money from being used to post bail, the story states.

Deceased Iraq Vet's Widow Gets Loan Modification Jerk-Around; Says Select Portfolio Yanked Approved Loan Mod, Claiming An Error In Processing

In Amboy, Washington, KATU-TV Channel 2 reports:
  • No one seems to have a definitive answer for her. She has heard a variety of excuses, and dealt with months of what she says are stall tactics. But the bottom line is, the wife of a slain local soldier is about to lose her home. And she's losing it to a company that took hundreds of millions of taxpayer dollars to help people just like her.


  • Casey [Werner] knew she wouldn't be able to make mortgage payments. She now knows she'll have "to fight for my house." It's a fight Casey did not expect when she heard how the federal government and banks were working together to save homes through "loan modification" programs. [...] Casey was especially encouraged after she received a letter from "Select Portfolio Servicing" telling her she was approved for a modification. Her monthly payment of $1,736.29 would be reduced to $517.39. [...] However, after Casey made one payment, Select Portfolio said it made a mistake. Casey needed to provide pay stubs, tax returns and other documents: paperwork she had already given the company. "It's just like a continuous cycle of, you know, ridiculousness," she said.

  • Then she got a letter from Select Portfolio stating: "We regret that we are unable to qualify you for the Obama administration's home affordable modification program ... You did not pass the U.S. Treasury's net present value test." Basically, the money Select Portfolio would get from selling Casey's home – after foreclosure – was more than it would get by modifying her loan. It's the same type of excuses one Portland-area real estate attorney says he hears all the time. "It's not for real," said attorney Rich Vial. "Banks just aren't getting it done."

For more, see A fight for the hero's home: One loan-modification saga.

Another Homeowner Faces Foreclosure Despite Having Made All Payments; Allegedly Delinquent Mortgage Is Owed By Previous Property Owner

Buried in a recent story in First Coast News is the following excerpt on a Northern Florida resident who faces foreclosure on a home he bought two years ago, despite the fact that he's made all his payments:
  • Tom Bloomer is a Camden County businessman on the wrong end of inaccurate foreclosure documents. "First I said they goofed up here, and then they said no we're taking the house. It started to get scary," he said. [...] "I have made my payments. I've made every single payment," said Bloomer.

  • He purchased his home two years ago from a Wells Fargo bank customer and is current on his mortgage. So he's left wondering why his home is in foreclosure. "They will not listen to me at all. I have actually filed a complaint with the Comptroller of Currency," said Bloomer.

  • Now Wells Fargo, unable to reach the seller about a debt, is foreclosing on Bloomer even though he doesn't owe Wells Fargo anything. In fact, his mortgage from the day he purchased his home has been with Bank of America. Bloomer said he is the victim of a wrongful foreclosure. "It is a scary ordeal."

  • The Atlanta law firm McCalla Raymer filed Bloomer's foreclosure lawsuit. The firm would discuss neither the number of cases it files nor Bloomer's case. [Jacksonville Area Legal Aid attorney Lynn] Drysdale said this type of filing is characteristic of foreclosure mills. [...] Bloomer has hired an attorney to put an end to his wrongful foreclosure nightmare so he can live the American dream of owning a home.(1)

For the story, see 'Foreclosure Mills' Using Wrong Documents may Lead to Wrongful Foreclosure.

(1) Homeowners in this situation would be well advised to dig out and read the title insurance policy they (presumably) obtained when they bought their home (hopefully, it hasn't been thrown away or gotten moldy sitting in a damp attic, basement, etc.), and file an insurance claim with the issuing underwriter. In addition to indemnifying a homeowner for losses due to title defects existing on the day the policy was obtained, the title insurer is required to:

  • defend the title in court against any attacks by those claiming an interest in the property that pre-dates the date of the insurance policy, and
  • foot the bill for the legal fees incurred in connection therewith,

provided the homeowner properly files a claim with the insurance company.

In this story, it's possible that the homeowner is suffering the consequences of a sloppy lender. A case like this could also be the result of the lender never having gotten paid off at closing, and that the escrow agent who handled the settlement improperly pocketed the proceeds intended to pay off the existing loan and headed for parts unknown.

Bookkeeping Error Leads To Loss Of Home To Foreclosure Despite No Missed Payments; Ocwen Then Backpedals, Rescinds Sale After Local Media Intervenes

In Houston, Texas, KTRK Channel 13 reports:
  • [O]ne couple found themselves facing eviction, through no fault of their own, until Action 13 Consumer reporter Jeff Ehling got involved. The family made their payments but mistakes were made by the mortgage company that lead to foreclosure and could of had a family out in the streets had we not gotten involved. Bill and Pam Marquis faced a nightmare no homeowner wants to go through. "They foreclosed on us," said Bill.

  • The Marquises say the trouble started when, without their knowledge, their mortgage was sold from one company to another then a third. It was a fact the couple only discovered after calling their original loan company. "That's when we got word that they sold the note to Cinlar, and we called Cinlar, and they said they sold the note to Ocwen," Bill said.

  • After calling Ocwen Financial, the family got another surprise. "They said we do have your note, everything is on file, but you are very delinquent," said Bill. The Marquises then learned the company had the wrong address for their home, and because of that, the mortgage company's delinquency letters never made it to them. The couple says even though they were making payments every month, Ocwen Financial saw the couple as being delinquent by several thousand dollars due to an apparent mix-up involving an escrow account.

  • "They thought that we did not have our own insurance, that they were covering our insurance, but they were not, we have our own outside insurance. And we had already paid our taxes and they said, 'No, we paid your taxes and you owe us escrow on the taxes,'" said Pam. Despite months of trying to get a solution, the family says just this week they were given an eviction notice. The family was told they had 15 days to leave the property, which includes the burial site for the ashes of Pam's mom and sister.

  • "When they told us we were going to lose the house, it was just devastating, It just tore me up," Pam said. After we talked to the family, we decided to contact Ocwen Financial and spoke with an executive vice president who told us they would look into the Marquis family eviction. One week later that VP told us, "The erroneous data point from the prior loan company seems to have caused much of the confusion. We did notify the borrower today that the foreclosure has been rescinded." Now the company says the family can stay in their home.

  • "I really believe you saved our house," Bill told us. The couple says they tried for months to get their mortgage problems fixed, but it took our involvement to get that foreclosure notice rescinded.

Source: Mortgage mix-up nearly costs family their home.

BofA Pocketed Insurance Proceeds From Gas Explosion, Then Attempts Foreclosure On Home Anyway, Says Now-Deceased Homeowner's Son In Lawsuit

In Houston, Texas, My Fox Channel 26 reports:
  • Last October a natural gas leak explosion rocked the house in the 56 hundred block of Nightingale. "There was a natural gas leak at the house next door to Miss Miles home" the family's attorney Daniel Horowitz said. And it would forever change Courtney [Miles'] life. "I didn't want to come back I just couldn't do it," Courtney said during his first trip back to the home since last fall's explosion.

  • His pain is visible when remembering how his mother Dell Miles was still alive when neighbors came running to help. "She had third and fourth degree burns over 60 percent of her body," Courtney said. According to the arson report, when neighbors tried to pull Dell Miles outside her skin was coming off and she kept screaming, "my baby, my baby." Those screams were for Courtney's sister Angela Landry who has multiple sclerosis and is confined to a wheelchair. "They had to actually pull her out of the window," Courtney said.

  • "We got in contact with Bank of America within a month of the explosion," Horowitz said. A Houston law firm sent Bank of America a letter in November of last year. It details the explosion and asks the bank to suspend Mile's mortgage payments pending her insurance claim. "We got no response," Horowitz said.

  • So Courtney's attorneys sent another letter in December. This one marked second request urgent. Again the attorneys said Bank of America ignored it. "We've been able to get nowhere," Horowitz said. In January Dell Miles died after spending many weeks in a coma. Her daughter Angela was still in serious condition and couldn't even attend her own mother’s funeral.

  • "She feels this emptiness like she never got a chance to say goodbye," Courtney said. While the family grieved Bank of America threatened them with foreclosure. "I couldn't believe it, I could not believe it," Courtney said.

  • In January Courtney's attorneys sent another letter to Bank of America. It explains Dell Mile's death, assures the bank the loan will soon be paid off and it requests the bank to stop threatening the family with foreclosure. "It's like a kick in the gut," Courtney said.

  • Horowitz said he soon realized Bank Of America didn't spend any of the millions it got in taxpayer bail out money to train employees in customer service. "No one can help you, no one knows what their doing, no one has the authority to do anything, then they transfer you back to the main switchboard," Horowitz said. "I've spent no less than 45 minutes on hold with Bank of America."

  • Meanwhile arson investigators ruled the fire that killed Dell Miles was caused by a nearby natural gas leak. Her insurance company wrote a check to Bank of America for over 72 thousand dollars. "Which was enough to pay off the entire balance of the mortgage," Horowitz said.

  • So then what did Bank of America do? "Turned their back on her after they were paid off," Horowitz said. Bank of America not only proceeded with the foreclosure, Dell's home was posted for sale on the county's auction block. "Our family had notices of the sale, not the foreclosure proceedings but the sale," Miles family attorney Benny Agosto Jr. said.

  • The Miles family filed a lawsuit accusing Bank of America of wrongful foreclosure, negligence, and fraud. In court filings Bank of America denies all the allegations in the suit. Courtney's attorneys also had to file a temporary restraining order to stop the bank from selling the property. A court hearing was held last month, but Bank of America was a no-show. "We expected them here however I'm not surprised they didn't show up," Agosto said.

  • Bank of America sent Fox 26 Investigates this prepared statement, "We have stopped the foreclosure. We requested the authorization from the representative of the estate for application of the funds to avoid any conflict or dispute by other potential claimant or heirs. Plaintiffs have not provided that authorization. We are working with plaintiffs to identify an alternate solution for application of the funds."

  • Even with a law firm writing and calling, Courtney says he got nothing but ignored by the huge financial institution. It makes some wonder if other homeowners have also been victims of wrongful foreclosures. "There's no telling how many other people out there come home from work one day and get a foreclosure notice," Horowitz said.

For the story, see Bank Forecloses on Home After it's Paid Off.

Thursday, May 20, 2010

NYC To Bill Collectors, Zombie Debt Buyers: "Produce The Paperwork!" When Demanding Delinquent Debt Repayments

In New York City, the New York Post reports:
  • Debt collectors here will have to provide documentary proof that the people they're pursuing owe the money they're demanding, under new consumer-protection rules announced [this week]. "Collectors are increasingly pursuing debt that New Yorkers don't owe. Let's say one name on their list is Michael Bloomberg," the mayor said. "They quickly find people with that name all across the tri-state area [and] are tempted to call each one, fishing for the Bloomberg they're after."

Source: Debt trolls told: Prove it.

$150K Homestead Exemption From Forced Sale Remains Intact For California Homeowner Retaining Possession Of Premises Despite Title Transfer To Another

A California Court of Appeals addressing several legal issues relating to a judgment creditor's attempt to snatch away a judgment debtor's home through a forced sale decided, among other things, that the debtor is entitled to shelter $150,000 of equity from the creditor pursuant to the state's homestead exemption laws, despite the fact that she transferred the legal title to another. The court essentially ruled that, given the facts and circumstances of this case, despite a title transfer by Larnise Tarlesson of her home to her cousin Peola Lane (in a failed attempt to have Peola assist in refinancing the home), the continuous use thereof by Larnisse both before and after said transfer was enough to entitle her to the continued protection of the exemption.

For the ruling, see Tarlesson v. Broadway Foreclosure Investments, LLC, No. A125445 (Ct. of App., 1st Dist. Div. 3, May 17, 2010) (Certified for Publication).

(1) In affirming a lower court ruling, the appeals court stated (bold text is my emphasis, not in the original text):

  • Broadway does not dispute that the property was Tarlesson's principal residence when it acquired its judgment lien. Nor does it dispute that she has continuously resided in the home since 1984, and there is no evidence that rebuts Tarlesson's claim that, "At all times I retained the beneficial interest in my home, which was acknowledged by Peola [Lane]."

  • In the circumstances, Tarlesson's continuous occupancy of her home qualifies it as her "homestead" under section 704.710, subdivision (c). We will not also read a requirement into sections 703.020 or 704.710 that Tarlesson must have held continuous title to her home to claim the homestead exemption.

Court Hits Sale Leaseback Peddlers With $33K+ In Plaintiff's Legal Fees; Declines To Apply Contingent Risk Fee Enhancement, Opts Against Punitives

A U.S. Bankruptcy Court in Newark, New Jersey that recently found two men liable for violation of several consumer protection statutes in connection with a sale leaseback, equity stripping foreclosure rescue scam (see O'Brien v. Cleveland (In re O'Brien), 423 B.R. 477 (Bankr. D.N.J. 2010))(1) has made additional rulings in the case with respect to:
  • the tab for the homeowner/victims' attorneys fees it will stick the pair with, and
  • the imposition of punitive damages it will impose on the duo.

With respect to the attorney's fees, the court:

  • Granted an award for the entire base amount (ie. lodestar calculation) requested Plaintiffs' attorneys in the net amount of $33,932.50 for 81.5 hours of work,
  • Declined to enhance this amount by applying a contingent risk multiplier (ie. lodestar multiplier).(2)

With respect to punitive damages, the court declined to impose said damages, saying that:

  • "[I]n large part because the Defendants' ability to pay such damages has not been adequately established by the Plaintiffs[]"(3) and
  • "[T]he Defendants have been adequately punished for their wrongdoing, particularly in light of the treble damages awarded Plaintiffs under the New Jersey Consumer Fraud Act."(4)

For the most recent ruling in this case, see O'Brien v. Cleveland II (In re O'Brien), Case No. 03-17448 (RTL), Adversary Proceeding Case No. 08-1676 (RTL) (Bankr. D.N.J., May 18, 2010).

(1) See also, Foreclosure Rescue Operator, Closing Attorney Found Jointly Liable For $690K+ In Bogus Sale Leaseback, Equity Stripping Ripoff.

The court found that Defendants' actions were fraudulent and constituted an unconscionable commercial practice in violation of New Jersey's Consumer Fraud Act ("CFA"). Furthermore, the sale leaseback was found to be a financing transaction subject to the Truth In Lending Act ("TILA") as amended by the Home Ownership and Equity Protection Act ("HOEPA") as well as the New Jersey Home Ownership Security Act of 2002 ("HOSA").

(2) In declining to enhance the base, or lodestar, fee by a contingent risk multiplier, the court said (bold text is my emphasis, not in the original text):

  • The Plaintiffs urge the court to enhance their attorneys' fees to the tune of fifty percent. The basis for the enhancement is the novelty of the issues and the fact that Counsel took the case on "primarily" a contingent fee basis.

  • Admittedly, there was a $10,000 retainer paid by the Plaintiffs and split equally between Mr. Halpern's firm and the Plaintiffs' former counsel. In Rendine v. Pantzer, 691 A.2d 1202 (N.J. 1995), the New Jersey Supreme Court "authorize[d] the award of contingency enhancements based on the risk of nonpayment." 661 A.2d at 1229. The court reasoned that a fee "awarded under a fee-shifting statue cannot be `reasonable' unless the lodestar, calculated as if the attorney's compensation were guaranteed irrespective of result, is adjusted to reflect the actual risk that the attorney will not receive payment if the suit does not succeed." 661 A.2d at 1228.

  • This rule is limited by certain standards set forth by the court that "require a relationship between the amount of the enhancement awarded and the extent of the risk of nonpayment assumed by counsel for the prevailing party." Id. at 1228-29. Factors the court should consider when determining the amount of an enhancement include: mitigation of the risk of nonpayment, such as receiving part of their hourly fee regardless of the result; if there are substantial damages at stake; and the likelihood of success. Id. at 1229-30.

  • Federal fee shifting statutes do not permit enhancement of the lodestar fee on the basis of contingency. See City of Burlington v. Dague, 505 U.S. 557, 567 (1992) (applying this holding to the Solid Waste Disposal Act and Clean Water Act); Rendine, 661 A.2d at 1223 (interpreting the holding of Dague to apply to all federal fee-shifting statutes).

  • The Defendants argue that Mr. Halpern was not paid on a contingent basis but rather was paid a flat fee. In Mr. Halpern's declaration in support of counsel fees submitted on January 25, 2010, he declared he was entitled to fee enhancement based on "the complexity of the issues, the novelty of the issues presented and the results obtained for the Plaintiffs." Counsel did not state that he was paid on a contingent basis. In Mr. Halpern's memorandum docketed May 7, 2010, he adds, "counsel took this case on primarily a contingency because of the fee shifting."

  • In light of this discrepancy, and also considering that the attorneys' fees for the TILA and HOEPA claims, an extremely large and important part of this case, do not permit enhancement, the court finds that the net fees are sufficiently reasonable and therefore declines to enhance the award.

(3) On this point, the court said:

  • The New Jersey Supreme Court has identified several relevant factors to consider when determining entitlement to punitive damages and the appropriate amount of such an award —

    In addition to bearing a reasonable relationship to actual injury, the amount of punitive damages should account for the profitability of the defendant's . . . misconduct, the plaintiff's litigation expenses, the punishment the defendant will probably receive from other sources, the defendant's financial condition, and the effect on its condition of a judgment for the plaintiff.

    Herman v. Sunshine Chemical Specialties, Inc., 627 A.2d 1081, 1086 (N.J. 1993) (citation omitted). In the instant case, while the Defendants advance various arguments in opposition to an award of punitive damages, the court is particularly concerned with the Defendants' financial condition. It is part of the Plaintiffs' burden of proof to establish the "ability of the wrongdoer to pay punitives." Id. The court should consider net worth but place more emphasis on income. Id. at 1089-90.

  • The Plaintiffs deposed both Defendants in an attempt to ascertain their respective financial conditions. Unable to discover any significant assets or income, the Plaintiffs submit that Mr. Gahwyler is "secreting assets" and that Mr. Cleveland's testimony is simply not believable. In the absence of any evidence to back up these suspicions, the court is not convinced that the Plaintiffs have met their burden on this issue and declines to award any punitive damages to the Plaintiffs.

(4) On this point, the court said:

  • Additionally, the court is satisfied that the Defendants have been adequately punished for their wrongdoing, particularly in light of the treble damages awarded Plaintiffs under the New Jersey Consumer Fraud Act. Treble damages awarded under the Consumer Fraud Act are punitive in nature. See Fineman v. Armstrong World Industries, Inc., 980 F.2d 171, 219 (3d Cir. 1992) ("Although treble damages are not solely punitive in character, they do serve a penal and deterrent function in addition to a remedial one, and as a consequence do overlap somewhat with punitive damages."); Lettenmaier v. Lube Connection, Inc., 741 A.2d 591, 593 (N.J. 1999) (finding that among the purposes of the CFA is to punish the wrongdoer through the award of treble damages); St. James v. Future Finance, 776 A.2d 849, 867-68 (N.J. Super. Ct. App. Div. 2001) (holding that a defendant cannot be subjected to treble damages under state RICO statute and punitive damages for breach of fiduciary duty claim because both claims arose from the same course of conduct). Furthermore, the treble damages in this case are sufficient to deter future wrongdoing by these defendants and others.

Alleged "Ghetto Loans" Peddler's SEC Filing Acknowledges Government Probe Into Possible Reverse Redlining Home Lending Practices

In Memphis, Tennessee, The Memphis Daily News reports:
  • The San Francisco bank Memphis and Shelby County governments sued in December over its lending practices has acknowledged it’s the subject of a probe by “certain government entities” over the same thing.(1)

  • In a quarterly report filed Friday with the U.S. Securities and Exchange Commission, Wells Fargo & Co. gave a two-sentence disclosure about the investigations near the end of the report. “Certain government entities are conducting investigations into the mortgage lending practices of various Wells Fargo-affiliated entities, including whether borrowers were steered to more costly mortgage products,” the bank noted. “Wells Fargo intends to cooperate fully with these investigations.”

  • A Wells Fargo spokesman said the company would not comment beyond those details. Left unsaid is what entities – state, federal or both – are looking into Wells’ mortgage lending.

For more, see Wells Fargo Acknowledges Gov't Investigation.

Go here for earlier posts on the "ghetto loans" allegations made against Wells Fargo.

(1) According to the story, the City of Memphis and Shelby County filed a federal lawsuit against the bank over the way Wells’ mortgage lending practices allegedly worsened the local foreclosure problem. The lender was accused of zeroing in on black homeowners in the city and county and prodding them into expensive, predatory mortgages. Last month, both governments amended their case to add testimony from four ex-employees of local Wells offices, all of whom claim the bank targeted black borrowers for less-than-desirable home loans, the story states.

Wednesday, May 19, 2010

More Light Shines On Baltimore City Tax Sale Auctions & Bid-Rigging Allegations

In Baltimore, Maryland, The Huffington Post Investigative Fund reports (story appears in The Baltimore Sun):
  • Baltimore City officials on Monday auctioned liens on 12,689 homes and properties whose owners failed to pay local taxes and municipal bills — a probable record and twice as many as in 2006 in the midst of Baltimore's housing bubble.
  • The city's record tax sale comes as the Justice Department continues a criminal investigation into bid-rigging by some investors. Federal prosecutors allege that the activity compromised as many as two dozen of the tax sales in Baltimore and several Maryland counties. Prosecutors say investors agreed in advance which properties to bid on, improperly reducing the money earned by municipalities. Three investors have pleaded guilty in the case.
  • Vicki Valentine lost her West Baltimore home that way one raw day in early February. Real estate investors snatched her property over what began with an unpaid city water bill of $362. [...] Valentine was incredulous when the price to keep her property shot past $3,600. Jobless and lacking the savings to pay, she said she could do little to stave off the day of reckoning. [...] Though Valentine had no way to know about it, some investors rigged the 2006 Baltimore tax sale auction that led to her eviction, federal prosecutors alleged in court.
  • The roots of that conspiracy run deep, prosecutors said. For years, a handful of Baltimore real estate lawyers and their investment partners quietly dominated Maryland tax sale auctions, with few questions asked about their bidding tactics or collection policies.
  • Prosecutors went on to charge three men with conspiring to rig bids at 21 auctions in Baltimore and four other jurisdictions, including Montgomery and Prince George's counties between 2002 and 2007. All three have since pleaded guilty.(1) No other charges have been filed.
For the entire story, see City auctions liens on homes; investors can collect.

For another version of the same story, appearing in The Huffungton Post, see The Other Foreclosure Menace (Mortgage Paid Off, Woman Loses Home -- Over a Small Water Bill); and go here for accompanying VIDEO: Tapped Out: How an Unpaid Water Bill Cost a Baltimore Woman Her Home.

Go here for more on bid rigging at real estate-related auctions.

(1) In earlier stories related to this Maryland bid rigging prosecution, see:

100+ Victims In Maryland-Based "Money Store" Sale Leaseback Foreclosure Rescue Scam To Get Stiffed In Proposed Civil Suit Settlement

In Greenbelt, Maryland, The Associated Press reports:
  • More than 100 people who say they were victimized by a mortgage fraud scheme would get only a few thousand each under a proposed settlement. Ten people have been convicted in the Metropolitan Money Store scheme, which took advantage of homeowners facing foreclosure.

  • The plaintiffs in the civil suit are Maryland, Virginia and Washington, D.C., residents. Their lawyers say they lost more than $60 million in the equity-stripping scheme. However, the settlement would provide at most a total of $344,000. An attorney for the plaintiffs say that's the best deal the parties could reach because most of the defendants are in default and the others have limited assets. The settlement is awaiting approval by a federal judge.

Source: Mortgage fraud victims to get paltry settlement.

Hefty Tax Bills Ready To Bite R/E Investors Using So-Called "Tax-Free" 1031 Exchange Deals; Many Close To F'closure w/ Little Cash, Equity To Pay IRS

Crain's New York Business reports:
  • During the real estate boom, hundreds of landowners reaped enormous gains on the sales of property and, under Rule 1031 of the U.S. Tax Code, deferred paying taxes on those profits by buying new properties of equal or greater value within 180 days.

  • With the value of many of those purchases down 30% to 60% and with some targeted for foreclosure, the owners find themselves in a bind. If they are forced into a foreclosure, they would not only lose out on that transaction, but would have to pony up huge capital-gains taxes on their earlier sales. As a result, many owners who conducted 1031 exchanges during better economic times are feeling trapped in their money-losing investments.

  • Ordinarily, they would be tempted to just give the property back to the bank and take the loss,” says Lou Weller, a principal at Deloitte Tax. “But if they do that, they have to consider the taxes involved.”


  • Foreclosures aren't the only threat looming on the horizon for 1031 owners. During the market boom, debt was cheap and plentiful, and many buyers relied heavily on borrowings to fund their deals. With property values down, often below the value of the mortgages, these owners find themselves with little or no equity to cover the taxes that are due on their earlier transactions, according to Mr. Weller.

For more, see Tax deals return to bite owners (Big gains made under IRS rule now being erased by falling prices) (may require paid subscription; if no subscription, TRY HERE, then click link for the story).

Providence Judge Issues Split Decision On City Foreclosure Ordinance

In Providence, Rhode Island, The Providence Journal reports:
  • A Superior Court judge has ruled on a controversial city ordinance enacted last year in an effort to slow the tide of foreclosures in the city. Superior Court Judge Jeffrey A. Lanphear ruled on Monday that the city has the right to require banks to take part in homeowner mediation before foreclosing on a home and the right to impose a $2,000 fine for noncompliance with the law.

  • But the city does not have the right to prevent banks that do not follow the law from filing necessary real estate documents to complete the foreclosure process, as the city ordinance mandated.

For more, see Judge upholds Providence foreclosure ordinance.

For the ruling, see Deutsche Bank National Trust Company v. City of Providence, et al.

Thanks to Donald Marritz of Regional Housing Legal Services, a nonprofit, Pennsylvania law firm headquartered in Glenside and with offices in Harrisburg, Gettysburg, and Pittsburgh, for the heads-up on the court ruling.

Tuesday, May 18, 2010

Minn. Feds Suspect Attorney Of Leaving 88-Year Old Mom Holding The Bag As Straw Buyer In Scam To Generate Cash To Redeem His Law Office From F'closure

In St. Paul, Minnesota, the Star Tribune reports:
  • At least the feds waited until after Mother's Day. The U.S. attorney's office filed documents in federal court [] revealing an IRS criminal investigation of White Bear Township's board chairman -- a St. Paul attorney -- on allegations of mortgage fraud and money laundering in a deal that centers on his 88-year-old mother.

  • In essence, the IRS suspects that Richard A. Sand was involved in "flipping" an Orono home that an associate bought and resold the same day to Sand's mother at a $1 million markup. According to the IRS, the deal was funded with $2 million in mortgages from Bank of America, which relied on grossly exaggerated income and other phony financial data for the buyer, Antoinette Sand. The bank got just one payment before foreclosing and ultimately sold the house at a loss for $700,000.

  • Some of the Bank of America mortgage money allegedly was used to redeem Sand's law office on Nina Street in St. Paul from foreclosure, and the government now wants to seize it because its ownership is traceable to the proceeds from the alleged fraud.

For more, see White Bear Township official Richard Sand accused of mortgage fraud (The IRS is investigating White Bear Township's board chairman over a real estate deal involving his 88-year-old mother).

Ohio AG Hammers Home Improvement Contractors For Pocketing Customer Cash, Failing To Provide Services Paid For

From the Office of the Ohio Attorney General:
  • As Ohio consumers begin to make springtime repairs to their homes, Attorney General Richard Cordray [] sent a stern message to home improvement contractors who defraud Ohioans. Concluding a statewide law enforcement sweep, Cordray announced charges, and in some cases judgments, against eight Ohio companies accused of swindling consumers.

The lawsuits and default judgments against contractors alleging violations of Ohio’s Consumer Sales Practices Act have accused the companies of pocketing money from Ohio consumers to do home improvement work, and then failing to provide the services for which consumers paid. Among the various accusations include failing to deliver, shoddy workmanship, soliciting consumers without providing a written agreement, failing to cough up refunds, among other things.(1)

For the press release, see Cordray Cracks Down on Home Improvement Fraud.

(1) The following companies have been targeted by the Ohio AG:

  • Anthony Otworth d.b.a. Custom Touch Remodel, based in Galloway; To view the complaint in full, click here.
  • Backyard Oasis/Royal Spa, located in Lewis Center; To view the complaint in full, click here.
  • Bob Brown d.b.a. Brown & Brown Roofing and Bob Brown Roofing, based in Dayton; To view the default judgment in full, click here.
  • Hometown Improvement, Inc., based in Columbus; To view the complaint in full, click here.
  • Kyle Wiehoff d.b.a C&W Concrete, located in Columbus; To view the complaint in full, click here.
  • Premier Design Consultants Inc., located in Columbus; To view the default judgment in full, click here.
  • Scott Goodin Heating and Cooling, located in Cincinnati; To view the complaint in full, click here.
  • Shawn Fleming Snowplowing and Shawn Fleming Roofing, based in Mentor; To view the complaint in full, click here.

Facing The Boot, Homeowners' Claim That F'closure Sale Price Was So Low As To "Shock The Conscience" Was Enough To Thwart Subsequent Eviction Attempt

In a recent ruling by the Court of Civil Appeals of Alabama, two Alabama homeowners were successful in reversing an adverse lower court ruling and, consequently, able to temporarily stall getting kicked out of their home that had been sold at a foreclosure sale.

The homeowners, Stephanie Berry and her grandmother, Eva Berry, asserted, among other things, that Deutsche Bank was not entitled to a summary judgment in the ejectment action that followed the foreclosure sale of their home because of their claim that the foreclosure upon which Deutsche Bank based its ejectment claim was invalid due to its sale for significantly less than its fair market value. The property was purchased by Deutsche Bank at the foreclosure sale for $33,915 when the market value of the property, according to the local tax assessor, was $84,800.

The lower court granted summary judgment for Deutsche Bank, but on appeal,(1) the state appellate court reversed the ruling and kicked the case back for further proceedings, saying that the existence of a genuine issue of material fact regarding the validity of the foreclosure sale was enough to preclude granting summary judgment in the ejectment action in favor of the lender.(2)

For the ruling, see Berry v. Deutsche Bank National Trust Company, No. 2080840 (Ala. Civ. App., May 14, 2010).

(1) Fortunately for Stephanie and Eva, their motion requesting a stay of the judgment pending resolution of the appeal was granted by the trial court. Had the trial court denied their motion for a stay and allowed for the eviction to go forward, the appeal may have been dismissed as being moot.

(2) Among other points, the appellate court made this general statement of the Alabama law applied in this case (bold text is my emphasis, not in the original text):

  • In Hawkins v. LaSalle Bank, N.A., 24 So. 3d 1143, 1151 (Ala. Civ. App. 2009), this court held that, when a plaintiff in an ejectment action claims title to the property by virtue of its having purchased the property at a foreclosure sale, the existence of a genuine issue of material fact regarding the validity of the foreclosure sale will preclude the entry of a summary judgment in favor of the plaintiff.

  • Stephanie and Eva argue that they established the existence of a genuine issue of material fact regarding the validity of the foreclosure sale on which Deutsche Bank bases its claim to title because, they say, they showed that the price realized at the foreclosure sale, i.e., $33,915 was so low in relation to the market value of the property as to shock the conscience. "`"The general rule is that, `where the price realized at the [foreclosure] sale is so inadequate as to shock the conscience, it may itself raise a presumption of fraud, trickery, unfairness, or culpable mismanagement, and therefore be sufficient ground for setting the sale aside.'"'" Mt. Carmel Estates, Inc. v. Regions Bank, 853 So. 2d 160, 168 (Ala. 2002) (quoting Breen v. Baldwin County Fed. Sav. Bank, 567 So. 2d 1329, 1333 (Ala. 1990), in turn quoting Hayden v. Smith, 216 Ala. 428, 430-31, 113 So. 293, 295 (1927)).

Based on its subsequent analysis of the surrounding facts and circumstances in this case, as set forth in its ruling, the appeals court found that Stephanie and Eva had successfully established the existence of a genuine issue of material fact as to the validity of the foreclosure sale based on the adequacy of the sale price and, accordingly, reversed the ruling of the lower court granting summary judgment in favor of Deutsche Bank, and remanded the case back to the lower court for subsequent proceedings.

Union, Grassroots Group Orgnize Invasion Of Lender Exec's, Lobbyist's Lawns

CBS News reports:
  • As the Senate gears up to continue its debate over Wall Street reform, liberal activists and labor unions are mobilizing protesters against the big banks in demonstrations in downtown Washington and in front of the homes of bank lobbyists.

  • Several hundred demonstrators from multiple states on Sunday collected in front of the homes Gregory Baer, a deputy counsel for Bank of America, and Peter Scher, an executive and lobbyist for JPMorgan Chase. Organized by the Service International Employees Union (SEIU) and the Chicago-based grassroots group National People's Action (NPA), the protesters took to the wealthy Washington suburbs to demand that banks stop lobbying against financial reform legislation.

For more, see Liberal Protesters Descend onto Bank Exec's Lawns.

For the accompanying YouTube video, see NPA and SEIU at the home of BofA's Gregory Baer.

See also, Charlotte Business Journal: Union targets Bank of America executive in Washington.

Monday, May 17, 2010

Queens DA Bags Seventeen Suspects In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket

From the Office of the Queens District Attorney's Office:
  • Queens District Attorney Richard A. Brown, joined by New York State Banking Superintendent Richard H. Neiman(1) and Acting New York State Police Superintendent John P. Melville, [] announced that 17 individuals – including two Queens attorneys – have been charged with defrauding legitimate homeowners and various lending institutions out of more than $3 million in equity that had been stripped from 26 refinanced residential properties valued at $13 million.(2)


  • The investigation further allegedly revealed that [Roger] Huggins and [Inderpaul] Sookraj targeted homeowners in Queens, Brooklyn and the Bronx who had substantial equity in their residences but either faced foreclosure due to their inability to make monthly mortgage payments or were simply behind in their mortgage payments and looking to refinance or modify their loans with their lenders. It is alleged that Huggins and Sookraj offered to help the homeowners by instructing them to permit title to their homes be put in the name of a third-party purchaser (a “straw buyer”) for one year, during which time the two defendants promised to improve the homeowners’ credit rating, help them obtain more favorable mortgages on their homes and ultimately, return to them the title to their homes. What allegedly occurred at the closings, however, was that Huggins and Sookraj – in order to keep as much of the mortgage proceeds as possible – fabricated reasons why they needed to hold the homeowners’ funds in escrow – such as that the equity withdrawn from the properties would be used to pay the mortgages and expenses on the homes and to repair the homeowners’ credit.(3)

For the Queens DA press release, see Seventeen Individuals - Including Two Attorneys Charged in Massive Multi-Million Dollar Real Estate Fraud (Ringleaders Allegedly Targeted Distressed Homeowners in Mortgage Rescue Scams; 26 Refinanced Residential Properties Stripped Of More Than $3 Million In Equity).

Go here for a Queens DA flowchart of how the alleged racket worked.

Thanks to Catherine Isobe of Bedford Stuyvesant Community Legal Services, Brooklyn, NY (a part of the Legal Services NYC network of legal groups providing free legal services for low income people throughout NYC) for the heads-up on the press release.

(1) State Banking Superintendent Neiman said, “The fact that these defendants took advantage of homeowners in distress, and in the guise of helping, actually stripped them of their equity and ownership, is compounded by the fact that some of these defendants were licensed professionals – attorneys, mortgage brokers and real estate advisors. Instead of acting as the gatekeepers whose function it is to protect the interests of vulnerable homeowners, they abused their positions in order to steal millions of dollars. [...]"

(2) The defendants are variously charged with first- and second-degree grand larceny, first degree criminal possession of stolen property, first-degree money laundering, first-degree identity theft, second-degree forgery, second-degree criminal possession of a forged instrument, first-degree falsifying business records, first-degree offering a false instrument for filing, first-degree scheme to defraud and fourth-degree criminal facilitation. If convicted, the defendants face as much as 25 years in prison. For the entire "honor roll":


  • ROGER HUGGINS, 34, of 92-06 Springfield Boulevard, Queens Village, New York, is the co-owner of Home Solutions, located at 127-16 Liberty Avenue in Richmond Hill, Queens. He is also the owner of Huggins Realty, LLC (an alleged shell corporation) and a loan officer with DMV Mortgage.
  • INDERPAUL SOOKRAJ, 44, of 116-01 Sutter Avenue, South Ozone Park, New York, is the co-owner of Home Solutions, located at 127-16 Liberty Avenue in Richmond Hill, Queens. He is also the owner of Marlon Brando Construction Company (an alleged shell corporation). (Fugitive)


  • SHAWN D. CHAND, 34, of 248 Mill Road, Valley Stream, New York, maintains a law office at 110-13 Jamaica Avenue, Richmond Hill, Queens.
  • TREVOR RUPNARAIN, 48, of 114-28 149th Avenue, South Ozone Park, maintains a law office at 131-02 Liberty Avenue and previously at 117-15 101st Avenue, both in Richmond Hill, Queens. He is also the registered real estate broker and owner of Remax Xcel Realty located at 131-02 Liberty Avenue.


  • ANAND BHARAT, 54, of 94-38 216th Street, Queens Village, was a licensed real estate salesperson with defendant Rupnerain’s company, Remax Xcel Realty, and owned A&T Realty, a non-licensed real estate brokerage company (an alleged shell corporation), and Signature Management Company (also an alleged shell corp oration).
  • * PRAHALAD MAHADEO, 32, of 89-15 205th Street, South Richmond Hill, New York, was a licensed real estate salesperson with defendant Rupnerain’s company, Remax Xcel Realty, and owned Reliance Realty, a non-licensed real estate brokerage company, and New Liberty Construction.
  • MANGAL SINGH, 57, whose last known address was 774 Regent Drive, Westbury, New York, was the principal founder and owner of DMV Mortgage, located at 127-18 Liberty Avenue. The company is presently out of business and the defendant is believed to be in India. (Fugitive)


  • ** ARIEL HUGGINS, 36, of 92-06 Springfield Boulevard, Queens Village, New York.
  • MOHAMMAD ABDALLAH,37, of 106-19 Guy R. Brewer Boulevard, Jamaica, New York. (Fugitive)


  • MICHAEL ABDUL, 44, whose last known address was 107-12 129th Street, South Richmond Hill, New York, is believed to be in Florida. (Fugitive)
  • FAIZ ALI, 46, of 101-67 121st Street, South Richmond Hill, Queens.
  • JAGDESH KULDIP, 31, of 245-28 147th Road, Rosedale, New York.
  • PURNIMA MAHAMMED, 29, of 102-12 135th Street, South Richmond Hill, New York.
  • ANEESA MOHAMMED, 30, is believed to be in Florida. (Fugitive)
  • KRISHNA RAMROOP, 56, of 102-12 135th Street, South Richmond Hill, New York.
  • VADIANUTH SANICHAR, 44, of 97-14 129th Street, Richmond Hill, New York.
  • DAVID SOOKDEO, 29, of 144-07 168th Street, Jamaica, New York.

* was also a recruiter
** was also a straw buyer

(3) According to the DA's press release, investigators believe that this alleged racket also engaged in using forged documents to steal homes out from under homeowners, one of whom was already dead, according to this excerpt:

  • In another instance, it is alleged, Huggins and Sookraj drafted and filed fraudulent documents which purported that they had purchased a home from a homeowner who, in fact, had died a year prior to the closing. The defendants subsequently flipped the property to a straw buyer at an inflated price ($420,000), thus allowing them to keep and split the entire loan proceeds between themselves and their co-defendants as there was no actual seller of the property. To date, the Jamaica, Queens, property remains vacant and the loan has gone into default.
  • It is additionally charged that Huggins and Sookraj stole the property deeds of at least two homes outright by fraudulently creating documents – complete with such identifying information of the homeowners as their social security numbers, dates of birth and driver’s licenses – which purported that the homeowner had sold their homes to Huggins and Sookraj, who then turned around and sold the properties to straw buyers. The homeowners neither had any knowledge of the fraudulent transactions, nor did they realize that their home had been stolen. In both instances, the original homeowners allegedly had met Huggins when he offered to assist them with the “short sale” of their properties. In one case, the homeowner had gone to Huggins because he had lost his job and his wife was stricken with cancer.

Two Phoenix Cops Face Internal Police Probe After Financially Strapped Homeowners' Complaints About Off-Duty Business Peddling Sale-Leaseback Programs

In Phoenix, Arizona, The Arizona Republic reports:
  • Two Phoenix police lieutenants are under investigation after residents complained that some of the 120 real-estate purchases conducted by their off-duty business were unethical or illegal. Lts. Mark Tallman and Lee Brent Shaw have been involved in several lawsuits, each of which were dismissed or settled for small amounts, court records show.

  • The lieutenants' Better Choice LLC focused between 2002 and 2006 on buying distressed homes where owners were on the brink of foreclosure. In many cases, they developed lease-buyback options where residents could remain in the homes with the option to buy. Another company, Taken Care of Investments, identified the at-risk homeowners and worked with the lieutenants - who are accused of charging exorbitant fees to manage the properties in various trusts.

  • The Phoenix Police Professional Standards Bureau is looking into allegations against Tallman and Shaw, though police on Thursday could not confirm the full nature of the allegations.(1)

For the story, see Phoenix lieutenants face probe over real-estate business.

(1) The story is silent as to how, if at all, these sale leaseback transactions differed from those involved in the foreclosure rescue, equity stripping racket that the Arizona Attorney General's Office prosecuted in a civil lawsuit last year. See:

Judge Sticks Sale Leaseback Peddler With Tab For Victim's Interim Attorney's Fee Even Though NJ Consumer Fraud Act Lawsuit Is Still In Discovery

In Newark, New Jersey, the New Jersey Law Journal reports:
  • In a case of first impression, an Essex County, N.J., judge has awarded counsel fees during a pending Consumer Fraud Act suit, brought by a couple who claim they were scammed by two foreclosure-rescue companies.

  • Superior Court Judge Kenneth Levy made the award after granting preliminary injunctive relief for the plaintiffs, saying "the question is ... can the court award counsel fees at this stage in the proceeding, and there is really no case law that's been presented to me that says I cannot do that."

  • In his motion for the pre-judgment fee award, plaintiffs lawyer Abraham Borenstein, who heads a firm in Springfield, N.J., said there is precedent for interim awards in other fee-shifting cases though none under the applicable Consumer Fraud Act section, N.J.S.A. 56:8-19. Ruling on April 23 from the bench, Levy found the preliminary injunction -- based on a probability of success on the merits -- was sufficient to trigger that section, which provides for fees and costs to anyone granted equitable relief under the Act.

  • "Although I'm not in a position to order a final judgment, I think that the plaintiffs should be awarded counsel fees for at least the work that they had to do through obtaining the preliminary injunction," the judge said in Pena v. Newell Funding, LLC, ESX-C-16-09.

  • The case is still in discovery, but Levy cited strong evidence of fraud already uncovered, which probably will result in the court imposing an equitable mortgage: a remedy that returns title to people who have been defrauded out of their property by an illegal mortgage scheme.(1)

  • In the suit, plaintiffs Juan Miguel and Iluminada Pena of Newark, N.J., claim that when they sought help from Newell Funding, a New York mortgage company, to forestall foreclosure of their home, Newell devised a scheme that purported to give them a $125,000 mortgage loan but actually had them execute a deed to a newly formed company, 376 Broad Street LLC, for little or no consideration. The suit charges Newell and other defendants -- including another mortgage company, Multi Solutions LLC -- used confusing documents to turn the loan into a sale without the plaintiffs' knowledge.

  • In January of this year, Levy entered a temporary restraining order barring the defendants from selling, encumbering or transferring the home, and in March he granted the preliminary injunction.

  • Levy awarded fees incurred from the outset of the case, filed in August 2008, to the entry of the injunction in March 2009. The award was made jointly and severally against the two mortgage company defendants and five other defendants. Borenstein calls the fee award "groundbreaking" and says it means that "litigants -- who previously could not afford to initiate a lawsuit -- are now empowered to fight and expose mortgage fraudsters."

  • Borenstein is preparing his certification of time spent on the case, saying he will seek his customary hourly rate of $500 and will renew his fee application periodically as the case proceeds. "The right to attorneys' fees, in my estimation, is not dependent on winning the entire case," he says. "It's dependent on winning relief. We have won relief already."

  • Newell was represented by Raphael Jacobs, of Jacobs & Bell in Tenafly, N.J., but on April 23, Levy approved a plaintiff's motion to disqualify him and add him as a defendant, says Borenstein's associate, Massimo D'Angelo. Jacobs declines to comment. The attorney for Multi Solutions, Scotch Plains, N.J., solo Richard Friedman, says, "I don't believe there's any support for the award of attorney's fees." He adds that the allegations against his client are "without foundation."

Source: Interim Attorney Fees Awarded in Consumer Fraud Suit Over Mortgage.

(1) In another recent New Jersey case in which, among other things, the attorney for the victim of another sale leaseback, foreclosure rescue equity stripping ripoff reportedly filed a request with the court to order the scammer to pick up the bill for his attorney's fees, see:

The underlying story in these posts, originally reported in the New Jersey Law Journal (see Real Estate Lawyer Liable for Damages for Role in Client's Mortgage Scam) contained the following excerpt in this regard:

  • [Gabriel] Halpern, of PinilisHalpern in Morristown, N.J., has already filed an application for $33,932 in fees and asked U.S. Bankruptcy Judge Raymond Lyons Jr. to multiply the amount by three, for an enhanced fee of $101,797.

(By the way, the appication of a "lodestar multiplier" in calculating the amount of enhanced plaintiff's attorney fees a court will impose on a losing defendant is not unheard of in foreclosure rescue scam cases. For example, in affirming a lower court judgment against a foreclosure rescue operator for violations of the state's Consumer Protection Act in operating a sale leaseback scam, the Nebraska Supreme Court in Eicher v. Mid America Financial Investment Corp., 270 Neb. 370, 702 N.W.2d 792 (2005) ok'd use of a multiplier of 1.3 in calculating the total tab of $375,000+ for plaintiff's attorney's fees that the operator was responsible for paying. Plaintiffs’ lead counsel requested fees based on 2,589 hours of billable time by various persons in his law firm. The lawsuit was brought by approximately a dozen victimized homeowners.)

Bay Area F'closure Help, Rent Skimming Racket Pocketed $2K Both From Homeowners Signing Away Deeds & Tenants Leasing Homes Subsequently Auctioned Off

In Northern California, KGO-TV Channel 7 reports:
  • Dozens of distressed Bay Area homeowners say they have been lured into signing away their homes to a company offering to help them. A seven-month 7 On Your Side investigation has uncovered what happens to many of these homeowners after they sign on the dotted line.

  • This story shows just how vulnerable people can become when they are facing a foreclosure. Many of these people have not only signed away their homes, they paid a company to take it from them.

  • Arnel Reyes remembers the day he signed over the deed to his house to United Investments of Hayward. His wife had just lost her job and the couple was facing the foreclosure of their home in Bay Point. "I couldn't afford a mortgage plus the other bills that we had, at that point I just wanted to save my credit," said Reyes.

  • United Investments charged Reyes $2,000 to take possession of his home. He claims the company told him it had a potential buyer and could do a short sale. The contract made no guarantees a foreclosure could be prevented, but Reyes figured by signing up he could save his credit, if not his house. "They said if they couldn't save it, they would foreclose on it under their name and not our name," said Reyes.

  • Hayward resident Lorenzo Lawson answered an ad on Craigslist from United Investment offering to rent out the Reyes home. Lawson said the company told him he might eventually be able to buy it. "If they want to have me stay there, maybe I could rent to own," said Lawson. He paid $2,000 to United Investments before moving in and before he knew it, he found a foreclosure notice on his door. Lawson was forced to leave the home and the lender foreclosed on the Reyes' property. Reyes says he felt deceived.(1)(2)

For the rest of the story, see People sign away their homes in foreclosure scam.

(1) Reportedly, four of the five transactions 7 On Your Side tracked ended in foreclosure. The fifth house belonged to a couple who, while avoiding foreclosure, were surprised when they found out United Investments wasn't paying off their mortgage, the story states. The company's president is Carl Renowitzsky, the man both Reyes and Lawson say they dealt with the story states. 7 On Your Side reportedly showed up at his office several times in an attempt to see Renowitzsky and was nowhere to be found, but 7 On Your Side did find a cease and desist order against Renowitzky in 1999 from the state Department of Real Estate. The Alameda County District Attorney's Office has reportedly launched an investigation of United Investments. An ABC affiliate in Fresno reported on Renowitzky's alleged scam in February when homeowners in Clovis tipped them off. See KFSN-TV Channel 30: One home, Two families, and a Company in the Middle.

(2) California case law has clearly addressed the notion that some scammers have that they can insulate themselves from criminal prosecution when conducting their ripoffs by using terms and conditions contained in legitimate-looking business contracts with consumers to screw them over, as was done in this story. For more on the California case law applicable when considering to criminally prosecute these types of scams, see this post - footnote 1.

Sunday, May 16, 2010

Queens County District Attorney Scores $100K In Federal Cash To Fight Deed & Mortgage Scams

In Kew Gardens, Queens, The Queens Gazette reports:


  • With a combination of high property values and vulnerable elderly and immigrant populations, Queens is especially at risk for mortgage fraud. We need to do everything we can to stop this growing epidemic, and these funds will help us in this ongoing battle,” Weiner said.

  • Brown also cited elderly homeowners, “whose properties go from being owned free and clear to being sold out from under them”. The DA added that while we have made some headway in prosecuting these cases, the problem is just too large to be addressed sufficiently with our current resources.

The following are among the mortgage fraud cases that have occurred, according to Brown:

  • Hundreds of thousands of dollars were stolen from a 93-year-old Queens man suffering from Alzheimer’s disease by a man who fraudulently refinanced a property that he owned in Bayside to steal its equity,

  • A St. Albans man convicted of stealing the identity of a 68-year-old Jamaica, Queens man who had been disabled as a result of a stroke and secretly selling his house out from under him and pocketing the profits,

  • A Texas man was charged with allegedly using a fraudulent power of attorney to transfer his elderly aunt’s Corona house to himself and taking two mortgages out on the property,

  • Two attorneys charged with selling the house out from under a Rosedale woman who was experiencing financial difficulties by engaging in an elaborate real estate foreclosure bailout scheme,

  • A Far Rockaway woman charged with allegedly forging the signature of her stepfather in an effort to transfer his house to herself,

  • The indictment of five individuals in connection with an approximately $2 million mortgage fraud scheme in which stolen identities were allegedly used to buy and sell three properties in Queens,

  • A Brooklyn man convicted in connection with the fraudulent sale of the Cambria Heights home of a retired New York City correction officer suffering from dementia.

Any Queens residents who feel that they may be a victim of or are aware of mortgage fraud should contact his office’s Economic Crimes Bureau at 718-286-6673.

For the story, see DA Brown Gets $100 G Grant From Weiner To Fight Mortgage Fraud.

For the Queens DA press release, see Queens District Attorney's Office Receives $100,000 Federal Grant To Combat Mortgage Fraud (Federal Funds Obtained by Congressman Anthony Weiner Will Enhance Office’s Efforts).