Saturday, May 29, 2010

Texas Woman Unwittingly Buys Home Slated For Tear-Down; Sues Firm For Subsequent Demolition After Deal Reached w/ City To Halt Action Pending Repairs

In Jefferson County, Texas, The Southeast Texas Record reports:
  • A Beaumont woman claims a demolition company razed a home she purchased despite an addendum ordering the company to refrain from such an action. Sandra Ledesma filed a lawsuit May 5 in Jefferson County District Court against Albert Dill doing business as Jay Dill Trucking.

  • Ledesma claims she purchased a home [...] in Beaumont on June 24 from Carl Adams for $15,000. Although she knew the home needed significant repairs, Ledesma did not realize the city of Beaumont had scheduled it for demolition until she attempted to obtain a permit for electrical work from the city on Sept. 21, according to the complaint.

  • "After talking with Quentin D. Price, the assistant city attorney for the City of Beaumont, Plaintiff entered into an agreement with the City of Beaumont wherein the City agreed that it would not demolish the structure located at 4070 Harding if a Certificate of Occupancy was obtained by November 22, 2009," the suit states. "This agreement was extended until December 22, 2009. On September 24, 2009, Plaintiff began repairs on the home."

  • Meanwhile, the city placed a notice for bids of the demolition of the home, which Dill accepted on Sept. 15, the complaint says. The city notified Dill on Sept. 22 that it could not demolish the structure pursuant to an injunction, Ledesma claims. Despite the notification, Dill demolished the home on Oct. 1, 2009, according to the complaint.

For the story, see House demolished despite injunction, lawsuit claims.

Hawaii Condo Associations Feel Pinch From Non-Maintenance-Fee-Paying Owners; Some Use Utility Shut-Offs To Persuade Delinquents Into Coughing Up Cash

In Maui, Hawaii, The Maui News reports:
  • Psst! Hey, buddy. Wanna buy a foreclosed condo in Wailea? One dollar! Believe it or not, it happens - but it can be a bad bargain. As more and more financially strapped apartment owners fall behind on their common area maintenance fees, condo associations find themselves feeling the pinch. The quitclaim foreclosure auction is just one of several unpleasant choices facing association boards when members quit paying their fees, which at upscale projects can easily run $1,000 a month.


  • Another tactic is to try to pressure the delinquent by shutting off the water, cable television or even electricity. Robert Miskae, past chairman of the Condominium Council of Maui, said that his group has been advised by one of Maui's leading condo law attorneys to avoid shutoffs, because of potential health and safety issues.

For more, see Isle condo boards get creative to obtain fees (As more financially strapped owners becoming delinquent, associations feel the pinch).

City Threatens "Drowning" Residents In 76-Unit South Florida Condo Complex With Water Shut-Off Followed By Eviction Over Unpaid Bill

In Margate, Florida, the South Florida Sun Sentinel reports:
  • Dozens of residents at the Atlantic Palms condominium complex could be evicted from their homes within two weeks if they're unable to pay a city utility bill of more than $7,000. Margate officials say more than 60 of the 76 units at Atlantic Palms, [...] are in different stages of foreclosure, and their homeowners association can't afford to pay the water bill.

  • Now, the city has posted notices on residents' doors saying they have until 6 p.m. June 3 to pay their water and sewer fees. If residents don't pay, their water service will be shut off June 7, and they will be forced to leave because of health concerns.

For more, see Margate condo residents face eviction over unpaid water bill.

Hundreds Of Mobile Home Residents May Face The Boot As County Pulls Plug On Waste Water Treatment Services; Park Owner Silent On Plans

In Scott County, Illinois, WHBF-TV Channel 4 reports:
  • Hundreds of Quad Citians may be forced to move as the future of one mobile home park is up in the air. For decades, Scott County has been treating the waste water at Lake Canyada Mobile Home Park. However in August that contract is up and the Scott County Conservation Department says it can't afford to cover the costs anymore.

  • Karen Constantino has lived at Lake Canyada for two and a half years. When she got the letter from Scott County last week telling her the waste water would no longer be treated, she panicked. "I think it's horrible," says Constantino, "especially if we can't get any straight answers on whether we need to find a place to live or if we're able to stay here."


  • The Scott County Conservation Department says it can't afford to treat the waste water. The only thing residents can do is build their own plant. "Our plant just can't handle the amount of waste going there and we can't handle the project cost to upgrade it," explains Scott County Conservation Director Roger Kean. Ohio based I & R properties, which owns Lake Canyada, hasn't told residents how it plans to fix the problem. Their silence doesn't surprise Constantino. "Anytime somebody tries to contact them, they never get back."

For the story, see Money Issues Could Force Community Out.

Managing Agent Faces Seven Felony Charges In Alleged $30K Rental Ripoff From Two Landlord/Clients

In Shasta County, California, The Redding Searchlight reports:
  • A former real estate agent accused of felony grand theft and conducting real estate business without a license pleaded not guilty last week during her arraignment in Shasta County Superior Court. Tina Marie Horan, 43, of Redding, who was arraigned on Friday, is scheduled to have her preliminary hearing on May 20.

  • Horan, who is free of custody without bail, is charged with seven felony counts of grand theft, grand theft of an elder and writing checks without sufficient funds. She’s also accused of conducting business as a property manager without a real estate license, a misdemeanor.

  • It’s alleged that Horan took more than $30,000 from two clients for whom she was managing residential properties, including an elderly Vallejo woman, said Bob Angulo, a real estate fraud investigator with the Shasta County district attorney’s office.

Source: Ex-real estate agent accused of grand theft.

Use Of GPS Tracking Devices Announced In Battle Against Air Conditioner Snatchers Targeting Vacant, Foreclosed Homes

In Central Florida, Hernando Today reports:
  • The Hernando County Sheriff's Office has reported an increase in the number of air-conditioning unit thefts in Royal Highlands. There have been three reports during the past three weeks, deputies said. Units of all sizes are being stolen and some parts also have been removed, according to a media release.

  • The sheriff's office announced it would begin using GPS tracking devices inside the units and unit parts, which could help authorities track down the culprits. Earlier this year, detectives placed warning stickers on houses that were under foreclosure or vacant. They were designed to alert would-be thieves that some of the appliances inside the homes had tracking devices, deputies said. Two people were arrested earlier this year as a result of the tracking devices.

Source: Air-conditioning units stolen in Royal Highlands, deputies say.

See also, WTSP-TV Channel 10: Rise in AC thefts in Hernando County, deputies blame snowbird off-season.

Air Conditioner Snatchers Target Vacant Foreclosed Homes For Quick Payday

In Avondale, Arizona, KNXV-TV Channel 15 reports:

  • Thieves are causing thousands of dollars in damage to homes in foreclosure for a quick payday. "It's a Valley-wide problem," said Detective Reuben Gonzales with the Avondale Police Department.

  • It's the theft of air conditioning units, and the latest incident happened in Avondale. Gonzalez said two units were stolen for scrap metal. "It's maybe $6,000 - $10,000 in damages they may cause in replacement costs for these things for just a few hundred dollars, in some cases less than $100 that they get for them in scrap metal," he said.


  • Agents like Bill Winston, who manages the foreclosed home in Avondale. He sees A/C thefts way too often. "I've probably been to at least 50 or 60 homes where this has taken place," said Winston.

For more, see Thieves target A/C units at vacant Valley homes for cash.

Friday, May 28, 2010

Property Seller Accused Of Allowing Would-Be Buyer To Take Possession Of "Ike-Damaged" Home & Make Repairs, Then Refusing To Transfer Title

In Jefferson County, Texas, The Southeast Texas Record reports:
  • A Port Arthur man claims he cannot rent out property he rightfully owns because its former owner refuses to transfer the deed. Raymond McClain filed a lawsuit [...] against Linda Garrison. McClain claims he bought property located [...] in Port Arthur from Linda Garrison for $4,000. The property formerly belonged to Linda Garrison's father, Oneal Garrison, but became hers after he died in August 2006, according to the complaint.

  • After purchasing the property, which had been damaged in Hurricane Ike, McClain claims he made significant improvements to it, believing that Linda Garrison would transfer the deed to him. However, Linda Garrison has failed to perform acts required of her, such as filing an inventory, appraisement and list of claims, and the court removed her as executor of her father's estate in March, the suit states. Still, McClain has attempted to get the deed transferred into his name, the complaint says.

  • "McClain has contacted the Defendant by phone and in writing several times, and even provided her with a deed to sign, but to date the Defendant has not signed the deed to the Property," the suit states. "As a result, record title to the Property still shows to be held by the estate of Oneal Garrison, and McClain is unable to rent the Property as section VIII housing." In his three-count complaint, McClain alleges breach of contract and specific performance and trespass to try title against Linda Garrison.

Source: PA man claims property owner failing to provide deed.

"We Are Not Bound By State Borders!" Proclaims Indiana AG In Launching Attack On Alleged Ohio-Based Loan Modification Racket

In Fort Wayne, Indiana, The Indianapolis Star reports:
  • The Indiana attorney general's office claims a Cincinnati-based loan modification firm signed fraudulent agreements to help nearly 600 Hoosier homeowners avoid foreclosure. Foreclosure Assistance USA told the homeowners they would help prevent foreclosure in claims made on websites and radio and in direct-mail advertisements and phone solicitations, the attorney general's office said in a statement.(1)


  • "The suit also claims FA USA violated Indiana law by failing to have a $25,000 surety bond while accepting money up front from customers for services that had not yet been performed," the statement said. "The company is also accused of deceptive acts including misrepresenting to consumers that the consultants were experts in the area of foreclosure prevention or possessed in-depth knowledge of the industry."


  • "Out-of-state companies often don't believe the Indiana attorney general's office has jurisdiction over their practices," Attorney General Greg Zoeller said in the statement. "That's simply not true. The vast majority of foreclosure consultant scams originate outside Indiana and this enforcement action reflects that we are not bound by state borders."

For the story, see Suit: Ohio foreclosure firm scams 600 Indiana homeowners.

For the Indiana AG press release, see Out of state but not out of reach, Attorney General goes after Ohio-based foreclosure consultant company.

(1) The Ohio attorney general filed a similar lawsuit against Foreclosure Assistance USA in 2009 in a Hamilton County, Ohio, court, the story states.

Wisconsin AG Files Civil Suit Against California Outfit For Alleged Misrepresentations Made In Offering Loan Modification Services

From the Office of the Wisconsin Attorney General:
  • The Wisconsin Department of Justice filed suit [] against a company doing business as "USA Loan Auditors" for engaging in deceptive practices in the course of selling purported "loan modification" services to Wisconsin homeowners.

  • The complaint alleges the California-based company, Relief Law Center (d/b/a "USA Loan Auditors") has engaged in deceptive practices by sending homeowners mailings that suggest the homeowner's mortgage lender is under investigation for predatory lending abuses. The mailings falsely claim that as a remedy for the supposed-abuses, the homeowner may be entitled to a loan modification. The Idaho Attorney General issued a Cease and Desist Order against the company earlier this year.

For the entire press release, see Van Hollen sues loan modification company.

Kern County Deputy DA On Loan Modification Rackets: "They Are People Very Worthy Of Criminal Prosecution!"

In Bakersfield, California, KBAK-TV reports:
  • When the economy and real estate market went south, many families went to home loan modification companies to save their homes. But, more than a dozen Kern County families contacted Eyewitness News after one modification company took their money and didn't do anything it promised. Each family paid Los Angeles-based Loan Modification Group ["LMG"] $3,000 to get a home loan modification, and each family had their own reason for wanting a modification.(1)


  • Eyewitness News went to Kern County Deputy District Attorney Gordon Isen, who specializes in real estate fraud, to ask about home loan modification scams. Isen said, "When there's a downturn in the real estate market this type of crime has arisen in the past, but it's now reached proportions I've never seen before and I don't think anyone's seen before." He added that not only is it a serious crime, but an intentional one. "It's not a crime of passion, it's not a crime of the moment. People doing this type of criminal conduct think about their crimes, they prepare for their crimes, they consult with others and conspire. I think they are people very worthy of criminal prosecution."

For the story, see Home loan modifiers scam families out of $3,000 each.

(1) According to the report:

  • Eyewitness News decided to ask LMG what happened to our homeowners' money, but that was easier said than done. When Eyewitness News went to the address where our homeowners mailed their payments and paperwork, it didn't exist. The search took us all over Los Angeles and we finally found the company in Chatsworth. When Eyewitness News asked an office employee if the company's name was Loan Modification group, she said it was Balboa company. Turns out, Loan Modification Group is also known as MBM and Balboa Law Group. [...] Since the encounter, Eyewitness News learned that the company is no longer offering home loan modifications.

Recently Enacted New Mexico Anti-Loan Modification Scam Law Calls For Prison, $10K Fine For Violators

In Santa Fe, New Mexico, The Associated Press reports:
  • A New Mexico law that went into effect [last week] is aimed at companies that charge homeowners and make fraudulent promises to help them get their loans modified to protect their homes against foreclosure. Attorney General Gary King says there's been an alarming increase in mortgage rescue scams as a result of the U.S. housing crisis.

  • He says many of the companies targeted by the Mortgage Foreclosure Consultant Fraud Prevention Act operate from outside the state. The law applies to people offering services to stop or postpone foreclosure. It requires companies to provide a written contract disclosing their services and charges and prohibits firms from charging fees until the services have been provided. The law calls for up to a year in prison and-or a $10,000 fine for a violation.

Source: New Mexico law targeting foreclosure scams.

Thursday, May 27, 2010

Brooklyn Judge Journeys Through "The Twilight Zone" In Recent Ruling Slamming Standing Lacking Lender, Notorious Foreclosure Mill Law Firm

In Brooklyn, New York, The Wirenius Report Blog reports on Kings County Supreme Court Justice's Arthur M. Schack (a judge which, it points out, has "earned fame just by making banks follow the rules applied to ordinary litigants") and his most recent journey through the "The MERS Mortgage Twilight Zone," and which features notorious Western New York assembly line, foreclosure mill law firm operator, Steven J. Baum, P.C.

One excerpt from his recent court ruling, in which Justice Schack denies, with prejudice, a standing-lacking lender's request to move forward with a foreclosure action, follows (bold text is my emphasis, not in the original text):

  • Plaintiff made its renewed motion for an order of reference 204 days late, in violation of the Court's May 2, 2008 decision and order. Moreover, even if the instant motion was timely, the explanations offered by plaintiff's counsel, in his affirmation in support of the instant motion and various documents attached to exhibit F of the instant motion, attempting to cure the four defects explained by the Court in the prior May 2, 2008 decision and order, are so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling, creator of the famous science-fiction televison series, The Twilight Zone.(1)

  • Plaintiff's counsel, Steven J. Baum, P.C., appears to be operating in a parallel mortgage universe, unrelated to the real universe. Rod Serling's opening narration, to episodes in the 1961 - 1962 season of The Twilight Zone (found at, could have been an introduction to the arguments presented in support of the instant motion by plaintiff's counsel, Steven J. Baum, P.C. - "You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land of imagination. Next stop, the Twilight Zone."

For more, see "The MERS Mortgage Twilight Zone."

For the court ruling, see HSBC Bank USA, N.A. v Yeasmin (aka "Yeasmin II"), 2010 NY Slip Op 50927 (NYS Sup. Ct. Kings County, May 24, 2010).

For "Yeasmin I", see HSBC Bank USA, N.A. v Yeasmin, 19 Misc 3d 1127, 2008 NY Slip Op 50924 (NYS Sup. Ct. Kings County 2008).

(1) The Twilight Zone was a TV series that ran between 1959 and 1964, and is described by The Internet Movie Database ("IMDb") as (bold text alterations added, not in the original description):

  • Rod Serling's seminal anthology series focused on ordinary folks [ie. In the MERS Mortgage Twilight Zone, that would be Justice Schack, other judges presiding over foreclosure actions, homeowners facing foreclosure and their foreclosure defense attorneys] who suddenly found themselves in extraordinary, usually supernatural, situations. The stories would typically end with an ironic twist that would see the guilty punished [ie. standing-lacking lenders, assembly-line foreclosure mill rackets, and the multiple corporate hat-wearing vice presidents that carry out their employers' illicit handiwork].

The "extraordinary, usually supernatural, situations" would be a reference to the creation of the "fictional chains of assignment upon assignment, by entities in which the same people appear as lawyers and principals, agents and employees."

Pair Charged In Ripoff Of Elderly Woman; Abused POA To Take Title To Home, Drain Bank Account, Say Investigators; Stiffed Nursing Home Triggers Probe

In Washoe County, Nevada, The Reno Gazette Journal reports:
  • Two Reno women in their 60s, including a real estate broker, are facing an August trial for alleged financially exploitation of an elderly woman. Peggy Viola Six, 63, an artist, and Robin Lee Benjamin, 64, a real estate broker who operates Market and Match home buying and selling system, pleaded not guilty Thursday morning to an indictment charging them with exploitation of an older or vulnerable person.


  • A Washoe County grand jury in March indicted the women on a charge of exploiting an 87-year-old woman. Six had the woman’s power of attorney due to her failing mental capacities, according to cout documents. Six and Benjamin are accused of draining the woman’s bank account and defrauding the woman of her home. Benjamin allegedly transferred ownership of the woman’s home to her name, and then tried to sell it for a $100,000 profit. [...] Officials estimate the woman was defrauded of hundreds of thousands of dollars.

  • Authorities say the woman was placed in a local elder care facility until Six stopped paying for her care.(1) Ultimately, the woman became a ward of the state and currently resides at a group home in Carson City.

For more, see Two Reno women arrested on suspicion of bilking elderly woman.

(1) Reportedly, Washoe Deputy District Attorney Dania Reid, a civil prosecutor who represents the county’s public guardian office, said the case was referred to her office once Six stopped paying for the woman’s care facility. During an investigation, it was discovered Six had allegedly used the woman’s money to buy a motor home and a car, and fraudulently transferred the woman’s home to Benjamin, the story states. Reid reportedly said her office is working to sell the woman’s home so that she can receive the proceeds.

Cops: Man's $315K Swindle Of Elderly, Dementia-Stricken Mom Leads To Eviction From Nursing Home & "Basically Put Her In The Poor House"

In Eden Prairie, Minnesota, the Eden Prarie News reports:
  • An Eden Prairie man was recently charged with stealing more than $315,000 from his elderly mother’s retirement accounts over the course of five years. The incident “is not a unique case,” noted Sgt. Bill Wyffels, who advised that older residents should never, never put only one person in charge of their assets. “This is an example of a mother putting faith into one of four children,” he noted. “That one child basically put her in the poor house.”

  • According to a criminal complaint, Terry Lee Carr, 66, has been charged three counts of theft by swindle over $35,000. In 1999 Carr was given power-of-attorney over his mother’s assets. By 2002, his mother was losing her memory and moved to Emerald Crest, a long-term care facility in Shakopee. Prudent investments and funds from long-term health insurance meant that his mother’s care should have been covered for the rest of her life.

  • However, in 2008 the victim’s three other children began to suspect that Carr was taking heir mother’s money. The woman was evicted from her care facility and one of her other children eventually looked to find her a less expensive care facility. In the process of that, Carr’s theft was uncovered. Over the years, the vast majority of the withdrawals were made at Mystic Lake Casino.

For the story, see Fraud involving elderly parent, ‘not a unique case’.

Texas Woman Accuses Sister Of Pocketing Rent From, Conspiring With Nieces To Use Forged Deed In Swiping Title To, Rental Property

In Jefferson County, Texas, The Southeast Texas Record reports:
  • A Jefferson County woman claims her sister stole money and property from her while serving as her property manager. Lieu Pham filed a lawsuit May 10 in Jefferson County District Court against her sister, Dieu Pham; her nieces, Lan Nguyen and Bong Nguyen; and Johnathan V. Tat. Lieu Pham claims she owns Gulfway Washateria [...] and entrusted management of the business to her sister, Dieu Pham.

  • As part of her responsibilities, Dieu Pham was supposed to collect rent from tenants who leased Lieu Pham's building, according to the complaint. However, Lieu Pham has not received any revenue or rent from her tenants, the suit states. When she pressed her sister for an accounting of business transactions, Dieu Pham refused to provide the requested data, the complaint says.


  • Not only did Dieu Pham hide records from her sister, but she also conspired with her daughters to steal her sister's land and building by forging Lieu Pham's signature on warranty deed purporting to transfer the property to the Nguyens from Lieu Pham, she claims. [...] Lieu Pham alleges breach of fiduciary duty against her sister, theft of property against her sister and nieces, conversion against her sister and nieces and negligence per se against [notary Johnathan V.] Tat for allegedly "fail[ing] to act as a reasonably and prudent notary would" in connection with notarizing the allegedly forged deed.

For the story, see PA woman in dispute with sister over property management.

Georgia Attorney Gets Five Years In Theft Of $600K+; Client Home Sale Proceeds Included In Pilfered Loot

In Fayetteville, Georgia, The Citizen reports:
  • A Fayetteville attorney who bilked his clients of more than $647,000 was sentenced [] to five years in prison and an additional 25 years probation. Howard Geoffrey “Geoff” Slade Sr., 62, pled guilty to all 12 counts he was charged with, all but two being theft by taking while acting in a fiduciary capacity. The remaining two were theft by taking charges.


  • In the wake of the money Slade admitted to pilfering was at least one broken marriage; another wife who felt guilt for not trusting her husband’s request to get her money from Slade because she trusted him; and more. [...] One of the victims was an invalid woman who was supposed to receive half of the proceeds from a house sold as part of an estate. The victim never got that money.


  • One of the victims, who was owed more than $289,000 from proceeds of a real estate transaction, said she tried for months on end to get Slade to repay her. One time he gave her a check with insufficient funds. Then came a laundry list of excuses, including that he would pay $25,000 at one time, $50,000 at another. He offered to give the victim his share of a beachside condominium. Lastly, he offered to make the victim a beneficiary of his life insurance policy.

For more, see Attorney gets 5 years for bilking clients (Geoff Slade Sr. admits to taking $647,000 from client funds).

Wednesday, May 26, 2010

Judge Awards Free & Clear Title To Homeowner After Lender Carries Out Foreclosure Sale w/out Posting "Lost Note" Indemnity Bond, Violating Court Order

In Miami, Florida, The Daily Business Review reports:
  • All Orlando Eslava wanted from his lender was a loan modification to make his payments affordable. Instead, he got his $207,000 mortgage wiped out — and a crash course in the confusing way foreclosures are unfolding in a court system chock-a-blocked with cases.

  • The teacher was Miami-Dade Circuit Court Judge Jennifer Bailey, who cancelled Eslava’s debt after lender HSBC Bank USA ignored her previous order to post a $414,000 bond. Bailey said the actions of William Huffman, HSBC’s lawyer from Tampa-based Florida Default Law Group, were “contemptuous,” according to a court hearing transcript.

  • HSBC’s run-in with Bailey began in December 2009 when she granted the lender’s motion for the foreclosure sale of Eslava’s one-bedroom unit at El Dorado Tower in Aventura. But HSBC lost the note on Eslava’s property. So the judge ordered the lender to post a $414,000 bond to indemnify Eslava in case another lender filed a claim against the unit.(1) According to court records, HSBC and Florida Default did not post the bond and proceeded with an April 9 foreclosure sale that gave the lender title to the condo.

  • Eslava and his lawyer, Sheleen Khan, sought to overturn the sale, claiming the lender violated Bailey’s court order. At a May 6 hearing, Bailey dismissed the foreclosure case with prejudice, which prevents the lender from suing Eslava again. The judge also canceled the mortgage and ordered HSBC to return title of the condo to Eslava. “None of us is above the law,” Khan said. “This is a landmark ruling.”

  • In addition to canceling the mortgage, Bailey chastised Huffman, according to a transcript of the hearing obtained by The Daily Business Review. “When the order is simply ignored … at the end of the day, you’re the lawyer, you’re responsible,” she said. Bailey did not sanction Huffman but said he should consider her order a “wake-up call.”

  • Some day, this foreclosure crisis is going to be over, and you need to decide what kind of lawyer you are going to be,” Bailey told him. “Because at the end of the day, you are responsible for your client’s compliance with court orders.” Huffman apologized. He said his client failed to post bond because he had misunderstood the order, according to the transcript. “I don’t want apologies,” Bailey replied. “I want performance. I want responsible attorneys who meet the basic standards of knowing what … is going on in their files.” Huffman did not return a telephone call or e-mail seeking comment.

  • Bailey’s frustration with the lender and Florida Default weren’t limited to Eslava’s case. She complained about the general “chaos and disorganization” of lenders and their lawyers.


  • Initially, Judge Bailey sided with Florida Default’s request to proceed with the sale but ordered HSBC to post the bond by April 2. On April 9, the bank sold the condo without posting the court-ordered bond. Kahn. Eslava’s lawyer, filed an objection to the sale. At the May 6 hearing, Judge Bailey expressed disbelief that HSBC had opposed canceling the sale when Eslava was still in the middle of a loan modification trial. She called the bank’s oppositionidiotic,” according to the transcript.

  • You are filing pleadings in court every day and you don’t even know what’s going on with the case,” she told Huffman, the HSBC lawyer. “In no other species or kind of law would that be remotely acceptable, or frankly, anything short of malpractice. But somehow in Foreclosure World everybody thinks that is just fine, that you can know absolutely nothing about your files and walk in here and ask judges for things left and right without even knowing what’s going on.”

For the entire story, see Judge wipes out homeowner’s $207,000 mortgage (requires paid subscription; if no subscription, TRY HERE, TRY HERE, or TRY HERE).

Thanks to Deontos .is for the heads-up on this story.

(1) Section 673.3091(2) of the Florida Statutes ("Enforcement of lost, destroyed, or stolen instrument") states the following with regard to a lender's attempt to enforce a lost, destroyed, or stolen promissory note or other negotiable instrument (bold text is my emphasis, not in the original text of the statute):

  • The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

In this case, Judge Bailey complied with this statute by requiring the posting of a "lost note" indemnification bond in the amount of double the homeowner's $207,000 mortgage to adequately protect the homeowner against loss that might occur if, in the future, someone else comes along with the actual note that was purportedly lost and attempts to enforce it against the homeowner. (I wonder how many judges have granted foreclosure judgments where purportedly lost promissory notes were involved without complying with this requirement in the Florida statute).

By the way, a question for all my friends in the Florida title insurance industry who are being asked to insure the (potentially crappy) title to real estate that has recently gone through a foreclosure proceeding. Does a judge's failure to comply with this statute in a foreclosure action involving a lost promissory note make a foreclosure judgment absolutely void (ie. void ab initio), or is the foreclosure judgment merely voidable??? (and how do you insure over this risk???).

Northern Florida Judge To Consider Sanctions For Alleged F'closure Mill Racket Suspected Of Fabricating &/Or Presenting False Or Misleading Paperwork

In St. John's County, Florida, The Florida Times Union reports:
  • A law firm under state investigation for its handling of foreclosure cases(1) could face court sanctions in St. Johns County for giving a judge false information about who owned a mortgage. Circuit Judge J. Michael Traynor threw out a foreclosure suit this month after concluding the plaintiff listed on a foreclosure filed by Florida Default Law Group never owned the note.

  • Lawyers compounded that problem, the judge decided, by filing paperwork later that named the real mortgage holder, HSBC Bank, but falsely described the bank as a “successor” to the original plaintiff, U.S. Bank National Association. Because U.S. Bank really never held the note, what the lawyers were claiming wasn’t true, the judge said.

  • The court was misled,” Traynor wrote in an order dismissing the case. He added that judges “should be able to confidently rely on the statements made by counsel.” “As officers of the court, attorneys should ensure that the facts they represent as true … are correct and accurate,” Traynor wrote.(2)

  • The ruling doesn’t stop the real mortgage holder from filing a new suit against homeowners William and Lauren McLeod, and the judge said the whole problem may have just been a matter of sloppy preparation for the case. But the case reflects a broader problem of faulty information being used in lawsuits where people’s homes are at stake, said Chip Parker, a Jacksonville attorney representing the McLeods. “This happens all the time in various forms,” Parker said, arguing that a number of South Florida law firms have become “foreclosure mills” designed to handle mass volumes of lawsuits with little regard to details.

  • "They will do whatever they have to do … without regard to the truthfulness of what they’re filing,” said Parker, whose firm asked for the dismissal. Many people never challenge foreclosures, he said, so cases that couldn’t win at trial sail through anyway.

For the story, see Foreclosure foul-up could cause court penalties for lawyers (A judge says the firm gave false information; state also investigating).

(1) The Tampa-based Florida Default Law Group was identified last month by the Florida Attorney General’s Office as being the subject of a civil investigation by its economic crimes unit, the story states. A statement posted on the agency’s website said the law firm, described as one of the state’s biggest handling foreclosures, “appears to be fabricating and/or presenting false and misleading documents in foreclosure cases.”

(2) Traynor has scheduled a hearing in August to decide whether lawyers from Florida Default should face sanctions, acording to the story.

Chronic, Rubber-Stamping Florida Judge Once Again Draws Appellate Court Attention For Denying Plaintiff/Lenders' Motions To Cancel Foreclosure Sales

A recent ruling from a Florida appeals court brings renewed attention to the conduct of now-ex-Volusia County Circuit Court Judge John V. Doyle for issuing rubber-stamped denials of motions to cancel foreclosure sales filed by plaintiff/lenders and allowing foreclosure sales to take place (against the wishes of both the lenders and the homeowners).

Doyle's rubber-stamped denials of these motions have been the subject of three recent appeals heard by Florida's Fifth District Court of Appeal. An excerpt from the most recent case (bold text is my emphasis, not in the original text):

  • On May 12, 2009, LaSalle filed a motion to cancel/vacate foreclosure sale, stating: "Since the date of the entry of the Final Judgment of Foreclosure and the notice of sale, the borrowers have entered into a Non-FNMA Home Affordable Modification Program in an effort to retain their home and avoid the sale of their home."

  • The trial court denied the motion without a hearing, using a "DENIED" stamp with a handwritten date of May 13, 2009. LaSalle then filed a renewed motion to cancel/vacate foreclosure sale, providing: "Since the date of the entry of the Final Judgment of Foreclosure and the notice of sale, the borrowers have entered into arrangements with the Plaintiff for a short sale of the property, which sale is scheduled to take place on May 20, 2009."

  • A docket entry indicates that the trial court denied the renewed motion. On May 14, 2009, the foreclosure sale took place as scheduled, at which "Equitable Gain Inc." purchased the property for a bid of $8,000.00.

LaSalle then filed an objection to the sale and an emergency motion to vacate summary final judgment and to vacate foreclosure sale and to return funds to the third party purchaser. The trial court again denied LaSalle's objection and motion without a hearing, using the "DENIED" stamp with a handwritten date of May 20, 2009. LaSalle's subsequent motion for rehearing or in the alternative motion to vacate certificates of sale and title met with the same, rubber-stamped fate.

In addressing this problem, the 5th District Court of Appeal stated (bold text is my emphasis, not in the original text):

  • This case is virtually identical in all material respects to two other cases recently before this Court. U.S. Bank Nat'l Ass'n v. Bjeljac, 17 So. 3d 862 (Fla. 5th DCA 2009) and Wells Fargo Bank, N.A. v. Lupica, 17 So. 3d 864 (Fla. 5th DCA 2009). The trial judge was the same in all three of these cases and the procedure he consistently followed is the problem.

  • In the U.S. Bank case, the lender sought to cancel and to reset a scheduled foreclosure sale, which the court denied without a hearing using a "DENIED" stamp. The lender's subsequent Objection to Sale, Motion to Return Third Party Funds, to Vacate Certificate of Sale and to Set Aside Foreclosure Sale met the exact same fate.

  • In the Wells Fargo case, the lender initially sought to cancel the foreclosure sale before it occurred, representing to the court that a modification agreement had been reached with the defendant homeowners. This motion was denied without a hearing, using a "DENIED" stamp. Thereafter, Wells Fargo filed a Motion to Vacate the Foreclosure Sale, again attempting to enter into a forbearance agreement with the defendant homeowner that would provide them with the opportunity to save their home. As with all the other motions, no hearing and a simple "DENIED" stamp disposed of the motion.

  • In this case, as in the Wells Fargo and U.S. Bank cases, there is nothing establishing that the documents bearing these executed "denied" stamps were filed with the clerk of the court or when they were filed. As with the Wells Fargo and U.S. Bank cases, these orders cannot be considered properly rendered or final. We elect to treat this matter as a premature appeal and relinquish jurisdiction to the trial court for a period of thirty days for properly rendered orders.(1)

  • Because the trial judge involved in these cases is no longer on the bench, the successor judge will necessarily have to consider the motions de novo.

  • In this case, as in the Wells Fargo and U.S. Bank cases, there is also no reason we can discern why denial of the plaintiff lender's repeated motions to cancel the foreclosure sale should not have been granted, and the procedure followed by the trial judge leaves us in doubt that the motions were given any merits consideration. Accordingly, in order to enable meaningful appellate review, if the trial court again denies LaSalle's motions, it must provide reasons.

For the latest of the three rulings, see LaSalle Bank National Association v. Alicea, Case No. 5D09-2129 (Fla. 5th DCA, May 21, 2010).

(1) The appeals court expressed some empathy in their ruling in the U.S. Bank case for overworked trial judges, but stressed the importance of jurists refraining from the use of their rubber stamps when ruling on motions (bold text is my emphasis, not in the original text):

  • We are mindful of the significant workload faced by Florida’s trial judges, particularly with the flood of foreclosures inundating the court system and the staff reductions necessitated by budget shortfalls. Nonetheless, for an appellate court to provide meaningful review of a trial court order, particularly when the trial court possesses significant discretion, some indication of the reasons underlying the trial court’s ruling is helpful. “It is not the function of an appellate court to cull the underlying record in an effort to locate findings and underlying reasons which would support the order.” Jacques v. Jacques, 609 So. 2d 74, 75 (Fla. 1st DCA 1992). Here, the trial court’s “denied” stamp does not help us determine if the trial judge abused his discretion or not. Some basis for the ruling would be instructive both to the parties and this Court.

Lack Of Evidence Of Individual's Authority To Execute Assignment Of Mortgage Sinks Foreclosing Assignee In Attempt To Lift Stay In Ch. 13 Proceeding

In a recent ruling by a U.S. Bankruptcy Court in Boston, Massachusetts, a foreclosing lender was denied relief from an automatic stay to foreclose on a mortgage. As the basis for its ruling, the court pointed to the failure of the foreclosing lender, Property Asset Management, Inc. ("PAM"), who purportedly acquired its interest in the mortgage via an assignment, to prove that the multiple-corporate-hat-wearing individual who executed the assignment on behalf of the assigning company had authority to do so.(1) Accordingly, the court found that the foreclosing lender failed in its burden of proving that it had authority to foreclose, standing to move for relief from the automatic stay, and therefore denied the lender's motion for relief from the stay, without prejudice to renewal upon proper proof.

For the ruling, see In re: Moreno, Case No. 08-17715-FJB (Bankr. D. Mass., Eastern Div. May 24, 2010).

(1) In denying the lender's motion for relief from the automatic stay, the court made the following analysis (bold text is my emphasis, not in the original text):
  • As the party seeking relief from stay to foreclose a mortgage on the debtor's property, PAM bears the burden of proving that it has authority under applicable state law to foreclose the mortgage in question and, by virtue of that authority, standing to move for relief from the automatic stay to foreclose.


  • To show that it presently holds the mortgage, PAM must show a valid assignment of the mortgage from MERS to itself. PAM contends that it holds the mortgage by assignment from MERS. Accordingly, PAM must show that the assignment, which was executed for MERS by Denise Bailey, was within the scope of Bailey's limited authority to act for MERS.

  • Ms. Bailey's authority to act for MERS is defined in the MERS Authorization in seven enumerated paragraphs. In each, Ms. Bailey's authority to act is dependent on the existence of a specified relationship of Litton, the MERS member by whom she is employed, to the loan in question. PAM has submitted no evidence of the existence of any such relationship. The beneficial owner of the loan at the time of the assignment was Aurora Bank FSB, but there is no evidence that Litton was at the time the servicer of the loan for Aurora Bank FSB or was registered with MERS as such.

  • The Court does not find that Aurora Bank FSB had not retained Litton as its servicer; there is simply no evidence on the issue. But the burden is on PAM to prove that it had, and PAM has not adduced evidence to that effect.

  • Accordingly, by a separate order, the Court will deny PAM's motion for relief from the automatic stay without prejudice to renewal upon proper proof.

Idaho Couple Gets Back Home Sold Out From Under Them In Foreclosure While Loan Modification Agreement In Effect; Trustee Agrees To Rescind Sale

In Boise, Idaho, The Idaho Statesman reports:
  • A West Boise family has gotten their home back after it was sold in March in a foreclosure sale, said their attorney, Richard Eppink of Idaho Legal Aid(1) in Boise. Zijad and Hata Rudan had formally entered and were complying with a federal loan modification trial period before the home was sold.

  • Eppink said Gorilla Capital of Oregon, the company that purchased their home, has relinquished all interest in the home. The trustee who conducted the sale has agreed to rescind the foreclosure sale. Zijad Rudan said he is happy about the agreement and feels that justice was done. The Rudans are waiting to see if their loan servicer MetLife will negotiate with them regarding the Making Home Affordable program and their mortgage.

Source: Boise family retains home sold in foreclosure.

(1) Idaho Legal Aid Services is a nonprofit law firm dedicated to providing representation for low income people throughout Idaho.

Louisville-Area Tax Lien Investors Accused Of Squeezing Delinquent Owners w/ Bogus Legal Fees When Redeeming Homes; Suit Seeks Class Action Status

In Jefferson County, Kentucky, The Louisville Courier Journal reports:
  • Companies that buy delinquent property tax bills are charging unnecessary, exorbitant and illegal legal fees to owners who want to reclaim their property -- and preying on the elderly and unsophisticated, according to a lawsuit filed in Jefferson Circuit Court.

  • The suit, filed earlier this month on behalf of an 86-year-old woman and two other plaintiffs, says that charging attorneys' fees, often within a year after the sales, is both unlawful and unethical.

  • Under Kentucky law, private companies can buy delinquent bills and charge derelict owners 12 percent a year until they pay the debt. If the owners still don't pay after one year, the company can start foreclosure proceedings against the property and add interest and attorney fees. But the law says that no action may be brought to initiate the foreclosure until one year after the property is certified delinquent.

  • The lawsuit alleges that the Jamos Fund I LP, of Fort Thomas, Ky., is violating that stipulation by tacking on exorbitant legal fees before the year expires, merely for sending notices to taxpayers that their bills have been purchased. In an interview, James Ballinger, one of the lawyers for the plaintiffs, said other companies, including some owned by lawyers, are doing the same.

  • Cindy Lanham, a spokeswoman for the Kentucky Finance and Administration Cabinet, which is not involved in the suit, said it believes that attorneys' fees can be charged during that period, but Ballinger said he believes the courts will look askance at such fees if they aren't earned. He said that the suit is the first of its kind filed in Kentucky and that the state's courts have never decided whether pre-litigation expenses can be charged during the year after a tax certificate is purchased.(1)

For more, see Companies that purchase late tax bills sued (Fees are illegal, local plaintiffs say).

(1) The complaint asks that the suit be declared a class action on behalf of everyone who has paid what are described as "outrageous fees" to the Jamos Fund I and attorneys Steven Roland Smith and Greg Dewey Voss.

Tuesday, May 25, 2010

Recently Issued State Supreme Court "Produce The Note" Rule Holding Down New Foreclosure Filings In Florida?

In South Florida, The Sun Sentinel reports:
  • Foreclosure filings have decreased this year, but it may not be a brightening economy causing the decline. Broward County had 7,134 homes and condos in some stage of foreclosure last month, down 31 percent from April 2009, according to RealtyTrac Inc. In Palm Beach County, foreclosure filings dropped 36 percent from March, county officials said. Partly responsible: a new Florida Supreme Court rule that requires lenders to verify they are the actual owners of a home before making the initial case for foreclosure. Show me the "note," in other words.


  • The new rule was approved in February with the intention of unclogging the foreclosure courts, which have an estimated statewide backlog of 500,000 cases. It also gives judges power to sanction plaintiffs who make false accusations on the ownership of notes, or missing notes. "I believe it has affected the number of new filings," said Palm Beach County Circuit Court Judge Meenu Sasser, who handles the county's foreclosures. "It streamlines the process.

  • Law firms handling the foreclosure overload, sometimes called foreclosure mills, have routinely filed a "lost note" claim with the original default notice, regardless of whether they looked for the note, said Miami-Dade Circuit Court Judge Jennifer Bailey. [...] When asked what efforts were made to find the note, however, such excuses as "searched file cabinet" and "searched fire proof safe" have appeared on several court records.

  • "It was very confusing. How can you foreclose on the note if the note is lost?" Bailey said. "The judges would be trying to track the note and they're saying they own it, but don't have it and don't know where it is." But if a borrower didn't protest the foreclosure, the cases often sailed through. [...] Bailey, who was on the foreclosure task force, said the rule wasn't needed before the real estate boom when home loans were more straightforward and foreclosures fewer. "There's some weird stuff going on," she said.

For more, see Banks must prove ownership to foreclose homes.

Homeowner Hammers HOA, Attorney In Court For "Unreasonable Collection Practices" In Foreclosing On House Over Tiny Amount In Unpaid Dues

In San Antonio, Texas, WOAI-TV Channel 4 reports:
  • When the HOA foreclosed on [Kent] Hern because he owed a couple hundred dollars, he took them to court. Hern lives on the north side of town in the Hidden Forest subdivision. He fell behind on his HOA payments a few years ago while he was out of the country on business. No matter, Newton still filed the papers with Bexar County to take Hern's house.

  • "He's the ringleader for attorneys who foreclose on homes for HOA's," says Hern about [local attorney Tom] Newton.(1) "When I saw there was a number of HOA's that had actually taken these steps to foreclose on homeowners for such ridiculously small amounts of money, we just decided that I was going to fight it because it just wasn't fair," he added. A Bexar County jury agreed with Hern, saying the HOA and Newton engaged in "unreasonable collection practices" while foreclosing on his house over such a tiny amount in unpaid HOA dues.

  • The jury also thought the massive amount of legal fees added to the dues was completely out of line.(2) Hern was awarded a total of $22,000; $11,000 of which was to cover his attorney's fees.

  • Hern's attorney, Peter Kilpatrick, took Hern's case because he's tired of seeing people lose their homes over something so small. "This is a message to those HOA's that even though homeowners should pay their assessments, and on time, when they don't, they have rights too and they should not be plowed over with these gestapo-like collection tactics," explained Kilpatrick. Kilpatrick says part of the problem is in the contract the HOA's sign with Newton. It says the HOA is not allowed to accept past due payments from homeowners without Newton's approval.

For more, see Homeowner beats HOA lawyer in court.

(1) Attorney Tom Newton reportedly represents almost all the HOA's in San Antonio, and if your home is on the auction block, there is a good chance he is the guy you'll have to deal with, the story states.

(2) This alleged practice sounds similar to the racket mortgage loan servicers run with homeowners. The moment a payment is missed, the door is open to play "let's run up the fees and squeeze the homeowner."

Couple Says They Followed All Bank Instructions Given At Lender-Sponsored, Traveling Loan Modification "Carnival Show" & Are Still Facing Foreclosure

In Phoenix, Arizona, KPHO-TV Channel 5 reports:
  • A Valley couple is about to lose their home to foreclosure and they claim their bank scammed them. Keven and Linda Harper, of Phoenix, said they were strung along by Wells Fargo Bank and promised a loan modification that never happened. Now, they said they're about to lose their home to foreclosure.

  • In September, the couple said they went to Wells Fargo's Loan Modification Workshop in downtown Phoenix.(1) The Harpers said they were promised a loan modification and told that all they'd have to do is go through a trial period, make their new lower payments on time and they'd be approved. "We did everything they asked," said Linda Harper.

  • According to the Harpers, they were told a few days ago that there would be no loan modification and they owed $9,200 in missed payments. They said they were also told if they didn't pay the amount in five days, the house would go into foreclosure. [...] A representative with Wells Fargo Bank told CBS 5 News they are looking into the Harpers' situation.

For the story, see Valley Couple Claims Bank Ran Scam (Couple: Promised Loan Modification Never Happened).

(1) Wells Fargo's traveling loan modification carnival show hit Miami Beach last weekend for a 3-day extravaganza.

"Cheat Sheet" Lays Out The "Who's & What For's" Regarding Ongoing Probes Into Banks & Their Business Activities

ProPublica reports:
  • Here’s our attempt to lay out exactly what’s known about which banks are being investigated by whom and for what.(1) We’re going to keep updating this page, so please send us stories or details we’ve missed.

For more, see Bank Investigations Cheat Sheet.

Related story: Covering the Bank Investigations: A Cautionary Tale.

Thanks to Deontos .is for the heads-up on the "cheat sheet."

(1) The "honor roll" of outfits, and links to stories about ongoing probes into their activities, included in the ProPublica "cheat sheet" are: Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, and UBS.

Monday, May 24, 2010

Bank Conduct, Witness Credibility The Focus Of Contempt Ruling Sanctioning Wells For Giving Ch.13 Couple The Jerk-Around After Finishing Payback Plan

In Houston, Texas, U.S. Bankruptcy Judge Jeff Bohm recently found Wells Fargo in civil contempt for its seemingly egregious conduct in failing to correct errors in its bookkeeping records with regard to the payment history on a home mortgage loan of a homeowner-couple. The couple, who had successfully completed their proposed 60-month repayment plan in connection with a Chapter 13 petition filed in order to save their home and reorganize its debts, nevertheless received a subsequent jerk-around by Wells Fargo which lead to the litigation in this matter.

According to Judge Bohm:
  • This adversary proceeding involves a sad and frustrating tale of how two successfully reorganized debtors unsuccessfully attempted to deal directly with their home lender, Wells Fargo Bank, N.A. (Wells Fargo). Their communications concerned the proper amounts that they owe Wells Fargo pursuant to certain orders of this Court entered during their Chapter 13 case. Only when their efforts at direct dialogue failed did the debtors turn to their counsel for assistance. This assistance first came through the filing of the above referenced adversary proceeding. Second, it came through the filing of a motion for contempt (the Motion for Contempt) when Wells Fargo failed to correct the debtors' loan records pursuant to an agreed judgment that it signed in order to settle the adversary proceeding and avoid a trial.

Not surprisingly, Judge Bohm found that the credibility of the testimony of the Wells Fargo witness called to testify in the matter, a certain John Grissom, should be attributed little weight. Grissom identified himself as a senior counsel of Wells Fargo.(1)(2)

For Judge Bohm's entire ruling, see In re: De La Fuente, Case No. 03-43483-H4-13, Adversary No. 08-03291 (Bankr. S.D. Texas, Houston Div. May 18, 2010).

(1) Among other statements made throughout the opinion, Judge Bohm made this observation with respect to Grissom's testimony under oath (bold text is my emphasis, not contained in the original text):

  • At the February 23 Hearing, counsel for Wells Fargo called one witness, Grissom, Senior Counsel for Wells Fargo, to testify on Wells Fargo's handling of the De La Fuente's mortgage loan and the corrections made to Wells Fargo's records in relation to this loan.

  • The Court finds Grissom's credibility to be lacking in certain respects. First, he gave a Shermanesque statement that Wells Fargo was now in compliance with the Agreed Judgment, but then subsequently had to admit that Wells Fargo's records still contained errors in violation of the Agreed Judgment. Second, he could not explain why there are late charges appearing on Wells Fargo's records.

  • Grissom's failure on these key points, combined with his nonchalance on the stand, reflects a troubling lack of perspective regarding how much is at stake for honest and diligent Chapter 13 debtors, such as the De La Fuentes, who are trying to hold on to their home, and how important it is for Wells Fargo to abide by this Court's orders when dealing with debtors. Grissom appears to be representative of the absence of any sense of urgency within Wells Fargo to maintain accurate records and comply with the law.

  • Indeed, the following testimony from Grissom underscores this point:

    Question (from counsel for the De La Fuentes): "And is that a correct figure?"

    Answer (from Grissom): "Well, it is—I don't believe it is correct. However, it is correct because that's what we're presenting to the Court today."

  • Apparently, it does not bother Wells Fargo, whose representative is a licensed attorney at law, to testify under oath in one breath that an escrow amount is both correct and incorrect. And, perhaps even worse, to say that this amount is correct because "that's what we're presenting to the Court today," even though he knows full well that it is incorrect.

(2) In concluding his ruling, Judge Bohm gave this observation:

  • The passing of BAPCPA [Bankruptcy Abuse Prevention and Consumer Protection Act (2005)] was applauded by the financial industry. The American Financial Services Association (AFSA), a financial industry lobbying entity which Wells Fargo has been and continues to be involved in, lobbied vigorously for BAPCPA and applauded its passage. An AFSA press release sent out on the day BAPCPA went into effect, stated that: "[t]he bankruptcy law going into effect today . . . encourages personal accountability and responsibility, the law also will bring changes to an overburdened, antiquated system, allowing it to better serve those in need of bankruptcy relief." (emphasis added).

  • This Court certainly agrees that personal accountability and responsibility are critical to maintaining the integrity of the bankruptcy system. However, in its zeal to see debtors be held personally accountable for their actions, Wells Fargo seems to have forgotten—at least in the case at bar—that the integrity of the bankruptcy system requires the good faith of both debtors and creditors.


  • Grissom's testimony, and Wells Fargo's own records, indicate that in with respect to the De La Fuentes' loan, Wells Fargo has had difficulty accepting personal accountability and responsibility.

Court: "Promissory Estoppel" Could Make Lender’s Verbal Agreement To Halt F'closure Sale Enforceable, Even Absent Consideration For Promise To Stall

Lexology reports:
  • The latest case following the mortgage meltdown underscores the need for lenders to be deliberate and clear in both their external and internal communications. In Garcia v. World Savings FSB, 183 Cal. App. 4th 1031 (2010), the appellate court determined that the lender’s verbal agreement with the borrower to postpone a foreclosure sale could be enforceable, even absent consideration for the lender’s promise to postpone. The appellate court found that the loan officer’s telephonic assurance to the borrower that he could, and would, briefly extend the pending foreclosure sale under certain conditions was reasonably relied upon by the borrower.(1)

For more, see Wrongful foreclosure – verbal assurance that foreclosure sale will be postponed may be enforceable (requires paid subscription; if no subscription TRY HERE, or TRY HERE, then click link for the story).

(1) The homeowners brought suit against their lender for wrongful foreclosure, breach of contract, promissory estoppel, and unfair business practices. The trial court granted the lender's motion for summary judgment, concluding that the foreclosure was valid, that the breach of contract claim was unsupported by consideration, that the promise allegedly made was insufficiently specific to support promissory estoppel and that the unfair business practices claim had no basis. The California appellate court reversed the lower court ruling with respect to the claim for promissory estoppel, but otherwise affirmed the ruling.

With respect to the claim for promissory estoppel, the court stated (bold text is my emphasis, not in the original text; all case law links may require free registration at

  • As a general rule, a gratuitous oral promise to postpone a foreclosure sale or to allow a borrower to delay monthly mortgage payments is unenforceable. (Raedeke, supra, 10 Cal.3d at p. 673; California Securities Co. v. Grosse (1935) 3 Cal.2d 732, 733; Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 547; Sutherland v. Barclays American/Mortgage Corp. (1997) 53 Cal.App.4th 299, 312; Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 121; Stafford v. Clinard (1948) 87 Cal.App.2d 480, 481.) fn. 9


  • The absence of consideration or benefit to the promisor does not, however, defeat a claim based on promissory estoppel. fn. 10 The doctrine of promissory estoppel "make[s] a promise binding under certain circumstances, without consideration in the usual sense of something bargained for and given in exchange." (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 249; accord, Raedeke, supra, 10 Cal.3d at p. 672.)

  • "Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise, if injustice can be avoided only by its enforcement." (Youngman v. Nevada Irrigation Dist., supra, 70 Cal.2d at p. 249.)

  • "'The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.'" (Wilson v. Bailey (1937) 8 Cal.2d 416, 423, quoting Carpy v. Dowdell (1897) 115 Cal. 677, 687.)

  • "'In such a case, although no consideration or benefit accrues to the person making the promise, he is the author or promoter of the very condition of affairs which stands in his way; and when this plainly appears, it is most equitable that the court should say that they shall so stand. [Citations.]'" (Wade v. Markwell & Co. (1953) 118 Cal.App.2d 410, 420.)

Legalized, Court-Sanctioned Scam Allows For Vulnerable "Senior-Snatching" In Kidnapping, Ripoff Racket Of The Elderly In Arizona???

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • Many people move to Arizona for the weather and recreation because it's considered a haven for retirees who want to live out their golden years. But something else is happening here - something haunting. For Clair's mom, Gloria Horrigan, it was a nightmare. Clair said her mother was taken to a nursing home against her will and not allowed visitors, not even family. “It's sickening...It really truly is sickening,” said Clair.
  • It was a struggle for Robert Brown to bring his wife, Rosemary, home. She was also taken and within a matter of weeks, the family wasn't allowed to see her either. What happened in both cases started in a Maricopa County Courtroom - right in front of a judge.
  • Both Rosemary and Gloria had health issues that made it hard on their families. Families can't force a loved one to get help, but a guardian can. That's why their cases ended up in probate court, which hears issues on care for vulnerable adults. The court approved a guardian in both cases. And both times, the guardian was Sun Valley Group of Tempe.(1)(2)
For more, see Guardianship in Arizona: Elder care or elder abuse?

(1) In total, Rosemary's family allegedly spent over a $100,000 for just four months of Sun Valley Group's care, the story states. It ended when the nursing home thought Rosemary was dying. They finally allowed the family to see her. As for Gloria, her daughter said the company seemed much more interested in her mom's money than her health. The final bill being just under $500,000 and included charges for an employee to open her mail at $75 an hour, the story states. The company also allegedly failed to make Gloria's house payments, allowing it to go into foreclosure, according to the story.
According to the story, the ABC15 Investigators have found more issues plaguing Sun Valley Group. Owner Peter Frenette's wife, Heather, is co-owner, but she is being investigated by the Arizona nursing board. The Maricopa County Sheriff's Organized Crime Unit is also reportedly investigating Sun Valley Group. By state law, both investigations are secret, the story states.
The ABC15 Investigators also reportedly discovered three multi-million dollar lawsuits filed this year against the company for fraud and racketeering. Grant Goodman is the attorney for three former Sun Valley Group clients:
  • It's more of a criminal enterprise,” said Goodman, “They need to be prosecuted.” He claimed to find a pattern with these cases. “They effectively medicate them to such an extent that they really are non-functional,” said Goodman, “And they do that while they're liquidating their assets.” The three lawsuits also blame probate court. “The mob isn't this efficient, nor does the mob have the luxury of having a court rubberstamp these proceedings,” said Goodman.
Reportedly, the Arizona Supreme Court last month issued an Administrative Order to investigate probate court. One of the issues is regulating fees.
(2) The fleecing of the estates of the vulnerable and the dead in probate / surrogate's court proceedings apparently is not all that unheard of. See, for example:
For one New York Times story in this regard dating back over 20 years, see 3 in Surrogate's Office Charged With Thefts:
  • Three investigators from the Brooklyn and Bronx Public Administrators' offices were arrested [] and charged with falsifying public records and stealing valuables from rooms they believed had been occupied by people who died without leaving a will. granny-snatching

100+ Victims Of Sale Leaseback Foreclosure Rescue Operators Get Stiffed; Scammers Left Such A Convoluted Mess That Judge Unable To Order Restitution

In Southern California, The Orange County Register reports:
  • The perpetrators of a mortgage fraud scheme involving an ex-Huntington Harbour resident left such a convoluted mess behind that a federal judge was unable to order restitution for the victims, who prosecutors say number more than 100.

  • U.S. District Judge George H. King this week agreed with a recommendation from prosecutors and decided not to order restitution in the case because of the complexities surrounding title disputes, questions about equity and unresolved litigation spawned by the actions of the ring.


  • Assistant U.S. Attorney Gregory Lesser said while there won't be a restitution order, the Justice Department's Asset Forfeiture section would be able to evaluate the claims of victims on an individual basis. He said about $1.3 million was seized once the government stopped the scheme.(1)

  • "They created such a consummate and 'ginormous' mess that the restitution is, for practical purposes, incalculable,'' Lesser said. "Paradoxically, (perversely, even), by creating the huge financial mess they did, the defendants now have no restitution order against them. Unfortunately, that is what the law dictates in this situation.''(2)

For the story, see Mortgage cons won't have to pay victims.(3)

(1) Victims in the case can contact the U.S. Attorney’s office at

(2) Edward Seung Ok was sentenced to 15 years in prison for his part in the scheme and his $3 million Huntington Harbour home was seized by the government. Martha Rodriguez, 35, of Downey pleaded guilty in 2007 to 1 count of mail fraud and 1 count of money laundering, and as the “mastermind” of the operation, received 10 years in prison. Others sentenced: Cynthia Valenzuela, 27, of Orange got 1 year and a day in prison; Vladimir Stefanovic, 38, of Lancaster, was sentenced to 18 months in prison, and Maria G. Juarez, 39, of Diamond Bar, was sentenced to 3 years in prison.

(3) For another recent story on over 100 victims of a sale leaseback scam ending uo with little or nothing after the racket participants were prosecuted, both criminally and civilly, see 100+ Victims In Maryland-Based "Money Store" Sale Leaseback Foreclosure Rescue Scam To Get Stiffed In Proposed Civil Suit Settlement.

Pair Dodges Jail, Get Probation For Participation In San Diego-Area Foreclosure Rescue Scam That Conned 22 Homeowners To Sign Over 34 Home Titles

In San Diego, California, The San Diego Union Tribune reports:
  • A husband and wife who took part in a foreclosure-rescue scam in San Diego were placed on probation for three years [] and ordered to surrender their real estate licenses. Benjamin and Gloria Hebron pleaded guilty last month to felony charges including rent skimming and deceitful practices by a foreclosure consultant. [...] If the Hebrons violate the terms of probation, they could each be ordered to serve a year in county jail.

  • Prosecutors contend that the Hebrons and two other men, one of them a felon, persuaded 22 people to sign over 34 houses to fraudulent trusts. The victims, many of them Filipinos living in the South Bay, believed doing so could save their homes from foreclosure. [...] Their business associate, Joseph Encarnacion, [...] pleaded guilty last month to two counts of securities fraud and was sentenced to a four-year prison term.

  • Edmundo Rubi, who prosecutors contend was the mastermind of the scam, has a mental-competency hearing scheduled for July 9 to determine how his case will proceed. In a separate matter, he pleaded guilty in 2005 to operating a pyramid scheme that swindled $24 million from 425 victims, mostly South Bay Filipinos.

Source: Probation for husband and wife in foreclosure scam.

Sunday, May 23, 2010

F'closure Rescue Hit Parade Continues As Sacramento Feds Slam Four; Charges Describe Sale Leaseback Peddling, Equity Stripping, Rent Skimming Racket

In Sacramento, California, The Redding Record Searchlight reports:
  • Three Redding residents have been indicted by a federal grand jury on mail fraud, money laundering and other charges, prosecutors with the U.S. Attorney’s Office announced Friday. Darrin Arthur Johnston, 45, Todd Allen Smith, 47, and Cheryl Ann Hitomi Peterson, 47, were indicted in what prosecutors described as a “foreclosure recovery” scheme in which homeowners in financial distress signed over the deeds to their homes. In exchange, homeowners were allegedly told they could lease their homes and buy them back in two years.(1)

  • Prosecutors said that Jeremiah Andrew Martin, 32, of San Antonio, Texas, who was also indicted, as well as Johnston and Smith, allegedly kept the lease-rental payments instead of paying off the loans.

For the story, see Four charged in housing scheme.

For the indictment, see U.S. v. Martin, et al.

(1) The story describes the alleged racket as follows:

  • According to the federal jury’s indictment, Martin, Johnston, and Smith allegedly marketed a “foreclosure recovery” program in which homeowners were convinced to sign over the deeds to their homes.The indictment states the “foreclosure recovery” program was based on their alleged false representations that the homeowners could lease them back for a low rent and that they would help them repair their credit. The homeowners believed they could buy the homes back after two years.

  • After obtaining titles to the homes, however, prosecutors said, Martin, Johnston and Smith are alleged to have extracted equity from them by inflating their values and obtaining additional loans, keeping the rent payments rather than making payments to lenders, and then allowing the homes to be lost in foreclosure. Peterson, an escrow officer and notary, is alleged to have used her office and her notary status to lend the appearance of legitimacy to the scheme.

Judge Hammers Mastermind In San Diego-Area Foreclosure Rescue Racket That Ran Land Grant & Sale Leaseback Scams On 400-500 Victims w/ 46 Years In Pen

In San Diego, California, The San Diego Union Tribune reports:
  • A man prosecutors described as the ring leader of a real estate fraud scheme that defrauded hundreds of San Diego County residents out of more than $2 million was sentenced Friday to 46 years in prison. A jury found William Jeffrey Hutchings, 63, guilty in March of 160 felony counts including conspiracy, grand theft, rent skimming and violations of the mortgage foreclosure consultant law.

  • Prosecutors argued that Hutchings and other defendants convinced 400-500 victims, most of them Hispanic homeowners from San Diego and other counties, that he could keep them from losing their homes to foreclosure. The criminal enterprise lasted 21 months.(1)


  • Deputy District Attorneys Stephen Robinson and William La Fond contended during the two-month trial that Hutchings and others led the victims to believe they could save their homes through his so-called land-grant program. They could either pay a one-time fee of $10,000 to put their property in a land grant or they could transfer their property to the defendants and rent it back through monthly payments.

For the story, see Foreclosure scam's mastermind gets 46 years in prison.

(1) Eight of the 10 co-defendants have been convicted of criminal charges, prosecutors said, and two are scheduled to go to trial Monday, the story states.

33 Months For Midwest Man In Scam Targeting Homeowners In Foreclosure; Filed Phony Liens To Pilfer Proceeds From Fraudulently Financed Sales, Say Feds

In St. Louis, Missouri, the St. Louis Business Journal reports:
  • [S]t. Louis real estate broker [Randall Penberthy Jr.] was sentenced to 33 months in prison Wednesday for a $500,000 bank fraud scam, the U.S. attorney’s office said.


  • Between late 2006 and October 2007, Penberthy recruited investors to buy residential real estate directly from distressed property sellers whose homes were in danger of foreclosure, prosecutors said.(1) With Penberthy’s assistance, investors would finance the purchases through bank loans.

  • Penberthy would fraudulently place and record a second or third deed of trust on the property, typically in the name of First Choice or some other entity he controlled,(2) in order to make it appear that a legitimate second or third mortgage had been placed against the property, according to the U.S. attorney’s office.

  • Bank loan funds were used to pay the sales price of the property as well as to pay off the fraudulent second or third mortgage, prosecutors said. Funds used to pay off the fraudulent second or third mortgage were paid to entities controlled by Penberthy, including First Choice and Midwest.

Source: St. Louis real estate broker gets 3 years jail time.

(1) Although the story is silent on this point, it is not unreasonable to suspect that Penberthy peddled bogus sale leaseback programs to dupe his financially strapped victims into doing business with him.

(2) Reportedly, Penberthy operated and controlled several business entities, including Covenant Financial LLC, First Choice Investment and Loan LLC and Midwest Management LLC.

California AG Charges Nine In Alleged Loan Modification Racket That Ripped Off At Least $2.3M From 1500+ Homeowners

From the Office of the California Attorney General:
  • Attorney General Edmund G. Brown Jr. [] announced that nine men engaged in a Southern California boiler room, tricked out in high-roller style with a roulette wheel and other casino equipment, have been charged with 97 criminal counts for stealing at least $2.3 million from more than 1,500 desperate homeowners who were promised loan modifications but received no relief.

  • Arrested [...] were Gregg Scott Quinn, 37, of Camarillo and Juan Pierre Washington, 40, of Winnetka, who worked as company sales managers and supervisors. They are being held at Los Angeles County Jail. Gary Arnold Eisenberg, 71, of Westwood, a top telemarketer with the company, and Ira Itskowitz, 58, a sales manager, each spent more than five years in federal prison for previous fraud convictions and are already in federal custody for violating parole in connection with their participation in the scheme.

  • The four principal owners of the business, Niv Iskin, 30, of Reseda, Reviv Karpman, 38, of Tarzana, Tomer Kogman, 29, of Receda and Avraham Yechizkia, 34, of Encino; and a sales manager, Barel Iskin, 23, of Woodland Hills, are still being pursued by law enforcement.

  • "This company was just a boiler room, long on promises and upfront fees but short on foreclosure relief," Brown said. "Its operators cruelly defrauded citizens trying valiantly to hang on to their homes."

  • Brown's office initiated its investigation in March 2009 in response to numerous consumer complaints against the defendants' Canoga Park-based loan modification business, which operated as Mason Capital Group, LLC and Gretchen Fox and Associates. When agents executed a search warrant at the office, they found a Las Vegas casino-themed sales floor complete with craps, poker and black jack tables fashioned as workstations, and a roulette wheel that top-selling telemarketers spun for cash bonuses (see photos attached - #1, #2, #3, #4). Between January 2008 and June 2009, the four owners took in at least $2.3 million in up-front fees, which ranged from $1,000 to $5,000, from more than 1,500 homeowners throughout the country. In almost every case, no loan modifications were completed, as promised.

For the California AG press release, see Four Arrested, Five Wanted for Fleecing Hundreds of Homeowners Seeking Foreclosure Relief.

For more from the California AG: