Saturday, July 03, 2010

City Officials Warn 175 Tenants In Building In Foreclosure Of Possible Immediate Boot If Power Is Cut Off To Premises As Electric Bill Remains Unpaid

In Arlington, Texas, the Fort Worth Star Telegram reports:
  • City workers went door to door at a north Arlington apartment complex Wednesday warning residents that the power may be shut off and urging them to make plans to move to alternate housing or an emergency shelter. Residents of the Bristol Pointe Apartments off Lamar Boulevard have been without hot water for three weeks because the gas was cut off.

  • The city notified about 175 residents that they could lose electric power because the apartment management is far behind in its payments to Gexa Energy, Community Services Director Lee Hitchcock said. "This is significant. We decided to take the unprecedented step of notifying the residents what may happen and be ready," he said. "We can not allow folks to live in a situation that is unsafe."

  • Bristol Pointe, owned by Allen and Shlomo Chelminsky of Florida, was posted for foreclosure and could be sold at auction Tuesday, according to public records. The complex has received 124 citations from the city because of the lack of hot water but passed its most recent annual inspection, Hitchcock said.

  • Arlington police and fire chiefs could decide to evacuate tenants if the electricity is shut off, he said.

For the story, see Arlington preparing to evacuate apartments.

See also: The Dallas Morning News: Tenants of Arlington apartment complex warned of power disconnection.

City Cancels Evacuation Order Affecting 200+ Tenants After Landlord Completes Emergency Repairs On Rusted Out Staircases

In Lauderhill, Florida, the South Florida Sun Sentinel reports:
  • City officials on Thursday afternoon canceled an order for hundreds of Brampton Court residents to leave their apartments because workers have finished emergency repairs. Police and fire officials also ended a "fire watch" that lasted more than a week at the four-building complex, in the 4500 block of Northwest 19th Street, to ensure that no one was hurt if there was an emergency, said city spokeswoman Leslie Johnson.

  • During an inspection Thursday, engineers determined the stairs were "structurally sound," even though the stairs are expected to undergo additional improvements during the next two months, Johnson said.

  • In notices the city circulated at Brampton on June 22, residents who lived on the second, third and fourth floors were given three days to vacate apartments because staircases were deemed unsafe. Three days later, the city let the buildings remain open because construction workers hired by Brampton Court's managers had begun replacing rusted stair parts.

  • The city repeatedly postponed a deadline for residents to leave, agreeing to keep the complex open as long as workers continued making improvements. The city's notices to vacate Brampton caused dozens of people to move out. Residents said they are living at relatives' homes or have signed apartment leases elsewhere. Other residents stayed, saying they couldn't afford to move.

Source: Lauderhill cancels order for Brampton residents to leave (Engineers find emergency repairs made stairs safe, city says).

In earlier stories, see:

Owners Pay $3,500 Water Bill To Temporarily Stall Mass Eviction In Cash-Strapped 76-Unit Condo Complex; 60+ Apartments In Some Stage Of Foreclosure

In Margate, Florida, the South Florida Sun Sentinel reports:
  • Dozens of Atlantic Palms residents so far have met demands from Margate city officials to pay their unpaid utility bills -- prompting the city to not evict them, a city official said. Atlantic Palms residents paid their last water bill, about $3,500, before a July 2 deadline, allowing them to stay in their homes, City Manager Frank Porcella said.

  • More than 60 of the 76 units at Atlantic Palms, at 400 NW 65th Ave., are in different stages of foreclosure, officials said. The homeowners association couldn't afford to pay bills, so residents faced being forced to leave their homes because of health concerns from lack of water.

  • Residents' next utility bill is due July 11, Porcella said. For nearly a year, the city helped Atlantic Palms residents by adjusting fees and making other accommodations. Residents also owe about $15,000 in back payments for garbage and water bills, an issue Margate city commissioners are expected to discuss during a July 14 meeting, Porcella said.

Source: Margate condo residents pay latest utility bill to avoid eviction.

Financially Struggling HOA Allowed Property Insurance To Lapse, Leaving Condo Owners In Recently-Burned Out 30-Unit Building Out Of Luck

In Lauderhill, Florida, the South Florida Sun Sentinel reports:
  • Days before their condo building burned, residents of Park South Six gathered to hear their association president say their building couldn't afford flood insurance. Some homeowners paid overdue assessments, and the president said flood insurance would be purchased. "I was rest-assured," said board member Jennie Valdes.

  • No one thought to ask about the building's master property insurance policy. On May 7, owners of the 30 units in the unadorned white, three-story building learned they didn't have that either. "I paid my maintenance fees every month," owner Jassodra Kirsch told police recently. "What happened to the money?"

  • Now owners are scrambling to figure out what to do. Some have talked with lawyers about suing the association board. Some have asked police to investigate the president and what happened to the monthly assessments they paid — $149 for one-bedroom units and more than $200 for the others. City and state officials say there's little they can do to help the condo owners now.

  • The situation illustrates the dire straits of some condo and homeowner associations in this tough economy. South Florida lawyers and insurance agents say they're sure Park South Six isn't the only building around that's going without coverage, even though it's required by law.

For more, see Condo owners at uninsured complex that burned have little recourse.

Cancer Victim Loses Desperately Needed Cash, Home After Being Snagged By Loan Modification Ripoff; Suspect Charged By Feds In Other Scams

In Hintington Beach, California, KABC-TV Channel 7 reports:
  • Nadia Iskander is in a race against time. Iskander is fighting breast cancer. She lost her husband. Now, she may lose her home after falling victim to a foreclosure rescue scam.


  • Last year, Iskander and her family held a sale at their jewelry store in Huntington Beach to raise money to pay for her medical treatment. Her home was also facing foreclosure. She borrowed against it to cover her husband's medical bills. He has since passed away.

  • For two years, Iskander and her daughter, Sherine, have worked on modifying their home loan through Aurora Loan Services, making payments. They also turned to a long-time customer, George Eggleston, who operated under the company Nexxus, or Private Solutions Group. They paid the 63-year-old now calling himself Giordan $7,000 to rescue their home. "He did nothing," Sherine Iskander said.

  • Eggleston was arrested last week and now faces federal charges involving other victims. Authorities allege he was operating a foreclosure rescue scheme dating back to 2008. "It was money that could have been used for medical," said Sherine as she wept. "It was money that could have been used for the bank. He did not negotiate with the bank. He just took our money."

  • The Iskanders have contacted the FBI about Eggleston. The FBI said it continues to investigate him. Last week, the Iskanders received a notice telling them their home was no longer theirs.

For the story, see Woman with cancer loses husband, possibly home.

Lake County Unleashes Full-Time Homestead Exemption Fraud Investigators To Bag Real Estate Tax Deadbeats

In Tavares, Florida, The Daily Commercial reports:
  • Simply having a home in Florida is not enough to qualify for a homestead exemption, as many Lake County residents will find out this week. On Wednesday, the county property appraiser's office will send out its exemption denial letters. Unlike past years, county officials are now more confident they know who's trying to get out of paying their fair share.

  • This is the first year the county has used full-time fraud investigators to actively evaluate homestead exemption claims, and it's put millions of dollars worth of property back on the county's books.

  • "I was thinking about how we could help the taxing authority and what I came up with was taking one of our experienced field men and having him go out and investigate these things." county Property Appraiser Ed Havill said. "Basically, we didn't have anybody doing that before." Now, fraud investigator Jim Kimpel and his chief deputy, Frank Royce, check out complaints reported through the county's fraud hotline, e-mail or by letter. [...] If the investigation reveals an intent to defraud the county, [Homestead Exemption Supervisor Ginger] Casburn said she can go back as far as 10 years to recoup back taxes, plus attach a 50 percent penalty on the amount that was supposed to be paid.

For more, see Lake County investigators cracking down on Homestead Exemption fraud.

Out-Of-Town Landlord Faces Criminal Charges Over Code Violations, Leaving Tenants Scrambling To Escape Collapsing Conditions

In Herkimer, New York, The Evening Telegram reports:
  • A property owner who faces criminal charges in Frankfort Village Court related to a building deemed unsafe by officials has been put on notice of code violations for an apartment he owns in Herkimer. Alan Patterson, of Westhampton Beach, has been notified by letter that a two-story apartment building at 219 Bellinger Ave. has multiple violations, according to David Kuehnle, Herkimer codes officer.

  • Patterson [...] appeared in Frankfort court to answer to four misdemeanor charges related to what officials believe to be the unlivable and unsafe condition of a vacant three-story apartment building at 202 S. Frankfort St.


  • Meanwhile, at least one tenant in the Bellinger Avenue duplex has moved out and the other family is planning to move out by the end of the week. Betty Santos said she has moved out of the apartment with her four children, ages 14 to 19, and fiancé. The family has been living at the apartment for over a year, according to Betty Santos, and everything from collapsed ceilings and mold to a broken hot water heater have gone unfixed. “And it seems like the house is just falling down around us,” she said. “I can’t live like this anymore.”

  • A family of four, with two children, lives in the other apartment and said they have many of the same problems. The adults did not want to give their names, saying they are trying to move out as soon as possible.


  • Codes officials in several area villages have expressed frustration with out-of-county landlords. Many of the parcels are purchased through foreclosure auctions, codes officers have said. The challenges of getting owners to appear in local courts often make it difficult to get action. Smaller municipalities also must face the realities of the cost of demolishing multiple properties, especially without the prospect of repayment due to bankruptcy filings or other delays, according to comments from codes officers. In instances of an imminent threat to the public, codes officers said villages will demolish a structure immediately.

For the story, see Landlord cited for violations in Frankfort, Herkimer.

Friday, July 02, 2010

Ohio AG Brings Civil Charges Against Payment Servicing Firm For Allegedly Ripping Off Homeowners' Property Tax, Insurance Escrow

From the Office of the Ohio Attorney General:
  • An Illinois-based company defrauded Ohioans out of thousands of dollars and Ohio Attorney General Richard Cordray is seeking restitution and civil penalties in Franklin County Common Pleas Court. Cordray said that the company and its owners, Derek C. Lurie and Steven Lurie, claimed that they would provide “escrow” services for their customers to pay property taxes or homeowner insurance but collected the money from consumers and never made the payments on their behalf.

  • Ohioans who contracted with this company lost thousands of dollars that they had set aside to pay taxes and insurance premiums,” said Cordray. “In the end, not only were their taxes and premiums not paid, but they had to come up with additional money out-of-pocket.”

  • According to the lawsuit, American Escrow entered into contracts with consumers to provide escrow services and to pay for property taxes and/or homeowner’s insurance each year. They divided the approximate annual amount by 12 payments, which they then collected each month from consumers. Consumers were charged a one-time set up fee of up to $250 and a monthly service charge up to $6.50.

  • The lawsuit alleges that the company stopped making payments for some customers in the fall of 2008 but continued to collect money through March 2009. The Attorney General’s office has received 89 complaints to date against American Escrow from Ohioans who said they lost money.

For the Ohio AG press release, see Escrow Company Ripped Off Ohioans, Cordray Says.

For the lawsuit, see State of Ohio v. American Escrow LLC, et al.

Texas Judge Gets Five Years Probation For Using Forged Signatures To Obtain Mortgage On Home Owned By Another

In Edinburg, Texas, The Monitor reports:
  • Elsa Municipal Judge Hilda Caceres was sentenced Wednesday to five years of probation for faking required signatures on a $227,000 loan application. An Hidalgo County jury took three hours Tuesday night to convict the suspended magistrate on four counts of forgery after a trial in which she maintained the charges amounted to nothing more than a personal dispute between her and a woman to whom she had sold an Elsa home.


  • The charges against her stemmed from a loan she and her ex-husband, Elsa City Commissioner Cain Caceres, took out in September 2009 to stave off foreclosure on another property they owned. Because the couple was already $700,000 in debt, they used an Elsa home they were in the process of selling to Elsa resident Nora Delgado as collateral.(1)

  • But prosecutors alleged throughout the six-day trial that Hilda Caceres never obtained Delgado’s consent and instead forged the woman’s signature on loan paperwork. She had an employee at the county judge’s office — where she also worked at the time — notarize the documents as if Delgado had signed them in her presence.

For the story, see Judge sentenced for forged signatures on loan documents.

For an earlier report on this story, see Grand jury indicts justice of the peace candidate on forgery charges:

  • Hidalgo County Sheriff Lupe Treviño has said his office’s investigation centers on a piece of real estate that Caceres shares with Nora Delgado and used as collateral for the loan. [...] The seven-count indictment filed Dec. 23 alleges Caceres forged Delgado’s signature on three documents on May 14: a deed of trust, an assignment of leases and rents, and an affidavit of identity.

(1) Presumably, ownership rights to the home in question had already been conveyed by the judge to the victim pursuant to some form of a deferred payment arrangement (ie. contract for deed, owner-financed sale, lease-purchase, or some other similar deal) at the time of the alleged forgeries.

AZ AG Tags City, Utilities w/ Fair Housing Suit Alleging Failure To Provide Service To Customer Due To His Religion, Failure To Accommodate Disability

From the Office of the Arizona Attorney General:
  • Attorney General Terry Goddard [] announced that his office has filed a lawsuit against the Town of Colorado City, Arizona, the City of Hildale, Utah, Hildale-Colorado City Utilities, Twin City Water Authority, and Twin City Power for alleged violations of the Arizona Fair Housing Act.

  • The suit follows an investigation by the Arizona Attorney General’s Civil Rights Division, which concluded that there is reasonable cause to believe that the Defendants discriminated against Colorado City resident Ronald Cooke by not providing water and other utility services because of his religion and by not accommodating his disability. Mr. Cooke is a former member of the Fundamentalist Church of Jesus Christ of Latter Day Saints (“FLDS”).

For the Arizona AG press release, see Goddard Files Fair Housing Lawsuit against Colorado City for Civil Rights Violations.

For the lawsuit, see State of Arizona v. Hildale-Colorado City Utilities, et al.

Homeowners Cautioned To "Look Before You Leap" When Dealing With Loan Modification Rackets Peddling Foreclosure Rescue Quick Fixes

In St. Paul, Minnesota, the Star Tribune reports:
  • Patricia Goff got taken not once, but twice, by shoddy loan modification companies promising to fix her mortgage woes for an upfront fee. Neither delivered and now Goff, 47, is facing foreclosure on the Rosemount home where she lives with her husband and 21-year-old son -- unless she comes up with $34,000 -- more than Goff earns in a year.


  • Hoping to prevent others from ending up like Goff, the Minnesota Home Ownership Center and dozens of partners are kicking off Look Before You Leap, a campaign designed to teach people how to spot foreclosure-related scams and let people know help is available for free from housing counselors around the state.(1)


  • [A]n event [was scheduled for last Tuesday] on the East Side of St. Paul, one of the areas hardest hit by foreclosure, featuring homeowners who have agreed to share their horror stories.

For the story, see Look Before You Leap: Out to quell foreclosure-related scam (The Look Before You Leap campaign warns of illegitimate loan modification companies. Event features homeowners who have agreed to share their horror stories).

(1) Reportedly, Look Before You Leap is part of a national public education effort called the "Loan Modification Scam Alert," which was started by the community development nonprofit NeighborWorks America with $1 million from Congress. According to the story, several cities around the country so far -- Los Angeles, Dallas, Miami, Atlanta, Las Vegas, Milwaukee and Kansas City, to name a few -- have created local versions of the campaign, NeighborWorks spokesman Steve Hermes said. Events are planned in Chicago, Des Moines and Omaha later this year, the story states.

Connecticut Court Strips Delinquent Developer Of Condo Association Control Amid Allegations Of Violations Of Unit Owners' Rights

In Hartford, Connecticut, Hartford Business reports:
  • A Hartford Superior Court judge has ordered a third party receiver to take possession of all accounts and records of the Bushnell on the Park Condominium Association, as the property's majority owners continue to face a host of legal and financial problems.

  • Superior Court Judge James T. Graham ordered June 25 that Trio Real Estate Services take immediate possession of all accounts and records of the association, according to Avon lawyer Jonathan Starble, who is representing nearly a dozen Bushnell on the Park condo owners who filed suit against the property's majority owners, alleging they have violated state condo laws.(1) Trio will report to the court and take actions to manage the affairs of the association, Starble said.

  • A key concern is whether Bushnell Regency, the company that owns 129 condominium units within the 180-unit complex at 100 Wells St. and is also facing foreclosure, has been paying its fees owed to the Bushnell on the Park Condominium Association. The suit alleges that the principals of Bushnell Regency have repeatedly refused to provide financial records to association members, and failed to collect dues or make necessary repairs to the building.

For more, see Bushnell on the Park Condominium Association placed in receivership.

(1) "It is the first time, to my knowledge, that a receiver has been appointed for a condo association in Connecticut," Starble reportedly said. "It is an extraordinary measure, but it was made necessary by extraordinary circumstances. My clients applaud the court's decision to provide an equitable temporary remedy for home owners who have been the victims of egregious breaches of fiduciary duty. As a result of the actions of Bushnell Regency, the Association finds itself in financial distress and with a building in disrepair. To be clear, this situation is not a result of the economy; it is a result of one company's actions."

Thursday, July 01, 2010

Countrywide Illegally Steered & Overcharged Blacks, Latinos In Home Financing Transactions, Says Illinois AG In Reverse Redlining Lawsuit

From the Office of the Illinois Attorney General:
  • Attorney General Lisa Madigan announced [] that she has filed a lawsuit against Countrywide, a subsidiary of Bank of America, for unlawfully discriminating against African American and Latino borrowers in home mortgage sales, in violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. The Attorney General filed her complaint in Cook County Circuit Court against Countrywide Financial Corporation; Countrywide Home Loans, Inc.; and Full Spectrum Lending, Inc., an arm of Countrywide that mostly sold subprime loans.

  • Madigan’s complaint alleges that the former mortgage giant steered African American and Latino borrowers into risky subprime mortgages more often than similarly-situated white borrowers. The complaint also alleges that minority borrowers paid more for mortgages across Countrywide’s product line, including its prime loans. Significantly, Madigan’s analysis of Countrywide loan data found that the racial disparities could not be explained by objective factors, such as borrowers’ credit scores or debt-to-income ratios.

For the rest of the Illinois AG press release, see Madigan Sues Countrywide For Discrimination Against African American And Latino Borrowers (Alleges African American and Latino Homeowners Paid More for Their Mortgages than They Should Have).

For the lawsuit, see People v. Countrywide Financial Corporation, et al.

NJ AG Scores $5M+ Consent Judgment Against Outfit Accused Of Upfront Fee Loan Modification Ripoffs

From the Office of the New Jersey Attorney General:
  • Attorney General Paula T. Dow announced [] that a New Jersey loan modification company and its owners have agreed to a judgment of $5,051,253 to settle civil charges they defrauded homeowners who sought help in avoiding mortgage foreclosure.

  • In addition to civil penalties of $5 million, corporate defendants Hope Now Financial Services Corp. and Hope Now Modifications LLC, of Cherry Hill, along with individual defendants Salvatore A. Puglia Sr. and Nicholas F. Puglia Jr., principals in the business, have agreed to pay the State $51,253 in attorney fees and investigative costs.


  • The lawsuit accused Hope Now Financial and the other defendants of charging already-distressed consumers thousands of dollars in upfront fees for loan modification services, but failing to provide any such services. [...] The complaint also charged that Hope Now Financial and the other defendants placed content on a Web site designed to deceive consumers into believing the company was affiliated with the non-profit Hope Now Alliance, which provides credit counseling and free foreclosure prevention.

For the entire NJ AG press release, see Attorney General Announces Settlement in Mortgage Fraud Case; Loan Modification Company, Individuals Agree to $5 Million Judgment.

Go here for Final Consent Judgment - Dow v. Hope Now Financial Services Corp., et al.

Go here for the original NJ AG lawsuit: Milgram v. Hope Now Financial Services.

Indiana AG Tags Another Loan Mod Outfit w/ Civil Suit; Alleges Retired Cop Seeking To Lower Payments Was Screwed Out Of $1K By Out-Of-State Operation

In Corydon, Indiana, the Louisville Courier Journal reports:
  • Larry Green thought he found the solution to his mortgage problem when he heard a radio ad. Green, a retired state trooper who has lived in his Harrison County home since 1983, wanted to lower his 9 percent interest rate to something more manageable. In April 2009, he heard the ad from California-based PFS Financial Corp. offering solutions for homeowners facing foreclosure. Although Green wasn't worried about foreclosure, he contacted the company and paid $1,000 up front, hoping they could help find a lower rate. "They seemed legit, but they weren't," he said.

  • On Tuesday, Indiana Attorney General Greg Zoeller filed a lawsuit on behalf of Green against PFS Financial for alleged violations of the Credit Services Organizations Act, the Mortgage Rescue Protection Fraud Act, the Deceptive Consumer Sales Act, and for lacking proper certification from the Indiana secretary of state.

  • Zoeller, who announced the lawsuit at a news conference in Corydon, said the company also failed to file a $25,000 surety bond that serves as insurance for clients when it doesn't perform services or provide a refund, something that Green has been seeking.

For more, see Indiana AG sues California mortgage consultant.

Foreclosed Homeowner Allowed To Stay Put Pending Litigation Accusing Wells Fargo Of Blindsiding Family With Home Sale During Loan Mod Negotiations

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • Tyree Brown, the homeowner who complained that Wells Fargo Bank blindsided him with a foreclosure during loan modification negotiations, has won the first round in court. District Court Judge Douglas Smith signed a preliminary injunction [], temporarily preventing the buyer from evicting Brown, his two sons and his fiancée from their northwest Las Vegas home.

  • JFS Management Group, which made the winning bid on the home at a February foreclosure sale, won't be allowed to take over the house at 1840 Spring Summit Lane and "flip it" for a profit while the case is pending. Brown and the buyer must negotiate a monthly payment amount or Smith will set the payment amount for them.

For more, see Homeowner gets foreclosure reprieve (Company barred from evicting tenant while case is pending).

Wednesday, June 30, 2010

Cuomo Tacks On 31 Outfits To Calling Card List Of Loan Modification Rackets Around The Country Being Reminded To Observe NY Law

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [] expanded his investigation into mortgage rescue companies that abuse New York homeowners. As a part of his ongoing investigation, Cuomo is sending over 30 additional cease and desist letters to mortgage rescue companies warning them to immediately end all misleading and illegal conduct. A total of 213 companies have now been put on notice.(1)

For the NY AG press release, see Attorney General Cuomo Expands Investigation Into Mortgage Rescue Companies That Abuse Homeowners (Cuomo Orders Over 30 Additional Mortgage Rescue Companies to Cease Fraudulent Practices; 213 Companies Have Now Been Put on Notice).

(1) Mr. Cuomo is reportedly the leading candidate for governor of New York in the state's upcoming election this November. Despite that, I'm quite confident that the timing of the recent 200+ friendly admonitions sent by his office to operators of loan modification rackets that may be screwing New York homeowners out of their hard-earned cash (especially those who plan to vote for governor but are undecided on who to support) is purely coincidental...

California AG Starts Probe In Effort To Ensure That Tenants In Foreclosed Houses "Aren't Rousted From Their Homes In Violation Of The Law!"

From the Office of the California Attorney General:
  • Attorney General Edmund G. Brown Jr. [] launched an investigation aimed at protecting the rights of the "forgotten victims" of the housing market collapse -- the tens of thousands of tenants facing eviction from buildings that have been foreclosed by banks.

  • "Tenants who live in properties in foreclosure are the forgotten victims of the collapse of the housing market," Brown said. "We'll fight every step of the way to ensure they aren't rousted from their homes in violation of the law." As a part of his investigation, Brown [] sent letters to 24 banks, loan servicers, private investors, and law firms demanding information about whether they are complying with federal, state, and local laws regarding foreclosed properties and their treatment of tenants.

  • More than 20 housing rights and public interest groups from across California have petitioned the Attorney General to take action, citing a "pattern of illegal conduct" and tenant harassment by banks, real estate agents and lawyers attempting to speed up evictions so that foreclosed properties can be sold.


  • In his letter, Brown requires banks, loan servicers, private investors and law firms to provide information by July 19 about their policies and procedures when dealing with foreclosed properties and current tenants. It specifically asks the recipients to outline how they "promote or preserve tenancies after foreclosure".

  • In May 2009, the federal government enacted the "Protecting Tenants at Foreclosure Act" giving tenants new protections, such as the right to stay in their homes for at least 90 days after receiving an eviction notice. While state and local laws also contain strong protections, unlawful evictions and harassment of tenants continue.(1)

For the California AG press release, and the text of his letter to the 24 alleged evil-doers, see Brown Investigates Whether Tenants' Rights Are Violated in Foreclosures.

For more on foreclosures and the rights of tenants, see National Law Center on Homelessness & Poverty: Staying Home: The Rights of Renters Living in Foreclosed Properties.

(1) According to the California AG, the rights of tenants in foreclosed homes and apartments include:

  • Tenants cannot be required to move out of their homes for at least 90 days following an eviction notice.
  • Tenants can insist on staying until the end of their leases. The only exception occurs when the new owner of a single-family home wants to move in.
  • Tenants can require banks and their agents to put all communication in writing.
  • Tenants are not obliged to accept "cash for keys" money to move out sooner than the law prescribes.
  • Harassment, such as improper entry into a person's home, shutting off water and lights, or changing the locks without a court order is illegal.
  • The above rights extend to tenants living in government-subsidized Section 8 housing, who may also have additional protections under state and local laws.

In addition, the state Attorney General points out that if a California city has a "just cause for eviction" law, a landlord must have a specific reason to evict a tenant, and foreclosure may not be recognized as a legitimate basis for eviction. Tenants should check local ordinances.

According to the California Attorney General's office, sixteen cities in California have just cause for eviction ordinances: Berkeley, Beverly Hills, East Palo Alto, Glendale, Hayward, Los Angeles, Maywood, Oakland, Palm Springs, Richmond, Ridgecrest, San Diego, San Francisco, Santa Monica, Thousand Oaks, and West Hollywood.

BofA Screw-Up In Handling Automatic Withdrawls To Be Applied Toward Mortgage Payments Leads To Loss Of Home, Says Foreclosed Owner In Lawsuit

In Jefferson County, Texas, The Southeast Texas Record reports:
  • A Groves woman has filed suit against a bank that she says failed to automatically withdraw mortgage payments from her account, causing her to face foreclosure and eviction. Charlenee Renee Hardee claims she first learned of the foreclosure on her house when she received an eviction notice posted on her door.

  • According to the complaint filed June 17 in Jefferson County District Court, Hardee had set up automatic withdrawals with defendant Bank of America in December that were supposed to go toward paying off her mortgage. However, she alleges Bank of America had not been withdrawing payments as scheduled, which Hardee claims she was unaware of until she received the eviction notice, the suit states.(1)


  • On April 10, Bank of America executed an appointment of a substitute trustee, who then held a trustee's sale on May 4 and conveyed the property to defendant Estatepro, Hardee claims. However, before the sale, Estatepro failed to supply Hardee with the required 30-day notice of default or with the notice of foreclosure sale, although it asserts that the required notices were sent, according to the complaint.

For the story, see Groves woman claims bank mistake led to foreclosure.

(1) In her complaint, Hardee is asking the court to declare the foreclosure, sale of her property and deed invalid, and is also asking the court to enter an order declaring her to be the rightful owner of the property, the story states.

Tuesday, June 29, 2010

NY AG's Recent Calling Card To Loan Modification Operators Around The Country Warns Of Personal Financial Liability For Officers Of These Outfits

In a cease and desist letter recently sent out to over 180 loan modification outfits, the Office of New York Attorney General Andrew Cuomo offered this friendly admonition to the firms, as well as to the individuals operating these rackets who mistakenly believe they can hide behind their corporate veils to shield themselves of personal financial liability for their actions:
  • Recently, the New York Supreme Court issued a favorable decision in one case filed by this Office, finding that one of the largest foreclosure rescue companies and its president had violated Section 265-b as well as General Business Law §§ 349 and 350.

  • Specifically, the Court found that the company violated Section 265-b by charging illegal, upfront fees for its loan modification services, failing to provide contracts in the language of its customers, especially Spanish, and failing to provide homeowners with the legally required notice of their right to cancel within five business days. The Court also ruled that the company made numerous false claims in its advertisements, including misrepresenting the number of homes it had saved, falsely claiming to have a 90% to 100% success rate, falsely claiming to be "licensed" by a government agency, and falsely claiming that it was affiliated with "legal experts."

  • The decision holds the company's president personally liable for engaging in fraudulent and illegal acts, and permanently prohibits the respondents from engaging in the illegal, fraudulent and deceptive business practices and false advertising described in OAG's lawsuit.

  • I encourage you to review your company’s practices and, where applicable, to cease and desist engaging in any unlawful, fraudulent, or deceptive practices. If you have any questions, please do not hesitate to contact our office at 212-416-8300 or 212-416-8250.

Go here for the NY AG's cease and desist letter.

Cleveland Housing Judge Hands Out $13M In Fines To Pair Of Out Of State Owners Of Dilapidated Real Estate

In Cleveland, Ohio, The Cleveland Plain Dealer reports:
  • Cleveland Housing Judge Raymond Pianka has fined two out-of-state real estate companies about $13 million -- the largest collective fines the court has imposed -- for their persistent failure to fix derelict property conditions. In a pair of blistering decisions, Pianka fined Interstate Investment Group, LLC $11.9 million and Paramount Land Holdings, LLC more than $1 million. The two are sister companies in Gilbert, S.C.

  • He gave the companies until July 19 to pay up. Unpaid fines will be ordered converted to civil judgment so that dollars can be collected and sent to the city's general fund. The decisions covered 13 properties, some that had houses so dilapidated that the city demolished them. Both Paramount and Interstate pleaded no contest. Company officials could not be reached for comment [].

  • In the Interstate ruling, Pianka criticized not just the companies for their offer to contribute no more than $100,000 toward resolving their property violations -- but Cleveland for recommending vastly lower fines than the maximum allowed by law. "Defendant's (and the City's) proposed sentences would allow Defendant to treat its neglect of its properties and the laws of the City as a mere cost of doing business and send the message to others that they too may benefit from wholesale disregard for the laws of the City," he wrote.

For more, see Cleveland Housing Court Judge fines 2 real estate firms about $13 million for neglect.

Struggling HOAs Use "Reverse Foreclosure" To Mitigate Problems Due To Foot-Dragging Lenders Reluctant To Foreclose On Underwater Condos

Lexology reports on a court ruling that came out earlier this year in Florida on the use of so-called "reverse foreclosures" by condominium and homeowners' associations to stick foot-dragging, foreclosing lending institutions with the title to unwanted underwater units. By doing so, the HOAs put those lenders on the hook for the periodic maintenance payments due to the HOAs that they (the lenders) were looking to avoid paying by failing to vigorously prosecute their foreclosure actions in court:
  • In a recent ground-breaking state court decision in Florida, a state particularly hard hit by residential mortgage foreclosures, one court has upheld the HOA’s right to recoup these past due assessments and costs from the lender, despite the fact that the lender has yet to take back title to the delinquent property. In HSBC Bank USA, et al. vs. Keys Gate Community Association, Inc., A Florida Non Profit Corporation, et al., the homeowners’ association successfully introduced a new procedure, dubbed areverse foreclosure.”

  • In Keys Gate Community Association, the homeowners’ association filed and foreclosed its own claim of lien on the delinquent property and acquired title to the property through its own foreclosure sale in April 2007. However, the home-owners’ association could not sell the property because of the lender’s senior priority mortgage. In June 2007, the lender filed its foreclosure against the delinquent property. Yet, two and a half years later, the lender had not completed the foreclosure process. As a last resort to move the case forward, the homeowners’ association set for hearing a summary judgment motion against itself, and asked the court to issue partial summary judgment in favor of the lender and to immediately grant the lender’s request to take title to the unit as stated in the lender’s foreclosure complaint. As part of this procedure, the association waived its rights to the property, and as the current unit owner, waived its rights to a public sale.

  • The court granted the homeowners’ association’s motion, and directed the Clerk of Court to issue a certificate of title immediately transferring ownership of the property to the lender, thus triggering the lender’s requirement to pay its share of past due assessments, legal fees, court costs and all assessments going forward.

  • It is important to point out that the reverse foreclosure procedure can only be filed after a home-owner is out of the picture and the home is legally the property of the homeowner’s association.

  • The use of this new legal strategy saved the Keys Gate Community Association a minimum of eight months or more of bad debt write-offs. Furthermore, given the current logjam of foreclosure cases pending in many state courts. clerks of court have enthusiastically endorsed this new procedure as an effective means of reducing their backlogs. Until the financial crisis subsides and the housing market regains steam, undoubtedly many homeowners’ associations will increasingly use this procedure in their quest to force lenders to take title to financially upside down properties much faster than the lender may have anticipated.

Source: Some lenders may soon be forced to follow through with residential foreclosures. (subscription required; for non-subscribers, TRY HERE - then click link for the story).

For another post on attacking foot-dragging lenders reluctant to foreclose on underwater condos and homes in a homeowners' association, where they are challenged to either take title to the financially upside down unit or release their mortgage, see Foot-Dragging Mortgage Lender Yields To HOA Demand; Abandons Foreclosure On Unwanted Collateral, Releases Security Interest In Condo Unit.

Monday, June 28, 2010

Judge Unsympathetic To "Poor Business Decisions" Defense As Title Agent Gets 11+ Yrs For Looting Escrow Cash; 15 Refin'cing Homeowners Left w/ 2 Loans

In Fort Wayne, Indiana, The Journal Gazette reports:
  • The courtroom was packed Friday to see what sentence Joseph Garretson would receive for running what state officials called one of the worst fraud cases they had seen. Allen Superior Court Judge Fran Gull ordered the former title broker to spend 11 1/2 years in prison and to pay more than $3.4 million in restitution. Friday’s sentence came more than five months after Garretson, 37, pleaded guilty – admitting to conversion or misappropriation of title insurance escrow funds, corrupt business influence and unlawful loan origination activities.


  • Along with numerous letters from family and friends, Garretson’s sister, Jodi, and his grandmother-in-law spoke on Garretson’s behalf. Most, as well as Garretson himself, characterized his conduct aspoor business decisions,” made to keep up a certain lifestyle as the economy and mortgage industry tanked.(1)


  • [Judge] Gull listened to victim after victim describe their anxiety over the possibility of losing their homes.(2) [...] So far, Garretson has paid less than $60 in restitution, which, if paid at that pace, would take more than 28,000 years to make the victims whole, [Allen County Deputy Prosecutor Tim] McCaulay said.

For the story, see Broker given 11.5 years in fraud scheme.

See also, The News-Sentinel: Broker gets 11.5 years for $3.4 million mortgage fraud scheme.

(1) Reportedly, Garretson said he was a victim of a shakedown and was adamant that he gave much of the money taken, about $1.8 million, to Todd Leary, former Indiana University basketball star and radio commentator, who faces 17 felony counts alleging his involvement in the title fund scheme. Leary was arrested in February, days after Garretson’s guilty plea and minutes before he was to call the IU-Purdue basketball game at Assembly Hall in Bloomington. According to court documents, Garretson told prosecutors Leary pressured him for money, threatening to reveal the scam, the story states.

(2) According to this story, several of Garretson's victims described him as a friend whom they trusted to refinance their home mortgages with title insurance, settlement and escrow services through Fort Wayne Title. The plan Garretson sold was to use an escrow agent to immediately pay off the mortgages using money derived from the refinancing. But Fort Wayne Title did not pay off the mortgages, pocketing the funds and using fraudulent statements to fool the homeowner into a false sense of security. The scheme resulted in net losses to homeowners of more than $2.7 million. It left 15 victims with two mortgages on their plate, according to Secretary of State Enforcement Officer David Maxwell.

Reportedly, Judge Gull was visibly moved, and said she was troubled by the stories the victims told about Garretson's actions, saying he “wreaked havoc” for his own benefit. Gull recalled one victim saying she could not plant flowers at her home because it would inevitably be taken from her for non-payment. “I'm just a lowly criminal court judge, Mr. Garretson, and I don't deal a lot with financial crimes,” Gull said. “I have a front-row seat to some of the most horrible crimes in humanity. What you've done here is horrible.”

BofA To Rescind Foreclosure Sale After Media Intervention Attracts Attention; Jerked-Around Homeowner Says She'll Believe It When She Sees It

In Wheat Ridge, Colorado, KDVR-TV Channel 31 reports:
  • The Wheat Ridge woman who had the Bank of America sell her house out from under her could be getting her home back. On Thursday FOX31 News first reported 61-year-old Stephanie Martin's story. She's lived in her home for 20 years and now takes care of her 84-year-old mother and 7-year-old granddaughter. Martin never had any trouble making her house payments, until last June when her legs were crushed in a horrible accident at the Target store where she worked.

  • She applied for and was accepted into a Freddie Mac program that lowered her mortgage payments and stopped any foreclosure proceedings. [...] But, even though her participation in the program was supposed to stop all foreclosure proceedings, Bank of America earlier this month sold her house at a foreclosure auction, to itself.

  • Martin says they never sent any warning or notification. And she found out about the foreclosure only after her lawyer coincidentally saw the public notice at the courthouse.


  • For nearly a month, Martin unsuccessfully tried to get some answers or help from the Freddie Mac program and the bank. After she contacted FOX31 News and KHOW Radio Talk Show host Peter Boyles, her case received attention. She and her lawyer say the Bank of America called them Friday and said they are going to rescind the sale and give Martin her house back. They indicated they will also work with her to keep the lower house payments. Martin is relieved, but says after all she's been through, she'll believe it when she sees it. "I hope this is true because I've been told so many things."

For the story, see: Bank to return woman's home sold without notice.

Woman Cops Plea In "Rescue" Racket That Clipped Homeowners Of $35-40K; Three Felonies To Be Reduced To Misdemeanors If Scammer Coughs Up Restitution

In Santa Barbara County, California, the Lompoc Record reports:
  • The manager of a Los Angeles-based foreclosure consultation business which had a Santa Maria office, entered a no-contest plea this week to eight counts of committing prohibited foreclosure practices. Irma Diaz, 41, of Hacienda Heights, entered the plea Thursday in Santa Barbara County Superior Court in Santa Maria.

  • Prosecutors had charged Diaz with eight felony counts, but Judge Edward Bullard permitted her to plead no contest to five misdemeanors and three felonies, which could all be reduced to misdemeanors if she follows the judge’s terms. “Over our objection, he reduced them to misdemeanors,” said Senior Deputy District Attorney Jerry Lulejian. Sentencing was postponed until Jan. 6 to allow Diaz time to make restitution to the victims.(1)


  • Lulejian has said all but one of the victims are from Santa Maria, and the crimes happened here. She took between $35,000 and $40,000 from the victims in all, Lulejian said, which she didn’t keep directly but that instead went to the organization she is a part of. [...] Lulejian said that he believes Diaz should have been convicted of all the felonies. “We want to scare people away from doing this kind of activity in the community,” he added.

For the story, see Woman pleads no contest in foreclosure fraud case.

For an earlier post, see Manager Of Foreclosure Consulting Outfit Bagged & Held On $1M Bail; Accused Of Pocketing Upfront Cash From Homeowners In Or Nearing Mortgage Default.

(1) Apparently, the judge has given Diaz six months before being sentenced to come up with the needed cash to buy down the three felony convictions. Hopefully, someone will keep an eye on her to see that she doesn't victimize anyone else to come up with the loot needed for the victim restitution.

Sunday, June 27, 2010

Philly Feds: F'clsure Rescue Operator In Sale Leaseback, Rent Skimming Scam Stalled Lenders w/ Bogus Bankrptcy Filings, Stiffed IRS On Illegal Profits

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
  • Gennaro Rauso, who owned and operated a real estate management company that purported to help financially distressed homeowners with their foreclosure problems, was charged [] by information with several mortgage fraud related offenses. The information alleges that as part of his scheme, Rauso took advantage of desperate homeowners with the promise of staying in, or saving, their homes when, in fact, he was using them to defraud the mortgage holders.(1)
  • According to the information, between January 2005 and December 2008, Rauso owned and operated a real estate management company, D&B Property Investors, to carry out a scheme to defraud mortgage companies out of hundreds of thousands of dollars in mortgage payments. Rauso sought out homeowners who were facing immediate foreclosure on their homes and offered to help them avoid foreclosure. In a flyer mailed to these homeowners, Rauso claimed that he could help homeowners fight the mortgage companies on their behalf, while at the same time helping them to rebuild their credit so they could keep their home. Rauso also boasted that even if their home were lost to foreclosure, he could still keep them in their home for an additional 12-18 months after the sheriff’s sale.
  • Once a homeowner agreed to participate, Rauso had the homeowner transfer the title of the home over to him for a nominal sum. Rauso then had the homeowner sign a lease, making the homeowner a tenant who paid rent to Rauso. He then delayed and obstructed the foreclosure process by, among other things, filing federal bankruptcy petitions.(2)
During this time when foreclosure was delayed, Rauso collected monthly rent payments from the homeowners, but made no payments to the mortgage companies. Ultimately, Rauso used more than 200 homeowners and their properties in his scheme to defraud mortgage companies, resulting in Rauso pocketing at least $400,000 in diverted or lost mortgage payments.
  • In addition to the mortgage fraud scheme alleged in the information, Rauso is also charged with willfully failing to file a tax return on behalf of D&B Property Investors, defrauding the government of taxes owed on more than $1.6 million in income.(3)
For the U.S. Attorney press release, see New Jersey Man Charged In Foreclosure Rescue Scam.

For the charging document detailing the allegations in this case, see U.S. v. Rauso.

(1) Rauso has also been the target of at least one civil lawsuit, filed in a U.S. Bankruptcy Court in Philadelphia, brought by a homeowner/couple in a successful attempt to unwind/undo a sale leaseback, foreclosure rescue equity stripping ripoff Rauso perpetrated on them.

See Fowler v. Rauso (aka In re Fowler), Chapter 13, Bky. No. 07-11692ELF, Adv. No. 07-00139ELF (Bankr. E.D. Pa. March 3, 2010).

For a summary of the court ruling in the civil lawsuit, see Pennsylvania B'kruptcy Court Voids Sale Leaseback Scam; Victimized Homeowners' Continued Possession Leads To Invalidation Of Subsequent Deed, Mortgage.

(2) See Final Report Of The Bankruptcy Foreclosure Scam Task Force, a report by the U.S. Bankruptcy Court in Los Angeles, California that identifies various kinds of foreclosure scams that are perpetrated through the abuse of the Federal bankruptcy system.

(3) The full set of charges Rauso faces are:
  • 18 U.S.C. §§ 1341 (mail fraud - 1 count),
  • 18 U.S.C. § 157 (bankruptcy fraud - 1 count),
  • 18 U.S.C. § 1029(a)(5) (access device fraud - five counts),
  • 12 U.S.C. § 1709-2 (equity skimming, aka rent skimming, - 4 counts),
  • 18 U.S.C. § 1344 (bank fraud - 1 count),
  • 26 U.S.C. § 7203 (failure to file federal income tax returns - 4 counts),
  • 26 U.S.C. § 7206(1) (filing a materially false federal income tax return - 1 count),
  • 18 U.S.C. § 2 (aiding and abetting),
  • Notice of forfeiture.

MD Feds Obtain Guilty Plea From Loan Officer Who Screwed Homeowners By Stripping & Pocketing Their Home Equity In Sale Leaseback F'closure Rescue Scam

In Baltimore, Maryland, The Annapolis Capital reports:
  • An Annapolis loan officer admitted [] he promised to help two homeowners avoid foreclosure, only to strip them of their equity and leave them homeless. James Dan, 45, faces up to 20 years in federal prison when sentenced Sept. 2 in U.S. District Court in Baltimore. Under a plea agreement - which involved a guilty plea to one count of conspiracy to commit wire fraud - he is allowed to appeal any sentence longer than three years and five months. Similar charges are still pending against Dan's alleged accomplice, James Fox, 40, of Crofton. Prosecutors contend the two cost homeowners $262,059 and their banks at least $308,612.


  • Beginning in 2006, Fox would identify homeowners who had equity in their homes, but who could not afford their mortgage payments and were at risk of losing their homes to foreclosure. Fox, sometimes in Dan's presence, told potential victims that they could "rescue" them and save their houses, prosecutors said.

  • In the scheme, the owners would transfer their homes to Dan, who had excellent credit and could obtain a new mortgage. Dan would then make the payments for six months to a year while the original owners continued to live in the houses and worked to "repair" their credit. After the agreed-upon time, the original owners were to refinance the property and reacquire it. Prosecutors said Dan knew the scheme would rarely, if ever, work in favor of the original owners.

For more, see Loan officer guilty in foreclosure scheme (Promised to help 2 owners, but left them homeless).

"Morgan Stanley Knew They Were Making Loans Designed To Fail!" Declares Massachusetts AG After Scoring $102M Settlement In Subprime Mortgage Case

In Boston, Massachusetts, The Boston Globe reports:
  • Attorney General Martha Coakley has won a $102 million settlement from Wall Street’s Morgan Stanley & Co., money that will help more than 1,000 Massachusetts homeowners who are in foreclosure or saddled with unwieldy subprime mortgages.

  • The deal, the first of its kind in the country with Morgan Stanley, followed an investigation by Coakley’s office into the firm for fueling subprime mortgages written by New Century Financial Corp., a large California lender that went bankrupt in 2007. She said Morgan Stanley knew that New Century was making predatory loans, but continued to provide the lender billions of mortgage dollars by buying the loans to turn them into securities.

  • Morgan Stanley “uncovered signals pretty early on that the lending practices of New Century were not sound,’’ Coakley said at a press conference yesterday. “Morgan Stanley knew they were making loans designed to fail.’’


  • Under the agreement, $58 million would go to cut the principal due on New Century loans for about 600 borrowers, as well as to assist 400 other New Century borrowers who have already lost their homes in foreclosure. Another $23 million would go to the state pension fund, which invested in the securities packaged by Morgan Stanley; those securities went bad when the mortgage market collapsed. The Commonwealth will get another $19.5 million in the settlement.(1)

For more, see Mass. wins $102m in subprime loan case.

For the Massachusetts AG press release, see Morgan Stanley to Pay $102 Million for Role in Massachusetts Subprime Mortgage Meltdown Under Settlement with AG Coakley’s Office.

(1) For the terms of the settlement agreement, see In re: Morgan Stanley & Co. Incorporated: Assurance of Discontinuance.

Federal Appeals Court To Review Ruling Lifting Statewide Injunction On All BofA Foreclosures In Utah

In St. George, Utah, KCSG-TV Channels 14, 16 reports:
  • A Notice of Appeal to Federal Judge Clark Waddoups court order vacating an Injunction against Bank of America and its subsidiary ReconTrust Company halting all foreclosures in Utah was filed Friday, June 25, 2010 by St. George attorney John Christian Barlow. Barlow told KCSG News he was “troubled by Court ruling but unrelenting in pursuit of redress for his client (Cox) and other homeowners who have become victims of mortgage lending gone mad.”


  • The David and Goliath legal battle over federal versus states-citizens rights is headed to the 10th Circuit Court. Judge Waddoups' Memorandum of Explanation in support of vacating a statewide Preliminary Injunction halting all foreclosures by the Bank of America only served to raise more questions.

For more, see Notice of Appeal Filed and Stay of Court Order Vacating Injunction Stopping Bank of America Foreclosures in Utah Requested.

(1) According to the story, some of the questions raised by vacating the statewide injunction temporarily jamming all BofA foreclosure actions are:

  1. Why is the judge's ruling at variance with his previous rulings this year as noted in a Letter to Judge Waddoups submitted to the court June 10th, 2010 by the Plaintiff's counsel John Christian Barlow, Esq. and E. Craig Smay, Esq. and posted June 21, 2010 in the court docket, after the Ruling and Memorandum of Explanation.
  2. Why did Judge Waddoups essentially brush aside the Plaintiff’s pleading that included the Supreme Court decision Cuomo vs. Clearing House Association in which the Court said...“If a State chooses to pursue enforcement of its laws in court, its targets are protected by discovery and procedural rules” meaning a state has a right to enforce its own laws against national banks.
  3. Why hasn’t Judge Waddoups recused himself from all Bank of America or ReconTrust Company related cases since he was a senior partner in the law firm Parr, Waddoups, Brown, Gee & Loveless now Parr, Brown, Gee & Loveless that represented the Bank of America in Utah Fourth District Court, Case No. 070402786 before he took the bench. And, the law firm continues to represent the Bank of America and its subsidiaries. According to the Code of Conduct for US Judges, a judge should recuse himself when there may be a conflict of interest.
  4. Why shouldn’t Judge Waddoups recuse himself from any case in which his old law firm represents either the plaintiff or the defendant until he takes full distribution of his retirement fund with the law firm as disclosed in Judge Waddoups most recent Financial Disclosure Statement that shows he only took a partial distribution of his retirement from the firm's 401K.

False Claims Act Lawsuits Say MERS' Mortgage Holder Status A Fraudulent Attempt To Dodge Payment Of Filing Fees, Taxes When Home Loans Are Assigned

In Reno, Nevada, The Reno Gazette-Journal reports:
  • A Reno law firm has filed two lawsuits alleging fraud against a nationwide mortgage registration firm, and if those legal actions prevail, the firm and dozens of mortgage lenders could be liable to Nevada’s counties for billions of dollars in compensation and penalties.

  • Law partners Robert R. Hager and Treva J. Hearne, with Reno attorney Mark Mausert, have filed a case in Nevada and one in California against Mortgage Electronic Registration Systems, which operates an electronic registry of mortgage loans in the United States. MERS serves as the mortgagee of record for lenders, investors and loan servicers in county land records, but doesn’t own any mortgages.

  • By using the firm’s names on deeds and other paperwork, the lenders are able to avoid county recording fees, according to the firm. MERS has no financial interest in the loans, but is listed as actual owner or surrogate for the owner on millions of deeds of trust, even as individual mortgages are repeatedly traded and packaged inside of mortgage pools. The lawsuits argue that listing the firm as the owner of mortgages in which it has no interest in order to avoid filing fees and taxes that are legally required constitutes fraud.

  • We look forward to holding these financial institutions and foreclosure mills responsible for their actions that have deprived the states and counties of much-needed revenue,” said Hager.(1)

For more, see Mortgage registration firm sued for fraud, billions in penalties in Nevada, California.

(1) According to the story, the lawsuits, which were filed last year, removed from under seal this year and amended this month, are brought under a statute called the false claims act. That law allows citizens to file complaints concerning fraud and waste on behalf of governments. The lawyers filed the suits on behalf of individuals, the two state governments and Nevada and California counties. In Nevada, the false claims act allows for triple damages and penalties of $5,000 to $10,000 per individual offense. The governments would collect most of the damages if the suit is decided in favor of the plaintiffs and damages are assessed. Hager said taking the 5-year statute of limitations and other factors into account, MERS and its members face a potential judgment of $6 billion to $12 billion in Nevada alone, the story states. Reportedly, there are 47 lenders listed as co-defendants in the lawsuit, including Countywide Home Loans Inc., Bank of America, Citimortgage Inc., GMAC Mortgage, Wells Fargo, N.A. and J.P. Morgan Mortgage.