Saturday, July 10, 2010

Officials Threaten Tenants With The Boot Due To Landlord's Failure To Register Housing Rentals With City

In Elmira, New York, the Star Gazette reports:
  • As part of Elmira's continuing battle against neighborhood blight, city officials will post notices on four rental properties Monday saying the homes cannot be occupied because their owners haven't registered with the city. Tenants of the affected residences were notified that they would be prohibited from living in their apartments in 30 days, City Manager John Burin said Friday. The properties [...] will be revisited Monday and posted a second time to notify occupants that they must vacate, he said.

For more, see Elmira moves to shut down 4 rental properties (Managers have not registered with city).

Insurance Agent Negligent For Failure To Renew Windstorm Policy Shortly Before Hurricane; Found Liable To Owner For $29K+, Owner's Attorney For $165K

In Jefferson County, Texas, The Southeast Texas Record reports:
  • Nashib Investments landed a $29,550 jury award [...] for damages to its property on Major Drive following Hurricane Ike. However, the company also witnessed jurors award $165,000 to its attorney.

  • Last August, Nashib Investments filed suit against Y.K. Man and his insurance agency, alleging the agent negligently allowed the company's windstorm insurance policy to lapse days before Hurricane Ike made landfall on Sept. 13, 2008. From Sept. 8, 2009, to Sept. 15, 2009, TWIA placed a moratorium on writing insurance policies, but Nashib Investments claims it had authorized Man to renew the policy two weeks earlier, court papers say.


  • Jurors found Man negligent in failing to expedite renewal of Nashib Investments' Texas Windstorm Insurance Policy, awarding the company $9,500 in actual damages to its property and $20,000 in exemplary damages. Jurors also awarded Nashib Investments' counsel, Houston attorney James Amaro, $165,000 in attorney's fees and court costs.

For the story, see Jury awards 5 times more to attorney than plaintiff.

GPS System Used To Track Appliances Ripped Off From Vacant Foreclosed Homes

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:
  • You never expect your house to get broken into, but when a burglary happens, it can be a scary thing. And expensive too. The good news is property crimes in the Valley are down. However, one type of burglary is on the rise and hitting places you wouldn't expect, empty, foreclosed homes. One victim emailed us to investigate and we found some local realtors are using some new technology to protect themselves.


  • While Metro tracks the crime patterns by location, [real estate investor Zolt] Szorenyi is also doing some tracking of his own. "That's going to show you where the GPS is located," Szorenyi shows Action News a web site with a GPS tracking system. He's installed the devices in all his appliances at his foreclosed properties.

  • "You'd have to put a GPS on a rock if you don't want it to go. They'll steal everything," he says. He can see where his appliances are on this web site and it alerts him if they're being stolen. "Basically going to tell me exactly where the location is and I can zoom in on that," he explains. He won't show us where he puts the GPS' but says they're wallet sized and have a motion sensor.

  • He tested one out for Action News. He moved a stove in one of his vacant properties. In under a minute, an email alert comes in. Then, his phone rings. An automated voice sounds from his speaker phone saying, "Dewalt mobile lock has just had an alarm." The system isn't cheap as it costs Szorenyi $400 per unit. He thinks it's saving him money in the long run.

For the story, see Homeowner puts GPS device on appliances to help stop theft.

Foreclosed Homeowner Charged With Endangering Neighbors After Being Found Living In Former Home Running Portable Generator

In Upper Darby, Pennsylvania, The Delaware County Daily Times reports:
  • A man was arrested after allegedly endangering neighbors with a portable running generator in a third-floor bedroom of a vacant house. John Siu, 61, the former owner of the house on the 7200 block of Hazel Avenue, Upper Darby, is facing charges of recklessly endangering another person and criminal trespass.

  • This is a twin home,” police Superintendent Michael Chitwood said. “He could have killed the three people next door and himself from carbon monoxide.” According to Chitwood, Siu was evicted in April due to foreclosure. “He gave an address in Springfield, but apparently has no place to live,” Chitwood said. “Neighbors called to report smelling something and police and firemen located the generator. “Officers on the scene reported a strong odor of exhaust fumes inside the residence with fire personnel determining the exhaust was leaking into the adjoining house. Innocent people could have died from his stupidity.” Siu was jailed in lieu of posting 10 percent of $5,000 bail that stipulated a stay away order from the residence.

Source: Police: Man endangered neighbors with generator.

Friday, July 09, 2010

Homeowners Continue To Be Submarined By Lender Foreclosures Despite Being Promised Loan Modifications

ProPublica reports:
  • In May, we published a story about how disorganization at the big banks has led to mistaken foreclosures: homeowners were under review for a modification, but were suddenly foreclosed on because of a communication breakdown within the mortgage servicer. A recent survey of California housing counselors demonstrates that’s a widespread problem, at least in the Golden State.

For more, see Survey: Homeowners Working with Servicers Often Blindsided by Foreclosures.

See The Press Democrat: Frantic bid to save home and Complaints soar over loan modification misinformation for stories this week about a Santa Rosa, California couple who say they were submarined by a Bank of America foreclosure sale after allegedly being told that they qualified for a loan modification.

Alleged Loan Modification Rackets Wanted In Other States Now Operating In Washington Targeting Financially Struggling Hispanic Homeowners

In Yakima, Washingtom, KIMA-TV Channel 29 reports:
  • KIMA uncovered a scam preying on our area's Hispanic community. They tell families they can save their homes, with little to no money up front. But these loan modification companies end up being a con. And we found out it has pushed families deeper into debt, and in most cases, into foreclosure. "They get fliers at home or phone calls promising they won't lose their home and they will help them. And it ends up being a fraud," said Isabel Garcia, Single Family Housing Program manager with Catholic Charity Housing Services.


  • Two of the companies allegedly scamming people with loan modification loans are National Modification Service, and Lincoln Lending Services, LLC. Several state government officials are now taking a closer look at their lending practices. KIMA tried contacting both, but their phone numbers either didn't work or didn't exist.


  • Several state attorneys general are now suing these bogus loan modification companies. The AG's say the companies violated the Foreclosure Rescue Fraud Prevention Act and are seeking a temporary injunction against them until a judge decides their case.

For the story, see Home Refinance Scammers Target Hispanic Community.

New State Disclosure Law Targets Colorado Short Sale Flippers

In Denver, Colorado, the Denver Real Estate Examiner reports:
  • Governor Bill Ritter just signed HB 10-1133 into law, a bill that makes marked changes to the Colorado Foreclosure Protection Act. This applies to you if you are a real estate investor who buys and flips short sale properties. The bill’s target is the “short sale flipper.” So, for the investor who plans to sell a short sale property within 14 days of purchase, the new law will require you to inform all parties involved in the transaction (including all lenders) about both transactions (including the profit you will make).

For more, see Seller beware. New Colorado law adds oversight to short sale flips.

Thursday, July 08, 2010

Federal Judge Issues Arrest Warrants For Foreclosure Rescue Scammers For Failing To Appear At Sentencing In Sale Leaseback, Equity Stripping Ripoff

In Honolulu, Hawaii, the Honolulu Star Advertiser reports:
  • A U.S. district judge issued two arrest warrants yesterday for an Oahu couple convicted of mortgage fraud after they did not show up for their sentencing. The couple—John Dimitrion and Julie Anne Baldueza Dimitrion—were scheduled to be sentenced on charges that they ran a fraudulent mortgage scheme that almost left three Oahu families homeless.


  • Under a plea agreement struck in April 2009, John Dimitrion pleaded guilty to one charge each of conspiracy to commit mail fraud, wire fraud, money laundering and making false statements on loan applications. He faced a maximum of 45 years in prison and $1.5 million in fines. Julie Anne Dimitrion entered into a similar deal, pleading guilty to everything her husband did, except wire fraud. She faced a maximum of 30 years behind bars and $1.25 million in fines.

  • The Dimitrions admitted to offering to help homeowners facing foreclosure by arranging fraudulent loans for straw buyers for the homes. The couple—owners of Mortgage Alliance LLC and Global Financial Holdings LLC—then drained equity from the properties and tried to evict the homeowners. The Dimitrions also skimmed off thousands of dollars in processing fees from the loans.

For the story, see Mortgage fraud couple wanted by law (Warrants are issued for John and Julie Anne Dimitrion, who failed to show for sentencing).

See also, KITV-TV: FBI Hunt For Fugitive Married Couple ($1,000 Reward Offered For Capture).

For an earlier post on this story, see Hawaii Feds Ring Up 2 More Guilty Pleas In Sale Leaseback Foreclosure Rescue Scam; Civil Case Continues As One Victim Seeks To Recover Property Title.

Mortgage Elimination Scammers' Claim That Judge Erred By Failing To Assign Counsel After They Insisted On Self-Representation Falls On Deaf Ears

In San Francisco, California, The Oakland Tribune reports:
  • A federal appeals court issued a stinging decision Tuesday upholding the convictions of a pair of Bay Area scam artists who made millions by claiming they could help people eliminate mortgage debts. Kurt Johnson, of Sunnyvale, and Dale Scott Heineman, of Union City, who operated the Dorean Group in Union City and Newark in from 2003 to 2005, were convicted in 2007 of one count each of conspiracy and 34 counts each of mail fraud. Johnson was sentenced in 2008 to 25 years in federal prison, Heineman to 21 years and eight months.

  • "They were adamant in their desire to represent themselves and assert an absurd legal theory wrapped up in Uniform Commercial Code gibberish," 9th U.S. Circuit Court of Appeals Judge Barry Silverman wrote in the ruling. "Both defendants were examined by a psychiatrist and found to have no diagnosable mental disorder."

  • The trial judge held several days of hearings in which Johnson and Heineman were extensively advised of the risks of self-representation, Silverman noted. "The judge practically begged them to accept counsel, but they refused," he wrote. On appeal, they claimed the trial judge should have forced attorneys upon them because of what they described as their own "nonsensical" legal "antics" during the trial.(1)


  • Prosecutors said Johnson and Heineman victimized at least 20 lenders and as many as 3,500 homeowners across 35 states with their idea that borrowers could ditch their mortgage debts through a legal and bureaucratic process. Homeowners first transferred their interest in their properties to a trust, naming Johnson and Heineman as trustees. The pair would then send demand notices to the lenders questioning the validity of their lending practices.

  • When banks failed to respond or "prove" their lending practices were valid, the pair recorded bogus documents with county clerks' offices supposedly establishing that the homes were no longer under a mortgage. The homeowners then refinanced with different banks using their supposedly unencumbered homes as collateral.

For more, see Mortgage scam artists' convictions upheld.

For the court ruling, see USA v. Johnson, No. 08-10147, No. 08-10258 (9th Cir. July 6, 2010).

(1) Judge Silverman prefaced his ruling with the following observation about these characters (bold text is my emphasis, not in the original text):

  • Defendants Kurt F. Johnson and Dale Scott Heineman were indicted for conspiracy and multiple counts of mail fraud related to their illegitimate debt-elimination business. They were adamant in their desire to represent themselves and assert an absurd legal theory wrapped up in Uniform Commercial Code gibberish. Both defendants were examined by a psychiatrist and found to have no diagnosable mental disorder. Thereafter, the district court conducted Faretta hearings spanning several days in which the defendants were extensively advised of their right to counsel and the disadvantages of self-representation. The judge practically begged them to accept counsel but they refused. The district court found that the defendants were competent to represent themselves and that such was their constitutional right.

  • Defendants now contend that Indiana v. Edwards, 554 U.S. 164 (2008), decided by the Supreme Court after their trial concluded, required the district court to terminate their self-representation because of what they describe as their “nonsensical” legal “antics” after the trial began. They say they may have been competent to stand trial but not to represent themselves.

  • The record clearly shows that the defendants are fools, but that is not the same as being incompetent. Under both Faretta and Edwards, they had the right to represent themselves and go down in flames if they wished, a right the district court was required to respect.

  • There was no legal or medical basis to foist a lawyer on them against their will. We also hold today that there was no basis for the recusal of the district judge nor error in any of the jury instructions.

Judge Silverman indicated in a footnote that a Faretta hearing (referring to the U.S. Supreme Court decision in Faretta v. California, 422 U.S. 806 (1975)) established that a defendant has the constitutional right to represent himself when he voluntarily and intelligently elects to do so.

"Discrimination Is Alive & Well In America Today" Says NY AG After Bagging Two Brooklyn Landlords In Undercover Race-Bias Rental Sting

In Brooklyn, New York, the New York Post reports:
  • Two Brooklyn landlords were nabbed in an undercover sting after they brazenly told black apartment hunters that no suitable units were available, while rolling out the red carpet for potential white tenants, Attorney General Andrew Cuomo charged [].

  • Investigators posing as would-be renters discovered that rental agents at two Ocean Parkway buildings routinely showed apartments to white applicants while telling black applicants none were available, according to court documents. In at least two cases, two sets of black would-be tenants were blatantly turned away from the 71-unit housing complex at 1648-50 Ocean Parkway hours before a white couple was invited to apply.

  • "Discrimination is alive and well in America today," Cuomo said at news conference to announce the action.

For more, see Bias scamlords (Lied to blacks: Cuomo).

For the NY AG press release, see Attorney General Andrew Cuomo, Joined By Lawmakers, Announces Lawsuits Against Landlords For Race Discrimination After Undercover Investigation (Landlords in Brooklyn and the Capital District Denied Access to Apartments to Black Applicants; Cuomo also Reaches Agreement with a Second Brooklyn Landlord as Part of Ongoing Investigation).

For the lawsuits, see:

Alleged Loan Modification Racket Continues To Operate Despite Warnings From Law Enforcement, Lender

In Oakland, California, a recent story from The Bay Citizen shines some light on Priority Realty Group, a suspected loan modification, foreclosure rescue racket based in Southern California that has attracted attention from the media, the California Attorney General's Office, and the Better Business Bureau for, among other things, allegedly using written solicitations designed to create the false impression that the mailings are coming from lender JP Morgan Chase Bank:
  • Priority Realty is one of hundreds of for-profit companies that seek to benefit from the pain of homeowners hit hard by the recession. [...] When [struggling homeowner Giselle] Jiles called them, a representative of the company said they would handle her loan modification request if she paid them the equivalent of one mortgage payment.

  • To get around a new state law banning mortgage modification firms from charging for services in advance, a company representative said they would charge her “as services are rendered, every step of the way,” from a fee for receiving her loan information to a fee for faxing that information over to Chase.


  • Priority Realty has an F rating from the Better Business Bureau, and BBB’s website is full of complaints from homeowners who say they were swindled by the Southern California company. One of them, California National Guardsman Erik Kallstrom, said he paid Priority $1,632, persuaded by their 100 percent money back guarantee. But when the company failed to renegotiate his mortgage, it refunded only $25, saying the balance had been absorbed by “earned fees.”


  • Evan Westrup, a spokesperson for Attorney General Jerry Brown’s office, said Priority Realty has failed to register with his office or to post a $100,000 bond as required by state law. In the last two years, Brown has sought court orders to shut down more than 30 fraudulent foreclosure relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of other deceptive loan modification consultants. But Westrup admits that represents a small fraction of mortgage fraud being perpetrated.

  • The loan modification industry is filled with con artists and swindlers who rip off desperate homeowners,” he said. “Ultimately, consumers have to be able to spot a scam themselves.”

  • Chase spokesperson Tom Kelly said the bank’s legal department sent a strongly worded letter to the company, which “demanded that Priority Financial Group and its affiliates omit all references to Chase, Washington Mutual Bank, and any affiliates from its solicitations.” “The marketing campaign clearly creates a likelihood of confusion among Chase’s borrowers,” Kelly said.

  • Despite the letters from Chase and law enforcement, Priority Financial has continued to operate, but under a new name. David Gomez, who was listed with the Department of Real Estate as the company’s broker, said he is now the “branch manager” at the Freedom Law Center, which he said operates under a license from the State Bar. As such, he said, there was no need for his firm to register with the attorney general’s office or to pay a bond, adding that his company never poses as a bank.

For the story, see Using Chase Name, Phony Agents Prey on Homeowners (Foreclosure crisis primed fraudulent mortgage relief businesses).

Wednesday, July 07, 2010

Conflict Of Interest Problems Continue Dogging Notorious Buffalo-Area Foreclosure Mill In Homeowner's Upcoming NYC Bankruptcy Proceeding

In New York City, the New York Post reports:
  • A Bronx homeowner is scheduled for a courtroom battle royale later this month -- facing off in Manhattan bankruptcy court against the largest foreclosure mill in the state to see if the firm's client, GMAC Mortgage, has the right to toss her from her Pelham Gardens home.

  • Also at issue is whether the law firm, Steven J. Baum PC, may have a conflict of interest problem. The lawyer for the homeowner, David Shaev, claims in recently filed court papers that a Baum lawyer allegedly represented GMAC without disclosing she worked for Baum.(1) The thorny issue is of growing interest to New York judges -- who last year faced more than 50,350 foreclosure actions, according to RealtyTrac, many of which were brought by banks that have sold or securitized the loans. Such actions make proving which entity owns the loan difficult.

  • That issue is key -- banks that can't prove they own a loan can't legally foreclose. At times, lenders and law firms have been chastised for taking short cuts to gloss over the ownership issue.

  • Complicating matters is that most delinquent homeowners battle foreclosure actions without a lawyer and get steamrolled. But that may be changing. On June 3, Bankruptcy Judge Allan Gropper denied a bank's attempt to move against a homeowner because it couldn't prove it owned a mortgage. Five days later, Brooklyn state court Judge Wayne P. Saitta, citing a bank's "egregious" misrepresentation, awarded a homeowner $10,000 in sanctions when the bank tried to evict knowing it didn't own the mortgage.

  • "The court can only speculate in how many other cases plaintiffs with no interest in mortgages wrongfully foreclose on them and collect proceeds to which they are not entitled," Saitta wrote in his order. "It is only because this was one of the rare foreclosure cases where the defendant was represented by counsel that the fact that the [bank] did not own the note came to light," Saitta continued.(2)

Source: GMAC faces New York foreclosure brawl.

(1) For earlier posts on problems facing the foreclosure mill firm Steven J. Baum P.C. see:

(2) For another of Judge Saitta's recent rulings denying foreclosure, without prejudice, to a standing-lacking lender, see Bank of NY v Alderazi, 2010 NY Slip Op 20167 (NY Sup. Ct. Kings Cty. April 19, 2010).

MD Homeowner Barely Beats Statute Of Limitations; Scores Triple Damages Of $700K After Being Screwed Over In Sale Leaseback, Equity Stripping Ripoff

In Baltimore, Maryland, The Maryland Daily Record reports:
  • An Ellicott City woman was awarded $700,000 [...] after falling victim to a foreclosure rescue scam. The judgment in favor of Susan Spicer includes $460,000 in non-economic damages, an amount Baltimore County Circuit Court Judge Patrick Cavanaugh doubled from the $230,000 he calculated in economic damages under the guidelines of the Protection of Homeowners in Foreclosure Act.(1)

  • Jane Santoni, Spicer's lawyer, said Spicer's experience was a "classic" one that the law was designed to target. "People do have recourse," said Santoni, of Williams & Santoni LLP in Towson. "When you have a strong law in place, you have a fighting chance."

  • Spicer and her husband took out a mortgage on her Catonsville property in October 2004 in order to pay some bills, according to the complaint. Spicer fell behind on her payments in 2005, and her lender, Royal Financial Services LLC in Owings Mills, began foreclosure proceedings that fall.

  • Royal Financial is an affiliate of New Towne Properties LLC in Owings Mills, which is operated by Robert Hurd, according to the complaint. Hurd called Spicer the day before the foreclosure sale and told her "he could keep her in the home if she could come to his office the next day to sign some papers," according to the complaint.

  • Hurd told Spicer that if she paid rent for one year, she could stay in the house and then "revert back to the original mortgage," the lawsuit states. Spicer deeded the house over to Royal Financial for $42,000, less than $200,000 of its value, the lawsuit states. The lease agreement called for Spicer to pay $775 a month, more than twice as much as her monthly mortgage payments, the complaint states. New Towne ultimately sold the home to someone else for $265,000 in the summer of 2006, according to the lawsuit and state property records.

  • Spicer was forced to move into a basement-floor apartment, Santoni said. "It was devastating to her," she said. Judge Thomas J. Bollinger Sr. granted the plaintiffs' motion for summary judgment in May, leading to Monday's damages hearing. Cavanaugh awarded Spicer nearly $231,000 in economic damages, the difference between the value of the house and what Spicer owed plus the rent she paid and the $1,200 she paid Hurd to complete the deed transaction, Santoni said. The judgment also includes $10,000 in attorney's fees. Hurd did not return a phone call [] afternoon seeking comment.

  • Santoni said Spicer was pleased with the judgment, particularly since Spicer filed the lawsuit the day the statute of limitations expired in 2008 because she had a "fatalistic" outlook. "She felt she finally had somebody to listen to her," Santoni said.

Source: Real estate scam victim awarded $700K under foreclosure law (paid subscription required; if no subscription, TRY HERE - courtesy of

(1) In this case, the screwed-over homeowner opted to seek monetary damages as compensation for being ripped off in lieu of attempting to unwind/undo the scam. In some cases, homeowners may opt against monetary damages as the remedy and, instead, seek to restore title to the home in their name. In this regard, they seek a judicial determination voiding the title conveyance altogether, along with invalidating the new mortgage obtained by the foreclosure rescue operator (or straw buyer) in the course of pulling off the equity stripping manuever. See, for example, Maryland High Court Revives Ex-Owner's Attempt In Civil Lawsuit To Undo Metropolitan Money Store Sale Leaseback Foreclosure Rescue Home Equity Ripoff.

Bankruptcy Judge Rejects Debtor's Use Of Ch. 13 Petition In Attempt To Thwart Due-On-Sale Clause In Lender's Mortgage

A recent ruling by Judge Jeff Bohm of the U.S. Bankruptcy Court in Houston, Texas that addressed a number of issues has rejected an attempt by an individual Debtor's attempt use a Chapter 13 petition as a vehicle to thwart a mortgage lender's rights under a due on sale clause.

In the case, an individual, unbeknownst to the lender, acquired a home subject to the lender's mortgage from a third party (the original mortgage borrower), and then filed a Chapter 13 bankruptcy petition shortly thereafter, proposing to pay off the existing loan over a 60-month period, which would have effectively require the lender to allow the Debtor to take over payments on the loan without first evaluating the Debtor's credit and earning capacity necessary to repay the loan.

The ruling is somewhat "fact heavy" and addresses related issues that may be of interest to consumer bankruptcy litigators, and possibly real estate operators and others using the Chapter 13 process to game the bankruptcy system in furtherance of their property investment endeavors.

For the ruling, see In re: Mullin, Case No. 09-39760-H4-13 (Bankr. S.D. Texas, Houston Div., July 2, 2010).

Nebraska Bank Dodges $8M Bullet As Bankruptcy Court Ruling Invalidating Improperly Notarized Mortgage Is Reversed On Appeal

In a follow-up to an earlier post, the United States Bankruptcy Appellate Panel for the U.S. Court of Appeals, Eighth Circuit, has recently reversed a ruling by a Nebraska Federal Bankruptcy Court that had invalidated an $8 million mortgage due to the improper notarization by the bank's president of a mortgage securing a loan taken out by the executive's brother-in-law.

The thumbnail summary of the court's reasoning for the reversal in this case (appearing on the 8th Circuit's website, prepared by the court's clerk, and not a part of the opinion) states:
  • BowlNebraska failed to demonstrate that it was without actual or constructive notice of the Bank's interest and thus a bona fide purchaser under Nebraska law; consequently, it could not avoid the bank's liens pursuant to the strong-arm provisions of the Bankruptcy Code, and the district court's judgment in favor of BowlNebraska avoiding the liens is reversed.

For the ruling, see In re BowlNebraska, L.L.C. (aka BowlNebraska, L.L.C. v. Omaha State Bank), No. 10-6016 (B.A.P. 8th Cir., July 1, 2010).

For the earlier post, see Bank President Laments: "Never Do Business With Family!" As Improper Notarization Allows Brother-In-Law/Borrower To Successfully Void Lender Mortgage.

Tuesday, July 06, 2010

C. Fla. Bkrptcy Court Nixes Trustee's Overly Legalistic Interpretation Of State Homestead Law In Failed Attempt To Snatch Family Home Away From Debtor

From a recent post on the Florida Asset Protection Blog:
  • Can a debtor protect a future legal interest in his primary residence under Florida homestead laws? In this bankruptcy case a debtor’s mother owned a property where the mother and the debtor resided with the debtor’s spouse and children. The mother executed a deed transferring title to the debtor reserving a life estate to the mother. (A "life estate" means the mother owns and controls the property and as long as she is alive). The debtor’s mother was old with a short life expectancy.

  • The debtor filed Chapter 7 bankruptcy and claimed his future legal interest in his mother’s house as an exempt homestead asset. The trustee objected to the debtor’s exemption because the debtor’s interest in the property was only a future "remainder interest" [...]. The trustee wanted to take and sell the debtor’s interest in the house which would vest upon his mother’s death in the reasonably near future.

  • The court said that the debtor’s future ownership rights was protected under Florida’s homestead laws. The court pointed out that the debtor occupied the home with his family as a family residence, and that the debtor contributed financially to the repairs and upgrades to the house. The court held that the debtor’s present right of possession is sufficient to qualify the house as an exempt homestead.(1)(2)

Source: Future Interest In Residence Protected From Current Creditors And Bankruptcy Trustee.

For the court ruling, see In re: Williams, Case No. 3:09-bk-586-PMG (Bankr. M.D. Fla., Jacksonville Div., March 31, 2010).

(1) In reaching its conclusion, the court made the following, among other, observations regarding the application of the homestead exemption against forced sale under Article X, Section 4 of the Florida Constitution with respect to those Florida residents holding a remainder interest in real estate (aka "remaindermen") within the state (bold text is my emphasis, not in the original text):

  • Allowance of the homestead exemption to remaindermen who occupy the property as their home in circumstances such as this is consistent with the Constitution's emphasis on the residential use of exempt property. "The availability of the homestead exemption is not dependent upon any strict or legalistic interpretation of the quality and nature of the property or of the quality of the debtor's title. The Court must instead focus on the circumstances and the debtor's intent to make the property his homestead and the debtor's actual use of the property as his principal and primary residence." In re Dean, 177 B.R. 727, 729 (Bankr. S.D. Fla. 1995).

  • "[E]ven if she merely retained possession of the land, it is of sufficient value to her to have it protected under the homestead law, and it is of no concern to the creditor that another has the superior title." Hill v. First National Bank of Marianna, 75 So. 614, 617 (Fla. 1917). "Actual 'family' occupancy and the intention to continue occupying the home have been held to be the key qualifications for homestead status and the protections deriving from that status under the Florida Constitution." Edward Leasing Corporation v. Uhlig, 652 F.Supp. 1409, 1412 (S.D. Fla. 1987). See also Southern Walls, Inc. v. Stilwell Corporation, 810 So.2d at 572.

  • Allowance of the homestead exemption to remaindermen who reside on the property in circumstances such as this is also consistent with the historically liberal construction of the exemption which favors the protection of the family home. Southern Walls, 810 So.2d at 569-70. The allowance promotes the constitutional purpose of securing a home to the householder, so that the homeowner and his family can live beyond the reach of financial misfortune. Snyder v. Davis, 699 So.2d at 1002.

  • Finally, it is also noteworthy that Courts in other jurisdictions have allowed remaindermen to exempt their interests in property on which they resided. In In re Cain, 235 B.R. 812 (Bankr. M.D. N.C. 1998), for example, the Court allowed a remainderman to claim a homestead exemption for property in which he had resided for a year. In construing North Carolina law, the Court stated:

    There is nothing in the statute which explicitly precludes the exemption claimed by the Debtor. Under the wording of the statute the Debtor must own an interest in the real or personal property in which the exemption is claimed. There is no limitation or restriction in the statute regarding the nature or extent of the interest which must be owned. . . . The next requirement under the statute is that the real or personal property in which the debtor owns an interest must be used as a residence by the debtor or a dependent of the debtor. This is the only requirement under the statute which is related to possession of the property and the only possessory interest required is that either the debtor or a dependent of the debtor use the property as a residence. There is nothing in the statutory language which requires that the debtor's use of the property be a matter of right based upon the debtor being the sole owner of a fee simple absolute title to the property.

  • In re Cain, 235 B.R. at 816-17 (Emphasis supplied). See also In re Kimble, 344 B.R. 546 (Bankr. S.D. Ohio 2006)(the debtor's remainder interest in property occupied under an oral lease with his mother qualifies for the exemption provided under Ohio's homestead law), and In re Eskew, 233 B.R. 708 (Bankr. W.D. Texas 1998)(the debtors' reversionary interest in their residential property was properly claimed as exempt under Texas homestead law).

(2) For those desiring to transfer a remainder interest to an adult child as was done in this case, use of a "Lady Bird Deed" (ie. an enhanced life estate deed) to make the conveyance would accomplish the transfer and, at the same time, avoid all the complications that may arise if the adult child subsequently gets into hot water with creditors (or, as in this case, a bankruptcy trustee). It has been described as working like a traditional Life Estate Deed, but going beyond a life estate deed, because not only does the life tenant get to live there for life, that former owner also reserves more than just a life estate. Also reserved are the rights to sell, commit waste, and almost everything else, except the transfer on death to the "remainderman". In effect, the remainderman is being treated for some purposes as holding only a contingent remainder interest in the subject property for as long as the holder of the life estate is alive. Use of this specially designed instrument is not available in all states.

See also:

Go here for other links for Lady Bird Deeds.

Debt Collection Scam Duped Now-Ex Attorney; Forced Him To Come Clean, Cop Felony Plea On $1.5M+ Client Swindle; State Bar's "Ripoff Fund" Left On Hook

In Montgomery County, Maryland, The Maryland Daily Record reports:
  • Had the American Bar Association's warning of the scam come three months earlier, disbarred lawyer Bradley D. Schwartz might not be facing a possible prison sentence. Schwartz, who consented to disbarment last year amid allegations of having dipped into client funds, pleaded guilty last week to felony theft in Montgomery County Circuit Court.

  • Prosecutors said Schwartz, 62, stole more than $1.5 million from about 20 clients over the past five years. Montgomery County Circuit Judge Steven G. Salant is scheduled to sentence Schwartz on Aug. 23. As The Washington Post first reported [...], Schwartz's scheme might have gone undetected had he himself not fallen victim to a con aimed at attorneys.

  • Around December 2008, Schwartz was contacted by a purported Singapore company, saying it needed legal help collecting debts in the United States. Schwartz agreed to represent the firm and soon received a $385,000 check from a purported debtor. He deposited the check and used the funds to pay clients whose money he had skimmed, prosecutors said. When the "debtor's check" turned out to be bogus, Schwartz's bank contacted authorities and prosecutors began to investigate.

  • A short time later, Schwartz contacted Maryland Bar Counsel Melvin Hirshman to confess to having misused client funds. "He called me from South America and told me what he had done," Hirshman said Friday. The clients have been reimbursed through the Client Protection Fund,(1) Hirshman added. Schwartz, in turn, is reimbursing the fund "to a degree that he's able," said his defense attorney, Thomas L. Heeney.(2)

  • In addition, Schwartz has changed his life-insurance policy to name the fund as a beneficiary of $750,000, said Heeney of Heeney & Arii Chtd. in Rockville. On Feb. 6, 2009, the ABA posted on its website a story warning its members of the debt-collection scam. Schwartz was disbarred by consent on March 23, 2009.

Source: Ex-lawyer duped by scam pleads guilty in Montgomery County Circuit.

(1) If a Maryland attorney, either in the course of representing you or acting as a fiduciary, screws you out of money or property through dishonest conduct, go to the The Client Protection Fund of the Bar of Maryland (formerly "The Clients' Security Trust Fund") for information on how to recover some or all of your losses from the fund.

For other states and Canada, see:

(2) My guess is that, to the degree Schwartz is unable to cough up the cash to reimburse the Client Protection Fund, the rest of the licensed attorneys in Maryland may be hit up in the form of increased fees when their law licenses come up for renewal in order to replenish the fund.

Man Acting As Trustee For 2 Kids Gets 30 Days For R/E Title Transfer To Himself Followed By Loan Ending In F'closure; Used Cash To Pay Child Support

In Lebanon, Ohio, WLWT-TV Channel 5 reports:
  • A Kettering man was sentenced [] after he was convicted of stealing his children's inheritance money. Scott Andrews was named trustee of the estate left to his two children by his father, with $25,000 in real estate held in trust for each child until they were 25 years old. Prosecutors said the 39-year-old Andrews transferred the property to himself without receiving prior approval from the probate court, refinanced the house and used the money to pay for his own expenses.

  • "Andrews had even used some of the money to pay his child support payments for these two minor children, thereby using the minor children’s own money to pay the child support they were entitled to receive from Andrews," prosecutors said in a statement.

  • Andrews eventually spent all the money and was unable to make the mortgage payment, which caused the home to fall into foreclosure, leaving the children without their inheritance. A judge sentenced Andrews to 30 days in jail and five years of community control and ordered him to pay restitution to the children.

Source: Kettering Man Stole Children's Inheritance (Man Used Stolen Funds To Pay Child Support).

Monday, July 05, 2010

Current & Former Local Cops, FBI Agent, Two Title/Closing Attorneys Among 13 Bagged by South Florida Feds In Alleged Mortgage Fraud Racket

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • When the former chief of the Plantation Police Department got a tip that some in his blue-uniformed ranks were involved in their off-hours in a suspicious real estate scheme, he turned the matter over to a state police agency. The Florida Department of Law Enforcement eventually brought in the feds, and Wednesday, six current and former Plantation police officers, along with an FBI agent, a Lauderhill police officer and others, were indicted by a federal grand jury, accused of being part of a $16 million-plus mortgage investment fraud ring that bought and sold homes with phony documents.(1)

For more, see Plantation police officers, FBI agent indicted in federal mortgage fraud ring.

For the U.S. Attorney press release, see Broward Mortgage Investment Scheme Indicted.

(1) Reportedly, Federal officials said a total of 13 people – including Plantation police officers Daryl Radziwon, 39, of Plantation; Casey Mittauer, 37, of Cooper City; and Joseph DeRosa, 35, of Coral Springs – were actors in the scheme. FBI agent Robert DePriest, 41, of Plantation, who was assigned to the Miami field office, was also named in the indictment, as was Joseph LaGrasta, 32, of Tamarac, a police officer with the city of Lauderhill. Also indicted were two brothers who had served as Plantation police officers but were fired years ago: Joseph Guaracino, 32, and Dennis Guaracino Jr., 34, both of Plantation. A third former Plantation cop, John Velez, 37, of Plantation, who left Plantation in 2007 and joined Hallandale Beach police in 2008, was indicted as well. Hallandale Beach police officials said Velez resigned several months ago. Steven Stoll, a licensed mortgage broker and a licensed attorney, and Stephen Orchard, also a licensed attorney, were also charged in the indictment with participating in the scheme by handling the closings of the fraudulently obtained loans, along with licensed mortgage brokers Matthew Gulla and Rene Rodriguez Jr.

MD Feds: Sticky-Fingered Closing Agent Looted $3.4M In Escrow Cash, Failed To Pay Off Existing Loans In R/E Deals, Leaving Clients Facing Foreclosure

In Baltimore, Maryland, WBAL-TV Channel 11 reports:
  • The target of an 11 News I-Team investigation is currently facing federal charges on accusations that he was part of a mortgage fraud scheme. The federal grand jury's 16-count indictment charged the president of Towson-based Maple Leaf Title, Anthony Weis, with wrongfully using $3.4 million from an escrow account set up by the firm in which the money was supposed to pay off his clients' mortgage loans. The indictment said he used the money for his own benefit.(1)

  • When the I-Team tried to get answers from Weis in January, he said his attorney would not allow him to discuss the allegations against him or his company. Maple Leaf Title was once located at 11 E. Chesapeake Ave. The business left that location, moving to 606 E. Joppa Road before shutting down, I-Team reporter Barry Simms said. The grand jury said Weis took the funds intended for real estate closings and used the money for himself.(2)

For more, see Title Co. President Indicted In Mortgage Fraud Scheme (Anthony Weis Charged With Taking $3.4M From Escrow Account).

See also, The Baltimore Sun: Title agency head indicted on fraud charges (Homeowners were bilked of $3.4 million, federal authorities say):

  • The Maryland Insurance Administration has revoked the licenses or penalized more than three dozen title and settlement companies since 2008, according to The Baltimore Sun's economic columnist, Jay Hancock. He wrote two weeks ago that complaints have jumped from 90 in 2005 to more than 600 last year.(3)

  • In September, the owner of a Severna Park title company was sentenced to seven years in federal prison for bilking homeowners of $3.4 million. And in February, the owner of a Parkville title company was arrested in Palm Beach, Fla., after having been a fugitive for a year while facing federal charges that he defrauded lenders of half a million dollars. His case is pending.(4)

(1) For the U.S. Attorney press release, see Towson Title Agency Operator Indicted In $3.4 Million Mortgage Fraud Scheme.

(2) "This man affected my life and a lot of other victims' lives in so many ways -- financially, emotionally, physically. Stealing our money, not paying off our mortgages and putting us through having to hire attorneys to have to represent us as victims, to getting our homes out of foreclosure because we were put in foreclosure," one victim reportedly said.

(3) See:

(4) Apparently, state lawmakers have been placed on notice of the closing agent problem in Maryland. See Report of the Commission to Study the Title Insurance Industry in Maryland (February, 2010 - 240 pages).

Racket Recorded Forged Deeds To Steal Homes From Unwitting Owners For Use In Mortgage Fraud Scam, Say Florida Authorities

In Miami, Florida, the South Florida Business Journal reports:
  • Ten South Floridians have been arrested in what authorities say was a criminal mortgage fraud and identity theft operation. It is alleged they defrauded banks out of more than $8 million by using stolen identities to obtain mortgages, according to a news release from Florida Attorney General Bill McCollum’s office. The arrests are the result of a four-year probe. Investigators said straw buyers used the stolen IDs of Florida and New Jersey residents to purchase and flip properties.

  • As part of the scheme, the straw buyers are alleged to have stolen property from legitimate owners by forging a quit claim deed or warranty deed, and then transferring ownership of the property to one of the co-conspirators. A total of 14 properties in Miami-Dade and Broward counties were involved, with most falling into foreclosure as a result.

For the story, see Ten arrested in mortgage fraud scam.

For the Florida Attorney general press release, see Ten Arrested in Multi-Million Dollar Mortgage Fraud and Identity Theft Enterprise.

15 Financially Struggling Texans File Lawsuit Alleging BofA Screwed Them Over When Seeking Loan Modifications To Avoid Foreclosure

In Austin, Texas, Texas RioGrande Legal Aid announces:
  • Fifteen low-income Texans are suing Bank of America for operating a home loan system that forces struggling homeowners into foreclosure by purposefully misleading them, preventing them from modifying their loans, and ignoring agreements for lower monthly payments.

  • Represented by Texas RioGrande Legal Aid (TRLA),(1) [...] the families allege that they tried to work with Bank of America on loan modifications and foreclosure prevention when tough economic times hit. Instead of providing them with the information necessary to save their homes, Bank of America provided inconsistent information, lost important paperwork, and failed to notify them of the status of their loans. In cases where forbearance and loan modification agreements were made, Bank of America ignored the arrangements and put homes up for foreclosure even though families made their payments.


  • According to the lawsuit, it is standard practice for Bank of America to ignore agreements made with homeowners in order to force them into foreclosure. In addition, Bank of America intentionally provides homeowners with misleading and inconsistent information about their loans, illegally ignores requests for information, and sets up unreasonable barriers to keep families from saving their homes.

For the TRLA press release, see Bank of America Practices Force Homeowners to Face Foreclosure.

For the lawsuit, see Harryman, et al. v. BAC and Bank of America.

(1) According to their website, Texas RioGrande Legal Aid is a nonprofit organization that provides free legal services to the residents of Southwest Texas in a 68-county service area who are unable to afford the fees of attorneys in private practice. In eight of the counties, TRLA also provides representation in criminal cases through its Public Defender Division. TRLA also serves migrant and seasonal farm workers throughout the states of Texas, Louisiana, Arkansas, Mississippi, Alabama, Tennessee and Kentucky.

Feds Indict Trio In Alleged $1.24 Trillion Bogus Lien Extortion Racket Targeting Government Officials, Bank Executives

In Kingston, New York, the Times Record Herald reports:
  • A federal grand jury has indicted three anti-government zealots in connection with an alleged scheme to extort money from Ulster County, three towns and a handful of public employees. The accused men also targeted executives of Mid-Hudson Valley Federal Credit Union, court papers said.

  • The bizarre plot came to light in April, when Ulster County and public workers brought a racketeering case against the alleged conspirators. The suit accused six people of intimidating government employees by sending them fraudulent bills and filing liens against their personal property, totaling $143 billion. Feds pegged the extortion plot at $1.24 trillion.(1)


  • According to the court papers, the stream of phony invoices and fraudulent liens started in 2009, after Ulloa and Parenteau were ticketed in separate incidents for driving without licenses. Ulloa later claimed he had an international driving permit.

  • But rather than hire lawyers and plead their cases in courts, the men and their alleged accomplices unleashed a barrage of fake paperwork, court documents said. Ulloa sent phony criminal invoices totaling $700 million to Rosendale Town Justice Robert Vosper. Parenteau filed a $62 billion federal lien against the Town of Lloyd and its police chief. And when Mid-Hudson Valley Federal Credit Union began foreclosure proceedings on a property Ulloa owned on Van Keuren Highway in Kingston, he filed a $2.82 billion lien against a top bank executive.

For more, see Ulster County men indicted in bizarre anti-government extortion plot (Feds say men sent fake bills, filed liens in $1.24T scheme).

For an earlier story, see Courthouse News Service: Towns, Judges Say They're Being Extorted.

For the civil lawsuit filed earlier this year, see County of Ulster, New York, et al. v. Ulloa, et al.

(1) According to the story, federal authorities arrested two of the men: Richard Enrique Ulloa, 41, of Stone Ridge, faces four counts of mail fraud. Ed George Parenteau, 53, of Chenango County, was charged with mail fraud and conspiracy to commit mail fraud. Ulloa was released on $10,000 bail, but Parenteau remains jailed in Albany County. The third man, Jeffrey Charles Burfeindt, 47, of Highland, is still missing. He faces the same charges as Parenteau. The men were charged with mail fraud because their fake documents were sent through the mail. No charges were filed against the remaining three, who were named in the civil suit. sovereign citizen

Sunday, July 04, 2010

Minnesota Regulator Takes Enforcement Action Against Alleged Out-Of-State Loan Modification Rackets, Forensic Audit Peddler

The Minneapolis Star Tribune reports:
  • On the heels of a statewide campaign alerting the public to foreclosure-related scams, the Minnesota Commerce Department took action against unlicensed, California-based loan modification companies Thursday.

  • The department sent cease-and-desist orders to Ronald LeClair of Bank Modifications and Ernest J. Bartlett of Both promised homeowners loan modifications and charged upfront fees of $1,000 to $3,000. It's illegal to offer loan modifications without a residential mortgage originator license and to charge an upfront fee for such modifications.

  • Steven Fattorusso of USA Loan Auditors, also known as Relief Law Center, allegedly offered a Minnesota resident a loan modification, claiming the homeowner's current mortgage company was being investigated for predatory lending and offering assistance, the Commerce Department said. The company sent ads to consumers that made it look as though it was somehow affiliated with the government. The company has caught the attention of regulators in several states. A hearing to show cause has been scheduled for Fattorusso on Aug. 12.

Source: State regulators crack down on loan modification firms.

For the Minnesota Department of Commerce press release, see Minnesota Department of Commerce takes action against unlicensed loan modification companies for deceptive business practices.

San Jose Man To Get Seven Years For Pocketing $1.6M From Investors While Purporting To Operate Foreclosure Rescue Business

In Santa Clara County, California, the San Jose Mercury News reports:
  • A 34-year-old San Jose man pleaded guilty to nine felony charges for running an illegal investment scheme from 2006 to 2009, according to the Santa Clara County District Attorney's Office. Reyes Alcaraz operated Safe Recovery, which promised high rates of return for investing money to rescue residential properties from foreclosure. Many of the investors were Spanish-speaking immigrants.

  • He defaulted on many of the contracts, but continued to solicit new investors, writing bad checks to some of them. Prosecutors say 40 investors lost a total of about $1.6 million in the scheme. Alcaraz pleaded guilty Thursday to one count of grant theft, one count of selling an unqualified security, one county of misrepresentation or omission of a material fact in the sale of a security, five counts of insufficient fund checks, and one count of money laundering. Alcaraz is scheduled to be sentenced Aug. 3 to seven years in state prison.

Source: San Jose man pleads guilty in foreclosure-rescue scam.

Cops Warn Tenants, Unwitting Handymen Of Rent Swindles Using Vacant Homes As Bait, Requesting "Cash Only" Deposits, Touting Great Deals On Craigslist

In Fairfax County, Virginia, The Washington Post reports:
  • Hand the deposit to a cleaning guy. Cash only. No need to sign a lease. If the rental agreement sounds a little shady, that’s because it is, and you’ll never actually get a place to live, Fairfax County police said [].

  • Detectives are looking into a scam that could be linked to swindles in Alexandria, Richmond, Washington, New York and Miami. "Once you hand your cash over, the money is gone," said Officer Tawny Wright, a spokeswoman for the Fairfax County Police Department. Police have arrested two men in the case so far: Richard Armstrong, 29, of the 8500 block of Brooks Street NE, in Washington, and Christopher Stanley, 27, of the 100 block of West 3rd Street in Frederick.

  • According to Wright, the swindle unfolds when the suspect places an advertisement on Craigslist, touting a great deal on a rental property, with no credit check required. What the victims don’t know is that the property is actually in foreclosure, and isn't really a rental.(1)

Source: Police issue warning on rental scam.

(1) According to the story, Wright said the suspects first enlist an unsuspecting cleaning person or handyman to go do work at the property. When this person shows up and finds it locked, he or she calls back to the suspect, who convinces the person to force himself or herself inside. Then the victim shows up. Arraignments are made to give a cash deposit to the cleaner or handyman, who takes a small cut and sends the rest on to the schemer, Wright said. Police said they have found "multiple occurrences" of the scam, and in one case used an undercover officer to make an arrest. They are encouraging citizens to be on guard for cash-only, no-signed lease arrangements.

Vacant Home Hijacker Dodges Hard Time; Scraps "Adverse Possession" Defense, Cops Misdemeanor Trespassing Plea After Spending 13 Months In County Jail

In West Palm Beach, Florida, the South Florida Sun Sentinel reports:
  • A Palm Beach County man who rented out homes he did not own will not spend any time in prison. Prosecutors dropped felony burglary and theft charges against Carl Heflin in return for him pleading guilty to trespassing, a misdemeanor. Heflin, 52, was released last week from the Palm Beach County Jail, where he had been since his arrest in June 2009.

  • Heflin, of West Palm Beach, tried to take over more than two dozen homes through adverse possession, a centuries-old concept that allowed people to lay claim to abandoned farmland and cottages if they lived there and paid the taxes for a period of years. In recent times, authorities say, the legal doctrine has been misused by squatters and swindlers claiming ownership of vacant and foreclosed homes.


  • In Heflin's case, prosecutors agreed to a plea deal because he had already spent 13 months in jail and "the victims/owners of the foreclosed properties were either unavailable or unwilling to appear for trial,'' Angela Miller, chief of white collar crimes for the State Attorney's Office, said in an email. "The resolution was appropriate under the circumstances.''

  • Heflin filed adverse possession notices with the Palm Beach Property Appraiser and even submitted deeds declaring ownership of 27 properties, records show. Heflin went into several of the homes, changed the locks, opened utility accounts and rented them to tenants.(1)

For the story, see Palm Beach County man spared prison time for renting out homes he did not own.

(1) Reportedly, the owner of one of the homes, Edward Pamplona, told the Sun Sentinel last month that his house was in foreclosure in December 2008, when he returned from a weekend away to find his front door had been removed. Pamplona said Heflin told him he had bought the house. Pamplona said he was skeptical since he had not been notified of any sale but took Heflin's word and temporarily lived in his car before moving in with a relative. The house had not been sold and is still in Pamplona's name, records show.

Oregon AG Shakes Refunds Out Of Loan Modification Outfit In Settlement Of Claims Of Illegally Pocketing Upfront Fees From Homeowners Facing F'closure

From the Office of the Oregon Attorney General:
  • Attorney General John Kroger [] announced a settlement that prohibits a Los Angeles County company from doing loan modification work in Oregon. "This office will not tolerate companies that attempt to exploit Oregon homeowners who are facing foreclosure," said Deputy Attorney General Mary Williams.

  • The Oregon Department of Justice began investigating Bank Modification Experts of Woodland Hills, California, after receiving consumer complaints that suggested the company was violating Oregon's Mortgage Rescue Fraud Protection Act by collecting advance fees for loan modification work aimed at preventing foreclosure. The company refunded several Oregon consumers. Bank Modification Experts eventually began doing business from Agoura Hills, California as Premier Legal Advocates.

  • Under the settlement [...] Premier Legal Advocates paid $4,000 to the Oregon Department of Justice, refunded an Oregon consumer $2400 and must refund any other Oregon consumers who paid illegal advance fees. The company is also prohibited from doing any further foreclosure consulting or loan modification work in Oregon.

For the Oregon AG press release, see Oregon Bans Another Loan Modification Company (California-based Premier Legal Advocates charged illegal advance fees for loan modification services it subsequently failed to perform).

State Regulator Squeezes Loan Servicers For $240K+ In Refunds Of Prepayment Penalties Illegally Clipped From Maryland Homeowners

From the Office of the Maryland Department of Labor, Licensing & Regulation:
  • Sarah Bloom Raskin, Commissioner of Financial Regulation for the Department of Labor, Licensing and Regulation, [] announced refunds to Maryland consumers of approximately $246,000 related to a series of completed regulatory examinations of mortgage loan servicers.

  • Litton Loan Servicing and Saxon Mortgage Services have each refunded approximately $71,000 to a combined total of 160 Maryland consumers, while Bayview Loan Servicing has refunded approximately $104,000 to 40 Maryland consumers.

  • The refunds followed compliance examinations conducted by the Office of the Commissioner of Financial Regulation that uncovered previous violations of Maryland law, primarily related to restrictions on the imposition of prepayment penalties.

  • "Maryland has provided protections related to prepayment penalties, and we are committed to making sure Maryland consumers receive those protections. We appreciate the cooperation of these firms in resolving this matter," Commissioner Raskin said. "These refunds relate to violations of prepayment restrictions in effect prior to the 2008 Maryland mortgage and foreclosure regulatory reforms. In 2008, Governor O'Malley signed into law a blanket prohibition against prepayment penalties in connection with Maryland residential mortgage loans." Maryland is one of the few states that maintain licensing and examination authority over independent mortgage servicers. The state does not have authority over those servicers owned by federally chartered banks and thrifts.

Source: DLLR Obtains Refunds for Consumers Over Improper Charges.