Saturday, September 11, 2010

Allegedly "Fixing" F'closure Case Among Activities Set Forth In Charges Filed Against Cuyahoga County Auditor Suggesting Possible Judicial Corruption

In Cleveland, Ohio, The Plain Dealer reports:
  • The charges filed Thursday against Cuyahoga County Auditor Frank Russo offer the most detailed description yet of the suspected corrupt activities of two Common Pleas Judges -- one of whom is seeking re-election.

  • Excerpts of conversations between Russo and Judges Bridget McCafferty and Steven Terry suggest that the judges accepted political support and financial assistance on their campaigns in exchange for allowing Russo to call the shots on cases in which he or his associates had a stake.


  • In exchange for his help, Russo wanted control over the outcome of certain [of Terry's ] civil cases, according to the charges. The docket Terry inherited included numerous civil foreclosure cases involving Russo's close friend O'Malley, who was representing one of the litigants. American Home Bank was seeking $190,000 in damages from O'Malley's client.

  • O'Malley called upon Russo to wield his influence over Terry and convince the judge to deny motions for summary judgment in the case to force it to a settlement. According to the charges, Russo called Terry in July 2008 and asked, "Did (a county employee) give you the case numbers? ... I talked to you about this once before ... it's about denying the motions for summary judgment."

  • "Yep, I still have the note you gave me," Terry replied. "Okay, good, so deny the motions for summary judgment, okay, good. ... I just wanted to touch base with you on that," Russo said. The following day, Terry reported to Russo that he had followed through on his promise. "I called just to tell you that I took care of those two issues with those two cases that we talked about. ... Denied everything."

For the story, see Frank Russo charges suggest he corrupted county judges.

Publicly-Traded S. Florida Foreclosure Mill's Reported Profits, Revenues Take Dip; Stock Sells At 25% Of April 26 Value

In Plantation, Florida, the South Florida Business Journal reports:
  • As an investigation by the Florida Attorney General’s Office looms over its chairman and CEO, Plantation-based DJSP Enterprises reported a decline in both profits and income during the second quarter. The foreclosure and title processing company (NASDAQ: DJSP) reported net income of $3.8 million, or 32 cents a share, on revenue of $56.1 million. That’s down from net income of $14.1 million, or 73 cents a share, on revenue of $61.7 million in the second quarter of 2009.

  • DJSP handles foreclosure legal work for major lenders, and its largest client is the Law Offices of David J. Stern, P.A. The lawyer is chairman and CEO of DJSP. [...] DJSP shares closed up 11 cents to $3.32 [as of Sept. 7]. The 52-week high was $13.65 on April 26. The 52-week low was $3 on Aug. 31.

For more, see DJSP reports smaller profit as AG probe looms.

Desperate Dogs Left Trapped In Garage Of Abandoned Home In Foreclosure; County Animal Control Officials Show Little Interest, Says Neighbor

In Anne Arundel County, Maryland, Investigative Voice reports:
  • The driveway is littered with an empty cigarette pack and toys. A garden hose sits at the ready, tools nearby. For all intents and purposes, the home on Oakwood Drive in Anne Arundel County looks occupied.

  • But from a garage with boarded-over windows, the sound of howling dogs fills the air. Trapped animals left behind. Neighbors say three dogs have been locked inside the dilapidated garage for at least a week and a half without food or water after the occupants of the home left, the result of a foreclosure. Through a cracked window the dogs bark, and growl, desperate it seems, to be released.


  • What’s really distressing is how the people who should take the most interest in this have responded,” said Jenn Rosowski, another nearby resident who fosters stray animals and has been coordinating efforts to free the dogs. Her efforts to get county officials to intervene again have been rebuffed. “She was actually really rude,” Rosowski said of the Animal Control agent who discussed the case with her. “These are innocent animals, they need help.”

For more, see Cruel Intentions — Anne Arundel residents want to free dogs left behind, trapped in garage (Animal Control Office Shows Little Interest).

In a follow-up story, see Maryland Gazette: No charges to be filed in 'abandoned' dog case (Police, animal lovers disagree on what constitutes proper care):

  • [W]hile the animals were heavily infested with fleas and living amid large piles of excrement, the head of the county's Animal Control unit noted that the property's absentee owners had laid out food and water for the dogs.


  • Animal lovers - some of whom broke into the garage yesterday and freed the dogs after reading about their plight on several online message boards and blogs - blasted the county's decision not to file charges against Patricia Strickland or even seize the animals. They argued the conditions inside the garage were deplorable. [... N]eighbors registered anonymous complaints with Animal Control. Then the story hit the Internet, and it all "mushroomed into hysteria," [Lt. Glenn] Shanahan said.

Ex-Project Mgr.: Condo Conversion Amounted To "Putting Lipstick On An Elephant" As Developer Allegedly Unloaded Shoddy Units On Unwitting Homebuyers

In Redmond, Washington, The Seattle Times reports:
  • Vijay Dusi is paying $2,450 a month to live in a condominium so riddled with toxic mold that his family has shuffled from room to room for three years to escape the health hazards that go with it. His kids, ages 2 and 4, can't sleep or play in their room. His wife has tossed away toys, clothes, bedding, even beds while their homeowners association grapples with the question of who will pay for an estimated $4 million worth of repairs at the 82-unit complex.

  • The Riverwalk at Redmond condo association tried to get the developer, Roger Nix, to pay for repairs, but finally gave up when it couldn't find him. Nix dissolved his company last year, and an associate said he is living in Mexico. The homeowners association filed suit in July against Nix's company in an effort to force the firm to pay for what it says is shoddy construction that has contributed to water damage in 15 units at the complex on Northeast Leary Way in Redmond. Three of the five buildings are affected. Without a legal victory or settlement with the developer, the owners of each unit could be on the hook for as much as $50,000 to replace the buildings' exteriors.


  • Riverwalk's situation is dramatic. But it's far from unprecedented. Attorneys specializing in construction lawsuits say condo owners across the state have been left holding the bag for millions of dollars in repairs to shoddy construction that should have been remedied by developers. And those developers often operate under corporate entities that evaporate once the project is finished.


  • That's the situation that Dusi and the Riverwalk board confronted after developer Nix converted an apartment complex into condominiums with an elegant Mediterranean-style facade. Some units, such as Dusi's, began showing signs of water problems almost immediately.


  • [Ex-project manager Kim] Steward, who owns a condo at Riverwalk, said the developer wasn't responsible for the original construction of the buildings — only the mostly cosmetic changes made to Riverwalk after he bought it. The Riverwalk conversion, she said, amounted to "putting lipstick on an elephant." "You're making it look cute," she said of the conversion, which included replacing windows and applying a new coat of stucco over the existing stucco exterior.


  • Vijay Dusi, who works as a software developer at Microsoft, said he cannot afford to move his family to another place and must continue to pay the mortgage and the homeowners-association dues lest he jeopardize the permanent-residency permit he applied for in 2005.

For more, see Owners worry moldy condos are unsellable — and unlivable (It will take an estimated $4 million to repair a Redmond condo complex, where water damage has riddled some units with toxic mold. But when condo owners tried to get the developer to pay, they couldn't find him: he had moved to Mexico and the original development company had been dissolved).

Escrow Agent Cops Guilty Plea For Role In Mortgage Fraud, Straw Buyer Flipping Scam Allegedly Involving Hundreds Of Condo Units Throughout California

From the Office of the U.S. Attorney (Oakland, California):
  • Donna Demello pleaded guilty in federal court in Oakland [] to conspiracy to commit wire and mail fraud for her role in a mortgage fraud scheme, United States Attorney Melinda Haag announced. At the time of the offense, Demello worked as an escrow officer at Stewart Title in Milpitas, Calif.

  • Demello, 44 of San Jose, Calif., [...] and five others, including James Delbert McConville, were charged with conspiracy to commit mail and wire fraud in violation of Title 18, United States Code, Section 1349. The Indictment alleges that McConville purchased hundreds of condominiums throughout California in the names of straw buyers, individuals who were promised $5,000 to $10,000 for the use of their names and credit. The loan applications are alleged to have contained false information about the employment, income, and assets of the straw buyers.

  • Demello admitted to participating in the fraudulent approval of approximately 80 loans for condominiums in Escondido, Calif., and San Marcos, Calif. The government has alleged in its filings that loans totaling more than $20 million were approved for the purchase of these condominiums in Southern California, and that more than $11 million of that was paid directly out of escrow to individuals and companies controlled by McConville.

For more, see Escrow Officer Admits Role In Mortgage Fraud.

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

Historic Hip-Hop Birthplace May Get New Life As NYC Helps Finance Delinquent Bronx Building Loan Buy; “A Great Moment For 1520 Sedgwick": DJ Kool Herc

From The Bronx, New York, The New York Times reports:
  • Housing advocates, tenants and elected officials(1) have declared a victory in the Bronx with the announcement of the sale of the mortgage on an apartment building that has been called the birthplace of hip-hop. The sale, which was financed with significant help from city agencies, was the first step toward bringing in new owners after what tenants called an era of neglect.


  • The hulking brick tower at 1520 Sedgwick Avenue(2) has been a haven for generations of working-class families. In the early 1970s, a young resident named Clive Campbell, otherwise known as D.J. Kool Herc, held much-celebrated parties in the community room — parties that played a crucial role in the early evolution of hip-hop.


  • The building was sold in 2008 to a real estate group that included Mark Karasick, a prominent real estate investor, as part of a wave of deals in neighborhoods that had long been ignored. [...] When the real estate bubble burst, the building’s conditions deteriorated, leaving tenants to battle rats, roaches and the threats of foreclosure. [...] The city provided a $5.6 million loan to [finance the purchase of] the building’s mortgage from Sovereign Bank for $6.2 million.


  • Gloria Robinson, president of the Sedgwick tenants’ association, said the sale offered the prospect of much-needed relief. “It had gotten to a point where nothing was being done properly around the building,” Ms. Robinson said. “The garbage wasn’t being picked up, the floors weren’t being cleaned. It just got really, really bad. It’s like we’re starting fresh now.”

For more, see Hope for a Bronx Tower of Hip-Hop Lore.

See also: Press release from the Office of the Mayor of the City of New York: Mayor Bloomberg, Senator Schumer, Congressman Serrano, Speaker Quinn and City Housing Officials Cestero and Jahr Announce Plan to Rescue South Bronx Housing Complex.

Go here for more on the history of 1520 Sedgwick Avenue, and here for a 2007 New York Times story on 1520 Sedgwick that asks Will Gentrification Spoil the Birthplace of Hip-Hop?(4)

(1) The public announcement, which took place on September 7, drew the usual suspects: Mayor Mike Bloomberg, the never-media-shy U.S. Senator Charles E. Schumer, Congressman Jose E. Serrano, City Council Speaker Christine C. Quinn, New York City Department of Housing Preservation and Development Commissioner Rafael E. Cestero and New York City Housing Development Corporation President Marc Jahr.

(2) For those hop-hop fans planning a pilgrimage to 1520 Sedgwick in The Bronx (not to be confused with Florida's 1520 Sedgwick Avenue, located in the city of Titusville, in Brevard County), and wonder exactly where it is, it is located just north of the Cross Bronx Expressway and along the Major Deegan Expressway, little more than a stone's throw from the historic George Washington Bridge. Go here for a local street map and directions.

(3) Speaker Quinn noted DJ Kool Herc's role in the history of 1520 Sedgwick in her public statement. “Three decades ago, DJ Kool Herc mixed funk songs with African beats and rap, and hip-hop was born during a house concert in the basements of 1520 Sedgwick. Hip-hop has often been an expression of hardships and 1520 Sedgwick has seen its fair share of struggles. After the fiscal crisis, 1520 Sedgwick became a victim of predatory equity investors, and we were at risk of losing a historical and cultural landmark. But with this purchase and $3 million of Council funding for repairs, we will now see the rebirth of 1520 Sedgwick – and maybe see history created once again. I’m particularly excited that this will give tenants a chance to recreate their homes, not to mention the possibility of one day converting the building into a co-op. I want to thank the Mayor, Senator Schumer, Congressman Serrano, HPD Commissioner Cestero and HDC President Marc Jahr for continuing to think of creative solutions to save the City’s distressed buildings.”

(4) Three years later, one can say that while gentrification didn't spoil the birthplace of hip-hop, the failed attempt at gentrification almost did.

Friday, September 10, 2010

FHA Continues Doing Business With Home Loan Execs With Tainted Backgrounds???

The Washington Post reports:
  • A crackdown on reckless mortgage lenders by the Federal Housing Administration has failed to root out several executives with criminal records whose firms continue to do business with the agency in violation of federal law, according to government documents, court records and interviews.

For more, see Executives with criminal records slip through FHA crackdown, documents show.

Homeowners' Lack Of Knowledge, Confusion About Complex Homestead Protection Laws Against Certain Creditors Creates Opening For Sleazy Debt Collectors

The New York Times reports:
  • [E]ven though homestead exemptions have been on the books since the late 1800s, many people do not know about them. Tax officials, consumer credit counselors and bankruptcy lawyers said homeowners often fail to claim rightful deductions on their property taxes and are unaware that a homestead, or a significant portion of its value, is often legally protected from creditors unless the house itself is collateral on a debt like a mortgage.


  • The degree to which homesteads are shielded from creditors [] varies by location and sometimes by age, marital status and number of children. Homesteads in Florida, for example, are almost entirely protected from seizure by unsecured creditors (those without a lien), which is why O.J. Simpson’s home there remained in his possession even after he had several judgments against him. Had he declared his homestead in New Jersey, Maryland or Pennsylvania, his creditors could have taken his house because those states have no homestead exemption.

  • In between these extremes are states like New York, where the homestead protection from creditors is $50,000. In California, the limit is $75,000 for those younger than 65 and $175,000 for seniors and the disabled. Other states, like Kansas and Iowa, cap homestead protections at a certain amount of acreage rather than a dollar amount.(1)


  • Complicating things further is that in some states, such as Kentucky and New Hampshire, the homestead protection from creditors is usually a default right, while in others, such as Idaho and Washington, a legal filing is required in some instances.


  • Unscrupulous credit collection agencies may add to the confusion by threatening to evict debtors from their houses when that’s not legally possible. “It appalls me how many people are scared to death that they are going to be thrown out on the street because they have never heard of the homestead exemption,” said Nina Parker, a consumer bankruptcy lawyer in Winchester, Mass. Whether it’s for the tax break or protection from creditors, she said, “Best practice is to register your homestead when you buy your house.”


  • It’s hard to communicate what people’s homestead rights are because the laws are so complicated and there are debt collectors out there spreading misinformation,” said Katherine Porter, a professor at the University of Iowa College of Law. “Unfortunately, a complex right can be a worthless right to the consumer.”

For more, see Home is where the exemption is (if link expires, TRY HERE).

(1) Likewise in Texas and Florida.

"Schack" Rulings Merit Note In Ohio Appeals Court Ruling Reinforcing Importance To Borrower That Promissory Note's Chain Of Title Be Established

In recent, apparently high stakes litigation(1) in which a lower court's ruling dismissing a lender's foreclosure action was affirmed, an Ohio Court of Appeals issued a reminder of how essential it is to the borrower (ie. the "maker" or "obligor" of the note) that the lender prove it is the proper holder of the promissory note being enforced.

In addition, it cited several rulings from Kings County (Brooklyn), New York Supreme Court Justice Arthur M. Schack to "indict" the lender in this case (HSBC Bank) and its "confederates" (Ocwen, Delta Funding Corporation, and Mortgage Electronic Registration Systems, Inc. - "MERS" ) for their history of apparent sloppiness when bringing foreclosure actions.(2)

Beginning at paragraph 71 of the Ohio appellate court ruling:

  • Thompson contends that because the last-named endorsement is made to Delta, Delta was the proper holder of the note when this action was filed, since the prior, first-named endorsement was from an entity other than the current holder of the note. In Adams v. Madison Realty & Development, Inc. (C.A.3, 1988), 853 F.2d 163, the Third Circuit Court of Appeals stressed that from the maker's (obligor's) standpoint:

    "it becomes essential to establish that the person who demands payment of a negotiable note, or to whom payment is made, is the duly qualified holder. Otherwise, the obligor is exposed to the risk of double payment, or at least to the expense of litigation incurred to prevent duplicative satisfaction of the instrument. These risks provide makers with a recognizable interest in demanding proof of the chain of title." Id. At 168.

  • The Third Circuit Court of Appeals further observed that:

    "Financial institutions, noted for insisting on their customers' compliance with numerous ritualistic formalities, are not sympathetic petitioners in urging relaxation of an elementary business practice. It is a tenet of commercial law that `[h]oldership and the potential for becoming holders in due course should only be accorded to transferees that observe the historic protocol.'" 853 F.2d at 169 (citation omitted).

  • Consistent with this observation, recent decisions in the State of New York have noted numerous irregularities in HSBC's mortgage documentation and corporate relationships with Ocwen, MERS, and Delta. See, e.g., HSBC Bank USA, N.A. v. Cherry (2007), 18 Misc.3d 1102(A), 856 N.Y.S.2d 24 (Table), 2007 WL 4374284, and HSBC Bank USA, N.A. v. Yeasmin (2010), 27 Misc.3d 1227(A), 2010 N.Y. Slip Op. 50927(U)(Table), 2010 WL 2080273 (dismissing HSBC's requests for orders of reference in mortgage foreclosure actions, due to HSBC's failure to provide proper affidavits). See, also, e.g., HSBC Bank USA, N.A. v. Charlevagne (2008), 20 Misc.3d 1128(A), 872 N.Y.S.2d 691 (Table), 2008 WL 2954767, and HSBC Bank USA, Nat. Assn. v. Antrobus (2008), 20 Misc.3d 1127(A), 872 N.Y.S.2d 691,(Table), 2008 WL 2928553 (describing "possible incestuous relationship" between HSBC Bank, Ocwen Loan Servicing, Delta Funding Corporation, and Mortgage Electronic Registration Systems, Inc., due to the fact that the entities all share the same office space at 1661 Worthington Road, Suite 100, West Palm Beach, Florida. HSBC also supplied affidavits in support of foreclosure from individuals who claimed simultaneously to be officers of more than one of these corporations.).


The Ohio appeals court adds this observation at paragraph 81 of its ruling (Note that Ocwen Loan Servicing's notorious, seemingly omnipresent, multiple corporate hat-wearing vice president Scott Anderson receives an "honorable" mention for his role in this case):

  • Even if HSBC had provided support for the proposition that ownership of the note is not required, the evidence about the assignment is not properly before us. The alleged mortgage assignment is attached to the rejected affidavits of Neil. Furthermore, even if we were to consider this "evidence," the mortgage assignment from MERS to HSBC indicates that the assignment was prepared by Ocwen for MERS, and that Ocwen is located at the same Palm Beach, Florida address mentioned in Charlevagne and Antrobus. See Exhibit 3 attached to the affidavit of Chomie Neil.

  • In addition, Scott Anderson, who signed the assignment, as Vice-President of MERS, appears to be the same individual who claimed to be both Vice-President of MERS and Vice-President of Ocwen. See Antrobus, 2008 WL 2928553, * 4, and Charlevagne, 2008 WL 2954767, * 1.(3)

For the entire ruling, see HSBC Bank USA v. Thompson, 2010 Ohio 4158 (2nd App. Dist., Montgomery County, September 3, 2010).

(1) The stakes in this case, which by all appearances involved nothing more than your standard, run-of-the-mill "lack of standing" and "real party in interest" claims, were apparently somehow ratcheted up significantly along the way as it attracted enough interest from the Ohio Attorney General's office to cause it to jump into the fray and file a "friend of the court" brief supporting the homeowner's position.

Further, a second amicus brief, also supporting the homeowner's position, was filed on behalf of six non-profit legal and consumer advocates, who also wanted to get in on the action.

Not to be outdone, in addition to being represented by local counsel, the foreclosing lender also called in the Washington, D.C. office of some big-shot, white shoe law firm for additional artillery (apparently to no avail).

(2) For links to some of Justice Schack's rulings booting sloppy foreclosing lenders from his courtroom, see:

Go here for other posts referencing Justice Schack.

(3) For some of the cases in which Scott Anderson receives mention for his multiple corporate hat-wearing role, see:

Judge Calls Off Tax Foreclosure Sale, Gives Homeowner Extension To Cough Up Cash After Finding Temporary Legal Incapacitation Prevented Payment

In Berrien County, Illinois, WSJM Radio 94.9 FM reports:
  • The owner of a lakefront home in Saint Joseph that was almost auctioned off by the Berrien County Treasurer's office won a break in court last week. According to the Herald Palladium, the Lakeshore Drive home of Tony Basso, of Chicago, will not be offered as part of a tax foreclosure auction on September 21st, after all. The treasurer's office had previously said that property taxes on the home were not paid for about three years and that Basso had all but abandoned the place.

  • However, Berrien County Trial Court Judge John Dewane decided last week that Basso was legally incapacitated and unable to attend to his affairs during that period. As such, he was entitled to some relief.

  • Basso, who is 82, told the court that he went to Italy about five years ago to help with family problems, leaving money with his son in Chicago to take care of the home in Saint Joseph, which is worth about 500-thousand dollars. The son failed to do so, but Basso couldn't manage the issue due to health problems. He now has until October first to pay the back taxes, and pay back the city of Saint Joseph for lawn mowing it's done for him at the property.

Source: Foreclosed Homeowner Gets A Break In Court.

Thursday, September 09, 2010

Ohio Appeals Court Boots Promissory Note-Lacking Lender As State AG, Six Non-Profits Jump Into (Apparently) High-Stakes Fray In Support Of Homeowner

A recent decision ruling by an Ohio Court of Appeals affirmed a lower court's ruling:
  • striking the affidavit of an employee of a loan servicer (identified as a manager of trial preparation and discovery for Ocwen Loan Servicing) acting as servicing agent of the purported lender (HSBC Bank, as Trustee for ..., etc., etc.) that brought a foreclosure action because of defects in the affidavit;

  • refusing to consider the Ocwen employee's restated affidavit, in the course of deciding objections to the magistrate's decision, because HSBC failed to indicate why it could not have properly submitted the evidence, with reasonable diligence, before the magistrate had rendered a decision in the matter; and

  • rendering summary judgment against HSBC, and dismissing the foreclosure action for lack of standing because HSBC failed to establish that it was (a) the real party in interest to bring the suit, and (b) the holder of the promissory note secured by the mortgage being foreclosed.

The stakes in this case, which by all appearances involved nothing more than your standard, run-of-the-mill "lack of standing" and "real party in interest" claims, were apparently somehow ratcheted up significantly along the way as it attracted enough interest from the Ohio Attorney General's office to cause it to jump into the fray and file a "friend of the court" brief supporting the homeowner's position.

Further, a second amicus brief, also supporting the homeowner's position, was filed on behalf of six Ohio non-profit legal and consumer advocates, who apparently also wanted to get in on the action.(1)(2)

Among the points the appeals court had problems with, and that sunk the lender in this case were:

  • In the original affidavit filed on behalf of HSBC, the Ocwen employee averred "[t]hat he had executed it in Palm Beach, Florida. However, the notation at the top of the first page of the affidavit and the jurat both state that the affidavit was sworn to and subscribed to in New Jersey, before a notary public." (see paragraph 11 of the ruling);

  • With respect to the restated affidavit, "The affidavit was identical to what was previously submitted, except that the first page indicated that the affidavit was being signed in Palm Beach County, Florida. The jurat is signed by a notary who appears to be from Florida, although the notary seals on the original and copy that were submitted are not very clear. HSBC did not offer any explanation for the mistake in the original affidavit." (see paragraph 15 of the ruling);

  • Regarding copies of a pair of purported, undated "allonges" submitted as loose papers to the court by the servicer accompanying a purported copy of the promissory note, there was no evidence that the allonges were ever affixed to the note as required under Ohio law; and further, the order in which the purported allonges were submitted did not support HSBC's claim that it was the holder of the promissory note.(3)

For the entire ruling, see HSBC Bank USA v. Thompson, 2010 Ohio 4158 (2nd App. Dist., Montgomery County, September 3, 2010).

(1) The Ohio non-profit heavyweights who chimed in with their support of the homeowner's position were:

(2) Not to be outdone, in addition to being represented by local counsel, the foreclosing lender also called in the Washington, D.C. office of some national, big-shot, white shoe law firm for additional artillery (apparently to no avail).

(3) In this regard, the appellate court stated (at pargraphs 67-70):

  • {¶ 67} In contrast to Watson, no evidence was presented in the case before us to indicate that the allonges were ever attached or affixed to the promissory note. Instead, the allonges have been presented as separate, loose sheets of paper, with no explanation as to how they may have been attached. Compare In re Weisband, (Bkrtcy. D. Ariz., 2010), 427 B.R. 13, 19 (concluding that GMAC was not a "holder" and did not have ability to enforce a note, where GMAC failed to demonstrate that an allonge endorsement to GMAC was affixed to a note. The bankruptcy court noted that the endorsement in question "is on a separate sheet of paper; there was no evidence that it was stapled or otherwise attached to the rest of the Note.")

  • {¶ 68} It is possible that the allonges in the case before us were stapled to the note at one time and were separated for photocopying. But unlike the alleged creditor in Watson, HSBC offered no evidence to that effect. Furthermore, assuming for the sake of argument that the allonges were properly "affixed," the order of the allonges does not permit HSBC to claim that it is the possessor of a note made payable to bearer or endorsed in blank.

  • {¶ 69} The first allonge is endorsed from Delta to "blank," and the second allonge is endorsed from Fidelity to Delta. If the endorsement in blank were intended to be effective, the endorsement from Fidelity to Delta should have preceded the endorsement from Delta to "blank," because the original promissory note is made payable to Fidelity, not to Delta. Delta would have had no power to endorse the note before receiving the note and an endorsement from Fidelity.

  • {¶ 70} HSBC contends that the order of the allonges is immaterial, while Thompson claims that the order is critical.

Court Hammers Alleged Loan Modification Racket With $100K Judgment; 2nd Score Against Foreclosure Rescue Operators In Recent Weeks For Wisconsin AG

In Dane County, Wisconsin, the Milwaukee Journal Sentinel reports:
  • A Dane County circuit judge has ordered the California-based Federal Loan Modification Center LLP to pay $105,754 and to stop doing business illegally in Wisconsin, Attorney General J.B. Van Hollen said [].

  • Van Hollen said in a statement that the company falsely presented itself as part of a federal program offering to help distressed homeowners modify their loans and stave off foreclosure. The firm collected as much as $3,500 in fees from Wisconsin homeowners, then failed to provide promised services or refunds, Van Hollen said.


  • The state Justice Department last week won a $111,861 judgment against another California company, Relief Law Center Inc. for violating consumer protection laws in soliciting homeowners for purported loan modification services.(1) In that case, the solicitations were designed to appear as though the firm was a loan auditor investigating the homeowner's lender, Van Hollen said.

Source: Loan firm told to pay $105,754.

(1) See Van Hollen Announces Judgment Against USA Loan Auditors.

State Regulator Orders Two Suspected Loan Modification Outfits To Cease & Desist As Sheriff's Deputies Execute Search Warrants On Companies' Records

In Northern Florida, The Florida Times Union reports:
  • The Florida Office of Financial Regulation ["OFR"] and Clay County Sheriff's Office [] ordered two Clay County mortgage loan modification companies to cease business and served search warrants on their records, the two agencies announced.

  • The two companies closed were Global Equity Solutions, [...] in Middleburg, and Hope Financial Services, [...] in Orange Park. The OFR served immediate cease and desist orders barring the companies from doing business as the sheriff's office executed the search warrants. Names were not released because charges are pending further investigation, the agencies said.


  • OFR investigators found the two companies marketed their services throughout the country via websites, mass mailings and a telephone call center. The companies have about 250 open contracts, where they received between about $1,200 and $1,800 up front first. Those who perform loan modifications in Florida without an active license are subject to being slapped with felony charges punishable by up to five years in prison and a fine as much as $5,000 per offense, [OFR communications director Flora] Beal said.

For the story, see State regulators shut down loan modification companies in Clay County.

Wednesday, September 08, 2010

Servicing Handbook Issued By Treasury Department Sets Forth New Rules For HAMP-Participating Loan Servicers When Evaluating Loan Modifications

Lexology reports:
  • There is a new manual governing HAMP loan modification practices, and the changes, often subtle but important, are worth noting. The United States Department of Treasury created the Home Affordable Modification Program (“HAMP”) to assist homeowners in default (or at risk of default) on their mortgages.


  • Although participation in the program is voluntary, HAMP imposes a number of requirements on participating servicers, including notice and reporting requirements. Until now, such requirements could be found only in what some perceived to be confusing and contradictory “Supplemental Directive” letters available on the HAMP website for servicers,

  • The Treasury Department has now released a Servicing Handbook that combines the former Supplemental Directives while also amending or revising prior guidelines. [...] The new Servicer Handbook does not merely collect prior guidelines — it establishes entirely new rules, in some cases clarifying or superseding prior Supplemental Directives.

For more, including an overview of the major new guidelines or clarifications, see The Home Affordable Modification Program: new handbook, revised guidelines (subscription required; if no subscription, TRY HERE; or GO HERE, then click link for the story).

For a copy of the new Servicer Handbook, see Making Home Affordable Program: Handbook for Servicers of Non-GSE Mortgages (Version 1.0 - 77 pages).

San Diego DA Bags Pair In Alleged Forged Deed, Bogus Bankruptcy Filing, Rent Skimming Ripoff Affecting 300+ Victims Throughout Five Counties

In San Diego, California, KGTV-TV Channel 10 reports:
  • Two brothers were charged Tuesday in a $1.5 million foreclosure fraud scheme in which they allegedly stole the identity of several notaries and forged hundreds of deeds across five counties, including San Diego.

  • David Zepeda, 57, and John Zepeda, 59, are each charged with 104 felony counts, including identity theft, forgery, grand theft and rent-skimming. The "brazen" conspiracy involved more than 300 victims, said San Diego County District Attorney Bonnie Dumanis.


  • In San Diego, more than 40 alleged victims have been identified, with losses totaling approximately $100,000, Dumanis said. Victims were also located in Santa Barbara, Ventura and Los Angeles counties, as well as Clark County in Nevada, said Deputy District Attorney Valerie Tanney.


  • Authorities said the Zepeda brothers identified properties in foreclosure and acquired title either by forging a quitclaim deed, which transfers the property into a trust, or convincing homeowners to transfer the property to them by promising the homeowner they would help avoid foreclosure.

  • Once they had acquired the title, the Zepedas would rent out the property, according to authorities. In order to forestall the foreclosure process and to extend the period over which they collected rent, the brothers also filed bankruptcy petitions, prosecutors said.

For more, see Brothers Charged In $1.5M Foreclosure Fraud Scheme (David And John Zepeda Each Face 104 Felony Counts).

Ex-TV News Anchor Says Loan Mod Racket Ruined His Reputation, Stiffed Him On Infomercial Fee After Promises To Homeowners In Foreclosure Were Broken

In Houston, Texas, KRIV-TV Channel 26 reports:
  • [H]omeowners Legal Assistance, also known as Delgado and Associates, was featured on infomercials on Spanish television. The advertisements featured Antonio Hernandez, a veteran Houston news anchor, as well as a money back guarantee. "It looked very credible on the surface and it wasn't," said attorney J.C.Castillo. [Homeowner Jose] Valladares paid the business $3,000.


  • When Valladares and other unhappy customers returned to the southwest side office building, the business was gone. "When all these complaints started coming in from everywhere, that's when they decided boom, it disappeared," said Castillo.

  • If losing their money and or their homes wasn't enough, some customers had bankruptcy filings they say they knew nothing about. Those filings were apparently done to stop their foreclosures. "That's obviously fraud on the bankruptcy court and fraud on the homeowners when that was being done," said Castillo. Court documents state one of the business' employees filed numerous bankruptcy cases for customers and in the process violated several provisions of the bankruptcy code. "Everything fell apart and everybody started pointing fingers at each other," said Castillo.

  • Business owner Arnold Gonzales and hundreds of thousands of dollars are nowhere to be found, according to court testimony. The bankruptcy court tried six times to serve Gonzales with a subpoena to testify. "We know that Arnold Gonzales disappeared and nobody seems to know where he's at," said Castillo.

  • Former television news anchor Antonio Hernandez told FOX 26 Investigates Gonzales owes him money for appearing in the commercials. He also accuses the business of ruining his reputation and plans to sue. Castillo estimates a thousand or more homeowners may have been ripped off by the business. [...] A criminal investigation is now underway.

For the story, see Unkept Promises For Homeowners Facing Foreclosure.

Ex-Real Estate Agent Cops Plea For Role In Mortgage Fraud Scam Where Builder Kicked Backed Cash To Buyers, Salespeople To Help Unload Unsold Inventory

In Charlotte, North Carolina, The Charlotte Observer reports:
  • A Mint Hill man has pleaded guilty in connection with a mortgage fraud scheme that involved kickbacks [by] a homebuilder, according to documents filed Wednesday in federal court in Charlotte. Mike Foley, a former real estate agent, pleaded guilty to one count of mortgage fraud conspiracy and one count of making false statements. He will be sentenced later.

  • The mortgage fraud scheme, according to court records, involved an unnamed builder who agreed to pay hidden kickbacks to buyers - and to promoters who would find buyers - in order to sell houses. [...] Foley was accused of serving as a real estate agent in the deals and facilitating the kickbacks. [...] Overall, the conspiracy involved about $5 million in kickbacks and about $42 million in fraudulent loans, court records say.

For the story, see Guilty plea entered in mortgage fraud case.

Tuesday, September 07, 2010

Fla. Rocket Dockets' Use Of Retired Judges To Steamroll Homeowners In Foreclosure Leaves Advocates Crying Foul As "Standing" Issues Are Often Ignored

The New York Times reports:
  • No one disputes that foreclosures dominate Florida’s dockets and that something needs to be done to streamline a complex and emotionally wrenching process. But lawyers representing troubled borrowers contend that many of the retired judges called in from the sidelines to oversee these matters are so focused on cutting the caseload that they are unfairly favoring financial institutions at the expense of homeowners.

  • Lawyers say judges are simply ignoring problematic or contradictory evidence and awarding the right to foreclose to institutions that have yet to prove they own the properties in question. “Now you show up and you get whatever judge is on the schedule and they have not looked at the file — they don’t even look at the motions,” says April Charney, a lawyer who represents imperiled borrowers at Jacksonville Area Legal Aid. “You get a five-minute hearing. It’s a factory.”


  • The [Rodney] Waters case offers an example of how wrong things can go in complex foreclosure cases. While AmTrust, a failed Ohio bank that is now a division of New York Community Bank, said it owned the note and could foreclose, Mr. Waters’s lawyer produced documents showing that Fannie Mae, the taxpayer-owned mortgage finance giant, was really the owner. In spite of the conflicting evidence, Aaron Bowden, the retired judge overseeing the case, made a summary judgment on Aug. 3, ruling that the property should go back to AmTrust. Mr. Bowden did not return phone calls seeking comment.

  • Chip Parker, managing partner at Parker & DuFresne in Jacksonville, which represents Mr. Waters, said: “The threshold issue in any foreclosure case is who has the right to foreclose. We presented evidence to the judge that Fannie Mae owns the note and mortgage, and yet the judge ignored this crucial evidence.”

  • Mr. Parker is concerned that some homeowners are victimized by the system. “What we are talking about is railroading homeowners through the rocket docket,” he added. When contacted by a reporter on Thursday, a spokeswoman for Fannie Mae confirmed that it owned the note. David Tong, the lawyer representing AmTrust in the case, declined to comment on the matter. But on Friday, he did an about-face, filing papers with the court acknowledging that Fannie Mae owns the note.


  • Setting up discrete foreclosure courts statewide was seen as a way to help deal with the issue; consumer law experts say they aren’t aware of any other state that has set up a temporary court to work down such a backlog.

  • But it is paradoxical, say lawyers representing homeowners in the cases, that Florida’s attorney general acknowledges problems in the cases while retired judges, intent on reducing caseloads, seem unconcerned about those same problems — like flaws in the banks’ documentation of ownership.

For more, see Florida’s High-Speed Answer to a Foreclosure Mess.

Convicted Foreclosure Rescue Scammer Could Face Life Sentence On New Charges In Alleged Sale Leaseback, Equity Stripping Ripoff That Fleeced 5 Victims

In Los Angeles, California, The Los Angeles Times reports:

  • Timothy Barnett spent nearly five years in state prison for a 1990s foreclosure rescue scam in which he conned homeowners out of tens of thousands of dollars. Now, prosecutors say, he has been at it again, targeting residents in the same South Los Angeles neighborhood he fleeced before.

  • But this time, the state is unleashing one of its more powerful weapons against him. The Los Angeles County district attorney's office has charged Barnett under California's much-debated three-strikes law. Usually aimed at offenders with a history of violent crime, it is rarely used for white-collar offenses such as fraud.

  • Arrested in April, the 47-year-old Barnett is charged with 23 felonies — including theft from the elderly, identity theft and real estate fraud — for allegedly tricking five people into unknowingly granting him title to their homes.(1) He has pleaded not guilty. Some experts said the case would be one of the first times a person charged with a white-collar crime was prosecuted under the state's three-strikes law. If convicted, Barnett could face life in prison.


  • He is charged with tricking victims — who said they thought they were refinancing their delinquent mortgages — into selling him their homes for a fraction of their value.(2) By the time prosecutors began looking at Barnett again, he had bought a $3.1-million home in Orange County and three Mercedes-Benz vehicles.


  • In addition to the five cases that are the subject of the criminal case, several others are described in civil lawsuits filed against Barnett. [...] "He'd look for homes that had a lot of equity and people that were vulnerable," said Patrick Dunlevy of the Los Angeles-based Public Counsel Law Center,(3) which has filed lawsuits on behalf of several people who said they had lost their homes to Barnett. "He would bill himself as a Christian, say he was doing God's work. That resonated very well with the people he was approaching.... It was all a con, just a way to get them to trust him."

For more, see Man accused of fraud may get life in prison under California's three-strikes law (The stiff penalty is rarely used against white-collar criminals. Timothy Barnett is charged with 23 felonies for allegedly tricking five people into unknowingly granting him title to their homes).

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

(1) According to the story, prosecutors also charged him with burglary because he met with his victims in their homes. Under California law, a person can be convicted of residential burglary for entering someone's house with the intent to commit a felony, even if he or she enters with the homeowner's permission, the story states.

(2) California case law appears to clearly support the proposition that, at least in the context of a criminal prosecution, tricking people into unknowingly signing over the title to their homes constitutes the crime of forgery. See:

Buck v. Superior Court, (1965) 232 Cal.App.2d 153 (case law links may require free registration at

  • Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. (Conklin v. Benson, 159 Cal. 785, 791 [116 P. 34, 36 L.R.A. N.S. 537]; Wright v. Rogers, 172 Cal.App.2d 349, 362 [342 P.2d 447].) An encumbrance may be the subject of forgery. (Conklin v. Benson, supra, page 792.) The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. (People v. McAffery, 182 Cal.App.2d 486, 493 [6 Cal.Rptr. 333]; People v. Morgan, 140 Cal.App.2d 796, 800 [296 P.2d 75].) Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent.

People v. Martinez, (2008) 161 Cal. App. 4th 754; 74 Cal. Rptr. 3d 409:

  • [A] a forgery conviction can be based on a document with a genuine signature.

See More On Property Owners Being Tricked Or Deceived By Scammers Into Signing Documents for a sampling of additional California case law in this regard.

Further, California case law has clearly addressed the notion some scammers appear to operate under in that they can insulate themselves from criminal prosecution when targeting their victims simply by entering into legitimate-looking business contracts to screw them over. See (bold text is my emphasis, not in the original text; case law links are found at - may require free registration):

People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

  • The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]:

  • Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.


  • Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

  • The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

(3) Public Counsel is a Los Angeles-based, pro bono public interest law firm that, according to their website, delivers free legal and social services to the most vulnerable members of the community, including abused and abandoned children, homeless families and veterans, senior citizens, victims of consumer fraud and nonprofit organizations serving low-income communities. They are the public interest law office of the Los Angeles County and Beverly Hills Bar Associations and the Southern California affiliate of the Lawyers' Committee for Civil Rights Under Law.

F'closure Rescue Operator At It Again As DC AG Slams Sale Leaseback Peddler w/ Suit Seeking To Void Title Transfers Violating Consumer Protection Law

From the Office of the District of Columbia Attorney General:

  • Attorney General Peter Nickles announced [] that the District has filed a Superior Court enforcement action against Vincent L. Abell, charging that he engaged in foreclosure rescue transactions that violated the District’s consumer protection law. The District’s complaint asks the Court to rescind the unlawful transactions.

  • According to the District’s complaint, Abell misled homeowners into believing that they were being offered loans that would prevent them from losing their homes to foreclosure. Instead, Abell had the homeowners sign documents that transferred the homes’ titles to him and converted the homeowners into Abell’s tenants.

  • Through these transactions, Abell obtained all of the equity in the homes for only a small fraction of its value. The homeowners victimized by Abell’s practices have typically been financially unsophisticated and desperate to save their homes from foreclosure. “We will not allow District homeowners to be preyed upon in this way,” Attorney General Nickles said.(1)(2)(3)

  • The District has also alleged that Abell sold condominium apartments in DC without posting the bonds or letters of credit required by District law.

For the DC AG press release, see Attorney General’s Office Files Action Against Foreclosure Rescue Scam.

For the DC AG's lawsuit, see District of Columbia v. Abell.

See also WTTG-TV Channel 5: DC Files Enforcement Action Against Foreclosure Rescue Scam, which also includes the story of DC resident Maria-Theresa Wilson, who was screwed over by Abell a couple of years back. She ended up suing him and scored a $3.3 million judgment against him, his company and a confederate named Calvin Baltimore. The judgment was upheld on appeal in a recent ruling. See Modern Mgmt Co. v. Wilson, 997 A.2d 37; 2010 D.C. App. LEXIS 283 (D.C. June 3, 2010).

(1) A 1988 ruling of the District of Columbia Court of Appeals supports the proposition that a home equity ripoff involving a sale of real estate with a contemporaneous leaseback of the premises to the seller, coupled with a right to buy back the property may be nothing more than a disguised usurious equitable mortgage masquerading as a true sale. See Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988) (bold text is my emphasis and [alterations added], neither of which appear in the original text):

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

  • It was therefore altogether reasonable for the trial judge to find that the depiction of each of these transactions as a sale and lease back was a transparent sham which masked an unlawful loan.

(2) For other stories on Vincent Abell and his foreclosure rescue racket, see:

(3) For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams.

Sentencing Postponed For Head Of Southern California Land Patent Foreclosure Rescue Scam

In San Diego, California, KGTV-TV Channel 10 reports:
  • Sentencing was delayed Thursday for a man convicted of defrauding homeowners by falsely telling them that for a price, he could provide them with "land patents" that would protect their properties from foreclosure. Larry Smith, 62, was found guilty in June of 21 felony counts, including grand theft and unlawful practices by a foreclosure consultant.

  • After the trial, Smith fired his attorney and hired another to consider seeking a new trial, according to Deputy District Attorney Marlene Coyne. [...] Smith -- who has prior convictions for second-degree murder, robbery and burglary -- faces a "very lengthy" prison term when he is ultimately sentenced, the prosecutor said. Smith and others tricked homeowners into paying them thousands of dollars for land patents that in fact did not stop their homes from being foreclosed on.

Source: Sentencing Delayed For Foreclosure Protection Scammer (Larry Smith Was Convicted Of 21 Felony Counts).

Monday, September 06, 2010

Labor Day "Greetings" To The Clerks Toiling In Anonymity At The Various Document-Manufacturing, Foreclosure Mill Factories

Sarasota Herald Tribune's Tom Lyons sends a "friendly" Labor Day greeting to all the overworked clerks at Florida's foreclosure mills in a column this weekend. He also comments on the mill bosses, and highlights his column with observations on one recent case where a judge hammered a law mill with a $49,000 fine with a promise to tack on an additional $7,000/day if the law firm/paperwork factory doesn't come up with a plan to clean up its sloppy practices.

For the column, see Lyons: Overworked clerks of foreclosure mills.

Minnesota Lawmakers Create Notice Requirements In Effort To Reduce Rescue Scams, Foreclosure Sale Surplus Swindles, Redemption Rights Ripoffs

Lexology reports:
  • The Minnesota Legislature has implemented new notice requirements to ensure that owners or borrowers of properties subject to foreclosure are properly informed of their rights. These requirements apply to properties with one to four dwelling units, one of which is owner occupied at the beginning of a foreclosure.

  • Foreclosure Advice Notice. Whenever a property is to be foreclosed, Minnesota law requires a foreclosure advice notice to be included with a notice of foreclosure. The template for the foreclosure advice notice has been modified to include the contact information for the U.S. Department of Housing and Urban Development. A template of the foreclosure advice notice can be found in Minn. Stat. §580.041(2).

  • Notice of Redemption Rights. In addition to the foreclosure advice notice, Minnesota law now requires a notice of redemption rights to be delivered with a notice of foreclosure. The purpose of this new law is to avoid abuse based on ignorance of redemption rights. Specific requirements for typeface and printing, as well as a template of the notice of redemption rights, are provided in Minn. Stat. §580.041.

  • Notice of Results of Sale. Minnesota law now requires a notice of results of sale to be provided to an owner or borrower of a property subject to foreclosure. The law applies to any party attempting to purchase the property after it has been auctioned at a foreclosure sale, but before the end of the redemption period. Minn. Stat. §580.06(2). This notice is required for all foreclosure sales conducted between August 1, 2010, and December 31, 2012.

For more, see Notice requirements (subscription required; if no subscription, TRY HERE - then click for the story).

California Lawmakers Move To Squelch Deed Service Ripoff; Bill Awaits Schwarzenegger Sign Off

In Los Angeles, California, KABC-TV Channel 7 reports:
  • A few weeks ago Eyewitness News warned you about a new scam. That report caught the eye of one [California] state legislator who introduced a bill to stop the scam. That bill is now about to be signed into law.


  • "We had homeowners being scammed out of hundreds of dollars for getting a document that they really don't need, because they probably already have it in their files, and two, that they can get it for about $10 instead of paying $200 for it," said [California State Assemblyman Ted] Lieu.

  • The letter from the Title Compliance Office, which doesn't exist officially, is trying to get you to use their services to get a grant deed for your home. The letter makes it sound like your home could go into foreclosure without the deed. But by signing up you'll have to pay $157 or more, and they want you to act right away.


  • The bill is expected to be signed into law by Governor Arnold Schwarzenegger in the next week or two. If you think you need a copy of your grant deed, you can get one through one your county's website.

For more, see Avoid deed scams - go straight to county site.

Wells Fargo Cancels Suit, Modifies Military-Related Mortgage Loan For Strapped Navy Vet After Failing To Follow Gov't Rules On VA Foreclosures

In Jacksonville, Florida, First Coast News reports:
  • [Nancy] Gemmill lived in the home 17 years and never missed a single payment. She owed $49,000 on the home when she lost her job because of health problems. Gemmill used her 401(k) at first to keep up the house but then that ran out, then she called Wells Fargo, asking for help to restructure her payments.

  • "I did everything they said by the book. You need to fill this out, fill that out. I was getting absolutely no response from them. I was at my wits end, didn't know what to do."

  • Gemmill is a retired Navy veteran whose home was purchased with a military loan, which is set up differently than regular loans. "There's special protection put in place to protect the veteran. There's specific rules a mortgage company must follow before they can foreclose on that loan and they didn't follow those rules," said Cronin.

  • So Gemmill and her attorney started to fight back. Recently, a letter came in the mail for Gemmill from Wells Fargo, which notified her it was volunteering to dismiss the case. Gemmill was in shock and was also relieved. She said Wells Fargo also has restructured her payments so she can get back on track. "There will be another 17 years in that house," said Gemmill. Who is already unpacking boxes and settling back in to her home.

For the story, see Jacksonville Woman Fights Wells Fargo on Foreclosure - and Wins.

Foreclosing Lender Agrees To Last Minute Sale Cancellation As Media Exposure Leads To Questions Regarding Bank's Lack Of Standing To Bring Suit

In Norfolk, Virginia, The Virginian-Pilot reports:
  • Hope was beginning to fade last week that Michele McBeth could save her Bayview home from foreclosure. The Norfolk elementary school teacher had been working for weeks with a foreclosure-prevention counselor, and spent hours going through financial documents, filling out paperwork and pleading with her mortgage company to cancel the auction. But Wells Fargo Home Mortgage offered no help, and the Aug. 27 sale date loomed.


  • McBeth contacted Newport News attorney and state Del. Robin Abbott, who had offered to help for no charge after reading [about her story in an Aug. 16 Virginian-Pilot] article. Abbott, who specializes in consumer and mortgage law, scheduled an emergency hearing with a judge to stop the foreclosure. She also called the Richmond attorney hired to handle the foreclosure to point out what Abbott believed were several missteps in the process.

  • "We had some conversations - that I didn't believe he had standing to bring the foreclosure," Abbott said. Among the problems, she said, was that the attorneys had not been hired by McBeth's current mortgage company, Wells Fargo. The attorneys, instead, had been hired by EverHome Mortgage Co., which had transferred the servicing of the loan to Wells Fargo before foreclosure proceedings began.

  • On Aug. 25, the attorney handling the foreclosure agreed to postpone the sale. A new date has not been set. In the meantime, Abbott is preparing to file a lawsuit alleging mishandling of McBeth's case.

For the story, see Norfolk homeowner narrowly averts foreclosure.

Sunday, September 05, 2010

Novice Homebuyers Left Facing Foreclosure Despite Having Made All Their Payments As Builder Allegedly Fails To Pay Off Construction Loan

In Brownsville, Texas, KGBT-TV Channel 4 reports:
  • Nearly 30 families in Brownsville may soon be homeless. Their entire subdivision will be auctioned off is less than two weeks. Residents at the Northeast Estates subdivision in Brownsville received a letter letting them know their properties will be auctioned off by Cameron County [...].

  • "Out of 180 about 80 one going to be auctioned off it appears," Francisco Gonzales told Action 4 News. "This section was never notified of any type of pending land issues or anything of that sort we found out by mere chance."

  • According to court documents, developer Landmark Valley Homes did not pay Inter National Bank in McAllen for dozens of lots at the subdivision and in total they owe a little more than $4 million dollars.(1)

For the story, see Nearly 30 Brownsville families to lose their homes.

See also KRGV-TV Channel 5: Some Brownsville Families Fighting for Their Homes.

For story follow-up, see KRGV-TV Channel 5: Brownsville Neighborhood Saved:

  • Folks who live in a Brownsville neighborhood say a sale to auction off their properties was canceled. Attorney Alex Begum stepped in to help. He spoke with the manager of Inter National Bank in McAllen and came to an agreement. The bank will take over the balances owed by Landmark Valley Homes.

  • The home building company put dozens of families in a bind, by not paying a $4 million debt. The majority of homes will be re-financed. About 50 homes in the North East Estate subdivision were set to be auctioned off [...]. However, the foreclosure sale has been stopped. Begum says he represented 26 people free of charge. He worked to get a global agreement that would keep everyone's home safe.

(1) My surmise is that the builder used a land contract/contract for deed arrangement with each of the unwitting homebuyers where they agree to make a downpayment and subsequent monthly payments directly to the builder. The builder, in turn, transfers possession of the homes to each of them subject to his gigantic construction (or possibly, acquisition) mortgage that's owed to the bank and agrees (either explicitly or implicitly) to apply the payments collected from the buyers to said loan until fully paid, at which point each homebuyer gets the home title. They, in all likelihood, were unfamiliar with real estate transactions, presumably failed to obtain a title search and title insurance protection, and were all caught flat-footed when the builder decided to pocket their payments, stiff the bank, and allow the lender to foreclose on the land out from under everyone.

Cops: Man Used Sheriff's F'closure List To Target Homes In Appliance Thefts; May Have Needed Cash To "Buy Down" Jail Time In Prior Escrow Funds Ripoff

According to various Indiana media reports:
  • Former I[ndiana] U[university] basketball player Todd Leary was arrested [] for allegedly stealing appliances from foreclosed homes in Hamilton County. [...] Leary, 39, Carmel, is accused of stealing appliances from foreclosed homes with the help of two cohorts and selling the appliances to Big Al's Superstore in Indianapolis, said Jeff Wehmueller, administrative chief deputy for the Hamilton County prosecutor's office. Leary used the sheriff's foreclosure listings to target homes he thought were unoccupied, but on at least one occasion, a home was still occupied, Wehmueller said.


  • Warrants were issued for Leary and the other two men identified by police. Leary turned himself in on Wednesday. The others, Gregg Campbell, 50, and Eric Campbell, 44, both of Indianapolis, are already incarcerated in the Marion County Jail on unrelated charges.


  • In July, Leary pleaded guilty to a felony charge of misappropriating title insurance escrow funds in Fort Wayne.


  • His agreement with Allen County prosecutors [in the title insurance escrow ripoff case] called for him to face up to three years in prison, with that cut in half if he pays nearly $295,000 in restitution before a sentencing hearing in October. Prosecutors said Leary worked for a title insurance broker who pleaded guilty in a $2.7 million fraud case.(1)

  • Leary played for Indiana during 1989-94 and was an analyst for IU's radio broadcasts when he was arrested [in the title insurance escrow ripoff case] in February, right before a game against Purdue.

For the stories, see:

(1) See 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.

Southern California Prosecutors Refile Charges In Foreclosed "Monster House" Fixture Stripping Case

In Encinitas, California, North County Times reports:
  • Prosecutors have refiled charges against the woman accused of stripping $1 million worth of lavish fixtures from the foreclosed home her Encinitas neighbors dubbed the "monster house," according to a deputy district attorney. Suzy Brown is scheduled to be arraigned on grand theft and felony vandalism charges in Vista on Sept. 23, Deputy District Attorney Robert Eacret said. [...] Authorities said Brown built the 15-bedroom, 16,000-square-foot home in 2004 to be a rehab center. The city nixed the plan and the home fell into foreclosure.

For the story, see Charges refiled in "Monster House" case.

Go here for earlier posts on the "Monster House" fixture stripping case.

Lender's Continued Efforts In Foreclosure Eviction Forces Renter File Lawsuit To Enforce Federal Tenant Protection Law

In Roseville, California, KXTV-TV Channel 10 reports:
  • A tenant living in a bank-owned home says the bank is trying to force her family to leave despite a federal law protecting renters in foreclosed homes. Christine Pierce, 29, said OneWest Bank has made multiple attempts through its real estate agent and law firm to get her and her husband and their three-year-old son to move out even though they had a two-year lease with the former owner through July 2011.


  • Pierce sought help from California Sen. Barbara Boxer, whose staff appeared to have stopped eviction proceedings. Boxer's office forwarded Pierce a letter dated July 8 from the U.S. Treasury's Office of Thrift Supervision. "OneWest advised us that after commencing the eviction proceedings, it obtained a copy of the lease between Ms. Pierce and the former landlord. In compliance with the Protecting Tenants at Foreclosure Act, OneWest will comply with the lease and terminate the current eviction attempts," the letter from OTS said.(1)

  • But three weeks later, on July 30, an eviction notice appeared on the front door signed by an attorney from the Endres Law Firm in Davis. News10 attempted to speak to a representative from the law firm by telephone. "We have no comment. Thank you," an unidentified woman said before hanging up.

  • A spokeswoman for OneWest Bank told News10 she would research the case. [...] Pierce hired Sacramento attorney Carla Johansen to block the eviction. Johansen said the Pierce case is not uncommon. "Lenders have been actively lying to tenants about what their rights are as far as being evicted after a foreclosure," she said.(2)

For the story, see Roseville tenant: Bank ignoring foreclosure law.

(1) The Federal Protecting Tenants at Foreclosure Act of 2009 provides important federal protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property and, in many cases, the right to remain for the length of the tenant's existing lease term. The law's expiration date has been extended and is now set to expire on December 31, 2014.

See also:

(2) Reportedly, Pierce said she was threatened with eviction by the bank's real estate agent unless she accepted a $5,000 "cash for keys" offer to move out after the house was repossessed in May. Pierce said they were given 15 days to move, which she found unacceptable, the story states. Pierce provided News10 with a copy of the agent's email. "As of right now you do not have an eviction on your record. If you agree to move ... then the eviction would be put on hold," the agent said. "It's threatening," Pierce reportedly said. "They wanted us out of the house and that was that. I called them and said I had a lease that was good until next year and they said it didn't matter."