Saturday, October 23, 2010

5 Bagged In St. Paul-Area Alleged Mtg Scam; Cal. Man's Stolen ID Used In Scoring $1.8M In Loans, Sham Entity Used To Pull Cash From Deals: Prosecutor

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:
  • Hennepin County prosecutors have charged five people with felony racketeering in an alleged mortgage fraud and money laundering scheme centered on a St. Paul-based mortgage brokerage firm.(1)


  • In several cases, part of the proceeds at closing were paid over to "Cire Building," supposedly for improvements negotiated as part of the sale. The complaint says that Cire was a "sham entity" created by [alleged ripoff artist Eric] Bernard.

  • The scheme also involved stealing the identity of a California man, creating a false paper trail to make him appear to be a legitimate buyer, and using that identity to obtain $1.8 million in loans on three properties, according to the complaint.

For the story, see Five charged in mortgage fraud, money laundering scam (Hennepin County prosecutors allege the group conspired to steal millions through phony loans).

(1) Charged were Eric Bernard (also known as Eric Shirpiro), 31, of Shakopee, Stacey Harrold, 42, of Burnsville, David Schoenhofen, 42, of Prior Lake, Michael Hudalla, 44, of Mendota Heights, and Nicole Marie Schmidt (also known as Nicole Origas), 33, formerly of Lake Crystal.

Indiana AG Tags Ten Outfits In Separate Suits For Running Alleged Loan Modification Rackets

From the Office of the Indiana Attorney General:
  • Many homeowners facing foreclosure who are frustrated with their loan servicers turn to for-profit foreclosure consultants whose advertisements often promise any home can be saved from foreclosure and their services are 100% guaranteed. Indiana Attorney General Greg Zoeller [] announced the filing of 10 lawsuits against companies(1) making such claims calling them false and illegal, [...].

For more, see State files lawsuits against 10 foreclosure consultants (Indiana Attorney General Greg Zoeller urges Hoosiers to avoid foreclosure rescue scams).

(1) The ten lawsuits, filed in various counties statewide, target the following outfits:

  • Colonial Financial Solutions, of New Jersey,
  • Pierce, Taylor, & Budrow, of Florida,
  • American Lending Review, of California,
  • National Future Mortgage, of New Jersey,
  • Oceanview Investment Services, of Florida,
  • US Homeowners Relief, of California,
  • Integrated Financial Solutions, of New Jersey,
  • Meridian Law Center, of California,
  • Manhattan Mitigation, of New York,
  • Fair Lending Review, of Nevada.

Kansas AG: Loot Pocketed From Suspected Loan Mod, Foreclosure Rescue Scams Doubles State Haul Attributable To Consumer Protection Enforcement Actions

In Topeka, Kansas, reports:
  • Kansas consumer protection enforcers recovered $17.3 million on behalf of consumers in 2010, more than twice as much as a year earlier, according to reports released Thursday by the state Attorney General's office.


  • A changed focus of consumer complaints from one year to the next accounts for much of the difference, said Gavin Young, a spokesman for the attorney general's office. Alleged debt collection, debt consolidation and credit repair abuses figured prominently in the division's 2009 case loads.

  • Home mortgage modification or repair schemes and foreclosure rescue plans - tending to involve larger sums - became more prominent in 2010.

For more, see Mortgage-scam settlements swell Kansas consumer collections. loan modification

Idaho AG Settles Charges w/ R/E Agent Accused Of Filling In Blanks In Contracts After Obtaining Clients' Signatures, Then Using Phantom Notarizations

In Boise, Idaho, LegalNewsline reports:
  • Idaho Attorney General Lawrence Wasden announced on Wednesday that he has settled with a real estate agent who allegedly violated the Idaho Consumer Protection Act. Daniel Myers and his now dissolved company, Paradigm Solutions LLC, allegedly allowed a client to sign an option contract with missing information that was added in later.(1)


  • Myers allegedly filled in the missing information once the client signed the documents, which made it possible to figure important terms of the contract without the consumer's knowledge or consent. Although the contract was supposed to be signed by a notary, Myers allegedly had his client's signature notarized outside of his client's presence.

  • Similar practices were allegedly carried out by Myers with other property owners who also signed contracts that contained blank spaces that were later filled in.

For more, see Wasden settles with real estate agent.

See also: Idaho AG press release: Boise Real Estate Agent Penalized for Alleged Real Estate Contract Violations.

(1) The alleged information included the beginning and ending date of the option, the address and legal description of the property and the purchase price, the story states. Under terms of the settlement, Myers will modify his business practices to comply with state law, respond quickly to any new complaints that arise, pay $1,500 to cover costs associated with the litigation, and agrees to pay a $10,000 civil penalty in the event of further violations, the story states. Myers was also issued a formal reprimand by the Idaho Real Estate Commission and ordered to pay them $6,300 in fines and costs.

County Sells Unwitting Buyer A Home At Tax Auction, City Demolishes It A Week Later

In Farmington Hills, Michigan, NBC Channel 24 reports:
  • A Michigan woman is devastated after buying a home and seeing it demolished. Susan Tusk had purchased the home from Oakland County for $1,000 at a foreclosure auction last Wednesday. And she had the paperwork to prove it. When she showed up this weekend to do some work on it, Farmington Hills city workers were bulldozing the home.

  • In July, city officials ordered that the owners of four foreclosed houses demolish their properties or the city would move in and do it. Tusk says she had plans to restore the home and live in it.

Source: Mich. woman buys foreclosed home, city then demolishes it.

Minnesota Debt Collector Agrees To Cough Up $1.75M To Settle Federal Allegations Of Illegal Practices

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:
  • Allied Interstate Inc., a large Minnesota debt collection agency with a history of consumer complaints and state fines, has agreed to pay $1.75 million to settle federal allegations that it broke the law by trying to collect debts people didn't owe. The Federal Trade Commission (FTC) said it is the second-largest civil penalty it has obtained against a debt collection firm. It comes amid rising complaints of abusive collection tactics and calls by state and federal legislators for more regulation.(1)


  • Many debt collectors use software, known as "robo dialers," that automatically call the same people multiple times a day. With Allied, such calls continued even after people insisted the firm was calling the wrong person or that they did not owe the debt, the FTC alleged in a federal lawsuit.

For more, see Local debt collector to pay $1.75 million (Federal officials said they are trying to send a message to other debt collectors to stop harassing people over debts they don't owe).

(1) Go here for:

Banks Turn Up The Heat On Delinquent Borrowers; Begin Employing Methods Normally Reserved To Feds While Billing Victims For Dubious Fees

The Spoof (satirically?) reports:
  • Justice Department investigators confirmed today they are considering possible fines and other penalties against several of the United States' largest financial institutions for the murders of hundreds of homeowners delinquent in their mortgage payments.

  • The Justice Department responded to complaints from families of recent murder victims claiming to receive billing statements from the deceased's mortgage companies demanding payment for "ammunition services," "break-in and terrorizing administrative charges," and "blood removal and dry cleaning fees," among other charges related to "Mortgage Remediation Services."

  • According to a Justice Department spokesman, "The Department is taking these accusations very seriously. While the laws regulating just how aggressive lending companies can act in their efforts to collect a debt are very broad, the actual legality of physically killing individuals behind on their payments is rather vague. Congress and the Courts have consistently ruled that large financial institutions can do whatever they want whenever they want, but, the authority to just kill people for very little reason is a power normally reserved to the federal government."

For more, see Banks Face Hefty Fine for Murdering Delinquent Homeowners.

Friday, October 22, 2010

Disbarment Possible For NY Attorneys Representing Foreclosing Lenders For Violation Of State High Court's New 'Anti-Robosigner' Rule

The New York Post reports:
  • While the mortgage industry grapples with a legal morass over millions of flawed foreclosure actions, the chief of New York's courts made a bold move yesterday to ease the crisis -- at least in the Empire State. New York Chief Judge Jonathan Lippman issued a new rule [Wednesday] requiring every lawyer handling foreclosures to sign a document verifying that the paperwork in the case is accurate. Failure to meet the new standard could result in disbarment or other sanctions.


  • Realtors, banks, buyers and the courts are complaining loudly about foreclosure cases tainted by improper documentation and rubber-stamped without any review.

  • Lippman said his rule will for the first time force lawyers to put their careers on the line in foreclosure cases with a binding document that replaces prior "good practices" pledges that had little bite. "We want to make sure that everyone is focusing like a laser on these particular types of proceedings," Lipmann said.

  • Some 78,000 homeowners are already caught up in foreclosure cases around the state. To make a case go forward, the new rule requires lawyers to include the name of a bank employee who affirmed the case facts as correct and the date it was done.

For the story, see Hear ye, hear ye! Lawyers' feet held to fire in foreclosure cases.

See also, NY forces lawyers to verify foreclosures, nixes robosigning:

  • New York’s presiding justices handed down the new state rules after banks disclosed that an unknown number of homeowners faced foreclosure although their lawyers failed to get proper notarization, relied on “robosigning,” and failed to prove “proper standing.”


  • We cannot allow courts in New York to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic needs – such as a family home – during this period of economic crisis,” Chief Judge Jonathan Lippman said in a statement.

NY Attorneys To Score Court-Awarded Legal Fees From Banks For Sucessfully-Defended Foreclosures On Behalf Of Homeowners

Buried at the end of a recent New York Post article on the nationwide foreclosure robosigning scandal is this gem that I'm sure is welcomed by New York foreclosure defense attorneys statewide:
  • [G]ov. [David] Paterson [Wednesday] signed a bill that would enable homeowners who successfully defend themselves against foreclosure proceedings to be awarded lawyer's fees from the lender that sued them. Previously, mortgage holders had no recourse to get lawyers' fees from lenders if foreclosure proceedings were brought against them. Many simply repped themselves or defaulted, said Assemblyman Rory Lancman, a Queens Democrat, who co-sponsored the bill.(1)

Source: Hear ye, hear ye! Lawyers' feet held to fire in foreclosure cases.

See also The New York Times: New Law Allows Homeowners to Recoup Legal Fees in Foreclosure Cases:

  • In some other types of litigation, like employment or civil rights, lawyers’ fees have long been awarded to the winning party, [the new law's co-sponsor, state Assemblyman Rory I.] Lancman said. But foreclosure litigation has been an exception.

  • There’s been a major problem as this foreclosure crisis has exploded in getting representation for people who need counsel,” said Andrew Scherer, the former president of Legal Services NYC, an agency that provides counsel to people who cannot afford lawyers in civil cases.

  • This is going to provide a pretty reasonable incentive for private attorneys to take on these cases,” Mr. Scherer added.

(1) For those New York attorneys practicing in the non-profit, Legal Aid/Legal Services sector of the profession who want some idea as to how to approach the issue of how much in legal fees they can belt foreclosing lenders with when successfully representing their pro bono homeowner-clients in foreclosure actions (and possibly other consumer protection litigation as well), check out this legal fee 'rate sheet' appearing on the website of one of your out-of-state 'bretheren' (unadjusted for contingency fee risk multiplier).

Reports Of Judges Sticking Banks w/ Tab For Homeowners' Legal Fees In Robosigner Cases Increase With Growth Of 'Foreclosure Defense' Bar

The Wall Street Journal reports:
  • The paperwork mess muddying home foreclosures erupted last month. But the legal strategy behind it traces to a lawyer's gambit in 2006 that has helped keep one couple in their home six years beyond their last mortgage payment.

  • Lillian and Robert Jackson stopped paying on their home in Jacksonville, Fla., in 2004 when business dropped off at their cleaning company. Eviction might have seemed inevitable when they faced a foreclosure hearing two years later.

  • But their lawyer, James Kowalski, had the idea of taking a deposition from the signer of the mortgage papers. When a document processor for GMAC Mortgage admitted she routinely signed such papers without being familiar with details of the loans, she was tagged as one of a species now known as robo-signers.(1)

  • It was a first step in the growth of a legal sub-specialty called foreclosure defense that has sown confusion and turmoil in the housing market.(2) Lawyers in the field now commonly use a technique more identified with corporate litigation: probing depositions, designed to uncover any lapses in judgment, flaws in a process or wrongdoing.

  • In the 23 states where foreclosures entail a court hearing, the bank may be ordered to pay the homeowner's legal bill if a lawyer can convince a judge that the bank has submitted false documents, such as affidavits saying employees personally reviewed the details of loans when they didn't.(3)


  • The big risk to banks and the housing market, indeed, is that more homeowners and lawyers come to see such cases as attractive to fight. Mr. Kowalski in Jacksonville has already filed a suit seeking class-action status, in circuit court in St. Johns County, Fla., naming Deutsche Bank AG and Citigroup Inc. mortgage unit Citi Residential Lending, accusing them of violating Florida laws and seeking nonmonetary relief. On Tuesday, a New Jersey law firm filed a damage suit in federal court in New Jersey accusing Bank of America of breaching contracts with borrowers at settlement.

For more, see Niche Lawyers Spawned Housing Fracas.

(1) Reportedly, GMAC's case against the Jacksons was thrown out in 2006 by Florida state-court Judge Bernard Nachman, and has never been refiled. The Jacksons, still living there, are reportedly seeking a settlement with GMAC.

(2) It should be noted that a "produce the note" foreclosure case originally filed as far back as 1999 coming out of Palm Beach County, Florida (see State St. Bank & Trust Co. v. Lord, Case No.CL 99-006652 AW) resulted in a big defeat for a foreclosing lender who couldn't produce the note. The lower court ruling, which was subsequently affirmed on appeal, see State St. Bank & Trust Co. v. Lord, 851 So. 2d 790; (Fla. App. Ct. 4th Dist., 2003), led to a change in the applicable statute (section 673.3091, Florida Statutes - Enforcement of lost, destroyed, or stolen instrument) that no doubt was lobbied for by the financial industry to make it easier to foreclose without having the promissory note.

The 1999 version of Sec. 673.3091(1)(a), Florida Statutes (the statute at the time State St. Bank was originally filed in a Palm Beach County Circuit Court) read as follows:

  • (1) A person not in possession of an instrument is entitled to enforce the instrument if:

    (a) The person was in possession of the instrument and entitled to enforce it when loss of possession occurred;

The 2004 version of Sec. 673.3091(1)(a), Florida Statutes (after the change in the statute), read (and now reads - see current section 673.3091, Florida Statutes) as follows:

  • (1) A person not in possession of an instrument is entitled to enforce the instrument if:

    (a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

The following two points are worth noting here:

  • The Florida Bankers Association appears to tacitly acknowledge their guilt in lobbying for (keen awareness of) the statutory change arising out of the State St. Bank case at page 4 thru 6 of their comments to the Florida Supreme Court made in connection with Emergency Rule and Form Proposals of the Supreme Court Task Force on Residential Mortgage Foreclosure Cases,

  • The attorney representing the (thwarted) foreclosing lender who got clobbered by the court for failing to "produce the note" in the State St. Bank case was none other than notorious South Florida foreclosure mill, Law Offices of David J. Stern, P.A., Plantation, Florida, who presumably played some role in setting the wheels in motion for the change in the statute.

(3) Reportedly, Florida state-court Judge Bernard Nachman ordered GMAC Mortgage, a unit of Ally Financial Inc., to pay the $8,000 fee of the Jacksons' attorney after finding GMAC had filed false testimony, an affidavit in which a document signer, Margie Kwiatanowski, said she had personal knowledge of the details of loans such as the Jacksons'.

In another recent case, a Maine state court judge, in ruling that robosigned affidavits had been submitted "in bad faith," ordered GMAC to pay pro bono attorney Thomas Cox a $27,000 legal fee, a sum it said he might have earned for his legal work if he hadn't been working pro bono, the story states.

Washington securities lawyer Andrew L. Sandler, who represents banks and firms that service mortgages, noted for the story: "The class-action lawyers are swarming around this issue right now, because they perceive that it can result in significant fees for them. [...]"

Reportedly, Michael Gaier, an attorney in Philadelphia, who recently switched to foreclosure defense last year after years of representing patients in malpractice suits and consumers who said they had purchased faulty products, said his new legal practice "is academically challenging, and I'm hoping it'll be financially rewarding. I'm hoping the banks rewrite the mortgages, cover my fees. That's my end game," said Mr. Gaier.

See also Florida Judge Sticks Standing-Lacking Lender With $30K Tab For Homeowner's Legal Bill After Booting Case.

GMAC's Embarrassment Over Publicity Surrounding "Robosigner" Practices Not Enough To Kibosh Dissemination Of Troubling Maine Deposition Over Internet

GMAC's embarrassment over the recent dissemination of a certain deposition revealing its troubling "robosigner" practices was one of the highlights in Maine state court Judge Keith A. Powers' denial of the company's attempt to cover up the contents therein from the public(1) by requesting a protective order, as he sets forth in the following excerpt from page 3 of his September 24, 2010 ruling:
  • Stephan's deposition was taken to advance a legitimate purpose, and the testimony elicited has direct probative value to this dispute. Attorney Cox did not himself take action other than to share the deposition transcript with an attorney in Florida.

    That the testimony reveals corporate practices that GMAC finds embarrassing is not enough to justify issuance of a protective order. Further, Plaintiff has failed to establish that GMAC has been harmed specifically as a result of the dissemination of the June 7, 2010 transcript, given that similarly embarrassing deposition testimony from Stephan's December 10, 2009 Florida deposition also appears on the Internet, and will remain even were this court to grant Plaintiff's motion.

    Accordingly, because Plaintiff has failed to establish its burden of persuasion [...], its Motion of Entry of Protective Order is denied.

For the entire ruling, see Order - FNMA v. Bradbury.

(1) See Mother Jones: Did GMAC Try to Bury Its Foreclosure Smoking Gun? (The deposition the lender really, really doesn't want you to see).

SF Man Gets 16 Months In $100K+ Ripoff Of Homebuyer In Bogus F'closure Rescue Deal; $3K Restitution Offer To Buy Out Jail Time "A Bribe": Prosecutor

In Napa, California, the Napa Valley Register reports:
  • A San Francisco man who scammed a Napa homebuyer out of more than $100,000 will serve 16 months in prison for the crime. Eric Kheng Yim, 35, pleaded no contest in August to grand theft and promised to repay the victim in the case.

  • In early 2008, Yim and his business partner Eddie Ceballos, who operated SAP Investments, approached a couple who were struggling to keep their home [...] and offered to help them, Deputy District Attorney Jose Rossi said. He then contacted the couple’s neighbor, Antonio Parra, and offered to sell the home to him. Parra knew Ceballos and trusted him, and they negotiated a price of $375,000, Rossi said.

  • In April 2008, Parra gave Yim $30,000 that he had saved and took out an additional $70,000 loan, he said. “They never owned the property or had any legal right to the property,” Rossi said. Yim took the money and disappeared, Rossi said. The homeowner lost the home to foreclosure.


  • At Yim’s sentencing Wednesday, Rossi asked for two years in state prison. He noted that Yim brought a $3,000 check for the victim to the hearing, but called it abribe.” “This defendant is the worst type of financial predator,” he said. He took advantage of hard-working people in difficult situations, Rossi said.(1)

For more, see Man gets 16 months for selling home he didn’t own.

(1) Reportedly, Yim’s defense attorney asked Judge Mark Boessenecker to give Yim probation so he could work to pay Parra back. “If he goes to jail, that will be the end of his business and the end of his ability to pay restitution,” he said of Yim’s photography studio. Judge Boessenecker set restitution at $140,479, the story states.

Thursday, October 21, 2010

BofA Says "Take A Hike!" In Response To Those Demanding That It Buy Back Crappy Mortgage Loans That Were Allegedly Improperly Made

The Wall Street Journal reports:
  • Bank of America Corp. and some of its largest mortgage investors clashed on Tuesday as the bank vowed to fight government-backed demands that it repurchase loans that allegedly didn't meet underwriting guidelines and other promises. The bank acknowledged receiving a Monday letter from investors alleging that a Bank of America unit didn't properly service 115 bond deals.

  • The investors include Freddie Mac, the government-owned mortgage company. Freddie Mac and Fannie Mae, its larger sibling, have boosted demands on lenders over the past year to buy back defaulted loans that had been sold to and guaranteed by the mortgage titans.

  • But Tuesday's action marks the first step by either company to force banks to buy back mortgage-backed securities that were issued by Wall Street, not by government-backed mortgage giants.

For more, see BofA Resists Rebuying Bad Loans (Bank Posts $7.3 Billion Third-Quarter Loss as Fee Revenue Tumbles; Effects of Regulatory Overhaul) (requires subscription; if no subscription, GO HERE, then click the appropriate link for the story).

Ohio AG On BofA Fixing Bogus Foreclosure Document Problem In A Matter Of Weeks: "We Are Certainly Not Just Going To Take Their Word For It!"

Ohio Attorney General Richard Cordray recently offered the following statement in response to reports that Bank of America plans to restart foreclosures on borrowers in 23 states where issues of possibly fraudulent documentation have been raised:
  • “While I would not presume to speak for all 50 state attorneys general, from my own standpoint, we will want to be very careful in reviewing whatever their revised process purports to be. I would caution that they still have significant financial exposure in many, many cases if they are now acknowledging that the evidence that they previously submitted to the courts was fraudulent.

    “Those previous submissions remain subject to possible sanctions and penalties by the courts and so Bank of America would be well-advised to consider aggressively pursuing loan modifications as a means of resolving those cases by agreement rather than pushing toward a court order that may involve sanctions and penalties for their prior misconduct.

    “You have to remember, these are the same people who have essentially acknowledged that they committed fraud in perhaps tens of thousands of cases. Now they tell us that they have fixed the problem in a matter of weeks. We are certainly not just going to take their word for it.”

For the Ohio AG press release, see Cordray Is “Deeply Concerned” as Bank of America Announces Move to Resume Foreclosures.

(1) Ohio homeowners who have questions about the litigation against GMAC/Ally or investigations into foreclosure fraud by other banks or mortgage servicers can contact the Ohio Attorney General’s office at Cordray also urged Ohioans with knowledge of foreclosure fraud to contact his office via the new e-mail address and share what they know. “Investigations are put in place to gather evidence, and that is what we are aiming to do here with the help of the public.”

Mom, Family Face Boot After Son Uses Forged Deed To Score Fraudulent Loan On Fully Paid-Off Home; Victim Fights Back, Seeks To Void Deed, Mortgage

In Miami, Florida, The Miami Herald reports:
  • Ten people spanning three generations share a single bathroom in what's left of Annie Edwards' crumbling home in Liberty City. There are holes in the wood floors and trash bags plastered to the leaking ceiling -- and Deutsche Bank is adamant that it wants this 82-year-old structure. It has been fighting to repossess the home since 2006 in an ongoing legal battle that involves allegations of forged signatures, a disbarred property appraiser and a family on the brink of homelessness.


  • Edwards' predicament represents a confluence of the fraud, document forgery, and suspicious foreclosure practices that have plagued South Florida's housing market from the housing boom after Hurricane Wilma in 2005, through the current "robo-signing'' scandal. In the midst of a new national foreclosure crisis, Edwards' story stands out as a case study of the housing and banking systems' laundry list of problems.

  • The 63-year-old retiree says her housing troubles began five years ago when her ex-husband, legally blind and illiterate, was duped into taking out a $102,000 mortgage on the house by his adult son and daughter-in-law. The couple forged Edwards' signature on a document that stripped her possession of the home, and then made off with the money in January 2006, she said.

  • "It's really a sad case,'' said Jonathan Heller, a lawyer who volunteered to defend Edwards from foreclosure.(1) "She worked for 30 years, had no mortgage on the property, is in a wheelchair and every night she goes to sleep thinking, `Am I going to have this house when I wake up?'

For more, see House, homeowner caught in a mortgage meltdown (A Liberty City woman is fighting foreclosure, claiming forgery, fraud and bank negligence in a drama that has her family home at stake).

(1) According to the story, using a dishonest property appraiser was only one of many suspicious actions by mortgage lender Argent Mortgage, Heller alleges. The loan approval process was also questionable, he said. The loan application claims Edwards' ex-husband, Kenneth Edwards, was an "owner-occupier,'' of the home, though he hadn't lived there for 10 years and public records shows he bought a separate homesteaded property in 1996. The bank never checked and, according to Kenneth Edwards, never asked. In a sworn affidavit, he states that he never spoke to any bank representatives before the loan was made.

According to Annie Edwards' counterclaim, the lender also relied on a forged quit-claim deed that stripped her of her ownership, the story states. A police report found her signature on that document was a forgery, the counterclaim states. If the forgery defense is accepted in court, that would make the loan, and the foreclosure, legally invalid.

Annie Edwards reportedly puts most of the blame on her stepson and his wife, since they obtained a loan without her knowledge, never paid the mortgage, and hasn't heard from either one of them since. Edwards' attorney Jonathan Heller hopes to take the matter to trial, and eventually have the foreclosure ruled unlawful. He also filed a counterclaim for wrongful foreclosure, the story states.

Colorado AG: Sale Leaseback Peddler Stripped $1M+ In Equity By Targeting Financially Unsophisticated, Vulnerable Homeowners In F'closure Rescue Racket

Courthouse News Service reports:
  • Jason L. Lynn, now of Marion, Ohio,(1) and his company, Superior Financial Group, of Superior, Colo., defrauded people through "unlawful foreclosure consulting services," the Colorado attorney general claims in Denver County Court.(2) The state filed a similar complaint against Patrick Brunner, Jerry Ohu, Gregory Hoffman, William Schultz, Fortune Financial Group, and Platinum Financial Group, in the same court.(3)

Source: Foreclosure Scams (5th story from top).

For the lawsuit, see State of Colorado v. Lynn, et ano.

(1) According to the lawsuit, Lynn was a resident of Colorado until in or around September 2009, at which point it appears that he decided to skip town. The AG has tracked him down residing, upon information and belief, at 975 Champagne Drive, Marion, Ohio 43302, the suit states.

(2) According to the lawsuit, the Colorado AG seeks to permanently enjoin Defendants, including Jason L. Lynn, individually, from engaging in deceptive trade practices, to obtain civil penalties and restitution, to disgorge unjust proceeds, and to recover attorney fees and costs. The suit alleges violations of the Colorado Consumer Protection Act, C.R.S. §§ 6-1-10 1 6-1-1120, and further alleges that Lynn is a "foreclosure consultant" within the meaning ofthe Colorado Foreclosure Protection Act, C.R.S. §§ 6-1-1101 to 6-1-1120.

The following excerpt from the Colorado AG's lawsuit (paragraphs 23-31) sets forth the general allegations made against Lynn (bold text is my emphasis, not in the original text):

  • 23. Beginning in 2005 and continuing through 2007, Jason Lynn, acting through his company Superior Financial Group, LLC, targeted financially unsophisticated and vulnerable Colorado homeowners in foreclosure and obtained more than $1,000,000 of equity through unlawful foreclosure consulting services involving sale-leaseback schemes. Lynn executed this scheme through the use of disparate bargaining power and inadequate disclosures. Homeowners not only lost all their equity to Lynn but in some cases their homes to eviction.

    24. Lynn promised victims that they could save their homes from foreclosure by selling them to Lynn's investors and then leasing the home from the investor for two years with an option to repurchase it. Upon information and belief, nearly all the homeowners were unable to repurchase the home, in part because significant amounts of equity were stripped from the home for Lynn's personal use and to compensate his investors, and the repurchase price was therefore unreasonable.

    25. Rather than provide meaningful assistance to homeowners, Lynn obtained substantial equity from the homeowners at closing without disclosing the amount and purpose of the sales proceed assignment to Lynn.

    26. Through advertisements on television and in newspapers and through referrals, Lynn targeted financially unsophisticated and vulnerable homeowners who had significant equity in their homes as a result of lengthy ownership, but nevertheless faced foreclosure because of economic hardship or personal tragedy.

    27. Lynn induced these homeowners to sell their homes to avoid a foreclosure sale, stay in their longtime homes, and have a opportunity to resume ownership. Some of the homeowners had spent many years, and some decades, in their homes and wanted to remain and once again repurchase their homes--and where thus susceptible to Lynn's deception and predatory conduct.

    28. After determining the amount of equity that could be obtained based on the existing mortgage and the estimated value, Lynn approached homeowners with a sale contract and a lease agreement containing an option to repurchase the property. Homeowners were not allowed to negotiate the sale price of their home or the repurchase price. Rather, Lynn misled the homeowners to believe that working with Superior Financial Group, LLC was the best way to save their home. Through deceptive, false, and misleading conduct, Lynn induced the victims to sign the sale contract and lease agreement.

    29. Lynn promised the victims that once they sell the home, they would remain in the home as a tenant with the option to repurchase the home when their credit or financial condition improved. Lynn informed the victims that he would use the equity from the sale, which was transferred at closing to Superior Financial Group, LLC through a proceed assignment, to assist the homeowners with rent payments and repairs. At no time, however, did Lynn disclose the actual purpose or amount of the proceed assignment. Moreover, he did not disclose that he himself would use the homeowner's equity for his personal use.

    30. At the closing, the homeowner victims would assign, without warning or disclosure, all the equity in their home through a proceed assignment to Superior Financial Group, LLC, which was presented to them for the first time at the closing.

    31. Lynn obtained equity from the victims up to $106,994 per transaction. The victims not only lost substantial equity in their homes as a result of this scheme, but many also lost the homes when they were evicted or forced to leave when the investor allowed the home to go into foreclosure.


This type of foreclosure rescue scam is the kind of title transfer where the deed conveying title that has been successfully attacked in Colorado through application of the state consumer protection statute, and has led to an award of triple damages on behalf of the victimized homeowner. See Appeals Court Reverses $3M+ Jury Award To Equity Stripping Victims; Homeowners Forced To "Settle" For Triple Damages ($741K) Under State Consumer Fraud Act.

A successful attack on a sale leaseback scam perpetrated on a homeowner could also conceivably result in the voiding of the mortgage loan that financed the equity stripping scam upon a finding that the lender is not entitled to the protection of the state recording statutes as a bona fide purchaser due to its failure to inquire of the occupants of the property that were in open possession thereof into any unrecorded rights and/or equities they may have.

See, for example, Martinez v. Affordable Hous. Network, Inc., 123 P.3d 1201; 2005 Colo. LEXIS 1075 (Colo. 2005), in which the Colorado Supreme Court applied the bona fide purchaser doctrine in a sale leaseback, foreclosure rescue scam:

  • It is well settled in Colorado that, with certain exceptions inapplicable here, possession of real estate is sufficient to put an interested person on inquiry notice of any legal or equitable claim the person or persons in open, notorious, and exclusive possession of the property may have. See Hitchens v. Milner Land, Coal & Townsite Co., 65 Colo. 597, 601, 178 P. 575, 576 (1919);  Colburn v. Gilcrest, 60 Colo. 92, 94, 151 P. 909, 910 (1915);  Yates v. Hurd, 8 Colo. 343, 344, 8 P. 575, 576 (1885);  Tiger v. Anderson, 976 P.2d 308, 310 (Colo.App.1998).

Such a result was recently achieved in a recent Minnesota case applying the applicable state consumer protection statute involving a similar fact pattern. See Minn. Sale Leaseback, Equity Stripping Victim Wins Back Free & Clear Home With Help From Non-Profit Law Firm As Judge Voids Sale & Subsequent Mortgage.

(3) Attorneys General in Massachusetts, Arizona, Maryland and Washington State have enjoyed recent success in bringing civil lawsuits prosecuting sale leaseback foreclosure rescue peddlers by invoking their respective state consumer protection statutes, See:

The New Jersey Attorney General's Office has also brought civil lawsuits in sale leaseback cases which are currently pending:

The Feds, state and local law enforcement authorities have all brought criminal prosecutions in equity stripping, sale leaseback cases cases involving the use of third party investor/straw buyers in the process of pocketing the equity out of a victim's home. See, for example, the following posts for the year 2010:

It goes without saying that if there was any fraud committed by Jason Lynn in obtaining the mortgages for his straw buyer investors in his Colorado civil case, he makes for a nice juicy target for a criminal prosecution by the Colorado Feds.

Wednesday, October 20, 2010

West Palm Beach Judges To Stop Ignoring Court Procedural Rules In Uncontested Foreclosure Actions

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Thousands of Palm Beach County homes have been repossessed by lenders that failed to follow a court rule requiring evidence be attached to foreclosure affidavits, something judges often allowed to happen when no one contested the case.(1)

  • After revelations in recent weeks that sworn affidavits from several major banks and home loan servicers may be flawed, Palm Beach County Chief Judge Peter Blanc said banks will increasingly have to prove their foreclosure claims with sworn or certified supporting paperwork.


  • "In the past when affidavits came in on defaults, the judges haven't been requiring the documents because no one was there objecting," said Blanc, who added that about 80 percent of foreclosures in the county are not contested. "Dealing with the volume we are dealing with we want to make sure that all or i's are dotted and t's crossed."


  • Foreclosure defense attorneys have argued for months that in the rush to take back homes, that large law firms representing lenders and overwhelmed judges ignored the evidence rule. Only when attorneys or homeowners protested did the rush to summary judgment slow, they claim.

For more, see Palm Beach County judges want more evidence in uncontested foreclosures.

(1) What happens now to all the foreclosures that have slipped through in disregard of this rule. Are those foreclosure judgments now absolutely void (ie. void ab initio), or are they merely voidable, but nevertheless subject to attack?

While they're at it, in cases where foreclosure mills and others submit bogus "lost note" affidavits to cover up for their inability to "produce the note" prior to obtaining a foreclosure judgment, Florida judges should at least be sure to comply with Section 673.3091(2) of the Florida Statutes ("Enforcement of lost, destroyed, or stolen instrument"), which states the following with regard to a lender's attempt to enforce a lost, destroyed, or stolen promissory note or other negotiable instrument (bold text is my emphasis, not in the original text of the statute):

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

"Adequate protection" has commonly been believed to mean the posting of a "lost note" indemnification bond in the amount of double the face amount of the homeowner's mortgage to adequately protect the homeowner against loss that might occur if, in the future, someone else comes along with the actual note that was purportedly lost and attempts to enforce it against the homeowner.

For an example of what one Miami judge did when a lender proceeded to foreclose without posting a "lost note" indemnification bond after being court ordered to do so, see Daily Business Review: Blasting Bank's Lawyer, Judge Wipes Out Homeowner's $207,000 Mortgage. Go here for the associated transcript of the May 6, 2010 court hearing, in which Judge Jennifer Bailey voided the promissory note and stuck the bank with the tab for the homeowner's attorney fees for good measure.

Sworn Statement: Foreclosure Mill Spread Around Gifts In Exchange For Altering, Forging Key Court Documents

The Tampa Tribune reports:
  • Some employees of Florida's largest "foreclosure mill" were given jewelry, cars and houses from the firm, in exchange for altering and forging key documents used to obtain foreclosures, according to a statement released today by the Florida Attorney General's Office.

  • The office released transcripts of two interviews it conducted for its investigation into the law offices of David J. Stern. The sworn statements were from Kelly Scott, a former employee of Stern's and Mary R. Cordova, a former employee of G&Z, a process server used by Stern's office. The women's testimonies appear to back up that of former Stern's employee Tammie Lou Kapusta, whose statement was released last week.

  • The three statements paint a picture of a secret system designed to speed up the foreclosure process. Attorneys and staff members forged signatures, changed dates, passed around notary stamps, the women say in interviews with attorney general's staff.

For more, see Witness: Foreclosure firm owner gave gifts for altering documents.

For the depositions, see:

The Controversy Continues On Role Of MERS In Foreclosures

Bloomberg News reports:
  • On July 1, a federal judge took away Robert Bellistri’s house in Arnold, Missouri. Bellistri, who bought the house as an investment after it was seized for non-payment of taxes, failed to notify Mortgage Electronic Registration Systems Inc. of his purchase, the judge said. A state appeals court last year had ruled otherwise, finding Bellistri didn’t need to tell MERS, a company that lets banks electronically register their sales of home loans so they can avoid trudging down to the county land-records office.

  • The case highlights a debate raging in courts on the role MERS has, if any, in home foreclosures. How it’s resolved will determine whether MERS’s involvement produced a defective process and clouded millions of property titles.

For more, see Foreclosure Crisis Triggers Debate on Role of Mortgage Registry.

White House Supports 50 State AG Probe Into Allegedly Fabricated Court Documents As BofA, GMAC Announce Foreclosure Resumption

The Wall Street Journal reports:
  • The White House is committed to holding banks accountable for any legal violations tied to housing foreclosures, White House Press Secretary Robert Gibbs said Tuesday. Gibbs also reiterated that the administration "strongly" supports an investigation by 50 state attorneys general into allegations that bank employees signed foreclosure documents without carefully reviewing the contents. Gibbs' statement comes as several large financial institutions, including Bank of America Corp. and GMAC Mortgage, a lender and loan servicer, said they were restarting foreclosures.

Source: White House To Hold Banks Accountable Over Foreclosure Violations (requires subscription; if no subscription, GO HERE, then click the appropriate link for the story).

Tuesday, October 19, 2010

Florida AG Releases Additional Depositions In Ongoing State Robosigner Probe Into Allegedly Fraudulent Foreclosure Mill Practices

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [] released three additional sworn statements in the ongoing investigations into The Law Offices of Marshall C. Watson, P.A. and the Law Offices of David J. Stern, P.A. for their alleged involvement in presenting fabricated documents to the courts in foreclosure actions to obtain final judgments against homeowners. The office will continue to release statements as we receive them.(1)

Source: Attorney General Releases Additional Sworn Statements in the Investigations Involving David Stern and Marshall Watson.

For the depositions, see:

(1) See also Business Week: Witness: signatures were faked at foreclosure firm.

  • A former secretary at a Florida law firm under investigation for fabricating foreclosure documents says the firm's office manager would sign her name to 1,000 files a day and sometimes would allow paralegals to sign her name for her when she got tired.

  • Kelly Scott, a former assistant at the law offices of David Stern, says in a deposition released Monday that office manager Cheryl Salmons would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses. Scott says paralegals would then collect the files and swap them with each other, signing them as witnesses even though they had already been notarized and executed.

C. Fla. F'closure Rescue Scammer Gets 10 Years In Ripoff Using Phony Non-Profit 'Front'; Described By Prosecutor As "A Kind Of Slow-Motion Theft"

In Tampa, Florida, the St. Petersburg Times reports:
  • Peter J. Porcelli, a Pinellas businessman who made millions in telemarketing and owned the world-champion Tampa Bay Smokers fast-pitch softball team, was sentenced to 10 years in federal prison [] for defrauding dozens of local homeowners with a foreclosure relief scam.(1)

  • Using a phony nonprofit, Porcelli promised residents facing foreclosure he would save their homes. But victims instead saw illegal loan fees, annual interest rates ballooning as high as 260 percent and a provision to forfeit their homes if payments were missed. Prosecutor Thomas N. Palermo called Porcelli's lending operation "a kind of slow-motion theft."

For more, see Belleair Beach millionaire scam artist Peter Porcelli finally faces justice.

See also The Tampa Tribune: Pinellas man gets 10 years in foreclosure scam.

(1) U.S. District Judge Susan Bucklew reportedly deferred the start of Porcelli's ten-year prison sentence until such time that he finishes off an eight-year sentence he is currently serving for an earlier, unrelated telemarketing fraud conviction.

NJ AG Reaches $800K Deal w/ Firms, Principals To Settle Phony Loan Modification Allegations; Outfit Allegedly Used 'Non-Profit' Front To Con Victims

From the Office of the New Jersey Attorney General:
  • Attorney General Paula T. Dow announced [] that the owner of several New Jersey loan modification companies has agreed to pay the state $805,000 and stay out of the foreclosure rescue business to resolve allegations he defrauded struggling homeowners who sought help in staving off foreclosure.

  • Defendant Stephen Pasch of Greenbrook Township, Somerset County, agreed to a judgment of $805,000 -- $205,000 of it payable to the Division of Consumer Affairs within 60 days – to settle charges that his New Day Financial Solutions, Inc. and other companies collected up-front fees from homeowners in return for promised mortgage modification help – a prohibited practice in New Jersey. Pasch’s other companies include American Credit Repair and Settlement, NDROA Inc. and Paramount Debt Settlement USA.

  • In addition to Pasch, another defendant in the same lawsuit, licensed attorney Ejike N. Uzor of Newark, has settled claims against him for $25,000. Two Uzor companies were also corporate defendants in the state suit: Uzor Financial Solutions and Ejike N. Uzor and Associates.

  • In most cases, the foreclosure rescue services for which homeowners paid Pasch and Uzor up front never materialized or actually made their situations worse. In addition, the state’s lawsuit charged that a Pasch/Uzor “non-profit” known as American Financial Advocacy Council – through its Web site at – fraudulently sought to instill consumer confidence in the defendants’ profit-making operations.

For the entire press release, see Attorney General Announces Settlement of Fraud Case with Mortgage Rescue Firms; Principal Defendant Agrees to Judgment of $805,000, Ban on Future Involvement.

Go here for the Consent Judgments.

State AG Scores Win In Civil Suit As Central Florida Loan Modification Racket, Owners Get Tagged With $4.3M Court Judgment

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [] announced that his office received a $4.3 million dollar judgment against what is believed to have been Central Florida’s largest loan modification operation. [The] judgment is against Wineberg, Lopez, & Rodriguez, and its owners, William Rodriguez, Jr. and Freddie Lopez, Sr. for violations of Florida’s Foreclosure Fraud Prevention Act.


  • [The] judgment resolves a lawsuit filed last March alleging that Mr. Rodriguez and Mr. Lopez were illegally charging consumers up-front fees for loan modifications. According to complaints received by the Attorney General’s Office, consumers paid upwards of $1,995 for loan modifications that were never completed.(1)

For more, see Attorney General's Office Receives Multi-Million Dollar Judgment From Loan Modification Operation.

Go here for the lawsuit against Wineberg, Lopez, & Rodriguez (and here for the initial press release).

(1) According to the press release, the Florida AG received a judgment against Mr. Rodriguez for almost $500,000 in civil penalties, restitution, and attorney’s fees in a separate civil case brought against him, National Payment Modification Company and The Bostonian Group, also involving allegations of illegal clipping of up-front fees from homeowners.

Chicago FHLB Accuses Banks Of Unloading Crappy RMBS On Them; Lawsuit: We Unwittingly "Purchased A Toxic Stew Of Doomed Mortgage Loans"

Bloomberg News reports:
  • Federal Home Loan Bank of Chicago sued lenders including Bank of America Corp. claiming their failure to disclose relaxed subprime mortgage underwriting standards, led it to unknowingly buy risky mortgage-backed securities. The lawsuit was filed an Illinois state court in Chicago(1) by the congressionally chartered wholesale bank, which describes itself on its website as one of 12 regional U.S. institutions serving smaller retail home lenders.

  • Bank of America and the other defendant commercial banks, including Citigroup Inc., Goldman Sachs Group Inc. and Wells Fargo & Co., sold it more than $3.3 billion in residential mortgage-backed securities, according to the complaint.

  • The defendants did not tell the bank the truth about the loans that comprised the mortgage pools,” underlying the securities, the Federal Home Loan Bank alleged. While it believed it was acquiring “safe” securities, “in fact the bank purchased a toxic stew of doomed mortgage loans,” according to the complaint.

For more, see Bank of America Sued by Chicago Home Loan Bank Over Subprime Mortgages.

See also the Announcement from the Federal Home Loan Bank of Chicago.

For the Illinois lawsuit, see Federal Home Loan Bank of Chicago v. Bank of America Funding Corporation, et al.

(1) According to their announcement, the FHLB of Chicago also filed similar suits in the Superior Court of California, County of Los Angeles; and the Superior Court of Washington, King County. The announcement went on to say that the FHLB of Indianapolis also filed similar complaints on the same day, and that the FHLBs of Pittsburgh, Seattle, and San Francisco have previously filed similar lawsuits.

Monday, October 18, 2010

Indictment Details Use Of Owner Financing, Double Loans At Closing In Home Equity Ripoff Targeting Northern California Seniors

In Modesto, California, The Modesto Bee reports:
  • Investor, beware. That's the best, most concise advice experts give to avoid losing big bucks in alleged property schemes such as those making recent headlines in Modesto. But even extreme vigilance won't stop deception when the bad guys are sophisticated and resort to forgery, said Tom Pool, spokesman for the California Department of Real Estate.

  • "It's a horrible story," Pool said of an account provided by federal prosecutors who indicted the owner of a venerable Modesto real estate company. Authorities say he and his companion targeted elderly homeowners, gained trust and robbed them blind.

  • In some cases, alleged victims died before authorities found out their property was lost, obituaries and recorded documents suggest. Others include their survivors, and maybe tenants in rentals facing foreclosure.


  • Federal authorities say [ex-Century 21 Apollo owner Jim] Lankford and his roommate, Jon McDade, bilked $10 million from lenders and elderly homeowners over 11 years.(1)

For more, see Indictment of Modesto realty agent tells about suspected scams.

(1) For the U.S. Attorney (Sacramento/Fresno) press release, see Modesto Century 21-Apollo Realty Owner Charged With Defrauding Elderly Homeowners ($10 Million in Losses Alleged).

For the indictment, see U.S. v. Lankford, et ano.

For earlier posts on Lankford and his alleged scams, see:

Florida AG Tags LPS, Docx With Subpoenas Ordering Firms To Fork Over Foreclosure Documents, Vendor Contracts As State Robosigner Probe Expands

Bloomberg News reports:
  • Lender Processing Services Inc. and Docx LLC, affiliated companies [and connected with Fidelity National Financial, Inc.] providing mortgage-processing services to lenders, were subpoenaed by the office of Florida Attorney General Bill McCollum as part of its investigation into possible foreclosure-document fraud. The state told the Jacksonville, Florida-based companies to hand over any network agreements with law firms having offices located in the state, according to the subpoena.

  • The companies were ordered to provide any contracts for payments to and from four Florida law firms already under investigation, and any communications on arrangements for backdating or otherwise altering court documents used in property transactions.(1)

For more, see Florida Subpoenas Records of Foreclosure Companies.

Go here for the Florida AG's subpoena.

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

(1) See also Firedoglake: Florida Foreclosure Employees Had Better Protect Themselves, which adds:

  • They want documents showing that Korell Harp, Jessica Ohde, Pat Kingston, Christina Huang, and Tywanna Thomas had authority to sign “in any capacity for any lender and/or servicing company.” They want a list of employees, identifying those who provide notary services. And they want policy and procedure manuals and training materials related to the business of DOCX.

Go here for the DOCX document "fabrication" price list for a variety of foreclosure documents.

Flood Of Suits Tagging GMAC With 'Robo-Signer' Charges Appears Imminent; Ohio Man Charges Bank w/ Consumer Law Violations; Lawyer Has 10 More Coming

In Newark, Ohio, the Newark Advocate reports:
  • The inevitable legal response to allegations of fraud on foreclosure documents reached Licking County on Friday with a Johnstown man's lawsuit against GMAC Mortgage and one of its employees.


  • Michael A. Fox, [of] Johnstown, claims in his complaint that GMAC violated the Ohio Consumer Protection Sales Practices Act, committed common law fraud, abuse of process and civil conspiracy in seeking to foreclose on his 22-acre horse farm.

  • In his complaint, filed in Common Pleas Court, Fox seeks at least $25,000 in compensatory damages and $25,000 in a civil penalty, plus undetermined punitive damages that his attorney said will be 2 percent of GMAC's 2009 gross revenue.

  • The complaint states that Jeffrey Stephan, who signed Fox's foreclosure assignment Jan. 26, 2009, also testified in a Florida state foreclosure case that he signed 10,000 affidavits and assignments in a month without knowledge of the cases or verifying the accuracy of the information.(1)


  • The complaint likely will become part of a class-action lawsuit, [Fox's attorney John] Sherrod said, as many similar cases will be filed throughout Ohio and across the country. "I'll be filing 10 more in a week or so,"(2) Sherrod said. "There should be some (of those) in Licking County."

For more, see Johnstown man sues GMAC Mortgage, alleges fraud in foreclosure process.

In related stories, see:

(1) Go here for additional Jeffrey Stephan testimony from a deposition in a Maine foreclosure case.

(2) Why stop at ten??? Just set the photocopier on '99' and have at it!

Title Agent Gets 34 Months For $800K+ Real Estate Escrow, Closing Cash Ripoff

From the Office of the U.S. Attorney (Minneapolis, Minnesota):
  • A 61-year-old Alexandria man was sentenced [...] in federal court in Minneapolis on charges connected to a scheme to defraud mortgage lenders and others out of more than $800,000. United States District Court Judge Joan N. Ericksen sentenced Dale Charles Dodge, Jr., to 34 months in prison on one count of wire fraud and one count of engaging in a monetary transaction with property derived from unlawful activity, commonly referred to as money laundering. Dodge was indicted on September 15, 2009, and pleaded guilty on May 12, 2010.

  • In his plea agreement, Dodge admitted that from 2002 through 2005, he operated a title closing company under the names Premier Title & Abstract, Inc., and Verity Title & Abstract. [...] The plea agreement goes on to state that between 2002 and 2005, Dodge executed a scheme to defraud mortgage lenders and others out of large sums of money by diverting loan proceeds from the escrow account at his title company. The money was used for his personal benefit as well as the benefit of his company and others involved in the scheme. [...] Furthermore, Dodge admitted concealing those actions from his title insurer and mortgage lenders as well as from property sellers and purchasers.

  • Dodge’s fraud scheme caused losses of more than $800,000. Approximately $844.561.60 is owed to one specific mortgage lender, who mistakenly deposited money into Dodge’s escrow account. An additional amount is owed to First American Title Insurance Company, Dodge’s title insurer, which was required under law to pay certain outstanding escrow obligations for which Dodge was unable to pay.(1)

For the U.S. Attorney press release, see Alexandria man sentenced for $800,000 mortgage-fraud scheme.

(1) In Minnesota, those who have been screwed out of money due to the fraudulent, deceptive or dishonest practices of, or conversion of trust funds by, a state-licensed closing agent (or state-licensed real estate broker or salesperson) can apply to the Minnesota Department of Commerce's Real Estate Education, Research and Recovery Fund to try and recover some or all of their losses. According to their website:

  • The improper action that was committed must be an activity that required a license,
  • Applicants may be awarded any amount from $0 to $150,000, depending on a number of factors.

According to the Fund's website, there is no guarantee that a claim will be paid. Whether an applicant will receive payment from the fund depends on the specific facts of the case.

Sunday, October 17, 2010

Sloppy Servicers Now Feel The Heat From Disgruntled Mortgage Bond Buyers As Concerns Rise Over Crappy Monthly Remittance Reports

Asset-Backed Alert (a weekly update on worldwide securitization) reports:
  • Mortgage-bond buyers are losing faith in the accuracy of remittance reports, and some say the apprehension could soon factor into their investment strategies. Remittance reports, distributed monthly by securitization trustees, are supposed to provide routine snapshots of the cashflow-collection and distribution activities of servicers. However, investors say there has been a rash of recent instances in which the reported data differed considerably from what actually happened - making it impossible to determine values for their holdings.

  • Frustrated with what they consider insufficient efforts by servicers to address the discrepancies, certain buysiders are even grumbling that they'll direct their money elsewhere. Should they take such steps en masse, the conflict could undermine both recent gains in the secondary-market values of mortgage bonds and plans by issuers to bring new deals to market.

For more, see Investors Grumble Over Flawed Remittances.

Fort Lauderdale Judge Gives Florida AG The Go-Ahead In David Stern Robo-Signer Probe; Foreclosure Mill's Counsel Says Appeal Will Follow

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A Broward County judge's ruling on Friday gives Florida Attorney General Bill McCollum the right to continue his investigation into a Plantation foreclosure law firm. Circuit Judge Eileen O'Connor denied a request from the law offices of David J. Stern to quash the state's subpoena for documents relating to the firm's procedures, clients and investments.

  • That leaves the lower courts split on which agency has the right to police law firms employing hundreds of people who prepare thousands of documents monthly for lenders and loan services.

  • Palm Beach County Circuit Judge Jack Cox, presiding over the Shapiro & Fishman foreclosure law firm's bid to throw out the state's subpoenas, had ruled against the attorney general a second time on Thursday. Cox said The Florida Bar, the State Supreme Court and the lower courts have jurisdiction over lawyers and their conduct, not the attorney general.

  • O'Connor gave no reason for her decision. Her order said the motion based on the argument "that the Attorney General has no jurisdiction to issue a subpoena to a law firm" was denied. "We respectfully disagree with the ruling," said Miami attorney Jeffrey Tew, representing Stern. He said he would file an appeal.

  • Tew had echoed the argument used by Shapiro & Fishman attorney Gerald Richman in Tew's hearing before O'Connor earlier this week. But Tew's focus was that the foreclosure firm's practices did not fall under the deceptive and unfair trade statute cited by the state because it had no direct relationship with homeowners. Tew would not speculate why two judges ruled differently on the subpoena cases, given the motions cited the same legal grounds.

  • Who will investigate the foreclosure firms' actions ultimately may be decided by the appellate courts. The Attorney General's Office said Thursday that it still was considering an appeal of Cox's decision on Shapiro & Fishman, which has offices in Boca Raton and Tampa.

For the story, see Broward judge denies firm's bid to stop state probe.