Saturday, October 30, 2010

Illinois Regulator Hits 11 Outfits With Cease & Desist Orders, $275K In Fines For Allegedly Peddling Unauthorized, Crappy Loan Modification Services

In Greater Chicago, Illinois, the SouthtownStar reports:
  • With a rise in foreclosure activity in the Chicago area as a backdrop, the state said Thursday it had cracked down on firms that promised homeowners breathing room with their mortgage companies, only to charge large fees for doing little or no work.

  • The state's Department of Financial and Professional Regulation said it had fined 11 mortgage modification companies, [...] $25,000 each for illegally charging upfront fees to homeowners with the promise they would renegotiate mortgage terms with their lenders.(1)

  • The companies never sent in required paperwork or even contacted banks in some cases, according to the department.

For more, see State slams mortgage firms (Collected fees, but offered little help to struggling homeowners).

See also: Illinois Department of Financial and Professional Regulation press release: Mortgage Fraud Task Force Investigation Finds Violations by Mortgage Loan Modification Firms ($275,000 in Fines Imposed on Unlicensed Firms).

(1) The companies ordered to cease and desist offering loan modifications without a license and fined $25,000 each are (click name to see C&D order)): Opportunity Consultants, Carrey Services, American Accurate Services, Gamez & Associates Ltd., Juan Hernandez, Home Loan Modification, Homeowner’s Advocates Centers, Imperium Realty Group, Mortgage Mitigators, Mi Familia, and Loan Rescue Corp.

Kentucky Judge Chucks Foreclosure Judgment After Review Reveals That Named Mortgage Note Holder Does Not Exist

Buried at the end of a New York Times story on the ongoing frenzy attributable to faulty foreclosures is this gem:
  • Charlotte and Thomas Sexton, of Carlisle, Ky., fell behind on their mortgage payments because the payments on their adjustable-rate mortgage spiked upward and Charlotte Sexton lost her job. They tried unsuccessfully to sell the home, to refinance it and to modify their mortgage payment.

  • When the Bank of New York Mellon filed a foreclosure notice last summer, they went to a local lawyer, Brian Canupp, who, with the help of a forensic accountant, found a problem in the foreclosure filing.

  • Last month, a judge tossed out a foreclosure judgment after Canupp argued that the mortgage trust that claimed to own the Sextons' promissory note did not exist.

Source: Facing Foreclosure, Homeowners Want Legal Recourse (Lenders To Answer For Errors).

County Real Estate Fraud Unit Bags Calif. Man Allegedly Running Upfront Fee Loan Modification Racket; Victims Urged To Step Up, File Complaints

In Tulare County, California, The Fresno Bee reports:
  • In a crackdown on foreclosure fraud, the Tulare County District Attorney's Office has filed charges against three men, leading to a Visalia man's arrest [last] week. Julio Garcia Cedillo, 33, of Visalia, was arrested Wednesday and made $25,000 bail Thursday. He is the manager of Blue Pacific Financial, a business that provides loan modification services, according to a statement by the Tulare County District Attorney's Office.

  • An arrest warrant was issued for Cedillo last month after prosecutors filed charges against three people in Tulare County Superior Court.(1) Prosecutions for foreclosure fraud are a growing trend in an era of mounting home foreclosures. [...] Five years ago, the Tulare County District Attorney's Office started a real estate fraud unit.

For more, see Visalian arrested, accused of foreclosure fraud (Two others charged in Tulare County crackdown).

See also: Tulare Advance Register: Suspected foreclosure fraud victims sought:

  • The District Attorney's Office is asking that anyone who believes they have been a victim of a foreclosure fraud to contact investigator Dwayne Johnson. Information: 733-6411.

(1) Reportedly, Cedillo is charged with two felony counts of foreclosure fraud and is accused of taking money from clients whose homes were in foreclosure and who were seeking loan modifications, the Tulare County District Attorney's Office said. Also named in the complaint were Cesar Martinez, 28, and David Martinez, 30, both of Visalia, the story states.

S. Florida Family Recovers Home Lost In Foreclosure; Court Grants BofA's Request To Vacate Sale After Media Shines Light On Another Loan Mod Screw-Up

In Miramar, Florida, the South Florida Sun Sentinel reports:
  • A Miramar homeowner who was facing foreclosure, despite securing a loan modification, will be allowed to stay in his house, according to a court ruling made public Wednesday by Bank of America. With less than a week to go before he was to lose his house, Kamberali Shamji learned from bank officials that the foreclosure sale of the home has been vacated by court order.

  • "We are so thankful," said Shamji, whose case was the focus of a Sun Sentinel article on Sunday about homeowners who thought they had saved their homes by modifying their mortgages only to lose them because the foreclosure process never stopped. He had battled the bank, but he was unable to convince the lender to take action until he contacted the newspaper.

  • Bank of America said it had tried to stop the sale before it took place. In the wake of the story, the lender asked the investor who owned the loan for consent to get the sale vacated. That took place Monday, said Bank of America spokeswoman Jumana Bauwens. [... Shamji] said he intends to make his next payment and as long as he is current on the loan, Bank of America's Bauwens said the modification will continue to be in force.

For more, see Miramar man gets home back after nearly losing it to foreclosure (Foreclosure sale reversed).

For the initial Sun Sentinel report on this story, see Those with loan modifications still lose to foreclosure.

More On Allegations That Foreclosure Mill Used 'Process Service' Racket To Run Up Charges When Serving Legal Papers

The Tampa Tribune reports:
  • Internal files from a company used by Florida's largest foreclosure law firm provide more detail about recent allegations that lenders were overbilled and lawsuits were served to people who don't exist. In some cases, thousands of dollars in process fees were billed on a single property to multiple people, according to documents obtained by The Tampa Tribune.

  • Such fees for service represent the first step in the foreclosure procedure employed by the law offices of David J. Stern, one of four "foreclosure mills" under investigation by the state. Florida's attorney general is investigating the company for allegedly "fabricating" or "presenting false and misleading" documents.

  • The firm delegates the chore of serving notice to homeowners that a lender is foreclosing on their property to two companies. Miami-based Gissen & Zawyer Process Service, known as G&Z, is one of those companies.

  • Internal documents and billing records at G&Z back up sworn statements by former employees at the company and at Stern's firm that accounts were charged for notice of service to people who don't exist. Typical service fees in a foreclosure suit range from $45 to $300, industry experts say, but in some cases, G&Z's bills for service on a single property reached $1,200 to $5,000.


  • Internal company invoices from three days last fall show G&Z served 60 to 80 people a day for more than $30,000 each day for service for Stern's files. "There's no way they could have that many legitimate papers," said Liz Mills, a former process server for G&Z. "There were only three of us who worked the county I worked in."

For more, see Foreclosure documents back allegations of overcharging.

S. Florida Attorney Probed For Allegations Of Forging Judges' Signatures; Once Linked To Now-Shuttered Loan Modification Outfit Also Under Microscope

In South Florida, The Miami Herald reports:
  • State authorities are investigating allegations that a Coral Springs lawyer forged the signatures of Broward County judges while working with a disgraced foreclosure assistance company, court documents show.

  • The lawyer, Frank J. Ingrassia, worked with Outreach Housing,(1) which is accused of siphoning more than $2 million from desperate homeowners, according to a search warrant filed in Miami-Dade court this month. The probe is being spearheaded by the Florida Department of Law Enforcement. Also investigating is the Florida Attorney General's Office and the Office of Financial Regulation, which last year sued the company and its officers. Ingrassia, a former Florida assistant attorney general, did not return calls for comment. He has not been charged.


  • [T]he lawyer made headlines in June 2008 when he filed dozens of lawsuits against financial lenders alleging they fraudulently inflated the incomes of borrowers so that they could qualify for loans. Ingrassia worked for Affirmative Defense Group, which was refered most of its cases by Outreach, a now-shuttered Margate company that purportedly assisted homeowners facing foreclosures in getting legal settlements with lenders.

  • State authorities allege the company induced 961 people to fork over their mortgage payments. The "illegal revenue'' amounted to more than $2 million, and employees were paid from the money that was supposed to be held until homeowners settled with lenders, the warrant said.

  • The companies did virtually nothing to help clients stave off foreclosure, FDLE said in the warrant. Agents raided Ingrassia's Coral Springs office in July "due to allegations that Ingrassia forged the signatures of some 17th Judicial Circuit [Broward County] judges.'' He is under investigation for forgery.

  • Agents are also looking into the practices of Outreach and its founder, Blair Wright. Wright, in an interview Wednesday, insisted his company was legitimately trying to help homeowners reach foreclosure settlements with lenders. He says lawyers such as Ingrassia and Kirsten Franklin -- both of whom he is suing in Miami-Dade court -- mismanaged the cases, ignored clients and pilfered hundreds of thousands of dollars.


  • The Florida Supreme Court, in January, ordered Franklin barred from practicing law for three years because she abandoned hundreds of clients and allowed Wright to unduly influence her. The state's lawsuits against Ingrassia, Franklin and Wright are still ongoing.

For the story, see Foreclosure lawyer accused of forgery (A Coral Springs lawyer who worked for a troubled foreclosure rescue company is facing a criminal probe for allegedly forging court documents).

(1) Go here for earlier posts on now-shuttered loan modification outfit Outreach Housing.

Fla. County Property Apprasier's Office OKs Tax Exemption For Family Of Maine Gubernatorial Candidate In 'Double Homestead' Case

The Associated Press reports:
  • A Florida county has closed its investigation into a tax exemption claimed by the family of Maine Republican gubernatorial candidate Paul LePage on a Florida home, concluding that the $1,400 tax break was allowed under state law, a tax official ruled [].

  • In a letter to LePage's lawyer, the property appraiser in Volusia County, Fla., said the homestead exemption in 2008 and 2009 was OK because of an exception allowing the tax break on a Florida home maintained for a dependent.


  • According to the LePages' attorney, Ann LePage went to Florida after her father died in the fall of 2007 to care for her mother, who suffers from scleroderma, an autoimmune disorder, as well as pulmonary hypertension. Ann LePage rented a home before buying a home in December 2008.

  • After the purchase, Ann LePage listed the home as her primary residence, but she failed to change the status of the home in Waterville that she'd previously claimed as primary residence. In September, the LePages corrected the Waterville home's status and paid the $227.93 in taxes owed, the LePage campaign said.

  • Morgan Gilreath Jr., property appraiser in Volusia County, noted that the Florida situation was unusual - so unusual that there's no place on the homestead exemption form or statement of gross income to make note of the exception to Florida's law. There's also no notation on the county website, he said.(1)

  • Because of the exception, Ann LePage can list Maine as her primary residence while continuing to claim the homestead exemption in Florida as long her mother lives in the home and the LePages maintain it and provide for her, making her "naturally dependent," said her attorney, William A. Lee III of Waterville, who is licensed in Maine and Florida.(2)

For the story, see Official: LePage tax exemption allowed in Fla.

(1) Of course there's no reference to the availability of the tax exemption in 'double homestead' cases on the government forms or on the Property Appraiser's office website. They clearly want to avoid the potential havoc that may break out in their offices attributable to the additional exemption claims that will result in these permissible 'double' tax exemptions cases.

(2) The relevant applicable statute can be found at Sec. 196.031(1)(a), Florida Statutes, which states in part (bold text is my emphasis of the relevant portion of the provision, not in the original text):

  • Every person who, on January 1, has the legal title or beneficial title in equity to real property in this state and who resides thereon and in good faith makes the same his or her permanent residence, or the permanent residence of another or others legally or naturally dependent upon such person, is entitled to an exemption from all taxation, except for assessments for special benefits, [...] up to the assessed valuation of $25,000 on the residence and contiguous real property, as defined in s. 6, Art. VII of the State Constitution.

For more on the availability of 'double homestead' tax exemptions in certain cases, see:

  • Florida Administrative Code Rule 12D-7.007(7):

    "A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. If it is determined by the property appraiser that separate permanent residences and separate “family units” have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution. The fact that both residences may be owned by both husband and wife as tenants by the entireties will not defeat the grant of homestead ad valorem tax exemption to the permanent residence of each."

  • Florida Attorney General Opinion 75 Op. Att'y Gen. 146 (1975), Husband And Wife Maintaining Separate Residences May Both Qualify For Homestead Exemption;

  • Florida Attorney General Opinion 05 Op. Att'y Gen. 60 (2005), Homestead Exemption -- separate residences and homestead exemption. Art. VII, s. 6, Fla. Const.;

Friday, October 29, 2010

Suit Seeking Class Action Status Wants Foreclosure Sales Voided, Title To Homes Lost Based On Bogus Affidavits Restored To Homeowners

In Miami, Florida, a press release from The Ferraro Law Firm:
  • The Ferraro Law Firm, Daniels Kashtan and The Burton Firm filed a Class Action lawsuit yesterday against BAC Home Loans Servicing, LP, a Texas Limited Partnership, a subsidiary of Bank of America Corporation, and successor in interest to Countrywide Home Loans Servicing, LP, a Texas limited partnership; Deutsche Bank National Trust Company, a New York corporation; and U.S. Bank National Association, a Minnesota association, on behalf of all those property owners who lost title to their property in foreclosure proceedings based on false and perjurious affidavits filed by the Banks and their servicing companies. They seek to restore title to the property owners.

  • The Complaint alleges that the Defendants obtained wrongful foreclosures by abusing the court process and submitting affidavits that were false, even though sworn to under penalty of perjury, as the basis for obtaining foreclosure judgments. The property owners' due process rights were violated and the Banks used and abused the court rules and process to obtain judgments against all of the Class Members.

  • "The rule of law and due process are the cornerstone of our judicial system and we must be able to rely on the integrity of the judicial system before property rights can be taken away," said Juan Bauta, II, of The Ferraro Law Firm. The courts relied on the Banks to provide true and accurate affidavits before granting judgments and taking the property away from the property owners. "In essence, the courts were lied to and the property owners' due process rights were blatantly violated," stated Mr. Bauta, II, of The Ferraro Law Firm, one of the attorneys representing the property owners.

  • The Complaint seeks to have the judgments that the Banks obtained with fraudulent affidavits vacated and title restored to the property owners.

Source: Class Action Filed Against Banks in Foreclosure Proceedings.

Lawsuit Filings Seeking Class Action Status Against Loan Servicers Continue To Pick Up Steam

Bloomberg News reports:
  • Billionaire Wilbur Ross’s American Home Mortgage Servicing Inc., facing lawsuits by attorneys general in two states, was sued by a homeowner who accused the firm of using tactics that lead to improper foreclosures.

  • The lawsuit, filed Oct. 25 in federal court in Dallas, seeks class-action status on behalf of homeowners with mortgages serviced by American Home going back to 2006. American Home’s “illegal, unfair and deceptive business practices victimize borrowers” across the U.S., according to the complaint. American Home “routinely and systematically assesses unwarranted fees against consumers, resulting in premature default that often gives rise to unfair and improper foreclosure proceedings,” according to the complaint.(1)


In another story in the same media report:

  • Bank of America Corp., the largest U.S. bank by assets, was sued by a Florida borrower who accused the bank of violating the federal government’s home-loan modification program to boost its earnings.

  • The bank told customer-service representatives to mislead homeowners who ask about loan modifications, ignored completed modifications and failed to credit payments, Shari Goldman said Oct. 27 in a complaint filed in U.S. District Court in West Palm Beach, Florida. Goldman, who cited unidentified former bank employees in the complaint as the source of her information, asked the court to grant her suit class-action, or group, status.

Source: Lions Gate, American Home, Clarient, GE, Wells Fargo, BHP in Court News.

For another recent filing, see Class Action Filed Against Banks in Foreclosure Proceedings.

(1) Reportedly, American Home is facing similar allegations in other lawsuits.

  • Kay VanHauen v. American Home Mortgage Servicing Inc., 10-02146, U.S. District Court, Northern District of Texas (Dallas);
  • State of Texas v. American Home Mortgage Servicing Inc., 2010-3307, District Court of El Paso County, Texas;
  • State of Ohio v. American Home Mortgage Servicing Inc., 09-708888, Court of Common Pleas, Cuyahoga County, Ohio;
  • Michael Landi v. American Home Mortgage Servicing Inc., 10-00921, U.S. District Court, District of Maryland (Baltimore);
  • Kenneth Coplin v. American Home Mortgage Servicing Inc., 3:10-cv-01096, U.S. District Court, Southern District of California (San Diego).

State AG, AZ Feds: Pair Ran Rent-To-Own Racket Victimizing 31 Would-Be Home Buyers, Leaving Multiple Unwitting Investors/Straw Buyers Holding The Bag

From the Office of the Arizona Attorney General:

  • Zandonatti and Silverstein owned and operated AZI Rent2Own L.L.C (also known as Arizona Investments and AZI), a company claiming to “specialize” in mortgage investment and rent-to-own programs.

  • The indictment alleges that between 2006 and 2008, 25 homes were involved in either straw-buyer or investor schemes perpetuated by AZI Rent2Own, where approximately 45 lending institutions were defrauded and 31 renters were victimized. Approximately $2.9 million in foreclosure losses occurred because of the alleged result these schemes. FBI agents began investigating both Zandonatti and Silverstein approximately one year ago when numerous consumer complaints were filed against both suspects.

  • The FBI determined that the suspects were orchestrating an elaborate scheme which defrauded both investors and the renters of numerous homes in Pima County using straw-buyers or investors to flip the properties, many of which had been rented to tenants under a rent-to-own agreement.

  • This case was investigated by the Arizona Division of the FBI, and is being prosecuted by Assistant Attorney General Michael Jette.

For the Arizona AG press release, see Terry Goddard Announces Indictment in Home Investment Fraud Case.

For the indictment, see State of Arizona v. Zandonatti, et ano.

Ohio Judge Nixes GMAC F'closure Action Withdrawl; Orders Lender To Fork Over “Proof Of Integrity Of All Docs Submitted" As State AG Files Amicus Brief

From the Office of the Ohio Attorney General:
  • [A]fter filing a lawsuit against GMAC for fraud earlier this month [go here for press release, lawsuit], [Ohio Attorney General Richard] Cordray demanded that the loan servicer withdraw all pending foreclosures in which questionable affidavits were used in Ohio. Th[e] foreclosure case, U.S. Bank National Association v. James W. Renfro, was one of a handful of cases in which GMAC willingly filed a motion to withdraw.

  • However, on October 25, Judge Nancy Margaret Russo denied the motion and ordered GMAC to provide the court withproof of integrity of all documents submitted” at a pretrial set for November 8.

  • To inform the court of evidence of affidavit tampering, Cordray filed an amicus brief. Cordray’s brief focuses on testimony given by GMAC employee Jeffrey Stephan in two cases acknowledging falsification of affidavits,(1) two previous sanctions against GMAC for filing false affidavits(2) and outlines the argument that filing false affidavits is an act of fraud on the court.

For the Ohio AG press release, see Cordray Outlines Fraud in Cleveland Foreclosure Case.

Go here for:

(1) The Ohio AG's amicus brief specifically references, and attaches as Exhibits A & B of the brief, Jeffrey Stephan's:

(2) The previous incidents referenced in the AG's amicus brief are:

Foreclosure Rescue Sale Leaseback Racket That Drained Equity From Unwitting Victims' Homes Among Scams California Man Pleads Guilty To

From the Office of the U.S. Attorney (Los Angeles, California):
  • A Downey man has agreed to plead guilty to federal fraud and money laundering charges, admitting that he ran two fraudulent operations – a Ponzi scheme that took in $30 million from more than 300 victims and a mortgage fraud scheme that preyed on homeowners by stealing the equity from their homes and secretly taking title to their properties. Juan Rangel, 46, who is currently in federal custody, signed a plea agreement that was filed late Friday in United States District Court.


  • In the plea agreement, Rangel [] admitted that he and others operated a mortgage fraud scheme that targeted Latino homeowners at risk of losing their homes by offering them help to avoid foreclosure.

  • Rather than assisting the distressed homeowners, however, Rangel took titles to their homes and drained the remaining equity out of the properties. As part of this scheme, Rangel arranged to sell the homeowners’ properties, usually without their knowledge, to third-party straw buyers. He then applied for loans in the straw buyers’ names related to these supposed purchases, and used a variety of falsified documents to ensure that the fraudulent loans were approved. Rangel admitted that the scheme caused mortgage lenders to fund more than $10 million in fraudulent loans.

For the U.S. Attorney press release, see Downey Man Agrees To Plead Guilty In Multi-Million Dollar Fraud That Bilked Investors And Homeowners (Juan Rangel Agrees to Serve 15-Year Sentence for Targeting Spanish-Speaking Victims and Stealing Their Savings and Titles to their Homes).

Iowa Feds Indict Closing Agent For Illegally Pocketing Escrow Money From Real Estate Transactions

In Sioux City, Iowa, KMEG-TV Channel 14 reports:
  • An Emmetsburg, Iowa real estate broker is charged with fraud, identity theft, and money laundering. She allegedly committed the crimes while working as a real estate settlement agent from 2005 to 2008. Fifty-nine-year-old Jean Teresa Hoffert faces 25 counts in the case.

  • According to the U.S. Attorney's office she fraudulently kept portions of sale or mortgage loan proceeds. If convicted on all counts she could face a fine of over $6 million and over 475 years in prison followed by 81 years of supervised release.

Source: Real Estate Broker Charged with Theft, Money Laundering.

Thursday, October 28, 2010

Ohio AG Nearing Declaration Of War Against Wells Fargo, Others Over "Brazen Efforts" To Sweep Foreclosure Screw-Ups Under Rug With Affidavit Refilings

From the Office of the Ohio Attorney General:
  • In response to Wells Fargo's statement acknowledging that it "made mistakes" and that affidavits in 55,000 foreclosures filed by the bank did not "adhere" to the law, Ohio Attorney General Richard Cordray offers the following statement:

    "The big mortgage servicers and financial firms continue to demonstrate their belief that they do not need to play by the same rules as everyone else who uses our court system. The suggestion by Wells Fargo and its colleagues at several other national firms that they can cure fraudulent testimony by simply refiling new affidavits and continuing to proceed toward foreclosures shows they do not recognize the seriousness of the problem they have created. There is no simple 'do-over' for false testimony that will be likely to avoid sanctions and penalties imposed by the courts. Their brazen efforts to minimize their financial exposure by sweeping these problems under the rug are an insult to the justice system in this country. These disclosures by Wells Fargo will now become the focus for a new prong of our on-going investigation."

For the Ohio AG press release, see Cordray: Refiling Affidavits is an Insult to the Justice System.

Wells Fargo Finally Comes Clean; Backpeddles On Initial Denials Of Faulty Paperwork, Now Acknowledges Errors In 55,000 Foreclosure Actions

The Washington Post reports:
  • Wells Fargo, which has stood by its foreclosure paperwork for weeks(1) as other major lenders discovered errors and halted sales, conceded Wednesday it had discovered some flaws in its documents as well. The latest acknowledgement of problems from one of the nation's biggest lenders points out that the failure to scrupulously check legal documents before foreclosing on delinquent homeowners has been widespread in the industry.

  • Wells Fargo said it is submitting additional affidavits for roughly 55,000 foreclosures pending in 23 states, but said it does not have any plans to halt foreclosure sales.

For more, see Wells Fargo acknowledges problems in foreclosure paperwork.

(1) See, e.g., ProPublica: Wells Fargo Case Belies Claim It Always Verifies Mortgage Paperwork:

  • The new deposition is from the Chapter 13 bankruptcy case of Texas residents Frederico and Herelinda Guevara. In the deposition, a Wells Fargo employee named Tamara Savery said she twice submitted documents to the court about who owned the Guevaras’ loan without personally researching or reviewing the underlying documents. She said she relied on the “expertise of others” when signing the legal paperwork.

NJ Appeals Court Slams Shut 'Loophole' Allowing Judgment Creditors To Obtain 'Double Recoveries' When Enforcing Liens Thru Forced Property Sales

Lexology reports:
  • On August 4, 2010, the New Jersey Superior Court, Appellate Division extended equitable principles previously applied in mortgage foreclosure cases to how far an unsecured judgment creditor could go to satisfy its lien against a debtor, deciding to follow a line of cases standing for the principal that “even in the absence of express statutory authorization, a court has inherent equitable authority to allow a fair market value credit in order to prevent a double recovery by a creditor against a debtor.”

  • Moreover, in the case, MMU of New York, Inc. v. Grieser, the Appellate Division even went so far as to hold that if the unsecured judgment creditor has been compensated beyond the value of its lien, it could owe a money judgment to the debtor, in order to prevent a windfall to the creditor.

For more, see How far is too far - judgment creditors that sell a debtor’s real estate told to account for the fair market value of that property and must reimburse the debtor if they go too far (requires subscription; if no subscription, TRY HERE, then click appropriate link for the story).

For the ruling, see MMU of New York, Inc. v. Grieser, No. A-2484-08T3, 2010 BL 180436 (N.J. Super. Ct. App. Div. Aug. 04, 2010).

Fla. Appeals Court Nixes County Official's Attempt To Strip Homeowner Of Tax Exemption In 'Double Homestead' Case As Legal Non-Profit Scores Big Win

A Florida appeals court has recently affirmed longstanding state law that (contrary to popular belief), in certain circumstances, the mere fact that two people are married will not, in and of itself, preclude them from each claiming a real estate tax exemption for their Florida homesteads allowed under Article VII, Section 6 of the Florida Constitution,(1) when living in separate residences.

After receiving an unfavorable trial court ruling and despite the plain language of the applicable rules and existing Florida case law in support thereof, hard-headed Pasco County Property Appraiser Mike Wells took the improvident step of submitting Pasco County Circuit Judge Stanley R. Mills ruling to an appeals court for review, which the latter unanimously upheld.(2)

For the county property appraisers throughout the state of Florida, whose job includes the determination of qualified tax exemption claims filed by homeowners and who probably don't want word to leak out that 'double homesteads' are, in fact, warranted in certain cases, this ruling surely represents an unwelcome defeat.

Conversely, it represents good news for, among others, married people in Florida who can't stand living with each other and who split up, establish their own separate homesteads, and for whatever reason (ie. financial, religious, children, convenience, hatred for divorce attorneys, etc.) never bother to formally get a divorce.

Representing the homeowner who, with the help of a local non-profit law firm, stood up against the property appraiser for improperly stripping an apparently not well-heeled homeowner of his homestead exemption and possibly thinking he could get away with it because the homeowner might lack the savvy and financial wherewithal to get an attorney and put up a fight before the appeals court in this case was Maurice M. Feller and Richard A. Motley, of Bay Area Legal Services, Inc., New Port Richey, Florida.(3)

For the court ruling, see Wells v. Haldeos, Case No. 2D09-4250 (Fla. App. 2d DCA, October 22, 2010).

(1) Not to be confused with Article X, Section 4 of the Florida Constitution, which grants an exemption against forced sale of a state resident's Florida homestead to satisfy most, non-mortgage, debts.

(2) In affirming the lower court ruling in favor of the homeowner, the Florida appeals court made these observations (bold text is my emphasis, not in the original text):

  • Mr. Haldeos and his wife have established two separate permanent residences in good faith. Mr. Haldeos has no financial connection with his wife and they do not provide benefits, income, or support to each other. He has a Florida driver’s license and his vehicle is registered in Pasco County. At the hearing, the attorney for the Property Appraiser stated that

    "we agree in this case that if there isn't an absolute [prohibition on married couples from receiving two homestead exemptions], this case would be the outlier that would surely be entitled to a homestead. We’re not trying to say that they’re trying to disprove factually a family unit, that there’s any financial aspects involved, or that there is any relationship on-going because we have nothing to surmise that or nothing has been developed."

  • The trial court found that it would defy logic for two people "who have no contact with one another, who don’t have any connections of a financial, emotional or any other way to call them a family unit.” Based on this reasoning, the trial court ruled that Mr. Haldeos and his wife constitute separate "family units" and may obtain two separate homestead exemptions.

  • The Property Appraiser argues on appeal that this interpretation of the term "family unit" is contrary to the intent of section 196.031(5), Florida Statutes (2009), which provides as follows:

    A person who is receiving or claiming the benefit of an ad valorem tax exemption or a tax credit in another state where permanent residency is required as a basis for the granting of that ad valorem tax exemption or tax credit is not entitled to the homestead exemption provided by this section.

  • We do not agree that the trial court's ruling is at odds with section 196.031(5), as the statute clearly prohibits an individual from receiving two residency-based tax credits. If the legislature had intended, as the Property Appraiser suggests, to prohibit a married couple from receiving two such tax exemptions, it could have included married couples in the above language.

  • The Property Appraiser further argues that the statute must be strictly construed against the taxpayer where "the homestead exemption provides relief from an ad valorem tax." DeQuervain v. Desguin, 927 So. 2d 232, 236 (Fla. 2d DCA 2006). While we agree with this premise, we note that "[w]here the statute's language is clear or unambiguous, courts need not employ principles of statutory construction to determine and effectuate legislative intent." See Fla. Dep't of Children & Family Servs. v. P.E., 14 So. 3d 228, 234 (Fla. 2009). Section 196.031(5) clearly and unambiguously refers to a "person" and not a married couple or family unit.

  • Although there is no constitutional or statutory guidance on the issue at bar, the Florida Department of Revenue has enacted a rule instructing property appraisers that married couples may be considered separate "family units" in certain circumstances. Florida Administrative Code Rule 12D-7.007(7), provides as follows:

    If it is determined by the property appraiser that separate permanent residences and separate “family units” have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution. The fact that both residences may be owned by both husband and wife as tenants by the entireties will not defeat the grant of homestead ad valorem tax exemption to the permanent residence of each.

  • In determining whether Mr. Haldeos was entitled to a homestead exemption, the Property Appraiser was required to follow rule 12D-7.007(7): "The Department of Revenue shall prescribe reasonable rules and regulations for the assessing and collecting of taxes, and such rules and regulations shall be followed by the property appraisers, tax collectors, clerks of the circuit court, and value adjustment boards." § 195.027(1), Fla. Stat. (2009).

  • In a case involving the protection of a homestead from a judgment, the Fourth District held that when a married couple is separated, the husband can claim a homestead exemption for a residence in which he resides and owns, even though he still owns a home with his estranged wife for which they claim a homestead tax exemption. Law v. Law, 738 So. 2d 522, 524 (Fla. 4th DCA 1999). In that case, the argument was made that the husband's home could not be homestead because the home he owned with his wife was, as a matter of law, his homestead, and a person cannot have two homesteads. Id. The Fourth District held:

    We see nothing inconsistent with our public policy if we extend a homestead exemption to each of two people who are married, but legitimately live apart in separate residences, if they otherwise meet the requirements of the exemption. When we say “legitimately” we mean that there is no “fraudulent or otherwise egregious act” by the beneficiary of the homestead exemption.

  • Id. at 525. The court agreed that the husband could not have two homesteads and that a husband and wife in an intact marriage could not have two homesteads. However, the court held that the husband's homestead could be different from the wife's homestead "where their separation was bonafide," and it was the intent of the husband to live in his separate home. Id.; see generally Judd v. Schooley, 158 So. 2d 514, 517 (Fla. 1963) (holding that the wife could claim a permanent home in Florida and receive a homestead exemption even though her husband was legally domiciled in another state).

  • Although opinions of the Florida Attorney General are not binding on this court, we note that they have favored the granting of two separate homestead exemptions to a husband and wife where they establish separate permanent residences. 75 Op. Att'y Gen. 146 (1975); 05 Op. Att'y Gen. 60 (2005).

  • The Property Appraiser urges that if married couples can be considered separate “family units” in these circumstances, such a result would make his job in reviewing homestead exemptions virtually administratively unworkable, because no property appraiser will have the staff and available resources to verify whether a married couple is, in fact, maintaining two separate permanent residences. While we recognize that property appraisers will be required to review the financial information of separated couples in these unique circumstances, we note that the person claiming the homestead exemption has the burden of proving that he or she qualifies for such. Schooley v. Judd, 149 So. 2d 587, 590 (Fla. 2d DCA 1963), reversed on other grounds, 158 So. 2d 514 (Fla. 1963).


Note that, in its ruling, the Florida appeals court fails to quote, in its entirety, the applicable Florida Administrative Code Rule 12D-7.007(7), which follows below (bold text is the portion of the Florida Administrative Code Rule 12D-7.007(7) which was inexplicably omitted by the appeals court):

  • (7) A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. If it is determined by the property appraiser that separate permanent residences and separate “family units” have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution. The fact that both residences may be owned by both husband and wife as tenants by the entireties will not defeat the grant of homestead ad valorem tax exemption to the permanent residence of each.

The point here simply (and obviously) is that as long as a husband and wife can demonstrate that they have, in good faith, established separate homesteads, no other reason or grounds for doing so (ie. marital instability or incompatibility, family illness/other health issues, high profile or other working professionals who work in different regions of the state or country, other uncommon circumstances, etc.) is necessary.

(3) Bay Area Legal Services is a regional, non-profit public interest law firm that provides a full range of civil legal services to individuals and non-profit groups that have limited access to legal services, with offices throughout the Tampa Bay region (operating offices in Hillsborough, Pasco, and Pinellas counties).

Inasmuch as this law firm's representation of individuals, like most non-profit law firms, is typically limited to those of low income, it's not too hard to read between the lines in this case and surmise that the Pasco County Property Appraiser may have thought he could get away with screwing over this homeowner by stripping him of his homestead real estate tax exemption, possibly figuring the homeowner didn't have the resources or savvy to challenge him. This, notwithstanding the fact that the Property Appraiser's actions flew in the face of the existing Florida case law, Florida Department of Revenue regulations, and past published opinions of the state attorney general's office, as this ruling clearly articulates.

By the way, contrast this story with the recently reported story (Miami Herald: Official: LePage tax exemption allowed in Fla.) where the Volusia County, Florida Tax Appraiser approved a homestead exemption claimed by the [presumably well-heeled] family of Maine Republican gubernatorial candidate Paul LePage on a Florida home without resorting to the kind of protracted legal battle the Pasco County Property Appraiser engaged in with a less-well-heeled homeowner:

  • Morgan Gilreath Jr., property appraiser in Volusia County, noted that the Florida situation was unusual - so unusual that there's no place on the homestead exemption form or statement of gross income to make note of the exception to Florida's law. There's also no notation on the county website, he said.

  • Because of the exception, Ann LePage can list Maine as her primary residence while continuing to claim the homestead exemption in Florida as long her mother lives in the home and the LePages maintain it and provide for her, making her "naturally dependent," said her attorney, William A. Lee III of Waterville, who is licensed in Maine and Florida.

The Lepage story was also reported by The Maine Public Broadcasting Network and the Bangor Daily News, among other media outlets.

Mom-Daughter Duo Dodge Major Prison Time For Running Rent-To-Own Racket After Agreeing To Take Over Payments From Distressed Home Sellers

In Bakersfield, California, The Bakersfield Californian reports:
  • A mother and daughter were sent to prison Monday for their part in a real estate scam that cheated dozens of people out of at least 24 homes, leaving a loss of at least $4.4 million. Two of the victims said the two years imposed on Alice Kantin, also known as Meyer, 69, and the five years for her daughter, Dawn Kantin, 38, were "a slap on the wrist" considering how much devastation they caused in people's lives. The daughter will be referred to the California Rehabilitation Center for drug treatment.


  • The probation report in the case listed 59 victims including 32 with losses ranging from $20,000 to $900,000 each and 26 whose loses have not been calculated. The known losses totaled $4.4 million. [...] Each had been charged with 44 felonies stemming from transactions between 2007 and 2009.

  • Both women reportedly agreed to take over payments for distressed homeowners by using rents from people who had an option to buy the homes, investigation reports say.

  • But in most cases, the homes went into foreclosure during a time the mother poured at least $290,000 into her bank account, the reports say. Alice Kantin operated a firm called Desert Air Real Estate Investments Inc. in Bakersfield, according to court reports. The Secretary of State's office has no record of the corporation.

For the story, see Mother, daughter sentenced in real estate scam.

Wednesday, October 27, 2010

Homeowner Attorney Describing Mortgage Servicers' Loan Modification Practices: "It Was Like They Had The Fax Machine Hooked Up To A Shredder"

In Los Angeles, California, the Los Angeles Times reports:
  • Financially strapped homeowners struggling to obtain mortgage modifications are taking their frustrations to court, accusing banks and loan servicers of misleading them or breaking promises to help them hold on to their homes. The lawsuits go to what U.S. Housing and Urban Development Secretary Shaun Donovan has described as the heart of the government's anti-foreclosure efforts: ensuring that banks work in good faith from the start to help borrowers.


  • A theme of the lawsuits filed by homeowners is that banks have denied permanent modifications to borrowers who make their payments on time and otherwise hold up their end of the agreements. [...] "It was just 'extend and pretend,'" said [one homeowner's] lawyer, Anthony Lanza of Irvine. "And it was like they had the fax machine hooked up to a shredder."

  • Anaheim lawyer Damian Nassiri said his firm had filed about 100 lawsuits against mortgage lenders since 2007. Earlier suits alleged that lenders misrepresented terms of mortgages or engaged in other shady practices to foist abusive loans on borrowers. Most of his firm's suits now accuse lenders of dealing in bad faith with borrowers(1) who have become delinquent on loans. Worse, Nassiri said, in cases where foreclosure was inevitable, banks misled borrowers into accepting trial loan modifications. The intent, he claimed, was "to get some kind of money out of them" while stalling actions to seize the homes.


  • Boston consumer lawyer Gary Klein, a longtime antagonist of mortgage lenders, has filed suits seeking class-action status against the top three loan servicers — Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. — and others. A multidistrict panel of federal judges on Oct. 8 consolidated eight such suits, including two from California, for pretrial proceedings in federal court in Boston.

For more, see Lawsuits accuse lenders of sabotaging mortgage modifications (More borrowers are taking banks and loan servicers to court, alleging they were misled when they tried to renegotiate the terms of their loans).

(1) A California appeals court recently ruled that a foreclosing lender can be held to its loan modification promises in certain cases, even absent a contractual obligation to do so. See Court: "Promissory Estoppel" Could Make Lender’s Verbal Agreement To Halt F'closure Sale Enforceable, Even Absent Consideration For Promise To Stall.

Cops: Home Health Aide, 4 Others Kidnapped 80-Year Old Dementia Victim In Effort To Strong-Arm Him Into Signing Over $500K Home, Cash

In New York City, the New York Post reports
  • A home-health aide and four relatives kidnapped and nearly killed an 80-year-old Brooklyn widower in an effort to trick him into handing over his legal rights, his money and his $500,000 home, authorities said [].

  • Cops on Thursday rescued decorated Army veteran Frank Maiorana, of Borough Park, from the Queens home of Saint Michael "Stacy" McKenzie, 26, sources said. "When we got to him, he was in pretty frail shape," a source said. "We don't know how much longer he'd have lived."

  • Cops believe the crew persuaded Maiorana, who suffers from dementia, to sign over his power of attorney and fleeced him of up to $100,000 in cash. Borough Park neighbors said they saw Maiorana, who earned a Bronze star in Korea for saving the lives of five men, walking with McKenzie over the summer. After a suspicious relative called cops Thursday morning, a neighbor told investigators they had not seen Maiorana for a week, sources said.

  • Cops found him dazed at McKenzie's 135th Street home. He was treated at Long Island Jewish Hospital for dehydration. The victim's former daughter-in-law, Virginia Maiorana, said some of the Borough Park neighbors called to say they were concerned about a parade of people entering and leaving the home. One neighbor said Frank "thought they were drugging him" and begged for help. But when Virginia checked in on him, he insisted "everything is fine," she said.

  • McKenzie, Carlina Lino, 17, Carmelo Lino, 22, Diane Lino, 42, and Cheryl Richard, 29, are charged with felony kidnapping, grand larceny and unlawful imprisonment.

Source: Widower rescued from aide 'kidnap'.

MD Lawmaker Takes 1-Year R/E License Loss To Resolve Claims Arising From Running Sale Leaseback Racket; Victims Seek Recovery From State Guaranty Fund

In Anne Arundel County, Maryland, WBAL-TV Channel 11 reports:
  • A Maryland state delegate on Monday struck a deal instead of fighting a state commission challenging his license to sell real estate. Under the settlement, the state will not revoke Delegate Tony McConkey's real estate license, but the license is suspended for a year.

  • McConkey, R-Anne Arundel County, said he made mistakes, but a four-year battle is finally behind him. He called the settlement with the Maryland Real Estate Commission a victory.


  • McConkey admitted he had a practice of contacting homeowners on the verge of losing their homes, offered to save them from foreclosure and willfully violated the Protection of Homeowners in Foreclosure Act -- a law he voted for in 2005 and 2008.

  • He also admitted to engaging in conduct that demonstrates incompetency and improper dealings. McConkey's license will be suspended for a year. To get it back, he'll have to reapply -- but there is no guarantee it will be reinstated.(1)

  • "Mr. McConkey will no longer be able to victimize people. This could have drug out for two years in appeals, and the state's obligation was to Maryland citizens, not just my clients," said former homeowners' attorney Mike Morin.

For more, see Md. Delegate's Real Estate License Suspended (Tony McConkey Admits To Engaging In Bad Practices).

For earlier stories reporting on McConkey's foreclosure rescue 'handiwork', see:

(1) Reportedly, three of the victims that lawmaker McConkey allegedly screwed over are each seeking $25,000 from the Maryland Real Estate Commission's Guaranty Fund, which covers qualified claims up to $25,000 for losses due to screw-ups by Maryland-licensed real estate agents, or unlicensed employees of Maryland real estate licensees.

Texas AG Subpoenas Servicers In Ongoing State Robosigner Probe

Bloomberg News reports:
  • Bank of America Corp., JPMorgan Chase & Co. and seven other banks or loan servicers were subpoenaed by Texas Attorney General Greg Abbott for information about their foreclosure practices, a spokesman said.

  • The state is subpoenaing information and documents,” Jerry Strickland, the spokesman, said yesterday in an interview. He didn’t elaborate. The state also subpoenaed Ally Financial Inc., CitiMortgage Inc. and Wells Fargo & Co.


  • The Texas subpoenas followed letters sent by Abbott’s office to 30 loan servicers on Oct. 4, asking them to halt foreclosures in the state pending a review of their practices.

For more, see Bank of America, JPMorgan Get Texas Subpoenas on Foreclosures.

Tuesday, October 26, 2010

Fannie, Freddie Slam Brakes On All Cases Handled By South Florida Foreclosure Mill

The Wall Street Journal reports:
  • Fannie Mae and Freddie Mac said on Monday that the mortgage giants had suspended all activity on foreclosure cases that had been referred to a Florida attorney under investigation by state officials.

  • Fannie and Freddie had previously stopped referring new cases to the Law Offices of David J. Stern, of Plantation, Fla., earlier this month. On Monday, Fannie said its latest move would affect all cases that "are not already subject to a foreclosure pause" by banks and other firms that service mortgages owned by Fannie, said a company spokeswoman. Freddie Mac said late Monday it had also suspended new referrals and current activity.

For more, see Fannie Mae Halts Law Firm's Foreclosure Work.

Massachusetts Foreclosure Mill Attorney Resigns Post With Outfit Linked To South Florida Mill's David Stern

Buried in a recent story in The Boston Globe is the following excerpt on the connection between a Massachusetts foreclosure mill law firm and a notorious foreclosure mill in South Florida:
  • DJSP Enterprises Inc., a troubled firm that provides foreclosure-related services nationwide, said Mark P. Harmon, president of Harmon Law, has resigned from its board of directors.

  • DJSP Enterprises, which is registered in the British Virgin Islands but headquartered in Florida, is one of the largest mortgage-servicing companies in the United States, according to documents filed with the Securities and Exchange Commission. Its president, David J. Stern, owns one of four law firms that are widely known as “foreclosure mills’’ and are being investigated by Florida’s attorney general for allegedly fabricating documents to speed up foreclosures and evict tenants.

  • Harmon declined to comment on his relationship with DJSP.

Source: AG seeks data on evictions (Newton law firm faces query over rules protecting tenants).

Go here for more on Harmon Law Offices from

Massachusetts AG Initiates Probe Into F'closure Mill Suspected Of Possible Illegal Practices In Booting Tenants When Carrying Out F'closure Evictions

In Boston, Massachusetts, The Boston Globe reports:
  • Harmon Law Offices, a Newton firm that specializes in foreclosures, is being investigated by the state attorney general’s office for allegedly unlawfully sending eviction notices to residents of bank-owned properties. State officials want to determine whether Harmon Law failed to comply with a new Massachusetts law that protects tenants living in foreclosed homes from eviction, a spokesman for Attorney General Martha Coakley said yesterday.

  • Coakley said her office also is looking into allegations that Harmon Law disregarded a court order requiring it to notify the state before foreclosing on homes with mortgages originated by subprime lender Fremont Investment & Loan.


  • Paul Collier, a Cambridge lawyer who represents many clients facing foreclosure, said a group of local lawyers has been monitoring the procedures Harmon Law uses to evict tenants living in foreclosed homes.

  • The new state law is intended to keep tenants from being forced out of a property regardless of when a foreclosure occurred, Collier said. “The purpose of the provisions of this statute is to protect anyone who is still in their homes,’’ he said.

For the story, see AG seeks data on evictions (Newton law firm faces query over rules protecting tenants).

Central Florida Homeowner Fights Off Two Banks Foreclosing On Same Loan; Notorious Law Mill Representing Lender In One Suit Fails To Return Calls

In Central Florida, CNN's AC 360 reports:
  • Tony Louzado is facing foreclosure. He's not alone -- in central Florida, where Louzado lives and works, one in every 56 homes is in foreclosure. That simple number, from foreclosure data firm RealtyTrac, doesn't tell the whole story, especially in Louzado's case.

  • Two different law firms are pushing the foreclosure -- on the same mortgage. "I see now that there's two people that are coming after me, that maybe [the bank] hired in this way," he said. "I don't know all the specifics, but there's two people that are coming after me on the same loan number."


  • "In my opinion, these are hired guns. Banks want these non-performing loans off their bottom line. And what do they do? They go out and hire a foreclosure mill who's trying to push it through as fast as possible," said Louzado's attorney, Jose Funica. [...] Funica's Palm Beach law firm, Ice Legal, has taken numerous depositions where banking officials have admitted under oath they signed thousands of foreclosure-related documents every month without personally verifying them.


  • One of the firms foreclosing on Louzado is the law office of David Stern in Plantation, Florida. Florida's attorney general says Stern's foreclosure business is the largest in the state and accuses the firm of submitting false documents, even making some up, just to speed up the foreclosure process. The state has opened a civil investigation against several firms, including Stern's. Repeated calls to Stern's office have not been returned.

For more, see Are some law firms cutting corners on foreclosures?

Newlyweds Need Media Intervention To Dodge Foreclosure Despite No Missed House Payments; Inquiries Lead To Discovery Of Chase Bank Payment Screw Up

In San Francisco, California, KGO-TV Channel 7 reports:
  • Mark and Brooke Barnum were married last year, bought their first home this year, and recently made their very first home mortgage payment. "I was exceptionally careful about making sure I had the account number right, the P.O. box number right," said Mark. Things were going along smoothly -- or so it seemed -- until a few weeks later. Mark received a shocking call from the collections department of his mortgage lender, Wells Fargo Bank. "That we hadn't made our first payment and they were concerned," said Mark.

  • But how could that be? Mark did pay, using his Chase Bank online bill-pay account. So right away Mark printed out a "proof of payment" sheet and marched down to Wells Fargo, but the bank insisted it never received that payment. So Mark went to Chase, and Chase said indeed, the payment was sent to Wells Fargo. "'What do you mean?' Chase doesn't have the money, they can't even draw back the funds because they say 'you've got it,' and Wells Fargo says 'nope,'" said Mark.

  • Mark's money had disappeared and neither bank could say where it went. Even worse, Wells Fargo said the Barnums in default on their loan and the bank could foreclose on their new home, if they didn't pay up. "I was receiving text messages from collections, phone calls from collections at first they were talking about big late fees, and of course ultimately there's you know taking back the house," said Mark.

  • This all happened on the very first payment of his very first home, which didn't make a very good impression on Mark's new in-laws. His father-in-law had co-signed on the loan and he was getting collection calls too.

  • "So here I am thinking OK, I've just married his daughter, I'm the one at this point who's supposed to be taking care of this mortgage payment and obviously it looks like I can't do it," said Mark.

  • Mark couldn't get answers and another payment was due. That's when he called 7 On Your Side. We contacted the two banks. Within hours, Chase tracked down Mark's missing payment. It turns out, it was sent to the wrong company. An insurance firm called Agia, which has nothing to do with Barnums. "From that point on, all the notices and everything stopped," said Mark.

  • Immediately, Wells Fargo Bank stopped all proceedings against the Barnums. Chase bank put $2,400 into Mark's account and he used it to pay his mortgage. Chase said the loan payment was sent to the wrong company because Mark had entered incorrect information on his bill pay account. However Chase would not say what he had typed in error. Mark says he checked his payment many times and still can't find any mistake, but for now he is relieved his house is safe.(1)

For the story, see Computer mishap shoves newlyweds into foreclosure.

(1) And hopefully Mark's father-in-law is off his back.

Pennsylvania Couple Falls Victim In Unwitting Purchase Of Home Once Used As Meth Lab

In Bristol, Pennsylvania, Wallet Pop reports:
  • A few days after moving into a 109-year-old twin home in the blue collar Philadelphia suburb of Bristol. Pa., Robert Quigley got the shock of his life when he finally met one of his next-door neighbors when he was taking out the trash. The neighbor was happy to learn that Quigley and his girlfriend, Jennifer Friberg, were in the house instead of the previous resident -- a known hoodlum who had been arrested for making crystal methamphetamine.

  • Suddenly, the $190,000, 4-bedroom home with the nice hardwood floors that the young couple had wanted to fix up and one day start a family in, had become an an albatross around their necks that still weighs them down. It still leaves the 31-year-old graphics designer dumbfounded, but did explain some strange things he experienced.

  • "As soon as we moved in, we started to get headaches immediately," he told WalletPop in an interview, adding that he and Friberg attributed their health issues to the stress of moving into their first house. "Our symptoms kept getting worse the longer we stayed there."

For more, see Young couple's dream house turns into a meth nightmare.

For other stories relating to the unwitting purchase of homes once used as meth labs, see:

Monday, October 25, 2010

NJ Class Action: "Many Thousands Of Foreclosures Are Plainly Void!" Under State Law; Homeowners Seek Note, Mortgage Cancellations, Money Damages

In Newark, New Jersey, the New Jersey Law Journal reports:
  • Bank of America has been hit with a class action on behalf of homeowners seeking damages for alleged disregard of foreclosure process rules. The suit, filed Wednesday in federal court in Newark, N.J., accuses Bank of America and two subsidiaries, LaSalle Bank and BAC Home Loans Servicing, of "an undisciplined rush to seize homes" through "pervasive and willful disregard of knowledge, facts and statutes."(1)

  • Bank of America has filed foreclosure proceedings on many mortgages in New Jersey without holding the necessary rights as the mortgagee or assignee at the time of foreclosure, the suit says.

  • "Many thousands of foreclosures are plainly void under statute and settled New Jersey case law. Many borrowers never obtain statutorily required notices, and many foreclosure suits are filed entirely based in inaccurate recitations concerning ownership of the mortgage, the note, or the assignment," the suit says.

  • The putative class in the suit, Beals v. Bank of America, N.A., 10-cv-05427, consists of all named defendants in pending New Jersey foreclosure actions initiated by Bank of America or its affiliates. The complaint includes counts of common-law fraud, breach of the covenant of good faith and fair dealing and violations of the New Jersey Fair Foreclosure Act and Consumer Fraud Act.


  • The plaintiffs claim they are entitled to compensation for emotional distress, damage to their credit scores and time lost from work for attorney meetings and foreclosure proceedings.

  • They also seek punitive damages and attorney fees as well as declaratory and injunctive relief dismissing the foreclosures of class members, with prejudice, declaring the mortgages and promissory notes of class members void and unenforceable` and rescinding or reforming the mortgages and promissory notes to conform to plaintiffs' reasonable expectations.

  • The suit was brought by Lawrence Friscia, head of a Newark firm that counsels distressed homeowners, and his associate, Jonathan Minkove, who say they’ve found that Bank of America regularly negotiates binding agreements to modify mortgage terms and then fails to honor the terms.

  • "There's a difference in the fact pattern [among individual cases] but there's pattern and a practice of blatant disregard for process," says Minkove. "Any lawyer who's worth his salt will tell you process matters."

  • And when judges call them to case management conferences in their foreclosure cases, outside counsel for Bank of America regularly fail to show up, says Friscia. Worse still, New Jersey's judges don't seem to be bothered by such behavior, he says. "There's a shocking deference given to Bank of America on the part of the judicial system," Friscia says.

For more, see Bank of America Sued in Class Action Over Flouting of Foreclosure Rules.

For the lawsuit, see Beals v. Bank of America, N.A., et al.

(1) According to the story, the plaintiffs cite a recent, well-publicized admission by a Bank of America official in a Massachusetts foreclosure case that she signed thousands of foreclosure complaints without reviewing them. That Bank of America official, Renee Hertzler, said in a deposition that she robosigned as many as 8,000 foreclosure documents a month without reviewing them, according to the lawsuit (at paragraph 29).

Indiana Class Action Quotes Brooklyn Jurist's Description Of Robosigner As "A Milliner's Delight By Virtue Of The Number Of Hats She Wears"

A class action lawsuit filed last week in Indianapolis, Indiana alleges that Countrywide Home Loans/Bank of America's use of robosigners resulted in violations of the Federal RICO statute as well as the Federal Fair Debt Collection Practices Act.

One of the robosigners described in the lawsuit is the notorious Keri Selman, described as "a nationally known robosigner" and a "robosigner extraordinaire" - (at paragraph 55), and who is further described in the following excerpt (at paragraph 58):
  • Selman's prolific career signing affidavits as a supposed vice president for so many entities led Judge Arthur M. Schack of the Supreme Court of the State of New York to remark in a court order that "Ms. Selman is a milliner's delight by the virtue of the number of hats she wears." Judge Selman [sic] noted that "Plaintiff's application is the third application for an order of reference received by me in the past several days that contain an affidavit from Keri Selman ... ." Judge Schack said he was concerned that Ms. Selman might be engaged in a subterfuge, wearing various corporate hats, and ordered that, before he would grant an application for an order of reference, Selman would be required to submit another affidavit describing her employment for the last three years. Selman never submitted such an affidavit.(1)

For the lawsuit, see Davis v. Countrywide Home Loans, Inc., et al.

(1) For Justice Schack's referenced court order, see Bank of NY v Myers, 22 Misc 3d 1117, 2009 NY Slip Op 50159 (2009).

In another of his court rulings (HSBC Bank USA, N.A. v Charlevagne, 20 Misc 3d 1128, 2008 NY Slip Op 51652 (2008)), Justice Schack makes an equally interesting observation in describing Ocwen Loan Servicing multiple corporate hat-wearing robosigner Margery Rotundo, whose affidavits also littered his courtroom and which, in my view, is equally applicable to describe Keri Selman, and which I will 'borrow' below:

  • The late gossip columnist Hedda Hopper and the late United States Representative Bella Abzug were famous for wearing many colorful hats. With all the corporate hats Ms. [Selmon] has recently worn, she might become the contemporary millinery rival to both Ms. Hopper and Ms. Abzug.

See also Foreclosure Halted As Questions Surround Court Filings; Brooklyn Judge Calls Multiple Corporate Hat-Wearing Bank Exec "A Milliner's Delight".

Ex-Homeowner Sues To Void Foreclosure Sale, Recover Home Allegedly Lost In Court Proceeding Tainted By Robosigner Scandal; Also Seeks $50K+ In Damages

In Erie County, Ohio, the Sandusky Register reports:
  • [A] Sandusky woman filed a lawsuit Wednesday claiming the foreclosure of her North Larchmont Drive home was spurred on by "robo-signing," where bank employees signed affidavits without bothering to review documents.

  • Rhonda D. McLaughlin filed her lawsuit against Bank of America, N.A., and Rhonda Weston, a vice president of Bank of America.(1) [...] Sandusky attorney Dan McGookey, a foreclosure specialist, is McLaughlin's attorney. It may be the first lawsuit filed in the U.S. by a private citizen seeking to undo an already completed foreclosure on grounds that a robo-signer was used, McGookey said.(2)


  • McLaughlin's lawsuit asks for Fannie Mae, now the owner of the North Larchmont Drive home, to give the home back to McLaughlin. [...] Fannie Mae is [also] named in the suit because it [now] owns the home.

For more, see Sandusky woman sues bank over "robo-" foreclosure.

For the lawsuit, see McLaughlin v. Bank of America, et al.

(1) Rhonda Weston is the robosigner in question in this case, and is alleged to be one of 10,000 Bank of America vice presidents, according to the BofA website (see lawsuit, paragraph 3).

(2) The lawsuit also seeks in excess of $25,000 in compensatory damages, in excess of $25,000 in punitive damages, and other costs and fees. The lawsuit alleges violations of the Ohio Consumer Sales Practices Act, O.R.C. Sec 1345; the Federal Fair Debt Collection Practices Act, 15 USC 1692; Ohio's "Baby RICO" statute, O.R.C. 2923.32, and the common law.

Homeowners In "Non-Judicial" States Face Additional Hurdles In Dealing With Foreclosing Lender-Created Robosigner Scandal

An excerpt from a recent story in The Dallas Morning News serves as a reminder as to how much more difficult it is to deal with the foreclosing lenders' "robosigner" scandal in Texas and other so-called "non-judicial" states, where the onus is on the screwed-over homeowner to initiate legal action against the lender in order to obtain their faulty and/or fraudulent foreclosure documents:
  • It is virtually impossible for average homeowners to determine if they're victims of robo-signers. "It will be difficult for a borrower on his or her own to spot this particular problem," said Karen L. Kellett, a bankruptcy attorney at Armstrong Kellett Bartholow. "It has been the very falseness of the documents that could not be detected because such documents were constructed, on their face value, to look normal and thus feed the foreclosure machine." Their falseness wasn't detected until lawsuits were filed challenging affidavits and depositions, she said.

  • Texas and other states without judicial oversight may be particularly potent breeding grounds for such fraud, legal experts said. "I think that's absolutely right," said [Kellett law partner Theodore] Bartholow. A judicial-foreclosure state requires lenders to "put the documents they're relying on in front of the court and in front of the borrower," he said.

  • "In a non-judicial foreclosure, the borrower likely would never see the documents that the lender is relying on to establish its right to foreclose," Bartholow said. "The likelihood of being caught for it is substantially diminished in a non-judicial foreclosure because you don't see the documents. There's no judge to review those documents."(1)

For the story, see Facing foreclosure? With document scandal, it's vital to act.

(1) The story points out that, in Texas, exceptions exist when a foreclosure stems from a home equity loan or a reverse mortgage, which reportedly must go through the courts. Except for those cases, the foreclosure process in Texas has a short timeline, the story states.

"Dine & Dash" Banksters Now Caught In The Middle Of Two-Front War With Homeowners, Bond Investors Over Faulty Foreclosures, Crappy Mortgage Loans

Bloomberg News reports:
  • Shoddy mortgage lending has led bankers into a two-front war, pitting them against U.S. homeowners challenging the right to foreclose and mortgage-bond investors demanding refunds that could approach $200 billion.

  • While federal regulators and state attorneys general have focused on flawed foreclosures, a bigger threat may be the cost to buy back faulty loans that banks bundled into securities. JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. have set aside just $10 billion in reserves to cover future buybacks. Bank of America alone said this week that pending claims jumped 71 percent from a year ago to $12.9 billion of loans.


  • It’s going to be trench warfare with years of lawyering,” Christopher Whalen, managing director of Institutional Risk Analytics, said in a telephone interview from White Plains, New York. “The banks can’t afford to lose.”


  • It’s troubling that the people who caused the problem have walked away and left everybody else to fight over who gets stuck with the tab,” [Chapman University law professor Kurt] Eggert said in a telephone interview. “It’s like a massive game of dine and dash.”

For more, see Banks Face Two-Front War on Bad Mortgages, Flawed Foreclosures.

In a related column, see The New York Times: One Mess That Can’t Be Papered Over:

  • When investors — like the New York Fed — contend that strict rules governing [complex Real Estate Mortgage Investment Conduit, or REMIC] structures aren’t met, they can try to force a company like Bank of America to buy them back.

  • Which brings us back to the sloppy paperwork that lawyers for delinquent borrowers have uncovered: some of the dubious documentation may undermine the security into which the loans were bundled. For example, the common practice of transferring a promissory note underlying a property to a trust without identifying it, known as an assignment in blank, may run afoul of rules governing the structure of the security.