Saturday, December 25, 2010

California Attorney In Hot Water For Advising Foreclosed Homeowners To Break In & Reoccupy Former Homes

In Southern California, the North County Times reports:
  • The real estate attorney who recommended that families break into homes they'd lost to foreclosure will be meeting with investigators from the state bar association in January, the attorney's assistant confirmed.

  • Encinitas lawyer Michael T. Pines made news in October when he advised four Southern California families, including two in Escondido, to hire locksmiths and break into their homes, which banks had repossessed. He argued that their lenders had granted the families mortgage loans under fraudulent conditions and had no right to foreclose.

  • Local legal experts found his theories dubious, and judges agreed. Pines himself is in a complicated bankruptcy liquidation proceeding and may soon lose his office building.

For more, see Bar complaint filed against foreclosure attorney Pines (Attorney advised clients to break into foreclosed houses).

See also: Ventura County Star: DA files complaint against lawyer of family who broke into home.

Virginia AG Squeezes Settlement From Loan Modification Outfit Allegedly Making Bogus Guaranties To Stop Foreclosure In Exchange For Upfront Fees

The Washington Post reports:
  • A mortgage modification company that had been illegally charging customers fees before providing emergency foreclosure help has agreed to refund customers and pay a $5,000 fine, [Virginia] Attorney Gen. Ken Cuccinelli (R) said.

  • In November, Cuccinelli filed suit against the American Neighborhood Housing Foundation, a Chesapeake-based company that also operated a Richmond office for three years, charging that the fees violated the Virginia Foreclosure Rescue and the Virginia Consumer Protection Act, by guaranteeing the company could halt foreclosures.

  • In a statement, Cuccinelli said the company has agreed to refund more than $94,000 to 273 customers nationally, as well as pay the fine and $10,000 to cover attorney fees. The company has also agreed to stop charging $1,500 in advance of providing foreclosure services and to stop guaranteeing that it can save people's homes.

Source: Mortgage company to pay fine for illegal fees, Cuccinelli says.

Mortgage Broker/Real Estate Agent Gets 30 Months For Running Home Equity Refinancing Ripoff; Ordered To Cough Up $200K+ In Victim Restitution

In Greeneville, Tennessee, the Knoxville News Sentinel reports:
  • A Florida man convicted of a nearly two-year mortgage fraud and money laundering scheme in Greene and Cocke counties was sentenced Thursday to more than three years in prison. Thomas Duane Roderick, 44, of Wesley Chapel, Fla., not only received 37 months in prison he was also ordered to pay more than $200,000 in restitution to his victims. Roderick had previously pleaded guilty to charges of wire fraud, mail fraud, bank fraud and money laundering in U.S. District Court in Greeneville.

  • According to an indictment, Roderick, a mortgage loan broker and real estate agent in Greeneville, devised a scheme to defraud clients. He worked with Premier Mortgage from 2005 until 2007 in Greeneville and used various real estate closing agencies in Greene County. At the closings, Roderick would provide fraudulent legal documents for the signature of the clients seeking loans, and the closing agency would disburse funds as required by the lending institution.

  • He set up a sham investment company, entitled MSI Inc., and used a bogus checking account to capture money from clients. Roderick caused one victim to wire $20,000 to MSI, falsely telling her that she would owe taxes on the $20,000 equity she received from the refinancing of her home mortgage. He convinced her that if she turned the funds over to him, he would invest the money to avoid taxes.

  • Roderick never invested the funds and immediately withdrew them after the wire transfer, and spent them for his own benefit.

Source: Florida man gets 3 years in mortgage fraud scheme.

City Of Cleveland, Local Non-Profit Target Lenders, Loan Servicers In Amended Federal Suit Over Blighted Foreclosures

In Cleveland, Ohio, WCPN Radio 90.3 FM reports:
  • A local nonprofit and the city of Cleveland are asking a federal judge to force nearly a dozen financial institutions and loan servicers to take care of the houses they took back in foreclosure or pay to knock them down.


  • Two years ago, a nonprofit affiliated with Neighborhood Progress Inc, an umbrella organization for Cleveland’s community development corporations, sued [Deutsche Bank and Wells Fargo] arguing the houses they had taken back in foreclosure were becoming public nuisances.The cases bounced around the courts and Deutsche Bank and Wells Fargo ultimately paid to demolish the properties named in that suit.

  • But, the plantiffs say, the problem continues with yet more properties, and so the nonprofit Cleveland Housing Renewal Project and the city of Cleveland have refiled an amended suit in federal court. The defendants include not just Deutsche Bank, says attorney Thomas C Wagner, but also nine loan servicers including big Wall Street names like JP Morgan Chase.

For more, see Cleveland, Nonprofit Sue Deutsche Bank, Loan Servicers Over Bills for “Dangerously Blighted” Houses.

Friday, December 24, 2010

Florida Appeals Court OKs Property Tax Homestead Exemption For Non-Permanent Resident Alien Couple Where Their Three Minor Children Are U.S. Citizens

Abstract Appeal reports:
  • If two parents are not legal residents of Florida(1) but they own a home in which they and their minor children reside, can the parents claim a homestead exemption for the property under Florida law? Yes they can, said the Third District [Court of Appeal] in this case.

  • The decision quotes portions of the father’s affidavit, in which he explains that he and his wife live on the property and that, for their three children, the property is their permanent residence.

  • The decision then observes: “Although one might wonder whether his assertions are congruent with the laws of nature, we apply in this court the constitution and laws of the State of Florida.”

Source: Third District: Homestead and Legal Residency Status.

For the court's ruling, see De La Mora v. Andonie, No. 3D09-3427 (Fla. App. 3d DCA, December 15, 2010).

(1) The homeowners in this case are a married couple who are citizens of Honduras, lawfully residing in the United States pursuant to temporary visas issued by the United States Department of Homeland Security. It was undisputed that the couple themselves (as opposed to their three minor children who are all U.S. citizens) are legally incapable of qualifying as “permanent residents” of Miami-Dade County. See Juarrero v. McNayr, 157 So. 2d 79, 81 (Fla. 1963) (finding that a non-citizen present in the United States under a temporary visa “cannot ‘legally,’ ‘rightfully’ or in ‘good faith’ make or declare [himself]” a “permanent resident” of this state for purposes of Article VII, section 6(a) of the Florida Constitution dealing with the property tax exemption for homesteads (the constitutional provisions dealing with the property tax exemption for homesteads under Florida law is to be distinguished from Article X, Section 4 of the Florida Constitution, which deals with the exemption for homesteads against forced sale by judgment creditors)).

Bay State Homeowners Sans Filed Homestead Declaration Now Entitled To Automatic $125K Home Equity 'Shield' Against Forced Sale By Judgment Creditors

In Boston, Massachusetts, The Patriot Ledger reports:
  • Massachusetts homeowners stand to receive new protections from creditors under a bill that was recently enacted by the state legislature. The bill would automatically protect the first $125,000 of equity on a primary residence from creditors.

  • Currently, only homeowners who file a “declaration of homestead” form with the Registry of Deeds enjoy such protections. A spokesman for the Patrick administration said Gov. Deval Patrick signed the bill into law on Thursday night. “This is really going to protect people who find themselves with their backs to the wall,” said Susan Grossberg, a Boston bankruptcy attorney.

  • The protections would apply both to new transactions and existing homes. Homeowners still would have the option of filing a declaration of homestead, which increases the exemption to $500,000. The legislation is designed to deter creditors from foreclosing on the homes of delinquent debtors, even if they have filed for bankruptcy.

  • Under the current law, if a homeowner does not have a declaration of homestead, a creditor could place a lien on the home and begin foreclosure proceedings. “They could turn around the next day and give you a notice that they’re going to foreclose to satisfy their lien by selling this house,” Grossberg said.

  • Massachusetts is one of a dwindling number of states without an automatic homestead provision, said Kathleen Joyce, director of government relations for the Boston Bar Association. The group lobbied for the expanded protection for several years without success. To file a declaration of homestead, homeowners fill out a signed, notarized one-page document declaring a property as their primary residence and pay a $35 fee to file it with their local Registry of Deeds. These are typically filed at the time of a home’s purchase, but can be done at a later date as well.

Source: New law would protect homeowners’ equity (Designed to deter creditors’ foreclosures). homestead exemption

Missouri AG Obtains $338K+ Judgment In Suit Against Alleged Contract For Deed, Payment Skimming Racket That Left Would-Be Homebuyers In Foreclosure

In Jefferson City, Missouri, Legal Newsline reports:
  • Missouri Attorney General Chris Koster announced [...] that he has obtained a summary judgment against a real estate company and two of its operators for allegedly defrauding consumers.

  • Greenleaf and The Real Estate Company, as well as business operators Scott Dasal and Eric Gagnepain, allegedly defrauded consumers by selling them homes that were already owned by investors that they had solicited. Under terms of the judgment, the defendants are permanently barred from engaging in any home sales or rentals in the state. They must also provide more than $308,000 in restitution to customers. Another $30,000 will be paid to the state.

  • According to the suit, the defendants would allegedly take out mortgages on homes without the consumers purchasing the homes knowing. Koster says while consumers were led to think they were purchasing the homes from Greenleaf and were buying an ownership interest in the home, the money the consumers then paid to Greenleaf, which they were told was for the mortgage, was then allegedly used for the defendants' operating expenses. Consumers learned the truth the hard way, when banks foreclosed on the loans, Koster says.(1)

Source: Koster gets judgment against real estate company.

(1) For earlier posts on this contract for deed, home-flipping racket, see:

WV High Court OKs Use Of Misrepresentations Where Plaintiff Fails To Prove Reliance On Bad Acts In Suits Brought Under State Consumer Protection Law

In Charleston, West Virginia, The West Virginia Record reports:
  • West Virginia consumers looking to sue for misrepresentation under the state's Consumer Credit and Protection Act now must show proof of reliance, according to an opinion released Friday by the state Supreme Court of Appeals. Previously, state consumers only had to prove misrepresentation to seek damages. Following the Court's ruling in White vs. Wyeth, plaintiffs now must show a causal connection between their individual claims of injury and any alleged unfair or deceptive conduct.


  • Justice Thomas McHugh, who authored the Court's opinion, wrote that the Court did its own study of other states. Its research revealed that the private cause of action provisions of 28 states contain the "as a result of" language. Eleven states and the District of Columbia, it said, have statutes containing the "whether or not any person has in fact been misled, deceived or damaged" language. Only five states have both statutory provisions, it found.(1)

  • "Our review of the diverse cases and numerous authorities addressing the issue of reliance in the context of private consumer protection causes of action leads us to the conclusion that courts are struggling to arrive at a way to be faithful to the purposes of consumer protection statutes -- promoting fair and honest business practices and protecting consumers -- without inviting nuisance lawsuits which impede commerce," McHugh wrote for the Court.

  • "In determining the meaning of the phrase 'as a result of' in the WVCCPA, we find the decisions from other jurisdictions which are most reasonable, practical and fair to all relevant purposes and interests are those which have concluded that proof of a causal nexus between the deceptive conduct giving rise to the private cause of action and the ascertainable loss may require proof of reliance in some but not all instances."

For more, see Supreme Court tightens control on consumer protection act.

For the ruling, see White vs. Wyeth, No. 35296 (W.Va. December 17, 2010).

(1) See generally, Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes for a survey on the various state consumer protection statutes throughout the U.S.

Thursday, December 23, 2010

Reports Of Alleged Illegal Home Break-Ins By Lenders Continue; Deceased Owner's Cremated Remains Among Items Taken, Says One Lawsuit Against BofA

The New York Times reports:
  • When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks. When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words “Together Forever,” that contained the ashes of her late husband, Robert.

  • The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand.(1)

  • In an era when millions of homes have received foreclosure notices nationwide, lawsuits detailing bank break-ins like the one at Ms. Ash’s house keep surfacing.(2) And in the wake of the scandal involving shoddy, sometimes illegal paperwork that has buffeted the nation’s biggest banks in recent months, critics say these situations reinforce their claims that the foreclosure process is fundamentally flawed.


  • In Washington, Celeste Butler went to check on her father’s house after he spent months in the hospital and ultimately died. “The house was ransacked,” Ms. Butler said, adding that it had been neatly maintained beforehand. “They had destroyed furniture, broken into china cabinet. They had looted jewelry.”

  • In her lawsuit, Ms. Butler is accusing Safeguard, a contractor for JP MorganChase, of breaking into her father’s house. Ms. Butler asserts that Chase failed to properly credit payments made when she switched to an automatic system in June 2009, but that she and the bank worked quickly to rectify the problem.

  • Officials at Chase said its contractors, dispatched to inspect the house when payments were late, found it in disarray. When no one responded to a letter asking if the property had been abandoned, Chase said, its crews went back in the house to put antifreeze in the pipes.

For the story, see In a Sign of Foreclosure Flaws, Suits Claim Break-Ins by Banks.

(1) Go here for links to other reported Bank of America foreclosure screw-ups.

(2) For the lawsuit in this case, filed in California, see Ash v. Bank of America.

Earlier media reports reveal that the same Massachusetts lawyers representing Ms. Ash in this case has filed similar illegal foreclosure & lockout cases on behalf of screwed-over homeowners in other parts of the country. See:

For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

Title Insurance/Closing Agent Cops Guilty Plea For Swiping Million$ From R/E Escrow Accounts; Resorted To "Playing The Float" To Keep Racket Running

From the Office of the U.S. Attorney (NYC/Manhattan):
  • PREET BHARARA, the United States Attorney for the Southern District of New York, announced [] that BRIAN H.MADDEN, the former president and co-founder of Liberty Title Agency, LLC ("Liberty Title"), one of the largest independently-owned title insurance agencies in New York State, pled guilty in Manhattan federal court to defrauding his clients by misappropriating and embezzling millions of dollars of escrow and other client funds entrusted to Liberty Title and two other entities controlled by MADDEN.(1)

For the U.S. Attorney press release, see Former President Of Title Insurance Agency Pleads Guilty In Manhattan Federal Court To Misappropriating Millions Of Dollars Of Client Funds.

(1) From the press release:

  • According to the Indictment and Complaint and statements made during the plea proceeding:

    MADDEN’s company, Liberty Title, sold title insurance to purchasers of property or lenders financing the purchase of property. [...] MADDEN also controlled and operated two other title insurance agencies: Skyline Title, LLC, and GNY Liberty Abstract, LLC. [...] In addition to issuing title insurance policies, MADDEN’s three companies also provided escrow services to clients, and collected and paid taxes and fees.

    Beginning around early 2008, MADDEN misappropriated millions of dollars of escrow and other client funds by transferring and commingling those funds among various bank accounts held by Skyline Title, GNY Liberty, and Liberty Title. MADDEN then used the misappropriated funds to sustain Liberty Title’s operations and to make significant withdrawals of monies for his personal use. In particular, between January 2008 and April 2009, MADDEN took more than $2 million in cash draws from Liberty Title. [...] To sustain Liberty Title’s operations in the face of such withdrawals and to pay current client debts, MADDEN misappropriated escrow and client funds of other clients, essentially using new funds from clients to pay off debts on behalf of other clients -- a practice called "playing the float." In addition, because MADDEN misappropriated the funds of title insurance agencies, he failed to timely and properly record and pay taxes on dozens of mortgages and other real estate transactions, further exposing his clients to loss.

Fleeing Florida Title Insurance Agents Accused Of Ripping Off $10M+ From Escrow Accounts Bagged In Colorado After 30 Months On The Lam

In Durango, Colorado, The Palm Beach Post reports:
  • Accused of stealing $10 million from clients of their title insurance company, Roger and Peggy Gamblin spent more than two years running from the FBI before agents cornered them [...] at a hospital in Durango, Colo. The couple, who mysteriously vanished in May 2008,(1) were taken into federal custody and most likely will be returned to Florida to face charges of conspiracy and wire and mail fraud.


  • In an eight-count superseding indictment handed up in October 2009, a federal grand jury charged the Gamblins with financing their lifestyle with stolen money. The indictment said the couple raided client escrow accounts reserved for buying houses or paying off mortgages and used the money to pay business and personal bills.


  • Underwriters for Flagler Title, which now is in receivership, won lawsuits against the Gamblins' company in August, and a judge ordered the couple to pay the underwriters, Lawyers Title Insurance and Chicago Title Insurance Company, more than $10.2 million.

  • In Durango, the Gamblins indicated they were short on cash. [...] Roger and Peggy Gamblin asked for, and were granted, a court appointed attorney, a move reserved for people who can't afford to hire their own lawyers.

For the story, see Title firm's owners, missing for 2 years, captured in Colorado.

(1) See The Palm Beach Post:

  • Millions missing at title company (Before his disappearance plunged employees and customers of one of Florida's largest independent title companies into chaos [...], Flagler Title founder Roger Gamblin dipped into millions of dollars his company held in escrow for clients, according to testimony),
  • Title firm owner had been fined.

Tampa Feds Charge WV Woman With Allegedly Abusing POA To Obtain, Pocket Proceeds From Mortgage Loan On 80-Year Old Disabled Victim's Free & Clear Home

From the Office of the U.S. Attorney (Tampa, Florida):
  • United States Attorney Robert E. O'Neill announces the unsealing of an indictment and the arrest of Rebecca Moody, 61, of West Virginia and formerly of New Port Richey[, Florida].


  • According to the indictment, Rebecca Moody is alleged to have engaged in a scheme to defraud an eighty year old disabled woman by using a fraudulently obtained power of attorney to procure a fraudulent mortgage loan from Wells Fargo Bank on the victim's unencumbered residence without the victim's knowledge.

  • The indictment claims that Moody was also engaged in the theft of other funds from other accounts belonging to the victim in order to acquire money for Moody's personal use, and for the use of her daughter, all in contradiction of her fiduciary capacity to conduct the financial affairs in the best interest of the disabled and elderly victim.(1)

For the U.S. Attorney press release, see Woman Who Defrauded Disabled/Elderly Victim Arrested.

(1) Moody is charged with one count of wire fraud and one count of transportation of stolen property in connection with a mortgage, and other accounts, belonging to the victim who resided in New Port Richey, Florida at the time of the charged offenses.

Wednesday, December 22, 2010

Alabama Woman Files Federal Suit Accusing BofA Of Jerk-Around In Loan Mod Process; Action Joins Others Transferred To Boston For Pre-Trial Proceedings

(This a revision of a story posted earlier today & reflects a revision of footnote 1)

In Mobile, Alabama, the Mobile Press Register reports:
  • A Mobile woman is suing Bank of America and its home lending service, claiming it wrongfully attempted to foreclose on her house after breaking an agreement to modify her loan.


  • Kimberley George filed suit in U.S. District Court in Mobile last month. According to the lawsuit, George began discussing a loan modification agreement with Bank of American in January 2009, reaching an agreement that summer. It required her to make three monthly "trial" payments of $648 before the bank would permanently modify her loan.

  • She made those payments for September, October and November, completing the trial program, according to the lawsuit. She paid the same amount in December, the lawsuit states, then was told by a bank representative to stop making payments so that the bank could "process the permanent modification and calculate a new mortgage payment based on current balance."

  • In June, Bank of America told George that it would not approve a modification of her loan, and said that she was in default of her mortgage, according to the lawsuit. "The gist of the suit is, she made her trial period payments, and they didn't give us the permanent modification," said Earl P. Underwood Jr., one of her attorneys. "It's a breach of contract."

  • The bank began a foreclosure proceeding in August, but later canceled it after her attorneys told the bank that she planned to seek an injunction, according to the lawsuit. Bank of America has not responded to the lawsuit, according to court records.

  • The case has been transferred to U.S. District Court in Massachusetts. Pre-trial proceedings for this and similar cases will be conducted there, and then the cases will be returned to their original districts, according to Underwood.(1)

Source: Mobile woman sues Bank of America over foreclosure.

See also, Mobile-Baldwin Consumer Law Firm files Mortgage related Class Action.

(1) According to the law firm's press release, it has associated the National Consumer Law Center as co-counsel in the George case. For similar HAMP-related lawsuits brought by the National Consumer Law Center with its co-counsel, see:

Wells Agrees To $2B+ In Loan Mods On "Pick-A-Pay" ARMs In Settlement Of California AG's Civil Lawsuit; Will Pay Add' $32M To Foreclosed Ex-Homeowners

From the Office of the California Attorney General:
  • Attorney General Edmund G. Brown Jr. announced [] that Wells Fargo has agreed to provide loan modifications worth more than $2 billion to thousands of California homeowners with "pick-a-pay" loans and to pay an additional $32 million to thousands of borrowers who lost their homes through foreclosure.

  • None of the loans were made by Wells Fargo. All were originated by World Savings and Wachovia, banks Wells Fargo acquired. "Customers were offered adjustable-rate loans with payments that mushroomed to amounts that ultimately thousands of borrowers could not afford," Brown said. "Recognizing the harm caused by these loans, Wells Fargo accepted responsibility and entered into this settlement with my office."

For the California AG press release, see Brown Reaches Settlement With Wells Fargo Worth More Than $2 Billion to Californians With Risky Adjustable-Rate Mortgages.

Refinance Gone Haywire Leaves Virginia Couple Facing Foreclosure As Payoff Proceeds From Now-Defunct Lender Fail To Reach Existing Mortgage Holder

In Amelia County, Virginia, the Richmond Times Dispatch reports:
  • Terry and Donna Hunt have never missed a mortgage payment. But their original lender has tried to foreclose on their house in Amelia County three times.

  • The Hunts weren't involved in a loan modification, nor were they trying to take equity out of their house. Rather, things went awry when they refinanced their $211,000 mortgage in October 2009 to lower their interest rate from 7.8 percent to 5 percent. Now, no one knows who owns the loan, said Jason Krumbein, the couple's attorney.

  • The new loan servicer, a government-approved lender that took over the refinanced loan from the originator, says it owns the loan, Krumbein said. But CitiMortgage, the original lender, claims it never received the payoff from Lend America, once one of the largest originators of mortgages backed by the Federal Housing Administration but now banned by the FHA from doing business.


  • Jay Speer, an attorney with the Virginia Poverty Law Center, said that since hearing a few weeks ago about the Hunts' situation, he has been alerted to a few more cases in Virginia involving Lend America not paying off previous loans. "It's a big can of worms," Speer said.(1)

For more, see Amelia couple faces a refinancing gone bad.

(1) Reportedly, the Hunts would later learn that Lend America abruptly ceased operations within weeks after it closed on their refinance. The U.S. Attorney for the Eastern District of New York had filed a complaint in federal court, accusing Lend America of fraudulent lending practices that compromised the integrity of the FHA mortgage insurance program and contributed to increases in loan defaults and foreclosures, the story states.

Fear Of 'Flopping' Fraud Leads Loan Servicers Away From Short Sales, Opting To Foreclose Instead

The Boston Globe reports:
  • [A]s more homeowners attempt to stave off foreclosure by striking [short sale] deals, lenders are denying or delaying many of these transactions even when it appears the sales would be in their best interest, according to real estate agents and housing advocates.(1)

  • Eventually, some of the properties are sold at auction for less than the lender would have recouped through a short sale, they say. That not only costs banks, but it further damages homeowners’ credit and depresses overall property values.


  • Indeed, lenders are growing more cautious about short sales as evidence of fraud in the process escalates along with volume, said Frank McKenna, vice president of fraud strategy for CoreLogic, a California research company. Lenders are losing about $310 million annually in short-sale fraud, with about one in every 53 sales plagued by problems, according to CoreLogic.

  • Those problems include a fraudulent process known as flopping, through which an outside investor or buyer hires a real estate agent to assess a home for less than its true market value and then convinces a lender to sell at that price. The buyer then quickly resells the home at a higher price. “There is a fear of not getting the right valuation because you have some shady investors,’’ McKenna said.


  • [S]tories of botched short sales are becoming more common in Massachusetts. Tony Nakhle, a real estate agent in Stoughton, said he had two deals fall through last year after lenders foreclosed upon homes even after sales were approved. In one case, the lender foreclosed on a house after approving a $136,000 deal, he said. Instead, the home was sold at auction for just $109,000. The buyer then sold the property back to the former owner for $136,000, he said.(2)

For more, see Wary lenders denying short sales (Citing price concerns, many opt to foreclose).

For an opposite viewpoint, see Housing Wire: Higher loss severities on foreclosures will push servicers to short sales in 2011: Fitch:

  • Loss severities are expected to increase between 5% and 10% on residential mortgage-backed securities in 2011 as loss mitigation costs and foreclosure expenses go up, according to Fitch Ratings. This, analysts said, will push servicers to short sales.

(1) In actuality, it is the loan servicer, not the lender/mortgage investor, that is denying or delaying many of these transactions. While it may appear that these short sales would be in the lender/mortgage investor's best interest, the loan servicer is the one calling the shots. Since the servicer isn't the one taking the financial hit, it apparently doesn't care one way or the other if the lender/mortgage investor loses money.

(2) See also NPR: Housing Nightmare Upends Family, Enriches Investor, for a story on loan servicer Wells Fargo who reportedly, unwilling to work out a deal with a homeowner, auctioned off a house at a foreclosure sale to a private investor for $115,000 — a fraction of the original $584,000 borrowed. The investor who bought the home at the auction then flipped the property to another investor two weeks later for $270,000, making a profit of $155,000. Michael DeVito, an executive vice president for Wells Fargo Home Mortgage, would not comment about this particular case, the story states.

Alabama Woman Files Federal Suit Accusing BofA Of Jerk-Around In Loan Mod Process; Action Joins Others Transferred To Boston For Pre-Trial Proceedings

In Mobile, Alabama, the Mobile Press Register reports:
  • A Mobile woman is suing Bank of America and its home lending service, claiming it wrongfully attempted to foreclose on her house after breaking an agreement to modify her loan.


  • Kimberley George filed suit in U.S. District Court in Mobile last month. According to the lawsuit, George began discussing a loan modification agreement with Bank of American in January 2009, reaching an agreement that summer. It required her to make three monthly "trial" payments of $648 before the bank would permanently modify her loan.

  • She made those payments for September, October and November, completing the trial program, according to the lawsuit. She paid the same amount in December, the lawsuit states, then was told by a bank representative to stop making payments so that the bank could "process the permanent modification and calculate a new mortgage payment based on current balance."

  • In June, Bank of America told George that it would not approve a modification of her loan, and said that she was in default of her mortgage, according to the lawsuit. "The gist of the suit is, she made her trial period payments, and they didn't give us the permanent modification," said Earl P. Underwood Jr., one of her attorneys. "It's a breach of contract."

  • The bank began a foreclosure proceeding in August, but later canceled it after her attorneys told the bank that she planned to seek an injunction, according to the lawsuit. Bank of America has not responded to the lawsuit, according to court records.

  • The case has been transferred to U.S. District Court in Massachusetts. Pre-trial proceedings for this and similar cases will be conducted there, and then the cases will be returned to their original districts, according to Underwood.(1)

Source: Mobile woman sues Bank of America over foreclosure.

See also, Mobile-Baldwin Consumer Law Firm files Mortgage related Class Action.

(1) According to the law firm's press release, it has associated the National Consumer Law Center as co-counsel in the George case.

Tuesday, December 21, 2010

NJ High Court Chief Justice Declares War On Robosigner Practices, Rogue Foreclosure Filings

In Trenton, New Jersey, The Newark Star Ledger reports:
  • Citing a staggering increase in filings and voicing fears of inaccurate applications, New Jersey’s top judge announced a series of initiatives Monday to combat rogue foreclosure filings.

  • "It’s our hope that these three steps will provide greater confidence" in the foreclosure process, Chief Justice Stuart Rabner said in a conference call with reporters. "It is important the judiciary ensures that judges are not rubber-stamping questionable documents that may not be reliable."

  • This practice of rubber stamping is known as "robo-signing," and refers to mortgage lender and service employees who sign hundreds, if not thousands, of affidavits submitted in support of foreclosure claims but without any personal knowledge of the information included in the application. This year, there were more than 65,000 applications filed statewide, up from nearly 22,000 four years ago. And the vast majority of foreclosure actions – 94 percent – are uncontested, Rabner said.

  • The judge ordered six mortgage lenders, including Bank of America, JPMorgan Chase and Citibank, to file to the court by Jan. 19 documents proving their internal foreclosure application processes are up to standards, or the applications will be suspended. The other companies are the mortgage divisions of Wells Fargo, OneWest Bank and Ally Financial. Rabner appointed General Equity Judge Mary Jacobson, who sits in Trenton, to oversee foreclosure matters in the state.

  • The announcement comes after a report prepared by Legal Services of New Jersey alleged industry-wide deficiencies in foreclosure filings, according to court documents. "The mortgage servicing and foreclosure industry really is rife with this certification without personal knowledge," said Melville Miller, president of Legal Services. The group published a 28-page report detailing information found in depositions and testimony about foreclosure proceedings in November, which was presented to Rabner. "From the best we can tell, at a national level and also in New Jersey, it’s a widespread practice."

  • Other states have issued similar orders, according to the order. In October, New York directed attorneys filing residential foreclosure actions to certify they have personally reviewed the documents’ accuracy. And at least four state attorneys general and the attorney general for Washington D.C., have required certain lenders, including those named in New Jersey’s order, to prove the validity of their residential mortgage foreclosure processes, the order states.

Source: N.J. top judge pushes for measures to target bad foreclosure practices.

For the New Jersey Supreme Court press release, see New Jersey Courts Take Steps to Ensure Integrity of Residential Mortgage Foreclosure Process.

Go here for links to the three orders issued in his matter.

Affidavit-Signing Vice Presidents Now Required To File 'Mini-Resume' In Foreclosure Actions In One Long Island Judge's Courtroom

A recent story in Daily Finance notes how one Suffolk County, New York judge is imposing additional requirements on foreclosing lenders to that contained in State Chief Judge Jonathan Lippman's recent order requiring a special affirmation from the banks' attorneys when pursuing foreclosure actions:

  • While all the cases can be refiled once the banks documents are in order, Cohalan's order requires the banks to go beyond the Lippman affirmation. In his court at least, a bank employee is going to have to sign an affirmation even more detailed than what Judge Lippman ordered for lawyers.

  • The bank affirmation comes from Cohalan's concern with robo-signing, explains Daniel J. Murphy, Judge Cohalan's chief law assistant. Going forward, banks that want to foreclose in Cohalan's court will have to have "whoever is looking at the documents provide an affidavit that the amounts are correct, the mortgage is present, the assignments of mortgage have been correctly signed and dated and the paperwork before court is accurate."

  • To prevent robo-signing of those affidavits, Cohalan also requires bank representatives to list every document they reviewed for the affidavit. That list must include the note, and they must explain who they are, how long they've been at the bank and what their educational background is.

  • Murphy explains the purpose of that mini-resume is to make sure these employees understand what they're looking at and that any "person claiming he is the vice president of the bank is in fact a vice president of the bank."

  • While that sounds silly -- why would someone sign a document with an inaccurate title -- the robo-signing scandal has exposed the practice of people signing as a vice president who have no link to the financial institution except for a resolution authorizing them to sign.

For the story, see Why New York Foreclosures Are Grinding to a Halt.

Frank "Appalled By The Insensitivity & Cruelty" Of Some Republicans As Congress Stiffs Non-Profit Law Firms Out Of TARP Cash For Foreclosure Defense

The Wall Street Journal reports:
  • U.S. House Republicans on Friday blocked a last-minute effort to allow foreclosure-prevention funds to be directed to legal aid groups, arguing it was an inappropriate use of financial rescue money. Lawmakers failed to pass a bill sponsored by Rep. Marcy Kaptur (D., Ohio) that would allow those groups to receive money through a federal program to assist homeowners on the verge of foreclosure.


  • Rep. Barney Frank (D., Mass.), the outgoing chairman of the House Financial Services Committee, said recent revelations of sloppy foreclosure practices at large banks underscore the need for homeowners to receive professional legal assistance when facing foreclosure.

  • Frank said he was “appalled by the insensitivity and the cruelty” of Republicans opposing the measure, and said it “does not extend the TARP in any way.”

  • But Rep. Steven LaTourette (R., Ohio) spoke in favor of the measure, saying he was disappointed that a partisan fight had broken out on the issue. “The money is already out there,” he said. “We should stop the nonsense, approve the bill and move on.”

For the story, see Lawmakers Reject Legal Aid Money for Troubled Borrowers.

Philly Federal Judge Grants TRO Delaying Foreclosure Of Homes Involved In Recent Sale Leaseback Foreclosure Rescue Indictment

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:
  • A federal judge [Friday] morning granted a temporary restraining order in the U.S. Attorney's civil case against Anthony J. DeMarco, who was also charged criminally Tuesday in a mortgage foreclosure rescue scheme involving $31 million in fraudulent loans on 120 properties.(1)

  • The restraining order shields an unspecified number of properties from sheriffs' sales until at least February. A hearing on a longer-term preliminary injunction was scheduled by U.S. District Judge Michael M. Baylson for Feb. 2.

For the story, see Sheriff sales blocked in alleged foreclosure fraud.

(1) See Philly Feds Continue Attack On Equity Stripping Sale Leaseback Peddlers; Indict 4, File Civil Suit In Alleged Racket Involving 120 Properties.

Accused Central Florida Vacant Home Hijacker Bagged Again On New Charges; Vows To Continue Snatching Homes, Claiming Adverse Possession Defense

In Lutz, Florida, the St. Petersburg Times reports:
  • At lunchtime Wednesday at the Royal Lanes bowling alley, fugitive task force deputies and U.S. marshals moved in on their suspect: 60-year-old Joel McNair, a smooth-talking felon who, authorities say, just can't quit the con. McNair had warrants out for scheme to defraud and grand theft in Sarasota and Manatee counties, where he's accused of finding empty homes in foreclosure and renting them out — even though he didn't own the properties.

  • The Sarasota Sheriff's Office said McNair cited a centuries-old legal concept called adverse possession. Chapter 95 of Florida Statutes spells out how someone can take possession of a property through squatter's rights.(1) The law requires that a person occupy the property for at least seven years and fulfill other legal requirements, such as paying taxes on the property, in order to obtain ownership.

  • "I will continue until someone can show me that I'm breaking the law," McNair told the Sarasota Herald-Tribune earlier this week while he was out on bail from a November arrest on similar charges. "But until then," he said, "I'm going to keep on going."


  • McNair told the Herald-Tribune his company has at least 11 houses in Sarasota County and about 60 in counties from Pasco to Charlotte. Kevin Doll, spokesman for the Pasco Sheriff's Office, said the agency is investigating the matter. As of Thursday, McNair faced no charges in Pasco.

  • "We have had that same scam tried in our county before," Doll said, referring to the February arrest of Stephen Bybel, a 49-year-old who set up a company called Real T Solutions LLC, with the listed purpose of being a "short sale specialist; legally and ethically working with distressed home owners."

  • Bybel is accused of claiming squatter's rights on 72 properties in Pasco. When he was arrested and charged with scheme to defraud, Bybel was actively renting 31 homes, authorities said. His trial is slated for March 21.

For more, see Felon accused of home fraud in Florida squatter's rights case.

(1) See:

  • Ch. 95.16, Florida Statutes: Real property actions; adverse possession under color of title, and
  • Ch. 95.18, Florida Statutes: Real property actions; adverse possession without color of title.

Monday, December 20, 2010

Nevada AG Slams BofA w/ Suit Over Allegedly Deceptive Loan Servicing Practices, Loan Modification Program Misrepresentations

From the Office of the Nevada Attorney General:
  • Attorney General Catherine Cortez Masto announced today that her office is filing a lawsuit against Bank of America Corporation, N.A., BAC Home Loans Servicing, LP, Recon Trust Company ("Bank of America") for engaging in deceptive trade practices against Nevada homeowners.

  • The lawsuit, filed in the Eighth Judicial District of the State of Nevada, was triggered by consumer complaints and follows an extensive investigation into Bank of America’s alleged deceptive practices involving its residential mortgage servicing, particularly its loan modification and foreclosure practices.


  • Because of Bank of America’s false promises, many Nevada consumers continued to make mortgage payments they could not afford, running through their savings, their retirement funds or their children’s education funds. Additionally, due to Bank of America’s misleading assurances, consumers deferred short-sales and passed on other attempts to mitigate their losses. And they waited anxiously, month after month, calling Bank of America and submitting their paperwork again and again, not knowing whether or when they would lose their homes. Whatever the consumers’ particular circumstances, they all suffered the stress and frustration of being misled by Bank of America while trying to take responsible action to modify their mortgages so they could continue to make their payments and remain in their homes.


  • Bank of America’s misconduct in misrepresenting its mortgage modification program was confirmed in interviews with consumers, former employees and other third parties and through review of relevant documents. Former employees describe an environment in which Bank of America failed to staff its modification functions with employees who had the necessary training, skills and experience. According to employees, the modification process was chaotic, understaffed and not oriented to customers. Employees were even reprimanded for spending too much time with individual consumers.(1)

For the Nevada AG press release, see Nevada Attorney General Sues Bank Of America For Deceiving Nevada Homeowners.

For the lawsuit, see State of Nevada v. Bank of America Corporation, et al.

(1) See The New York Times: Two States Sue Bank of America Over Mortgages:

  • One former employee said, “The main purpose of the training is to teach us how to get customers off the phone in less than 10 minutes.” Another employee said, “When checking on a borrower’s status, I often found that the modification request had not been dealt with or was so old that the request had become inactive. Yet, I was instructed to inform borrowers that they were ‘active and in status.’ One time I complained to a supervisor that I felt I always was lying to borrowers.”

Arizona AG Slams BofA With Lawsuit Saying Lender Showed "Callous Disregard" In Jerking Around Borrowers Seeking Loan Modifications

From the Office of the Arizona Attorney General:
  • Attorney General Terry Goddard announced that his Office [] filed a lawsuit against Bank of America Corporation and its affiliated companies (“Bank of America”) alleging violations of the Arizona Consumer Fraud Act and violations of the consent judgment entered in March 2009 between Arizona and the Countrywide companies owned by Bank of America.

  • The lawsuit, filed in Maricopa County Superior Court, was triggered by hundreds of consumer complaints and follows a year-long investigation into Bank of America’s residential mortgage servicing practices, particularly its loan modification and foreclosure practices.(1)

  • Goddard stated that Bank of America, the nation’s largest residential mortgage loan servicer, should be leading the way out of the country’s foreclosure crisis. Instead, he said, “Bank of America has been the slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis. It has shown callous disregard for the devastating effects its servicing practices have had on individual borrowers and on the economy as a whole.”


  • As a result of Bank of America’s deceptive practices, many homeowners who were already contending with other financial hardships have been led to unnecessarily deplete their dwindling savings in futile attempts to obtain the promised relief and save their homes.

  • Many homeowners who tried to obtain a modification from Bank of America ended up owing more principal on their loans or having less equity (becoming more “underwater”) in their homes. Others gave up their chances to pursue other financial options, such as short sales, while trying to modify their loans with Bank of America. These consumers endured months of frustrating delays, not knowing whether or when they would lose their homes. They called Bank of America and resubmitted their paperwork over and over again in futile efforts to get the help they were promised.

For the Arizona AG press release, see Terry Goddard Charges Bank of America with Mortgage Fraud.

For the lawsuit, see State of Arizona v. Countrywide Financial Corporation, et al.

Go here for FAQ’s regarding the State’s Lawsuit against Bank of America.

(1) According to the press release, the complaint alleges that, since the consent judgment was entered, Bank of America has repeatedly violated the judgment’s provisions related to loan modifications. Instead of providing the relief to which eligible homeowners were entitled, Bank of America has failed to make timely decisions on modification requests and proceeded with foreclosures while modification requests were pending in violation of the agreement.

The complaint also alleges that Bank of America has violated the Consumer Fraud Act by misleading Arizona consumers about its loss mitigation process and programs, including matters such as:

  • Whether homeowners must be delinquent on their mortgage payments to be considered for a loan modification.
  • How much time it would take to receive a decision from Bank of America on a modification request or a short sale request.
  • Whether foreclosure would proceed while a modification or short sale request was pending, or while a homeowner was making trial payments.
  • Whether the homeowner had been approved for a loan modification.
  • Failure to provide valid reasons why the homeowner was declined for a modification.
  • Whether the homeowner would be approved for a permanent modification if the consumer successfully made all trial modification payments.

Brooklyn Judge Rips Foreclosing Lender, Lawyer For Littering Courtroom With Unverified Paperwork

In Brooklyn, New York, the New York Post reports:
  • Lawyers handling foreclosures in New York will think twice about showing up in court without the proper paperwork after a Brooklyn judge ripped into lender Citigroup and its unprepared lawyer.

  • On Monday, Brooklyn Supreme Court Judge Arthur Schack mocked the bank and its lawyer for failing to ensure the accuracy of papers filed in a foreclosure case. "The court does not work for Citi and cannot wait for Citi, a multi-billion-dollar financial behemoth to get its act together," Schack said, in throwing out the case.

For more, see Judge reams Citi housing lawyer.

For Justice Schack's ruling, see CitiMortgage, Inc. v Nunez, 2010 NY Slip Op 52142(U) (NY Sup. Ct., Kings County, December 13, 2010).

(1) According to an October 20, 2010 press release, New York State Chief Judge Jonathan Lippman said the purpose of the new rule is to ensure "that the documents judges rely on will be thoroughly examined, accurate, and error-free before any judge is asked to take the drastic step of foreclosure."

Recent Jury Verdict Proves Borrowers Aren't Alone In Being Screwed Over By Sleazy Servicers As Litigation Exposes Their Bag Of Tricks

The New York Times reports:
  • ALL the revelations this year about dubious practices in the mortgage servicing arena — think robo-signers and forged signatures — have rightly raised borrowers’ fears that companies handling their loans may not be operating on the up and up.

  • But borrowers aren’t the only ones concerned about potential mischief. Investors who hold mortgage securities are increasingly worried that servicers may be putting their interests ahead of those who own the loans.


  • Last week, a jury in federal district court in Reno, Nev., awarded a group of 50 mortgage investors $5.1 million in punitive damages against defendants in a loan servicing case. Although the numbers in the case aren’t large, its facts are fascinating. Indeed, the case exposed some of the tricks of the servicers’ trade.


  • Because loan servicers operate behind the scenes, it’s hard for investors who own these mortgages to monitor fee-gouging. In addition, the servicing contracts make it difficult to fire administrators — under a typical arrangement, investors holding at least 51 percent of the loans must agree on termination. In short, loan servicing is a perfect setup for administrators who want to take advantage of both borrowers and lenders.

For more, see Opening the Bag of Mortgage Tricks.

Feds Raid Foreclosure Rescue, Sale Leaseback Peddler's Office; Snatch Computer Files, Documents; 'F-Rated' Outfit Targeted By Complaints, Media Probe

In Rancho Bernardo, California, KGTV-TV Channel 10 reports:
  • The FBI raided the office of a Rancho Bernardo financial firm on Thursday after a joint investigation by 10News and 10News' media partner The San Diego Union-Tribune into the firm's owner and practices. At the office, agents took computer files and other documents on Thursday belonging to Michael Monaco, the owner of Investors Finance, Inc., which offers to buy homes in foreclosure and lease them back to the people living there.


  • Last month, in a joint investigation with the 10News I-Team and 10News' media partner The San Diego Union-Tribune, Monaco squirmed when he was asked about the 1,300 desperate homeowners who each paid him $1,400 upfront to save their homes and then could not even get a call back from him.


  • Monaco has been sued for fraud and breach of contract 17 times. Investors Finance has an "F" rating with the Better Business Bureau and several complaints have been filed.

For more, see FBI Raids Rancho Bernardo Financial Firm's Office (Investors Finance, Inc. Offers To Buy Homes In Foreclosure, Leasing Them To People Living There).

For a previous story, see Customers Unhappy With Rancho Bernardo Man's Mortgage Firm.

Sunday, December 19, 2010

Lenders Face Difficulties In Scramble To Find Qualified Attorneys Willing To Pick Up Dumped South Florida Foreclosure Mill's Caseload

In Plantation, Florida, the Daily Business Review reports:
  • As the one-time largest plaintiffs foreclosure law firm in Florida, the Law Offices of David J. Stern at its peak handled 20 percent of all foreclosures in the state, processing more than 70,000 foreclosure cases on behalf of major lenders like Fannie Mae, Freddie Mac, Bank of America and JPMorgan Chase in 2009.

  • Now that the Plantation law firm has been dropped by a number of lenders and servicers including Fannie Mae and Freddie Mac, ex-clients are scrambling to find law firms and lawyers to fill the void.


  • But the replacement law firms haven't found it easy to find enough qualified law firms to take the work, and the transition has slowed a system already clogged with overwhelming numbers of cases. Some judges are not willing to delay cases due to the change in attorneys as Stern files are turned over to new lawyers.(1) More and more counties are requiring in-person rather than telephonic hearings.

For more, see Lenders, Servicers Scramble to Shift Foreclosure Cases to New Firms (The head of one coverage attorney service has been swamped with requests but says there's a shortage of qualified attorneys).

(1) Reportedly, transitioning cases from Stern's firm to others has not been seamless, judging by one hearing. According to the story, some banks have assigned their main counsel as transition firms to farm out the work. That is the case with CitiMortgage, which handed Akerman Senterfitt 30,000 residential foreclosure files. According to a Nov. 23 hearing transcript obtained by the Daily Business Review, Edmund Whitson III, a Tampa-based Akerman attorney, pleaded with a Punta Gorda judge for a postponement on a 2-year-old foreclosure case, and the judge wasn't happy.

Approved "Sandbagging" Of Homeowners At Court Hearings, Banks Filing Incomplete Affidavits Reflect Disregard For Procedure By Some F'closure Judges

Jacksonville, Florida foreclosure defense attorney Chip Parker writes in The Florida Times Union:
  • With all due respect to Judge J. Thomas McGrady, his recent guest column reflects the state of denial demonstrated by our judiciary about the general failure of Foreclosure Court in Jacksonville and throughout Florida.(1) In the nearly two decades that I have practiced law in Florida’s courtrooms, I have never witnessed a process so blatantly tilted in favor of one party, which happens to be the mortgage industry.

  • McGrady references a procedure known as summary judgment, which he correctly points out as an efficient proceeding for disposing of cases when no issue of fact is present. Because summary judgment is an extraordinary measure that terminates a homeowner’s ability to keep his home, there are strict legal requirements that ensure fairness in the process.

  • All evidence upon which the mortgage company intends to present to prove its case must be provided to a homeowner 20 days before the hearing, but in reality, the bank lawyers often “sandbag” defendants by presenting key evidence at the hearing.

  • Additionally, affidavits — written testimony sworn under penalty of perjury — are always used to prove the bank’s case. Since the bank affidavits reference amounts due by the homeowner, business records must be attached but, in reality, never are. These affidavits are particularly disturbing because many servicers now admit that they were executed by employees who had no idea whether the statements were true.

  • Judges’ own statements reflect how out of touch they are with the issue of foreclosure fraud and how willing they are to overlook thousands of instances of lying by plaintiffs in most every foreclosure case. As a group, they shrug off the lies as sloppy paperwork.”

  • While McGrady correctly states that a judge’s job isn’t to “go behind the paperwork submitted in summary judgment,” it is the judge’s job to disallow evidence that clearly fails to comply with the rules of procedure even if the homeowner isn’t present.

  • Area judges have stated on the record that they do not require these rules to be followed in foreclosure cases, and lawyers throughout the state describe similar situations in their courtrooms.

For more, see Guest column: In reply: Serious flaws in foreclosure courts allowed to continue.

(1) See J. Thomas McGrady: 'Rocket docket' is a misnomer.

Process Servers Probed For Alleged Slipshod Business Practices

In Fort Lauderdale, Florida the South Florida Sun Sentinel reports:
  • The Florida attorney general is investigating two companies that deliver foreclosure notices to homeowners, one based in South Florida, on civil allegations of slipshod business practices.

  • State regulators this month began examining Gissen & Zawyer Process Service Inc., of Miami, for "numerous complaints." Among them: filing questionable statements with the court, back-dating documents and questionable billings. The attorney general also has begun investigating ProVest LLC of Tampa, one of the largest process servicing outfits in the nation, for similar complaints.

For more, see AG investigates two companies delivering foreclosure court papers.

9 To 33 Year Sentence No Bar To O.J.'s Florida Homestead Exemption; Ex-Football Star To Keep Benefit Despite 'Scoring' Extended Stay In Nevada Prison

In Miami, Florida, The Miami Herald reports:
  • O.J. Simpson may not be coming back to South Florida for a good long while, but he's still entitled to a homestead exemption on his Kendall home. So ruled the Miami-Dade County property appraiser's office after a neighbor complained that the convicted armed robber and long-ago football and TV star's current extended residency at a Nevada prison should preclude him from receiving the property-tax break usually afforded to Florida homeowners.

  • Now the miffed neighbor, David Weston, thinks someone in Tallahassee should take another look. What bothers Weston, he says, is not so much the fact that it's Simpson getting the tax break, but more generally that state rules allow felons serving prison sentences -- even those doing so out of state -- to keep their exemptions.


  • Florida Department of Revenue rules, which govern the homestead exemption, require that the property be the homeowner's primary residence. But the rules also clearly state that a felony conviction by itself doesn't disqualify anyone. Nor does a temporary absence -- "regardless of the reason for such,'' the rule book says, "providing an abiding intention to return is always present.''

  • So there is no legal basis to rescind Simpson's exemption, said Lazaro Solis, deputy property appraiser. In fact, the only way Simpson could lose the exemption is if he rents out the home, Solis said.

  • A county inspector paid a visit and found Simpson's son, Justin, living there. Justin Simpson, 22, told the inspector he's going back and forth to an out-of-town school, Solis said.


  • O.J. Simpson, now 63, moved to Miami with Justin and his older sister, Sydney, who is now 25, in 2000, five years after he was acquitted of murdering their mother, Nicole Brown, in Los Angeles. Simpson's Miami sojourn was cut short when he and a co-defendant were convicted in October 2008 of leading a bungled heist at a Las Vegas hotel to retrieve memorabilia the disgraced star claimed was stolen by dealers. Simpson, who has appealed, was sentenced to serve nine to 33 years at a Nevada state prison on charges of armed robbery, kidnapping and conspiracy.(1)

For the story, see O.J. Simpson in jail, but still gets tax break.

(1) The right of convicted felons to retain their homestead rights, despite being shipped off to prison for a long time, is not unique to Florida. See Sexual Assault Victim's Attempt To Satisfy Money Judgment By Snatching Now-Vacated, Jailed Perpetrator's Texas House Squelched By Homestead Claim, involving a recent Texas Court of Appeals ruling holding that the home of a convicted felon retained its homestead character, and thereby exempted it from forced sale by judgment creditors - including the victim of his crime, despite his having to spend the next 35 years away from it in a state prison.

Disbarred Lawyer Cops Plea In $2.4M+ Client Trust/Escrow Funds Swindle; Admits Snatching Closing Cash Meant For Loan Payoffs, Ripping Off Dead Client

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • A disbarred Fort Lauderdale attorney pleaded guilty Thursday to a mail fraud charge, admitting he ripped off clients of more than $2.4 million. Joseph Sindaco, who practiced law in South Florida for three decades, stole from four clients' trust funds and used the money to pay personal expenses. He had specialized in estate and trust cases and real estate closings.

  • Sindaco, 63, now faces up to 20 years in federal prison when sentenced Feb. 24 by U.S. District Judge James I. Cohn. The recommended federal sentencing guidelines call for Sindaco to serve a prison term of at least 41 months, according to his plea agreement. In addition, he agreed to pay $2.4 million in restitution to his four victims. One of them lost $1.8 million. Sindaco's attorney, Robert Trachman, did not return a call to his office on Thursday.

  • Sindaco cut a deal in August with the Florida Bar to surrender his law license and be disbarred for five years. He admitted during those proceedings he misappropriated about $445,000 from two clients. The mail fraud charge against Sindaco arose from his handling of the estate of Werner Clauss, an 82-year-old who died at a Lauderdale Lakes nursing home in 2008. Sindaco liquidated Clauss' investment account and transferred the money to his law firm's trust account, according to federal court records.

  • Sindaco was supposed to send the money to one of Clauss' cousins but never did, according to Florida Bar records. The cousin alleged in a state court lawsuit that Sindaco claimed multiple times that a check was on the way, but it never came. The former attorney admitted he stole the $2.4 million from April 2006 to December 2009.(1)

Source: Disbarred attorney admits stealing $2.4 million (Joseph Sindaco faces up to 20 years in prison).

For the U.S. Attorney (Fort Lauderdale) press release, see Broward Lawyer Pleads Guilty To Stealing More Than $2 Million From Trust Funds:

  • As an attorney, he handled real estate closings for clients, mortgage lenders and estate transactions. In this capacity, Sindaco misappropriated approximately $2,4443,857 of funds that were supposed to be used to pay off prior loans and also clients’ funds from his law firm’s trust account. Instead of using the money as directed, however, Sindaco stole the money and sent letters to clients falsely stating that he was holding their money or disbursing it according to their directions.

(1) The victims in this story may be able to turn to the The Florida Bar's Clients' Security Fund (which was created to help reimburse clients for money they may have lost because of misappropriation or embezzle­ment by their attorneys) to recover some, if not all, of the swindled money.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.