Saturday, January 08, 2011

Squatting 'Gang' Of 30 Snatches Vacant 10-Bedroom, £10M London Mansion; Pending Eviction Action Of No Concern As Group Has Sights On 'Roomier' Abode

In London, England, the Daily Express reports:
  • A LATVIAN squatter living in a £10 million mansion has offered to “open” houses for others to take over – and is planning to move into a bigger home himself. Jason Ruddick, 21, moved into a four-storey Victorian mansion with a 30-strong gang, many of whom are also from eastern Europe. It is believed he entered the house in Highgate, north London, on Boxing Day.

  • Ruddick, who came to the UK after hearing it was a “soft touch” for squatters, said: “I like it around here and there are empty houses. We are going to keep going.” The house, which belongs to Lebanese businessman Albert Abela, was empty because it was to be renovated. Mr Abela is said to be furious at having to pay for gas, water and electricity as he cannot legally disconnect supplies while the house is occupied.

  • A court hearing to evict the squatters is set for January 19 but the gang has already set its sights on a new home. Yesterday Ruddick – an anglicised version of his Latvian name – said: “We will move to a bigger place. I have found somewhere only 15 minutes away and we want more people to join us.”

  • And, in a post on the Advisory Service for Squatters website, he offers to “open” empty houses for others to live in. He writes: “I have many empty houses… I can open them for anybody who’s interested – but not for free.”

For more, see I Want An Even Bigger House Says Latvian In £10M Squat.

See also BBC News: Squatting in 10-bed Highgate home was 'easy': squatter:

  • [Ruddick] said squatters rights in England means "this is one of the few countries (where) it is so easy to do it". "I would probably get arrested (in Latvia), that would be the end of it", Mr Ruddick added.

  • Occupation of empty properties is a civil, not a criminal, matter in England and Wales, unless entry is forced. Police can act only if the squatters commit offences such as theft or criminal damage.

Orange County DA: Squatting Couple Hired PI To Locate Vacant Foreclosed Homes, Then Drafted Fake Lease To Obtain Utility Service For $2.6M House

In Newport Beach, California, The Associated Press reports:
  • Prosecutors say an Orange County couple squatted in a foreclosed home in a ritzy Newport Beach neighborhood more than three months before they were discovered and arrested. The district attorney's office said Thursday that 42-year-old Chris Wayne Duncan and 36-year-old Robin Ann Duncan face charges of second-degree burglary and other charges.

  • Authorities allege the Duncans hired a private investigator to locate foreclosed and vacant homes in Orange County and then drafted a fake lease so utility companies would put bills in their name as renters. They are also accused of changing the locks after an appraiser tried to enter the property.

Source: DA: Couple squatted in Newport Beach foreclosure.

See also:

MERS Continues Efforts To Allegedly 'Buy Off' Congress By Beefing Up Its Gang Of Lobbyists

The Center for Responsive Politics' OpenSecrets Blog reports:
  • One company embroiled in the nation's property foreclosure crisis is not unprepared for a fight. In Washington, D.C., Merscorp Inc. has retained several well-heeled lobbyists and invested hundreds of thousands of dollars in lobbying efforts since the start of the mortgage crisis and economic meltdown.Merscorp Inc. is the parent company of Virginia-based Mortgage Electronic Registration Systems (MERS), which serves as an electronic registry for 67 million U.S. mortgages -- more than 60 percent of the country's total.


  • Rolling Stone reporter Matt Taibbi recently summed up the company's status this way: "In short, the mortgage industry considers MERS owner enough to foreclose on you, but not owner enough to be sued, or reasoned with, or even to provide basic customer service."


  • The company has retained several lobbyists with powerful pedigrees. Among them?

    (1) Former House Appropriations Committee Chairman Robert Livingston (R-La.),
    (2) J. Allen Martin, Livingston's former chief of staff,
    (3) Arnold Havens, who formerly served as general counsel at the U.S. Treasury,
    (4) John M. Duncan, who formerly worked in the Treasury Department under President George W. Bush and served as the chief of staff for Sen. William Roth (R-Del.) -- the former Senate Finance Committee Chairman who is the namesake of the Roth IRA investment vehicle.

  • Merscorp has also utilized the lobbying services of two other men who have passed through the "revolving door" between public service and the private sector: William D. Crosby Jr., a long-time lawyer for the House Rules Committee, and Steve Kreseski, the former chief of staff for Rep. Bob Ehrlich (R-Md.).

For more, see Embattled Virtual Mortgage Registry MERS Retains Top Lobbying Talent.

Beware Of Sovereign Citizen Movement Peddling Worthless Service To Homeowners Facing Foreclosure

In Orlando, Florida, WKMG-TV Channel 6 reports:
  • The words are stamped in red across every page of the bank foreclosure notice. Statements such as "United States is a for-profit corporation and is bankrupt," or, "No consent to forced seizure by sale or takings," cover the foreclosure papers without any apparent purpose.

  • Yet, over the past nine months, court clerks in Lake County report they have received a handful of foreclosure documents covered in the same random words and statements.

  • Paul Urmson had some of those statements stamped on his foreclosure notice. He is about to lose his Lake County home to foreclosure. [...] Urmson said a friend guaranteed he would save his home. He claimed the government already had $800,000 set aside in his name. [...] He was told to pay $1,000 for the service and mail the documents to the Lake County Court. He never did.


  • Matt Englett, managing partner of the KEL law firm, said his staff has seen a few of those stamped documents from clients who had turned to his firm for help. KEL specializes in mortgage foreclosure cases. "Courts do not recognize this, and any court that sees this will not give it any credibility," Englett said.

  • The veteran attorney said the bigger issue is the sovereign movement's sales pitch. "I don't think the courts waste a lot of time on these things, but I'm more concerned about people spending $1,000, which is probably all the money they have on something that will not work," he said.

For the story, see Lawyers Warn Against Foreclosure Quick Fix (Anti-Tax Group's Propaganda Shows Up In Local Foreclosure Courts).

Go here for other posts on the sovereign citizens racket.

Massachusetts AG: Landlord's Craigslist Ads Discriminating Against Families w/ Young Kids Due To Lead Contamination In Apartments Violates Law

From the Office of the Massachusetts Attorney General:
  • A Melrose-based realty trust and its manager violated Massachusetts law by allegedly posting a discriminatory rental advertisement on the popular classified advertising website (“Craigslist”), according to a lawsuit filed by AG Coakley’s Office. The complaint, filed in Suffolk Superior Court against Mt. V.M. Realty Trust (“Mt. V.M.”) and Nicholas Keramaris, alleges that they violated state anti-discrimination, lead paint, and consumer protection laws by placing an advertisement on Craigslist which referred to the lead status of an apartment and refused to rent it to families with young children.


  • According to the complaint, Keramaris, on behalf of Mt. V.M., posted an advertisement on Craigslist in June 2010 that discriminated against families with young children. The advertisement, for an apartment building in Melrose that Keramaris managed, stated that the unit could not be rented to families with children under six years old as it was not deleaded. Under Massachusetts law, it is illegal to refuse to rent or steer families away from rental properties because they have young children whose presence triggers an owner’s duty to eliminate lead hazards that pose serious health risks.


  • Since taking office in January 2007, Attorney General Coakley’s office has obtained judgments in 91 housing discrimination cases brought against landlords, property managers, and/or real estate companies.

For the Massachusetts AG press release, see AG Coakley Sues Melrose Realty Trust And Manager For Posting Discriminatory Housing Ad On Craigslist.

Illinois Law Allowing Active-Duty Servicemembers To Apply For 90-Day Foreclosure Delay Goes Into Effect

The Huffington Post reports:
  • The state of Illinois has faced an especially grim foreclosure picture in the last several years, and the outlook is likely to get bleaker in the first quarter of 2011. [...] But thanks to a new law that went into effect on New Year's Day, one especially vulnerable group of Illinoisans will be allowed a temporary reprieve.

  • House Bill 3762, which passed the House and Senate unanimously in the spring and was signed into law over Memorial Day 2010, will allow active-duty service members to apply for a 90-day delay if facing foreclosure.

For more, see Illinois Foreclosures Law Helps Military Service Members Get Reprieve.

Acquitted Cop Killer Vows "We Will Defend Ourselves!" If Crim'l Defense Lawyer Attempts Eviction After F'closing On Family Farm Over Unpaid Legal Fees

In Kingston, Tennessee, the Knoxville News Sentinel reports:
  • The lawyer who won Leon Houston's freedom holds a prize he can't cash. Not a single bidder showed up Tuesday when former defense lawyer Jim Logan stood on the Roane County courthouse steps and auctioned a little less than 100 acres of the Houston family farm for unpaid legal fees. Logan ended up buying the land back himself. The winning bid came in at $150,000 - far less than the quarter-million-plus Logan said the family still owes him.


  • "This is going to get interesting when they come try to evict me by way of fraud," Leon Houston said. "We will defend ourselves."


  • Logan sat beside Leon Houston through two double-murder trials over three years in the deaths of Roane County Deputy Bill Jones and ride-along Mike Brown. Jones and Brown died in a shootout with the Houston brothers May 11, 2006, in front of the family farmhouse on Barnard Narrows Road south of the Tennessee River.

  • The brothers argued self-defense, and prosecutors couldn't prove who shot first. Leon Houston's first trial ended in a mistrial, the second in acquittal on all charges in November 2009. [Brother] Rocky Houston's only trial in December 2008 ended in a split verdict, and an appeals court threw out the case last year.

For the story, see No bids made on Houston land (Lawyer buys back farm he owns in lieu of fees).

Friday, January 07, 2011

Massachusetts High Court Ready To Rule On 'Ibanez/LaRace' Case; Validity Of Thousands Of Bay State Foreclosures Hang In Balance

In Boston, Massachusetts, Bloomberg reports:
  • Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real estate law governing how mortgages may be transferred.

  • The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues.

  • A victory for the homeowners may invalidate some foreclosures and force loan originators to buy back mortgages wrongly transferred into loan pools.(1) Such a ruling may also be cited in other state courts handling litigation related to the foreclosure crisis.


  • The case is U.S. Bank v. Ibanez, 10694, Supreme Judicial Court of Massachusetts (Boston). The lower-court cases are U.S. Bank National Association v. Ibanez, 08-Misc-384283, and Wells Fargo Bank NA v. LaRace, 08-Misc-386755, Commonwealth of Massachusetts, Trial Court, Land Court Department (Boston).(2)

For the story, see Foreclosures May Be Undone by Massachusetts Ruling on Mortgage Transfers.

For a related post, with links to relevant court documents, see Massachusetts High Court Hears Arguments In 'Ibanez' Case That Threatens To Open The Door To Voiding Thousands Of State Foreclosures.

(1) A homeowner victory could also trigger an additional slew of lawsuits (ie. alleging violations of the Federal Fair Debt Collection Practices Act, state law prohibiting unfair and deceptive acts or practices in violation of G.L. c. 93A, § 2, etc.) against the foreclosure mill law firms who have brought foreclosure actions tainted with flaws similar to those at the center of this case.

(2) For Massachusetts Land Court Judge Keith C. Long's two rulings in this matter, see:

For related earlier posts on this story, see:

Federal Reserve To Support Tougher Rules Regulating Mortgage Servicing Rackets; Reverses Earlier Stance

The Huffington Post reports:
  • The Federal Reserve has reversed its opposition to new rules reining in foreclosure abuses, and will support stronger regulations on the nation's largest banks, according to a source familiar with the matter.


  • Problems in the packaging and sale of mortgage bonds helped inflate the housing bubble and facilitated the sale of predatory loans nationwide. Since banks could push mortgages on borrowers and then sell them to investors, critics say that banks lacked serious incentives to ensure those loans could be repaid.

  • The FDIC has been pushing hard to ensure that new regulations on the mortgage bond market include clear instructions for how banks handle mortgages-- and under what circumstances they can evict delinquent borrowers. The bank divisions that collect payments from borrowers and implement the foreclosure process-- known as "mortgage servicers"-- have been plagued by rampant problems with fraudulent documentation. This fraud has resulted in everything from illegal fees charged to borrowers to improper evictions.

For more, see Fed To Back New Rules To Rein In Home Foreclosure Abuses.

BofA's "Pennies On The Dollar" Settlement With Fannie, Freddie Over Sale Of Crappy Mortgages A "Backdoor Bailout" Of Bank By Federal Government?

The New York Post reports:
  • Bank of America is getting blasted with accusations of a "backdoor bailout" for its $2.8 billion settlement with Fannie Mae and Freddie Mac over billions of bad mortgages. Fannie and Freddie, which are wards of the government, accepted pennies on the dollar to settle a dispute over billions of faulty mortgages the bank sold to the pair during the housing bubble.

  • Bank of America breathed a sigh of relief on Monday after the cost was far less than investors feared, sending its shares up as much as 6.4 percent. But detractors on Wall Street and in Washington denounced the deal as another taxpayer buyout for a bank that weathered the financial crisis only with the help of a $45 billion government lifeline.


  • Analysts estimate the taxpayer bill for propping up troubled institutions Fannie and Freddie could hit a whopping $150 billion, while the entities' recent settlements with banks over bad mortgages represent a drop in the bucket.

  • "If Fannie and Freddie had really pushed hard on this settlement, it would have really caused problems for BofA," Edward Pinto, resident fellow at conservative Washington think tank American Enterprise Institute, told The Post.

  • The outrage stems from BofA's agreement to pay just $1.28 billion to Fannie and $1.52 billion to Freddie to resolve a dispute over loans purchased between 2005 and 2007 that the pair claims were improperly created. According to critics, the BofA settlement was struck for a mere fraction of the amount the bank should be forking over to Fannie and Freddie.

  • "This [settlement] is a standing subsidy that has to be worth $10 billion or $15 billion for [BofA]," Christopher Whalen, the founder of Institutional Risk Analytics, told The Post.

For more, see Furor over BofA's $2.8B mortgage settlement.

Colorado AG Scores $181K+ Judgment Against Foreclosure Rescue Operator For Clogging Courts With Frivilous Filings, Clipping Homeowners w/ Upfront Fees

In Denver, Colorado, The Denver Post reports:
  • A man accused of running a company called "America's Foreclosure Defense" and preying on elderly and vulnerable people has been ordered to pay $181,266 in restitution and fines to the state, Colorado Attorney General John Suthers announced Tuesday.

  • Sherron L. Lewis Jr., 54, has been barred from providing foreclosure-relief services. Lewis was accused in a suit filed by the attorney general of filing frivolous lawsuits that clogged the courts. Suthers alleged that Lewis used deceptive and misleading schemes that Lewis claimed would stop the foreclosure process.

  • Suthers said Lewis had no legal experience, had improperly raked in thousands of dollars of upfront fees and had "grossly misused and abused the judicial system." The $181,266 judgment against Lewis was ordered after he failed to respond to the state's lawsuit over his activities.

  • A Jefferson County district court judge ordered Lewis in August to pay more than $76,000 in restitution to victims, including an elderly Illinois woman, Suthers said. The fines ordered against Lewis in August stemmed from his alleged practice of collecting upfront fees and acquiring an interest in his victims' properties as part of his services, both of which violated Colorado law, according to the attorney general.(1)

Source: Man pays fines, restitution to state in case alleging frivolous lawsuits.

(1) For the Colorado AG press release, see Attorney General announces $181,266 judgment against Denver man who provided fraudulent foreclosure-relief services.

For the relevant court documents, see:

Ex-Ohio AG Files Class Action Suit Alleging Lenders' Law Firm Files Frivilous Foreclosures

In Cleveland, Ohio, WKYC-TV Channel 3 reports:
  • Ohio's former embattled attorney general Marc Dann is taking on his first high-profile lawsuit since a sexual harassment scandal forced him to resign from the job in 2008. Dann and co-counsel James Douglass Tuesday filed a class-action lawsuit against a law firm he says files frivolous foreclosures.

  • The lawsuit filed in Cuyahoga County Common Pleas Court claims the debt collection firm-- Lerner, Sampson and Rothfuss -- doesn't have the right to file foreclosures and has created incorrect documentation.(1)

For more, see Ex-AG Dann sues law firm regarding their foreclosure process.

For the lawsuit, see Turner, et al. v. Lerner, Sampson & Rothfuss.

See also attorney Marc Dann's press release: Lawyers for Foreclosing Banks Should be Held Accountable for Telling the Truth:

  • The suit alleges that filing lawsuits on behalf of banks and investors who do not actually hold the notes or mortgages that are the subject of the lawsuit is a violation of the Fair Debt Collection Practices Act, Ohio Consumer Sales Practices Act and constitutes abuse of process. We have also alleged that Lerner Sampson and its staff members created and signed assignments, endorsements and affidavits without having actual knowledge of the facts contained in those documents.

Thanks to for the heads up on the story.

(1) According to Dann's press release, the Cuyahoga County County Common Pleas Judges have recently enacted much stricter requirements for proof when lawyers like Lerner Sampson are seeking a judgment in a foreclosure case (Cuyahoga County Affidavit Policy, Attorney Affidavit Forms).

Big Bear Homeowner Scores Small Claims Win Over BofA In Alleged Fraudulent Bait & Switch Loan Modification Scam

In Big Bear City, California, reports:
  • Dave Graham got fighting mad. The Big Bear City resident took Bank of America’s mortgage division, BAC Home Loans Servicing LP, to small claims court claiming fraud. Graham won his case Dec. 17. And he doesn’t feel apprehensive about gloating one bit.“I feel real good about this,” Graham says. He sued the mega bank for fraud because he was put into a loan modification program by Bank of America when the bank knew from the start he did not qualify.


  • The judge awarded Graham $7,595. This is the first known case where Bank of America has been found guilty by reason of fraud.

For more, see Big Bear bank shot (Local man wins lawsuit against Bank of America).

See also The Huffington Post: Homeowner Beats Bank Of America In Small Claims Court:

  • Graham, who faces reduced income after retiring from his job as a shift foreman at a grocery distribution center, said he never would have bothered with HAMP had the bank not sent him a packet saying he should apply. "I would have found some way to [make my payments] if I had to," he said. "It may even been that we'd have fallen behind a month or two. I certainly wouldn't have been in this sort of shape."

  • It's the classic HAMP bait-and-switch: Homeowners are told they're eligible for the program but eventually discover the foreclosure process, triggered by the reduced payments, moved faster than the modification process.


  • Lots of people have sued big banks for their bad faith HAMP efforts, but Graham may be the first to try it in small claims court. It won't save his home, but it gives him some dignity. "Both small claims courts judges and juries often have a refreshing sense of justice that allows these sorts of bellwether decisions," HAMP expert Alan White told HuffPost. "Judges are also less reticent to denounce unfair practices in small stakes individual cases than in government enforcement or class actions."

  • The National Consumer Law Center is involved in several class-action lawsuits against banks and others over broken HAMP promises.(1) (Those lawsuits, if successful, will prevent foreclosures.) The NCLC's Charles Delbaum told HuffPost that Judge John Pacheco's "terrific decision" in Graham's case picked up on the same theme of more than a dozen actions against the likes of Bank of America, JPMorgan Chase, Wells Fargo, and CitiMortgage.

  • "[I]t is unconscionable to string homeowners along far beyond the three month trial periods they and their banks have agreed to," Delbaum emailed, "allowing them to become more and more behind on the payments due under their original loan, making the hole they are in ever deeper and harder to dig out of, and then to tell them they weren't eligibile for the program in the first place -- something the banks are required to determine within the three month trial period."

(1) For some of those lawsuits, see:

Thursday, January 06, 2011

Rubber Stamping Florida Judge Changes Public Position On Exempting F'closing Banks From Complying w/ Procedural Rules, Then Lets 'Em Break Them Anyway

AOL Daily Finance columnist Abigail Field writes:

  • Apparently, the judge merely changed his public position: Rather than admit the fact that foreclosing banks don't have to follow the rules on affidavits and loan documentation, he'll say they do, then fail to make them comply. That smells like a cover-up, not a correction.


For more, see Florida Is Still Letting Banks Break the Rules in Foreclosure Cases.

(1) See Florida Trial Judges Continue Sloppy Work In Foreclosure Actions; Rubber-Stamped Judgments Tainted By Sewer Service Reversed By State Appellate Courts for more on the apparent crappy attitude of some Florida judges presiding over foreclosure proceedings.

Florida AG Outlines Its Evidence Of Fraudulent Court Filings In Foreclosure Cases With 98-Page Presentation

The Palm Beach Post reports:
  • Sweeping evidence of the case the state attorney general's office has built in its pursuit of foreclosure justice for Florida homeowners is outlined in a 98-page presentation complete with copies of allegedly forged signatures, false notarizations, bogus witnesses and improper mortgage assignments.

  • It is one of the first examples of what the state has compiled in its exploration of foreclosure malpractice, condemning banks, mortgage servicers and law firms for contributing to the crisis by cutting corners. "What we got from this is the state has had the opportunity to see where the laws have been broken, and frankly, it is in large part thanks to the work of the defense attorneys," said Palm Beach County Clerk and Comptroller Sharon Bock. "They've been bringing these defenses up in foreclosure cases for years now."

For more, see State details foreclosure chaos: Evidence of forgeries, bogus witnesses and illegal shortcuts.

For the Florida AG Economic Crime division's 98-page presentation, see Unfair, Deceptive and Unconscionable Acts in Foreclosure Cases (whoever illustrated this presentation had a good sense of humor).

A Mortgage-Backed Security Map: The Fantastic Fate of One Man's Loan

A recent story from PBS Newshour featured the case of homeowner Daniel Edstrom, who is employed by a company who happens to perform securitization audits, who decided he'd look into the history of his own mortgage.

He reportedly spent a year mapping his mortgage, came up with this flowchart showing how his mortgage was ripped apart during the securitization process, and observed:
  • "If someone steals a car, they can make much more money if they break the car up into pieces and sell the pieces individually. That's exactly what happened here [to my mortgage]."

The story concludes with this excerpt:

  • [I]ncreasingly, those who engineered these deals are looking suspect, as Brooklyn Supreme Court Judge Arthur Schack recently explained to us. If a judge were to study Daniel Edstrom's chart of his own wayward mortgage, might his or her honor have even more reason to slow the foreclosure process? Take a close look yourself and see how you might rule.

For the PBS' story, see A Mortgage-Backed Security Map: The Fantastic Fate of One Man's Loan.

Michigan Couple Victimized By Illegal Trashout Linked To Wrongful Bank Foreclosure Of 'Mortgage-Free' Home Settle Lawsuit

In Grand Rapids, Michigan, The Grand Rapids Press reports:
  • A couple who said a bank wrongly foreclosed on their $14,000 fixer-upper have settled their lawsuit. Rick and Sherry Rought of Gowen bought the house near Big Rapids in 2009 for their daughter, Hannah, while she attended Ferris State University. Seven months later, a company allegedly hired to “trash out” the house changed locks and turned off utilities, the couple said in a lawsuit filed last year in U.S. District Court.(1)

  • Their house, bought with cash, was not subject to foreclosure. They sued Deutsche Bank National Trust Co., Field Asset Services and American Home Mortgage Servicing. The companies denied any wrongdoing, and said a contractor, Out in the Woods, “may be wholly or partially at fault.” Out in the Woods was not named as a defendant in the lawsuit.

  • The parties reached a settlement that was not disclosed in court records. The agreement, which results in the lawsuit being dismissed, was signed Monday by District Judge Janet Neff.

For the story, see Grand Rapids homeowners end lawsuit against bank in foreclosure case.

(1) For the lawsuit, see Rought v Deutsche National Trust Company, Trustee, et al.

(2) For examples of other lawsuits involving these illegal lockout cases, 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:

Wednesday, January 05, 2011

Change In Judicial Mood On New Jersey Robosigning Scandal Reflected In Recent Rulings

The Metropolitan Corporate Counsel reports:
  • New Jersey courts have started clamping down on lenders' ability to enforce mortgage documents by raising concerns when the lender cannot establish that it possesses the original note at the time a foreclosure action is commenced or that it is a holder in due course under the Uniform Commercial Code ("UCC").

  • Two recent decisions, one from the New Jersey Superior Court, Chancery Division, General Equity Part, Atlantic County, and a second from the United States Bankruptcy Court for the District of New Jersey, elucidate this change in judicial mood. The teachings of these decisions, which are discussed herein, are that lenders and their counsel need to determine and be sure of certain facts before they start an action to enforce mortgage documents. The failure to take the simple steps discussed in this article could result in such action being substantially delayed or never getting off the ground.

  • In Bank of New York v. Raftogianis, ___ N.J. Super. ___, 2010 N.J. Super. Unpub LEXIS 2316 (N.J. Super. Ct. Ch. Div. June 29, 2010), the Hon. W.C. Todd, P.J. Ch., issued a lengthy and scholarly opinion addressing many issues relating to foreclosure litigation, including the applicability of the UCC, how the Mortgage Electronic Registration System ("MERS") operates, and the impact on foreclosures of the securitization or pooling of mortgages. In fact, the opinion could be viewed as a treatise on these subjects.


  • In Kemp v. Countrywide Home Loans, Inc. (In re Kemp) , 2010 Bankr. LEXIS 4085 (Bankr. D.N.J. Nov. 17, 2010), the debtor filed an adversary complaint seeking to expunge the proof of claim filed on behalf of Bank of New York by Countrywide Home Loans, Inc. as servicer.

For more, see New Jersey Courts Place Roadblocks On Lenders' Ability To Enforce Mortgage Documents (for print version, TRY HERE).

Indiana AG Asks State High Court To Implement Procedural Rules To Address Robosigner Scandal

In Indianapolis, Indiana, WRTV-TV Channel 6 reports:
  • The Indiana attorney general on Monday asked the Indiana Supreme Court to implement new regulations regarding the handling of foreclosures in the state. The proposed changes, which would not require legislative action, are in response to mortgage companies that admitted they improperly filed documents with courts to process foreclosures.

For more, see Court Asked To Toughen Foreclosure Lender Regulations (AG Says New Proposal Will Protect Homeowners).

Fannie, Freddie Score $2.5B+ From BofA To Settle Crappy Loan Buyback Demands; Requests For $10B+ From Other Banks Still Outstanding

The New York Times reports:
  • Bank of America announced Monday that it had paid more than $2.5 billion to buy back troubled mortgages and resolve related claims from Fannie Mae and Freddie Mac — deals that may prompt a wave of such settlements by big banks.

  • The agreements center on home loans that Countrywide Financial sold to Fannie and Freddie at the height of the mortgage bubble. The government-controlled housing giants, which have suffered billions of dollars in losses in recent years, have said that the lender misrepresented the quality of the loans. Bank of America bought Countrywide in 2008.

  • Fannie and Freddie also are looking to collect from other large lenders, including Wells Fargo, Citigroup and Washington Mutual, now owned by JPMorgan Chase.

  • Before the Bank of America payments, Fannie and Freddie received about $9 billion from repurchase claims, according to their financial statements. The two firms still have more than $10 billion of requests outstanding. Banks have a major incentive to cut deals with Fannie and Freddie. The two firms currently own or guarantee roughly two-thirds of all new mortgages in the United States.

For more, see Bank of America Buys Back $2.5 Billion in Mortgage Debt.

Tuesday, January 04, 2011

MD Appeals Court: State Foreclosure Rescue Law Applies To Transaction Where Law Took Effect After Contract But Before Closing Of Sale Leaseback Ripoff

In a recent ruling by the Maryland Court of Special Appeals, the court rejected an accused sale leaseback peddler's attempt to dodge the application of the state's Protection of Homeowners in Foreclosure Act by claiming that the contract for the transaction pre-dated the effective date of the statute, in a deal that didn't actually close until after the law took effect.

In reversing a lower court ruling, the appeals court said that applying the law to this case did not operate as an impermissable retroactive application of the statute to deprive the sale leaseback peddler of vested rights, and found that the trial court erred in concluding that the law was inapplicable to the transaction.

For the ruling, see Kargbo v. Gaston, 195 Md. App. 222; 5 A.3d 1231 (September 30, 2010).

Fed-Up Judge Refuses Further Trial Delays For Ex-Closing Attorney Accused Of Ripping Off Real Estate Escrow Funds In 4-Year Old Case

In Pittsburgh, Pennsylvania, the Pittsburgh Tribune Review reports:
  • The only way a former Fayette County attorney accused of stealing about $99,000 in mortgage-settlement claims from two elderly couples can avoid going to trial on Jan. 3 is if he is hospitalized, according to the trial judge.

  • Judge Steve Leskinen [] told Mark Morrison's attorney that if Morrison fails to appear for trial in the four-year-old criminal case, a bench warrant will be issued for his arrest unless Morrison is "confined to a hospital." Morrison, 53, of Hopwood was charged in 2006 with two counts each of theft by failure to make required disposition of funds, forgery, tampering with records or identification, and misapplication of entrusted property. The state Attorney General's Office alleges Morrison failed to use the money to settle outstanding mortgages on two properties.

  • Citing numerous health problems and questions over competency, Morrison has successfully petitioned the courts to postpone his trial. The case was put back on the trial list [...] when Leskinen, after a 4 1/2-hour long hearing in November, declared Morrison competent for trial.


  • "This case has been pending for four years," Leskinen said. "It needs to be resolved."

For the story, see Enough delays, exclaims judge in alleged mortgage scam case.

For a couple of follow-up stories, see

  • Ex-lawyer from Hopwood gets one more day to appear in court ("A Fayette County judge yesterday said he was unconvinced a former attorney couldn't secure an ambulance ride to the courthouse in time for the start of his trial yesterday on theft charges, but he gave the Hopwood man another day to appear."),

  • Broker: Lawyer withheld payment ("A former Fayette County attorney's reputation persuaded a mortgage broker to let him represent two clients at closings, according to a former loan officer who testified Tuesday in the Hopwood man's theft case.").

Florida Statewide Mandatory Foreclosure Mediation Program Off To Sluggish Start

The Palm Beach Post reports:
  • Florida homeowners have had scant success in the state's required foreclosure mediation program with just 6 percent leaving the negotiating table with a resolution. The first statewide measure of the program, which the Florida Supreme Court made mandatory one year ago, was released Wednesday with information from seven of the state's 20 circuit courts.

For more, see Florida foreclosure mediation report shows program is struggling to log successes.

Monday, January 03, 2011

Florida Appeals Court: Presenting Meritorious Defense In Foreclosure Action Unnecessary Where Notice Of Lawsuit Not Properly Served On Homeowner

A recent ruling by a Florida appeals court hopefully serves as a reminder to the rubber-stamping trial judges intent on pushing as many foreclosure judgments through the rocket dockets as quickly as possible to slow down when defects in the process by which notice of the lawsuit was purportedly served on the homeowner are apparent on the face of the affidavit of service filed in court by the process server. Apparently, trial judge Ronald M. Friedman of the Miami-Dade County Circuit Court believed that it is legally acceptable to rubber-stamp a judgment in a foreclosure action when notice thereof was not properly served on the homeowner if the homeowner has not presented a meritorious defense to the lawsuit.(1)

According to the appeals court:
  • Where no in personam jurisdiction is obtained over a defendant, the defendant is not required to demonstrate a meritorious defense to set aside the default. Ubilla v. L&W Supply, 637 So. 2d 994 (Fla. 3d DCA 1994); Gamboa v. Jones, 455 So. 2d 613 (Fla. 3d DCA 1984). The trial court should not have required Ms. Bennett to demonstrate a meritorious defense to the action once it became clear that the summons and complaint were never properly served.(2)

For the ruling, see Bennett v. Christiana Bank & Trust Co., No. 3D09-2653 (Fla. App. 3d DCA, December 1, 2010).

(1) Judge Friedman entered an order actually finding that the service of process wasquestionable,” but because there was no meritorious defense to the foreclosure, he denied the motion to vacate the foreclosure judgment.

(2) To the uninitiated, this would appear to be a pretty basic and fundamental precept of law. Apparently not, at least not for Judge Friedman. Either that or maybe he wasn't expecting that the financially strapped homeowner would be able to afford the cost (ie. attorney fees) of filing an appeal of his ruling. As trial judges ponder this ruling, they may also want to consider whether presenting a meritorious defense to a foreclosure action by a homeowner is necessary where the party initiating the action has failed to prove that it has standing to bring the lawsuit in the first place.

By the way, where a foreclosure sale has already taken place with the property being purchased by an unwitting third party, the situation illustrated by this case could result in the foreclosure sale being voided and, consequently, the title to the property held by the third party purchaser (and any other property interest holders - ie. downstream buyers, mortgage holders, etc. - claiming under the 3rd party buyer) being voided as well.

Pennsylvania Notary Unlicensed In New Jersey At Center Of Garden State Robosigner Scandal

The New York Post reports:
  • The face of New Jersey's robo-signing scandal may be a Pennsylvania notary public who signed thousands of foreclosure documents in the Garden State even though he wasn't licensed there.

  • Thomas Strain, who now heads the bankruptcy team at GMAC Mortgage Corp., has emerged as a key player in New Jersey's foreclosure mess through a damning report that swayed the state's top judge to crack down on rogue foreclosure filings by the nation's largest mortgage lenders, including GMAC.


  • In announcing the measures [to halt abusive foreclosure practices in the state, including rubber-stamping documents without verifying their authenticity, known as robo-signing],(1) [New Jersey's chief justice, Stuart] Rabner pointed to a report compiled by Legal Services of New Jersey, a non-profit in Edison, NJ, which mentions Strain in no less than four cases involving instances of robo-signing when Strain worked for Mount Laurel, NJ-based Full Spectrum Services prior to joining GMAC in 2009. The report also repeatedly mentions Strain's former boss, Frank Hallinan, a lawyer with mortgage law firm Phelan, Hallinan and Schmeig.(2)

  • Full Spectrum was a legal support company owned and operated by Phelan, Hallinan. "I was notarizing maybe on an average of 50 a day," Strain said under oath in a 2008 deposition attached to the report.

  • In one foreclosure case, Strain verified that Hallinan, who is Strain's primary notary client, is a vice president and assistant secretary of Mortgage Electronic Registration Systems, the electronic registry that tracks servicing rights and ownership of mortgages. But when questioned as to how he confirmed that Hallinan held this position, Strain said "word of mouth" before admitting, "I do not know."

  • In another instance, Strain said he couldn't explain why he signed off on a document referring to Hallinan as a "she" rather than a "he." Strain also admitted that Hallinan may not have been present when he notarized documents on his behalf because they often worked out of different offices. When asked in the 2008 deposition if he was authorized to work as a notary in NJ, Strain said "no" even though he acknowledged notarizing documents in the state.

  • Strain said under oath he understood the repercussions for false notarizations, but when asked for specifics he stumbled: "I don't know the exact. . .I just know that you have to. . .I don't know what the actual penalties are."

  • As for Hallinan, the report alleges that he testified to preparing his mortgage assignments according to the instructions he received from the foreclosing party "without reviewing and supporting documentation." Neither Strain nor Hallinan responded to requests for comment.

For the story, see Report rips NJ foreclosure robo-signing notary.

See also Legal Services of New Jersey resource material on statewide robosigner scandal.

(1) For the court's 'robosigner' orders, see:

(2) For the report, see Legal Services of New Jersey Report and Recommendations to the New Jersey Supreme Court concerning False Statements and Swearing in Foreclosure Proceedings, November 4th, 2010.

For the Exhibits to the Report:

Lender Processing Services

Deposition Transcripts

Sample Documents

Deutsche Bank Memos

Scholarly Writing

Examples of Robo-Signing in NJ

Court Sanctions and Corrective Actions



Go here for links to robosigner videos.

Thousands Of Affidavits 'Robosigned' By Dead Woman Used By Zombie Debt Buyers To Collect Debts In Credit Card Account Lawsuits

The Wall Street Journal reports:
  • Martha Kunkle has come back to life. She died in 1995. Yet her signature later appeared on thousands of affidavits submitted by one of the nation's largest debt collectors, Portfolio Recovery Associates Inc., in lawsuits filed against borrowers.

  • Some regulators complain that the use of Ms. Kunkle's name reflects an epidemic of mass-produced, sloppy and inaccurate documentation in the debt-collection industry.


  • Large debt collectors such as Portfolio Recovery Associates and publicly traded rivals Encore Capital Group Inc. and Asset Acceptance Capital Corp. frequently buy delinquent accounts in bulk. Information about each debt sometimes is little more than a line in a spreadsheet with the borrower's name and amount owed, according to lawyers who represent borrowers. As of Sept. 30, Portfolio Recovery Associates had $91.5 million in revenue from lawsuits it won, or 34% of its overall revenue.


  • Questions about Martha Kunkle first popped up in 2008 after her name appeared in thousands of affidavits generated by a unit of Providian National Corp. The credit-card issuer sold an undisclosed number of delinquent account balances to Portfolio Recovery Associates and other debt collectors, which then sued the borrowers to collect the debt.

For more, see Dead Soul Is a Debt Collector (Deceased Woman's Name Was Robo-Signed on Thousands of Affidavits).

Foreclosure Law 'Reading List' To Be Given To Central Florida Judges; Circuit Chief Hopes Briefing Will Help Jurists Avoid Getting "A Pie In The Face"

In Central Florida, the Sarasota Herald Tribune reports:
  • Starting Monday, three of the most experienced circuit judges will begin handling civil cases [in the courtrooms of Florida's 12th Judicial Circuit], but first they have a reading list: lengthy analysis of the latest foreclosure law and arguments, and guides written by judges who have been in the foreclosure mess for years.

  • "It's hard to step into that role," said 12th Circuit Chief Judge Lee Haworth, who made the judicial assignments for this year. "I'm hoping we can get them briefed so they don't get a pie in the face."

  • Foreclosures are not even close to the most complex type of litigation to cross a civil judge's desk -- for example, some trials about car crashes involve medical testimony and have seven or eight attorneys. But the more advanced foreclosure defenses now delve into the sometimes labyrinth world of financial markets, trusts and securities. The handbooks discuss the areas of disagreement, or "gray areas" in the law. "There's a larger gray area than we like," Haworth said.

For the story, see Judges studying home suits (FORECLOSURES: Three will have to get up to speed on a fast-moving field).

Sunday, January 02, 2011

Fla Appeals Court 'Green Lights' Class Action Against Foreclosure Mill Accused Of Clipping Delinquent Borrowers In Bogus Loan Reinstatement Fee Ripoff

In West Palm Beach, Florida, The Palm Beach Post reports:
  • As many as 2,000 homeowners suing the law firm of self-proclaimed foreclosure king David J. Stern over excessive attorney fees and costs won a major victory [last week] when an appeals court blessed the group's class-action status.

  • "We are very excited," said Louis M. Silber, the West Palm Beach attorney who filed the case in January 2007 — the first class-action lawsuit filed against Stern and his Plantation-based law firm stemming from foreclosure fraud accusations.

  • In a four-page opinion, the 4th District Court of Appeal upheld the findings of Circuit Judge Thomas H. Barkdull,, who decided the complaints and circumstances of the homeowners were so similar that they would best be handled in a class-action lawsuit.

  • Members of the class are homeowners who received letters from Stern's firm between Jan. 18, 2003 and Feb. 19 2009 offering to reinstate their loans with Wells Fargo by paying reinstatement charges.(1)

For more, see Judge OK's class-action status for homeowner lawsuit against Florida law firm.

See also South Florida Sun Sentinel: Court upholds decision on Stern foreclosure class action suit (Homeowners claim they were charged excessive fees for title searches and examinations, being served foreclosure papers, legal work — and in some cases, were billed for expenses and mortgage payments not yet due).

For the ruling, see Law Offices of David J. Stern, P.A. v. Banner, Case No. 4D09-3928 (Fla. App. 4th DCA, December 29, 2010).

(1) The class action lawsuit claims that the foreclosure mill's alleged misbehavior constitutes violations of the Florida Consumer Collection Practices Act and the Florida Deceptive and Unfair Trade Practices Act.