Saturday, April 09, 2011

Renters In Apartments Facing Foreclosure Report Illnesses, Breathing Problems After Noticing 'Black Stuff' Growing In Their Units

In Fresno, California, KFSN-TV Channel 30 reports:
  • A condo complex already facing foreclosure is now dealing with potentially toxic fungus as well. Tuscany Villas is on Fruit just north of Herndon in Northwest Fresno. Action News first reported about foreclosure proceedings in January and a follow-up uncovered the new problems.
  • Several residents have reported illnesses and breathing problems after noticing something black growing in their units. They thought it might be toxic black mold, but test results in one apartment show a different problem -- a black fungus that's also potentially toxic.

For more, see Potentially toxic fungus at troubled Fresno condo complex.

Would-Be Buyer Offering $52K For REO Irked By Real Estate Agent's Possible Double-Dealing After Latter Buys Same Property From Bank For $40K

In Spring Hill, Florida, The Tampa Tribune reports:
  • Dominick Marchica has sold guns at an indoor flea market for eight years. In January, he thought he'd found the perfect building to expand his business – right around the corner from his Spring Hill home.
  • But the real estate agent hired by Lutz' Heritage Bank of Florida to sell the foreclosed property said his offer of $52,000 was too low. "He was adamant that he was on the board of the bank and the bank would not come up short," Marchica said. "We got a letter back … it said the bank would not negotiate any further and they came back at a $62,000 offer."
  • So imagine Marchica's reaction when he found out last month that the property sold for $40,000 – to the real estate agent's company, Williams Realty & Investments. "If someone else bought that property and they paid $62,000 for it, I would not be mad," Marchica said. "What makes me annoyed is that this Realtor stone-walled me, refused to take my offer to the bank, played me, and then he bought it for himself."
  • The real estate agent, Cary Williams, runs his realty business out of his used car dealership on U.S. 41, near the property Marchica wanted to buy. He said he's not on the board of the bank, and never told Marchica he was. As for undercutting Marchica?
  • "The bank turned down (Marchica's) offer in January," Williams said. "In March, things had changed, and they really needed to sell the property."
  • Richard Adams, president of Heritage Bank, said Williams is a long-time customer of the bank, and was hired because of his office's proximity to the property. He said he didn't authorize Williams to tell Marchica the bank wouldn't negotiate. "I remember the $52,000 offer," Adams said. "I countered and was waiting on his counter. When I didn't hear back, I thought he had changed his mind and didn't want the property anymore."


  • By March, Adams said, the FDIC was pressuring the bank to shed bad assets. Regulators cracked down on the bank in late January, telling it to clean up its balance sheet. Heritage Bank agreed to a consent order, which required the bank to boost capital levels and reduce exposure to troubled assets.
  • In light of that, Adams said, losing $12,000 on this deal is especially troubling. "No bank wants to lose money on a foreclosed property," Adams said. "Especially not in this economy."

For more, see Agent's foreclosure purchase angers potential buyer.

State Regulators Vote To Revoke Real Estate Agent's License For Alleged Double-Dealing On Listed Property Bought At Foreclosure Sale

In Denver, Colorado, KUSA-TV Channel 9 reports:
  • The Colorado Division of Real Estate voted to revoke a Jefferson County real estate agent's license following a 9Wants to Know investigation into a transaction where a Realtor didn't bring an offer to the seller and then turned around and bought the building at a foreclosure auction.(1)
  • "Justice was served," Carol Price, who hired Realtor Mark Dyson to sell her dance clothing store before it went into foreclosure, said. "License revocation and maximum fines are as severe as it gets for discipline imposition," said Marcia Waters, Division of Real Estate director.


  • The Colorado Real Estate commission voted to revoke Dyson's license during a meeting Tuesday morning. The commission investigates complaints made by consumers such as Price, whose daughter filed a complaint after 9Wants to Know started looking into the deal. (Read how to file a complaint)
For more, see Realtor's license revoked after 9Wants to Know investigation.

(1) See Listing R/E Agent Conceals Purchase Offer To Client/Owner Of Bldg In F'closure, Then Buys Property At Auction, Flips It To Original Prospective Buyer.

Bay State Auctioneer Off The Hook When Selling Foreclosed Property With Crappy Title

In Boston, Massachusetts, Massachusetts Lawyers Weekly reports:
  • A real estate auctioneer could not be held liable under Chapter 93A for auctioning foreclosed property in which the title was in dispute, a Superior Court judge has ruled. The defendant auctioneer claimed he was not aware of any title issues with the property, [...]

For more, see Auctioneer not liable for unlawful foreclosure sale (requires paid subscription).

Elderly Woman Faces Foreclosure, At Least Two Other Couples Borrowed Against Property To Invest In Alleged Ponzi Scheme

In Seattle, Washington, the Seattle Post Intelligencer reports:
  • Securities fraud charges have been filed against two men accused of bilking $3.5 million from several elderly people living in the Seattle area. Filing charges Wednesday, King County prosecutors contend Stephen J. Klos, 84, was running a Ponzi scheme targeting people he met at the Mercer Island Covenant Church.
  • "The defendant used his charm and influence to persuade elderly victims to invest with him but instead used the money for his personal benefit and lifestyle," King County Prosecutor Dan Satterberg said in a statement. Robert A. Justice, a 52-year-old Mercer Island man, is accused of helping Klos in the long-running fraud.
  • Writing the court, Tyler Letey, staff attorney with the state Department of Financial Institutions, said Klos launched the scheme in February 2004 and ultimately defrauded 23 families of $3.5 million. Among his victims, Letey said, were a recently widowed woman and six elderly people.


  • Letey contended that Klos went so far as to take the monthly Social Security payments from an 85-year-old woman with whom he was romantically involved. The woman is now facing foreclosure while Klos maintains control of her finances. At least two other couples mortgaged or refinanced property to invest with Klos, according to charging documents.

For more, see Two charged in $3.5 million fraud targeting Seattle-area elderly.

NYC Pols, Tenants, Advocates Urge FDIC To Put Squeeze On Big 'Landlord Lender' In Effort To Preserve 34 Rundown Bronx Buildings Housing 800 Families

In New York City, Crain's New York Business reports:
  • Housing advocates, tenants and some of New York's most powerful elected officials Thursday called on the Federal Deposit Insurance Corp. to force New York Community Bank to evaluate the finances and living conditions at 34 rundown Bronx buildings in foreclosure, and then disclose information on building repairs that are needed.
  • The move to pressure the FDIC to get involved is the latest salvo in a three-year campaign by officials and advocates to hold banks responsible for loans they made on multi-family properties that ended up falling into a state of disrepair.
  • An amendment inserted into last year's Dodd-Frank Wall Street Reform and Consumer Protection Act by two New York politicians, Sen. Charles Schumer and Rep. Nydia Velazquez, gives the FDIC the power to intervene.
  • We're asking the FDIC to investigate the practices and actions of NYCB and force NYCB to make documents public so we can actually see whether there is enough money at the table to make these buildings livable,” said City Council Speaker Christine Quinn. “There are 800 units and 800 families at risk.”


  • By pressuring the bank to disclose financial and living conditions, officials and advocates hope to create a level of transparency so potential buyers will understand the true value of the buildings and the amount of money needed to make repairs.
  • New York Community Bank is currently the most active provider of multi-family loans in New York City, and this makes their actions important to the health of our city's housing stock,” said Benjamin Dulchin, executive director at the Association for Neighborhood and Housing Development.(1)

For more, see Group asks FDIC to help 34 Bronx buildings (Elected officials, housing advocates and tenants nudge feds to pressure lender to disclose details on badly-needed repairs in properties housing 800 families).

(1) According to the story, New York Community Bank has a large portfolio of distressed multi-family loans, including mortgages on 328 buildings—housing more than 6,000 families—with more than three outstanding code violations per unit that pose serious health and safety risks. Of those buildings, 34 are in foreclosure, with a total of 800 apartments. Advocates worry they will be sold to the highest bidder without vetting the buyers' ability or willingness to rehabilitate the deteriorating properties, the story states.

100+ Tenants Ordered Out Of F'closed Complex; New Landlord Says Mold, Plumbing Repairs In Condemned Units Can't Be Fixed Unless Premises Is Vacated

In Lexington, Kentucky, WKYT-TV Channel 27 reports:
  • Some of them say it came as a shock. More than 100 people at Sonnet Cove Apartments in Lexington have been told to leave, because many of the units are considered unsafe.
  • "I have to start all over..and I haven't even started," said Melinda Clemons, who just moved in to the complex. Clemons didn't expect to be apartment hunting again so soon. "I signed my lease the 25th of February, and on March 29th I was notified the building was condemned," said Clemons.
  • A notice from the new complex owners was put on the doors of more than a hundred tenants who live at the complex. Much to Clemons' surprise, Sonnet Cove had been in foreclosure. Nearly a year ago, dozens of units had been condemned because of mold and plumbing problems.
  • Last Tuesday, the complex was purchased by a new company, and the residents were given 30 day's to leave. The new owners referred to the buildings as unsafe.
  • "I just moved in," said Clemons, "but other residents have just renewed their leases, and from my understanding others were also unaware of the situation."

For more, see Tenants of apartment complex told to find new homes (More than a hundred people living in a large Lexington apartment complex are asked to leave after dozens of units were condemned a year ago).

(1) While the tenants would probably have no protections against this type of eviction if it were local city/county officials ordering the premises vacated for health and safety reasons, it appears that the landlord in this case would be bound by the Federal Protecting Tenants at Foreclosure Act of 2009, which provides important protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property and, in many cases, the right to remain for the length of the tenant's existing lease term. There is no exception in the law allowing for a landlord purchasing an occupied foreclosure property to boot tenants based on health & safety issues.

Tenants In 7-Unit Building Left In The Dark As Landlord In Foreclosure Decides To Cut His Losses & Stiffs Utility Company, Leading To Power Shutoff

In Fort Pierce, Florida, WPTV Channel 5 reports:
  • Todi Marinack paid her April rent on Friday. Her studio apartment on South Hutchinson Island in Ft. Pierce costs $600, including utilities. The power went out Monday morning and Marinack tried calling her landlord. When she couldn't get in touch with him, she talked to her neighbors in the small complex of 7 units.
  • "He had contacted a couple people in here, I don't know which ones at first," says Marinack. "But he said that he was going to have the electricity turned off."
  • Ft. Pierce Utilities shut off the power after several months of late payments or no payments at all. Now the few residents left in the complex are in the dark.


  • [The landlord] told us over the phone he's cutting his losses. He says months of tenants not paying rent left him broke and though he'd like to pay the power bill, he doesn't have the $1,800 needed to turn the electricity back on.
  • [He] told us the building is in foreclosure and should belong to the bank in a couple of weeks. Tenants at the complex wonder how long it will take to get the power restored. "It's either this or I live in my car," says Marinack. "I don't know what to do."(1)

Source: Tenants powerless after landlord doesn't pay bill.

For story update, see Tenants still powerless after landlord doesn't pay bill (Florida Legal Aid is now helping the Marinacks build a case against their landlord).

(1) Presumably, the landlord hasn't paid the water bill, either, so a water shutoff can't be far behind. At that point, the building will be 'ripe' for a local code enforcement 'vacate order' giving all the residents an immediate 'boot' because of the health and safety hazards caused by the utility shutoffs.

Bank Refuses To Talk To Widow In Foreclosure Seeking Loan Modification, Saying Mortgage Was Solely In Late Hubby's Name

In Sonora, California, News10 reports:
  • A widow who is losing her home to foreclosure said she's willing and able to make her house payments, but the bank insists on dealing with her dead husband. Jeanette Noble, 66, fell several months behind in her payments following the death of her husband, Norman, in Oct. 2009, because their joint bank account was temporarily frozen.
  • Jeanette later contacted Wachovia Mortgage to arrange a repayment plan, but the bank refused to talk to her because the loan was in her husband's name alone.
  • "I tell them he expired. He's dead. He's not here. He can't talk to you," Jeanette explained. She faxed a copy of Norman's death certificate, which only complicated the problem. Future mail was addressed to "Estate of Norman Noble," and bank representatives still refused to talk to Jeanette because she wasn't a court-appointed representative of Norman's estate.
  • Jeanette said an attorney told her probate would cost $1,000 and could take several months. The home was scheduled for a courthouse auction this week, but for unknown reasons the auction was postponed until May 5.

For more, see Widow: Bank insists on talking to my dead husband.

Friday, April 08, 2011

Ohio Supremes Boot Foreclosure Mills' Challenge To Procedural 'Anti-Robosigner' Rule Implemented By Three State Trial Judges

In Columbus, Ohio, The Columbus Dispatch reports:
  • The Ohio Supreme Court has dismissed a complaint against three Franklin County judges who are requiring lawyers to verify the authenticity of the documents they file in home foreclosures.
  • Six lawyers challenged the action in December, asking the Supreme Court to prohibit the judges from ordering them to sign "certifications" on behalf of their clients.(1) The Franklin County prosecutor's office filed a motion in January to have the complaint dismissed, which the Supreme Court granted yesterday without comment.

For more, see Justices uphold foreclosure rule (It's fine for judges to require lawyers to verify details, court ruling says).

(1) See Local judges get tough on foreclosure documents.

Washington State AG: Some Of The Largest Foreclosure Trustees Have Failed To Comply With 'In-State Office' Requirements When Conducting Forced Sales

In Seattle, Washington, the Seattle Post Intelligencer reports:
  • Mortgage trustees handling many foreclosures in Washington are violating a state law intended to help people get in touch with them, the Washington Attorney General's Office announced Wednesday.
  • "Foreclosures run on strict timelines and homeowners need a human who they can talk with face to face when there's a problem. They need an office where they can make last-minute payments or show documents that may prove reasons for stopping forced sales," Attorney General Rob McKenna said in a news release.
  • "Washington law requires that foreclosure trustees maintain actual offices in our state and local phone numbers for this reason. But our investigation shows that some of the largest trustees are not in compliance and borrowers who have a legitimate reason to stop a foreclosure are having trouble reaching trustees."(1)

For more, see Troubled homeowners can't reach many mortgage trustees, AG says.

For the Washington AG press release, see Washington Attorney General’s investigation turns up additional foreclosure process problems (Attorney General steps in to ensure homeowners can contact foreclosure trustees):


  • [AG Rob] McKenna sent a letter to 52 trustees in October 2010, announcing its concerns about inaccurate documents, conflicts-of-interest, faulty chains of title and failure to provide disclosures and conduct mediations. The letter called on trustees to suspend any questionable foreclosures. Since then, the office has requested and received documents from several trustees. Attorneys are reviewing the information they have received so far and are waiting for documents from other companies.

(1) The next question to be addressed here, as it is in all these 'technicality' screw-up cases, in connection with those foreclosure/trustees' sales that have already taken place, and where strict compliance with the law was not met, is:

  • Does the failure to strictly comply with this requirement make the sale at auction (and any further subsequent sales to 'downstream' 3rd party bona fide purchasers) wholly void (ie. void ab initio, nugatory, without effect, etc.) and subject to attack at any time, or merely voidable (although defective, nevertheless valid as to bona fide purchasers), where any attack thereon is subject to restrictions???

See Albice v. Premier Mortgage Services Of Washington, Inc., 157 Wn. App. 912; 239 P.3d 1148 (Wn. Ct. of App., Div. 2, September 28, 2010) for a recent Washington State case where a three-judge panel of the state Court of Appeals found that a procedural flaw in the foreclosure process rendered the trustees' sale wholly void, and thereby left an unwitting investor at the auction who bought the subject property holding the bag, despite any claim on his part of bona fide purchaser protection.

For the briefs filed in Albice, see:

LPS Announces It Has (Finally?) Added 'Integrity' To Software For Use In F'closure Document Management Capabilities; Declines Comment For National TV

The Palm Beach Post reports:


  • In countless foreclosure cases, attorneys have argued that Docx, a defunct subsidiary of LPS, used so-called robo-signers to sign sworn affidavits claiming they had "personal knowledge" of a foreclosure case, often without reviewing the documents.
  • One former employee told a 60 Minutes reporter that he signed the name of a co-worker, Linda Green, as fast as he could on thousands of documents. A notary who formerly worked for LPS said she was told to notarize documents without witnessing the signature.


  • LPS, which bills itself as the nation's largest provider of mortgage processing services, declined to comment on its software upgrades or the allegations in the 60 Minutes segments.

For more, see Firm says its new software ensures the soundness of foreclosure papers.

Growth Seen In Number Of Clueless Bidders At Court-Ordered, Online Foreclosure Sale Auctions Screwing Themselves Out Of Thousand$

In Southeast Florida, the South Florida Sun Sentinel reports:
  • More than a year after courthouse foreclosure auctions moved online in Palm Beach, Broward and Miami-Dade counties, bidders are still making mistakes, some worth tens of thousands of dollars.
  • Novice investors who think they're getting great deals ultimately discover they've bought worthless second mortgages or other junior liens.
  • "It happens every day," said Luis Valdeon, who publishes detailed reports for investors on homes to be auctioned in Broward and Miami-Dade counties. "People who get into this and don't know what they're doing will lose their [shirt] in 15 minutes."
  • The errors could have been prevented had the investors spent roughly $100 each for title searches, auctions officials say. Though figures aren't available, complaints have intensified since online auctions opened bidding to more people, observers say.
  • The courthouse auctions typically attracted a small group of about 50 participants, but now anyone with a computer can bid on a foreclosed property. Palm Beach County has more than 5,000 registered bidders worldwide, while Broward has nearly 18,000.

For more, see Novice investors can lose big money in online foreclosure auctions.

Lawsuits: National Natural Gas Company Behind Effort That Bilked 92-Year Old Widow & Many Other Northern Michigan Landowners On Drilling Leases

In Emmet County, Michigan, Interlochen Public Radio reports:
  • Last May, oil and gas companies spent of hundreds-of-millions of dollars buying up rights to drill in Michigan. By summer, private landowners in northern Michigan had signed leases promising record payments to drill for their minerals.
  • But by the end of the year, the frenzy over the new gas play had fizzled, and hundreds of people were claiming they'd been cheated. Lawsuits now say gas developers didn't just break their word, but they allegedly engaged in fraud and conspiracy to manipulate the market.

    Feeling Bilked

  • The first person to file suit against the gas companies in Emmet County is Mildred Lutz. A sturdy 92 years old, she still keeps a garden and cans her own vegetables. Last summer, a man knocked on her door and offered to pay her almost $100,000 dollars for the oil and gas deep underground beneath her farm.
  • Mildred had just lost her husband of 69 years, Carl, and she thought the money would come in handy for a whole list of expenses, including funeral costs. [...] After talking it over with her five children, she signed a lease with the man from Western Land Services of Ludington squeezed around her kitchen table with a son and a grandson. Then they took the document to the bank in Alanson to be notarized.
  • She never heard another word from the oil and gas developers and she never got paid.


  • Last summer, land men for a number of oil and gas companies were swarming over northern Michigan signing these leases. It appeared Michigan could be on the verge of a new natural gas boom to rival those in Louisiana and Pennsylvania. But by fall the activity seemed to drop off a cliff and Attorney Bill Rolinski says he heard from a lot of people who ended up in the same boat as Mildred Lutz.
  • Many of them showed up at town hall meetings held late last year. "We'd have 200-to-400 people in attendance," he says. "And then I began to understand the scope of how the market was manipulated."
  • Rolinski has named six companies in lawsuits. But what he discovered is that they all were working on behalf of Chesapeake Energy, the second largest natural gas company in the country.

For more, see Area Landowners Claim Fraud In Oil & Gas Contracts (Mildred Lutz, 92, is suing over an oil-and-gas lease that brought her nothing).

See also, WPBN-WTOM-TV Channels 7&4: Energy company says they have done no wrong voiding oil and gas leases (Chesapeake Energy says lawsuits are without legal merit).

See NY AG Warns Consumers On Entering Natural Gas Exploration Leases for similar complaints regarding oil & gas drilling outfits operating in other parts of the country.

Thursday, April 07, 2011

Pro Se NJ Homeowner Scores Win, Stalls Foreclosure Where State 'Fair Foreclosure Act' Notice Fails To I.D. Lender; Naming Servicer Only Not Enough

In Middlesex County, New Jersey, the New Jersey Law Journal reports:
  • Homeowners fighting foreclosure have a new weapon: a published trial court ruling that the notice required by law to be sent to mortgagors by certified mail must identify the lender and not just the loan servicing company.
  • Because the foreclosure notice sent to George and Mona Elghossain did not name the Bank of New York Mellon, which owns their debt, Middlesex County Chancery Division Judge Glenn Berman dismissed the suit without prejudice, rejecting the bank’s request to cure the defect by redoing the notice correctly.
  • Monday’s ruling, Bank of New York Mellon v. Elghossain, MID-F-13402-10, follows a series of decisions finding would-be foreclosers that did not have possession of the original mortgage note lacked standing and could not go ahead with the process.
  • Like the standing cases, the notice issue in Elghossain is the consequence of the widespread securitization of mortgages, with accompanying pooling and servicing agreements that have placed loan servicing companies rather than lenders at the forefront of foreclosure efforts.


  • The 1995 N.J. Fair Foreclosure Act requires such notice and specifies that it state “the name and address of the lender and the telephone number of a representative of the lender whom the debtor may contact … .” It defines “lender” as “any person, corporation, or other entity which makes or holds a residential mortgage, and any person, corporation or other entity to which such residential mortgage is assigned.”
  • Berman found the notice to the Elghossains — mentioning only the servicer, BAC Home Loans, and not Bank of New York — violated the act, which he called “clear, unambiguous, and readily comprehensible, (especially to a sophisticated lender).”


  • Berman [] said substantial compliance with the law is not enough; that “strict compliance is required.”(1) He would not allow Bank of New York to fix the mistake by serving a corrected notice. “Merely re-serving the [notice] would eviscerate the statute’s plain meaning and effectively reward plaintiff for its neglect, regardless of how benign it may appear,” he wrote.
For more, see Foreclosure Notice Found Deficient for Naming Only Loan Servicer, Not Lender (requires paid subscription; if no subscription, TRY HERE).

For the ruling, see Bank of New York Mellon v. Elghossain (when link expires, GO HERE).

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

(1) This raises the question, in connection with those past foreclosure actions where strict compliance was not met, and where a judgment was obtained anyway and the property subsequently sold at auction:

  • Does the failure to strictly comply with this notice requirement make the foreclosure judgment & subsequent sale at auction (and any further sales to 'downstream' 3rd party bona fide purchasers) void ab initio (ie. wholly void, nugatory, without effect, etc.) and subject to attack at any time, or merely voidable (although defective, nevertheless valid as to bona fide purchasers), where any attack thereon is subject to restrictions???

State Bar Hammers Attorneys For 'Sticky Fingers', Real Estate-Related Improprieties

From The Florida Bar's recent quarterly gossip/scandal sheet:
  • The Florida Bar, the state's guardian for the integrity of the legal profession, announces that the Florida Supreme Court in recent court orders disciplined 26 attorneys, disbarring four and suspending 20. Some attorneys received more than one form of discipline. One attorney was placed on probation; two attorneys were publicly reprimanded. Two attorneys were ordered to pay restitution.

Among those making this quarter's 'honor roll' for either playing fast & loose with their clients' money or trust funds,(1) improper conduct in real estate matters, or, in one case, fabricating court documents and giving it to a client, are:

  • Jacqueline Jeannette Bird, Tallahassee, suspended until further order, effective 30 days from a March 4 court order. (Admitted to practice: 1988) According to a petition for emergency suspension, Bird appeared to be causing great public harm by misappropriating funds and/or diverting funds entrusted to her. Bird's offenses include writing herself checks on numerous occasions from clients' settlements, delaying delivery of client settlements, refusal to fully pay client medical liens and commingling personal and trust funds. (Case No. SC11-339);
  • Mark Irwin Blumstein, Weston, permanently disbarred effective immediately following a Feb. 9 court order. (Admitted to practice: 1986) In August 2007, Blumstein was disbarred for five years. Nevertheless, he continued to practice law and subsequently mishandled and/or misappropriated thousands of dollars in client funds. (Case No. SC09-1572);
  • Ryan Thomas Dosen, Kennett Square, Pa., permanently disbarred effective immediately, following a Feb. 22 court order. (Admitted to practice: 2004) Dosen pleaded guilty in U.S. District Court to one felony count of conspiracy to commit bank fraud. He acted as a settlement agent in two illegal real estate transactions in South Florida. His actions resulted in losses in excess of $2.5 million. (Case Nos. SC09-1613 & SC10-615);
  • Robert W. Frazier, Jr., 507 S.E. 11th Court, Fort Lauderdale, suspended until further order, effective 30 days from a March 2 court order. (Admitted to practice: 1977) According to a petition for emergency suspension, Frazier appeared to be causing great public harm by diverting trust funds as evidenced by a Certified Public Accountant and a Bar auditor. (Case No. SC11-324);
  • Shawn Louis Michaelson, Miami Lakes, suspended for three years, effective 30 days from a Feb. 9 court order. (Admitted to practice: 2001) Michaelson made several misrepresentations to his clients and the court: in one instance, he fabricated a court order by cutting and pasting a copy of the presiding judge's signature from a different order. He then gave the order to his clients but later denied having much knowledge about the order. Michaelson also billed clients for work that had not been formed. In another instance, he failed to properly communicate and neglected to explain the true status of a lawsuit to his clients. (Case No. SC10-1496);
  • Matthew Glenn Palentchar, Colonia, N.J., suspended for 91 days until further order, following a Feb. 9 court order. (Admitted to practice: 2004) Palentchar is currently suspended, therefore the suspension is effective immediately. Further, Palentchar shall pay restitution of $750 to one client. In several instances, Palentchar was retained to represent clients but he failed to communicate regarding the status of cases. Palentchar failed to properly maintain his trust accounting records, he practiced law while ineligible, due to delinquent Bar fees and he failed to respond to the Bar disciplinary inquiries. (Case No. SC10-1401);
  • Pablo Perez, South Miami, suspended until further order, following a Feb. 7 court order. (Admitted to practice: 1988) According to a petition for emergency suspension, Perez appeared to be causing great public harm. The Bar received 11 different complaints against Perez from former clients. They alleged they retained Perez to represent them in various legal matters including foreclosure and loan modification for which they paid legal fees, but he failed to provide services and eventually abandoned their cases. Perez subsequently informed the Bar that due to economic problems, he was forced to close his practice, but he planned to reopen in the near future. Perez then failed to have any further communication with the Bar or respond to any Bar inquiries. (Case No. SC11-201);
  • Eric Jefferson Tinsley, 2000 N. Dixie Highway Suite 4, Lake Worth, suspended until further order, following a March 4 court order. (Admitted to practice: 2003) According to a petition for emergency suspension, Tinsley appeared to be causing great public harm. An audit revealed that Tinsley misappropriated nearly $11,000 from his trust account. (Case No. SC11-394).

For the entire gossip sheet, see Supreme Court Disciplines 26 Attorneys.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help 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.

Attorney Featured On '60 Minutes' Scores Foreclosure Dismissal On Own Home & Is 'Loaded For Bear' If Lender Re-Files Lawsuit

In West Palm Beach, Florida, The Palm Beach Post reports:


  • An attorney for Deutche Bank declined to comment on whether the bank would refile the foreclosure case. However, if the bank does so, it will have to comply with new, court-ordered guidelines that require lenders to verify the truthfulness of the documents. Those rules were not in effect in 2008 when Deutsche Bank filed to foreclose on Szymoniak's home.
  • Szymoniak's attorney, Mark Cullen, said the ruling is good news, even if the bank refiles . In a new lawsuit the bank would be required to attach the note for the loan. Initially, the bank said it lost the note. Then the bank found the note. However, the date on the newly found document showed that Deutsche Bank did not acquire the loan until several months after it sued Szymoniak.
  • Other irregularities appeared as Szymoniak continued reviewing her documents, including an addendum, called an allonge, that appeared to have been cut and pasted together before being copied and a sworn affidavit signed by Linda Green, a prolific robo-signer. One of Green's co-workers appeared on 60 Minutes and said he also signed Green's name to notarized documents.

For the story, see Woman on '60 Minutes' has foreclosure dismissed.

Philly Firm Flags CitiMortgage With 2nd HAMP Suit; Complaints Requesting Class Action Status Filed On Behalf Of Keystone, Garden State Homeowners

In Philadelphia, Pennsylvania, the law firm of Berger & Montague, P.C. recently announced:
  • The law firm of Berger & Montague, P.C. has filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of all Pennsylvania homeowners whose mortgage loans have been serviced by CitiMortgage, Inc., and who, since April 13, 2009, (1) have entered into a Trial Period Plan (“TPP”) Contract with CitiMortgage and made all payments as required by their TPP Contract and complied with CitiMortgage’s requests for documentation, and (2) have not received or have been denied a permanent Home Affordable Modification Agreement that complied with the U.S. Department of the Treasury’s Home Affordable Modification Program (“HAMP”) rules.


  • The Complaint alleges that CitiMortgage accepted billions in government bailout money under the Troubled Asset Relief Program (“TARP”) earmarked to help struggling homeowners avoid foreclosure. CitiMortgage, like other TARP-funded financial institutions, is contractually obligated to modify mortgage loans it services for homeowners who qualify under HAMP, a federal program designed to abate the foreclosure crisis by providing mortgage loan modifications to eligible homeowners.

For the press release, see Berger & Montague, P.C. Files Class Action Lawsuit Against CitiMortgage, Inc. on Behalf of Pennsylvania Homeowners.

For the lawsuit, see Whiting v. Citimortgage, Inc. (April 1, 2011).

See also, Silva v. Citimortgage, Inc. (March 11, 2011) for a similar lawsuit filed by this firm on behalf of screwed-over New Jersey homeowners.

See Parade Of HAMP Lawsuits Seeking Class Action Status Continues; Banks Accused Of Stiffing Homeowners On Loan Modifications, Despite Pocketing TARP Ca$h for links to some of the complaints filed in an ever-growing list of HAMP-related, loan modification lawsuits.

Wednesday, April 06, 2011

Screwed-Over Homeowner In Sale Leaseback Equity Stripping Scam Scores $83K+ Triple Damages Award & $52K In Attorney Fees Pursuant To Virginia CPA

A U.S. District Court in Charlottesville, Virginia recently awarded a homeowner victimized in a sale leaseback, equity stripping racket $27,900 in actual damages, which was then tripled to $83,700 pursuant to the Virginia Consumer Protection Act ("CPA").

The homeowner also prevailed on various other claims as well (ie. Violations of Federal Credit Repair Organizations Act (15 U.S.C. §1679b(a)) and the Virginia Credit Services Business Act (Va. Code §59.1-335.5-8), as well as Fraud, Conspiracy, Fiduciary Duty violation, Conversion, Unjust Enrichment). (The court noted that, prior to the conclusion of this litgation, the homeowner recovered the title to her home, but that she had still suffered uncompensated monetary and emotional harm as a result of this racket).

In addition to the damages award to the homeowner, the court granted the homeowner's attorney, the Legal Aid Justice Center in Charlottesville, Virginia, prevailing party legal fees in the amount of $52,515, the tab for which is picked up by the sale leaseback peddler and the escrow agent who handled the real estate closing, who was also named as a defendant and co-conspirator in the suit.(1)

The court noted that the foreclosure rescue operator involved, one Nicholas McLeod, pleaded guilty to criminal charges in connection with equity-stripping scams for taking equity from homeowners in Virginia and Maryland through transactions similar, but unconnected to, the transaction at issue in this civil lawsuit. He was sentenced for those ripoffs to six years in Maryland state prison after pleading guilty to felony theft and embezzlement.

For the facts of the civil case and the court's ruling, see Kindred v. McLeod, Civ. Action No. 3:08CV00019 (W.D. Va., Charlottesville Division, November 19, 2010).

(1) The Legal Aid Justice Center provides legal representation for low-income individuals in Virginia. In awarding them $52,515 in legal fees, District Judge Norman K. Moon noted the relationship between this sum to the amount of the homeowner's damages award:

  • I pause to note that the attorneys' fees amount to 62% of the trebled damages, and 188% of the actual damages. However, given Defendants' default, the protracted status of the litigation, and the merits of Plaintiff's claims — and considering that the fees are provided for by statute as an incentive, because if fees were not awarded in cases such as these, they typically would not be brought — I find that the fees are reasonable.

Suit Against Notorious D.C.-Area Foreclosure Rescue Operator To Undo Sale Leaseback, Equity Stripping Scam Allowed To Continue

In a preliminary ruling back in November, a U.S. District Court in Washington, D.C. refused to dismiss a lawsuit brought by a homeowner who was allegedly screwed-over in a sale leaseback equity stripping ripoff by by notorious, D.C.-area foreclosure rescue operators Vincent Abell, Calvin Baltimore, and Modern Management Company.(1)

Also named in the lawsuit is Wells Fargo which, in a separate transaction, allegedly made a predatory loan.

The court described the basis for the lawsuit as follows:

  • With respect to Abell, Baltimore, and Modern Management, [homeowner George R.] Hughes alleges violations of the D.C. Consumer Protection Procedures Act ("CPPA"), the Truth in Lending Act ("TILA") and the Home Ownership and Equity Protection Act ("HOEPA"), common law fraud, usury, and a claim for an equitable mortgage.

    As to Wells Fargo, Hughes alleges violations of CPPA and a common law negligence claim.

    And as against both Abell and Wells Fargo, Hughes seeks to quiet title to his primary residence after refinancing his mortgage.

    Hughes alleges that while he believed he was securing a loan to save his home from foreclosure, in fact, Abell, Baltimore, and Modern Management engaged in a scheme to defraud Hughes of his home.

    Arising from a separate transaction, Hughes alleges that Wells Fargo provided him financing on unconscionable terms and misrepresented material facts(2).

For the reasons discussed in its ruling, the court:

  • dismissed the usury charge as to Abell, Baltimore, and Modern Management on statute of limitations grounds,
  • allowed the lawsuit to proceed on the remaining allegations against all the defendants.

Representing the homeowner is the Legal Aid Society of the District of Columbia.(3)

For the ruling, see Hughes v. Abell, No. 09-220 (JDB) (D.D.C. November 17, 2010).

For the lawsuit, see Hughes v. Abell - Amended Complaint.

Go here for earlier posts on Vincent Abell.

(1) See DC High Court Affirms Punitive Damages Award Slamming Sale Leaseback Peddlers For $3.3M In Equity Stripping Foreclosure Rescue Ripoff for an example of earlier litigation involving Vincent Abell, Calvin Baltimore, and Modern Management.

Inasmuch as "both Abell and Baltimore have done time in federal prison for property schemes" according to a 2004 CBS News' story (see Loan Scam Targets Seniors' Homes (Washington Con Artists Preyed On Elderly People In Financial Trouble) (go here to watch related CBS News' video)), nothing short of additional criminal prosecution will put these guys out of business.

(2) With regard to the alleged predatory loan involving Wells Fargo, the D.C. Consumer Protection Procedures Act, according to the court, applies to real estate finance transactions like the one in this case, citing DeBerry v. First Gov't Mortgage & Investors Corp., 743 A.2d 699, 703 (D.C. 1999).

The court further noted:

  • Hughes's claim, as alleged, is analogous to other CPPA claims that have been sustained in this Circuit. In Williams v. First Government Mortgage & Investors Corp., 225 F.3d 738 (D.C. Cir. 2000), the D.C. Circuit upheld a jury verdict finding that the defendant had knowledge that there was no reasonable probability of payment on a refinanced mortgage requiring 57% of the plaintiff's monthly income. Id. at 744.

    Similarly, in Johnson v. Long Beach Mortgage Loan Trust 2001-4, 451 F. Supp. 2d 16 (D.D.C. 2006), the court declined to dismiss a complaint under section 28-3904(r)(1) alleging that loan payments would require more than half of the plaintiff's income. Id. at 38.

    Here, Hughes similarly alleges that Wells Fargo's terms require payment of nearly half of his income, or even more, given potential increases in the rate in the future. Hughes has satisfied his pleading burden, then, because he has alleged that Wells Fargo was aware that its terms would require approximately half of his income and that he had no prospects for increased income.

(3) The Legal Aid Society of the District of Columbia was formed in 1932 to provide civil legal aid to individuals, families and communities in the District who could not otherwise afford to hire a lawyer.

County Civil Rights Division To Assert "Prescription Pooch" Claim In Fair Housing Suit Against Condo Association On Behalf Of Elderly S. Florida Widow

In Deerfield Beach, Florida, the South Florida Sun Sentinel reports:
  • Phyllis Schleifer was so fragile and lonely, her doctors prescribed a medicine that weighs three pounds. His name is Sweetie, a Chihuahua. A prescription pet.
  • But the Century Village widow has had nothing but emotional turmoil since 2008 when Sweetie moved into her no-dogs-allowed condo in Deerfield Beach. Condo officials refused to allow the pet, though Schleifer had a doctor's note saying she needed him as an "emotional service animal.''
  • She says her condo retaliated against her and mistreated her, and made her neighbors pay for the legal fight. Someone — she doesn't know who — even pushed her down a flight of stairs, she alleges.
  • Now, she's taken her case not to doctors, but to taxpayers. Broward County government will sue Schleifer's Ventnor "H" Condo Association on her behalf, commissioners agreed Tuesday.
  • Schleifer, who was in a horrible car accident and then several years later, in 2005, lost her husband of 42 years, suffers "severe depression and post-traumatic stress disorder,'' county documents say, a legitimate disability in the courts' eyes. Hence, the county says, she needs Sweetie much like a blind person needs a Seeing Eye dog.
  • The unusual move to push a case onto the Broward taxpayer's bill is embedded in law, though few cases make it that far. County officials said Schleifer's is their first prescription pet lawsuit — an increasingly popular type of disability case. The case is expected to cost the county between $15,000 and $50,000.
  • Broward Commissioner Ilene Lieberman worried Tuesday when the case came to commissioners' attention that Schleifer's case would spark a "field day'' of complainants asking taxpayers to pick up 100 percent of their legal costs, whether they're rich or poor or in between.
  • The county has no choice, though, and is obligated to file the lawsuit because of its contract with the U.S. Department of Housing and Urban Development, which provides funding for the arrangement.


  • The attorney Ventnor hired, Patrick J. Murphy of Deerfield Beach, sent her a letter demanding that she pay the condo's $16,752 legal fees, and threatened to file a lien against her condo. His letter threatened a lawsuit, county documents say. Those acts were among the things considered "coercing, intimidating, threatening, or interfering'' with Schleifer's exercising of her federal legal rights. Later, Murphy failed to sit down for mediation, according to county documents, which moved the case to litigation. Murphy declined to comment Thursday.

For more, see Broward to sue for Deerfield widow's right to live in Century Village condo with Chihuahua (County takes on "prescription pet'' case against condo).

A Long, Winding Road For Chicago Homeowner Victimized By Renegade Loan Servicer

In Chicago, Illinois, a recent story in Gapers Block Mechanics tells the story of Zabrina Worthy, a local homeowner who, along with her children, was allegedly illegally locked out of her home by her loan servicer, Wells Fargo Bank, after falling behind on her house payments, despite the fact that no actual foreclosure sale ever took place.

Her story starts on the day she came home from work, only to find her home boarded up and with the locks changed, and goes from there:

  • the failure to winterize the home led to bursted frozen water pipes which led to the destruction of the house,
  • squtters taking up residence in the home which led to more trashing,
  • the destruction and loss of all the family's personal belongings,
  • a notice of foreclosure action that was improperly served (ie. 'sewer service'),
  • a $2,000 nuisance fine by the City of Chicago because of the debris from a home gutting that was left piled on the front lawn (since she was still the owner, she got hit with the fine),
  • the efforts Zabrina's lawyer, attorney Kelli Dudley, who coordinates the predatory lending program at John Marshall Law School, and who has teamed up with a private local law firm to file a seven-count counterclaim against the banks in their foreclosure action, alleging misdeeds from trespassing to unlawful conversion of property to consumer fraud.

After spending time couch-surfing with her family across Cook County, Zabrina ultimately gave up on Chicago and moved her family to Valparaiso, Indiana in search of a new start.

For the story, see Not a Wonderful Life: The Effects of Aggressive Foreclosure.

Tuesday, April 05, 2011

CBS' '60 Minutes' On Foreclosure Fraud - 'The Many Faces (& Signatures) Of Linda Green'

The Wall Street Journal's Deal Journal blog reports:
  • 60 Minutes” [Sunday] night weighed in with a thoughtful segment on the mortgage mess involving faulty or fraudulent mortgage paperwork. (Deal Journal readers previously have dubbed this the “Fauxclosure Crisis.”)
  • The news magazine program went in search of “Linda Green,” a woman in rural Georgia whose signature was on thousands on mortgage documents as a vice president of more than 20 banks — at the same time. Linda Green told “60 Minutes” she had never been a bank vice president, but was dubbed one by an alleged mortgage sweatshop because her name was short and easy to spell.
  • (Other news outlets, including the Washington Post [see Linda Green's changing signature] previously have dug into the many people who claimed to be “Linda Green” on foreclosure affidavits.)
  • Click HERE to watch the “60 Minutes” segment.

Source: Watch ’60 Minutes’ Take On Foreclosure Crisis.

For additional '60 Minutes' video on this story, see Mortgage mess: Who really owns your mortgage? (Scott Pelley explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents).

Chase To Pay $4M Surety Bond For Release Of $400M+ In Promissory Notes, Mortgages 'Held Hostage' By Foreclosure Mill As Firm Continues Employee Purge

In Fort Lauderdale, Florida, The Palm Beach Post reports:
  • Chase Home Finance will have to pay the Fort Lauderdale-based law firm Ben-Ezra & Katz a $4 million surety bond to get its foreclosure case files back. The U.S. District Court for the Southern District of Florida made the ruling Friday after the bank's lawsuit against Ben-Ezra & Katz alleging that the firm was delaying the return of the documents after being fired March 9.
  • Chase said the files contain more than $400 million worth of original notes and mortgages "without which Chase will be unable to proceed with any of the pending cases." Ben-Ezra & Katz, which also was let go by federal mortgage backer Fannie Mae in February, said it is owed $6.2 million in legal fees from Chase.


  • On Thursday, the firm filed notice with the state that it planned to lay off 54 employees in May. That follows a staff cut of 236 employees in February. Seven employees from the firm's title company, Brokers' Floridian Title Corp., also are expected to be laid off in May, according to the state report.
  • The Boca Raton-based foreclosure firm Shapiro & Fishman also suffered recent layoffs. The firm would not say how many employees it laid off, but it did say the staff cut was not done because of a loss in clients. The two firms are among eight statewide that the Florida attorney general's office is investigating over their foreclosure practices.

For the story, see Court: Chase owes $4 million for files.

Wanted Woman Located In Georgia, Charged In NC With Illegally Clipping HELOC Cash From Dead Stepfather's Estate, Leaving Home In Foreclosure

In Alamance County, North Carolina, The Burlington Times News reports:
  • A woman was charged Tuesday with allegedly accessing more than $49,000 from an equity line that was linked to her dead stepfather’s estate. Melissa Dawn Ruffell, 49, of Kingsland, Ga., was charged by the Alamance County Sheriff’s Department with identity theft, obtaining property by false pretenses, felony accessing computers and failure to produce a will, according to warrants.
  • After the warrants were issued, Ruffell was considered wanted and U.S. Marshals located her in Georgia. She was brought back to Alamance County and placed in jail under $60,000 bond, said Alamance County Sheriff’s Chief Deputy Tim Britt.
  • Ruffell was originally taking care of her stepfather, James T. Isley, of Carolina Street, Graham. Isley died in October 2008. Isley had a will and most of his estate was left to his daughter, who lives in Jamestown, N.Y. Ruffell allegedly had a copy of Isley’s will but failed to produce it for law enforcement, Britt said.
  • Ruffell is accused of using her position after her stepfather’s death to access the equity line on Isley’s home. She allegedly used his Social Security number and account number to access $49,500. The equity line went into default in February 2010. At that time, representatives from BB&T, the bank handling the equity line, contacted the sheriff’s department.
  • “The house went into foreclosure for exceeding the equity line after his death,” Britt said.

Source: Woman accused of stealing from dead stepfather's estate.

Consumers Take Credit Hits After Outfit Attempts Collection On Zombie Debts; Victim Suffers Insurance Rate Boost After Improper Derogatory Report

In Minneapolis, Minnesota, a recent story in the Star Tribune on a recent state attorney general lawsuit against alleged robosigning debt buyer Midland Funding LLC (a subsidiary of its publicly traded parent, Encore Capital Group Inc. of San Diego, and which reportedly announced recently it had tentatively agreed to settle a separate Ohio debt collection lawsuit for up to $5.7 million), and describes how its collection activities have impacted two local residents:
  • Daniel Fischer of Brooklyn Park said he discovered he had been a victim of Midland's tactics a year ago, when his credit card company reduced his credit limit because of a "derogatory statement" in his credit report. It turned out that Midland had sued him five years earlier, obtained a judgment for $1,155 and was ready to garnish his paycheck or other assets.
  • But Fischer didn't owe anyone money, and the order to appear in court to prove his innocence was sent to an address where [he] had hadn't lived for 23 years. Only after he contacted the attorney general's office did Midland's law firm, Messerli & Kramer of Minneapolis, drop the case, he said.
  • That pattern was repeated with Barbara Thies of Eagan, who kept getting dunned for an obligation she had paid before it was due in 2001. Thies said she repeatedly sent the canceled check to Midland, but had to go to court anyway. There, confronted with the evidence in person, the Messerli firm dropped the case in 2007, she said.
  • But that didn't repair her credit. Later, her auto and home insurers raised her rates because her credit rating had dropped, she said.

For the story, see State files suit against debt firm (Collections giant is accused of "robo-signing" documents).

Monday, April 04, 2011

Florida Judges Beginning To See The Light In Foreclosure Actions?

The Palm Beach Post reports:
  • Angry and exasperated by faulty foreclosure documents, judges throughout Florida are hitting back by increasingly dismissing cases and boldly accusing lawyers of "fraud upon the court."
  • A Palm Beach Post review of cases in state and appellate courts found judges are routinely dismissing cases for questionable paperwork.(1) Although in most cases the bank is allowed to refile the case with the appropriate documents, in a growing number of cases judges are awarding homeowners their homes free and clear after finding fraud upon the court.
  • Still, critics say judges are not doing enough. "The judges are the gatekeepers to jurisprudence, to the Florida Constitution, to access to the courts and to due process," said attorney Chip Parker, a Jacksonville foreclosure defense attorney who was recently investigated by the Florida Bar for his critical comments about so-called "rocket dockets" during an interview with CNN.(2) "It's discouraging when it appears as if there is an exception being made for foreclosure cases."
  • In February, Miami-Dade County Circuit Judge Maxine Cohen Lando took one of the largest foreclosure law firms in the state to task in a public hearing meant to send a message.(3) She called Marc A. Ben-Ezra, founding partner of Ben-Ezra & Katz P.A., before her to explain discrepancies in a case handled by an attorney in his Fort Lauderdale-based firm.
  • "This case should have never been filed," said Lando, who referred to the firm's work on the case as "shoddy" and "grossly incompetent." She called Ben-Ezra a "robot" who filed whatever the banks sent him, and held him in contempt of court.
  • She then gave the homeowner the home - free and clear - and barred the lender from refiling the foreclosure. Attorney Maria Mussari, who represents the homeowner, said she wasn't surprised. "She has become a voice for other judges,"(4) Mussari said. "If judges crack down on following the rules, we'll still have foreclosures, but maybe the banks will pay attention and do it right."
  • Mussari said it's taken a while for the courts to wake up to the foreclosure disorder because homeowners were largely unrepresented and judges overwhelmed. "It's not that they don't care," she said. "They have thousands of cases on their docket and it's the same thing over and over again."

For more, see Foreclosure crisis: Fed-up judges crack down disorder in the courts.

(1) See, for example, these Palm Beach Post resources:

(2) See also, Approved "Sandbagging" Of Homeowners At Court Hearings, Banks Filing Incomplete Affidavits Reflect Disregard For Procedure By Some F'closure Judges.

(3) See, Hearing Transcript, Central Mortgage Co. v. Gonzalez Del Real.

(4) See "The Eleventh Judicial Circuit Does Not Have A Rocket Docket!" Says Judge As She Dismisses Foreclosure Action, Cancels Debt Over Sloppy Paperwork.

Sloppy Securitization Sinks Foreclosure In AL Case; Judge "Surprised To The Point Of Astonishment" At Bank's Failure To Comply w/ Terms Of Its Own PSA

AOL's DailyFinance reports:
  • On March 30, an Alabama judge issued a short, conclusory order that stopped foreclosure on the home of a beleaguered family, and also prevents the same bank in the case from trying to foreclose against that couple, ever again.
  • This may not seem like big news -- but upon review of the underlying documents, the extraordinarily important nature of the decision and the case becomes obvious.

    No Securitization, No Foreclosure

  • The couple involved, the Horaces, took out a predatory mortgage with Encore Credit Corp in November, 2005. Apparently Encore sold their loan to EMC Mortgage Corp, who then tried to securitize it in a Bear Stearns deal. If the securitization had been done properly, in February 2006 the trust created to hold the loans would have acquired the Horace loan.
  • Once the Horaces defaulted, as they did in 2007, the trustee would have been able to foreclose on the Horaces. And that's why this case is so big: the judge found the securitization of the Horace loan wasn't done properly, so the trustee -- LaSalle National Bank Association, now part of Bank of America -- couldn't foreclose.
  • In making that decision, the judge is the first to really address the issue, head-on: If a screwed-up securitization process meant a loan never got securitized, can a bank foreclose under the state versions of the Uniform Commercial Code anyway?

  • This judge says no, finding that since the securitization was busted, the trust didn't have the right to foreclose, period. Since the judge's order(1) doesn't explain, how should people understand his decision? Luckily, the underlying documents make the judge's decision obvious.

For more, see Court: Busted Securitization Prevents Foreclosure.

See also:

For the homeowner's summary judgment filings, see:

(1) In his order, Russell County Circuit Judge Albert L. Johnson zings the bank with this gem:

  • "[T]he Court is surprised to the point of astonishment that the defendant trust (LaSalle Bank National Association) did not comply with the terms of its own Pooling and Servicing Agreement and further did not comply with New York Law in attempting to obtain assignment of plaintiff's Horace's note and mortgage."

For 20 reasons you need to request through formal discovery in any mortgage-related lawsuit the Pooling and Servicing Agreement and why it is relevant, see Max Gardner’s Top Reasons for Wanting a Pooling & Servicing Agreement.

For more on the problems that foreclosing lenders have reason to fear in connection with PSA screw-ups, see The Alphabet Problem and the Pooling and Servicing Agreement.

See Finding Investor Restrictions on Loan Modifications for some guidance on locating pooling and servicing agreements.

Orange County DA Charges Five In Alleged "Shared Equity" Foreclosure Rescue Scam That Led To Loss Of Homes For 16 Financially Strapped Families

In Orange County, California, the Rancho Santa Margarita Patch reports:
  • A Coto de Caza man and a Rancho Santa Margarita woman are among the five people implicated in a real estate scheme in which they allegedly defrauded banks and homebuyers of more than $8 million and cost 16 families their homes.
  • William David Robin, 53, and Agida Jamil, 52, will be arraigned next week. Robin will be arraigned April 7 at 8:30 a.m. at the Central Justice Center in Santa Ana. Jamil will be arraigned April 4.
  • Authorities consider Robin the mastermind behind the scheme that began in 2006. He faces a maximum term of 12 years eight months in prison and is currently free on $500,000 bail. Jamil is free on $50,000 bail. Two others, Christopher Allen Taylor, 38, of Riverside and Richard Cadieu, 73, of Laguna Woods, will be arraigned Friday at 9 a.m. Zane Rogers, 49, of Paso Robles, will be arraigned April 7 along with Robin.
  • According to the Orange County district attorney's office, Robin—owner of Pacific Vantage in Rancho Santa Margarita—along with Jamil and Taylor in 2006 began advertising and marketing ashared-equity program” for the purchase of homes in Southern California.
  • They are accused of instructing buyers to pay half the mortgage to Pacific Vantage while Pacific Vantage paid the full amount to the mortgage lending institution; after two or three years, the buyer had the option to buy out Pacific Vantage or sell the house and split the profit.
  • After making several payments to the lender as part of the “shared-equity program” agreement, the district attorney alleges that Pacific Vantage ceased payment to the lender on all 16 properties in 2007 while the homebuyers continued to send their monthly mortgage payments to Pacific Vantage.
  • All 16 homebuyers lost their homes to foreclosure.
  • Each of the five defendants is charged with one felony count each of conspiracy to commit grand theft and conspiracy to make false financial statements with sentencing enhancements and allegations for property loss over $3.2 million, property loss over $1.3 million, aggravated white collar crime over $500,000, property loss over $200,000, aggravated white collar crime over $100,000, property loss over $100,000 and property loss over $65,000.

For more, see Scheme Bilked Millions, Cost 16 Families Their Homes (William David Robin of Coto de Caza is accused of masterminding a scheme to defraud banks and steal from homebuyers—all of whom lost their homes to foreclosure).

Disgraced Ex-Real Estate Agent Bagged In Texas; Brought Back To Pennsylvania To Face Charges In 35 Sale Leaseback, Equity Stripping Ripoffs

In Harrisburg, Pennsylvania, The York Dispatch reports:
  • A former East Berlin real estate agent allegedly defrauded mortgage lenders, homeowners and investors out of $2.7 million. Joanne M. Seeley, 40, now of Tolar, Texas, is free on supervised bail while awaiting trial in federal court, tentatively set for May 2, according to the U.S. Attorney's Office in Harrisburg.
  • She was arraigned Tuesday in federal court on the 10-count indictment, according to assistant U.S. attorney Kim Douglas Daniel. Seeley is charged with five counts each of wire fraud and making unlawful monetary transactions.
  • Between 2006 and 2008, Seeley owned and operated the East Berlin-based business S&D Property Solutions. She was a licensed real estate agent until November 2006, when she surrendered her license in lieu of disciplinary action, according to a news release from the U.S. Attorney's Office.
  • The indictment against her alleges Seeley used false real estate contracts, inflated property appraisals, bogus employment verifications and fictional leases to defraud people and companies out of money. The alleged crimes happened in York, Adams, Cumberland and Dauphin counties, officials said.
  • The allegations: Seeley would find homes listed for sheriff's sale and tell the homeowners they could avoid foreclosure by selling their homes to her or her buyers, who would then lease the properties back to the homeowners after the sale, the indictment alleges.
  • Seeley assured homeowners this would allow them to pay off debts, rebuild their credit ratings and allow them to qualify for new mortgages when they bought back their homes a year or so later, according to the news release.


  • The defrauded homeowners were never able to buy back their homes, the U.S. Attorney's Office said.

For the story, see Feds charge former East Berlin woman in $2.7M real estate scam.

See also, WHTM-TV Channel 27: Former East Berlin real estate agent charged in $2.7 fraud case (A former East Berlin real estate agent has been charged with defrauding 14 mortgage lenders, 35 home owners and five investors in Cumberland, Dauphin, York and Adams counties out of $2.7 million, according to federal prosecutors).

For the U.S. Attorney (Harrisburg, Pennsylvania) press release, see Former Operator Of York County Real Estate Firm Charged With $2.7 Million Mortgage Fraud Scheme.

Michigan Duo Pinched With 'False Pretenses' Charge In Alleged Sale Leaseback, Foreclosure Rescue Scam

In Lansing Township, Michigan, the Lansing State Journal reports:
  • Two Lansing-area women have been charged in connection with a foreclosure-rescue fraud. Joella Jean Britton, 37, of Eagle, and Nicole Lee Otis, 35, of Lansing were each recently charged with one count of false pretenses for their involvement in a scam that resulted in a Lansing Township couple being evicted from their home, according to a statement from Michigan Attorney General Bill Schuette.
  • The homeowners went into default on their mortgage in 2005 and were at risk of going into foreclosure. Later that year, Schuette alleges Britton coordinated a deal in which Otis would purchase the home and later sell it back to the homeowners on a land contract.
  • The homeowners gave part of the sale proceeds back to Otis for the $20,000 down payment, according to Schuette. The homeowners made payments under the land contract, but Otis stopped paying the mortgage and the home fell into foreclosure.
  • Lansing Township police investigated the case after the homeowners filed a complaint in 2007. Otis was arrested last week, and Britton is expected to turn herself in this week. They're expected to be arraigned later this week. If convicted of the felony, they face up to 10 years in prison.

Source: Two Lansing-area women charged in foreclosure-rescue scam.

Sunday, April 03, 2011

Mortgage Industry-Designed Roadblock Prevents Homeowners From Obtaining Legitimate Loan Modifications

In Atlanta, Gorgia, ProPublica reports:
  • Pamela Jeter of Atlanta, Ga., has been trying to get a mortgage modification for more than two years. She seems like an ideal candidate. She has shown she can stay current with a reduction in her monthly mortgage payments. Everybody would seem to win. Even the investors who ultimately own her loan think she should be able to get one. So, why is Jeter facing foreclosure?


  • Two big banks act as middlemen between the homeowners like Jeter who make payments and the mortgage-backed securities investors who ultimately receive them. The banks' jobs were supposed to be relatively hands-off, devoted more than anything to processing homeowner payments. When the housing bubble burst, they faced new demands.
  • One of those middleman roles is well-known to homeowners: the mortgage servicer, responsible for collecting homeowner payments and evaluating requests for a modification.
  • But it's another middleman that's proven the real barrier for Jeter: the trustee, who is supposed to be the investors' representative, making sure the servicer is maximizing investors' returns and distributing checks to them. HSBC is the trustee for the pool of loans of which Jeter's is a part -- and it's refused to approve any modifications for loans like hers, saying the contracts around the mortgages simply don't allow it.
  • The good news for Jeter is that, in what seems an unprecedented step, her servicer OneWest has taken HSBC to court in order to allow modifications. It filed suit in June of last year. But in a sign of just how convoluted the mortgage world has become, OneWest is also pushing to foreclose on her. A recent sale date was avoided only after her lawyer threatened to sue.

For more, see Lawsuit Reveals How a Middleman Is Blocking Mortgage Modifications for Homeowners.

Sacramento DA: Trio Clipped 16 Vulnerable Homeowners In Illegal Loan Modification Ripoff; Attorney Also Accused Of $60K Client Trust Fund Heist

In Sacramento County, California, the Fair Oaks Patch reports:
  • Arrest warrants were issued Wednesday for three men accused of preying on more than a dozen vulnerable borrowers facing foreclosure or unaffordable mortgage payments, including those in Fair Oaks and Carmichael.
  • From November 2009 to about June 2010, the Sacramento County District Attorney’s Office says the loan modification business run by Ashik Azeez, 49, Frank Joseph Ferris, 69, and Vicente Jose Perez, 49, all of Sacramento, performed unlicensed loan modification activities, improperly collected advance service fees, and failed to notify clients that paying a loan modification through a third party was unnecessary.


  • The warrant request outlined 16 separate instances in which people were charged upfront for loan modification costs or otherwise swindled, including many that occurred after the company was issued a cease and desist order this past October.


  • Ferris is also implicated in a separate matter in which he [allegedly] misappropriated $60,000 in client funds while a licensed attorney.

For more, see Fair Oaks Couple Lost Home In Loan Modification Swindle (Arrest warrants issued for employees of Turbo Mortgage Modification).

Insurance Underwriter Tags Agent With Lawsuit Over Blown Title Search In Home Refinance; Seeks $136K+ For Failure To Discover 2nd Mortgage Lien

In Madison, Wisconsin, The Madison Record reports:
  • A Madison County title company is suing one of its contractors for allegedly failing to fulfill its agreement. First American Title Insurance Company and its subsidiary, United General Title Insurance Company, filed the lawsuit March 18 in Madison County Circuit Court against Nations Title Agency of Missouri Inc.
  • According to the complaint, Nations Title had an agreement with United General to obtain applications for title insurance and complete examinations of those real estate titles, among other duties. United General also claims the contract would protect them from any loss due to errors on the part of Nations Title.
  • In September 2005, Maurice and Diane Heidel allegedly refinanced their New Baden property through Homestead Mortgage for nearly $100,000. United General says Nations Title issued a title commitment for that loan without doing a proper title search of the property.
  • After the Heidels entered into foreclosure on the Clinton County property, a previous mortgage of more that $63,000 was allegedly discovered.
  • Since that original mortgage was not paid at the Heidels' refinancing closing, a lien remained on the property, leaving United General liable for the amount due. First American Title says it settled the claim with the bank in May 2009 and asked Nations Title to reimburse them for the payment, which the company allegedly refused to do.
  • First American and United General accuse Nations Title of breach of contract and ask to be awarded more than $136,000 plus interest and court costs.

Source: Title company sued for not discovering second mortgage.

Brooklyn DA's Real Estate Crime Unit Pinches 18 Suspects In Various Realty-Related Rackets

In Brooklyn, New York, the New York Post reports:
  • Real-estate crime is so prevalent in Brooklyn, even a former city councilman was duped, the Brooklyn district attorney said yesterday. The Mortgage Fraud and Real Estate Crimes Unit has recently locked up 18 people on a variety of scams including reverse mortgage schemes that prey on the elderly and loan-modification swindles like the one that duped former Councilman Kendall Stewart, DA Charles Hynes said.
  • In three loan-modification cases, including Stewart's, scammers posing as financial-services specialists solicited up-front fees -- which are prohibited -- to process loan modifications to stave off foreclosures.
  • In one brazen case of attempted fraud, Hynes said, a man named Ralph Baker "had the gall, or, as we say in Brooklyn, the chutzpah" to pester the DA's office to help recover a $1.7 million brownstone that he claimed had been stolen from him. The only problem was that the home belonged to a different Ralph Baker, Hynes said.
  • The unit was set up two years ago after Sen. Charles Schumer, who was at yesterday's announcement, arranged an $875,000 federal grant, Hynes said.

Source: Brooklyn is scamville.

Harassed Consumers Fight Back Against Sleazy Bill Collectors; Suits Skyrocket As Growing Army Of 'Contingency Fee' FDCPA Lawyers Target Industry

In Minneapolis, Missesota, the Star Tribune reports:
  • Minneapolis attorney Pete Barry points expectantly at the video screen, drawing the attention of the 16 attorneys in the hotel conference room who've come to learn his trade secrets.
  • On the screen, a debt collector with spiky hair is squirming, his eyes darting back and forth as Barry barrages him with questions. "You see!" Barry yells triumphantly. "He's lying. Collectors often lie. If it's between me and him in front of a jury, I'll win every day."
  • Hounded by collection firms that buy unpaid debts and relentlessly pursue debtors through court judgments, many of Barry's clients have turned to him for relief from what they contend is nothing short of harassment.
  • Yet the legal movement Barry helped create -- by training hundreds of lawyers at grueling, 30-hour boot camps that cost $2,500 per head -- has begun to look more and more like the collections industry he despises. Federal lawsuits by debtors against collectors have soared sevenfold over the past decade, in a mirror image of the huge jump in collections judgments that Barry and others accuse debt collectors of churning out mill-style without regard to accuracy.
  • And while collectors usually win judgments when they go to court, debtors are finding success when they fight back. Debtors win so easily, in fact, that about a third of those who sue do it again, according to WebRecon, a Michigan firm that tracks the litigation.
  • High-volume consumer law firms are churning out lawsuits as efficiently as the collectors they battle. Many of these suits are cookie-cutter complaints that are skimpy on details -- just like many collection actions clogging the nation's court systems.
  • Some debtors, armed with scripts and recorders given to them by attorneys, have goaded collectors into making abusive comments that violate the federal Fair Debt Collection Practices Act, or FDCPA. At least 80 people have sued creditors more than 10 times under the law. On message boards and blogs, debtors brag of gaming a system that is otherwise stacked in favor of lenders.


  • Barry and his client were awarded $275,000 in a legal settlement [in one egregious case]. That's just one of more than 2,000 such cases he has pressed in the past decade. Barry declined to disclose his income, but he works on a contingency basis, meaning he doesn't collect attorneys' fees unless he wins.

For more (a must-read for those looking to slam sleazy collectors), see Debtors in court -- suing collectors (Pete Barry, a Minneapolis attorney, has flown all over the country conducting boot camps for lawyers, teaching them how to sue debt collectors under the federal Fair Debt Collection Practices Act (FDCPA)).

Go here for more on Barry's law firm, Barry & Slade, LLC (We Sue Abusive Debt Collectors™).