Saturday, May 21, 2011

Foreclosed, Short-Selling Arizona Homeowners Face Deficiency Judgments When Property Size Exceeds 2.5 Acres

In Cave Creek, Arizona, KTVK-TV Channel 3 reports:
  • Kimberly and her husband decided to short sale their home and after securing a buyer, Kimberly's lender, M & I Bank, sent a letter saying the short sale and purchase amount were approved. "They just recently, in the last couple of weeks, they approved the short sale and we were like "Yeah!"
  • But inside the approval letter was a little paragraph from M & I Bank stating they had the right to sue Kimberly and her husband for the rest of the money reportedly being forgiven.
  • In Kimberly's case, her $500,000 mortgage was approved to be short sold for around $250,000 but M & I claims it would sue Kimberly for the remaining $250,000 short fall.
  • Dean Wegner has been in the real estate industry for years and is a frequent contributor to 3 On Your Side. He says Kimberly's problem lies in a little-known clause in the [Arizona] state law that says if property is more than 2.5 acres then the lender can and will sue homeowners for any balance left over. Kimberly's property is five acres.


  • Remember, it’s not just for homeowners who are short selling. If you own more than 2.5 acres and are losing the home to foreclosure, financial institutions will probably sue you for the balance after the auction.

For the story, see Short selling: You better not own more than 2.5 acres.

NYC Pols, Housing Officials, Advocates Express Ire As Local Bank Continues Dumping Delinquent Debt Secured By Violation-Riddled Apartment Bldgs

In The Bronx, New York, Crain's New York Business reports:
  • In the latest in a series of note sales on distressed properties by New York Community Bank, it has unloaded the mortgage on three foreclosed Bronx buildings riddled with code violations, and once again drawn the ire of city officials, politicians and housing advocates.
  • In the last year, the bank has sold the mortgages on three dozen buildings “that had significant distress on them,” said RuthAnne Visnauskas, deputy commissioner for development at the city's Department of Housing Preservation and Development.
  • There's obviously nothing wrong with a bank selling a mortgage, but to have 36 buildings with significant code violations have mortgages sold…there should be more involvement on the side of bank to make sure violations are getting corrected and that they don't let it slide just to get it off their books,” Ms. Visnauskas said. “It doesn't feel like the right responsibility nexus.”

For more, see Bronx debt sale triggers storm of protest (Sale of notes on three foreclosed Bronx buildings riddled with code violations blindsides city officials who had been working to find buyer able to fund repairs).

Sacramento DA: Local Man Pocketed Illegal Upfront Fees In Running Loan Modification Racket

From the Office of the Sacramento County, California District Attorney:
  • District Attorney Jan Scully announced [] the arrest of 56 year-old Rodney Andrews of Elk Grove. Andrews operated Andrews Investment Group, which offered loan modification services. It is alleged that in conducting loan modification services, Andrews collected illegal upfront fees.
  • In 2009, the California Legislature passed a law prohibiting this type of conduct to prevent individuals from preying on vulnerable borrowers facing foreclosure or unaffordable mortgage payments.
  • Anyone with further information regarding Rodney Andrews and Andrews Investment Group is asked to contact the Sacramento County District Attorney’s Office Real Estate Fraud Unit at (916) 874-9045.

Go here for the Sacramento County DA press release - Rodney Andrews.

Jury Slaps S. California Woman With Financial Elder Abuse, Felony Grand Theft, UPL Convictions In $30K Foreclosure Rescue Ripoff Of Senior Couple

In Santa Barbara, California, the Santa Barbara Independent reports:
  • A Santa Barbara jury [] found Denise D'Sant Angelo guilty of embezzling $30,000 from an elderly couple whose home was about to go into foreclosure. The bespectacled fraudster, convicted last year of lining her pockets with money meant to save housing for a group of nuns, convinced the husband and wife she was skilled in the ways of financial and legal maneuvering and could save their home if they paid her.
  • She didn't, and Deputy District Attorney Brian Cota proved in court that D'Sant Angelo used the money to pay for her rent and other personal expenses.(1)


  • Judge Frank Ochoa granted Cota's request that D'Sant Angelo's bond be forfeited and she be immediately taken into custody. He argued she's a threat to the public and showed herself willing to continue scamming people while out on bail. Ochoa agreed, and D'Sant Angelo was lead out of the courtroom in handcuffs shortly after the jury was dismissed.
  • Cota said immediately after the verdicts were read it was telling that the jury, after deliberating for only three hours, reached a unanimous decision after listening to D'Sant Angelo tell her side of the story on the stand for four days. During closing remarks, Cota called D'Sant Angelo a “textbook case of a con artist, plain and simple,” and that she “gained [the victims'] confidence in order to steal their money.”

For the story, see Nun Scammer Found Guilty of Financial Elder Abuse (Jury Convicts Denise D'Sant Angelo on 12 Felony Counts).

(1) According to the story, the jury convicted D'Sant Angelo on:

  • six counts of felony financial elder abuse,
  • six counts of felony grand theft,
  • one count of misdemeanor unlawful practice of law,
  • the special allegation that she committed the crimes – spread out over the course of a year-and-a-half – while she was out on bail during her prior embezzlement case.

If she receives the maximum sentence this time, D'Sant Angelo faces 11 years in prison.

Texas Man Bagged For Allegedly Pocketing Cash, Passing Himself Off As Lawyer Providing Foreclosure Rescue Services

In Williamson County, Texas, KXAN-TV Channel 36 reports:
  • A Williamson County man is arrested after allegedly fraudulently posing as an attorney. The Williamson County Sheriffs office was contacted after Ray Echavez filed several documents with the Williamson County Clerk’s Office. Clerks in the office did not believe that Echavez was a lawyer.
  • Deputies contacted the man named in the document. According to the affidavit, the victim said that he met Echavez through a realtor and agreed to pay $2,500 for help in stopping the foreclosure of his Cedar Park home. The victim said he received legal advice and even appeared in court with Echavez, where a judge refused to grant an application for a restraining order against the foreclosure company.
  • The victim also said there was paperwork where his signature was forged. Investigators also believe that Echavez at one point called deputies attempting to impersonate the victim. Echavez is charged with falsely holding oneself out as a lawyer, a third degree felony.

Source: Man posing as attorney arrested (Man allegedly paid $2500 for legal advice).

Foreclosure Fraud Complaints Targeting Attorneys Flood Florida Bar

The South Florida Sun Sentinel reports:
  • Complaints about foreclosure fraud are pouring into The Florida Bar, with four times more cases pending today than six months ago, as property owners trying to save their homes increasingly take on their banks and their lenders' lawyers.
  • The Bar, which regulates lawyer conduct in Florida and most states, has opened 202 foreclosure fraud grievance investigations since November, with 226 now pending. Such complaints target lenders' attorneys, some of whose practices process thousands of foreclosures a month.
  • These practices, nicknamed "foreclosure mills," have faced accusations by homeowners and state regulators of allegedly submitting false or misleading paperwork, and having employees "robo-sign" piles of documents without verifying them.


  • Yet among the 46 foreclosure fraud cases closed so far, none have resulted in any sanctions against attorneys — including David J. Stern, whose Plantation operation once employed more than 1,000 people. Stern, who is the target of a civil investigation by the Florida attorney general, also has a Bar complaint against him that was opened last year.


  • Bob Jarvis, a law professor at Nova Southeastern University, said the lack of Bar disciplinary action — such as disbarments and suspensions regarding foreclosure fraud — will "lend credence to those who say the Bar is incapable and someone else should regulate lawyers."

For more, see Foreclosure fraud complaints flood Florida Bar but no lawyer reprimands so far.

Chicago-Area Lawmaker Suspects House Speaker's Procedural Move To Kibosh Automatic Homestead Property Tax Exemption Renewal For Cook County Seniors

In Chicago, Illinois, the Chicago Tribune reports:
  • A measure to save senior citizens in Cook County the hassle of reapplying each year for a property tax break is languishing at the Capitol, and its fate may be sealed because House Speaker Michael Madigan opposes it.
  • Senior homeowners used to get the special tax exemption automatically renewed, but the General Assembly ended that practice last year as part of a broader tax relief package.
  • This year, some lawmakers tried to go back to the old way, allowing nearly 300,000 homeowners 65 and older to get the benefit without filling out a form every year. The idea passed the Senate 54-0.
  • But when the bill made it to the House, it got shunted into a three-member subcommittee. There, two of Madigan's top lieutenants — downstate Democratic Reps. Frank Mautino, of Spring Valley, and John Bradley, of Marion — voted against it. That was a partisan political maneuver aimed at smothering the legislation, according to sponsoring Rep. Sidney Mathias, R-Buffalo Grove. "I suppose that way only two people have to say they voted 'no.' And they were, if I recall, not from Cook County. So, yes, that's why they have all revenue bills in subcommittee rather than have the full committee to vote on it," Mathias said.


  • New county Assessor Joe Berrios, who fears up to 90,000 seniors are on the verge of losing tax breaks because they haven't reapplied this year, said he will try to persuade Madigan, a longtime political ally, to change his mind. Berrios, who doubles as county Democratic chairman, said he plans this week to lobby Madigan, the longtime Illinois Democratic Party chairman who usually can pass or kill a bill at will.

For more, see Push to make senior tax break automatic stalls in House (Speaker Michael Madigan opposes benefit for Cook County seniors).

Ex-Foreclosure Mill King Says Servicers Stiffed Him Out Of $34M+

Housing Wire reports:
  • Foreclosure king no more, David J. Stern is fighting back against former clients whose business once elevated him to one of the richest and most well-known default services lawyers in the country.
  • The fight is taking place largely in state and federal courtrooms via 25 lawsuits where Stern alleges that the biggest names in the mortgage industry owe him more than $34 million in unpaid invoices. The fight includes at least two major mediation cases, as well.

For more, see David J. Stern launches legal battle against nation's biggest mortgage servicers.

See also, Broward/Palm Beach New Times: David J. Stern Employs Gigantic Balls and Asks for Money in Possibly Shady Cases his Firm Handled.

Friday, May 20, 2011

Sacramento-Area Foreclosure Rescue Operator Gets 32 Months For Role In Fractional Interest Deed Transfer Bankruptcy Scam

In Sacramento, California, The Sacramento Bee reports:
  • Charles C. Jamison assured potential customers he was a foreclosure stopper, someone who could, for a fee, save their homes from trustee sales. It worked for a while, until federal fraud stoppers stepped in. The 30-year-old Citrus Heights resident pleaded guilty in February and was sentenced Tuesday to two years and eight months in prison.

This is the scheme to which he admitted:

  1. Distressed homeowners in the Sacramento region received fliers in which Jamison, using an alias, promised he could, through a program he called "Stop Now," halt an impending sale.

  2. The charge: $1,000 a month, and he claimed that included mortgage payments.

  3. Between July 2007 and May 2009, he persuaded desperate people to take desperate measures. Via notarized and recorded grant deeds, they transferred partial interests in their homes to fictitious entities created and controlled by Jamison.

  4. Under the names of those entities, he then filed petitions in the U.S. Bankruptcy Court in Sacramento, resulting in automatic stays of foreclosure proceedings.

  5. The lenders were delayed in foreclosing on properties in default, while being forced to pay lawyers to contest the sham bankruptcies.

  6. According to a written plea bargain, "a reasonable estimate of the loss to the financial institutions cannot … be determined." Prosecutors and Jamison agreed his gain from the rip-off was between $120,000 and $200,000.

Source: Man gets prison term in foreclosure rip-off.

See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

San Bernardino DA: Foreclosure Rescue Operator Took Illegal Upfront Fees, Duped Homeowners Into Signing Over Deeds, POAs In Sale Leaseback Ripoffs

From the Office of the San Bernardino County, California District Attorney:
  • On Tuesday, May 10, 2011, Investigators from the San Bernardino County District Attorney’s Office Real Estate Fraud Prosecution Unit arrested Yunuen Medina, 26, of Corona, California near her residence.
  • Medina worked for Home Recovery Trust, which operated an illegal loan modification business. The scheme involved taking upfront fees from the victims, having them sign Specific Power of Attorneys, in some cases Quitclaim Deeds, placing their properties into the Michael Martinez Trustee, and having the victims then make monthly payments, payable to "Home Recovery Trust."
  • On Wednesday, April 20, 2011, the founder and owner, Luis Miguel Macias was arrested and currently remains in jail. Since his arrest, numerous victims have come forward from Riverside, Los Angeles, Ventura Counties, and from as far north as Reno, Nevada. This is an ongoing criminal investigation and more arrests are expected.
  • Macias’ victims are usually Spanish speaking and unaware of the California Loan Modification Law, under California Civil Code, § 2944.7, which went into effect October 11, 2009. Medina has a no bail INS hold.

For the San Bernardino County DA press release, see Corona Woman Arrested for Real Estate Fraud.

Rockland County Clerk Offers Free Scam Alert In Move To Minimize Use Of Forged Land Documents To Steal Houses, Equity Out From Under Local Homeowners

In Rockland County, New York, The Journal News reports:
  • A new program can help alert Rockland County residents about potential scams that target their home and property. Called PropertyCheck, the software program is available through the County Clerk's Office. It works by alerting residents via email whenever a property transaction is recorded in their name, County Clerk Paul Piperato said.
  • "It's about trying to protect our residents," Piperato said. "A person may be unaware that this is going on. This helps them find out."
  • Rockland County District Attorney Thomas Zugibe said the new program could have helped prevent recent incidents when forged deeds and mortgages were filed in an unsuspecting property owner's name.
  • "All too often, property owners are unaware or surprised when a lien is filed on their property, or other illegitimate documents are filed in their name," Zugibe said. "Had this tool been in place over the past few years ... that never would have happened."
  • Rockland County Executive Assistant District Attorney Gary Lee Heavener said there are dozens of types of property scams. A lot of scams can be prevented if a property owner quickly finds out about a transaction in his name, which can also allow authorities to get involved sooner, Heavener said.
  • In some cases, a scammer will apply for and receive a mortgage and even pay the mortgage for several years to prevent discovery of the crime, Heavener said. Years can go by until the unsuspecting property owner receives a lien or foreclosure notice. "No one knows about it until someone knocks on the door," Heavener said.
  • But it can take months or years to straighten out all the legal paperwork in such cases as the rightful property owners work to clear their name and credit with banks and other lenders, even though they did nothing wrong, Heavener said.(1)

For more, see Rockland offers free scam-alert service for property owners.

(1) Typically, it's up to the victimized homeowner to file a civil lawsuit known as a quiet title action, in which he/she has the burden of proving that the rogue land documents are forgeries, in order to remove any 'clouds', or claims (either legitimate or purported) on the title and otherwise clear up the mess and reclaim his/her home title.

Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice

In a relatively short and sweet ruling reversing another lower court screw-up in a foreclosure case, a Florida appeals court held that a defendant is entitled to recover her attorney’s fees as a prevailing party under subsection 57.105(7), Florida Statutes (2009), after the court granted a motion to dismiss a mortgage foreclosure action and dismissed the case without prejudice.

While, on its face, there doesn't seem to be anything particularly ground-breaking about this ruling in that it appears to merely reaffirm and reinforce long-standing law in Florida,(1) it nevertheless serves as a valuable reminder that:
  • Homeowners should not hesitate to hammer lenders with a claim for reimbursement of their legal fees after being forced to defend themselves in a foreclosure action where he/she successfully fends off a foreclosure action - particularly if the foreclosing plaintiff lacked standing to file the lawsuit in the first place,
  • Foreclosure defense attorneys who are not already seeking reimbursements from banks for their legal fees on behalf of their clients after successfully scoring a dismissal of a foreclosure action (either with or without prejudice) had better start doing so, if for no other reason, to minimize their malpractice exposure for failing to assert all possible claims their clients may have against the rogue lender/loan servicer, and
  • Non-profit law firms which take these cases on a pro bono basis should also submit a claim for legal fees (if they are not already doing so), applying a reasonable hourly billing rate to the amount of time spent defending these cases (hopefully, this could provide a modest source of revenue to help keep their operations going, in light of the budget cuts being made by the Federal and state governments and others who provide sources of funding for their operations). Further, they should also seek approval of the use of a contingency fee risk multiplier in calculating their fees (see Bank of New York v. Williams, 979 So.2d 347 (Fla. 1st DCA 2008), approving a contingency fee multiplier of 2.5 in determining the tab for homeowner's legal fees that the improperly foreclosing lender was belted with).
Representing the homeowner was Enrique Nieves, of Ice Legal, P.A., Royal Palm Beach, FL.

For the ruling, see Nudel v. Flagstar Bank, FSB, No. 4D10-3001 (Fla. App. 4th DCA, May 18, 2011).(2)
(1) See Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137 (Fla. 1st DCA 1999) (bold text is my emphasis):
  • The general rule is that "when a plaintiff voluntarily dismisses an action, the defendant is the prevailing party." See Thornber v. City of Ft. Walton Beach, 568 So. 2d 914, 919 (Fla. 1990). Further, "it is well established that attorney's fees are properly awarded after a voluntary dismissal where such award is provided for by statute or agreement of the parties." See Century Construction Corp. v. Koss, 559 So. 2d 611, 612 (Fla. 1st DCA 1990), review denied, 574 So. 2d 141 (Fla. 1990). See also Boca Airport, Inc. v. Roll-N-Roaster of Boca, Inc., 690 So. 2d 640, 641 (Fla. 4th DCA 1997), review dism'd, 698 So. 2d 543 (Fla. 1997)("for purposes of a prevailing party attorney's fees statute, a voluntary dismissal by the claimant makes the opposing party a 'prevailing party' as to the issue of entitlement to fees").
In addition, in Florida, where an agreement allows for an attorney fee award to one of the contracting parties (a one-sided attorney fee provision), state statute mandates an award of prevailing party attorney's fees to the other party under the reciprocity provisions of section 57.105(7), Florida Statutes; Landry, supra. (Mortgages almost always contain a provision that allow a lender to tack on its legal fees to the amount owed by the borrower when bringing litigation to enforce its rights. Accordingly, by reason of section 57.105(7), the homeowner likewise would be entitled to a recovery of his/her attorney's fees from the losing lender).

Further, foreclosure mill law firms and other attorneys bringing foreclosure actions on behalf of lenders that get summarily kiboshed due to a lack of standing could be ordered to ante up part of the homeowner's legal fees out of their own pockets by reason of section 57.105(1), Florida Statutes:
  • Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee, including prejudgment interest, to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:

    (a) Was not supported by the material facts necessary to establish the claim or defense; or
    (b) Would not be supported by the application of then-existing law to those material facts.
This tool could possibly act as a deterrent to foreclosure mills and other attorneys bringing cases when they lack the proper paperwork at the time they file their legal actions.

(2) From the court ruling (bold text is my emphasis):
  • Additionally, Nudel was entitled to recover her attorney's fees. The mortgage between Nudel and Flagstar entitled Flagstar to reasonable attorney's fees for enforcement. By operation of subsection 57.105(7), the contractual provision also allows attorney's fees to Nudel if she is the prevailing party. See § 57.105(7) ("If a contract contains a provision allowing attorney's fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney's fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.").

    Nudel is the prevailing party within the meaning of subsection 57.105(7). This court has held that a plaintiff's voluntary dismissal makes a defendant a "prevailing party" in the dismissed action even where the plaintiff refiles the case and prevails. In Alhambra Homeowners Ass'n v. Asad, 943 So.2d 316, 317-18 (Fla. 4th DCA 2006), an association sued some of its homeowners, but voluntarily dismissed its lawsuit without prejudice before a summary judgment hearing. The association subsequently re-filed the suit after unsuccessful mediation talks. Id. at 318. In the other, dismissed action, the homeowners moved for prevailing party attorney's fees. Id. The circuit court found the homeowners to be the prevailing parties and awarded them fees. Id.

    Following Thornber v. City of Fort Walton Beach, 568 So.2d 914 (Fla. 1990), this court affirmed. Id. at 318-20. We held that the homeowners were "entitled to recover attorney's fees under a statute awarding fees to the prevailing party in litigation after the plaintiff took a voluntary dismissal without prejudice." Id. at 317. This was so "even though the plaintiff subsequently refiled the identical lawsuit and ultimately prevailed." Id.

    For the purpose of determining a "prevailing party" under section 57.105(7), we see no reason to distinguish between a voluntary dismissal without prejudice and a court's involuntary dismissal without prejudice. This same conclusion was reached in Bank of New York v. Williams, 979 So.2d 347 (Fla. 1st DCA 2008), where the first district affirmed an award of prevailing party attorney's fees on facts similar to those in this case. There, the bank sued the defendant to foreclose a mortgage. Id. at 347. The defendant moved to dismiss because the bank failed to show that it owned the mortgage and promissory note and, thus, it lacked standing to sue. Id. The court dismissed a complaint and amended complaint without prejudice; "[w]hen the Bank declined to file a second amended complaint, the trial court dismissed the amended complaint with prejudice." Id. The bank did not appeal this order, but instead instituted a new foreclosure action. Id. In the first action, the court awarded the defendant prevailing party attorney's fees and costs. Id.

    On appeal, the bank argued that, "because the same factual and legal issues raised in the dismissed action [were] also the subject of the new litigation, [the defendant] [could] [not] be the prevailing party." Id. at 347-48. Relying on a voluntary dismissal without prejudice case, State ex rel. Marsh v. Doran, 958 So.2d 1082 (Fla. 1st DCA 2007), the first district rejected the bank's argument. Id. at 348.

    "The refiling of the same suit after the voluntary dismissal does not alter the appellees' right to recover prevailing party attorney's fees incurred in defense of the first suit." Id. (quoting Doran, 958 So. 2d at 1082 (citing, inter alia, Alhambra Homeowners Ass'n, 943 So. 2d at 319)). Accordingly, the court held that the defendant was the prevailing party and affirmed her award. Id. We agree with Williams and conclude that Nudel was a prevailing party entitled to recover attorney's fees.
(It should be noted that, in Bank of New York v. Williams, 979 So.2d 347 (Fla. 1st DCA 2008), noted above, the court also approved the use of a contingency fee multiplier of 2.5 in determining the amount of the homeowner's legal fees that the improperly foreclosing lender was hammered with.)

"See No Evil, Hear No Evil" Broward County Court Chief Quits Post; Follows The Money By Hopping Aboard Recently-Slammed Foreclosure Mill

In Fort Lauderdale, Florida, The Examiner reports:
  • In a move that is sure to stun the legal community, Broward County Circuit Court Judge Victor Tobin has notified Governor Rick Scott of his intent to resign as a Judge of the Seventeenth Judicial Circuit effective June 30, 2011.
  • In an after-hours e-mail sent to all judges, judicial assistants, and the court administrator, Judge Tobin stated:

    Late this afternoon, I notified Governor Scott that I would be resigning as a Circuit Court Judge effective June 30, 2011. Effective July 1, 2011, I will return to private practice with the Law Offices of Marshall C. Watson. I wish to express my sincere thanks to each judge for permitting me the honor of being your Chief Judge during the last four years. I appreciate the confidence you placed in me.

    Vic Tobin

  • On March 25th, Attorney General Pam Bondi announced a settlement against attorney Marshall C. Watson and his law firm for alleged improprieties in the prosecution of foreclosure cases throughout Florida. The Law Offices of Marshall C. Watson is one of the largest foreclosure firms in Florida.
  • The settlement is a first of its kind and stems from an investigation into the alleged deceptive practices of Florida foreclosure mills. It calls for a $2 million payment and imposition of certain requirements to conduct business. $1 million of that payment will be contributed to the Florida Bar Foundation to continue the Florida Attorney General Mortgage Foreclosure Grant Program.

For more, see Broward Chief Judge Vic Tobin Quits - Joins Law Offices of Marshall C. Watson.

See also:

For an earlier post referencing Judge Vic Tobin, see Fort Lauderdale-Area Court System Not Immune To 'Kangaroo-Itis' In Foreclosure Actions As Local Chief Judge Takes "See No Evil, Hear No Evil" Posture.

DC Feds Pinch Escrow Agency Owner In Alleged Serial Refinancing Scam; Accused Of Failing To Terminate Existing HELOC, Then Borrowing Against It

From the Office of the U.S. Attorney (District of Columbia):
  • Ronald Johannes Sneijder, 48, a former owner of a title and escrow company based in the District of Columbia, has been indicted on federal charges relating to mortgage fraud. The total amount of loans was approximately $1,829,000.


  • According to the indictment, Sneijder was the manager and majority owner of a title and escrow company known as Red Box Settlements [in] Washington, D.C. On about January 13, 2004, Sneijder purchased a residence at 1325 Independence Avenue SE. About a month later, he refinanced the loan through Wells Fargo Bank, obtaining a home equity line of credit with a maximum credit limit of up to $575,000.
  • In February 2005, the defendant sought a $581,000 refinance loan from First Savings Mortgage Corporation, using as collateral his house at 1325 Independence Avenue SE, which was already encumbered with the home equity line of credit from Wells Fargo. First Savings Mortgage Corporation approved the loan on the condition that the Wells Fargo line of credit would be paid off and closed and the lien in the public record be “released” so that no additional money could be borrowed on the Wells Fargo line of credit, and so that there would be no other loans that would take precedence over the First Savings Mortgage Corporation loan.
  • After settlement, Sneijder paid off the Wells Fargo line of credit but did not close it. Thereafter, from March 2005 to November 2006, he again borrowed money against the Wells Fargo line of credit. He obtained cash advances up to approximately $558,000 by the end of November 2006.
  • The indictment further alleges that in November 2006, Sneijder sought a $675,000 loan from Wachovia Bank using as collateral 1325 Independence Avenue SE, which was already encumbered with the Wells Fargo home equity line of credit and the First Savings Mortgage Corporation loan.
  • Wachovia approved the loan on the condition that the Wells Fargo line of credit would be paid, closed, and the Recorder of Deeds be notified of the closure so that no additional money could be borrowed on the Wells Fargo line of credit. The defendant paid down less than half of the line of credit, and again failed to close the Wells Fargo account.
  • From January to August 2007, Sneijder again continued to borrow money against the Wells Fargo line of credit for a total amount due and owing of approximately $573,000.

  • According to the indictment, Sneijder failed to repay the approximate $573,000 Wells Fargo line of credit, the $581,000 First Savings Mortgage Corporation loan, and the $675,000 Wachovia loan, resulting in foreclosure of 1325 Independence Avenue SE, the proceeds of which were insufficient in value to repay the approximate $1,829,000 loaned to the defendant.
  • The indictment further alleges that the defendant took about $216,000 from client escrowed money from May to November 2006.

For the U.S. Attorney press release, see Former Title and Escrow Agent Indicted for Mortgage Fraud (Case Involves More Than $1.8 Million in Loans).

Southern California Homeowner Boots MERS In Illegal Foreclosure

In Calexico, California, the Imperial Valley Press reports on the victorious homeowner in the recent U.S. Bankruptcy Court ruling in In re Salazar:
  • Calexico resident Eleazar Salazar built his home in 2001 using a loan and received a loan modification in 2009. He was making steady payments when in December 2009, after just making a payment, he received a notice saying his home was being foreclosed on. The family was shocked. They contacted The Advocates’ Law Firm LLP, and were assured by firm partner Francisco Aldana that everything would be all right.
  • In the case, the U.S. Bank National Association had foreclosed on Salazar’s home by exercising the power of sale under the deed of trust.Salazar filed to invalidate the foreclosure sale and seek damages while U.S. Bank filed to regain possession of the home through an unlawful detainer action against Salazar.
  • On April 11, Judge Margaret Mann of the U.S. Bankruptcy Court for the Southern District of California, ruled on the case, saying, among several points, that the bank’s use of Mortgage Electronic Registration System couldn’t replace statutory foreclosure laws.
  • This is an important decision — today we helped kick open the door in our ongoing efforts to stop wrongful foreclosures,” Aldana wrote in a press release after the decision.

For more, see Homeowner wins foreclosure fight against bank.

Thursday, May 19, 2011

JP Morgan Chase Breaks Into C. Florida Woman's Home A 2nd Time; Clueless Cops Refuse To Do Anything About It, Loan Servicer Dodges Media Phone Calls

MSNBC's The Dylan Ratigan Show reports on the ostensiby out-of-control JP Morgan Chase Bank which, for a second time, had one of its property preservation contractors break open the doors and change the locks on the home of Orange County, Florida homeowner Nancy Jacobini, despite the fact that Ms. Jacobini is apparently current on her loan modification payments.(1)

Among the highlights of the story is the claim that the local cops are so out-of-touch with the problem of banks prematurely breaking into homes that may be in or near some stage of foreclosure that they refuse to do anything about it, apparently taking the stance that the matter is nothing more than a 'civil matter.'(2)

According to MSNBC's Ratigan, JP Morgan Chase was called to participate in the interview, but they are dodging his staff's phone calls.

For the story, see Breaking In: Lenders Overstepping Their Bounds?

Go here for earlier posts on the plight of Nancy Jacobini in her relationship with her mortgage loan servicer, JP Morgan Chase.

(1) For examples of filed lawsuits involving illegal bank break-in, "trash-out" & 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:

(2) This isn't the first time that cops have washed their hands when investigating real estate-related these crimes. See:

NC AG Scores Temporary Halt Of Outfit Clipping Distressed Homeowners Out Of Upfront Fees For Foreclosure Help; Seeks Permanent Shutdown

From the Office of the North Carolina Attorney General:
  • A Winston-Salem foreclosure rescue operation that targeted financially distressed homeowners with claims to help them save their homes from foreclosure is barred from collecting any money from consumers for foreclosure assistance or loan modifications, Attorney General Roy Cooper announced.
  • This kind of scheme robs struggling homeowners of valuable time and hard-earned money that could be used toward legitimate help that could put them back on their feet again,” Cooper said. “My office will continue to target outfits that violate the law by charging an upfront fee for their service.”
  • Last week, Wake County Superior Court Judge Howard Manning agreed with Cooper’s request to temporarily bar Edward “Eddie” Phillip Long, Jr., doing business as Credit Enhancement Services, from offering foreclosure and loan modification services, and from charging advance fees for credit repair and credit score improvement services. Cooper is seeking to permanently shut down Long’s foreclosure assistance business and win consumer refunds and civil penalties.

For more from the North Carolina AG press release, see AG Cooper moves to stop phony foreclosure assistance scheme (Forsyth County operation makes promises to save homes but fails to deliver).

For the lawsuit, see State of North Carolina v. Long.

Foreclosure Rescue Operator Faces Arraignment For Allegedly Peddling Mortgage Elimination Racket Involving Phony Land Document Filings

In Oakland, California, KGO-TV Channel 7 reports:
  • A Las Vegas man is scheduled to be arraigned this week on 29 counts of mortgage fraud. He has been indicted in Alameda County on charges of cheating distressed homeowners out of thousands of dollars. It's a story 7 On Your Side broke earlier this year, and now our investigation shows evidence the program extends far beyond the East Bay.


  • [Alan David] Tikal[, owner of a so-called mortgage reduction company,] was extradited from Las Vegas where he was arrested and made his first court appearance in Alameda County late last month. He is charged with conspiring to commit real estate fraud, mortgage security fraud and filing false documents. Prosecutors say Tikal's mortgage rescue program promised to pay off a homeowner's mortgage and refinance at a 75 percent savings.

For more, see More homeowners claim mortgage rescue fraud.

For an earlier post on Tikal's indictment, see Bay Area Grand Jury Indicts Four In Alleged Foreclosure Rescue Racket; Filed Fraudulent Documents In Bogus Attempts To Stall Legal Process: DA.

Fed. Court Affirms 29+ Year Sentence For F'closure Rescue Operator In Rackets That Local Cops, DAs, Texas AGs Cluelessly Minimized As 'Civil Matters'

The 5th Circuit Court of Appeals recently affirmed a 350-month prison sentence for Texas woman Rosario Divins (aka Rosie Divins), a notorious upfront fee foreclosure operator who, by reason of the length of her sentence, has apparently reached the end of an inglorious, 30+ year career screwing financially distressed people by falsely promising to keep their homes out of foreclosure in exchange for exorbitant fees.(1)

Congratulations to the Texas Feds for properly pursing this racket that, according to a September, 2009 San Antonio Express News story, local cops, local DAs, and more than one Texas AG washed their hands of, dismissing the complaints as "civil matters."(2)

For the ruling, see U.S. v. Divins, No. 09-50855 (CA-5, May 16, 2011) (unpublished).

Go here for earlier posts on the now-defunct Rosie Divins.

(1) The 3-judge panel describes Divins and her conduct in these excerpts (bold text is my emphasis):
  • For the past 30 years, Divins has made a living swindling financially distressed people by promising (falsely) to keep their homes out of foreclosure in exchange for exorbitant fees. She has been brought to court and sanctioned on four separate occasions for this conduct.

    Various court orders, issued in 1994, January 2000, June 2000, and September 2003, permanently enjoined Divins from the unauthorized practice of law, including offering or providing bankruptcy services, making representations to assist or stop foreclosure, and making representations to provide mortgage brokering services to assist or stop foreclosure.

    In February 2006, the district court learned that Divins was violating these orders. The court initiated criminal contempt proceedings, which the government supplemented with charges of mail fraud. The matter went to trial. At least eight individuals testified against Divins, including Jackie Guerrero, Guadalupe Dominguez, Stanley Miele, Tommy Bordelon, Lupe Monreal, Maria Martinez, Issac Vela, and Juana Anderson.

    Their stories were similar. Each had faced the possibility of foreclosure due to some sort of financial hardship brought about by an illness or a lost job. Divins had contacted them via mailed flyers promising that she could keep them out of foreclosure in exchange for thousands of dollars in up-front fees. In each case, Divins either had absconded with the money or refused to return it when she failed to secure the clients relief from foreclosure. Many of Divins' victims ultimately spent thousands more on real attorneys to undo the damage Divins caused.


  • The evidence showed that Divins solicited vulnerable individuals facing foreclosure by mailing flyers to them to further her scheme. The flyers stated that she could stop foreclosure. Each individual contacted Divins based on the representations made in the flyers. The victims would then pay Divins sums of money, usually in cash, in exchange for promises from Divins that she would stop foreclosure, negotiate with the mortgage company, and sell homes or refinance mortgages.

    Though there was testimony that foreclosures were initially delayed, there is no evidence that Divins performed her promised actions. The evidence showed that she continually requested more money and then avoided contact with these individuals when her fraudulent actions were suspected or discovered. Mortgage companies never received the money on behalf of her "clients."

    Additionally, Divins did not inform any of these victims that she had been prohibited by the bankruptcy court from representing that she could assist in foreclosure or bankruptcy proceedings. Divins was repeatedly warned by the bankruptcy court of the consequences if she failed to comply with the court's orders. These warnings occurred in bankruptcy proceedings where it was apparent that the individuals involved had suffered loss as a result of her actions.

(2) See Woman sentenced to almost 30 years for fraud (Besides ripping off homeowners, Divins had a long record of harassment and threats):

  • The 350-month sentence imposed by U.S. District Judge Fred Biery was an exclamation point on a case that screamed a question even Biery asked: Where were state and local authorities when Divins was dishing out various forms of fraud for more than 30 years? The judge also ordered restitution, but acknowledged it wouldn't be likely any victim would be repaid.
  • An investigation by the San Antonio Express-News found disinterested police agencies, Texas attorneys general, assistant district attorneys and others nudged aside complaints as civil matters between Divins, 55, and her victims. Some of the homeowners ultimately lost their houses while other managed to stave off foreclosure through no help from Divins.


  • Biery noted that it wasn't until Divins' shenanigans spilled into federal bankruptcy court that she was finally caught. The FBI investigated her after she was found in contempt in bankruptcy court and violated orders to stop her misleading, direct-mail foreclosure-rescue ads. Biery also read her 32-year criminal record of harassment, stalking and threats, including one case where she called one person 50 times.
  • "Other than that, you've been a model citizen," Biery said, sarcastically. [... B]iery said he admonished her for taking advantage of desperate people who shared her cultural, ethnic and religious background and trusted her.

AZ Lawmaker In F'closure Drops Proposal To Hold Banks Accountable During Loan Mod Negotiations After Scoring 50% Loan Principal Reduction

In Phoenix, Arizona, Blog For Arizona reports (based on a KPHO-TV Channel 5 story):
  • Republican Rep Carl Seel got a "principle reduction loan modification" on his home loan to the tune of $100,000 while he was facing foreclosure. That amounted to more than half the principle he owed.
  • Before his principle was cut in half, Seel had planned to propose an amendment to hold banks accountable during foreclosure negotiations. You know, protection for people like him. But after he got the loan reduction, he dropped the amendment.
  • Seel swears there was no quid pro quo. I'm sure he's telling the truth, in a literal sense, anyway. I doubt there was a deal that he would drop the amendment in return for a $100,000 loan reduction.
  • But there are two other options, both of which give off a very bad odor.

For more, see Probably not a bribe. But was Carl Seel's $100,000 mortgage reduction a gift?

Would-Be Buyers Under Rent-To-Own Program Threatened With Foreclosure Over Landlord's Failure To Pay Real Estate Taxes

In Cleveland, Ohio, The Plain Dealer reports:
  • Dozens of renters in Cleveland's Glenville neighborhood, whose dreams of home ownership have been threatened by tax delinquencies that are not their fault, received foreclosure letters this week.
  • Huntington National Bank moved last month to foreclose on a loan to Northeastern Neighborhood Homes Limited Partnership II because more than $95,000 in taxes and penalties going back to 2007 had not been paid. The loan is secured by 46 homes built or rehabbed in the 1990s as part of a rent-to-own program that is now in shambles.
  • A letter about the foreclosures from Cleveland Housing Court Judge Raymond Pianka was mailed to the homes, creating panic in the minds of some renters who interpreted the notice to mean they could be evicted or possibly thrown in jail if housing or building codes are violated.

For more, see Foreclosure letter concerns rent-to-own residents in Cleveland's Glenville neighborhood.

Wednesday, May 18, 2011

HUD IG Claims Fraud By Five Biggest Banks Involving Government-Backed Mortgage Loans; Refers Findings To Justice Department

The Huffington Post reports:
  • A set of confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans, four officials briefed on the findings told The Huffington Post.
  • The five separate investigations were conducted by the Department of Housing and Urban Development’s inspector general and examined Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, the sources said.
  • The audits accuse the five major lenders of violating the False Claims Act, a Civil War-era law crafted as a weapon against firms that swindle the government. The audits were completed between February and March, the sources said. The internal watchdog office at HUD referred its findings to the Department of Justice, which must now decide whether to file charges.

For more, see Confidential Federal Audits Accuse Five Biggest Mortgage Firms Of Defrauding Taxpayers.

NY AG Opens Probe Into Mortgage Loan Packaging In Banks' Securities-Peddling Operations

The Wall Street Journal reports:
  • New York Attorney General Eric Schneiderman has opened an investigation into the packaging of mortgage loans into securities, in the latest sign of increased scrutiny of the mortgage industry.
  • Mr. Schneiderman will hold meetings with executives of several major banks, including Bank of America Corp., Morgan Stanley and Goldman Sachs, according to people familiar with the investigation. He intends to discuss securitization of mortgage loans and other mortgage practices and has requested related documents from the firms, these people said. The meetings over securitization are expected to happen in the coming week.


  • Mr. Schneiderman, who took office this year, appears to be continuing in the aggressive footsteps of his predecessors, Andrew Cuomo and Eliot Spitzer. They have a powerful legal tool at their disposal. The 1921 Martin Act, revived by Mr. Spitzer as a weapon against Wall Street, is seen as one of the most potent prosecutorial tools against financial fraud.
  • The sweeping definition of fraud in the Martin Act doesn't require prosecutors to prove intent to defraud, in contrast to federal securities laws. The act has been used to prosecute Wall Street firms for securities manipulation, improper allocation of initial public offerings of stock and misleading stock research on Wall Street.

For more, see New York AG Probes Banks Over Mortgage Securities (requires paid subscription; if no subscription, TRY HERE; or GO HERE, then click appropriate link for the story).

Garden State Feds Squeeze 3rd Guilty Plea In Norhern NJ Sale Leaseback Equity Stripping Scam

From the Office of the U.S. Attorney (Newark, New Jersey):
  • A West Orange, N.J., man who owned and operated multiple foreclosure rescue companies admitted today to his role in a mortgage fraud scheme that defrauded numerous mortgage lenders of over $10 million, U.S. Attorney Paul J. Fishman announced.
  • Ronald Harris Jr., 41, of Piscataway, N.J., pleaded guilty [...] to an Information charging him with one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering.


  • According to documents filed in this case and statements made during Harris’ guilty plea proceeding:
  • Harris owned and operated Harris Capital and Skyline Capital Group, both of which held themselves out as foreclosure rescue companies and operated out of offices in Newark and later, Maplewood, N.J. Harris admitted that he and other individuals, including Harris Capital employee Sterling Bruce, 37, of Newark, fraudulently promised to help homeowners avoid foreclosure, keep their homes, and repair their damaged credit by directing the homeowners to allow title to their homes to be put in the names of third party purchasers, or straw buyers, for approximately six month to one year.
  • Harris told the homeowners that during that time period, he and others would help them obtain more favorable mortgages and improve their credit ratings. The homeowners were told that the titles to their homes would be returned to them.
  • After the homeowners were signed up, Harris, Bruce and others recruited individuals with good credit scores to act as straw buyers of the distressed properties. The straw buyers were told that they were helping someone save his or her home and that they would make money when they sold the property back to the current owner after approximately one year.
  • Once the distressed homeowners and straw buyers were in place, Harris, Bruce, Pia Perkinson, 39, of Parlin, N.J. – a mortgage loan officer at a number of different mortgage loan companies – and others caused loan applications to be sent in the straw buyers’ names to mortgage lenders. To increase the credit-worthiness of the straw buyers and to ensure that they would be approved for the loans, Harris, Bruce, Perkinson, and others submitted loan applications containing material false personal and financial information about the straw buyers, such as misstating their employment, income, and assets.


  • Prior to the closings of these fraudulent transactions, Harris and Bruce regularly filed fraudulent liens for tens of thousands of dollars on the properties. At the closings of the transactions, the liens would be paid off with the proceeds of the fraudulently obtained loans and Harris and Bruce would enrich themselves. Harris admitted that he regularly laundered these loan proceeds through various bank accounts he controlled.
  • In total, Harris and his co-conspirators caused lenders to fund dozens of fraudulent loans that totaled more than $10 million. Of that amount, Harris received approximately $1,145,993.(1)

For the U.S. Attorney press release, see Owner of New Jersey-based mortgage foreclosure rescue companies pleads guilty to $10 million mortgage fraud.

For the formal charges filed in this case, see USA v. Harris.

(1) According to the press release:

  • Sterling Bruce previously pleaded guilty to one count of wire fraud conspiracy relating to his role in the mortgage foreclosure rescue scheme, and is currently scheduled to be sentenced on September 12, 2011;
  • Pia Perkinson also previously pleaded guilty to one count of wire fraud conspiracy; a sentencing date has not yet been determined;
  • Sabir Muhammad, 47, of South Plainfield, N.J., was charged along with Harris in the initial Complaint, and the charges against him remain pending.

BofA Refuses To Cancel Foreclosure Sale Despite Losing Homeowner's Certified Check To Reinstate Loan; Forces Borrower To Scramble To Save Home

In Sacramento, California, The Consumerist reports:
  • CBS 13 has the story of a man who fell behind on his mortgage payments who was told by Bank of America that unless he sent them $4,175 he would lose his house that he had spent years putting work into. So he managed to put together the money and sent it in as a cashier's check. Then the bank lost his check.
  • They told him to just cancel the check and send a new one, but the cashier's check wouldn't become void for 90 days. The foreclosure was scheduled to happen well before then. He had sent the check in by certified mail and so he had proof that Bank of America got it, but they just said, "whoops."
  • Bank of America said they lost the check because it didn't have his loan number on it. But the man says he gave the teller payment instructions when he had them make out the check. The teller was a Bank of America teller.
  • The man was able to send in a new check from a friend and get the foreclosure action stopped, no thanks to BofA.

Source: BofA Loses Check That Would Have Saved House From Foreclosure.

For the CBS 13 story, see The Bank Lost My Mortgage Check And Is Auctioning Off My House.

Tuesday, May 17, 2011

Head Sacramento Fed: Latest Bid-Rigging Convictions "Not Going To Be The Last That You Hear About These Types Of Prosecutions!"

In Northern California, CBS 5 reports:
  • For those who are losing their homes to foreclosure, it’s a bitter pill to swallow. But some homeowners may have lost their homes to investors cheating on the courthouse steps. Richard Northcutt and Yama Marifat are part of a ring of at least six men who have pled guilty to a new kind of foreclosure fraud called “bid-rigging.”
  • It all started on the courthouse steps in Stockton, where there are thousands of foreclosures up for bid. It’s a fast-paced world where cash is king, and the highest bidder nabs the best deal. With that much money swirling, federal officials say some people cheat.


  • It was a temptation Marifat and Northcutt couldn’t resist. Both have admitted to making hundreds of thousands of dollars from the bid rigging scheme. “This is not going to be the last that you hear about these types of prosecutions,” said [U.S. Attorney Benjamin] Wagner.(1)

For more, see New Kind Of Foreclosure Fraud Sweeping California.

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

(1) In Northern California, anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit, the United States Attorney’s Office for the Eastern District of California at 916-554-2700 or the FBI’s Sacramento Division at 916-481-9110.

Servicemember Screwed Over By Court-Appointed Lawyer's Lack Of Action Now Seeks To Undo Foreclosure Sale Of Home Sold Out From Under Him While On Duty

In Tampa, Florida, WFTS-TV/ABC Action News reports:
  • While they are fighting for our nation overseas, some military personnel are losing their homes to foreclosure here at home. In the thick of battle, in the heat of the fight, it's the last thing a GI should have to worry about. While Coast Guardsman Keith Johnson was fighting for our country overseas, he was losing a battle here at home, for his home. A battle, he claims, he had no idea was being waged until the moment he got back and spoke to his wife.
  • "It just boggled my mind. I got back and she said 'the house is basically foreclosed' and I was like 'What do you mean?'" Johnson says.
  • At the same time Johnson and his wife Alysia were negotiating with their lender, Wells Fargo, to modify the mortgage on their Clearwater home, the bank's lawyers were foreclosing on the property, getting a summary judgment, and auctioning it off.


  • The I-Team has uncovered case after case in the Tampa area, around Florida, and the nation where banks have foreclosed on the homes of active duty military personnel. In Johnson's case, Tampa Attorney Jay Passer was appointed by the court to track him down and protect his rights.
  • He said he went to neither their home nor the base to find Johnson. If Passer had only contacted Johnson’s unit at Air Station Clearwater or used the Coast Guard's world-wide personnel locator, Johnson said, "My command would have informed me immediately -- immediately."
  • Instead, Passer sent a letter to the Pentagon. He never received an answer from them. "It was not known to me. It was never explained to me, and I never received a response to any of that," Passer said.
  • With no defenses to the foreclosure filed on his behalf, Wells Fargo obtained a summary judgment and auctioned off Johnson's home.


  • Johnson and his new attorney are now petitioning the court to undo the foreclosure. "We're going to get in front of a judge and I believe the judge is going to undo this sale," says Johnson's attorney Matt Weidner.

For more, including the responses from Wells Fargo and the snoozing court-appointed attorney, see Banks find it easy to skirt federal laws protecting servicemembers from foreclosure (Clearwater Coast Guardsman Fights Foreclosure).

County Official Agrees To Comply With Colorado Law In Handling Left Over Surplus Cash From Foreclosure Sales Belonging To Ex-Homeowners

In Arapahoe County, Colorado, The Denver Post reports:
  • Despite a law that dictates otherwise, Arapahoe County for years has not told homeowners who lost their property to foreclosure that they are entitled to money left over from the sale.
  • Instead, tens of thousands of dollars in overbids that belong to homeowners have sat in a county-controlled account. The money is from funds remaining after the house was sold in foreclosure and the bank note and liens were satisfied.
  • State law says counties must publish notice that they have the money so it can be claimed. If it isn't claimed after five years, the county can keep it.


  • Arapahoe County has published almost none of the required notices since the law took effect in 1990. The county published a notice once, in early 2009, for a foreclosure with an overbid of $6,600, but Treasurer Sue Sandstrom said it's unclear why only that one was handled properly. The money remains unclaimed.
  • State law requires county treasurers to take out five weeks of newspaper ads shortly after a foreclosure sale to announce it has the leftover money.


  • Sandstrom said notices were published properly last week on 15 properties, a practice that will continue. Arapahoe County recently doled out more than $165,000 in overbids to seven homeowners who have lost their property to foreclosure since 2006. That was the result of a Denver Post story last month about how few people know about the money and how counties sometimes do little to find them.
  • Sandstrom, in office since Jan. 1, said her plan now is to also publish the names from the entire five-year period on the county's website as well as in a local newspaper.

For more, see People foreclosed on in Arapahoe County might be owed money and not know it.

Sovereign Citizen Movement, 'Paper Terrorism' & Bogus Lien Extortion Rackets Involving Billion$

CBS' '60 Minutes' recently did a story on the 'sovereign citizen' movement, a a group of Americans that have little regard for the police or the courts and who the FBI lists among the nation's top domestic terror threats. One of the tactics they have been known to engage in when they get thwarted in their attempts to beat the system is referred to as "paper terrorism."

An excerpt:

  • But when those efforts to beat the system fail, a sovereign citizen will often seek retribution. The weapon of choice is paper. For example, when a sovereign has a run-in with the law, they might file a lien or financial claim against the personal assets of the police officer or the judge involved. It's easy to file and you don't even need a lawyer. The sovereign never collects, but the target of the lien can have their credit ruined. The practice has been called "paper terrorism."
  • "I have liens against me in three states in this country for a half a billion dollars," Robert Vosper, the town justice in tiny Rosendale, N.Y., told Pitts. Vosper thought there was some/thing odd about a defendant named Richard Ulloa, who appeared in his court room over a misdemeanor traffic offense.
  • Ulloa refused to cooperate during his arraignment, so Vosper set bail. And that's when Ulloa inundated Vosper's court with paper. "We're talking a couple of pieces of paper?" Pitts asked.
  • "No, no, it was 20, 30 sheets he would crank out on his computer of quasi-lookin' - like if a layperson looked at it, you would say, 'Boy, this guy's pretty good. Look at all the law in here,'" Vosper explained. "But you looked at it and thought what?" Pitts asked. "Gobbledygook," Vosper replied.
  • Eventually, Ulloa and two other sovereign citizens filed liens against Judge Vosper and other local officials in excess of $1.24 trillion. The three men were convicted on federal mail fraud charges.(1)

For the full story, see A look at the "sovereign citizen" movement.

Go here for other posts on sovereign citizens and "paper terrorists."

(1) See Feds Indict Trio In Alleged $1.24 Trillion Bogus Lien Extortion Racket Targeting Government Officials, Bank Executives.

For a civil lawsuit filed in this case that describes this racket in more detail, see County of Ulster, New York, et al. v. Ulloa, et al.

Monday, May 16, 2011

FDIC Head: Bankster Robosigner Screw-Ups "Infected Millions Of Foreclosures"; "Damages ... Could Be Significant & Take Years To Materialize!"

The Wall Street Journal reports:
  • The head of the Federal Deposit Insurance Corp. is warning that flaws may have “infected millions of foreclosures” and questioned whether other regulators’ inquiries into problems at the nation’s mortgage-servicing companies have been thorough enough.
  • We do not yet really know the full extent of the problem,” FDIC Chairman Sheila Bair said Thursday in written remarks submitted to a hearing of the Senate Banking Committee. “Flawed mortgage-banking processes have potentially infected millions of foreclosures, and the damages to be assessed against these operations could be significant and take years to materialize.”
  • Federal and state officials launched numerous investigations last autumn after revelations that, to process foreclosures, banks used “robo-signers” who didn’t review documents prepared by their colleagues. Banking regulators’ have said their reviews of a sample of 2,800 foreclosure cases have found a small number of improper foreclosures.

For more, see FDIC’s Bair: Millions of Foreclosures Could Be ‘Infected’.

In related stories, see:

Unwitting Homebuyer Of MERS-Related REO Told "Don't Move In, There's A Problem!" As 'Crappy-Title Clouds' Darken Over F'closd Houses Thru-Out Michigan

In Three Rivers, Michigan, WWMT-TV Channel 3 reports:
  • A foreclosure mess is putting people's status as homeowners in question. It has to do with a recent Michigan Appeals Court ruling that calls into question thousands of foreclosures. The court says a company called Mortgage Electronic Registration Systems didn't have the right to initiate foreclosures. That company keeps mortgage records.
  • Now, some people who bought foreclosed homes, or homes in the process of foreclosure, are finding themselves in limbo.
  • It's hard to find a replacement for the perfect house,” said Bob Van Zalen. Van Zalen says he'd found the perfect home, a foreclosed home near Three Rivers. Van Zalen closed on it a few weeks ago. “It was typical closing, flawless,” said Van Zalen. “Title company was there, bank was there, realtor was there.” Van Zalen got the keys and an hour later his moving crew and rental truck were ready to go.
  • Standing in line at the rental place, phone rang,” said Van Zalen. “Realtor said 'don't move in there, there is a problem.'” Van Zalen had already gotten the utilities turned on, and even had to rush to the house to stop the cable company from installing service.
  • Three weeks later, and Van Zalen still can't move in. Big questions are being raised about the sale of foreclosed homes related to MERS, the mortgage record company accused of fraudulent practices. Until the mess is sorted out, Van Zalen is in limbo even though he has the keys and is packed and ready to move in. “I have signed documents saying I am the owner,” said Van Zalen.
  • What if I find another house, then this gets straightened out, then I have two homes.” The foreclosure mess is some/thing that the registrar of deeds offices across the State of Michigan and the rest of the country are dealing with.(1)

Source: Foreclosure mess puts homeowners in limbo.

In a related story, see The Battle Creek Inquirer: Michigan appeals court ruling could erase thousands of foreclosures:

  • Debbie Barnett, the owner of the East Lansing real estate company Tomie Raines Inc., said the company already has halted one sale of a MERS-foreclosed home.
  • Not only have people lost their homes under a process the Court of Appeals declared illegal, said Curtis Hertel Jr., the county register of deeds, but "we also have people who have legitimately bought those homes and now are going to have problems insuring the title in the future when they go to sell the property."

In a related post, see Michigan To Join Massachusetts As Real Estate Resale Market Quagmire After Recent State Appeals Court 'Anti-MERS' Ruling?

(1) For more on the crappy title problem in connection with improperly foreclosed homes, see

Grandson: MERS Illegal Foreclosure Forced Sale Of Dying Gandmother's Home; Hope Still Alive In Attempt To Recover Title

In Ingham County, Michigan, WILX-TV Channel 10 reports:
  • Nick Reeser's love for his grandma is written all over him. "Grandma was a huge tigers fan, this is a tribute to her," he said, pointing to a still-healing "D" tattoo on his leg. When she died just weeks ago, she left him her house. So he went to the Register of Deeds' office to get a copy of the deed and mortgage.
  • "He finds out when he got here there had been a foreclosure on his grandmother's house the last few months before she passed away," said Curtis Hertel, Ingham County Register of Deeds. "Nobody was notified, my grandma was in no mental or physical state to make decisions on it," said Reeser.
  • To make matters worse, it was a MERS foreclosure, one of 469 just in Ingham County deemed illegal by the Court of Appeals.
  • "MERS did not own the note, they were in the chain of title but you need to have both to foreclose by advertisement," said Attorney Brian Dailey.
  • Dailey has filed a class action law suit against the Mortgage Electronic Registration Systems company (MERS), saying its crimes are many.(1) "Violating people's rights, trespassing on their property, taking their property when they shouldn't be," he said.

For more, see Illegal Foreclosures Prompt Class Action Suit (Hundreds of homeowners, just in Ingham County, have been illegally foreclosed upon, according to the Court of Appeals).

(1) For the lawsuit, see Depauw v. Mortgage Electronic Registration Systems Inc.

Ex-NH Sale Leaseback Peddler Cops Plea In Equity Stripping Scam After Fleeing State; Undicted Co-Conspirator Remains On The Loose

In Concord, New Hampshire, The Nashua Telegraph reports:
  • A second man accused of operating an elaborate mortgage scheme that fleeced banks out of millions of dollars and people out of their homes pleaded guilty in U.S. District Court this week. Former Nashua resident Walter Bressler, 42, now of Frisco, Texas, admitted this week in U.S. District Court to participating in the scheme and violating federal mail fraud laws, according to the U.S. Attorney’s Office.
  • Prosecutors charge that Bressler helped persuade financially troubled home-owners to sign over the deed to their property with the promise that the homeowners could stay on as tenants, pay rent for two years and then buy the property back at a prearranged price.
  • Instead, the scheme participants resold the homes to “straw buyers,” often in amounts that exceeded the original owner’s loans, according to the U.S. Attorney. Some of the rent money was used to pay off the new mortgages, but the loans eventually went unpaid and the homes fell into foreclosure.
  • The original owners had no “realistic opportunities” to buy their homes back because they had been stripped of equity and encumbered with large, defaulted loans, according to the U.S. Attorney.
  • The first to admit to the scheme was Richard Winefield, of Nashua, a former Re/Max real-estate agent (See Sale Leaseback Peddler Starts "Singing" To NH Feds After Copping Guilty Plea In Equity Stripping, Foreclosure Rescue Conspiracy). Winefield has pleaded guilty to mail fraud and is due to be sentenced June 1.(1)
  • Michael Prieto has been identified by prosecutors as a partner of Bressler’s and Winefield’s, but he hasn’t been charged. Prieto said it was no scheme; rather, a refinancing program that was intended to help struggling homeowners, which would have worked if they had paid their agreed-upon rent.
  • The agreement and the program … was not a scam,” Prieto previously told The Telegraph. “It was designed for its purpose, which was helping people pay off their debts, giving them breathing room, giving them an opportunity to stay in their homes for two years.” Prieto couldn’t be reached by phone or e-mail for this story.(2)

For more, see Former Nashua man admits to mortgage scheme.

Go here for Bressler's plea agreement filed in U.S. District Court.

(1) Congratulations goes to Winefield, who has proven himself to be the clear winner of the "race to the prosecutor's office", "bellying-up" to investigators and spilling his guts in an attempt to take down as many of his co-conspirators and "buy-out" of as much prison time as possible. See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observation, made in the context of drug conspiracy cases, involving the so-called "race to the courthouse/prosecutor's office" which seems equally suited to other types of major, multi-defendant felony cases:

  • In practical terms, drug conspiracy cases have become a race to the courthouse. When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed.

Winefield's cooperation has presumably been of help to the Feds in taking down two other co-conspirators - there is apparently one left on the loose.

(2) Prieto may simply be trying to enjoy his remaining days of freedom. Presumably, now that Winfield and Bressler, as well as a 3rd co-conspirator, Sadie Stanhope Ng, have copped guilty pleas, they have become very cooperative with prosecutors in helping them bag Prieto - especially if it results in a 'downward adjustment' in their expected prison sentences.

Sadie Stanhope Ng, 34, of Quincy, Mass., and formerly of Milford and Bedford, was part of the same conspiracy. See 2nd Suspect Agrees To Go Down In Granite State Sale Leaseback, Equity Stripping Foreclosure Rescue Scam.

Stanhope, Prieto and Bressler were previously sanctioned by state Banking Commissioner Peter Hildreth by a "cease and desist" order in 2007. The trio were fined $10,000, and they and their various limited liability companies were ordered to repay eight homeowners around the state (including two in Nashua) money gleaned from the sale of their properties. They also were ordered to stop being involved in mortgage brokerage or debt adjustment services in the state.

See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals for other incidents that led to criminal prosecutions in sale leaseback deals.