Saturday, June 04, 2011

Woman Gets Probation Over Attempt To Persuade Hubby To Sign Over Home Deed, Divorce Papers By Putting Steak Knife To His Throat & Slashing His Fingers

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A Tamarac woman who held a steak knife to her husband's throat and demanded he sign divorce papers and the deed to their house was sentenced to three years probation Wednesday.
  • Prosecutors dropped an attempted murder charge, and Tamara Strulovici, 53, pleaded no contest to aggravated battery with a deadly weapon. In May 2009, Strulovici approached her husband from behind, put the steak knife to his throat, made her demands and slashed the fingers on his left hand, the Broward Sheriff's Office said.
  • In court Wednesday, Strulovici said through a Russian interpreter that she is "not sure" if she and her husband, James Little, are still legally married. "I heard the rumors that he did apply for divorce," Strulovici said. "I don't do that because I don't have any money."
  • Married or not, Broward Circuit Judge Sandra Perlman ordered that Strulovici have no contact with Little. Strulovici's lawyer said she has no problem with that aspect of her sentence. "He lives out of state and she has no interest of ever having contact with him," Strulovici's defense attorney, Frank Prieto, said.

Source: Tamarac woman gets three years probation for demanding divorce with knife.

Lawsuit, Media Intervention Force Loan Servicer To Backpeddle On Home Foreclosure Of Elderly Widow Who Was Current On Loan Modification Payment Plan

In Apache Junction, Arizona, KNXV-TV Channel 15 reports:
  • Eighty-three-year old Harriet Black has owned a rural home in Apache Junction since 1976, but in March she was served an eviction notice. "I don't have anywhere to go," she said. The problems all stem from mistakes with a mortgage modification.


  • She worked with a mortgage service provider to get a modified mortgage agreement that was finalized in January. Or so she thought. Black's son made payments on her behalf for $822, the reduced amount agreed upon in the modification. Before that her payments werer near $1,800 per month. Despite the payments, the bank foreclosed on the property in February and an eviction hearing was set in the courts.
  • The Consumer Law Group filed a suit on her behalf Wednesday alleging the bank Deutsche Bank and mortgage servicer Ocwen wrongfully and unlawfully foreclosed. The suit filed in Pinal County included exhibits showing on-time payments since January.
  • We contacted Paul Koches, the Executive Vice President of Ocwen to get some answers. In less than a day, Koches was able to find the problem. He explained that Harriet was actually making payments on the wrong modification agreement. Therefore the valid one was going unpaid which paved the way for foreclosure.
  • He acknowledged the problem as a mistake by all parties and said that steps will be taken to rescind the foreclosure and reinstate the agreement so Harriet can remain in her home.

For the story, see Apache Junction woman nearly evicted over mortgage confusion.

Massachusetts Man Receives BofA Foreclosure Notice Accusing Him Of Stiffing Lender Out Of 'Zero Dollars & Zero Cents'

In Northampton, Massachusetts, WWLP-TV Channel 22 reports:
  • A man from Northampton got a letter from his bank stating his house would be foreclosed on if he didn't pay them a total of zero dollars and zero cents. Not wanting to lose his home, he called the 22News I-team to get some answers. We did some digging, and found out that a glitch in the bank's electronic system caused the error.(1)

For more, see 22News I-Team: $0 Foreclosure Notice (A bank error almost cost one man his home).

For Bank of America's foreclosure notice demanding the unpaid $0, see Notice of Intention to Foreclose.

(1) Reportedly, the consumer requested payment for expenses incurred fixing the matter and was told he would receive compensation. That never came, but the homeowner has noted that Bank of America has sent him a form letter requesting he sign up for their paid credit watch report service.

Tenant Left Scrambling After Unwittingly Renting Vacant House In Foreclosure From Home Hijacker

In Jacksonville, Florida, WTLV-TV Channel 12 reports:
  • Pamela Lewis has few words to describe what happened. "These last few days (have been) hell, excuse my language, because I am scared to leave," she said. Her nightmare began in August when she rented a house - which was not actually authorized by the owner to be rented. Now she is afraid to leave her home because she doesn't know what she'd return to find.
  • After searching Craigslist, she found a two-story house near Morse Avenue on Jacksonville's Westside. "They were here on the property working," said Lewis. After making contact with the person she thought was the property owner, Lewis said a week later she signed a lease with James Loen to rent the property for $950 a month. She said that Loen told her he was the landlord. September 2010, Lewis moved in.
  • But in May, eight months later, a man showed up at her front door, and told her he was the owner, he didn't know who she was and that she needed to move out. "He gave me a 24-hour notice, stuck it on my door. The cops seen it and said this is illegal he can't do this, he typed it up and signed it," said Lewis.


  • On Your Side put her in contact with Erica Shaffor, an attorney with Three Rivers Legal Services.(1) Shaffor said even if a tenant signs a fake lease with a phony landlord, the tenant has rights. "The tenant cannot just be thrown out by the alleged owner," said Shaffor. Shaffor said the property owner has to file for an 'ejectment.' She said Lewis had every reason to believe her lease was legal.


  • Lewis said now that she knows she was scammed, she's in the process of finding a new home, but said she can't move as quickly as the property owner wants her to move.

For the story, see Beware of Rental Scam Using Foreclosures.

(1) Three Rivers Legal Services is a local, non-profit law firm which provides free civil legal services to low-income, eligible clients in seventeen counties throughout North Florida.

Abandoned Buildings In 'Foreclosure No-Man's Land' Leave Poor Tenants In Dangerous Digs As Lawyers Look To Lienholders To Fork Over Fix-Up Funds

In Brooklyn, New York, WABC-TV Channel 7 reports:
  • There's a major legal push to help tenants living in deplorable conditions. The tenants are living in apartment buildings now in foreclosure and essentially neglected because of the dire financial situation. It has become a nationwide problem.
  • Without landlords, no one is fixing these rent controlled buildings. There are crumbling ceilings and floors, and there was little heat or hot water over the winter and the roof has holes in it. "When it comes in, it's all over the floors," said Yolanda Jimenez, a tenant.
  • There is black mold, the vents have not worked in years, and in this building at 294 5th Avenue, five of the six tenants are more than 70 years old. The average monthly rent runs about $200. Downstairs, a 98-year-old woman in a hospital bed and her son deal with all of these problems. He showed Eyewitness News a list of the people he has called for help.
  • "This is New York City, America! This is not supposed to happen," said Congresswoman Nydia Velazquez, (D) Brooklyn. How were these tenants left in foreclosure no man's land?
  • So, advocates and lawyers with South Brooklyn Legal Services(1) are taking banks and intermediaries to court to fix buildings, in foreclosure now around the city, buildings that are full of people. "I hope they fix it, I'm not going nowhere," Jimenez said. There's no comment from the bank involved.

Source: Brooklyn rent controlled apartment in foreclosure.

See also, South Brooklyn Legal Services Files Lawsuit to Hold Mortgage-Holders Accountable for Foreclosed Properties (The advocates seek to draw attention to a major housing crisis across the borough— a rapid increase in overleveraged multi-family buildings going into foreclosure).

(1) South Brooklyn Legal Services is a non-profit law firm that provides legal services and information to low-income people in Brooklyn, NY.

Ineffective Code Enforcement An Incentive For Continued Rentals Of Shoddy, Substandard Housing Endangering Poor

In Houston, Texas, the Houston Chronicle reports:
  • Just weeks before 19-year-old Jamesha Floyd was pulled from her burning home, her aunt and uncle complained to their landlord about faulty electrical wiring in the four-room house they shared with Floyd on Sayers Street. Five days after the fire, Floyd died from her injuries. The fire, which started while she slept, was attributed to an electrical problem.
  • The home is one of more than 200 properties in low-income neighborhoods owned by a Houston investment company whose other properties have been cited repeatedly for being dangerous or posing a public nuisance, a Houston Chronicle analysis shows.


  • The burned house on Sayers Street still stands, a charred shell, although the fire occurred nearly two years ago. Joe and Earnestine Brown were renting from Barbara Markman and her investment company, BMI Investment Inc. The Browns had complained of troubles with electrical outlets, and an electrician determined the wiring was faulty, records claim. Their niece had graduated from Kashmere High School just before the fire that took her life.
  • Markman bought the house in a tax foreclosure resale for $12,000. The annual median income in the northeast Houston neighborhood is about $17,000. The Browns filed suit and reached an undisclosed settlement with Markman — who told the Chronicle the fire was not electrical, even though fire inspectors said it was. The house was never repaired or demolished, Markman said, because of the civil lawsuit brought by the Browns.
  • Nearly 500 correction orders were issued to Barbara Markman and her husband Jack Markman's 100 properties going back to 2008 - for everything from holes in walls and floors to unsafe building parts. Five properties were cited for failure to provide and maintain electrical circuits and outlets in good operating condition. "Many of the properties were damaged by the tenants, when they move out; they trash the properties," said Markman.
  • Together, Markman and another property owner, Richard Pfirman, are among those with the greatest number of troubled properties, according to the data examined by the Chronicle. Pfirman was cited for more than 800 violations for 100 houses he has owned since 2008. More than half of the orders haven't been corrected.
  • The city legal department has sued Pfirman and ordered him to demolish 12 houses, though some of them still display "For lease or sale" signs noting that "No credit is no problem". The Chronicle called All American Properties, one of Pfirman's companies. The office manager declined to comment. Pfirman did not return calls for comment.

For more, see Owners prey on poor with dangerous rentals (Thousands of properties remain on the market despite repeated citations).

North Carolina Mobile Home Residents Face The Boot Over Park Owner's Delinquent $50K Water Bill

In Salisbury, North Carolina, WCNC-TV Channel 36 reports:
  • Neighbors in two Salisbury mobile home parks could have their water turned off and face possible eviction because their landlord isn’t paying his bills. "We got to cook, shower, wash our clothes, water our dogs, and we've got a little garden we've got to water,” said “Cowboy” Childress, explaining how much he relies upon water. All the water Cowboy and his wife Mona Childress use is included in their rent at Circle Drive mobile home park on Highway 29.
  • The other mobile home park facing the same problem is Matika Villa on Airport Road. Still, landlord Tim Smith says he's $50,000 behind on his water bill to Salisbury-Rowan Utilities. That's why warning signs are on doors letting residents know disconnection is coming at the end of June and that neighbors should take whatever precautions are necessary.


  • Smith says the reason he's 50 grand behind is because he's an embezzlement victim. He says his former property manager cut rent deals that he didn't know about, then pocketed the money and took off. $150,000 and six months worth of rent were gone. Smith says police told him there's not enough evidence to prosecute.

For more, see Landlord's bills piling up; residents fear losing water.

Hundred$ Of Thousand$ In Deferred Maintenance Leads To Quick, Court-Ordered, Pre-Foreclosure Boot For 100+ Residents Of Deteriorating Low-Income Motel

In Colorado Springs, Colorado, The Gazette reports:
  • Few people would have mistaken Lynn Burke’s tiny room at the Express Inn for a luxury apartment, but to her, it was Eden. She could walk to her job at the Eighth Street. Walmart, a blessing for someone who has never owned a car. She could pay a little extra each month so she could keep her cat with her. And she could afford the $569-a-month rent. “Such as it is, it was home,” said Burke, who has lived at the motel for four years.
  • Now, she doesn’t know where home will be. [S]he and more than 100 other tenants at the motel-cum-low-income-rental complex received notice that they must move out [...] in advance of a [] court-ordered shutdown tied to an impending foreclosure sale.
  • A nonprofit that sublet rooms at the Express Inn for some tenants found accommodations for about 20 of them, and others found places on their own or went to stay with friends or family. But Burke and another half dozen tenants who remained [] were scrambling to find another place to live, and were upset that they weren’t given more time to move, considering that the foreclosure was filed on March 7.


  • The Express Inn, on Cimarron Street at 8th Street, has had a range of tenants: families, young people and the elderly, the working poor and the homeless. Many of those who have jobs, like Burke, were able to afford the rent, especially if they had roommates.
  • Others became clients of C-C Boarding Home Annex, a nonprofit created in 2008 to sublet rooms from the Express Inn to house homeless and low-income people. Their rent — as low as $15 per day or $60 per week per person — was paid through donations and sponsorships from individuals and nearly two dozen churches.
  • But Ray Castillo, co-founder of C-C- Boarding Home Annex, said [] that expenses outstripped income, and the management company couldn’t keep up with the bills.


  • The property is scheduled to be auctioned on July 6, but [court-appointed receiver Dave] Mersman said the court ordered it to close before [] because of crumbling sidewalks, unsafe electrical connections and other problems that posed a hazard to tenants. “It amounts to hundreds of thousands of dollars in deferred maintenance that’s been ignored on this property,” Mersman said.(1)

For the story, see Residents booted from low-income rentals at Express Inn (Court cites hazards in ordering closure).

(1) For a Gazette editorial on this story, see They're trampling the rights of our homeless ('Get out,' without much warning):

  • “They may be trying to get rid of them before the tenants have an opportunity to exercise their rights,” said Steve Flynn, a staff attorney with Colorado Legal Services. “A person occupying a foreclosed upon property is entitled to a court process of eviction.” Exercising the eviction process, Flynn said, can buy a tenant weeks of valuable time to transition into a suitable living arrangement.

    Theresa Kilgore, managing attorney of Colorado Legal Services, said a federal law enacted in 2009, titled the “Protecting Tenants and Foreclosure Act,” should protect the motel’s residents from having to obey an order to leave on inadequate notice.

    In general, the law gives tenants of foreclosure properties the right to a 90-day notice of eviction. Kilgore said the motel dilemma is complicated, involving a tenant who sublets to the poor, and she will research whether the law may protect any who remain in the motel.

Colorado Legal Services is a non-profit corporation that provides access to civil legal services for as many low-income persons and members of vulnerable populations throughout Colorado as possible.

For more on the rights of tenants in homes/apartments in foreclosure, see National Law Center on Homelessness & Poverty: Staying Home: The Rights of Renters Living in Foreclosed Properties.

Friday, June 03, 2011

Bankster Attempt To Score 'Get Out Of Jail Free' Card Over MERS Mess Falls Flat; Pitchfork-Wielding Public To OR Lawmakers: Don't Even Think About It!

The Oregonian reports:
  • A late attempt by the finance industry to waive Oregon mortgage recording laws in most foreclosures is dead. The Oregon House Judiciary Committee voted [] to approve Senate Bill 519 without an amendment sought last week by loan servicers, title companies and credit unions. The amendment would have relieved lenders of ensuring a property's ownership history is properly recorded in public records before foreclosing outside a courtroom.
  • The committee voted with no debate to send the bill to a floor vote without the amendment. Afterward, co-chair Jeff Barker cited a public outcry over the amendment as reason for its failure and described an intense back-room negotiations to do so."There was a lot of opposition," said Barker, D-Aloha. "I probably got more emails about this than anything all session."(1)
  • Document recording and signing issues have hung up foreclosures across the nation, and many of them have involved the Mortgage Electronic Registration System, or MERS.
  • Federal judges in Oregon have blocked such foreclosures, saying MERS failed to record underlying documents properly as required by Oregon law in out-of-court foreclosures.(2)

For more, see MERS foreclosure amendment dies in Oregon House committee.

(1) No doubt the incensed public was driven to their pitchforks (metaphorically speaking, of course) in expressing their sentiments to state lawmakers on this issue, as evidenced by this photo of an obviously-outraged couple.

(2) For more on MERS' role in foreclosure actions:

Alleged Lawyer-Renting Racket At Center Of West Virginia AG Lawsuit Tagging Out-Of-State Outfit Peddling Debt Settlement Services

In Charleston, West Virginia, The West Virginia Record reports:
  • West Virginia Attorney General Darrell McGraw filed suit Friday to ban a debt settlement company from doing business in the state. The suit, filed in the Circuit Court of Kanawha County, names as defendants: Morgan Drexen's principle owner Walter J. Ledda; attorneys Rachelle McIntyre-Nicholson of West Virginia and Lawrence W. Williamson of Kansas; and the California law firm of Vincent Howard and Damian Nassiri.
  • In his complaint, McGraw asks that the court enjoin the out-of-state lawyers from practicing law in West Virginia and cease operation of the debt settlement business. The suit alleges that Morgan Drexen, Inc., a Nevada company based in greater Los Angeles that claims to be a support services company for attorneys providing debt settlement services, is selling debt settlement services to West Virginia consumers and misrepresenting the services are being provided by lawyers.
  • Lawyers who are licensed to practice law in West Virginia are exempt from some state regulations that govern the debt settlement industry. "Although the debt settlement approach to debt relief may work for some persons, the service has legal consequences and should only be offered by persons licensed to practice law in West Virginia," McGraw said.


  • By linking to [West Virginia-]licensed lawyers, Morgan Drexen allegedly maintains it can avoid applicable state debt collection laws and charge higher fees than normal, McGraw says. These [West Virginia-licensed] lawyers allegedly do no substantive work and are merely renting out their licenses to Morgan Drexen.

For more, see McGraw sues lawyers over debt settlement company.

Rent Skimming Allegations At Center Of Indiana AG Action Seeking Real Estate License Suspensions For Property Management Pair

From the Office of the Indiana Attorney General:
  • The real estate licenses of two central Indiana property managers are facing emergency suspension, Indiana Attorney General Greg Zoeller announced [].
  • The Attorney General filed petitions for summary suspension with the Indiana Real Estate Commission on May 16 seeking to suspend the real estate licenses of Craig Bartels and Derek Crager, principal operators of Crager-Bartels, LLC.
  • The petitions allege Bartels and Crager failed to pay property owners more than $13,000 in rent payments they had collected from tenants. Crager-Bartels, LLC is located in Plainfield, Ind. and entered into contracts with property owners in several states including Indiana, California, Nevada and North Carolina to manage rental properties in central Indiana.
  • "By seeking an emergency license suspension we hope to prevent these individuals from continuing to operate as we attempt to resolve the issues stemming from the mismanagement of these rental properties," Zoeller said. "The actions of these two licensed real estate agents harmed both the property owners and the families who are tenants."

For the Indiana Attorney General press release, see Attorney General seeks to suspend licenses of two central Indiana property managers.

Foreclosure Scam 'Hunter': "We're Going To Make Them All Run!" After One Target Dashes Out Of Office & Slithers Away Through Emergency Exit

In Los Angeles, California, New America Media reports:
  • Juana Castillo Quintanila paid $3,500 to a real estate broker who promised to help her strike a deal with her bank to lower her monthly payments. The Latina, who faces imminent eviction, says he didn’t deliver. He refused to return her money, so last Thursday she went to his office with about a dozen other angry homeowners to demand a refund.
  • Christopher Lim, shame on you,” the homeowners yelled, as they poured onto the 27th floor of a high-rise in the mid-Wilshire district of Los Angeles, where the agent rents an office.
  • Hearing their shouts, Lim, dressed in a tidy gray suit, emerged from the conference room. Upon seeing video cameras, he shielded his face with a stack of papers, and turned and bolted down a corridor of identical office doors. The homeowners continued to shout, “refund now,” as they chased after him. They lost sight of him, and believed that Lim hid in his office, before slipping out through the emergency exit when the hallway was clear.
  • He’s not done a thing to this day,” Quintanila said through a translator, adding she’s disappointed he “got away.” The Latina says she hired Lim after hearing an ad for his company, Neighborhood Credit Solutions, on Spanish-language radio. [...] Quintanila says Lim promised to “fight” for her to stave off foreclosure, but that only involved submitting one loan modification application, which resulted in slightly lower payments that didn’t improve her situation.


  • The homeowners say Lim broke a California law that bans real estate agents and attorneys from collecting up front fees in negotiating a loan modification. Lim denies doing that, and says he was contracted to performdocumentation preparation” to help Quintanila make her case to her bank. The bank could have offered a number of options, including modification, he said.
  • Lim told New America Media that he will offer Quintanila a refund. “I guess I just want to be a bigger person. Sometimes you lose, you don’t always win,” he said.
  • He may win or lose, but members of the Home Defenders League (HDL), a 2,500-strong homeowners group in California that is fighting foreclosures, are determined to make scammers pay.
  • We had him on the run. It’s an action of guilt,” said HDL member Peggy Mears. “That’s why he ran. We’re going to make all of them run.”
  • The league, a part of the Alliance of Californians for Community Empowerment, has organized similar showdowns with individuals and companies that they say defrauded homeowners, many of whom have joined the statewide network. As a result of the group’s actions, several homeowners have recouped their money – a feat that representatives with the district attorney’s offices in Los Angeles and Alameda counties say is rare to achieve.

For the story, see Homeowners Determined to Make Scammers Pay.

Thursday, June 02, 2011

Inflated Fees, Force-Placed Insurance, Robosigning Among MBS Investor Concerns In Suit Demanding Bankster Accounting Over Loan Servicing Costs

In New York City, Reuters reports:
  • The Knights of Columbus, a 129-year-old Catholic charitable organization, is suing Bank of New York Mellon to obtain information about residential mortgage loans the former lending giant Countrywide funneled into some of the Knights' investments.
  • The Knights, who have a $17-billion investment portfolio, invested in two residential-mortgage-backed security trusts. The organization is questioning how Countrywide handled foreclosures as the "master servicer" of the loans, according to the complaint filed Thursday in New York Supreme Court in Manhattan. BNY Mellon is the trustee.
  • The complaint pointed to "recent revelations" that Countrywide may have been "acting for its own benefit rather than for the benefit of investors," and thereby "damaging the borrowers" whose loans make up the trusts.
  • Kevin Heine, a spokesman for BNY Mellon, said, "The complaint does not assert any claims against BNY Mellon or seek damages. The complaint merely seeks an accounting."


  • The complaint says courts around the country have responded to the loan servicers' "notoriously flawed paperwork" by instituting new procedures, such as allowing the courts to pass on the cost of scrutinizing the documentation to the foreclosing firms.
  • The Knights are requesting an accounting of the "extra fees and costs associated with robo-signing," to assure that those costs are borne by the loan servicers and not passed on to the beneficiaries of the trusts.
  • The complaint also cites problems with Bank of America failing to promptly pursue valid foreclosures or dispose of real-estate-owned properties, practices that can increase the severity of losses associated with defaulted loans, according to the Knights' complaint. The complaint requests an accounting of these losses as well.(1)

For the story, see Knights of Columbus sue for Countrywide loan information.

For the lawsuit, see Knights of Columbus v. The Bank of New York Mellon, New York Supreme Court, New York County, No. 651442-2011.

Go here for links to other filed court documents.

(1) Paragraph 1 of the lawsuit summarizes the complaint:

  • This action requests the Court to order an immediate accounting of two trusts known as CWALT 2005-6CB and CWALT 2006-6CB (the “Trusts”). The Trusts hold residential mortgage loans for the benefit of investors such as Plaintiff.

    An accounting is required because one or more of the Trust administrators have:

    (1) been examined by the Office of Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, which “found critical deficiencies and shortcomings in foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third party law firms and vendors”;

    (2) been accused by the City of Buffalo, among others, for failing to properly care for and dispose of unoccupied properties, contributing to the deterioration of neighborhoods and increasing losses to the Trusts’ beneficiaries;

    (3) been found by the Office of the Comptroller of the Currency to have “engaged in unsafe or unsound banking practices” “[i]n connection with certain foreclosures of loans in its residential mortgage servicing portfolio”, which is subjecting each Trust to unknown costs and expenses;

    (4) been accused by the Federal Trade Commission of engaging in a deliberate strategy to “mark up” the actual cost of services that are ultimately paid by each Trust;

    (5) been exposed by the AMERICAN BANKER for using affiliates to place on homes insurance costing up to ten times the price of regular policies, which premiums are ultimately charged to the beneficiaries of each Trust; and

    (6) had a court find that a practice that an employee of a Trust administrator testified under oath was “customary” precluded a similar trust from enforcing its rights under a mortgage.

For the City of Buffalo accusations, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al.

For the American Banker stories, see

Closing Agency Owner Gets 57 Months For Illegally Dipping Into Escrow Account; Title Insurance Underwriter Left Holding The Bag On $258K Damages Tab

From the Office of the U.S. Attorney (Harrisburg, Pennsylvania):
  • Peter J. Smith, United States Attorney for the Middle District of Pennsylvania, announced a Lancaster County woman was sentenced [] to 57 months incarceration following her conviction last September on charges she defrauded a local real estate settlement firm and a national real estate title insurance company out of more than $258,894.
  • Following a three-day jury trial before U.S. District Court Judge William W. Caldwell in Harrisburg, Shawn Chambers-Galis, age 48, of Mt. Joy, Pennsylvania, was convicted of wire fraud.
  • Testimony at the trial revealed that between 2005 and 2007 Chambers-Galis diverted more than $273,000 from the escrow accounts of Donegal Settlement Services, a real estate closing firm Chambers-Galis co-owned and operated in Jacobus, Pennsylvania, and Mt. Joy, and converted the funds to her own use. As a result, mortgages that should have been paid off by Donegal at real estate closings were not, in fact, paid off and the Commonwealth Land Title Company (“Land America”) had to eventually pay $258,894 to clear the titles to the properties.

For the U.S. Attorney press release, see Lancaster County woman sentenced for wire fraud related to local real estate settlement firm and national real estate title insurance company.

Title/Settlement Agency Owner Slammed w/ 55 Months, Restitution Order After $2.3M Closing Cash Proceeds Swindle From R/E Deals That Screwed 33 Victims

From the Office of the U.S. Attorney (Harrisburg, Pennsylvania):
  • The United States Attorney’s Office for the Middle District of Pennsylvania announced that the owner of a settlement company was sentenced [] by United States District Court Senior Judge William J. Nealon to a 55-month term of imprisonment and ordered to pay restitution to 33 victims totaling $2,318,829.99.
  • According to United States Attorney Peter J. Smith, Elizabeth Sichler, age 58, of Harvey’s Lake, Pennsylvania, owned Priority Search, Inc, a real estate settlement company. From July 2005 until 2008, Sichler failed in her fiduciary duty to pay certain obligations associated with real estate transactions her company handled as a title agent.
  • According to court documents, Sichler failed to pay sellers’ first and second mortgages, seller’s cash proceeds, utility bills, real property taxes, real estate transfer taxes, recording/filing fees, and title insurance premiums. Instead, Sichler misappropriated dedicated funds for personal gain and to cover operating expenses of her business, including employee salaries and benefits.

For the U.S. Attorney press release, see Owner of settlement company sentenced to prison term for federal wire fraud charges.

Florida Bar Clears Foreclosure Defense Attorney In Probe Into Billing Practices

The Palm Beach Post reports:
  • Foreclosure defense attorney Peter Ticktin was cleared of wrongdoing by the Florida Bar following a complaint about his firm placing second mortgages on clients' homes to pay for services. Ticktin, who is based in Deerfield Beach but has offices throughout Florida, uses the unique payment plan in cases where homeowners wouldn't otherwise be able to afford an attorney.
  • The Bar opened an investigation following media reports about how struggling homeowners were paying court costs. In addition to paying a monthly stipend - a common practice in foreclosure defense - Ticktin said he came up with the second mortgage as a type of contingency fee. If Ticktin's firm gets a case dismissed or a mortgage reduced, the client must take out a new mortgage that awards the firm 40 percent of whatever the homeowner saved.
  • A letter from the Bar dated Monday says a grievance committee found "insufficient evidence to determine probable cause for disciplinary proceedings." "We knew we didn't do anything wrong," Ticktin said. "There is no logical reason why it wouldn't be appropriate or ethical."(1)

Source: Florida Bar clears foreclosure lawyer Ticktin over plan.

(1) However, there could be a problem if, once the case is over and the client's overall liability for attorney fees is determined, the amount of the contingent fee, coupled with the fixed monthly stipend paid, is found to be "clearly excessive." See (bold text is my emphasis):

  • Rule 4-1.5, Florida Rules of Professional Conduct:

    (a) Illegal, Prohibited, or Clearly Excessive Fees and Costs

    An attorney shall not enter into an agreement for, charge, or collect an illegal, prohibited, or clearly excessive fee or cost, or a fee generated by employment that was obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar.

    A fee or cost is clearly excessive when: [go here for more of Rule 4-1.5
    , Florida Rules of Professional Conduct].
  • The Florida Bar v. Richardson, 574 So. 2d 60 (Fla. 1990):

    This Court recognizes that a lawyer's fee will vary in accordance with many factors; however, we fully concur with the expert witness's statement in this case that all of the time a lawyer spends on a case is not necessarily the amount of time for which he can properly charge his client.

    As explained by the expert witness, "[I]t's the time that reasonably should be devoted to accomplish a particular task." This statement is consistent with the principles we set forth in Standard Guaranty Insurance Co. v. Quanstrom
    , 555 So.2d 828 (Fla. 1990), and Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985), neither of which allows billing clients solely on billable hours or charging clients without determining what is the reasonable time to accomplish a particular task.
  • The Florida Bar v. Moriber, 314 So. 2d 145 (Fla. 1975):

    Few, if any, areas of attorney discipline are as subject to differing interpretations as the matter of what constitutes an excessive attorney's fee. See The Florida Bar v. Winn
    , 208 So.2d 809 (Fla. 1968), cert. den., 393 U.S. 914, 89 S.Ct. 236, 21 L.Ed.2d 199. The answer turns upon multiple factors including the difficulty of the case; the contingencies, if any, upon which the fee is based; the novelty of the legal issues presented; the experience of the attorney; the quality of his work product; and the amount of time spent in preparation and litigation.
  • Franklin & Marbin, PA v. Mascola, 711 So. 2d 46 (Fla. App. 4th DCA 1998): Commenting on attorneys fee contracts with clients and their enforceabilty, generally, the court observed:

    Of course, the supreme court has also long held that attorney's fee contracts are infused with the public interest and that attorneys are not free to negotiate just any fee. In Baruch v. Giblin
    , 122 Fla. 59, 164 So. 831 (1935), the court said:

    "Lawyers are officers of the court. The court is an instrument of society for the administration of justice. Justice should be administered economically, efficiently, and expeditiously. The attorney's fee is, therefore, a very important factor in the administration of justice, and if it is not determined with proper relation to that fact it results in a species of social malpractice that undermines the confidence of the public in the bench and bar. It does more than that; it brings the court into disrepute and destroys its power to perform adequately the function of its creation."

    164 So. at 833. To meet this public interest, the supreme court has adopted specific rules regulating attorney's fees.[7],[8] The issue of enforceability of lawyer fee contracts is set out in a specific rule that states:

    "Contracts or agreements for attorney's fees between an attorney and client will ordinarily be enforceable according to the terms of such contracts or agreements, unless found to be illegal, obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar, prohibited by this rule, or clearly excessive as defined by this rule."[9]
  • Chandris, S.A. v. Yanakakis, 668 So.2d 180 (Fla.1995), where the Florida Supreme Court held that fee contracts that do not comply with the lawyer disciplinary rules are subject to being held void as against public policy. See also American Casualty Co. v. Coastal Caisson Drill Co., 542 So.2d 957, 958 (Fla.1989); City of Miami v. Benson, 63 So.2d 916 (Fla. 1953); City of Leesburg v. Ware, 113 Fla. 760, 767, 153 So. 87, 90 (1934).

Go here for approximately 100 or so links to Florida cases addressing the issue of attorneys' fees that are 'clearly excessive.' (It may be that, given the Bar's seemingly slumbering approach recently in probing complaints against attorneys in connection with home foreclosures (see The Palm Beach Post: Foreclosure fraud complaints flood Florida Bar but no lawyer reprimands so far), a homeowner may have to file a civil lawsuit to seek redress rather than simply file a complaint with The Florida Bar in a case where one believes they've been clipped with legal fees that are 'clearly excessive'). In this regard, one needs to remember that, just because The Florida Bar says there is no ethical violation of the rules, it doesn't necessarily mean they are right. A court of law (probably an appellate level court) has the final say.

Go here for some links to cases from other jusrisdictions addessing 'clearly excessive' attorneys' fees (or GO HERE to refine a search for the jursidiction of your interest).

(On a side note, it is not unheard of for a court, in determining what constitutes a reasonable attorney fee, to disregard applying a percentage of value approach and, instead, use the lodestar method to calculate the amount of the fee an attorney is entitled to. See Nager v. Teachers' Retirement System of The City of New York, 57 A.D.3d 389, 869 N.Y.S.2d 492 (NY App. Div. 1st Dept. 2008):

Something for litigants to keep in mind when they think their attorney may be taking advantage of their vulnerable situation in getting them to agree to an unfavorable attorney fee agreement.)


Further, there could also be a 'negligence' problem for any foreclosure defense attorney in Florida (and possibly in other states) who, after gaining a favorable ruling in court on behalf of a client facing foreclosure:
  • fails to then file a motion with the court requesting prevailing party attorneys fees to be awarded (the liability for payment to be imposed by the court upon the losing party; ie. the foreclosing bankster), and,
  • where a contingency fee is involved, fails to request that a contingency fee multiplier be applied when calculating the attorney fee award.

Wednesday, June 01, 2011

HUD: Underwriters' Refusal To Insure Titles Due To MERS' Michigan Mess Requires Reforeclosure Of Crappy Deeds

National Mortgage News reports:
  • The Department of Housing and Urban Development will re-foreclose on all its REO properties in Michigan where the original foreclosure was conducted in the name of MERS using the state’s nonjudicial process.
  • In late April, the Michigan Court of Appeals ruled that Mortgage Electronic Registration Systems Inc. is ineligible to use the state’s nonjudicial foreclosure process because MERS does not meet the requirements to foreclose by advertisement and should have filed the foreclosures through the state’s judicial process. That ruling vacated the 2009 foreclosures of two borrowers.(1)
  • In an email to HUD mortgagees that was obtained by National Mortgage News, the agency said most of the major title insurance company underwriters have ceased issuing title insurance for any properties where MERS foreclosed by advertisement.
  • As a result, any Michigan REO properties in HUD’s inventory that cannot close due to an inability to obtain title insurance must be re-foreclosed in accordance with the Michigan Court of Appeals opinion,” the email reads.(2)

For more, see MERS Ruling Forces HUD to Reforeclose on Mich. REO.

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

(2) For earlier posts on the colossal "home title" mess created by MERS' non-judicial foreclosures in Michigan, see:

80% Of Success Is Just Showing Up!

William A. Roper, Jr. writes in the Mortgage Servicing Fraud Forum:
  • Woody Allen has suggested that 80% of success is just showing up. The reciprocal to that is that one LOSES about 99% of the time when one FAILS TO SHOW UP. This is a key reason that it is imperative to ANSWER any foreclosure suit in which the defendant is properly named and served.
  • The purported mortgage investors acting as plaintiffs routinely WIN cases when borrowers fail to answer and default.
  • But an interesting thing has been taking place in an increasing percentage of appellate cases over the last year. The mortgage investors have been defaulting in a seemingly growing number of instances by either failing to file an appellee's brief or otherwise confessing error in the appellate courts.
  • The decision in Augenstein v. Deutsche Bank was one such case in Kentucky. There the Kentucky Court of Appeals not only overturned the summary judgment, but also dismissed the case.
  • The Court of Appeals for the Fifth District in Florida overturned two foreclosure judgments this week by confession of error:

    Gillen v. Federal National, No. 5D09-4194 (May 27, 2011)

    Blumenfeld v. Fifth Third, No. 5D10-3638 (May 27, 2011)
  • There is not any useful case law to cite from these decisions, though the Appellant's Brief in each case might be worth a look. But the decisions are reflective of the increasing tendency for the foreclosure mills to abandon appeals. I am going to begin to collect in this thread the cases where a foreclosure judgment is set aside by confession of error or where the appellee fails to file an appellate brief.(1)

For Bill Roper's entire post thread, see Appellee Confession of Error: Sometimes the Borrower Can Win By Appealing and then Just Showing Up!

Thanks to Deontos for the heads-up on the MSF Forum post.

(1) Bill Roper adds the following:

While we're at it, tack these cases onto the list as well:

On a related point, see Vinson v. Vidal, 28 So. 3d 614 (Miss. Ct. App. 2009):

  • This Court has long held that an appellee's failure to file a brief is tantamount to confession of error and will be accepted as such unless the reviewing court can say with confidence, after considering the record and the brief of the appealing party, that there was no error. Varvaris v. Perreault, 813 So.2d 750, 752(¶ 5) (Miss.Ct. App.2001) (citing Dethlefs v. Beau Maison Dev. Corp., 458 So.2d 714, 717 (Miss.1984)). "Automatic reversal is not required where [the] appellee fails to file a brief." Id. (quoting N.E. v. L.H., 761 So.2d 956, 962(¶ 14) (Miss.Ct.App.2000)). In order to merit reversal, "[t]he appellant's argument `should at least create enough doubt in the judiciousness of the trial court's judgment that this Court cannot say with confidence that the case should be affirmed." Id. (citing Selman v. Selman, 722 So.2d 547, 551(¶ 13) (Miss.1998)).

Minneapolis Homeowner Recovers Lost Home, Gets New Payment Schedule After Flaw Found In Serving Required Paperwork In Foreclosure Process

In Minneapolis, Minnesota, Fox 9 News reports:
  • A Minneapolis woman, who was facing foreclosure, is back in her home for the long term. Tanya Deba's troubles began when her hours at her job were cut and she fell behind on her mortgage. She tried to catch up, but just could not.
  • In March, Fox 9 told her story and showed how she was packing up her belongings expecting to be evicted at a moments notice. She didn't want her 2 kids to lose their lifelong home. Deba found help in an organization called Financial Integrity Foundation. For a fee, the Twin Cities group assists homeowners in finding flaws in foreclosures.
  • Financial Integrity Foundation discovered her mortgage company had never served the paperwork to this homeowner about the foreclosure.
  • Delivery of that paperwork is required by law in a foreclosure. She filed a lawsuit against the company. The two sides settled out of court and the bank set Deba up with a new 30-year fixed rate mortgage.

Source: Woman Fights Foreclosure & Wins.

Foreclosure Trustee Screw-Up The Focus Of Ongoing Arizona Lawsuit

In Maricopa County, Arizona, a recent story in The Arizona Republic describes current litigation in a state appeals court in a dispute over ownership of property that was purportedly sold in a foreclosure sale.

The story centers on the apparent screw-ups by the trustee who conducted the sale, and serves as a reminder that the conduct of those having a role in properly carrying out a public auction in the foreclosure context needs to be scrutinized closely for errors, irregularities, etc. which, apparently, are not all that uncommon.(1)

For the story, see Judges hear Elevation Chandler land dispute.

(1) See, for example:

Beleaguered Bankster Beefs Up Political Influence By Adding Recently-Retired U.S. Senator Onto Payroll

The Huffington Post reports:
  • With Goldman Sachs' latest high-profile hire, the Wall Street giant is unlikely to shake its Government Sachs nickname or the reputation for exerting undue influence in Washington that it implies.(1)
  • Goldman announced Friday that it had named three-term Sen. Judd Gregg an international adviser to the bank. The New Hampshire Republican will "provide strategic advice to the firm and its clients, and assist in business development initiatives across our global franchise," Goldman said in a statement.

For more, see Judd Gregg Hired By Goldman Sachs As International Advisor.

Thanks to Mike Dillon at for the heads-up on the story.

(1) See The Huffington Post: Government Sachs: Goldman's Close Ties To Washington Arouse Envy, Raise Questions:

  • [G]oldman has more than 30 ex-government officials working as registered lobbyists on staff, including former House Majority Leader Richard Gephardt (D-Mo.) to represent its interests on issues related to TARP, according to Mother Jones.

Tuesday, May 31, 2011

NY Appeals Court: Failure To Strictly Comply With Notice Requirements Under State Anti-Equity Stripping Statute Enough To Sink Foreclosure Action

A recent ruling by a New York intermediate appellate court (which, by the way, reversed another lower court ruling in a foreclosure action) serves as a reminder that notices required to be served on homeowners facing foreclosure pursuant to the New York State's anti-foreclosure rescue, equity stripping statute are, in fact, mandatory, and failure to comply with the notice requirements is enough to sink the foreclosure action.

The appeals court gives the following summary of the law in the first paragraph of their ruling:
  • In First Natl. Bank of Chicago v Silver (73 AD3d 162) (hereinafter Silver), we held that the plaintiff in a foreclosure action has the burden of demonstrating compliance with Real Property Actions and Proceedings Law § 1303 (hereinafter RPAPL 1303), a notice requirement of the Home Equity Theft Prevention Act (see Real Property Law § 265-a [hereinafter HETPA]).

    Proper service of RPAPL 1303 notice with the summons and complaint is a condition precedent to the commencement of the action, and noncompliance results in dismissal of the complaint. In the appeal before us, we are called upon to consider another notice pursuant to HETPA which must be served at least 90 days prior to commencement of the foreclosure action pursuant to Real Property Actions and Proceedings Law § 1304 (hereinafter RPAPL 1304).(1)

    Consistent with the rationale of Silver, we determine that proper service of RPAPL 1304 notice is also a condition precedent to the commencement of the action. Here, the plaintiff failed to establish compliance with RPAPL 1304, requiring dismissal of the complaint insofar as asserted against the mortgagors.

For the ruling, see Aurora Loan Servs., LLC v Weisblum, 2011 NY Slip Op 04184 (NY App. Div. 2d Dept. May 17, 2011).

(1) The court elaborated on its position, and described the contents of, and requirements surrounding, the mandatory RPAPL 1304 notice in this excerpt (bold text is my emphasis):

  • In holding that compliance with RPAPL 1303 is a mandatory condition precedent to the commencement of a foreclosure action, we were persuaded by the explicit statutory requirements and mandatory language of RPAPL 1303, as well as the Legislative purpose behind HETPA (see Silver, 73 AD3d at 165, 169).

    In the case before us, unlike Silver, the notice provision of RPAPL 1304 is at issue. The Supreme Court here determined that "actual or constructive notice" of the content of RPAPL 1304 suffices under circumstances where the borrower has not shown prejudice from the lender's failure to strictly comply with the statute. We disagree.

    Thus, we now make clear what is implicit in Silver, namely, that proper service of the RPAPL 1304 notice containing the statutorily-mandated content is a condition precedent to the commencement of the foreclosure action. The plaintiff's failure to show strict compliance requires dismissal.

    We reach this determination for reasons similar to those stated in Silver. RPAPL 1304, like RPAPL 1303, contains specific, mandatory language in keeping with the underlying purpose of HETPA to afford greater protections to homeowners confronted with foreclosure (see Silver, 73 AD3d at 165).

    Both statutes have titles containing the word "required" (RPAPL 1304 ["Required prior notices"]; RPAPL 1303 ["Foreclosures; required notices"]). Content, timing, and service provisions of RPAPL 1304 are very specific and couched in mandatory language. "[A]t least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower in at least fourteen-point type" of certain statutory-specific information (RPAPL 1304[1]).

    The notice must be prefaced with the warning, "YOU COULD LOSE YOUR HOME. PLEASE READ THE FOLLOWING NOTICE CAREFULLY," and must contain the specific language set forth in RPAPL 1304(1), including information concerning the homeowner's right to cure a default and access to counseling agencies to obtain financial help. Indeed, as noted, the RPAPL 1304 notice must include "a list of at least five housing counseling agencies as designated by the division of housing and community renewal, that serve the region where the borrower resides" with their "last known addresses and telephone numbers" (RPAPL 1304[2]).

    With regard to the manner of service, RPAPL 1304 is equally precise: "Such notice shall be sent by such lender, assignee or mortgage loan servicer to the borrower, by registered or certified mail and also by first-class mail to the last known address of the borrower, and if different, to the residence that is the subject of the mortgage . . . in a separate envelope from any other mailing or notice" (RPAPL 1304[2]).

Group Suspected Of Running Loan Modification Racket Agree To $18M+ Settlement With Feds

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Three Palm Beach County men, including a Palm Beach Gardens attorney, have agreed to an $18.8 million settlement with the Federal Trade Commission following charges the trio preyed on struggling homeowners seeking loan modifications.
  • The FTC, which filed suit against First Universal Lending in 2009, believes 13,500 people nationwide suffered losses because of company practices that included charging upfront fees as high as $7,000 and failing to contact lenders to negotiate lower mortgage payments.
  • Named in the suit filed in the U.S. District Court for the Southern District of Florida are Palm Beach Gardens attorney David J. Feingold, 44, Delray Beach resident Sean Zausner, 39, and his brother David Zausner, 43, most recently of Wellington. The agreement has yet to receive a judge's approval, but FTC attorney Gideon Sinasohn, said he's not expecting a problem with receiving the final sign-off.


  • A 2008 Florida law prohibits businesses from collecting upfront fees for foreclosure rescue or loan modification services.

For more, see Palm Beach Gardens mortgage mod firm to pay $18.8 million to help distressed homeowners.

De Facto Temporary Moratorium For All Current Non-Judicial Foreclosures For Owner-Occupied Hawai'ian Homes

The Honolulu Star Advertiser reports:
  • It will be several months until a key consumer-protection provision of Hawaii's overhauled foreclosure law can be used. But there has been one immediate impact: a freeze on many new foreclosures and auctions of homes owned by occupants.
  • The new law, which took effect earlier this month, did not prescribe a foreclosure moratorium, but the law prohibits lenders from holding nonjudicial foreclosure auctions until borrowers have an opportunity to participate in a dispute resolution program.
  • The dispute resolution program, a pivotal piece of the law, is slated to begin operating by Oct. 1. So in effect, existing foreclosure cases between owner-occupants and lenders are on hold for up to five months.


  • The law also is hindering lenders from starting some new foreclosure cases until the state is ready with the dispute resolution program. This could postpone hundreds of foreclosure filings over the next few months.
  • The freeze stands to affect many, but not all, auctions and new foreclosure cases. Only nonjudicial foreclosures against homeowners who have lived in their homes for a minimum 200 consecutive days are eligible to participate in the dispute resolution program.
  • Excluded are judicial foreclosure cases, which represent a small minority of home foreclosures, and cases involving commercial property, time shares and homes owned by investors. Foreclosures initiated by condominium or homeowner associations are also exempt from this aspect of the law.


  • Another part of the law allows borrowers to convert a nonjudicial foreclosure to a judicial foreclosure overseen by a judge. Industry observers say it will be interesting to see how use of the law plays out — especially regarding how many borrowers use the dispute-resolution tool and whether lenders avoid it by turning to judicial foreclosure.

For more, see Law's delay halts foreclosures (The required state dispute resolution program has not been set up, slowing many repossessions).

Monday, May 30, 2011

NY Appellate Court Has Critical Words For MERS In Recent Ruling; Could Be Sign Of Things To Come For Foreclosure Actions In Empire State

Housing Wire reports:
  • A decision by New York's 2nd Appellate Division may not have a direct impact on the issue of when Mortgage Electronic Registration Systems has standing in foreclosure cases, but it contains persuasive language that could be a shot across the bow when it comes to jurisdiction relating to MERS.
  • In Aurora Loan Services v. Steven Weisblum, the appellate court overturned a lower court's decision to dismiss claims the Weisblum family made against Aurora. The appellate court concluded that Aurora's motion for summary judgment should have been denied and said Aurora failed to comply with the Real Property Actions and Proceedings Law under the Home Equity Theft Prevention Act.
  • While the decision was not directly based on MERS, attorneys say language in the decision could impact later court rulings because it gives an appellate court's view on how MERS operated in this particular transaction.


  • On the MERS standing issue, which is not what the case was decided on, the Weisblums argued that Aurora did not have standing because it failed to provide evidence of MERS' authority to assign the first mortgage note tied to the home.
  • The court said "Aurora failed to provide a copy of the first note but submitted a copy of the original first mortgage and a series of assignments culminating in the purported assignment of the first note and mortgage to Aurora. The first mortgage was originally held by MERS, as nominee for Credit Suisse; the mortgage document recites that the lender on the first note is Credit Suisse, but there is nothing in this document to establish the authority of MERS to assign the first note."
  • The court goes on to say MERS later assigned the first mortgage with the underlying note and then made successive mortgage assignments. "While, in some circumstances, the assignment of a note may effect the transfer of the mortgage as an inseparable incident of the debt, here the assignment instruments purport to do the opposite, without any evidence that MERS initially physically possessed the note or had the authority from the lender to assign it."
  • The case also outlined what is needed for a foreclosing party to have an equitable interest in a mortgage — namely the plaintiff has to be both "the holder or assignee of the subject mortgage, holder or assignee of the underlying note — either by physical delivery or a written assignment prior to the commencement of the action that led to the plaintiffs filing a complaint." The court ruled Aurora failed to make this showing.

For more, see NY appellate court scrutinizes the MERS standing issue.

For the ruling, see Aurora Loan Servs., LLC v Weisblum, 2011 NY Slip Op 04184 (NY App. Div. 2d Dept. May 17, 2011).

DC High Court Affirms Ruling Nixing Improper Foreclosure Attempt Over $359 Unpaid Water Charge, Voiding Lien Based On Notice Mailed To Wrong Address

A recent ruling by the District of Columbia Court of Appeals affirmed a lower court decision throwing out an attempt by a real estate investor, who ostensibly trafficks in municipal liens, to improperly foreclose on a $359.63 lien for unpaid water & sewer charges on the property belonging to one Charles E. Heyward.(1)

In addition, the court went further and affirmed the lower court ruling finding that, because of a failure to give proper notice (the certificate of delinquent charges that gave rise to the lien was mailed by the D.C. Department of Public Works to the wrong address - 715 Irving Street, N.W. instead of 715 Irving Street, N.E. - maybe a typo by a clerk in the billing department???), the lien itself was void. Accordingly, the water & sewer lien was nullified.(2)

For the ruling, see Crusader v. Heyward, No. 09-CV-1414 (D.C. May 26, 2011).

(1) In this regard, the court stated (bold text is my emphasis):
  • D.C. Code § 34-2407.02 (2001) governs the enforcement of liens for unpaid water and sewer charges, and it specifies the time line and procedures necessary to effectuate such a lien. Specifically, § 34-2407.02 (a)(3) states the “Mayor may enforce the lien . . . in the same manner that real property tax liens are enforced pursuant to Chapter 13 and Subchapter IV of Chapter 13A of Title 47.” Additionally, § 34-2407.02 (a)(4) provides that “real property may be sold for the unpaid water and sanitary sewer charges . . . at a tax sale in accordance with the provisions for the sale of property for delinquent real property taxes pursuant to Chapter 13 of Title 47.” If the property is sold, the purchaser will receive a certificate of sale, but the property owner has the right to redeem the property within the time frame specified by statute. D.C. Code §§ 47-1304, -1306, -1360 (2001).

    Here, there has been no showing that the property was ever offered at a public auction in accordance with the statute. In its brief, Crusader argues that “all of the liens ... subsequently sold and assigned to Strategic [Crusader’s predecessor-in-interest] had previously been bid off at a tax auction in the District of Columbia.”

    In response to that claim, the trial court, relying on several statutory provisions, properly ruled that “assignments between private entities are not ‘tax sales’ as intended by [§] 47-1385.” Crusader cites no contrary authority and there is nothing in the record that indicates any property transfer at a public auction. Moreover, Crusader concedes that there was no tax sale. For these reasons, the trial court correctly concluded that Crusader did not comport with the statutory requirements for enforcing its lien. Therefore, the trial court did not err in dismissing its complaint.

(2) In this regard, the court stated (bold text is my emphasis):

  • Crusader also contends that its lien on the property was valid, and the trial court erred in voiding it. We disagree. As already noted, the certificate of delinquent charges that gave rise to the lien was mailed to Heyward at 715 Irving Street, N.W., but the lien was on property located at 715 Irving Street, N.E. In addition, the original sale of the lien from WASA to Breen Capital did not comport with the requirements of D.C. Code § 47-1303.04 (d) because the document assigning the lien failed to state Heyward’s name and the dollar amount due, including penalties and interest.

    While we have not expressly ruled that a lien is void when a party fails to strictly adhere to the statutory notice requirements, other jurisdictions have recognized this principle. See Town of Pownal v. Anderson, 728 A.2d 1254, 1259 (Me. 1999) (“The failure to properly name a record owner of the property on the tax lien certificate rendered the lien void even when that unnamed owner had actual knowledge of the lien’s existence.”); Cary v. Town of Harrington, 534 A.2d 355, 358 (Me. 1987) (“Because the tax lien certificates recorded by the Town do not strictly comply with the statutory requirements [the certificates failed to properly identify the property owner’s name], the tax lien mortgages are void . . . .”).

    We are in full agreement with the authorities cited above. Crusader’s failure to notify Heyward of his right of redemption is a significant statutory defect, which cannot be cured given our tenets of public policy and strict adherence to statutory compliance. A failure of this magnitude warrants the nullification of the lien itself. Thus, the trial court properly invalidated Crusader’s lien on Heyward’s property.

    The judgment on appeal is Affirmed.


It may be worth noting that, in voiding the lien, the trial judge relied on Boddie v. Robinson, 430 A.2d 519, 523 (D.C. 1981) in determining that the lien was void, because Crusader failed to notify Heyward of his statutory right to redeem his property in that the notice was sent to the wrong address. The appeals court apparently did not see Boddie as supporting that proposition, and instead, looked to the rulings of the Maine Supreme Court to find support for voiding the lien.

Ohio Appeals Court: Failure To Assert That Notice Of Acceleration Was Sent To Homeowner Sinks F'closure; Another Lower Court Ruling Suffers Reversal

The failure of a foreclosing lender to present any evidence of a written notice of acceleration having been sent to a homeowner was sufficient to sink another foreclosure judgment, according to a recent ruling by an Ohio appeals court.(1)

A second aspect of this ruling that may be of interest to those avid fans of the Ohio Rules of Civil Procedure is that the attorney for the foreclosing lender was successful in improperly introducing evidence in obtaining its foreclosure judgment. In allowing the foreclosing lender's attorney to get away with it, the appeals court apparently had its hands tied by existing case law, noting that the homeowner had not properly objected to the improper introduction of the materials in the lower court proceeding. Because the appeals court booted the foreclosure judgment on other grounds, the homeowner will now get a renewed opportunity to object to the improper evidence.(2)

Another aspect of the court's ruling that may be of interest is that an "official" for the lender who signed a mortgage assignment and an affidavit filed in the case may have been a multiple corporate hat-wearing robosigner. The homeowner had correctly observed that, within about a month, the "official" signed an assignment of the mortgage at issue as a vice president of MERS, and then he signed the affidavit in question as a vice president of CitiMortgage. Because their was no evidence on the record before the appellate court actually contradicting the official's Citimortgage affiliation at the time of the signing of the affidavit, it had no choice but to accept the affidavit.(3)

For the ruling, see CitiMortgage, Inc. v. Elia, 2011-Ohio-2499 (Ohio App. 9th Dist. Summit County, May 25, 2011).

See Florida Appellate Courts Continue The Clean-Up; Another Lower Court Error In Rubber-Stamped Foreclosure Case Caught, Booted Back, where a Florida lower court ruling also recently suffered reversal involving a homeowner's claim that a notice of acceleration was not properly sent by the foreclosing entity.

Thanks to Ohio FRAUDClosure for the heads-up on the story.

(1) In this regard, the court observed (bold text is my emphasis):
  • {¶15} The only statement in Menne’s affidavit that even hints at CitiMortgage having complied with the notice provisions of their mortgage is Menne’s statement that CitiMortgage “has elected to call the entire balance of said account due and payable, in accordance with the terms of the note and mortgage.” CitiMortgage did not present any evidence of written notice actually having been sent to the Elias. Compare GMAC Mtge., L.L.C. v. Jacobs, 9th Dist. No. 24984, 2011-Ohio-1780, at ¶16-18 (upholding summary judgment award to bank where bank’s affidavit provided that “written notice of default was given in accordance with the terms of the note and mortgage”).

    Moreover, CitiMortage did not file any response or reply, much less any additional evidence, when the Elias directly challenged the notice deficiency in their own affidavits in support of their memorandum in opposition/cross-motion for summary judgment. Compare Ly at ¶22 (concluding that bank rebutted debtor’s assertion that bank failed to send notice of default/acceleration where bank filed supplemental affidavit, incorporating letters of notice sent to the debtor).

    On appeal, CitiMortgage’s response to the Elias’ notice challenge is that it would be “a waste of [] judicial resources” for this Court to remand this matter because the Elias clearly know they defaulted and CitiMortgage would simply re-file its motion, adding language that notice was provided. Had CitiMortgage filed proper materials in the first instance, however, far more judicial resources might have been saved. The plain language of the mortgage clearly requires that the Elias be given notice “prior to acceleration.” It was CitiMortgage’s burden to prove that the notice was given. Under these circumstances, we cannot conclude that CitiMortgage met its initial Dresher burden and showed that it complied with paragraph 22 of the mortgage note. Accord Kelly at ¶14.
(2) In this regard, the court observed (bold text is my emphasis):
  • {¶9} Civ.R. 56(C) limits the types of evidentiary materials that a party may present when seeking or defending against summary judgment. Civ.R. 56(C) (limiting summary judgment evidence to “pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact”). “The proper procedure for introducing evidentiary matter not specifically authorized by Civ.R. 56(C) is to incorporate it by reference in a properly framed affidavit pursuant to Civ.R. 56(E).” Skidmore & Assoc. Co., L.P.A. v. Southerland (1993), 89 Ohio App.3d 177, 179. “[P]apers referred to in an affidavit ‘shall be attached to or served with the affidavit.’” GMAC Mtge., L.L.C. v. Jacobs, 9th Dist. No. 24984, 2011-Ohio-1780, at ¶17, quoting Civ.R. 56(E).

    Even so, it is the opposing party’s duty to object when a summary judgment motion relies upon improperly introduced materials. Id. “[I]f the opposing party fails to object to improperly introduced evidentiary materials, the trial court may, in its sound discretion, consider those materials in ruling on the summary judgment motion.” Wolford v. Sanchez, 9th Dist. No. 05CA008674, 2005-Ohio-6992, at ¶20, quoting Christe v. GMS Mgt. Co., Inc. (1997), 124 Ohio App.3d 84, 90.

    {¶10} The Elias did not object to CitiMortgage’s summary judgment motion on the basis that it referred to improper Civ.R. 56(C) materials, which were not incorporated by reference in Menne’s affidavit. Further, they did not object to Menne’s affidavit on the basis that it lacked any attachments. See Civ.R. 56(E).

    The Elias only challenged the affidavit on the grounds that: (1) Menne lacked personal knowledge to attest to the statements contained therein; and (2) it did not show that CitiMortgage complied with paragraph 22 of the mortgage before pursuing the remedy of foreclosure. Compare U.S. Bank, N.A. v. Richards, 9th Dist. No. 25052, 2010-Ohio-3981, at ¶19. Thus, we limit our review to those issues. See Wolford at ¶20 (holding that trial court may disregard defects in Civ.R. 56 materials if the opposing party fails to object to the defects).

(3) In this regard, the court observed (bold text is my emphasis):

  • {¶12} [W]e are troubled by the fact that CitiMortgage opted not to respond, either in the court below or on appeal, to the Elias’ argument that Menne’s affiliation with the bank is questionable.

    Specifically, the Elias correctly observed that, on February 2, 2009, Menne signed an assignment of the mortgage at issue as a vice president of MERS and, on March 3, 2009, he signed the affidavit in question as a vice president of CitiMortgage.

    Without any additional evidence in the record before us that actually contradicts Menne’s assertion that he was a vice president of CitiMortgage at the time he signed an affidavit on its behalf, however, we cannot reject his averment on the basis of the Elias’ unsupported observation. The Elias’ argument that Menne’s affidavit is deficient because it is not based on personal knowledge lacks merit.