Saturday, June 11, 2011

Foreclosure Defense Attorney Shakes Another $3K Out Of BofA For Add'l Legal Fees & Costs Over Attempted Bogus Foreclosure On Home Without Mortgage

In Naples, Florida, The News Press reports:
  • Bank of America is caught up at last on its account with a Golden Gate couple who were sued by the bank for foreclosure even though they never had a mortgage, the couple’s attorney said today.
  • The bank cut a check [last week] for $5,772.88 to cover Naples-based attorney Todd Allen’s(1) $2,534 fee for defending retired Bay Village, Ohio, police Sgt. Warren Nyerges and his wife, Maureen, who were being foreclosed on by the bank.
  • That check also covers the expenses of the Collier County Sheriff’s Office. Two deputies showed up Friday at the bank’s Davis Boulevard branch in Naples with Allen and a court order authorizing them to remove property such as furniture from the bank for public auction if the debt wasn’t paid.
  • On Wednesday, Allen said the bank agreed to pay him $3,000 more for the expenses he incurred collecting the original attorney’s fees. “So BOA spent approximately $9,000 to solve a $2,500 problem,” he said in an e-mail.
  • Warren and Maureen Nyerges bought a house from Bank of America for $165,000 in 2009, paid cash and never had a mortgage. Somehow, the bank and its former attorney in the case, the David J. Stern law firm, believed the couple had a mortgage and was behind in the payments, Allen said.

Source: Bank of America settles up with Golden Gate couple's attorney, Collier sheriff's office.

See also, Naples Daily News: Attorney gets another $3,000 from Bank of America for bad foreclosure.

(1) Allen is associated with The Law Office of Conrad Willkomm, P.A., Naples, Florida.

Booted Foreclosed Homeowner Attempts To Fight Off Multiple Jail Threats Over Now-Dilapidated Former Home That Bank No Longer Wants

In Paulding County, Georgia, WXIA-TV Channel 11 reports:
  • It is 95 degrees in the shade, but 46-year-old Curtis Neeley, with high blood pressure and heart trouble, doesn't have time to rest. His old yard had to be cut by the close of business Wednesday or he could have gone to jail. Even now that it's done, he could still end up behind bars.
  • "Cutting the grass today is keeping me out of jail," he said, sweating in the oppressive heat. "But if the house doesn't get demolished in 14 days, I'm going anyway."
  • It's all part of an apparent snafu with the bank that Curtis and his attorney say took possession of the property during a foreclosure and bankruptcy two years ago. "I left the house two years ago," Neeley said. "The mortgage company came in and changed all the locks on the door so I couldn't get in."
  • After taking the Paulding County house -- and maintaining it -- the bank is now trying to foist it back on him, Neeley claimed, saddling him with the cost to tear it down; something he doesn't have the money to do.


  • The county says its goal is simply to get the property cleaned up, and unfortunately for Neeley, marshals consider him to be the owner. After trying to track him down for months, they finally located him on Facebook.
  • However, officials will likely now hold off on any further threat of arrest, at least until their lawyers can cut through the blur of the bank's role with Neeley's property.

For the story, see Facing arrest, man cleans up home he says isn't his.

War Against BofA Bank Branches Continues As Court Threatens To Throw Local Manager In Jail Over Lender's Refusal To Demolish Vacant Foreclosure

In Riverdale, Georgia, The Atlanta Journal Constitution reports:
  • A Bank of America branch manager in Riverdale faces jail time if the banking giant continues to ignore city orders to demolish a vacant, fire-damaged home. The bank, however, says it can’t comply because it doesn’t own the home.
  • Riverdale city officials have tried for more than six months to get the bank to tear down the dilapidated property, and the bank has ignored requests to appear in court, city attorney Deana Johnson said. “We’ve cited and served them with legal process and they’ve not come,” Johnson said.


  • On Wednesday, the bank hired the Atlanta law firm of McGuire Woods to handle the case. Meanwhile, the bank has racked up nearly $20,000 in fines, including a $500-a-day fine imposed several months ago.
  • A Riverdale City Court judge earlier this week ordered a June 28 hearing for the bank to show cause why the local branch manager should not be arrested for contempt, Johnson said, adding that the bank failed to appear in court in May despite city efforts to keep the branch manager apprised of the situation. [...] The house at 6878 Cedar Hill Court in Riverdale caught fire in December 2008, forcing the homeowners to move. The house ended up in foreclosure and was eventually taken over by Bank of America. (1)

For the story, see Vacant Riverdale home spurs court threats.

(1) Earlier this month, a branch manager in Naples, Florida was reportedly visibly shaken when local cops showed up to execute an asset seizure over the bank's failure to comply with a court order awarding a homeowner/couple payment of legal fees paid in connection with a failed BofA foreclosure action. See BofA's Refusal To Pay Court-Ordered Attorney Fees In Failed Foreclosure Leads To Bank Branch 'Raid' By Cops Seeking Asset Seizure To Satisfy Judgment.

Political Pamphlets Disguised As Eviction Notices Create Chaos Among Some Detroit Residents

In Detroit, Michigan, CBS News reports:
  • Residents in a Detroit neighborhood received a scare this week when they found what appeared to be eviction notices on their doors. The flyers, however, turned out to be political pamphlets in opposition to the construction of a controversial new bridge.
  • The fake eviction notices were posted by a local chapter of Americans for Prosperity, the conservative political advocacy group backed by Charles and David Koch, the billionaire brothers who run Koch Industries and are longtime libertarians. Local political leaders and columnists are condemning the group for scaring residents -- whose homes sit in the epicenter of the nation's foreclosure crisis -- while refusing to disclose which of its corporate backers are funding the flyers.
  • At the center of the flyer in question, in large print, reads: "Eviction Notice." In medium print, the top of the flyer reads, "This property is subject to seizure by the Michigan Department of Transportation."
  • Only in small print does the flyer say the property in question could be seized if legislation approving the bridge is passed.


  • Still, fake eviction notices had residents on edge. Resident Steve Toth told the Free Press his elderly mother saw the flyer and "damn near keeled over," while one of his neighbors was "beside himself." Scott Hagerstrom, American for Prosperity's Michigan state director, told the Free Press the group had no apologies for the flyer.

For more, see Koch-backed group's fake eviction notices rile up Detroit.

Go here for the fake eviction notice.

Tragedy Involving Deadly Bronx Firetrap That Lingered For Years In Foreclosure Spurs Crackdown On Illegally Converted Rooming Houses Throughout City

In New York City, Bronx News Network reports:
  • Mayor Bloomberg and the City Council announced yesterday that the city will be taking a new, more aggressive approach in identifying and inspecting apartment buildings suspected of being divided illegally.

  • At the end of April, a fire tore through an apartment building in Belmont and killed three family members who had been living there--Christina Garcia, 43, Juan Lopez, 36, and their 12-year-old son Christian Garcia.(1)

  • The early morning blaze broke out on the top floor of a multi-family building at 2321 Prospect Ave., a space that had been subdivided into several rooms using partitions, according to FDNY spokesman Frank Dwyer.

  • The tragedy has shined a spotlight on the proliferation of dangerous housing conditions in the Bronx, and across the city. Experts and elected officials say practices like illegal divisions, erected by both tenants and landlords alike, are frighteningly common and growing in number.

  • Sally Dunford, of the West Bronx Housing and Neighborhood Resource Center, called the problem “endemic.” She described some of what she’s seen in the community in recent years:

    1- already small apartments portioned off into even smaller ones, blocking access to the fire escape or stationed dangerously close to the building’s heating source;

    2- five people living in a basement with no bathroom or kitchen;

    3- an elderly couple living in a closet;

    4- tenants moving back into a property immediately after the city ordered them to vacate.

  • "People are more willing to do than to go to a shelter,” she said.

  • Landlords, meanwhile, who are struggling to make mortgage payments on the city’s ever-growing number of financially unstable properties can collect more rents if they can fit more tenants into a given space—even if it’s a fire hazard. People who are going under are much more likely to do stupid things,” Dunford explained.

  • The last known owner of the Prospect Avenue building where the fire took place, a used car salesman named Domingo Cedano, told the New York Times that he’d lost the building to foreclosure years ago.

For more, see Deadly Belmont Fire Points to Illegal Housing Dangers; City Launches Crackdown. subdivided
For the City press release, see Mayor Bloomberg And Speaker Quinn Announce New Approach To Target Most Dangerous Illegally Converted Apartments (Task Force Developed New Method Using Risk Analysis Model to Identify Properties Most at Risk for FireIn Pilot Test, 40 Percent of Targeted Properties Required Vacate Orders, Compared to Typical Rate of Three Percent).
(1) See Early Morning Bronx Fire In Illegally Converted Rooming House Leaves 3 Dead, 8 Injured; Firetrap Lingered In Foreclosure Since 2008.

Dubious Dealings Leave Nursing Home Chain Under Threat Of Collapse; 31,000 Elderly Residents Could Face The Boot

The New York Post reports:
  • Don't tell Blackstone Group chief executive Stephen Schwarzman that lightning doesn't strike twice. The New York billionaire private-equity kingpin has become the subject of a blistering attack in the British media after the country's No. 1 nursing home chain, formerly owned by Blackstone, has run into a financial iceberg -- possibly putting its 31,000 residents in danger of being booted from their homes.
  • The reports have blamed Blackstone for putting the chain, the 750-unit Southern Cross, in financial straits. "Former Southern Cross tycoon owns five houses worth $125.9M while 31,000 residents may have to leave their care homes," trumpeted a headline on the Daily Mail site on Sunday, referring to Schwarzman.


  • Private-equity firms that invested in Southern Cross split off the company's real estate from its actual nursing homes. This doomed the company as landlords increased rents and said they will not give the chain, which is losing money, a break.
  • This comes after the British government cut reimbursement for nursing home services, leading to the Southern Cross cash crunch. If the landlord and Southern Cross do not reach a compromise in about one month, there is a danger that the chain could collapse.

For more, see Don't kill granny (Schwarzman under fire in UK over retirees).

Extended Trips Away From Home Could Kill Property Insurance Coverage

In Tacoma, Washington, The News Tribune reports:
  • You’re a snowbird who spends six months in the Arizona sun and six months at your home here in the South Sound. Or you’re a homeowner with a mortgage that has gone underwater, and you’ve walked away from your loan expecting to face foreclosure. You’ve got homeowner’s insurance, and you think you’re covered.
  • Well, maybe not. Karl Newman, president of the Northwest Insurance Council, said this week that homeowners who fail to occupy their homes for 30 days or more could face significant insurance implications and serious financial risk.” Some policies, he said, “exclude losses caused by abandonment of a home or neglect when the home is left unoccupied for a specified number of consecutive days.”
  • Only recently – especially with an increase of foreclosures – has this facet of coverage become widely known, he said.
  • As long as people continue to own that home, they have liability,” Newman said. “We’re sounding the alarm. People may be without coverage and not know it. This could be a problem for people. We just don’t want them to be unaware.”

For more, see Little-known insurance clause can mean liability when leaving home.

Double Hit & Run Killer Gets Ultimate Prison Buy Out Deal; Dodges 20-45 Year Sentence, Gets 24 Months House Arrest At Luxury Hi-Rise Oceanfront Condo

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A privileged Illinois man who fled after running down two British businessmen in his speeding Porsche avoided prison [] and will instead serve out a 2-year sentence at a luxury oceanfront condo.
  • Ryan LeVin, 36, will be on house arrest at one of his parents' two condos at the Point of Americas on Fort Lauderdale Beach(1) – less than two miles from where he careened into the British visitors as they walked to their hotel two years ago. The house confinement will be followed by 10 years of probation. LeVin, who hails from a prominent Chicago family, worked out a deal to pay the victims' families an undisclosed sum.
  • The widows supported the sentence, and their attorneys collected checks from LeVin immediately after the [...] hearing, where he pleaded guilty to leaving the scene of a fatal accident and two counts of vehicular homicide.


  • Sentencing guidelines called for 20 to 45 years in prison, and prosecutor Stefanie Newman asked for 10 years. "He needs to go to prison,'' Newman said in court. "He needs to be penalized for his actions."
  • In imposing the lighter sentence, Broward Circuit Judge Barbara McCarthy said, "The need for restitution does outweigh the need for prison."
  • Both widows wrote letters to the judge, describing the "financial hardship" they've suffered since losing their husbands, who were the sole earners of their families. Watkinson left behind a wife, Kirsty, two sons, 5 and 21, and an 18-year-old daughter. Elford and his wife, Claire, had two young daughters.
  • The widows agreed to LeVin staying out of prison with certain conditions, including immediate payment to settle a civil wrongful death lawsuit they filed against him.


  • At the time of the hit-and-run, LeVin was on probation in Illinois for a 2006 high-speed chase in Chicago that injured a police officer and two motorists. He had multiple convictions in Florida, Illinois and Texas for speeding, disobeying traffic lights, improper lane passing, fleeing and eluding police officers, and cocaine possession.
  • Illinois officials will work with Florida authorities to have LeVin brought back to his home state, where he faces a parole violation stemming from the 2006 incident, an Illinois corrections spokeswoman said. Illinois will seek to have LeVin's parole revoked and have him sent back to prison.

For more, see Porsche hit-and-run killer gets house arrest in Fort Lauderdale oceanfront condo.

See also:

(1) Located on Port Everglades Inlet, Point of Americas boasts a "spectacular private beach,'' three fitness centers and luxury condos where residents can watch cruise ships from their terraces, the story reports.

Friday, June 10, 2011

Feds To Stiff Three Major Servicers On Cash Handouts Over HAMP Rules Violations

Bloomberg reports:
  • The U.S. Treasury Department will withhold financial incentives from three of the largest mortgage servicers after they failed to take required steps to prevent foreclosures under an Obama administration program.
  • Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. were found to need “substantial improvement,” the Treasury said in a report [...]. The banks are being penalized for failing to meet rules set by the Home Affordable Modification Program, or HAMP, which pays servicers to lower monthly mortgage payments for distressed homeowners.
  • We don’t have the power to impose fines,” Tim Massad, acting Treasury Assistant Secretary for Financial Stability, told reporters. “We have the power to publicize what they’re doing. We have the power to withhold incentives. That’s what we’re doing.” [...] A fourth servicing company, Ocwen Loan Servicing LLC, also was cited for poor performance. The company won’t sacrifice its fees because it had acquired a large servicing portfolio during the testing period, the Treasury said.

For more, see BofA, JPMorgan Penalized by U.S. for Failing to Act on Home Foreclosures.

Ingham County Commissioners To Fund Effort To Fight Local Foreclosures Based On Dubious 'Docx' Docs

In Ingham County, Michigan, The Michigan Messenger reports:
  • A committee of the Ingham County Board of Commissioners unanimously approved a plan to fund an attorney that will be dedicated to helping homeowners battle the growing number of foreclosures based on faulty documents.
  • In a meeting Tuesday night, the General Services Committee of the Board approved a contract worth up to $60,000 for Legal Services of South Central Michigan. That money will be used to pay an attorney full time to work with county residents caught up in the burgeoning cases of foreclosures based on bad documents.
  • Those documents have been identified as robo-signed documents from the now defunct company Docx in Georgia. Curtis Hertel, Jr, the county’s register of deeds, discovered the documents after seeing a 60 Minutes report on the company.
  • Those documents, which Hertel says number more than 100, have been referred to both the Michigan Attorney General’s Office and the FBI. In addition, other questionable documents have been found, and Hertel says investigations into the documents are ongoing.

Source: Ingham County to fund attorney to help with foreclosures (Register of Deeds finds more than 100 cases of fraud).

Local Register Of Deeds To Banksters Recording Robosigned Docs: 'Take A Hike!' Says Those Creating Havoc To Chains Of Title Should Be Held Accountable

Firedoglake reports:
  • John O’Brien[, Register of Deeds]] of the Southern Essex District in Massachusetts, has decided to reject all robo-signed records coming into his office, forcing the entities wishing to foreclosure under his jurisdiction to file separate forms. Thigpen has backed up O’Brien on this announcement. Here’s the press release.

    Saying “the buck stops here” Massachusetts Southern Essex District Register of Deeds, John O’Brien, today rejected 2 robo-signed documents submitted to his Registry for recording and plans to continue doing so. “My Registry will not be a knowing participant in this fraud against homeowners. From today forward, lenders be on notice, the Southern Essex District Registry of Deeds will not record robo-signed documents.”

    The rejected documents containthe signatures of three known robo-signers, Linda Green, Korell Harp and Linda Burton. According to O’Brien, in his Registry he has 22 different variations of Linda Green’s signature and 5 different variations between Korell Harp and Linda Burton. “I find this practice very troubling on many levels. It has completely jaded my understanding that a notarized document was something that could be relied upon.” stated O’Brien. In Massachusetts, notaries must take an oath of office, under the pains and penalties of perjury. “If these documents are signed by anyone other than the noted signatories, these notaries and those that employed them should be held accountable for the fraudulent documents that they have produced and the havoc they have caused to chains of title everywhere.”

    Register O’Brien said, “Knowing what I now know, it would be a dereliction of my duties as the keeper of the records to record these documents and any other documents that contain questionable signatures. To do so, would make me a willing participant in a continuing scheme which has corrupted the chain of title of thousands of Essex County property owners. I have decided to put a stop to this reckless behavior and hold these lenders and their agents accountable for the authenticity of what they are attempting to record in my Registry. I do not believe this to be unreasonable.”

For more, see Register of Deeds O’Brien Rejects Fraudulent Foreclosure Documents.

Class Action Horror For Wells Fargo Pick-A-Payment Borrowers As $50M Settlement With Bankster Yields $96 Per Victim, $25M For Attorneys

The Reno Gazette Journal reports:
  • Ninety-six dollars. That's the compensation borrowers nationwide are set to receive for giving up their right to sue a leading lender for a controversial mortgage program critics call "deceptive" and "toxic."
  • The amount comes from a class-action lawsuit settlement that was granted final approval by a California district court in May. The lawsuit targeted a loan product known as "Pick-a-Payment," an adjustable rate mortgage (ARM) that allowed borrowers to make minimum payments for a limited time.


  • A closer look at the terms of the settlement, however, raises questions about just how fair the deal is for borrowers. High on the list is the amount of the financial compensation borrowers are set to receive.
  • "Wells Fargo is taking Pick-a-Payment customers buried in toxic mortgages and giving them less than $100," said Wayne Moon, a spokesperson for The Public Interest Law Firm (TPI), a Reno 501 (c)(3) nonprofit that also operates in Utah and California. "And they're getting away with it."


  • The firm [TPI] believes that [class action lead counsel] Arbogast & Berns and Wells Fargo purposefully withheld key information from class members to prevent any objections to the settlement prior to final approval. The firm also accused Wells Fargo of purposefully approving a large number of less favorable modifications while knowing full well that a settlement was in the works.
  • "Wells Fargo wants this thing to go through because they're getting away with a $50 million settlement for all the garbage they've done," Moon said. "Meanwhile, people are getting less than 100 freaking dollars while lead counsel is getting $25 million. It certainly shows you which parties stood to benefit from this settlement. It's certainly not the class members."


  • Now TPI is working to file an appeal against the class action settlement at the U.S. District Court for the Northern District of California, San Jose Division. The firm also filed a separate objection against the settlement.


  • "It's bad enough that homeowners can't get help when they need it," Moon said. "Now you have this crappy settlement that sets a precedent. Banks nationwide are watching to see if they can do this. They know they can mitigate their losses through civil litigation. It's criminal what they're doing and they're getting away with it. And our courts and complicit government is allowing them do so."

For more, see RGJ Investigates: Fraud case could give borrowers only $96.

Add One More F'closed Homeowner To List Of Those BofA Told To Miss Payments To Qualify For Loan Mod; Woman Was Current On Reworked Plan When Home Sold

In Santa Clara, California, the St. George News reports:
  • Bank of America foreclosed on a Santa Clara woman’s home, despite her doing everything she was instructed to do in order to prevent it. Annette Lake resided in her house in Santa Clara from 1986 until May 24, 2011, when Bank of America foreclosed on her home.
  • Just after her divorce from her husband was finalized in 2008, Lake was diagnosed with breast cancer. She was laid off from her job during chemotherapy treatments. She began having a hard time paying her mortgage, though she never missed a mortgage payment.
  • In 2009 Lake learned that the government had given banks money to assist people experiencing hardships. She called Bank of America, the holder of her home loan, to learn if she could refinance her loan so that her payments would be more affordable.
  • They told me they couldn’t assist me because I was paid up to date,” Lake said. “I had to be behind on my payments before they would give me assistance.” Bank of America representatives told Lake she needed to miss three mortgage payments in order to be eligible for assistance. Lake then missed three mortgage payments, as Bank of America instructed her to do.
  • After missing three payments, Lake’s home loan was remodified and her mortgage payments were lowered to $728.50 per month, which she paid on time each month. But in late June 2010, the day after her mother died, Lake came home to find a foreclosure notice posted on her house.


  • Though Lake continued paying her mortgage payments, Bank of America attempted to foreclose on Lake’s house again, and on May 24, the efforts were successful. Lake and her 19-year-old daughter moved out of her house, which has now been sold by Bank of America. Lake and her daughter moved into Lake’s father’s basement, where they share a bedroom.


  • The entire experience has given Lake a different outlook on life. “I honestly understand how people become homeless and how they give up and say they don’t care,” Lake said. “You get to the point where you don’t care. I get it. You just feel like saying, ‘Fine, you win.’”
  • Though she’s already lost her home, Lake is hoping to participate in a class action lawsuit against Bank of America.(1)I know I’ll never get my home back,” Lake said. “But hopefully there’ll be some repercussions, some reciprocation.”

For more, see Bank of America Forecloses on Santa Clara Woman After Telling Her to Miss Her Payments (Annette Lake lost her home after Bank of America told her to miss three payments so she would qualify for a remodification. Lake needed to remodify her loan after being diagnosed with breast cancer).

(1) Beware of "class action lawsuits bearing gifts." See Class Action Horror For Wells Fargo Pick-A-Payment Borrowers As $50M Settlement With Bankster Yields $96 Per Victim, $25M For Attorneys.

Northern California 'Hard Money' Racket Sinks Claws Into Local DA

In Nevada City, California, The Sacramento Bee reports:
  • His personal finances in disarray and his ability to do his job compromised, Nevada County District Attorney Clifford Newell sat in a local cafe, eyes welling, as he described how he became beholden to a loan broker who is under investigation for bilking investors.
  • A few years ago, Newell and his wife assumed crushing debts to keep their summer camp business solvent. Unable to get a conventional loan – "Neither of us were qualified," Newell said – they borrowed from what is called a "hard money" broker, the equivalent, some say, of a legal loan shark who uses others' money to make high-priced loans.
  • That decision inextricably linked Newell, the county's top law enforcement officer, to Philip Lester. That hard money broker has since been accused by investors of cheating them, leading to investigations by police, and now the state attorney general's office, for securities fraud.
  • A yearlong Bee investigation found that Newell, 54, received favorable treatment on his own loans from two hard money brokers. Documents show that one of them, Lester, tried to help the Newells avoid foreclosure and possible bankruptcy by raising money for a loan and misleading investors who contributed.

For more, see Nevada County DA Took Special 'Hard Money' loan favors.

Thursday, June 09, 2011

Michigan Trial Judge: Failure To Strictly Follow Pooling & Servicing Agreement, NY Trust Law Sinks Non-Judicial Foreclosure As To MERS Mtg Assignments

Buried in a recent Michigan story on the battle against foreclosure robosigners, The Michigan Messenger reports:
  • [A] judge in Washtenaw County ruled on Tuesday that foreclosures involving any title exchanges controlled by Michigan Electronic Recording Systems, Inc. (MERS) were improper. That ruling could void thousands and thousands of foreclosures in the state because it is likely the bank or mortgage company had no legal right to foreclose on the property.
  • Michigan law requires each mortgage assignment — which means company A sells the mortgage to company B — to be registered with the country register of deeds office. MERS marketed itself as a company that would keep track of the transfers, without all the fees associated with filing assignments. Many of the mortgages were sold over and over again, but the judge ruled that MERS had failed to keep an accurate accounting of the assignments.
  • In short, no one knew who exactly owned the mortgage, and thus had the right to foreclose. Hertel said his office was contacting those homeowners who were affected by the fraudulent foreclosures.(1)

Source: Ingham County to fund attorney to help with foreclosures.

For the ruling, see Hendricks v. U.S. Bank Nat'l Association, Case N. 10-849 CH (Washtenaw Cty. Trial Ct., June 6, 2011).

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

(1) Central to Washtenaw County Trial Court Judge Archie C. Brown's ruling was the bankster's failure to strictly follow with the terms of the Pooling and Servicing Agreement, as well as violations of the trust law of the State of New York in connection with the attempt to transfer the borrower's loan to the trust. Accordingly, Judge Brown declared the sale of the borrower's home through the use of a non-judicial foreclosure process to be absolutely void (ie. void ab initio).

It should be noted that one of the banksters named in the homeowner's lawsuit, the originator and original Lender of the Note and Mortgage, filed a counterclaim for judicial foreclosure against the homeowner, judgment on which was granted by Judge Brown.

Upstate NY Sale Leaseback Peddler Accused Of Using Various Aliases In Alleged Ripoff Racket Duping Strapped Homeowners Into Signing Over Home Titles

In Rochester, New York, the Rochester Democrat & Chronicle reports:
  • Anthony Cerame is a man of many names. Most of them are unusual; he's fond of Anthony Shablacone. Some are juvenile — he has signed documents as Joseph Damifino [read damn-if-I-know] — and some don't make much sense. According to court records, he has assumed the name Alphonse Portadori because it reminded him of an outhouse.
  • With all of these names, Cerame, who has lived recently in Ontario and Monroe counties and has an office in Gates, portrays himself as an expert in "distressed property" real estate. In the past year, he has been in court with three different lawsuits against him, and court records and testimony have detailed his various aliases.
  • What's left unanswered — and at issue now in the final pending lawsuit — is whether he uses the aliases for fraudulent purposes or, as he contends, for purely innocent reasons. Cerame said he needs aliases for security reasons, while those who have sued him instead allege that his shifting identities were part of a scheme to cheat them out of properties.
  • The two other lawsuits against Cerame were settled out of court last year. Pending still is a lawsuit by Irondequoit resident Cheryl Helfer; in that case, state Supreme Court Justice Evelyn Frazee is considering whether Cerame used fake names to set up fraudulent trusts for property ownership.

For more, see Man of many names target of civil suits.

F'closure Rescue Operator Gets 6+ Yrs For Running Racket Purporting To File Legitimate Lawsuits Pitting Borrowers & Banks Over Lending Law Violations

From the Office of the U.S. Attorney (Sacramento, California):
  • United States Attorney Benjamin B. Wagner announced that [] United States District Judge Lawrence J. O'Neill sentenced George Eggleston, 65, of Las Vegas, to six years and nine months in prison, to be followed by three years of supervised release.
  • Eggleston had previously pleaded guilty to charges he committed mortgage fraud and had operated a mortgage foreclosure rescue scheme to defraud homeowners facing foreclosure. The court also ordered Eggleston to forfeit $364,899, and to pay restitution to the victims of his offense. The actual amount of restitution has yet to be determined.
  • According to court documents, Eggleston, who did business as Nexxus and Global Legal Associates, admitted he told homeowners in California and elsewhere that he could save homes nearing foreclosure.
  • Through his websites, he falsely and fraudulently represented that his companies used and managed attorneys to file lawsuits against foreclosing lenders for violations of state and federal laws. Eggleston claimed that Nexxus could stop and reverse any pending or completed foreclosure. Victims each paid Eggleston $1,000 per month for his services, and in total Eggleston received more than $100,000 for his fraudulent scheme. Eggleston used the money for his own personal expenditures and not for the benefit of his clients.

For the U.S. Attorney press release, see Las Vegas Man Sentenced For A Foreclosure-Rescue Scheme And Mortgage Fraud.

Watch Out For Financially Strapped Home Builders Nearing Foreclosure Using Lease-Purchase Deals To Unload Unsold Inventory Onto Unwitting Homebuyers

In Bartlett, Tennessee, WMC-TV Channel 5 reports:
  • [V]iviana and Alex Cifuentes of Bartlett, TN, negotiated a lease-purchase agreement with John Porter of Precision Equity Homes in Collierville, TN. The Cifuentes agreed to pay $8,000 down on the home Porter's company built [...] in Bartlett's Brunswick Village, a development of Precision Equity Homes.
  • Agreeing to reasonable monthly lease terms as well as a furniture purchase from Porter, the Cifuentes moved into the home in January to start the lease, which officially began Feb. 1, according to the agreement.
  • March 10, the Cifuentes received the first foreclosure notice from the bank that Porter and Precision Equity Homes had defaulted on the mortgage. "Definitely, his intention was to be able to get this money, and then the house was going to go into foreclosure," said Viviana. "We were played and totally used by Precision Equity Homes," added Alex.
  • Court records revealed Precision Equity Homes defaulted on three of its homes, all in the Brunswick Village development, since last summer. At least three banks - First Citizens National Bank, First Capital Bank and Community Bank, North Mississippi - have sued Porter and Precision Equity Homes for breach of contract. Porter denied the allegations in responses to the suits filed by his attorneys.


  • After Action News 5's inquiry into the case, Porter paid the Cifuentes an undisclosed cash settlement. The family will attempt to use that money to negotiate a new agreement with the property's current owner, Regions Bank.

For more, see The Investigators: Lease-Purchase Agreement: Don't Do It! rent to own rent skimming

Short Sale Fraud: Quick Way To Big Profits?

Syndicated columnist Kenneth R. Harney writes:
  • Are banks and distressed home sellers getting rooked on a massive scale in the booming short-sale arena — leaving hundreds of millions of dollars on the table for white-collar criminals?
  • A comprehensive new study estimates they will lose more than $375 million this year alone when they sell undervalued houses to tag teams consisting of real-estate agents and investors. Worse yet, the trend appears to be growing at the rate of 25 percent a year.

For more, see Quick profits, a 'short' way to fraud.

Wednesday, June 08, 2011

Mom Sues To Stop Abusive Ex-Son-In-Law From Inheriting Deceased Daughter's Share Of Home; Suit Says Domestic Violence Incident Led To Woman's Death

In Kanawha County, West Virginia, The West Virginia Record reports:
  • The mother of a St. Albans woman whose case of domestic violence set a national precedent is now seeking to prohibit her former son-in-law from deriving any benefit from her daughter's estate.
  • Elena Campbell filed suit against Christopher J. Bailey on May 4 in Kanawha Circuit Court. In her complaint, Campbell, 74, of South Charleston, asks that a court order be entered against Bailey, 50, barring his ability to inherit anything from his wife Sonya Bailey's estate since torturing her in 1994 ultimately resulted in her recent death. According to the suit, Sonya on Feb. 25, 1993, purchased a home at 6716 MacCorkle Ave. in St. Albans. Later on Nov. 7, 1994, she conveyed title of the home to both she, and Chris.
  • A quarrel between the two on Nov. 26, lead Chris to abduct Sonya, and place her in the trunk of his car. During the next five days, he kept her bound in the trunk all the while assaulting and beating her. Eventually, Chris took Sonya to Baptist Regional Hospital in Corbin, Kentucky. After she was initially treated there, Sonya, who was near death, was later airlifted to Morgantown for additional treatment.
  • Though initially arrested and charged in Kentucky, Chris was later extradited back to West Virginia to face kidnapping, and, for the first time in U.S. history, interstate domestic violence charges. The later was enabled by the then-recently enacted Violence Against Women Act.
  • Following a trial, Bailey was found guilty on both charges. On Sept. 11, 1995, U.S. District Judge Charles Haden II sentenced Bailey to 20 years on the interstate domestic violence, and life on the kidnapping charge. Also, Haden fined Bailey $100, and ordered him to pay $40,000 in restitution to Sonya. Currently, he is incarcerated at the Gilmer Federal Corrections Institution in Glenville.
  • Due to being deprived of oxygen while in the trunk of Chris' car, Sonya lapsed into a permanent vegetative state. After a long stay in a nursing home, she died on Dec. 19 at age 49.
  • After posting a $10,000 bond, records show the Kanawha County Commission appointed Campbell the administratrix of Sonya's estate on Feb. 10. Since she died intestate, or without a will, Chris, by law, is entitled to inherit from Sonya's estate, including the house.
  • However, Campbell wants to deny him that right on the grounds "his felonious criminal acts caused the death of his wife...Sonya Bailey."(1) Along with an order barring Chris' intestate succession interest in Sonya's estate, Campbell seeks another lifting the liens the federal government and Equifax placed on the house for $100, and $40,000, respectively.
  • In her suit, Campbell says this is necessary so that title of the home can pass unencumbered to Sonya's sister, Kelly Campbell, and her daughter, Samantha, who've occupied, and paid taxes on it since Sonya's death.
  • Campbell and the estate are represented by Bruce Perrone and Elizabeth Wehner with Legal Aid of West Virginia.(2)

Source: Mother of domestic violence victim challenging son-in-law's estate claim.

(1) How this case turns may well depend on the application of West Virginia's common-law "slayer rule" as well as the state's "slayer statute" (W.Va.Code, 42-4-2), an issue which was most recently addressed by the Supreme Court of Appeals of West Virginia in Plumley v. Bledsoe, 216 W.Va. 735, 613 S.E.2d 102 (2005). In that case, the West Virginia high court affirmed a lower court ruling that cut out a son, who killed his mother, from consideration when determining inheritance rights to the deceased mother's property, despite the fact that there was no criminal conviction against the son for the death.

For a discussion of the "slayer rule", see Sneddon, Karen J.: Should Cain's Children Inherit Abel's Property: Wading into the Extended Slayer Rule Quagmire, 76 UMKC L. Rev. 101 (2007-2008).

(2) Legal Aid of West Virginia provides free advocacy services to West Virginians with twelve offices throughout the state, from Wheeling to Princeton, Martinsburg to Logan. Click here for a map of its office service areas.

Fla. Appeals Ct. Nixes Prevailing Party Legal Fee Award In Foreclosure Defense; Failure To Include Request In Pleading Sinks Recovery Attempt

A major screw-up by a foreclosure defense attorney seeking recovery of prevailing party attorneys fees pursuant to section 57.105(7), Florida Statutes(1) on behalf of a client in a defense of a mortgage foreclosure action was at the heart of a recent decision by a Florida appeals court.

An abbreviated, somewhat 'butchered' summary of the facts follows:
  1. Lender filed a mortgage foreclosure action against defendants.

  2. Defendants filed their answer.

  3. The answer did not contain a claim for attorneys' fees.

  4. Subsequently, Defendant filed a supplemental answer to correct a scrivener's error but again failed to raise a claim for attorneys' fees.

  5. Court grants foreclosure judgment, and lender ultimately takes title to property at a foreclosure sale.

  6. Lender then filed a motion for deficiency judgment against defendants.

  7. The hearing was scheduled for February 10, 2009, and began as scheduled. However, due to insufficient time to present all evidence, the hearing was continued to February 18, 2009.

  8. Five days before the scheduled continuation of the evidentiary hearing, counsel for defendants filed an emergency motion to withdraw and to continue the hearing. The trial court granted the motion, and the hearing was continued to March 19, 2009.

  9. New counsel for defendants filed a notice of appearance on March 12, 2009.

  10. On March 13, 2009, only seven days before the final hearing on lender's motion for deficiency judgment (and after obviously realizing the screw-up by the original foreclosure defense attorney in failing to raise a claim for attorneys' fees in the defendant's answer to the foreclosure complaint), defendants filed a notice of intent to seek attorneys' fees and costs ("Notice of Intent").

  11. Following completion of the evidentiary hearing, the trial court entered final judgment denying lender's motion for deficiency judgment.

  12. Defendants subsequently filed a motion for attorneys' fees and costs, claiming entitlement to attorneys' fees and costs for both the foreclosure and deficiency judgment proceedings pursuant to portions of the subject loan documents as well as the reciprocal fees provisions of section 57.105.

  13. Lender filed a response to the motion, objecting to defendant's entitlement on multiple bases.

  14. Following the hearing on the fee motion, the trial court awarded $44,667.50 in attorneys' fees to defendants on account of the work of the foreclosure defense attorneys. The fee award reflected time spent by all of the attorneys involved in defendant's defense throughout the deficiency judgment proceedings only, and acknowledge no entitlement for time spent on account of the unsuccessful defense of the foreclosure proceedings.

In reversing the trial judge's $44K+ attorney fee award to the foreclosure defense attorneys, the appeals court, citing multiple authorities, simply said that the fee request must be included in a 'pleading' (Complaints, answers, and counterclaims are 'pleadings' pursuant to Rule 1.100(a) of the Florida Rules of Civil Procedure), and said that including the attorney fee claim in the "Notice of Intent" did not satisfy the 'pleading' requirement, because the "Notice of Intent" is not a pleading.(2)

This ruling should serve:

  • as a handy reminder for attorneys representing homeowners in foreclosure of what to do (and just as importantly, what not to do) when addressing the issue of recovering attorneys fees paid by their clients from the losing bankster in a successful defense,(3) and
  • as valuable information for homeowners successful in fending off foreclosure regarding their rights to recover, from the losing bankster, any fees paid or payable to the attorney representing them in a foreclosure action.

For the ruling, see BMR Funding, LLC. v. DDR Corporation, 2D10-2284 (Fla. App. 2d DCA, June 3, 2011) (Editor's Note: This ruling was subsequently withdrawn, and a new opinion was issued here, with a change contained in the text of one paragraph only).

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

(2) The appeals court ruled as follows in applying Florida law to the facts of this case (bold text is my emphasis):

  • Because DDR and Dunn did not claim entitlement to attorneys' fees and costs in any pleading, as defined by Florida Rule of Civil Procedure 1.100(a), the trial court erred in granting DDR and Dunn's motion for attorneys' fees and costs. In Stockman v. Downs, 573 So. 2d 835 (Fla. 1991), the supreme court held that a claim for attorneys' fees must be pleaded, regardless of whether the claim is based on contract or statute. Id. at 837. This pleading requirement was subsequently clarified in Green v. Sun Harbor Homeowners' Ass'n, 730 So. 2d 1261 (Fla. 1998):

    This Court's use of the phrase "must be pled" [in Stockman] is to be construed in accord with the Florida Rules of Civil Procedure. Complaints, answers, and counterclaims are pleadings pursuant to Florida Rule of Civil Procedure 1.100(a). A motion to dismiss is not a pleading. Stockman is to be read to hold that the failure to set forth a claim for attorney fees in a complaint, answer, or counterclaim, if filed, constitutes a waiver.

    Id. at 1263 (emphasis added).

    Subsequently, in Precision Tune Auto Care, Inc. v. Radcliffe, 815 So. 2d 708 (Fla. 4th DCA 2002), the Fourth District reversed an attorneys' fee award where the claimant failed to plead entitlement to fees. Applying the supreme court's ruling in Green, the court stated: "We assume that the supreme court meant what it said and said what it meant in Green. The plaintiffs here were required to set forth their claim for attorney's fees in a pleading." Id. at 712.

    In this case, DDR and Dunn urge this court to find that their "Notice of Intent" satisfied the pleading requirement. In its entirety, the notice states:

    Defendants, DDR Corporation and Carol J. Dunn, by and through their undersigned attorneys, hereby provide notice that, if they prevail with respect to Plaintiff's efforts to obtain a deficiency judgment, Defendants intend to seek the recovery of their attorneys' fees and costs from Plaintiff pursuant to the express terms of the subject Guaranty and the operation of the reciprocal fee provision of F.S. 57.105.

    We agree with BMR that the Notice of Intent is not a pleading. Having filed two answers to the amended complaint, DDR and Dunn had multiple opportunities to plead a claim for attorneys' fees. Thus, DDR and Dunn failed to raise entitlement to attorneys' fees in any pleading, as defined by Stockman and Green, and any claim they may have had was waived. See Sardon Found. v. New Horizons Serv. Dogs, Inc., 852 So. 2d 416, 421 (Fla. 5th DCA 2003).

    Further, pursuant to Stockman and Green, the purpose of the pleading requirement is notice. By pleading entitlement to attorneys' fees, the claimant puts the opposing party on notice, thereby preventing unfair surprise. Sardon Found., 852 So. 2d at 421. "The existence or nonexistence of a claim for attorney's fees may often affect the decision whether to pursue, dismiss or settle a claim. For these reasons, a party may not recover attorney's fees unless he has put the issue into play by filing a pleading seeking fees." Id.

    Here, not only did DDR and Dunn fail to plead entitlement, their "Notice of Intent" failed to satisfy the purpose behind the pleading requirement. The issue of DDR and Dunn's entitlement to attorneys' fees was not raised until the final hearing on BMR's motion for deficiency judgment was well underway and the foreclosure proceedings were complete. Not only was BMR deprived of any meaningful opportunity to consider whether to proceed with the deficiency judgment in light of possibly being assessed attorneys' fees, it was never put on notice of a potential claim for attorneys' fees during the pendency of the foreclosure action.

    Finally, DDR and Dunn urge this court to apply the exception to the pleading requirement recognized by the court in Stockman. "Where a party has notice that an opponent claims entitlement to attorney's fees, and by its conduct recognizes or acquiesces to that claim or otherwise fails to object to the failure to plead entitlement, that party waives any objection to the failure to plead a claim for attorney's fees."

    Stockman, 573 So. 2d at 838 (citing Brown v. Gardens by the Sea S. Condo. Ass'n, 424 So. 2d 181 (Fla. 4th DCA 1983); Mainlands of Tamarac by Gulf Unit No. Four Ass'n v. Morris, 388 So. 2d 226 (Fla. 2d DCA 1980)).

    DDR and Dunn argue that BMR failed to object to their "Notice of Intent" on the basis that such notice was not a pleading; however, the record conclusively establishes otherwise. BMR's written response to the "Notice of Intent," as well as its argument at the fee entitlement hearing, clearly relied upon the pleading requirement and Stockman in objecting to DDR and Dunn's entitlement to fees. BMR did not "recognize[ ] or acquiesce[ ] to that claim" for attorneys' fees. Stockman, 573 So. 2d at 838.

    Accordingly, the final judgment awarding attorneys' fees to DDR and Dunn is reversed.

(3) See Pleading Requirements for a Claim for Attorneys' Fees for an old (July/August, 2000) article in The Florida Bar Journal that may be of some value in providing guidance to lawyers in requesting court-ordered, prevailing party attorneys fees from losing defendants (ie. lenders, servicers, etc.).

24 Dartmoor Drive: Representative Of Ever-Diminishing Value Of Collateral Securing MBS-Investor-Held Crappy Paper As Trustees, Loan Servicers Fiddle

Holders of investments in mortgage-backed securities ("MBS") who are curious as to how the collateral securing their crappy paper is doing and want to see an example of what their trustees and loan servicers are allowing to happen to said collateral can take a ride over to 24 Dartmoor Drive in Crystal Lake, Illinois, where the Northwest Herald reports:
  • The house at 24 Dartmoor Drive in Crystal Lake is rotting from the inside out. Water damage from a burst pipe caused part of the ceiling to cave in and the wooden floors on the first floor to buckle. Neighbors can smell mold. There is a for sale sign out front, but no one is allowed in. City inspectors put a notice on the house saying it’s uninhabitable.
  • This beige two-story house with a brown roof is one of more than 8,500 properties in McHenry County that have fallen into foreclosure since 2008. The circumstances of the house – and many others like it throughout the state – have become problems for which no one seems to want to take responsibility.(1) New legislation would change that, shifting the burden of security and maintenance of these homes to lenders.
  • David and Sherri Modrzejewski – who live next to the dilapidated Crystal Lake home with their children – want it cleaned up. They worry the mold will make their boys sick. They have called the bank that owns the property, the listing agent, and the city of Crystal Lake. So far, little has been done. “It’s been really frustrating,” Sherri Modrzejewski said. “Everyone says their hands are tied.”
  • The couple who lived at 24 Dartmoor Drive owed $191,107.59 on the mortgage. Foreclosure proceedings began March 30, 2009. The house was sold at auction in December 2009 to the highest bidder, Deutsche Bank National Trust Co., for $135,000, according to court records.
  • Deutsche Bank National Trust Co., based in Los Angeles, said it is not to blame because it acts as a trustee, spokesman John Gallagher said. “Loan servicing companies, and not the trustee, are responsible for foreclosure activity, maintenance of foreclosed properties and resale of foreclosed properties,” he said.
  • In May, the city of Los Angeles disputed such claims, calling Deutsche Bank’s subsidiary “one of the largest slumlords” in the city. The city attorney filed suit alleging that the international lender left dozens of homes and apartments to decay and illegally evicted tenants from foreclosed properties, according to The Associated Press.

  • Litton Loan Servicing, Gallagher said, is accountable for the house at 24 Dartmoor Drive in Crystal Lake. The Houston-based company said it would look into the matter.


  • Local health inspectors visited the house, saw the damage and smelled the mold, said Debra Quackenbush, spokeswoman for the McHenry County Department of Health. The property trustee has been asked to inspect the home. Quackenbush said she didn’t know when that would happen. [...] The Health Department has had complaints about foreclosed homes in neighborhoods throughout the county.

For more, see Foreclosure ownership gaps leave ‘rotting’ homes.

(1) MBS-investor concerns over the tab for increasing costs and expenses associated with the handling of loan collateral is at the center of a recent lawsuit by an institutional investor demanding an accounting from their loan servicer. See Inflated Fees, Force-Placed Insurance, Robosigning Among MBS Investor Concerns In Suit Demanding Bankster Accounting Over Loan Servicing Costs.

Broke C. Fla Man Unable To Mount Defense To Charges Of Hijacking, Renting Out 100+ Vacant F'closures Under Claim Of Adverse Possession Commits Suicide

In Sarasota, Florida, the Sarasota Herald Tribune reports:
  • When Joel McNair committed suicide last week, he left behind a broken management company and a string of legal issues that threatened to land him in prison. For some time, McNair found vacant homes, many of them in foreclosure, and rented them out — even though he did not own the homes. McNair moved more than 100 people into foreclosed homes along Florida's Gulf Coast.
  • He was arrested in November on charges of fraud and grand theft and was awaiting trial. McNair contended that renting empty properties was legal under Florida's adverse possession statute, which was created in 1869. The law allows someone to occupy an abandoned property as long as that person takes care of the property and pays the taxes, said Bob Hurt, an Internet blogger who had become fascinated with McNair's program of occupying foreclosed homes. And McNair was doing just that.
  • But law enforcement officials and legal experts say McNair was simply a con man stealing money from people down on their luck.


  • [A]cquaintances said the thought of going back to prison and having no money to mount a defense also was difficult for McNair to deal with. He spent seven years in Sumter County and Zephyrhills prisons from 1987 through 1993 after being convicted of racketeering and 52 counts of grand theft for collecting millions in commissions on more than 100 bogus time-share sales.
  • "He saw himself spending the rest of his life and dying in prison," said Hurt, the Internet blogger. "He was broke," he said. "It cost him $12,000 to get out of jail in November and he had to pay an attorney on to of that. His trial was coming up and he saw his life disappearing."(1)

For more, see Landlord left messy legal issues behind in suicide.

(1) See The Lord of Squat: Mark Guerette Got Busted for Putting Families in Foreclosed Homes for another example of an individual who got into the vacant home hijacking business and who, when faced with criminal charges, pleaded "no contest" to organized fraud, a felony. According to that story, "His lawyer was willing to fight the charges, but Mark said he didn't want to risk ending up in jail and leaving his wife and kids stranded without a husband and father."

Tuesday, June 07, 2011

NYS Martin Act May Provide Manhattan DA With Noose Feds Lack To Be Fitted Around Banksters' Necks

In New York City, Bloomberg reports:
  • The criminal investigation of Goldman Sachs Group Inc. by the Manhattan District Attorney’s Office has at its disposal a 90-year-old New York law that makes it easier for state prosecutors to bring charges than their federal counterparts.
  • District Attorney Cyrus Vance Jr. subpoenaed Goldman Sachs, the fifth-biggest U.S. bank by assets, for records on its activities leading into the credit crisis, two people familiar with the matter said. Vance may bring charges under the state's Martin Act, which lawyers call a potent tool for New York prosecutors probing investment frauds, Ponzi schemes and other white-collar crime.
  • To prove securities fraud in federal court, U.S. prosecutors must show that a defendant intended to defraud victims and that the investors relied on misstatements or omissions.
  • Under the Martin Act, New York prosecutors aren’t required to prove intent, said Michael Perino, a law professor at St. John’s University in New York.
  • The reason why New York prosecutors love it so much and Wall Street firms hate it so much is that it is a much, much easier case to bring,” Perino said in an interview. “All a prosecutor has to show under the Martin Act is a material misstatement in connection with a securities offering.”

For more, see Goldman Sachs Criminal Probe May Allow Use of Powerful New York State Law.

For some background on New York's Martin Act, see:

Beleagured Bankster Bails Out Of Loan Servicing 'Racket'; Agrees To Unload Litton, Remain On The Hook For Gov't Penalties & Some 3rd Party Claims

Bloomberg reports:
  • Goldman Sachs Group Inc.(1) agreed to sell Litton Loan Servicing LP to Ocwen Financial Corp. for $263.7 million in cash, ending the New York-based bank’s 3-1/2 year experiment in processing home-loan payments.
  • In addition to the cash payment, which may be adjusted at closing, Ocwen will pay about $337.4 million to retire some of Litton’s debt, according to a filing by West Palm Beach, Florida-based Ocwen. The sale of Litton comes two months after Goldman Sachs wrote down the value of the mortgage-servicing business by about $200 million.
  • It really makes sense for them to sell it, and better for them to sell it sooner rather than later,” said David B. Hilder, a New York-based analyst at Susquehanna Financial Group LP who has a positive rating on Goldman Sachs. “They bought it at a time when the business was easier and it looked like there might be some insights to be gained in the mortgage market from having a servicer.”


  • Goldman Sachs will remain liable for fines and penalties that could be imposed by government authorities relating to Litton’s foreclosure and servicing practices before the deal closes, the statement said, and Goldman Sachs will share some of the losses arising out of third-party claims in connection to servicing agreements.
  • Litton is among the mortgage-servicing businesses cooperating with investigations by 50 state attorneys general into foreclosure practices. The probe began after authorities discovered some firms used faulty paperwork to seize homes.

For more, see Goldman Sachs Agrees to Sell Litton Unit to Ocwen for $264 Million in Cash.

(1) Affectionately referred to by some as Government Sachs, and which one critic calls "the most political firm on Wall Street."

Appeals Court 'Conga Line' Of Happy Homeowners Winning Reversals Of Erroneous Trial Judge Foreclosure Rulings Continues To Get Longer

William A. Roper, Jr. writes in Mortgage Servicing Fraud Forum:
  • In yet another appellate decision on conditions precedent, the Florida Court of Appeals for the Second District overturned a decision of the Circuit Court for Charlotte County. The decision is:

    Konsulian v. Busey Bank, N.A, No. 2D10-2163 (Fla. App. 2nd Dist. June 1, 2011.)


  • I would expressly note that litigants in other states might want to take particular note of conditions precedent cases in other jurisdictions where the express language of the mortgage provision is given. [emphasis in the original] In many instances, this language is uniform across jurisdictions. While an out of state case may NOT be authoritative in YOUR jurisdiction, the case is more influential when the facts are IDENTICAL.(1)

For more, see FL Court of Appeals Reverse Another Case on Conditions Precedent: Konsulian v. Busey Bank, N.A.

Representing the homeowner was attorney Gregg Horowitz, Sarasota, Florida.

Editor's Note: A question remaining unanswered is whether the defect in this case makes the foreclosure judgment absolutely void (ie. void ab initio), or merely voidable??? My guess is that in this case, the property has not yet been sold at a foreclosure sale so that the rights of downstream, innocent 3rd party purchasers are not involved. In such a case, the distinction between void and voidable may not need to be addressed.

However, had the property been sold at a foreclosure sale, with title ending up (either as a result of the foreclosure sale, or a subsequent conveyance by a title-taking lender) in the hands of a 3rd party purchaser, the void-voidable determination becomes crucial in assessing the rights of such a purchaser. See Bay State High Court Hears 'Ibanez' Follow-Up Case Involving Unwitting 3rd Party Buyer Who Purchased Void Title On Improperly Foreclosed Home for an example of such a problem currently being considered in Massachusetts by the state Supreme Judicial Court (the state's highest court).

(Given the nature of the defect in the foreclosure action at the center of the Florida case Konsulian v. Busey Bank, N.A (which is significantly different than the nature of the foreclosure defect in the Massachusetts case), I'll shoot from the hip, take a wild guess and say the judgment in the Florida case would probably be found to be merely voidable, not void ab initio, in which case a 3rd party purchaser's rights would be unaffected by the voiding of the judgment - provided, of course, the 3rd party purchaser otherwise qualifies as a bona fide purchaser).

(1) From the appellate court's ruling, reversing the earlier ruling of Charlotte County Circuit Court Judge George Richards (bold text is my emphasis):

  • Here, nothing in Busey's complaint, motion for summary judgment, or affidavits indicates that Busey gave Konsulian the notice which the mortgage required. The language in the mortgage is clear and unambiguous. The word "shall" in the mortgage created conditions precedent to foreclosure, which were not satisfied. See Frost v. Regions Bank, 15 So. 3d 905, 906 (Fla. 4th DCA 2009).

    Under Florida law, contracts are construed in accordance with their plain language, as bargained for by the parties. Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). Further, Busey did not refute Konsulian's defenses nor did it establish that Konsulian's defenses were legally insufficient.

    Because Busey did not prove that it met the conditions precedent to filing for foreclosure, it failed to meet its burden, and it is not entitled to judgment as a matter of law.

    Reversed and remanded.

Continued Crappy Loan Servicer Practices Harm Homeowners Even After 'Successfully' Obtaining Loan Modifications

ProPublica reports:
  • Chanel Rosario was supposed to be one of the lucky ones. After years of sending and re-sending documents, waiting on hold and attending court hearings to avoid foreclosure on her Staten Island home, she'd finally received a much-needed reduction on her mortgage. Eagerly, she and her husband signed it and mailed it in last September. "We thought it was over."
  • It wasn't. After months of making payments, Rosario called the bank handling her mortgage, Chase Home Finance, and found out Chase was still reporting her as delinquent, damaging her credit score and putting her home in jeopardy. Despite months of trying to get an explanation with the help of a legal-aid attorney, she still doesn't know why Chase isn't abiding by the agreement.
  • It's a disturbingly common occurrence, say consumer advocates: Many homeowners have been granted a hard-fought mortgage modification only to have their mortgage company effectively pull a bait and switch. The problems range from homeowners being hit with unexpected extra charges to the bank simply ignoring the signed agreement.


  • To get a sense of how common this problem is, the nonprofit Connecticut Fair Housing Center conducted an informal survey of 16 legal aid organizations and one private attorney. In nearly a quarter of the 655 cases of modifications they reviewed, the mortgage servicer didn't abide by the terms of the agreement. In the worst cases, homeowners who thought they'd successfully run the gauntlet of servicer errors and delays found themselves once again facing foreclosure. Sometimes the house was actually foreclosed on.
  • "It's not just one servicer screwing up," said Andrew Neuhauser, an attorney with Advocates for Basic Legal Equality of Toledo, Ohio. "It's industry-wide practice."

For more, see Even After Mortgage Modification, Shoddy Bank Practices Hurt Homeowners.

See also, Profiles: Shoddy Bank Practices Continue Even After Mortgage Mods for profiles of six homeowners who ended up getting screwed over, despite 'successfully' obtaining a loan modification from their respective banksters.

Monday, June 06, 2011

NYC Judge Voids Foreclosure Sale Over Use Of 'Sewer Service', Homeowner To Move Back In After Being Booted Two Years Ago

In East Elmhurst, Queens, the New York Daily News reports:
  • Johnny Ferreira may be the luckiest guy in Queens. Ninety-nine times out of a hundred, a struggling homeowner who loses his home to foreclosure will never see it again. Last month, a judge vacated a bank's foreclosure sale of Ferreira's home, effectively handing him back his keys.
  • As a result, Ferreira is preparing to move back into the same brick two-family with postage stamp front lawn, snug backyard and tidy driveway he'd been evicted from two years ago. "He loves that house," his lawyer, Pankaj Malik, said. "He doesn't want to move" again.
  • The extremely unusual ruling appears to be a one-of-a-kind victory in New York for a homeowner in a battle that banks almost always win. The problems started in 2009 when Ferreira was evicted after his home in East Elmhurst a few blocks from LaGuardia Airport was sold at auction. He fought back in court.


  • "When he came to me I said his chances of winning were slim to none because judges are loath to do something this drastic," the lawyer said. Then Queens Supreme Court Justice Allan Weiss suddenly set aside the auction sale and ordered Ferreira "restored to possession."


  • Weiss ruled that Ferreira was never served with the foreclosure papers, depriving him of due process. The judge said the bank's document was filled with errors, including an incorrect docket number, and was never filed in court. "It was just shoddy paperwork," Malik said.(1)

For more, see Home sweet foreclosed home: Queens man returns to home after judge overrules bank's foreclosure.

For Justice Weiss' ruling, see Deutsche Bank Natl. Trust Co. v Quinones, 2011 NY Slip Op 31284(U) (NY Sup Ct., Queens County May 16, 2011).

(1) Justice Weiss offered these observations on the facts of the case and the application of New York law thereto (bold text is my emphasis):

  • A party moving to vacate his default pursuant to CPLR 5015(a)(1) must demonstrate a reasonable excuse for the default and a potentially meritorious defense (see Eugene DiLorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 NY2d 138, 143 [1968]).

    The defendant is relieved of that obligation when the basis for vacature is lack of personal jurisdiction (Harkless v. Reid, 23 AD3d 622 [2005]; Steele v. Hempstead Pub Taxi, 305 AD2d 401 [2003]).

    In the absence of personal jurisdiction, all subsequent proceedings are rendered null and void (see Feinstein v. Bergner, 48 NY2d 234, 241 [1979]; Muslusky v. Lehigh Val. Coal Co., 225 NY 584, 587 [1919]) and subject to vacature at any time without any conditions (see McMullen v. Arnone, 79 AD2d 496, 499 [1981] and cases cited therein).

    It is, at all times, the plaintiff’s burden to prove that jurisdiction over the defendant was obtained by proper service of process (see Pearson v. 1296 Pacific Street Associates, Inc., 67 AD3d 659 [2009] lv denied 14 NY3d 705 [2010]; Munoz v. Reyes
    , 40 AD3d 1059 [2007]). A process server's affidavit of service ordinarily constitutes prima facie evidence of the facts contained therein and proper service (see Deutsche Bank Nat. Trust Co. v. Pestano, 71 AD3d 1074 [2010]; Frankel v. Schilling, 149 AD2d 657, 659 [1989]).

    Here, the plaintiff has failed to submit any proof of service upon the defendant in this action. The affidavit of service plaintiff submitted has a Supreme Court, Kings County caption with Index Number 74150/08 (not the index number of the instant action) and was filed in the office of the County Clerk of Kings County.

    In addition, the affidavit of service asserts that service was made at 17-24 Curtis Rd, East Elmhurst, N.Y. which is not the foreclosed premises nor the premises which was the subject of the holdover proceeding nor defendant’s actual dwelling place when the action was commenced.

    The affidavit of service produced by the plaintiff, on its face, demonstrates lack of personal jurisdiction, and a traverse hearing is unnecessary. Plaintiff’s attorney’s assertion that regardless of the defective affidavit of service, the defendant was properly served is without probative value since he has no personal knowledge of the facts (see JMD Holding Corp. v. Congress Fin. Corp.
    , 4 NY3d 373, 384-385 [2005]; Warrington v. Ryder Truck Rental, Inc., 35 AD3d 455 [2006]).

    With respect to plaintiff's claim of waiver, there was no waiver in this case. In appropriate circumstances, a defendant may be deemed to have waived his jurisdictional defense (see e.g. Lomando v. Duncan
    , 257 AD2d 649 [1999]; Biener v. Hystron Fibers, Inc., 78 AD2d 162 [1980]).

    A valid waiver "requires no more than the voluntary and intentional abandonment of a known right which, but for the waiver would have been enforceable" (Nassau Trust Co. v. Montrose Concrete Prods. Corp.
    , 56 NY2d 175, 184). It may arise by an express agreement or by such conduct or a failure to act that will evince an intent not to claim the purported advantage (Hadden v. Consolidated Edison Co. of N.Y., 45 NY2d 466, 469 [1978]).

    A waiver "is not created by negligence, oversight, or thoughtlessness, and cannot be inferred from mere silence" (Peck v. Peck
    , 232 AD2d 540, 540 [1996]; see Golfo v. Kycia Associates, Inc., 45 AD3d 531 [2007]. Intent is an essential element of a waiver, and requires that the person against whom the waiver is asserted had, at the time or the waiver, actual or constructive knowledge of the existence of his rights or of the relevant facts to support such right and chose not to take advantage of it (S. & E. Motor Hire Corporation v. New York Indemnity Co., 255 NY 69 [1930]; see also Savasta v. 470 Newport Associates, 180 AD2d 624 [1992] Airco Alloys Division, Airco Inc. v. Niagara Mohawk Power Corp., 76 AD2d 68 [1980]).

    In this case, there is no evidence from which the defendant’s knowing and intelligent waiver may be inferred. [...]

The Heat Continues For One Bankster; Is It Time Yet To Take A 'Short' Position In BofA Stock?

Fortune Magazine reports:
  • Are Countrywide mortgage-backed securities really mortgage-backed? Do banks even have the legal right to foreclose on certain homes?
  • These are just a few of the questions raised since the foreclosure crisis revealed shoddy mortgage servicing practices at many of the big banks – practices that have led to countless investigations and lawsuits. Court testimony by a former Countrywide employee added to the intrigue last fall, because she confessed that many loans there weren't properly handled, bringing into doubt the validity of Countrywide's securitization process. Bank of America, which owns Countrywide, quickly silenced the discussion with firm denials.
  • But Fortune has examined dozens of court records that corroborate the employee's testimony. And if Countrywide's mortgage securitizations systematically failed as it appears they did, Bank of America's potential liability dwarfs its shareholder equity, as the Congressional Oversight Panel points out.
  • Last November, a decision in a New Jersey bankruptcy case brought to light the testimony of Linda DeMartini, operational team leader for the litigation management department for Bank of America, which intended to prove the bank had the right to foreclose on a debtor's mortgage. Instead, her testimony was key to the judge's ruling that Bank of America couldn't foreclose, and along the way DeMartini made two statements that called into question the securitization of Countrywide loans.
  • She testified that Countrywide didn't deliver the notes to the securitization trustee, and that Countrywide notes weren't endorsed except on a case-by-case basis generally long after securitization ostensibly occurred. Both steps are required, in one form or another, under all securitization contracts.
  • Only the delivery issue was really scrutinized at the time, because without a doubt the failure to deliver the notes would invalidate the securitization.
  • The other issue, failure to endorse the notes, sparked a debate: the American Securitization Forum argues the notes would still have been securitized without endorsement, while Adam Levitin, associate professor of law at Georgetown Law, convincingly argues that they would not have been.
  • If the securitization failed, a variety of securities fraud charges could follow. Indeed, one investor lawsuit based in part on DeMartini's testimony about endorsements and delivery has already been filed. And investors aren't the only possible pursuers of securities fraud -- New York Attorney General Eric Schneiderman is investigating mortgage securitizations by three banks, including Bank of America.

For more, see At Bank of America, more incomplete mortgage docs raise more questions (Fortune examined hundreds of foreclosure documents to determine the validity of mortgage securitizations after Bank of America debunked testimony about them last fall. The results raise more questions than they answer).