Saturday, July 16, 2011

Chase Tagged With More HAMP Allegations As Bankster Threatens Foreclosure On Homeowner Currently Up To Date On Loan Modification Payments

In Los Angeles, California, the Los Angeles Daily News reports:
  • A Pacoima couple is suing the financial services firm JPMorgan Chase for allegedly disregarding federally backed loan modification agreements and illegally attempting to foreclose on their home, according to court papers [...].

  • Anabeht and Armando Velasco are suing Chase to prevent the bank from selling their home of 12 years at a foreclosure sale next week, according to their breach of contract complaint.

  • The suit filed Wednesday in Los Angeles Superior Court alleges that Chase entered into a loan modification agreement with the plaintiffs while continuing to move forward with foreclosure, even though the couple are making timely payments on their house.

  • "The very banks deemed 'too big to fail' refuse to comply with federal programs that aim to help families targeted by predatory lending practices," said Yvonne Mariajimenez, deputy director of Neighborhood Legal Services of Los Angeles County, a public interest law firm representing the plaintiffs.(1)

For more, see Pacoima couple accuses JPMorgan Chase of illegally foreclosing on home.

(1) Neighborhood Legal Services of Los Angeles County is a private, non-profit law firm advocating for low-income residents by providing effective legal representation and a variety of legal services and community education at no cost to qualifying residents in various areas of law.

Unpaid Real Estate Taxes Leave Bronx Homeowners Scrambling To Get Off City 'Lien List'

In The Bronx, New York, the New York Daily News reports:
  • The latest realty industry statistics might signal an end to the foreclosure epidemic that ravaged New York neighborhoods in 2009, but for those in the hard-hit northwest Bronx, the fear of losing their homes is still palpable.(1)

  • Nearly 3,000 private homes and businesses face the threat of lien sales by next month, making them prime candidates for foreclosure, according to the nonprofit University Neighborhood Housing Program.

  • Ominous news like this drew dozens of Bronxites looking for help to the West Bronx Homeowner Resource Fair in the Davidson Center Wednesday night.

  • Attendee Wayne Mayo, 46, knows the fear of making the lien list. He recently scrambled to get his father's Highbridge home of 45 years off the city's list of properties to be sold by Aug. 2. Mayo said his father, an 80-year-old World War II veteran on a fixed income, fell behind on bills after becoming ill. "The reason I'm here today is to make sure he doesn't end up on the list again," he said.

For more, see Bronxites scramble to avoid lien list; Home-saving clinic big draw for residents facing forclosure.

(1) Once the liens are sold, homeowners have six months and thirty days from the date of the tax sale to satisfy this lien with the tax lien servicer before the servicer has the right to initiate a foreclosure action on the property.

Go here for more on New York City's Annual Lien Sale, and here for tax lien servicer FAQs.

Foreclosure Winds May Blow Cubs' Fans Off Roof As 'Windy City' Rooftop Club Faces Forced Sale Over Unpaid Mortgage

In Chicago, Illinois, the Chicago Tribune reports:
  • A suburban bank has obtained a foreclosure judgment of more than $3 million against the owners of a building that houses a Wrigley Field rooftop club.

  • The Lakeview Baseball Club, 3633 N. Sheffield Ave., has been operating in receivership since last year when First Personal Bank, based in Orland Park, filed a foreclosure suit alleging that the building's owners defaulted on two loans. The lender issued a $2.8 million loan in 2006 and a second, junior loan for $350,000.

  • Cook County Circuit Judge Darryl Simko ordered July 8 that the property be sold at public auction next month. But the owners are negotiating to sell the building privately before the public sale, said their attorney Martin Oberman, a former Chicago alderman.

  • Oberman represents the children of Robert Racky, a Chicago developer, who started the first rooftop business in 1988 as a private club. The Lakeview Baseball Club is best known for the tote board under its rooftop seats that details the years elapsed since the Cubs' last division, league and World Series titles.(1)

  • Since then many of the apartment buildings surrounding Wrigley have opened rooftop businesses, turning a novelty into multi-million-dollar businesses. The rooftops pay royalties to the Cubs as part of a 2004 legal settlement. Even in an uncertain economy, the Racky property is expected to draw much interest.

For more, see $3M foreclosure judgment issued against building with Wrigley rooftop club.

(1) A very long time, indeed!

Cook County Cops Score Indoor Pot Farm Bust, Confiscate Weapons Cache In Raid That Began As Routine Foreclosure Eviction

In Glenview, Illinois, the Glenview Patch reports:
  • A routine foreclosure eviction in Glenview Wednesday morning turned up a marijuana grow house and weapons cache, resulting in one arrest by the Cook County Sheriff’s department, according to witnesses and Glenview police sources.

  • Later that afternoon, Glenview police arrested two women on criminal trespass charges when they returned to the home at 1427 Evergreen Terrace to try and retrieve property.

  • The Glenview Police and Cook County Sheriff’s office indicated they would release further details of the eviction-turned-raid [], including the names of those arrested and a more detailed accounting of the property seized.

For more, see Routine Eviction Turns Up Grow House, Weapons (Cook County Sheriff arrests one man Wednesday morning; Glenview PD arrests two women that afternoon).

Discovery Of 'Mental Health Issues' On Eve Of Sentencing Buys Convicted 'Bogus Lien' Extortion Racket 'Sovereign Citizen' Extended Freedom

In Albany, New York, The Associated Press reports:
  • An Ulster County man described by federal authorities as one of several self-proclaimed anti-government sovereign citizens recently convicted of similar fraud charges in upstate New York had his sentencing adjourned Tuesday for a psychological evaluation.

  • Richard Enrique Ulloa, 52, potentially faces decades in prison on seven federal mail fraud convictions. He told U.S. District Judge Thomas McAvoy that a jail therapy program for alcoholics and drug addicts helped him realize he has a delusional disorder — a mental illness he said was originally diagnosed two years ago — that he needs to deal with, and he shouldn't have represented himself at trial. "I've come to the realization I need therapy," Ulloa said.


  • According to federal authorities, Ulloa filed financial liens against a police officer and local justice in the Hudson Valley town of Rosendale for $552 million following two traffic tickets and a brief time in jail, and against mortgage lenders for $2.8 billion following foreclosure on his property.(1)

  • "But you're still filing bizarre papers," McAvoy said, citing recent papers purportedly signed by Ulloa naming McAvoy and other officials as his trustees and threatening to fine them if they failed in their responsibilities. The defendant said he didn't send or sign the papers. At the end of Tuesday's proceeding McAvoy cautioned him not to cause any more such filings or he could face a stiffer sentence.

For more, see Ulster County man's sentencing put off in liens case.

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

See County of Ulster, New York, et al. v. Ulloa, et al. for a related civil lawsuit tagging Ulloa that alleges a detailed description of his racket.

Cleveland Tenant Scores $482K Damage Award Over Sibling/Deadbeat Landlords With Reputation For Dodging Process Servers, Stiffing Judgment Creditors

In Cleveland, Ohio, the Cleveland Plain Dealer reports:
  • By some accounts, brothers Graig and Derek Brown are exceptionally bad landlords. Court documents and interviews portray the brothers as vindictive and mean-spirited with a track record of illegally shutting off utilities and locking out tenants for being a few days late with the rent or for complaining about conditions in their rental units.

  • Cleveland Housing Court Judge Raymond Pianka made his feelings clear when he recently awarded $482,000 in compensatory and punitive damages to Cindy Smith, a former tenant of the Browns.(1)

  • "The court has never, in its 31-year history, heard proof in so many cases of a landlord or landlords engaging in such repeated, ongoing, deliberate, cruel, harmful and illegal conduct," Pianka wrote. Neither the Browns nor their attorney, Fernando Mack, returned phone calls for this story.

  • The Browns are unrepentant bullies, according to an account by an aggrieved tenant included in a 2006 Cleveland Housing Court decision. The Browns reportedly told the mother of a former tenant that they were proud of their hardhearted tactics and had been employing them for years.

  • In this case, they had cut off a woman's electricity and water, locked her out and then took some of her family's belongings, including one shoe from each pair owned by her and her children.

For more, see Tenants, attorneys accuse Cleveland property owners of cruel treatment.

(1) The Browns, who reportedly own two apartment buildings and several houses in Cleveland, have also cemented their reputation in legal circles for their ability to evade service on subpoenas and for an inability to collect on judgments rendered against them, the story states. Judgments have been difficult to collect because the brothers often have transferred ownership of properties from one limited liability company to another, said one attorney, and when there are mortgages on properties, judgments are tough to collect because those claims are secondary to the mortgages themselves, according to the report.

45 Minneapolis-Area Tenants Face The Boot As City Threat To Yank Rental Licenses For Sub-Par Housing Looms Over Landlord

In Minneapolis, Minnesota, the Star Tribune reports:
  • Only a year out of college, Alan Kwong became a landlord and eventually acquired 15 rental properties on the North Side of Minneapolis. Yet his business has struggled in recent years, and now Kwong has become the latest target of the city's crackdown on negligent landlords.

  • Kwong has lost two of his rental licenses already, and on Monday, a City Council committee will vote on a recommendation to revoke the rest of them. If the measure is approved by the full council, 45 tenants could be forced to find somewhere else to live in a rental market already shrunken by the devastating May 22 tornado.


  • [One] tenant of a Kwong-owned property, Amber Johnson, 27, worried about how the council's action would affect her and her three children. "I'm going to try to look for a place, but I don't have money to move right now," she said. "I don't really know where I would go; I'd probably be homeless."

For more, see Landlord's loss leaves tenants in limbo (Forty-five north Minneapolis residents could be out on the street if the city revokes his remaining rental licenses).

For story update, see North Minneapolis landlord allowed to keep rental license (A Minneapolis City Council panel overturned recommendations to revoke licenses for 12 rental units, involving 45 tenants).

Beaumont Homeowner Asks Court To Slam Brakes On Oncoming Bulldozer As City Votes To Add 'Below Code' Home To 'Demo' List

In Jefferson County, Texas, The Southeast Texas Record reports:
  • Hoping to save his home from being demolished, Kenneth Wilcox has filed an injunction request against the city of Beaumont. The petition was filed July 7 in Jefferson County District Court.

  • In his petition, Wilcox says that on May 10 the city, in spite of his protest, voted to demolish his home [...]. Wilcox claims that he is in the process of repairing the home but that he may not be able to finish the repairs before the city bulldozes the house. He is asking the court to issue a temporary injunction while he works to bring the house up to city code.

Source: Injunction seeks to stop city from bulldozing Beaumont home.

Homeowner Faces Felony Charge For Ripping Off Fixtures From House While In Foreclosure; Claims He Still Owned Items Until Process Was Completed

In Menomonie, Wisconsin, the Leader Telegram reports:
  • A Colfax man is accused of damaging or removing items, including a furnace and water heater, from a foreclosure house in Menomonie that would cost more than $91,000 to repair, according to testimony during a preliminary hearing [].

  • Mark S. Mouledoux, 46, []was ordered to stand trial [] on a felony charge of removal or damage to encumbered property. The charge is for allegedly removing or damaging items from his then-Menomonie house that was mortgaged and later foreclosed on in November.


  • Menomonie police were told Nov. 4 by a default mortgage employee of Bremer Bank that Mouledoux had removed permanent fixtures [...] without the bank's permission. The bank completed the foreclosure Nov. 1.


  • Mouledoux told police he removed the items before the bank owned the home, and a neighbor confirmed some of the items were removed in late October. Mouledoux was told by police the bank owns the house until the mortgage is actually paid off.(1)

For more, see Colfax man accused in foreclosure damage.

(1) Under Wisconsin law, ripping off fixtures from a home encumbered by a mortgage can also subject the perpetrator to liability for triple damages under §895.80(1) of the Wisconsin statute. See generally, Tri-Tech Corp. v. Americomp Services, Inc., 247 Wis.2d 317, 633 NW 2d 683 (Wis. App. 2001).

Friday, July 15, 2011

Minnesota Judge Halts Foreclosure; Says Publication Of Foreclosure Notice In Wrong Newspaper Fails To Give Notice To Those To Whom It Is Directed

In Olmstead County, Minnesota, the Post Bulletin reports:
  • An Olmsted County District Court judge has ruled that a mortgage foreclosure sale notice published in an area newspaper was invalid because the notice wasn't in a legally recognized newspaper distributed in the area where the home is located.

  • The ruling was in regard to a foreclosure case involving a house in northwest Rochester. The legal notice was published by the lender in the Stewartville Star, and the home owner argued that the weekly isn't regularly distributed in "the area of the property," as required by statute.

  • Olmsted County District Judge Jodi Williamson agreed, granting a preliminary judgment Feb. 14. A declaratory judgment was entered June 8.


  • In the ruling, Williamson says that "publication in a qualified newspaper is not sufficient by itself to provide notice to the public." The legal notice must be published in a newspaper "that is likely to give notice in the affected area or to whom it is directed," according to the ruling."


  • The judge ordered the foreclosure process halted pending further proceedings or possible resolution by the parties.(1)

For more, see Foreclosure notice ruled invalid.

(1) Since no actual foreclosure sale took place in this case, and the rights of unwitting, 'downstream' 3rd party buyers (ie. potentially, buyers qualifying for protection as "bona fide purchasers") were not implicated, it was unnecessary for the court to determine whether the defect in the published notice would have rendered any resulting foreclosure judgment absolutely void/void ab initio (which would negatively impact on all 'downstream 3rd party purchasers), or merely voidable (which would not negatively impact on 'downstream' buyers if, and only if, they qualify for protection as bona fide purchasers - ie. did the downstream purchaser know, or should he have known, of the defect in the foreclosure notice?).

See, e.g. Harris v. Harris, 428 Pa. 473 (Pa. 1968), where the Pennsylvania Supreme Court made the following observation on this point (bold text is my emphasis):

  • Whether title will pass at an execution sale depends upon the validity of the underlying judgment.

    If the execution sale was based upon a voidable judgment, a bona fide purchaser will be protected against actions seeking to recover the purchased property.

    On the other hand, where a void judgment is the basis for an execution sale, one who purchases property will not acquire title even if a bona fide purchaser for value. See 33 C.J.S., Execution §§ 6, 230, 299a (1942); Restatement, Judgments § 115, comment j (1942) and Pennsylvania Annotations; 3 and 4 American Law of Property §§ 13.1, 18.60 (1952).

See Straw, Ralph L. Jr., Off-Record Risks for Bona Fide Purchasers of Interests in Real Property, 72 Dick. L. Rev. 35 (1967-1968) for a general discussion of the various 'hidden hazards' that face bona fide purchasers of interests in real estate.

Indianapolis Feds: Suspect Used Phony Mortgages, Bogus Repair Bills To Pocket Cash, Rip Off Lenders In Straw Buyer Scam

From the Office of the U.S. Attorney (Indianapolis, Indiana):
  • Joseph H. Hogsett, United States Attorney, announced that Roger D. McKuhen, age 66, formerly of Avon, Ind., and currently a resident of Virginia, was charged [] in an indictment with conspiracy to commit wire fraud, [...].

  • The indictment alleges that between April 2006 and January 2007, McKuhen and his coconspirators conspired to defraud various mortgage lenders by creating false, fraudulent, and bogus second mortgages and false estimates and fake invoices for repairs, which allowed McKuhen and his co-conspirators to use funds provided by the lenders at closing to settle the false second mortgages and repair bills as down payments on the properties, all without the lenders’ knowledge.


  • For each property, McKuhen created either: (1) a false second mortgage payable to a company owned by McKuhen; or (2) a fraudulent invoice or estimate (payable to a coconspirator) for repair work allegedly done or to be done to the property, even though McKuhen knew that the repair work would never be done. These false mortgages and/or repair invoices or estimates were presented at closing as genuine, and the title agent initiated payments to settle the bogus mortgages and repair invoices/estimates to McKuhen’s company and/or McKuhen’s coconspirators.

For the U.S. Attorney press release, see Hogsett announces indictment of ex-Indianapolis area realtor in mortgage fraud scheme.

BofA Tagged w/ Proposed Class Action Over Business Connection w/ Convicted Scammer Who Ran $30M Ponzi-Scheme, Equity Stripping Sale Leaseback Ripoffs

From a press release from law firm Capretz & Associates:
  • Bank of America has been named as a defendant in a class action lawsuit filed in Los Angeles Superior Court, Central District, on behalf of hundreds of LA homeowners and investors who lost millions of dollars in a highly complex Ponzi scheme run by one of Los Angeles' most notorious fraud operators, Juan Rangel.

  • The lawsuit, filed on behalf of the mostly Latino plaintiffs by the law firms of Pearson, Simon, Warshaw & Penny, LLP; Capretz & Associates; and Girardi & Keese, alleges that Bank of America employees as well as bank management were aware or should have been aware of the Ponzi scheme and despite such knowledge provided banking services to Juan Rangel and his associates.

  • Notably, Dony Gonzalez, a former Bank of America branch manager was indicted and pled guilty to receipt of bribes by Juan Rangel. The lawsuit alleges that from about November 2007 to July 2008, Rangel used his firm, Financial Plus Investments, as well as other financial companies he owned, to defraud middle-class working families through investment, mortgage and foreclosure rescue schemes that netted Rangel about $30 million. Rangel's firms shut down in July 2008 and Rangel was arrested by federal agents in August 2008.


  • According to the lawsuit, Rangel not only took investor monies, he also operated a mortgage fraud scheme that targeted distressed homeowners who had equity in their homes but were behind on mortgage payments.

  • Rangel offered these homeowners assistance in bringing their loans current and saving their properties. As part of these transactions, however, the homeowners' equity in their properties was invested with Financial Plus and, in some cases, Rangel also took title to their properties.

For more, see Class Action Lawsuit Filed Against Bank of America on Behalf of Latino Homeowners Who Lost Millions to LA Fraud Operator Juan Rangel.

For the lawsuit, see Arreola v. Bank of America, National Association, et al.

Closing Agent Faces 57 Months After Copping Plea To Looting Escrow Funds From R/E Closings Intended For Existing Mortgage Loan Payoffs

From the Office of the U.S. Attorney (Sioux City, Iowa):
  • A real estate broker who stole mortgage loan proceeds received during real estate closings pled guilty on July 5, 2011, in federal court in Sioux City. Jean Teresa Hoffert, age 59, from Emmetsburg, Iowa, was convicted of one count of mail fraud. At the plea hearing Hoffert admitted defrauding others out of money and causing the United States mail to be used as part of the fraud.

  • According to information disclosed in court, when acting as a settlement agent, Hoffert failed to pay off prior mortgage loans that were supposed to be paid off following mortgage loan refinancings. In other instances, the prior mortgage loans were paid off late.

  • Sentencing [...] will be set after a presentence report is prepared. Under the plea agreement, Hoffert faces a sentence of 57 months’ imprisonment. Hoffert also faces a maximum possible fine of $250,000 or twice the amount of money involved in the offense, a special assessment of $100, and up to 3 years of supervised release following imprisonment. Hoffert will also be ordered to pay full restitution to all victims of her related criminal conduct.

For the U.S. Attorney press release, see Emmetsburg, Iowa, Real Estate Broker Convicted Of Mail Fraud.

Thursday, July 14, 2011

Fla AG Slams Brakes On Meaningful Efforts In F'closure Fraud Probe; Political Arm-Twist Forces Pair Of Investigators Out Door; Duo Start Defense Firm

The Palm Beach Post reports:
  • A lead foreclosure fraud investigator for the state said she and a colleague were forced to resign from the Florida attorney general's office, unexpectedly ending their nearly yearlong pursuit to hold law firms and banks accountable.

  • Former Assistant Attorney General Theresa Edwards and colleague June Clarkson had been investigating the state's so-called "foreclosure mills," uncovering evidence of legal malpractice that also implicated banks and loan serv­icers.

  • Despite positive performance evaluations, Edwards said the two were told during a meeting with their supervisor in late May to give up their jobs voluntarily or be let go. Edwards said no reason was given for the move.

  • "It all happened very abruptly," said Edwards, who had worked in the attorney general's office for about three years. The foreclosure investigations were launched under former Attorney General Bill McCollum, but Edwards said she sensed changes were coming under Gov. Rick Scott and Attorney General Pam Bondi.

  • "I think they wanted to put people in there that were more in line with their thinking," Edwards said.


  • Edwards and Clarkson have opened their own foreclosure defense firm based in Hollywood and hope to help homeowners with the knowledge they gained in the attorney general's office.

For more, see Foreclosure fraud investigators forced out at attorney general's office.

Ohio AG Tags Foreclosure Rescue Operator With Lawsuit For Allegedly Running Illegal Upfront Fee Loan Modification Ripoff

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine [] announced a lawsuit against foreclosure rescue company Diversified Real Estate Consultants LLC (DREC), its affiliates, and its owner for multiple violations of Ohio consumer laws.


  • According to Attorney General DeWine's lawsuit, filed in the Cuyahoga County Common Pleas Court, DREC is a Florida registered company operating from Ohio that offered mortgage assistance relief services to Ohio consumers, even though it never registered to do business in Ohio. DREC charged and accepted fees of $500 to $3,495 from homeowners, promising them reduced monthly mortgage payments or better interest rates, and represented a "100% money-back guarantee." Despite the company's claims, consumers received no help and no refunds.

For the Ohio AG press release, see Northeast Ohio Foreclosure Rescue Company Sued for Consumer Law Violations.

For the lawsuit, see State of Ohio v. Diversified Real Estate Consultants, LLC, et al.

(1) In addition to DREC, the Attorney General's lawsuit names defendants DREAM Management USA (DREAM) and Precision Processing Solutions International LLC (PPSI) – Ohio companies that provided DREC research, analysis, and documentation processing services, in direct connection with DREC's mortgage relief assistance services. The suit also names North Canton resident Daniel J. DePasquale, owner and operator of DREC, DREAM, and PPSI.

The lawsuit charges the defendants with violations of Ohio's Consumer Sales Practices Act, Debt Adjusters Act, and Telephone Solicitation Sales Act. It seeks a declaratory judgment, injunctive relief, civil penalties, and full restitution for consumers.

Homeowner Trips Over Procedural Rules, Sinking Proposed Class Action Alleging Servicer Overcharges Without Lawsuit's Merits Ever Being Addressed

The following facts come from a recent ruling from a U.S. Circuit Court of Appeals (3rd Circuit), applying the law of the State of New Jersey in a controversy centered on a foreclosure action (the take-away here, folks, is that regardless of the merits of a case, if a lawsuit is filed in the wrong court, the plaintiff could find itself dead in the water without the litigation ever really getting out of the starting gate. And, by the way, filing in the wrong court is no unusual occurrence; it happens quite frequently in the context of foreclosure actions when homeowners bring certain actions having some connection to the foreclosure in a Federal court long after a state court has already rendered judgment in the foreclosure action itself):
  1. Homeowner goes into default on her home mortgage loan.

  2. Chase filed a foreclosure action in the Chancery Division of the New Jersey Superior Court (ie. state court) and obtained a judgment of $90,401, plus fees.

  3. Homeowner, however, did not pay the judgment, and a foreclosure sale was stalled for approximately three and a half years while she filed three bankruptcy proceedings.

  4. After dismissal of the third bankruptcy proceeding, Chase sent Homeowner a quote for reinstating the mortgage in return for a payment of $18,658. Of that total, the letter stated that $900 was to be collected for foreclosure fees and $5,791 was to be collected for foreclosure costs.

  5. Homeowner paid in full the amount quoted by Chase to reinstate her mortgage, and the Chancery Court entered a judgment of dismissal without prejudice in the foreclosure action.

  6. Two years after paying the reinstatement balance, Homeowner commenced a class action suit in a U.S. (Federal) District Court against Chase alleging multiple claims, all stemming from the alleged overcharges of foreclosure costs and fees contained in the reinstatement quote.

  7. Without considering the merits of the allegations, the District Court booted the lawsuit, saying Homeowner failed to state a claim upon which relief may be granted.

  8. On appeal, the 3rd Circuit Court of Appeals affirmed the lower court ruling.

Agreeing with the lower court, the appeals court applied New Jersey's 'entire controversy doctrine' in finding, in a nutshell, that the homeowner brought her lawsuit in the wrong court.

It noted that her lawsuit should have been filed as a counterclaim in the original foreclosure action, which was filed in state court (ie. the Chancery Division of the New Jersey Superior Court) beacuse her suit was based on the same or similar underlying facts associated with the events related to the foreclosure action, said action being brought in the Chancery Court.(1) Accordingly, it was in the state court (as part of the original foreclosure action) where the Homeowner's lawsuit should have been brought.(2)(3)

For the ruling, see Coleman v. Chase Home Finance, LLC, No. 09-4727 (3rd Cir. July 12, 2011).

(1) The federal appeals court addresses the 'entire controversy doctrine' in the following excerpt (bold text is my emphasis):

  • The entire controversy doctrine compels the parties, when possible, to bring all claims relevant to the underlying controversy in one legal action. When the court finds that a claim not joined under the original action falls within the scope of the doctrine, that claim is barred. N.J. Ct. R. 4:30A.

    The doctrine "seeks to further the judicial goals of fairness and efficiency by requiring, whenever possible, `that the adjudication of a legal controversy should occur in one litigation in only one court.'" Circle Chevrolet Co. v. Giordano, Halleran & Ciesla, 662 A.2d 509, 513 (N.J. 1995) (quoting Cogdell v. Hospital Ctr., 560 A.2d 1169, 1172 (N.J. 1989)). The doctrine is also applied to New Jersey claims in federal court. Bennun v. Rutgers State Univ., 941 F.2d 154, 163 (3d Cir. 1991).

    However, application of the entire controversy doctrine is "equitable in nature" and based substantially on "judicial fairness," meaning that the Court must balance considerations of judicial efficiency as well as fairness to the litigants. Cafferata v. Peyser, 597 A.2d 1101, 1103 (N.J. Super. Ct. App. Div. 1991)

    New Jersey courts have held that the primary consideration in determining if successive claims are part of the same controversy is whether the claims "arise from related facts or from the same transaction or series of transactions." DiTrolio v. Antiles, 662 A.2d 494, 502 (N.J. 1995). It is a "commonality of facts, rather than [a] commonality of issues, parties, or remedies that defines the scope of the controversy." Id. at 504.

    The limits of the entire controversy doctrine with regards to foreclosure actions are necessarily somewhat narrower, as N.J. Ct. R. 4:64-5 requires that only "germane" counterclaims may be joined in a foreclosure action. See N.J. Ct. R. 4:30A. Claims are considered to be germane to a foreclosure action if they arise out of the mortgage that is the basis of the foreclosure action. Leisure Technology-Northeast, Inc. v. Klingbeil Holding Co., 349 A.2d 96, 98 (N.J. Super. Ct. App. Div. 1975).

    Here, Coleman's claims arose directly out of a reinstatement quote that was provided to her as an alternative to a foreclosure sale, and the excessive fees allegedly charged by Chase would not have been charged but for the foreclosure action. Accordingly, Coleman's causes of action arose out of and were germane to the original foreclosure action.

(2) Homeowner's seemingly strong arguments against the application of the entire controversy doctrine in this case fell upon deaf judicial ears (bold text is my emphasis):

  • However, Coleman makes three arguments why her federal claims should not fall within the doctrine despite the fact that they are otherwise "germane" to the foreclosure action.

    First, the doctrine is not a bar to successive claims where they have accrued after the pendency of the of the original action. McNally v. Providence Washington Ins. Co., 698 A.2d 543, 548 (N.J. Super. Ct. App. Div. 1997). Coleman argues that the foreclosure action was no longer pending once judgment was issued on August 1, 2002, and thus her claims are not barred by the entire controversy doctrine. We disagree.

    A court retains jurisdiction in a foreclosure action even after a final judgment, until delivery of the sheriff's deed under New Jersey Court Rule 4:65-5. Sovereign Bank, FSB v. Kuelzow, 687 A.2d 1039, 1043 (N.J. Super. Ct. App. Div. 1997). "The foreclosure action, although already the subject of a judgment, is not totally concluded until the defendants' equity of redemption is cut off by the delivery of the sheriff's deed." Id.

    Here, the fact that the foreclosure sale had been stalled due to the bankruptcy proceedings and the judgment had not been paid meant that the foreclosure action continued to be pending until Coleman paid the reinstatement quote and the judge vacated the judgment and dismissed the claims on January 20, 2006. Thus, the state court still had jurisdiction over the matter and Coleman could have brought her claims as a part of the original foreclosure action until January 20.

    Second, Coleman argues that the entire controversy doctrine does not apply to "related claims which were unknown, or had not arisen or accrued during the pendency of the original action." Riemer v. St. Clare's Riverside Med. Ctr., 691 A.2d 1384, 1388 (N.J. Super. Ct. App. Div. 1997). New Jersey's discovery rule states that a cause of action has not accrued unless the plaintiff knows or should have known that "(1) she has suffered damage and (2) that the damages were caused by the fault of another." Maertin v. Armstrong World Indus. Inc., 241 F.Supp.2d 434, 458 n.18 (D.N.J. 2002).

    Therefore, if Coleman was unaware of either of these facts at the time the foreclosure action became final on January 20, 2006, her successive causes of action would not yet have accrued and the doctrine would be inapplicable. Yet, when Coleman received the reinstatement quote from Chase on November 4, 2005, she should have been aware that the amount differed substantially from the fee determination in the original foreclosure action. Her counsel, who had represented her since the original foreclosure action, and whom we presume reviewed the reinstatement quote, also should have been aware of these facts. Thus, her cause of action accrued on November 4 while the original foreclosure action was still pending, and she is barred by the entire controversy doctrine.

    We also disagree with Coleman's argument that she did not have a "fair and reasonable opportunity to have fully litigated that claim in the original action." Cafferata, 597 A.2d at 1104. While it might not have been clear to Coleman that the fees charged by Chase in the reinstatement quote were allegedly in violation of state law, as explained above, it is undeniable that she was on notice, or should have been on notice, that the fees charged were substantially larger than those issued by the state court. This is especially true given that the same counsel represented Coleman from the time of the original foreclosure action up through the time that she paid the reinstatement quote.

    Ultimately, the entire controversy doctrine requires equitable considerations and is determinable on a case-by-case basis. Paramount Aviation Corp. v. Agusta, 178 F.3d 132, 137 (3d Cir. 1999). The "polestar for the application of the rule is judicial fairness." Reno Auto Sales, Inc. v. Prospect Park Sav. & Loan Ass'n, 581 A.2d 109, 113 (N.J. Sup. Ct. App. Div. 1990) (citing Cogdell, 560 A.2d at 1179) (internal quotation marks omitted).

    We must balance the plaintiff's right to bring a separate action against the defendant's right to avoid excessive litigation. Here, we are not persuaded that Coleman was deprived of a fair opportunity to litigate her claims.
(3) A point that begs highlighting here is that the allegedly screwed over homeowner in this case appears to be under a double onus to bring her claims not only within the applicable statute of limitations, but also within the boundaries set by the entire controversy doctrine. Said point was made in Circle Chevrolet Co. v. Giordano, Halleran & Ciesla, 142 N.J. 280, 662 A.2d 509 (N.J. 1995), in the context of a malpractice claim arising out of an attorney-client relationship where the errant attorney is continuing to represent a client on the underlying matter.

In this case, Chase sent Homeowner the quote for reinstating the mortgage on November 4, 2005. On January 17, 2006, Homeowner paid in full the amount quoted by Chase to reinstate her mortgage. Three days later, the Chancery Court entered a judgment of dismissal without prejudice in the foreclosure action. Unless the Chancery Court is requested to retain jurisdiction over the matter for possible claims arising from the foreclosure (or if, for whatever reason, the court is simply not asked to formally dismiss the case), it appears that Homeowner's window for bringing her claims for the alleged overcharges ran from November 4, 2005 (or possibly January 17, 2006, the date of actual payment of the alleged overcharges) through January 20, 2006 (the date of dismissal), notwithstanding what the applicable stautute of limitations might otherwise have been.

Because, according to the court, "the entire controversy doctrine requires equitable considerations and is determinable on a case-by-case basis," and Homeowner (who was operating under a foreclosure "Sword of Damocles" hanging over her head), only had, at best, 2 1/2 months to assess and bring her claims against Chase, it sure looks like she took a serious screwing over in this matter.

Pro Se Homeowner Fails In Foreclosure Defense Attempt, Despite Involvement Of Notorious Robosigners In Executing Lender's Mortgage Documents

A recent ruling by a Florida appeals court should serve as a reminder to self-represented, "pro se" homeowners defending against a home foreclosure that it isn't enough to merely go into court, and point out generally that there are defects with the lender's paperwork due to the involvement of three prolific, nationally-recognized robosigners in the execution of those documents and expect the court to give the case the boot.(1)

As in any case, all litigants have to adequately plead their case, raise and brief all the issues, and submit evidence to support the allegations that are in a form that is admissible in court (in compliance with the court's rules of procedure).

While it is true that a court is to hold pro se litigants to less stringent standards in construing their pleadings than formal pleadings drafted by lawyers,(2) they must still adequately raise and brief the issues, and acquaint themselves and follow the applicable rules of procedure.(3)

Failing that, no matter how hard they work familiarizing themselves with the stories of robosigning, document-manufacturing, forgeries, etc. that are floating around on the Internet, pro se homeowners like the one in this case (who, in fact, may have had strong defenses and counterclaims) will find themselves on the dead-end road of disappointment.(4)

For the ruling, see Harvey v. Deutsche Bank National Trust, No. 4D10-674 (Fla. App. 4th DCA, June 29, 2011).

(1) In this regard, the court noted, in footnote 2 of its ruling:
  • As to this point, Harvey specifically argued that on April 16, 2009, an assignment of mortgage was executed by Korell Harp, vice president for MERS, as nominee for AHMAI, and Tywanna Thomas, assistant secretary for MERS. Harvey stated that on May 6, 2009, an assignment of mortgage in a different and unrelated foreclosure case was executed by Korell Harp; Harp was listed as vice president and assistant secretary for Argent Mortgage Company, LLC. Harvey further stated that in another unrelated foreclosure case, an assignment of mortgage was executed by Cheryl Thomas and Tywanna Thomas; Cheryl Thomas was listed to be vice president of Sand Canyon Corporation and Tywanna Thomas was listed as assistant vice president.

    Harvey stated that in yet another unrelated foreclosure case, an assignment of mortgage was executed by Korell Harp and Tywanna Thomas. Harvey argued that the signatures of Harp and Tywanna Thomas "appear to be different when compared with the other assignments signed by Ms. Harp and Ms. Thomas," and "[b]ecause there was a dispute concerning either the facts of the controversy or the inferences to be drawn from those facts, a summary judgment was improper."

(2) See e.g. Estelle v. Gamble, 429 U.S. 97 (1976), which supports the mandate that trial judges cut pro se homeowners slack when bringing their cases:

  • As the Court unanimously held in Haines v. Kerner, 404 U. S. 519 (1972), a pro se complaint, "however inartfully pleaded," must be held to "less stringent standards than formal pleadings drafted by lawyers" and can only be dismissed for failure to state a claim if it appears " `beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' " Id., at 520-521, quoting Conley v. Gibson, 355 U. S. 41, 45-46 (1957).

(3) See e.g.:

Pliler v. Ford, 542 U.S. 225 (2004):

  • District judges have no obligation to act as counsel or paralegal to pro se litigants. In McKaskle v. Wiggins, 465 U. S. 168, 183-184 (1984), the Court stated that "[a] defendant does not have a constitutional right to receive personal instruction from the trial judge on courtroom procedure" and that "the Constitution [does not] require judges to take over chores for a pro se defendant that would normally be attended to by trained counsel as a matter of course."

Faretta v. California, 422 U. S. 806 (1975):

  • The right of self-representation is not a license to abuse the dignity of the courtroom. Neither is it a license not to comply with relevant rules of procedural and substantive law.

Rhodes v. Wathen, No. 10-10892 (5th Cir., March 2, 2011):

  • Although pro se briefs are afforded liberal construction, Haines v. Kerner, 404 U.S. 519, 520 (1972), even pro se litigants must brief arguments in order to preserve them. Yohey v. Collins, 985 F.2d 222, 224-25 (5th Cir. 1993).

Timson v. Sampson, 518 F. 3d 870 (11th Cir., 2008):

  • While we read briefs filed by pro se litigants liberally, Lorisme v. I.N.S., 129 F.3d 1441, 1444 n. 3 (11th Cir.1997), issues not briefed on appeal by a pro se litigant are deemed abandoned, Horsley v. Feldt, 304 F.3d 1125, 1131 n. 1 (11th Cir.2002). Moreover, we do not address arguments raised for the first time in a pro se litigant's reply brief. Lovett v. Ray, 327 F.3d 1181, 1183 (11th Cir.2003).

Childs v. Motor City Casino Hotel, Case No. 09-13108, No. 10-13458 (E.D. Mich., Southern Div. April 27, 2011):

  • A pro se litigant's complaint is to be construed liberally, Erickson v. Pardus, 551 U.S. 89, 94 (2007), and is held to "less stringent standards" than a complaint drafted by counsel, Haines v. Kerner, 404 U.S. 519, 520 (1972). Nonetheless, "[t]he leniency granted to pro se [litigants] . . . is not boundless," Martin v. Overton, 391 F.3d 710, 714 (6th Cir. 2004), and such complaints still must plead facts sufficient to show a redressable legal wrong has been committed, Fed. R. Civ. P. 12(b); Dekoven v. Bell, 140 F. Supp. 2d 748, 755 (E.D. Mich. 2001).

Caidor v. Onondaga Cnty., 517 F.3d 601 (2d Cir. 2008):

  • This Circuit makes certain allowances for pro se litigants. We recognize that the right to appear pro se "should not be impaired by harsh application of technical rules," and therefore we "make reasonable allowances to protect pro se litigants from inadvertent forfeiture of important rights because of their lack of legal training." Traguth v. Zuck, 710 F.2d 90, 95 (2d Cir. 1983).

    Nonetheless, "pro se litigants generally are required to inform themselves regarding procedural rules and to comply with them."
    Edwards v. INS, 59 F.3d 5, 8 (2d Cir.1995) (citation omitted);

Keeler v. Aramark, No. 10-3214 (10th Cir. April 7, 2011):

  • [A]lthough courts afford a pro se litigant's filings some leniency, they have no obligation to advise such a litigant of the authentication requirement, for even pro se litigants are expected to "follow the same rules of procedure that govern other litigants." Kay v. Bemis, 500 F.3d 1214, 1218 (10th Cir. 2007) (quotation omitted).

Petty v. Krause, No. 1:10CV573 (M.D. N.C. April 27, 2011):

  • Moreover, although the Supreme Court has reiterated the importance of affording pro se litigants the benefit of liberal construction, Erickson v. Pardus, 551 U.S. 89, 94 (2007), the United States Court of Appeals for the Fourth Circuit has "not read Erickson to undermine Twombly's requirement that a pleading contain more than labels and conclusions," Giarratano v. Johnson, 521 F.3d 298, 304 n.5 (4th Cir. 2008) (internal quotation marks omitted) (applying Twombly standard in dismissing pro se complaint). Accord Atherton v. District of Columbia Off. of Mayor, 567 F.3d 672, 681-82 (D.C. Cir. 2009) ("A pro se complaint . . . `must be held to less stringent standards than formal pleadings drafted by lawyers.' But even a pro se complainant must plead `factual matter' that permits the court to infer `more than the mere possibility of misconduct.'" (quoting Erickson, 551 U.S. at 94, and Iqbal, 129 S. Ct. at 1950, respectively)), cert. denied, 130 S. Ct. 2064 (2010).

Lomax v. Capital Rental Agency, Inc., (11th Cir. May 23, 2011):

  • "Pro se pleadings are held to a less stringent standard than pleadings drafted by attorneys and will, therefore, be liberally construed." Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th Cir. 1998).

    Although we show leniency to pro se litigants, we will not serve as de facto counsel or "rewrite an otherwise deficient pleading in order to sustain an action."
    GJR Invs., Inc. v. County of Escambia, Fla., 132 F.3d 1359, 1369 (11th Cir. 1998),

C.P. v. Shepherd, No. E2010-00726-COA-R3-CV (Tenn. App. March 24, 2011):


  • Pro se litigants should not be permitted to shift the burden of the litigation to the courts or to their adversaries. They are, however, entitled to at least the same liberality of construction of their pleadings that Tenn. R. Civ. P. 7, 8.05, and 8.06 provide to other litigants. Irvin v. City of Clarksville, 767 S.W.2d at 652.

    Even though the courts cannot create claims or defenses for pro se litigants where none exist,
    Rampy v. ICI Acrylics, Inc., 898 S.W.2d 196, 198 (Tenn. Ct. App. 1994), they should give effect to the substance, rather than the form or terminology, of a pro se litigant's papers. Brown v. City of Manchester, 722 S.W.2d 394, 397 (Tenn. Ct. App. 1986); Usrey v. Lewis, 553 S.W.2d 612, 614 (Tenn. Ct. App. 1977).
(4) Homeowners expecting a court proceeding similar to those on "Judge Judy" (or other TV court shows) will be in for a big let down.

Wednesday, July 13, 2011

"Strategic Defaulters" - Savvy Homeowners Choosing To Cut Their Losses On Underwater Homes

The Arizona Republic reports:
  • Many of the people who have been walking away from mortgages over the past few years don't fit the standard profile. Cash-strapped? Unemployed? Financially unsophisticated? Low-income?

  • None of those descriptions seem to apply to most "strategic defaulters" - homeowners who have chosen to cut their losses on properties that dropped in value, just as they might sell an old car with mounting repair bills or dump stock in a company that just reported a loss.

  • "Many are financially savvy people with higher credit scores and higher income," said Tracy Bremmer, director of decision analytics at credit-bureau Experian, which has studied the issue to help lenders identify people who might be default candidates. "They often own multiple properties, with larger original loan amounts."

  • Strategic defaulters, in other words, seem to know what they're doing. In fact, they're often angling to buy the foreclosed home across the street at a bargain price before abandoning their own property, Bremmer said. "They'll open a new mortgage before defaulting on the existing loan," she said.


  • Defaulting on a loan - that is, missing payments - will hurt your credit score. But many strategic defaulters apparently don't worry about this or consider it a lesser evil. [...] Still, strategic defaulters tend to keep current on other obligations such as credit cards and auto loans. In fact, this tendency to keep making other payments is how Experian sorts out strategic defaulters from more distressed borrowers. "They're skipping out on their mortgages but paying everything else," she said.(1)

For the story, see 'Strategic defaulters' tend to be affluent, savvy homeowners.

(1) See Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis for more on the phenomenon of strategic defaulting:

  • This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences.

  • Moreover, these emotional constraints are actively cultivated by the government and other social control agents in order to encourage homeowners to follow social and moral norms related to the honoring of financial obligations - and to ignore market and legal norms under which strategic default might be both viable and the wisest financial decision.

  • Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility.

Minnesota Appeals Court Slams Hammer On Foreclosure Redemption Scheme Involving Use Of Sham Note & Mortgage By Property Owner To Squeeze Co-Owner

The Minnesota Court of Appeals recently refused to allow a 'foreclosure redemption' scheme whereby one co-owner of real estate attempted to screw his co-owner out of the equity in the subject property that had gone through foreclosure proceedings through the use of:
  • a sham mortgage, and
  • an "improper side agreement" with the 'creditor' holding the sham mortgage to redeem the subject foreclosed real estate
with the intended effect of extinguishing his unwitting co-owner's interest in the property.

The point here is that, had the cunning co-owner redeemed the property directly, he would have (under the law) also been treated as having redeemed on behalf of his unwitting co-owner as his co-tenant. The adroit-thinking co-owner thought he could avoid his obligation to his co-owner by instead surreptiously redeeming through a third/straw party (the 'creditor' holding the sham mortgage).

The 'creditor's attempt to assert that there was no improper side agreement with the bad actor, claiming she was an innocent unwitting party, an "unwilling accomplice," fell on deaf ears as the Minnesota appeals court pointed out that "even if a creditor is an "innocent" third party, relief may be available as long as that creditor is participating in a sham scheme with a devious cotenant and an improper result is obtained."(1)

The case makes for interesting reading, but probably only if you are in the business of undoing real estate equity ripoffs in Minnesota, and possibly in other states where the owner of a partial interest in real estate tries to screw his/her co-owners out of their interests through the use of a redemption scam used after a foreclosure sale due to an unpaid mortgage loan, municipal real estate taxes, or mechanics' and judgment liens.(2)

For the ruling, see Blat v. Takita, No. A10-2217 (Minn. App. July 5, 2011) (unpublished).

(1) In support of this proposition, the appeals court cites Hall v. Hall, 173 Minn. 128, 131, 216 N.W. 798, 799 (1927), a case where the Minnesota Supreme Court concluded that a foreclosure redemption scheme among remaindermen was improper because it eliminated the ownership interest of the life tenant, not because of the state of mind of the redemptioner who was given the sham note and mortgage in order to redeem the property. (Editor's Note: The fact that the Hall case dates back to 1927 is a clear indicator that this particular type of racket is nothing new - it's been around a pretty long time. It just doesn't seem to get litgated all that much - maybe because the victims of this scam don't know what hit them, or how to undo them.)

(2) See generally, Nelson, Grant S., The Foreclosure Purchase by the Equity of Redemption Holder or Other Junior Interests: When Should Principles of Fairness and Morality Trump Normal Priority Rules?, 72 Mo. L. Rev. 1259 (2007) (contains heavily-cited discussion on foreclosure redemption schemes involving junior lien 'squeeze-outs' by the owner of the property in foreclosure).

Fla. Lawyer Gets 210 Months For Running Ponzi Scheme Preying On Elderly, Servicemembers w/ Investments In Phony Mortgages, Predatory & Usurious Loans

From the Office of the U.S. Attorney (Miami, Florida):
  • [A] federal judge sentenced attorney and C.P.A. Lorn Leitman, 61, of Miami, Florida, to 210 months’ incarceration for his role in a 10-year Ponzi scheme. In an unusual decision, the court departed upward from a sentencing guideline range of 121-151 months, commenting, “this case is exceptional.”

  • A federal grand jury charged the defendant with violating the mail fraud statute for defrauding elderly victims and retirees, among others, through the operation of a Ponzi scheme which sought investments in either phantom residential mortgages or a separate venture burdening U.S. military personnel with predatory and usurious loans.


  • Several victims appeared in court to address the impact of the fraud. As one victim explained, losses from the Ponzi scheme forced the end of his retirement and his return to work. He commented, “my dreams are dead.”

  • The court explained that the decision to sentence above the guidelines resulted from the defendant’s conduct preying upon his closest friends, fellow servicemen, the elderly and retirees, and noted that the defendant breached codes of conduct applicable to members of the Florida Bar and certified public accountants. In addition to the enhanced sentence, the court ordered the defendant to pay $3,308,435.03 in restitution to victims.

For the U.S. Attorney press release, see Ponzi Scheme Defendant Receives 17 1/2 Year Sentence.

San Bernardino Investigators Bust Six In Alleged Swindle That Stole Title To Vacant Land Out From Under Owners & Peddled It To Unwitting Buyers

From the Office of the San Bernardino, California District Attorney:
  • A $2.1 million dollar fugitive arrest warrant has been issued by the San Bernardino County Superior Court for Salvador Anzo Sr. Between November 2007 and January 2009 Anzo Sr., 44, along with additional suspects Salvador Anzo Jr., 22, Marlen Medina, 26, Jennifer Costa, 37, Yvette Costa, 36, and Milton Figueroa, 23, allegedly conspired to sell vacant land they did not own in the Hesperia area of San Bernardino County. Anzo Sr. recruited the others to assist by using their personal bank accounts to receive the proceeds of the fraudulent land sales.(1)

  • According to investigators from the San Bernardino County District Attorney’s Real Estate Fraud Unit, the suspects advertised the sale of vacant land in the "Pennysaver" which is how they met the unsuspecting buyers.

  • The actual owners of the land were alerted to the sale of their property when their property tax payments were returned to them. In San Bernardino County, the suspects are alleged to have sold 22 separate pieces of property with the total loss to the victims estimated at approximately $980,000.00.


  • "A lot of these victims who were taken advantage of were elders," said Senior Investigator Tina Greco of the San Bernardino County District Attorney’s Office. "I just hope that we are able to find him and take him into custody and then locate some of the stolen funds."

Source: Investigators Seek Public’s Help Locating Fugitive in Land Fraud Scheme.

(1) According to the press release:

  • Medina was located and arrested in Utah, and was subsequently extradited to the West Valley Detention and is being held there with a bail of $940,924.00 for the San Bernardino County charges, and INS hold and other outstanding warrants from Orange County;

  • Anzo Jr. was arrested in San Diego County and transferred to San Bernardino County where he is being held at the Adelanto Detention Center with a bail of $197,266.00;

  • Jennifer Costa, Yvette Costa and Figueroa pleaded guilty in plea agreements with the court.

Investigators are seeking the public’s assistance in finding Salvador Anzo Sr. If anyone has information of his whereabouts they are asked to contact Sr. Investigator Tina Greco at 909-891-3348.

Tuesday, July 12, 2011

Robosigning Allegations Begin Hounding Prominent Michigan Foreclosure Mill Sweatshop

The Michigan Messenger reports:
  • A Massachusetts county clerk says a forensic examination of documents filed by Troy-based Orlans Associates, one of the largest foreclosure firms in Michigan, shows that the company has engaged in illegal robo-signing.

  • Robo-signing is when a bank, mortgage company or foreclosure company has multiple people sign documents with the name of the person who is supposed to sign those documents and then has them notarized as having been signed by that person. In the case of Orlans, the signer was supposed to be attorney Marshall Isaacs, but he has now been implicated in two states for having had others sign his name and notarize that he did so.


  • Michigan Messenger has been carefully following the allegations against Isaacs since early May, following revelations [Ingham County Register of Deeds Curtis Hertel Jr.] had found robo-signed documents involving DocX, a Georgia company profiled on 60 Minutes. Hertel’s discovery led to investigations by both the Michigan Attorney General’s office and the FBI.

For more, see Michigan foreclosure firm implicated in robo-signing (Thousands of foreclosures may be invalidated).

For a follow-up story, see Orlans robo-signing allegations drawn concerns from lawmakers, activists (Most say independent investigation is required):

  • Allegations that an attorney working for Troy-based Orlans Associates foreclosure giant is allegedly involved in robo-signing drew immediate concerns from lawmakers and activists.

Phony Land Document Epidemic Infects Charlotte-Area Courthouses; Recording Official: "My Records Are Literally Full Of This Stuff!"

In Weddington, North Carolina, The Associated Press reports:
  • Officials at Charlotte-area courthouses say they are seeing epidemic of frivolous paperwork filed by people claiming the right to seize foreclosed property.

  • The bogus deeds are being filed by people who claim to belong to the Moorish Science Temple of America, an obscure religious sect founded in the 1920s with beliefs loosely connected to Islam.

  • In one incident, a real estate agent and a couple viewing a foreclosed $700,000 home in the Union County town of Weddington were confronted on June 1 by two men who produced a deed claiming the home in the name of the Moorish Science Temple, The Mecklenburg Times reported.(1)


  • J. David Granberry, Mecklenburg County's register of deeds, said at least 200 deeds and other documents filed in his office in the name of the Moorish Science Temple are "outright fraud."

  • Granberry said he's seen forgeries and notary fraud in the deeds claiming ownership of vacant, foreclosed properties. Many times, the documents appear official and legitimate, he said. "My records are literally full of this stuff," he said. "It's like an epidemic, as far as I can tell."

  • In Union County, about 25 deeds have been filed this year in the name of the Moorish Science Temple, Register of Deeds Crystal Crump said.

  • Granberry and other officials said as more homes have fallen into foreclosure and been vacated, the more opportunity there's been for others to move in. Real estate agents in Virginia and police in California warn of similar incidents there.

  • "Today, all you have to do is go on to the Internet to find sites that purport to tell you how to beat your mortgage," said Tom Miller, legal counsel for the North Carolina Real Estate Commission.

  • Registers of deeds say they are powerless in the face of fake deeds. As long as the deeds meet certain requirements, their offices must accept them, Crump said. "We don't check to make sure the title is good," Crump said. "That's why people have an attorney. Anybody can do this, and there is nothing we can do to stop it."

For more, see NC officials say fake property claims flooding in on real estate caught in foreclosure crisis.

(1) According to the story, the grand sheik of the Moorish Science Temple in Charlotte said his group is not affiliated with any effort to seize vacant properties. Christopher Bennett-Bey said he has heard of similar real estate scams around the country, which misrepresent a faith he has followed for more than two decades. He said he does not believe people using the group's name are members.

Judge 'Splits' Decision In HAMP Suit; Homeowners To Continue Pursuing Claims, BofA To Continue Foreclosures; Combines 26 Actions Filed In 19 States

The Huffington Post reports:
  • Bank of America Corp lost its bid to dismiss a lawsuit accusing it of reneging on promises to help borrowers modify their mortgage loans under a much-criticized federal program. The bank, however, claimed a partial victory, citing District Judge Rya Zobel's decision to dismiss claims by borrowers who sought to participate in the two-year-old Home Affordable Modification Program, or HAMP.

  • Zobel nonetheless ruled that homeowners who contend they did not get modifications for which they qualified under HAMP, to avoid foreclosures, could pursue claims against Bank of America.

  • The complaint "meticulously" detailed each of these plaintiffs' compliance with loan modification conditions, but said the bank "willfully failed" to modify the loans, either in bad faith or for its own economic benefit, Zobel wrote. Such allegations are "sufficient" to let the lawsuit go forward, she added.

  • Zobel rejected claims by borrowers who claimed they were "intended beneficiaries" of HAMP but never entered the program, saying they had no contractual right to relief. She also rejected a request to block Bank of America while the lawsuit is pending from foreclosing on 37 borrowers said to be in "imminent danger" of losing their homes.


  • The lawsuit combines 26 cases that had been brought in 19 states, and sought class-action status for various plaintiffs.

  • "The Court's conclusions will likely help hundreds of thousands of families to convert temporary mortgage modification plans into permanently lower monthly payments. Tens of thousands of foreclosures are likely to be prevented," said Gary Klein, a lawyer for the plaintiffs, adding that he expects the case to get class certification quickly.

For more, see Bank Of America Loses Bid To Dimiss Mortgage Modification Lawsuit.

Pair Of Alleged Long Island Loan Modification Rackets Get The 'Freeze' As Judges Limit Firms' Activities, Order Hold On Assets

In Nassau County, New York, Long Island Business News reports:
  • The assets of two Long Island mortgage modification companies will remain frozen after separate rulings by Nassau County Supreme Court justices.

  • On Tuesday, Justice Thomas Adams extended a temporary restraining order that limits the activities and freezes the assets of a group of companies in West Hempstead operating under the names Express Home Solutions and Home Preserve Law Group.

  • Last week, Justice John Galasso extended a similar order, which enjoins a group of individuals operating a business called Homesafe America in Levittown, also known as United Legal Solutions.


  • The cases were brought by the Lawyers’ Committee for Civil Rights Under Law(1) and its pro bono counsel Manhattan-based Davis Polk & Wardwell on behalf of more than 30 homeowners who allegedly lost money to the two companies. Plaintiffs are seeking a combined $3 million in punitive damages, as well as court orders permanently preventing their owners and employees from engaging in mortgage-related activities.

For more, see Judges freeze assets of LI mortgage mod firms.

(1) The Lawyers’ Committee for Civil Rights Under Law is a nonpartisan, nonprofit organization formed to involve the private bar in providing legal services to address racial discrimination. It implements its mission and objectives by marshaling the pro bono resources of the bar for litigation, public policy advocacy, and other forms of service by lawyers to the cause of civil rights. For more on this case, see:

Monday, July 11, 2011

Defective Assignment, Failure To Produce Note Endorsement Sanctionable Under Nevada Mediation Rules; Halts F'closures; Another Lower Court Reversal

From a recent ruling by the Nevada Supreme Court:
  • In this appeal, we consider issues arising out of Nevada's Foreclosure Mediation Program.

    First, we must determine whether a homeowner who is not the original mortgagor is a proper party to participate in the program. We conclude that the Foreclosure Mediation statute, NRS 107.086, and the Foreclosure Mediation Rules (FMRs) dictate that a homeowner, even if he or she is not the named mortgagor, is a proper party entitled to request mediation following a notice of default.

    Second, we must determine if a party is considered to have complied with the applicable statute and FMRs governing document production in a mediation proceeding by producing what the district court referred to as "essential documents." In this, we address whether substantial compliance satisfies the mandates of the statute and FMRs.

    Because we conclude that strict compliance is compelled by NRS 107.086(4) and (5), that the assignment offered was defective, and that no endorsement of the mortgage note was provided according to Article 3 of the Uniform Commercial Code, we conclude that Wells Fargo failed to produce the documents required under NRS 107.086(4).(1)

    Additionally, we recently concluded in Pasillas v. HSBC Bank USA, 127 Nev. ___, ___. P.3d ___ (Adv. Op. No. 39, July 7, 2011), that a party's failure to produce the enumerated documents required by NRS 107.086 and the FMRs prohibits the district court from directing the program administrator to certify the mediation so that the foreclosure process can proceed. Here, we again conclude that, due to the statute's and the FMRs' mandatory language regarding document production, a party is considered to have fully complied with the statute and rules only upon production of all documents required.

    Failure to do so is a sanctionable offense, and the district court is prohibited from allowing the foreclosure process to proceed.

    Therefore, we must reverse and remand this case to the district court for it to determine appropriate sanctions against respondents.

For the rest of the ruling, see Leyva v. National Default Servicing Corp., 127 Nev. Adv. Op. No. 40 (Nev. July 7, 2011).

For a discussion of this and a companion case issued by the Nevada Supreme Court on the same day, see Credit Slips: Nevada Supreme Court: You Gotta Prove Chain of Title.

(1) It may be that the foreclosing lender here may attempt to cure its problem by 'producing' an endorsement on a separate sheet of paper that magically appears at the 11th hour in this litigation in order to move forward and proceed to foreclosure. Such a separate sheet of paper, also known as an allonge, may be fatal to the foreclosing lender's status as a holder in due course when not attached to the actual note itself. Consequently, additional defenses to the foreclosure action may become available to the homeowner when the foreclosing lender lacks this special status.

For what may be, for some, helpful discussions on the importance of this separate sheet of paper being affixed to the note itself, see: