Saturday, August 27, 2011

BofA Drags Feet On Undoing Screw-Up After Driving Terminally Ill Senior, Sole-Caregiver Spouse Into Foreclosure For Making House Payment Too Early

In New Port Richey, Florida, the St. Petersburg Times reports:
  • It appears Sharon and James Bullington will have to wait a little longer to learn how Bank of America plans to modify their mortgage. The couple's anxiety hasn't diminished since the bank apologized this week for mistakenly pushing their home into foreclosure despite the couple making their mortgage payment early.

  • Shawn Yesner, the Bullingtons' attorney, said bank officials told him they will call him daily until a resolution is reached. Bank officials told him "they are aggressively working the Bullingtons' file at the highest level … and may not have an answer by week's end."

  • State Sen. Mike Fasano, R-New Port Richey, started calling bank officials about the case Monday. An official told him he'd get an answer Wednesday. No call came. On Thursday, the bank assured Fasano the couple would have details by Friday.

  • "It's concerning and frustrating that it has taken this long to get a simple answer," Fasano said.

  • James Bullington, 78, is terminally ill and bedridden. Sharon, 70, is his sole caregiver.

For more, see Bank of America still working on case of Pasco couple who paid mortgage early.

Suit: Woman Married Dying 87-Year Old Tenant To Inherit Succession Rights In Low-Priced, Rent-Controlled Apt; Landlord To Judge: Give Her The Boot!

In New York City, the New York Post reports:
  • The object of this woman's love was really a rent-controlled apartment, a frustrated West Village landlord says. Sarah Berman wed ailing 87-year-old Stanley Lowell last September and inherited his cheap digs at 302 W. 12th St. when he died just a month later.

  • The landlord is now trying to evict Berman, saying it's not fair for her to take over the apartment after such a brief period of wedlock. And at age 63, Berman could be paying his cheap rent for many years to come.

  • Court papers don't disclose Berman's rent, and neither she nor the landlord could be reached for comment. But a neighbor guessed her monthly payment could be as little as $400, in a building where market rents can run to more than $5,000.

  • The building's owner, Fourth FGP LLC, doesn't believe the grieving newlywed married for love, accusing her of using "gamesmanship, seduction and artifice" to get her man and his bachelor pad.

  • The company wants a Manhattan Supreme Court judge to give Berman the boot, arguing in legal papers that she tricked the vulnerable Lowell into wedded bliss "to wrongfully procure succession rights to the apartment."


  • The landlord, which wants "immediate possession" of Lowell's unit, insists in court papers that Lowell would have "lacked the mental capacity to understand the nature, effects and consequences of the purported marriage."

For the story, see Gal got a groom for rent (Landlord's claim in evict bid).

Dozens Of NYC Seniors To Get The Boot After Non-Profit's Insider Pulls Off Lucrative Deal In Nursing Home Buyout

In New York City, the New York Post reports:
  • The oldest-running nursing home on the Lower East Side is shutting its doors for good even as residents protest a pricey property deal struck by one of its board members.

  • About 95 seniors are getting the boot from the Bialystoker Center -- a kosher nursing home that many have lived in for over a decade, including Catherine McDonald, a 107-year-old woman from the neighborhood. She and others like Mildred Mondshein, 88, and Annie Green, 85, have to find new digs at nursing homes elsewhere in the city.

  • But the demise of the Bialystoker Center has been a boon for one of its board members -- real-estate magnate Ira Meister picked up a four-story commercial building owned by the nursing home last year in a no-bid insider deal.(1)

  • Meister is the chairman of the Bialystoker board that's charged with keeping the senior center financially sound. But that didn't stop him from buying the commercial property at 232 East Broadway for $1.5 million in an all-cash deal that never was up for bid on the open market.

  • The insider sale infuriated Bialystoker residents, family members and staffers, who only learned of it last month after being told the home is shutting and the Bialystoker building, at 228 East Broadway, is going up for sale.

  • "I was shocked when I heard about it. It's a dirty thing. We're out, the nursing home building is being sold and he winds up with the property next door," said Denise Perez, who visits her grandmother Miguela Candelaria, 88, daily.

  • The Bialystoker board said Meister's purchase was made as a last-ditch effort to help save the nonprofit nursing home, which is $8.5 million in debt and hemorrhaging $100,000 a month, according to board spokeswoman Virginia Lam.

  • Meister plans to lease it to a community group for two years while renovating it, she said. Then he'll move his private real estate company -- Matthew Adam Properties in Midtown -- to the Lower East Side.

  • That news doesn't sit well with the nursing-home seniors being forced to leave. "If I'm not in the Lower East Side, nobody will be able to come visit me," said Green, who wants to stay in the neighborhood where she grew up.

  • The residents are also miffed no local pols spoke up for the fabled Jewish institution, built in 1928 and later a haven for many Holocaust survivors. "I think all the politicians have forgotten us -- they only remember us when it's time to vote," said Mondshein.

Source: Sale rakes in 'old' money (Real-estate meanie to close senior home).

(1) See The Real Deal: Bialystoker nursing center hits market for residential conversion.

Cops: Foreclosed Owners' Home-Trashing Escapade Leaves Them Facing Five Years In Prison; Couple Declined 'Cash for Keys' Offer: Investor

In Tampa, Florida, ABC Action News reports:
  • When real estate investor Jon Spinks walks into a foreclosure property, he is never sure what he'll find. One month ago, he found a big mess. "The house was totally trashed," he said.

  • Photos show the New Tampa house in a gated community littered with trash when the former owners moved out. Deputies say when the married couple took off, they also stripped $10,000 worth of property and took it with them.

  • "All the cabinet doors were missing. Of course, the refrigerator was gone," said Jon Spinks. The ceilings fans, fixtures, bathroom vanities, water heater and more were also missing, according to Spinks.


  • Spinks says he offered the couple cash to leave their keys and the house intact. He also says they refused the offer.

  • Now the couple is dealing with foreclosure and criminal charges. "That was our intent at first, to try to recover the property," said Sergeant Joel Masci with the Hillsborough County Sheriff’s Office. Sergeant Masci says they arrested the couple, who now face five years' prison time if convicted.

  • "If it was something you would normally purchase a house that you expect it to be included with the house, then that's what we look at. If those items were taken, we can actually file grand theft charges," he said.

For the story, see New Tampa couple accused of stealing $10,000 of goods from foreclosed home (Deputies say couple stripped front door, cabinets).

Ex-Homeowner Squats Her Way Into Loan Modification, 18 Months After Losing Home To Foreclosure

In Alameda County, California, The Bay Citizen reports:
  • It's hasn't been easy, but nearly a year and a half after Wells Fargo foreclosed on her home of 27 years, Tanya Dennis has finally convinced the lender to modify her mortgage.

  • "They had to deal with me to pacify me and get me out of their hair," joked Dennis, who made headlines earlier this year by hiring a locksmith and breaking into her South Berkeley home after Alameda County sheriff's deputies evicted her.

  • Since then, Dennis, a short, 63-year-old woman who was once vice principal of Oakland's Castlemont High, has been a thorn in the side of the nation's largest mortgage originator.

  • Wells Fargo spokesman Tom Goyda said the deal — which Dennis said reduces the amount of money she owes on her home from $484,000 to $365,000 — occurred not because of Dennis' persistence, "but because we want to keep homeowners in their homes."


Here are some of the steps Dennis took after breaking back into her home in January:

  1. Representing herself, she sued Wells Fargo in federal court. When U.S. District Judge Claudia Wilken dismissed her suit, Dennis appealed her case to the 9th Circuit — all without the help of a lawyer.

  2. On May 3, Dennis was carted away in handcuffs after disrupting Wells Fargo's annual shareholders meeting.

  3. On May 24, she confronted Jim Foley, the bank's regional president for the San Francisco Bay Area, at Wells Fargo's Oakland office. The meeting was arranged by Oakland's teachers' union. (The union's president, Betty Olson Jones, was also among those who disrupted Wells Fargo's shareholders meeting).

  4. In June, three members of the state Legislature — state Sen. Loni Hancock (D-Berkeley) and East Bay assemblymembers Sandré Swanson and Nancy Skinner — wrote to Wells Fargo on Dennis' behalf.

  5. On June 17, with another eviction from the sheriff looming, the Alliance of Californians for Community Empowerment, an advocacy group founded by former employees of the now-defunct ACORN, sent an email asking its supporters to contact Foley and Leesa Whitt-Potter, the bank's senior vice president for consumer operations.

For more, see Squatting Homeowner's Persistence Pays Off (Breaking into her own home was just the beginning of Tanya Dennis' campaign to convince Wells Fargo to modify her mortgage).

Law School Clinic Scores 3-Year, State AG Grant To Fund Unit Defending Homeowners Facing Wrongful Foreclosure, Victims Of Mortgage Fraud

From Arizona State University School of Law:
  • Distressed homeowners have a new advocate in their corner as the Homeowner Advocacy Unit in the Civil Justice Clinic at ASU's Sandra Day O'Connor College of Law opens its doors this month.

  • In response to the foreclosure crisis, student attorneys enrolled in the new program will start working with clients who have been victims of mortgage fraud or are facing a wrongful foreclosure. The unit is made possible through a three-year grant from the Arizona Attorney General’s Office.

  • This is an excellent opportunity for the law school to provide a valuable public service while training up to 90 new attorneys over the next three years in the skills needed to become effective advocates on behalf of distressed homeowners,” said Douglas Sylvester, interim dean of the college.

  • We are grateful to the Attorney General’s Office for funding this project. It comes at a time when the community is in desperate need of professionals with training in the complex legal and social issues created by the mortgage crisis."

For more, see Distressed homeowners to receive assistance from ASU law school.

Squatter Movement Begins To Gain Steam In Detroit As Local Laws Leave Complaining Residents Frustrated, Cops With Hands Cuffed

In Detroit, Michigan, The Detroit News reports:
  • The foreclosure crisis has led to a surge of complaints about squatting in Detroit, and city officials acknowledge they're not sure what they can do about the problem.

  • In a city with more than 100,000 vacant properties, city officials and residents say they're increasingly seeing people take over empty houses and call them their own. Once they're in, it's tough to get rid of them: Michigan law places the burden of proof on rightful owners, and the eviction process can take months.


  • Squatting isn't new, and its secretive nature makes it tough to track. But city officials say it's spiking as one in every 339 city homes received foreclosure notices last month, according to RealtyTrac, an industry marketer. City ombudsman Durene Brown points to a thick stack of complaints about squatting she's received over the past two years. A few years ago, about 100 people a year called about the issue. Now, 300 do.


  • Squatting laws present a major challenge in ridding someone who illegally possesses a home. Legally, only the homeowner or banks can seek remedies to remove squatters. And under a loophole, a squatter can gain possession of a home if he or she openly lives in it uninterrupted for 15 years, according to state law.

  • No real moves have been made to change squatting laws by the state Legislature, but some community groups and city officials said the loopholes need to be closed.


  • As the head of the mobile patrol for the nearby Grandmont Association, Muhsin Muhammad said the group has fought against people who have taken over eight homes in the past year. Rosedale-Grandmont, a larger contingent of seven associations, has dealt with about 30 homes, he said.

  • They ranged from a family just finding a place to stay for the children, to a group of about 30 young people who took over a house. At that home, there was gambling on the street, illegal drug use, incidents of the inhabitants urinating on nearby properties and loud music playing until 3 or 4 a.m., Muhammad said.

  • "The homeless and criminals have been wise as to how the system protects them. They go through the neighborhood shopping for nice homes to move into," said Muhammad, the father of the former Michigan State University and professional football star who shares his name.

For the story, see Squatter problem balloons in Detroit (State law makes it hard to evict illegal residents, city claims).

NYC Congressman, Other Queens Pols Could Feel The Squeeze After Indictment Of Suspect Accused Of Falsifying $50M In Home Loan Applications

In New York City, the New York Post reports:
  • The walls may be closing in on Rep. Gregory Meeks with the indictment of a real-estate broker pal who gave him $40,000. Edul Ahmad faces up to 30 years in prison if convicted of mortgage fraud in an indictment Friday.

  • Though the indictment makes no mention of his political ties, the threat of a lengthy sentence could give the feds leverage to question Ahmad about Meeks and other Queens pols.(1)

  • Ahmad, 43, is accused of falsifying $50 million in loan applications for borrowers who lacked the means to pay them back and pocketing "fees and commissions in excess of those permitted by the lenders," the indictment says.

  • His relationship with Meeks has been under intense scrutiny since the Queens Democrat revealed the $40,000 payment last year. Earlier this month, a House ethics panel announced that it would investigate Meeks over the 2007 payment.

  • Meeks has said that the $40,0000 was a loan from Ahmad, but he did not report it on his personal financial disclosure forms until 2010, after the FBI questioned Ahmad about it.

Source: Meeks' mortgage 'lender' indicted.

(1) As has been observed by at least one learned federal judge:

  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an uncovered criminal conspiracy).

Whether Ahmad, if guilty, considers to "belly up" and "sell out" others on whom he may have some 'dirt' remains to be seen.

Friday, August 26, 2011

Sale Leaseback Peddler Throws In Towel, Cops Guilty Plea For Running Foreclosure Rescue, Equity Stripping Racket That Left Victims Without Homes

From the Office of the U.S. Attorney (Norfolk, Virginia):
  • Kathleen Harps, 51, of Chesapeake, VA, pleaded guilty [...] in Norfolk federal court to conspiring to commit mail and wire fraud in connection with a scheme to fraudulently obtain mortgage loans.


  • According to court documents, during 2006 Harps operated the New Beginnings Group in Hampton Roads and engaged in the business of “foreclosure rescue.” Harps and another conspirator solicited homeowners in financial distress and facing foreclosure, to sell their homes to Harps or other buyers that she located.

  • To induce participation in the program, Harps promised homeowners that:

    (a) they could remain in their homes and live “mortgage free” for one year;
    (b) during the one year period, they would receive credit repair assistance to put their financial house in order; and
    (c) at the end of the year they could buy back their homes.

  • In furtherance of the conspiracy, then Harps and other straw buyers made assorted false statements to fraudulently obtain mortgage loans. At the real estate closings on these loans, all or most of the homeowners’ equity in their homes was paid out to Harps’ business, the New Beginnings Groups.

  • Harps used these sales proceeds to, among other things, pay kickbacks to straw buyers and a loan officer, to make payments to and for the benefit of her and her companies, and to make mortgage payments for a period of time upon the fraudulently obtained mortgage loans.

  • After one year, when homeowners could not afford to buy back their homes or to pay the rents charged by Harps’ businesses, Harps and the straw buyers defaulted on the loans and they fell into foreclosure, causing the lenders to suffer losses and the homeowners to lose their homes.(1)

For the U.S. Attorney press release, see Chesapeake Woman Pleads Guilty to Committing Foreclosure Rescue Loan Fraud.

(1) Undoing cases like these in an attempt to recover the homeowner's ripped-off equity, particularly if a related criminal prosecution fails to yield any restitution from the scammer (many of these scammers are lowlifes who live from scam to scam, and who commonly wind up broke by the time they're frog-marched off to prison) would require the filing of a civil lawsuit alleging that the lender that financed the equity stripping deal had either actual or constructive knowledge of the underlying fraud.

Virginia case law, like the case law in many other states, appears to have enunciated the rule that a purchase or lender dealing in real property could possibly have a duty to physically inspect the premises prior to purchasing or taking a mortgage to secure a loan and, failing that, it takes its interest subject to any of the rights and equities of the occupants in possession.

See, for example, Brooks v. Lum, Case No. (Chancery) 00-13, 52 Va. Cir. 390; 2000 Va. Cir. LEXIS 301; Circuit Court of the City Of Winchester, Virginia (2000):

  • When the purchaser has actual knowledge that there are persons in possession of the property being purchased who dispute the seller's title, he has a duty to inquire about the circumstances of that possession. Ely v. Johnson, 114 Va. 31, 75 S.E. 748 (1912) (purchaser on notice as to possession and use of land by another).

    As stated in 58 Am. Jur. 2d, Notice, § 21: Possession of land is notice to the world of every legal or equitable right that the possessor has therein. It is a fact putting all persons on inquiry as to the nature of the occupant's claims, as well as the claims under whom he occupies.

    "Under the [recording] statute, only purchasers without notice can take advantage of a failure to record."
    National Mutual Building & Loan Association v. Blair, 98 Va. 490, 498, 36 S.E. 513. "Such a failure cannot affect a purchaser who has actual notice." Chavis v. Gibbs, 198 Va. 379, 383, 94 S.E.2d 195 (1956).

    Chavis v. Gibbs, 198 Va. 379, 385, 94 S.E.2d 195 (1956), the Supreme Court stated "whatever fairly puts a person on inquiry is sufficient notice where the means of knowledge are at hand; and if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained."

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Michigan Deed Recording Official Tags Banksters w/ Suit Alleging Improper Exemption Claims To Dodge Local Taxes On F'closure-Related Realty Transfers

In Coldwater, Michigan, WTVB Radio 1590 AM reports:
  • The County of Branch and Branch County Register of Deeds Nancy Hutchins have filed suit in Circuit Court, alleging that nine separate mortgage companies and their business service providers have failed to pay appropriate fees and taxes on property transfers in the County.

  • Hutchins says review of county real estate records has shown a pattern of inappropriate claims for exemptions to state and county transfer taxes, primarily on sheriff’s deeds on foreclosure and the subsequent sale of those foreclosed properties. Hutchins is questioning the validity of claimed exemptions.

  • Transfer taxes are the monies paid when a new deed is recorded in the county’s Register of Deeds office. The taxes apply to the sale price of the property being transferred, unless it falls under $100. Many large-scale banks have used Fannie Mae and Freddie Mac to claim an exemption to pay the taxes by identifying Fannie Mae and Freddie Mac as government entities.

  • Hutchins says the issue has seriously affected the County Revenue stream, jeopardizing services that taxpayers rely on. She says it’s time for some of the banks and mortgage companies responsible for the nation-wide foreclosure mess to pay their fair share, instead of making county’s taxpayers bear all of the burden.

Source: Branch County Register Of Deeds Files Suit.

Westchester DA: Pair Used Escrow Acct. Holding Clients' Home Refi Proceeds As Personal 'Piggy Bank;' Alleged Scammer's Elderly Dad Among Those Screwed

From the Office of the Westchester County, New York District Attorney:
  • From April 2009 to June 2009, operating under the home mortgage closing company Settle One Corporation, with an office located at 428 Main Street in Armonk, New York, the defendants, Loronda Murphy and real estate attorney Scott Forcino, engaged in what amounted to a home mortgage fraud "Ponzi" scheme.(1)

  • The targeted homeowner/victims each took out a new mortgage on their home through Settle One Corporation with the understanding that real estate attorney Scott Forcino would oversee their closing and that money from their new mortgage would pay off their pre-existing mortgage.

  • However, Forcino instead allowed Murphy to fraudulently assume the role of attorney for each closing, and, much to the homeowner's surprise, rather than paying off their pre-existing mortgage, Murphy instead stole portions of their new loan money and left their pre-existing mortgage unpaid.(2)

  • Murphy's theft then left the homeowner with the unsustainable burden of having multiple mortgages on their family home at one time. Over this time period the pair defrauded five victims including Murphy’s father.

  • In addition to skimming money out of the Settle One Corporation bank account for her own personal benefit, Murphy also attempted to conceal her crimes by using money left in the Settle One bank account to make monthly mortgage payments on various unpaid mortgages and, in some cases, Murphy even stole one homeowner's new mortgage loan money and used it to pay off another homeowner's previously unpaid mortgage.

  • In the three months, beginning in April of 2009 and ending in June of 2009, Murphy orchestrated the preparation and submission of a series of false mortgage documents in connection with five mortgage loan closings that resulted in her, through the Settle One bank account, receiving over one million dollars from two home mortgage lenders: Wells Fargo Bank and Live Well Financial.

  • In turn, Murphy then stole over fifty thousand dollars in loan money from each of five Westchester County homeowners, including her own elderly father, all for her own personal financial gain and to cover up her continuing criminal activity.

For the Westchester County DA press release, see Former North Castle Republican Chairwoman Indicted For Mortgage Fraud.

(1) According to the press release, a nineteen count indictment against Loronda Murphy charges her with:

  • one count of Residential Mortgage Fraud in the First Degree, a class “B” Felony,
  • one count of Residential Mortgage Fraud in the Second Degree, a class “C” Felony,
  • five counts of Grand Larceny in the Second Degree, class “C” Felonies,
  • ten counts of Falsifying Business Records in the First Degree, class “E” Felonies,
  • one count of Scheme to Defraud in the First Degree, a class “E” Felony,
  • one count of Conspiracy in the Fifth Degree, a class “A” Misdemeanor.

In addition, a three count indictment against Scott Forcino charges him with:

  • one count of Scheme to Defraud in the First Degree, a class “E” Felony,
  • one count of Conspiracy in the Fifth Degree, a class “A” Misdemeanor,
  • one count of Criminal Facilitation in the Fourth Degree, a class “A” Misdemeanor.

(2) To the extent attorney Forcino is found guilty of playing a role in this ripoff and fails to cough up restitution, The Lawyers’ Fund For Client Protection Of the State of New York may find itself being asked by the victims to step up and cover at least some of the losses they suffered. The Fund exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Questions Surrounding Applicability Of State Consumer Protection Law To Mortgage Servicer Activities To Be Decided By Ohio Supreme Court

From the Supreme Court of the State of Ohio:


Certified Question of State Law, United States District Court, Northern District of Ohio, Western Division, Case Nos. 3:10-cv-02537-JZ and 1:10-cv-02709-JZ. On review of preliminary memoranda pursuant to S.Ct.Prac.R. 18.6. The court will answer the following questions:

1. "Does the servicing of a borrower's residential mortgage loan constitute a `consumer transaction' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(A)?"

2. "Does the prosecution of a foreclosure action by a mortgage servicer constitute a `consumer transaction' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(A)?"

3. "Is an entity that services a residential mortgage loan, and prosecutes a foreclosure action, a `supplier . . . engaged in the business of effecting or soliciting consumer transactions' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(C)?'"

O'Donnell, J., dissents.

Source: 08/24/2011 Case Announcements, 2011-Ohio-4217 (State ex rel. DeWine v. GMAC Mtge. L.L.C.).

Indiana AG Tags Two More Loan Mod Outfits w/ Suits; Says Out-Of-State Operators Failed To Post Surety Bonds, Stiffed Homeowners On Promised Refunds

From the Office of the Indiana Attorney General:
  • Indiana Attorney General Greg Zoeller filed a lawsuit [] against two out-of-state credit services and foreclosure consultant companies that were operating illegally in Indiana.

  • Zoeller said Hoosiers in 13 Indiana counties - including Porter, Kosciusko and St. Joseph - signed contracts with Community One Law Center based in Florida and National Law Partners based in Florida and California. The lawsuit alleges both companies collected money up front and failed to provide refunds to customers after services were not provided.


  • Community One Law Center and National Law Partners are accused of violating Indiana's consumer protection laws by not registering $25,000 surety bonds with the Office of the Attorney General. Indiana law requires credit service organizations and foreclosure consultants to register bonds prior to performing any services, including collecting money up front. Zoeller said the bond acts as an insurance policy for consumers in the event a company fails to perform.

  • According the suit, these companies are separate entities, but both worked interchangeably on files and shared employees. Zoeller said deposit amounts illegally collected from Hoosiers range from $499 to $2,699.

  • This lawsuit alleges both organizations violated the Credit Services Organization Act, the Mortgage Rescue Protection Act, the Home Loan Practices Act and Deceptive Consumer Sales Act. Community One and National Law Partners also failed to obtain a certificate of authority from the Indiana Secretary of State's Office to conduct business in Indiana.

For the Indiana AG press release, see Zoeller files suit against out-of-state foreclosure consultants (Two for-profit companies illegally operating in Indiana failed to pay refunds).

Thursday, August 25, 2011

NY AG Gently 'Flips Bird' At Antagonists; Vows To Continue Forward In Bankster Probe

Based on a recent post in The Journal News' Politics on the Hudson blog, it appears that New York Attorney General Eric Schneiderman has gently 'flipped the bird' at his antagonists in connection with his recent ouster from a committee of the 50-state foreclosure fraud probe:
  • Attorney General Eric Schneiderman is reacting to his removal from a committee negotiating a huge foreclosure settlement with U.S. banks as a badge of honor, saying he will continue to press for a full investigation into the banks’ misconduct.

  • In a email(1) today through his campaign account titled “Standing Up For You,” the first-year Democratic attorney general says it would be wrong to settle with the banks and give them a pass on any further legal action.

For more, see Schneiderman Vows Full Investigation Into Banks’ Foreclosure Practices.

(1) The full text of AG Schneiderman's email, as reported by Politics on the Hudson, follows:

  • You might have been following the latest developments related to the national settlement of the mortgage probe, including this story in today’s Huffington Post about our tough fight for a comprehensive resolution to this crisis.

    Let me tell you directly: I am deeply committed to pursuing a full investigation into the misconduct that led to the collapse of America’s housing market, and to seeking a resolution that gives homeowners meaningful relief, allows the housing market to begin to recover, and gets our economy moving again.

    Our ongoing investigation into the housing crisis cannot be shut down to accommodate efforts to settle quickly and give banks and others broad immunity from further legal action. If you have any thoughts or concerns about this critical issue, please contact me at 1-800-771-7755, or send a message via Facebook or Twitter.

    Thank you for your support,

    Eric T. Schneiderman
    Attorney General

Bankster Lawsuit Tags Foreclosure Document Sweatshop; Servicer Says 'We Only OK'd Use Of Robosigners, Not Sub-Robosigners!'

The Wall Street Journal reports:
  • One of the nation's largest mortgage servicers filed a lawsuit on Tuesday against Lender Processing Services Inc., a top mortgage industry technology and services vendor, alleging that the firm improperly signed mortgage documents on its behalf and triggered millions of dollars in legal expenses as a result.

  • American Home Mortgage Servicing Inc. said in the lawsuit that it had incorrectly processed more than 30,000 mortgage assignments when seeking foreclosure on properties in all 50 states as a result of the work by an LPS subsidiary.

  • The lawsuit was filed Tuesday in a state court in Dallas County, Texas, and seeks unspecified damages worth millions of dollars. LPS, based in Jacksonville, Fla., does business with many of the nation's largest mortgage servicers.


  • American Home alleged in the lawsuit that LPS didn't dispute that it had improperly executed, notarized, and recorded thousands of assignments that American Home used to process foreclosures. But American Home said that LPS has refused to indemnify the servicer for millions of damages that resulted from the shoddy work by arguing that it wasn't under an enforceable contract when the breaches occurred.


  • Tuesday's lawsuit is one of the first by a servicer to attempt to put back losses for certain document-handling improprieties on an outside vendor. It concerns the use of "surrogate signers," or employees that weren't authorized to sign documents on behalf of the company.

  • American Home designated certain LPS employees as "special officers" [ie. robosigners] of the company in 2009 to process certain foreclosures, according to the lawsuit. But American Home said that LPS then allowed other unauthorized employees to sign the names of the approved "special officers" on foreclosure filings [ie. sub-robosigners]. The company also alleged that LPS had proposed steps that would have retroactively allowed the improper signatures.

For more, see American Home Mortgage Files 'Robo-Signing' Suit (requires subscription; if no subscription, TRY HERE, or GO HERE - then click appropriate link for the story).

SEC & 'Deep-Sixed' Docs: Have Records Gathered In Probes Of Subsequently Unprosecuted Cases "Disappeared Forever Into The Wormhole Of History?"

Records gathered in fraud probes by the U.S. Securities & Exchange Commission that reportedly appear to have been 'deep-sixed' is the issue investigative reporter Matt Taibbi writes about in a recent article in Rolling Stone:
  • Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case.

  • No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

  • That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed.

  • By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG.

  • With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

For more, see Is the SEC Covering Up Wall Street Crimes? (A whistle-blower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation's worst financial criminals).

See also, S.E.C. No Evil: Matt Taibbi on SEC covering up Wall Street crimes (interviewed on Countdown with Keith Olbermann).

Florida HOAs Begin Scoring Big Wins Voiding Lender Mortgages; Banks Fail To Defend Suits, Claiming 'We're Only The Trustee, We're Not The Servicer'

Bloomberg reports:
  • Financially troubled condo associations are taking banks to court as foreclosure delays enable delinquent homeowners to stay in their buildings for years, often without paying dues that keep boards running. The groups start by pressuring lenders to speed up home seizures and take over payment of the monthly fees. In extreme situations, [...] , associations may force banks to give up rights to the property.

  • The lenders are stalling foreclosures,” Ben Solomon, the Miami Beach attorney for [one] association, said in a telephone interview. “Our complaints say the banks abandoned their interest and either need to accept responsibility for the title or walk away.”

    ‘Mortgage Terminator’

  • Solomon, whose Association Law Group represented homeowner boards in 16 Florida counties with 15,000 delinquent owners, also won what he calls “mortgage terminator” lawsuits in claims against Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Wells Fargo & Co., according to court records.


  • To compel banks to act, Solomon’s lawsuits start by suing the homeowner for unpaid dues as a way of seeking title to the property. Then he files a claim against the bank, contending the non-performing loan restricts the association’s right to sell the property because the mortgage is worth more than the home.

  • The bank defendant is usually a trustee for the loan that was sold into a mortgage-backed security, a legal structure that can leave the party responsible for a mortgage unclear.

  • Citigroup and Deutsche Bank declined to challenge lawsuits brought by Solomon because both banks were trustees, not the servicers of the delinquent loans, bank representatives said.

  • In March 2010, Citigroup lost a lawsuit over a Miami Beach condo with a $136,000 mortgage, according to court filings. Danielle Romero-Apsilos, a spokeswoman for the New York-based bank, declined to comment, saying Citigroup wasn’t the servicer.

  • Deutsche Bank in September forfeited its right to a unit with a $149,300 mortgage to the Palm Aire Gardens Condominium Association Inc. in Pompano Beach, Florida.

  • Litton Loan Servicing, the loan servicer for the loan, and not Deutsche Bank as trustee, was responsible for all foreclosure activity relating to the loan,” John Gallagher, a Deutsche Bank spokesman in New York, said in an e-mail.

  • Donna Marie Jendritza, a spokeswoman for Litton in Houston, declined to comment on the lawsuit, citing privacy restrictions. Litton, which Goldman Sachs Group Inc. is selling to Ocwen Financial Corp., wasn’t named in the complaint or other court documents.

  • We sue whoever holds the mortgage,” Solomon said. “The bottom line is the bank had a loan and the mortgage got terminated.”

    No Defense

  • Palm Aire Gardens also won title to a unit with a $184,410 mortgage after Wells Fargo failed to mount a defense because it no longer owned the loan, a transfer that wasn’t reflected in property records, said Tom Goyda, a spokesman. The bank would have defended the mortgage if it hadn’t sold the loan, he said.(1)

For more, see Homeowner Associations in Need of Cash Sue Lenders to Force Foreclosures.

(1) The cavalier attitude that the banksters are exhibiting here will no doubt come back to haunt them in that the unwitting holders of the mortgage-backed securities (with the ever-diminishing value of their investment as each mortgage gets voided) are the ones getting hammered, and this gives them one more reason to sue the servicers and trustees to recover their losses.

Inasmuch as these suits are apparently going forward undefended by the trustees & servicers, it wouldn't surprise me if there is a mad rush by attorneys (or their 'runners & cappers') throughout Florida to solicit homeowner associations, offering to take on their collections work for unpaid maintenance dues with the view of ultimately voiding the existing delinquent mortgages on each home/condo held by foot-dragging banksters.

Media Scores Again; Report Forces BofA Into Quick Backpeddle After Filing Foreclosure On Terminally Ill, Bedridden Senior, Spouse For Paying Too Early

In New Port Richey, Florida, the St. Petersburg Times reports:
  • It looks like Sharon and James Bullington might be able to stay in their home — for now at least. The retired couple faced foreclosure after paying a January mortgage payment one week early in December to Bank of America. The following month, the bank rejected their payment because it was made electronically without a signature. The bank then kicked them out of a loan modification plan and filed to foreclose on the home they have lived in for 15 years.

  • On Monday, two days after the St. Petersburg Times published an article detailing the saga, Bank of America admitted it made a mistake and said it was putting the couple back into the program.

  • James Bullington, 78, is terminally ill and bedridden. Sharon, 70, is his sole caregiver.

For more, see Bank of America admits error in foreclosure case.

See also, BofA Begins F'closure On Elderly Couple For Paying Too Early On Loan Mod Payments After Telling Them Default Required For Payment Workout Eligibility.

Wednesday, August 24, 2011

NY AG Gets The Boot From Executive Committee Of Multi-State Foreclosure Fraud Probe As Iowa AG Joins Feds In Move To Continue Screwing Over Homeowners

Reuters reports:
  • New York Attorney General Eric Schneiderman was removed on Tuesday from a committee of state attorneys general probing mortgage abuses, Iowa's attorney general said.

  • Schneiderman's removal follows his statements in recent months voicing concerns over a proposed deal between major banks and a coalition of federal and state officials over claims of foreclosure abuses.

  • "Effective immediately, the New York Attorney General's Office has been removed from the Executive Committee of the Robosigning multistate," an attorney in the Iowa Attorney General's office, which is leading the investigation, said in an email on Tuesday to other lawyers involved in the probe.

  • The removal is the latest sign of discord between Schneiderman and the state and federal coalition on mortgage abuses. On Monday, the New York Times reported that the federal government was pressuring him to agree to a settlement with the banks over abuses such as submitting allegedly false documents to remove borrowers from their homes.

For more, see Schneiderman removed from committee (Iowa says New York has "undermined" gov't coalition).

See also, Feds To Sell Out Homeowners? Begin Arm-Twisting Campaign, Targeting NY AG, Others To Seek Support For Crappy, 50-State Foreclosure Fraud Settlement.

"Sima Schwartz Saga" Continues; Bay State Homeowner Scores Big Win In Continuing Battle With Banksters To Hang Onto Home As Court Voids F'closure Sale

A U.S. Bankruptcy Court in Worcester, Massachusetts has recently issued a ruling in the ongoing saga (at least five years, based on the filing of the initial bankruptcy petition in this case) of local homeowner Sima Schwartz and her battle against foreclosing international bankster giant Deutsche Bank in her battle to hang on to her home.

Primarily on the basis of the Massachusetts Supreme Judicial Court ruling in U.S. Bank Nat. Ass'n v. Ibanez, 458 Mass. 637, 941 N.E.2d 40 (2011), the court found that that Deutsche Bank inexcusably screwed up in bringing a foreclosure where, while holding the promissory note, it failed to acquire the mortgage from MERS and, consequently, U.S. Bankruptcy Judge Melvin S. Hoffman declared the foreclosure sale of Ms. Schwartz void.(1)

For the ruling, see In re Schwartz, Case No. 06-42476-MSH, Adversary Proceeding No. 07-04098 (Bankr. D. Mass. August 22, 2011).

For most recent prior post on the ongoing "Sima Schwartz Saga," see 'Ibanez' Issue Compels Bay State Bankruptcy Court To Vacate Unfavorable Earlier Ruling Against Homeowner Fighting Foreclosure.

(1) The court concluding its opinion with this nutshell:
  • Having determined that MERS, and not Deutsche, held legal title to the mortgage on Ms. Schwartz's home mortgage as of May 3, 2006, when the notice of the foreclosure sale of her home was first published, it follows that Deutsche did not have the right to exercise the statutory power of sale and to foreclose the mortgage. See, e.g., Novastar Mortgage, Inc. v. Safran (may first require free registration to LexisOne Free Case Law; if not registered, TRY HERE) 79 Mass.App.Ct. 1124, 948 N.E.2d 917 (2011) (finding, in a post-foreclosure eviction proceeding, that the foreclosing entity had the burden to prove its title to the property by establishing that the mortgage had been assigned to it by MERS "at the critical stages of the foreclosure process.").

    By publishing notice of the foreclosure sale when it was not the mortgagee, Deutsche failed to comply with Mass. Gen. Laws ch. 244, § 14, and thus its foreclosure sale is void. Ibanez, 438 Mass. at 646-47.

    A declaratory judgment to that effect shall enter on count I of the complaint.


Congratulations to Ms. Schwartz on this, and hopefully future success in this matter.

Freddie's Friendly, Subtle 'Warning' To Real Estate Agents On Short Sale Fraud: 'Don't Play A Role, Don't Look The Other Way!'

Housing Wire reports:
  • Freddie Mac recently began reaching out to real estate associations and fielded more calls on a rising rate of fraudulent short sales. [...] Shelley Poland, a vice president at Freddie, and Robert Hagberg, the associate director of fraud investigations, said in a blog post Monday the mortgage giant sees short sale fraud on the rise as well — especially when real estate agents fail to disclose other parties involved in the transaction, who will rig sales at a low price and hide better offers from Freddie and the distressed homeowner.

  • "Then, after the house is sold, the fraudster can flip it a few hours later for the better price and walk away with the profitable difference," the Freddie executives said.


  • Short sales fraud is now the top priority for Hagberg's investigation unit. It began working with these real estate agents and law enforcement to detect suspicious activity before a deal closes. The unit also built an exclusionary list of companies and individuals who will can no longer do business with Freddie.

  • The unit soon began seeing trends. Some agents provide false offers on a property to discourage legitimate bids and ensure accomplices get the property for a planned low bid. Others manipulate the listing price to make the house seem more problematic than it is by inflating repair costs and obtaining an artificially low broker price opinion.


  • Others even skew the HUD-1 settlement statement, which itemizes fees, charges and other funds, to skim away proceeds from the short sale.

  • Freddie now requires all parties in a short sale to sign an affidavit, holding them liable if investigators find the transaction wasn't done at arms-length.

  • "There are many conscientious real estate professionals who want to do the right thing. We often receive calls in our servicing, quality control, fraud investigation, outreach, and HomeSteps divisions from real estate agents who know they've seen something inappropriate and won't look the other way,"(1) the executives said. "They understand that real estate fraud turns a shortsighted profit at the cost of the public's long-term confidence in homeownership and the housing industry."

For more, see Freddie Mac alerts real estate agents to rising short sale fraud.

See also, Freddie Mac: Teaming Up to Fight Short Sale Fraud.

(1) Real estate agents may want to note that, as a practical matter, they legally can't look the other way, at least not without opening themselves up to potential criminal exposure for misprision of a felony, a federal crime. See 18 U.S.C. §4:

  • Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both.

A couple of dozen court cases decided in 2011 alone is an indicator that the Feds don't take too kindly to those who, when witnessing a felony, simply look the other away and engage in willful ignorance in an attempt to establish plausible deniability in the event law enforcement investigators question them in the future about their knowledge of a crime they've witnessed (this seemingly-convenient 'lapse' into a state of willful ignorance by those witnessing a bad act is referred to by some as 'pleading the dummy defense').

NJ Homeowner On BofA: "Better Going To A Loan Shark & Borrowing All That Money" After Getting F'closure Threat Despite Making Continued Full Payments

In Caldwell, New Jersey, The Star Ledger reports:
  • As a real estate agent, Mark Conca has watched homeowners struggle to make their mortgage payments. He’s seen a lot of short sales and foreclosures in recent years, and he’s even assisted homeowners looking for mortgage modifications. He didn’t want to be one of them.

  • But the distressed housing market put a major dent in Conca’s commission-based income. He said he still paid his bills on time, but his savings account was dwindling. He decided to approach his lender, Bank of America, to see if he’d qualify for a modification.

  • After he applied, many months passed and Conca heard nothing from the bank. Knowing lenders had huge backups in modification requests, he remained patient. Conca, 41, continued to make the full payment on the mortgage for his Caldwell home, on time, every month.

  • But that’s not what Bank of America said when it sent Conca a letter about its intent to foreclose. “I would have been better going to a loan shark and borrowing all that money,” Conca said. “At least with the street mafia, you know where you stand.”(1)

For the details of exactly what happened, see Homeowner says Bank of America foreclosure notice doesn't add up.

(1) Mr. Conca noted his frustration in dealing with BofA in this excerpt, which alludes to his seeking out media assistance to shine light on this bankster's practices:

  • The process was a disgrace and it took a threat from the media to get them to move? It annoys me that they have no respect for the common man,” he said. [...] “The least they can do is say now that they’ve screwed up, now that they caused me all this pain, they will modify my loan,” he said.

Woman Gets 11 Years For Swindling Elderly Couple In Foreclosure Rescue Ripoff Perpetrated While On Bail On Earlier Housing Scam Charge Targeting Nuns

In Santa Barbara, California, KEYT-TV Channel 3 reports:
  • A local woman who stole money from an elderly Montecito couple was sentenced to state prison Monday. The Santa Barbara District Attorney's Office says a judge sentenced Denise D'Sant- Angelo, 56, to 11 years in state prison.

  • D'Sant-Angelo was found guilty of financial elder abuse, grand theft and unauthorized practice of law in March 2010 while out on bail for stealing nearly $3,000 from a group of elderly nuns.

Source: Woman Sentenced In Elder Abuse Case.

See also, The Santa Barbara Independent: Nun Scammer Found Guilty of Financial Elder Abuse (Jury Convicts Denise D'Sant Angelo on 12 Felony Counts):

  • A Santa Barbara jury [] found Denise D'Sant Angelo guilty of embezzling $30,000 from an elderly couple whose home was about to go into foreclosure.

  • The bespectacled fraudster, convicted last year of lining her pockets with money meant to save housing for a group of nuns, convinced the husband and wife she was skilled in the ways of financial and legal maneuvering and could save their home if they paid her.

Tuesday, August 23, 2011

Feds To Sell Out Homeowners? Begin Arm-Twisting Campaign, Targeting NY AG, Others To Seek Support For Crappy, 50-State Foreclosure Fraud Settlement

The New York Times reports:
  • Eric T. Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices, according to people briefed on discussions about the deal.

  • In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement, said the people briefed on the talks.

  • Mr. Schneiderman and top prosecutors in some other states have objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.

  • But Mr. Donovan and others in the administration have been contacting not only Mr. Schneiderman but his allies, including consumer groups and advocates for borrowers, seeking help to secure the attorney general’s participation in the deal, these people said. One recipient described the calls from Mr. Donovan, but asked not to be identified for fear of retaliation.

  • Not surprising, the large banks, which are eager to reach a settlement, have grown increasingly frustrated with Mr. Schneiderman. Bank officials recently discussed asking Mr. Donovan for help in changing the attorney general’s mind, according to a person briefed on those talks.


  • [A recent NY AG] lawsuit [to block a proposed $8.5 billion settlement involving the peddling of crappy mortgage-backed securities] angered Bank of New York Mellon, and as Mr. Schneiderman was leaving the memorial service last week for Hugh Carey, the former New York governor who died Aug. 7, an attendee said Mr. Schneiderman became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public.

  • Ms. Wylde, who has criticized Mr. Schneiderman for bringing the lawsuit, is also chief executive of the Partnership for New York City. The New York Fed has supported the proposed $8.5 billion settlement.

  • Other investors in the Countrywide mortgage pools who were not part of the settlement talks between Bank of New York Mellon and Bank of America have called the terms inadequate.

  • Characterizing her conversation with Mr. Schneiderman that day as “not unpleasant,” Ms. Wylde said in an interview on Thursday that she had told the attorney general “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

  • Mr. Schneiderman declined to comment on the encounter.

For more, see Attorney General of N.Y. Is Said to Face Pressure on Bank Foreclosure Deal.

See also, Editorial: It's A Flawed Settlement:

  • The Obama administration has turned up the heat on Eric Schneiderman, New York’s attorney general, to go along with a proposed settlement with the nation’s largest banks over dubious foreclosure practices.

  • Mr. Schneiderman should stand his ground in not supporting the deal. The administration says that a settlement would quickly deliver much needed relief to hard-pressed borrowers, but it’s doubtful it would provide redress on a par with the banks’ wrongdoing or borrowers’ needs.

Roof & Sinkhole Foreclosures May Be On Horizon As Changes In One Insurer's Underwriting Guidelines May Squeeze Some Florida Homeowners Onto Street

In Central Florida, The Tampa Tribune reports:
  • Homeowners across Florida who are up for an insurance policy renewal with the state's insurer of last resort are receiving letters about their roofs. Anyone with a home 25 years old or older must get an inspection and prove to Citizens Property Insurance Corp. that their roof is expected to last at least three more years.

  • Robert Brown says he thought he had a few more years to save money to put new roofs on his rental homes. But Citizens told him the roofs must be replaced now, or it won't renew his policies.

  • "They're forcing people to put on a new roof, even if you have a few years of life left on the roof," Brown said. "This could force a lot of people into foreclosure, if they can't afford the roof and then lose their insurance." Replacing a roof on a typical home can cost several thousands of dollars.

  • The relatively new requirement for the roof inspection comes on the heels of another controversial Citizens policy. The company recently said it's raising its rates for sinkhole coverage by 400 to 2,000 percent in some Bay area locations.(1)

  • When it comes to the roof policy, some customers can't afford a new roof now and say they're letting their insurance lapse, local insurance agents said. "This couldn't come at a worse time," said Laura Hart, of Florian Insurance Inc. in Hudson. "This is the worst economy most of these people have seen in their lives." Hart said some customers are angry that their insurance company is taking away their chance to save longer for a new roof.

For more, see Citizens policy pushes some homeowners to add new roofs.

(1) See Residents rally in Pasco against sinkhole coverage hike:

  • Al Kutchera said he'll be one of many residents abandoning their homes and leaving the state if Citizens Property Insurance fulfills its proposal to raise rates for optional sinkhole coverage. The plan increases rates by more than 400 percent on average statewide and more than 2,000 percent in some Bay area locations.

  • "Nobody will buy the house, so I'll just let the bank have the house and look for a Realtor in South Carolina or Alabama or something," said Kutchera, who owns a home in Hernando County.


  • State Sen. Mike Fasano, R-New Port Richey, organized the rally with consumer advocacy group Policyholders of Florida. Fasano said the issue is bringing together people from all over the Bay area and from all walks of life that wouldn't be able to afford the increased rates.

  • He said a senior citizen came to his office because her mortgage company told her she had to have sinkhole coverage. The woman was in tears because she can't afford the coverage under the proposed rate hikes.

Title Search Failure To Disclose Subordinate Lien Leaves Lender Holding The Bag With Foreclosed Home Subject To Junior Lienholder's Claim

The following facts have been taken from a recent court ruling from a Memphis, Tennessee Federal Court:
  1. Bank, a 1st mortgage holder, initiates foreclosure process against homeowner.

  2. At the sale, Bank is the successful bidder and takes title to home.

  3. At some point subsequent to the foreclosure sale, Bank discovered that a junior lien on the premises was not included in the title report prepared prior to the foreclosure sale.

  4. Because Bank was unaware of the existence of the junior lien prior to the foreclosure sale, it failed to give the junior lienholder proper notice of the sale.

  5. Because junior lienholder failed to receive proper notice of the sale, its lienholder's interest in the premises was not extinguished - it survived the sale.

  6. Upon said discovery, Bank went to court and sought to rescind the foreclosure sale; to void the deed recorded pursuant to that sale; and to reinstate the foreclosed mortgage (actually, it was a deed of trust) and other liens as to the subject property.

  7. In effect, Bank requested a chance for a 'foreclosure do-over' to undo the mess it now found itself in, holding title to a home encumbered by a lien that, prior to the foreclosure sale, was junior in priority to its own mortgage.

For the reasons set forth in his ruling, U.S. District Judge S. Thomas Anderson told Bank, in effect, 'tough luck' and refused to set aside the foreclosure sale, and left Bank holding the bag with a foreclosed home subject to the 'now-no-longer junior' lienholder's interest.

For the ruling, see Nationstar Mortgage, LLC v. Humphrey, No. 11-2185-STA (W.D. Tenn. July 29, 2011).

Monday, August 22, 2011

Sale Leaseback Peddler Gets 4 To 12 On Grand Larceny Plea For Duping Homeowners Into Signing Over Deeds, Then Stripping, Pocketing Their Home Equity

In New York City, the New York Daily News reports:
  • The ringleader of a $2 million mortgage fraud scam targeting members of the city's Guyanese community has been sentenced to up to 12 years in prison. Roger Huggins, 36, pleaded guilty to a grand larceny charge in November for duping desperate homeowners into turning over the title to their homes so he could take out inflated mortgages and pocket the proceeds.

  • Queens prosecutors say the four-year scheme defrauded homeowners and lending institutions of $2 million in equity stripped from properties valued at $8 million. Queens Supreme Court Justice Joel Blumenfeld sentenced Huggins to four to 12 years in prison Wednesday.

  • "In unjustly enriching himself and his accomplices of millions of dollars, the defendant created a human tragedy of immense proportions for the homeowners who had turned to him in desperate hope of saving their homes from foreclosure," said Queens District Attorney Richard Brown.

  • Huggins' Richmond Hill company targeted homeowners in Brooklyn, Queens and the Bronx.

Source: Mortgage scam leader Roger Huggins sentenced to up to 12 years in prison.

Cincinnati Feds Bust 4 Sale Leaseback Peddlers Accused Of Running F'closure Rescue, Equity Stripping Racket Targeting No Cash, High Equity Homeowners

From the Office of the Ohio Attorney General:
  • A federal grand jury has indicted four people(1) who ran a Cincinnati real estate business known as American Equity Group (AEG) with fraudulently obtaining more than $13 million in loans through a loan fraud scheme that targeted homeowners or builders in or near foreclosure.

  • Ohio Attorney General Mike DeWine, Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the indictment today. These agencies are members of the Greater Cincinnati Mortgage Fraud Task Force.


  • According to the indictment, they conspired to locate distressed properties that were in or nearing foreclosure or that needed to be sold quickly. They would typically promise the sellers that they could continue to live in the property as a renter, then purchase the property back after AEG assisted the homeowner with repairing their credit.

  • The defendants are accused of finding "investors" to purchase the property, often at inflated values, with the promise that the mortgage would be paid through rent payments from the original seller and that the original seller would purchase the property back within a short period.

  • After the properties were stripped of any equity, they would be back in foreclosure again, and the distressed homeowners wouldn't have any standing in court because they no longer owned the properties. The "investors" who bought the houses were left with the debt.

For the Ohio AG press release, see Attorney General DeWine Announces Foreclosure Rescue Actions.

(1) According to the press release, the indictment charges Adam Moellers, 33; Gary Dailey, a.k.a Gary Klump, 32; Perry Bensick, Jr., 35; and Gary Dailey's mother, Mary Dailey, 50; all of Cincinnati, with wire fraud, mail fraud and conspiracy. The indictment alleges that the four worked together at AEG, which also operated under the names Equity Financial Solutions and Equity Financial Group, and carried out the scheme between July 2006 and October 2007.

Cal. AG Tags Alleged Nat'l 'Mass Joinder Lawsuit' Racket With Civil Suit, Shuts Down Operation That Attempts To Circumvent Upfront Fee Bans, Some Say

In San Francisco, California, the Los Angeles Times reports:
  • California authorities have sued a group of lawyers and their associates, accusing them of fraudulently taking millions of dollars from thousands of homeowners by deceiving them into thinking they would receive relief on their troubled home loans.

  • Atty. Gen. Kamala D. Harris said Thursday(1) that the California Department of Justice, in conjunction with the State Bar of California, sued Philip Kramer of Calabasas, the Law Offices of Kramer & Kaslow, two other law firms, three other lawyers and 14 non-lawyers.

  • The defendants are accused of working to defraud homeowners across the country by deceptively marketing "mass joinder" lawsuits, which have hundreds or more individually named plaintiffs.

  • At a news conference, Harris said the state would seek "fines, penalties, damages and restitution in potentially the tens of millions of dollars." She said the lawyers' assets had been frozen.

For the story, see Alleged foreclosure-prevention scam shut down by California.

For the lawsuit, see People v. The Law Offices of Kramer and Kaslow, et al.(2)

(1) See California AG press release: Attorney General Kamala D. Harris Sues Law Firms Engaged in National "Mass Joinder" Mortgage Fraud:

  • The legal actions were designed to shut down a scheme operated by attorneys and their marketing partners, in which defendants used false and misleading representations to induce thousands of homeowners into joining the mass joinder lawsuits against their mortgage lenders.


  • "The number of lawyers who have tried to take advantage of distressed homeowners in these tough economic times is nothing short of shocking," said State Bar President William Hebert. "By taking over the practices of four attorneys accused of fraudulent marketing practices, the State Bar can put a stop to their deplorable conduct as part of our ongoing effort to protect the public."

    It is believed that at least two million pieces of mail were sent out by defendants to victims in at least 17 states. Defendants' revenue from this scam is estimated to be in the millions of dollars.

    Defendants unlawfully paid commissions to their sales representatives on a per client sign-up basis, a practice known as "running and capping."

    The State Bar has seized the practices and attorney accounts of the attorney defendants: The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq.; Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.

    Attorney General Harris is challenging the defendants' alleged misconduct in marketing their mass joinder lawsuits; her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.

    Victims in the following states are known to have received these mailers, or signed on to join the case. This is a preliminary list that may be updated: Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Texas, Washington.

(2) For the related court filings, etc., see:

Trio Pinched For Obtaining, Abusing POA From Frail, Vulnerable Senior To Pocket Proceeds From Loan Against 1st Home, Sale Of Vacation Home

In Hanover Township, Pennsylvania, The Express Times reports:
  • A Hanover Township woman, her former fiance and her daughter are accused of conspiring to steal $260,000 from an 88-year-old Emmaus woman and failing to care for her medical needs.

  • Penelope Veronikis, 49, and Barbara Paxos, 26, both of the 1200 block of Granite Drive in Hanover Township, Northampton County, and Hristos G. Dimou, 49, of the 3700 block of Church View Road in Upper Milford Township, depleted Queen E. Hersh's assets -- including a Poconos vacation home, bank accounts and her Emmaus home -- for their own pleasure from June 2006 through August 2008, police said.

  • The trio was charged [] with dealing in proceeds of unlawful activities, criminal conspiracy, theft and related offenses. Veronikis and Dimou are also charged with reckless endangerment.

  • Hersh, who was 88 when the thefts began, died at age 90 in December 2008. She lived in Emmaus in a home she owned free and clear with her sister, Ella Crawford. Crawford worked as a waitress and supervisor at the Emmaus Diner owned by Dimou, police said.

  • In 2006 Crawford became ill and died. She was the lone caretaker for Hersh. Both women were widowed and neither woman had any children, police said. According to court papers, Crawford asked Dimou to take care of Hersh, and he agreed.

  • Two days after Crawford's death, police said, Veronikis took Hersh to a Bethlehem attorney, Ewalde Cook, who prepared a power of attorney document.


  • Veronikis allegedly used her power of attorney to take out a $50,000 mortgage against Hersh's Emmaus home in 2007 and never made a payment on the loan. According to court papers, Veronikis' hold on Hersh unraveled after Hersh was served with a foreclosure notice in July 2008. Hersh, distraught and confused, went to a neighbor to help explain the foreclosure notice since she had not had a mortgage for more than 20 years, police said. The neighbor referred Hersh to attorney Karl Longenbach. Longenbach's office investigated Hersh's case and dissolved Veronikis' power of attorney and destroyed the will naming Veronikis as sole beneficiary.

For the story, see Hanover Township women, Upper Milford man accused of stealing $260,000 from elderly woman.

Sunday, August 21, 2011

F'closed Homeowner Victimized By 'Mysteriously Disappearing' Loan Proceeds In Refinance Foul-Up Settles Suit; Score To Provide Downpayment On New Home

In Baltimore, Maryland, The Baltimore Sun reports:
  • A Howard County man who lost his townhouse in a refinancing foul-up six years ago has settled the matter before trial, giving him enough money for a down payment on a new house, a lawyer in the case said.

  • Kwaku Atta Poku, 59, a Ghanaian immigrant who runs a taxi business, settled with the Federal Deposit Insurance Corp. and a third party in the spring, a few months before his lawsuit seeking $34 million in damages and compensation was scheduled to go to trial in U.S. District Court.

  • "I'm very grateful at least they got me something to start my life over with," said Atta Poku, who said he could not give any specifics about the settlement terms. Gerald M. Richman, an Ellicott City lawyer who acted as Atta Poku's co-counsel in the case, said he could not disclose details, but he said the settlement would "permit [Atta Poku] to make a significant down payment on a house." He said the lawyers in the case agreed to forgo their fees and accept only compensation for expenses.


  • The federal agency became the defendant in the case when Washington Mutual Bank declared bankruptcy, Richman said. The bank insisted at first that the original mortgage was not paid off in a refinancing in 2001. Atta Poku's lawyers argued that the bank had mishandled the transaction, failing to ensure that the new loan was used to pay off the original mortgage of $97,500.

  • Atta Poku continued to make his monthly payments, but could not prove that he had paid off the original loan. The bank foreclosed in 2005, eventually putting him, his wife and four children out of their house. In a court hearing early this year, the title company engaged in the refinancing agreed that Atta Poku had done nothing wrong.

  • Early this year, after several of Atta Poku's lawsuits were dismissed on technical grounds, a federal judge ruled that Atta Poku was entitled to a trial. The proceeding was scheduled to begin this month, but the parties held a settlement conference by phone in May and the case was dismissed in June.

For the story, see Howard immigrant who lost home to mistake settles case (Atta Poku never missed a mortgage payment, fought in court for more than five years).

Judge Stays Lower Court 'Boot' Order; Reprieve For Widow Not Named On Title To Deceased Hubby's Home Refused Loan Mod; Says Notice Never Received

In Rochester, New York, the Democrat and Chronicle reports:
  • A Rochester woman who was evicted from her home this spring and moved back in two months later, is again being evicted from the house. City Court Judge Melchor E. Castro today granted a warrant of eviction and told Catherine Lennon that she and the other occupants need to leave [] by Wednesday. “You have no legal basis to permit you to remain on the premises,” Castro said.

  • Lennon was originally evicted from her home on March 28 after a court proceeding. She failed to pay her mortgage and was unsuccessful in renegotiating the terms of the loan. In May, Lennon moved back into the home without permission.

  • Ryan Acuff, a member of Take Back the Land-Rochester, a group dedicated to “elevating housing to a human right,” fighting foreclosures and making mortgage companies renegotiate loans under some circumstances, said he was disappointed with the judge’s decision. “It never should’ve gotten to this point,” he said. “The problems can be worked out.”

  • According to Acuff, Lennon had lived in the home for seven years, but struggled with mortgage payments after her husband, Jascha Lennon, died of brain cancer in 2008. When she tried to renegotiate the loan to lower the payments, the bank refused because her name was not on the deed and Jascha Lennon did not have a will that transferred ownership to his wife, Acuff said. Lennon then tried to get her name on the deed, but foreclosure proceedings were nearly complete. Lennon [then] claimed she never received a foreclosure date.

For the story, see Previously evicted woman told to leave home again.

For follow-up stories, see:

  • WHAM-TV Channel 13: Judge Orders Hearing on Disputed Foreclosure:

    A Monroe County judge ordered(1) Countrywide Home Loans to show cause for evicting Catherine Lennon. Lennon was forcefully evicted from her foreclosed home in March. [...] Lennon claims she’s the victim of a Western New York foreclosure mill under federal and state scrutiny.(2) The lender has said it tried to work with her. Lennon has gotten support from the activist group, Take Back the Land Rochester, which has held demonstrations at the house. The group breaks into foreclosed houses and secretly moves people in.

  • Democrat and Chronicle: City woman gets eviction reprieve:

    [S]tate Supreme Court Justice Ann Marie Taddeo signed a court order late Tuesday that halted the eviction pending a review of the underlying foreclosure action, which Lennon and members of the activist group Take Back the Land Rochester say was carried out under fraudulent circumstances.

    Victory will be mine,” Lennon said at a news conference [...] as about 25 neighbors and activists applauded. Lennon can remain in the home at least until Aug. 30, when Taddeo has scheduled a hearing on the case to examine the claims of irregularities. "The entire (foreclosure) process is going to have to be justified now,” Lennon said.

Thanks to Bill Collins at Frontier Abstract, Rochester, NY for the heads-up on the story.

(1) Go here for Judge Taddeo's Order & Catherine Lennon's Affidavit in Support of Order To Show Cause To Vacate Default Judgment.

(2) According to the court order, the foreclosure mill involved is the notorious Steven J. Baum, P.C.