Saturday, September 24, 2011

California City Begins Using Violations Of Public Health Ordinance As Basis To Quickly Boot Squatters From Vacant F'closed Homes Without Court Process

In Manteca, California, the Manteca Bulletin reports:
  • Every neighborhood seems to have one. And they’re not hard to spot. They are foreclosures with a twist. Homes owned by small-time landlords that are in process of being repossessed by the bank. The investor’s name is on the tax rolls but they’ve been missing in action even before the property started going south. Even if you know the name of the bank that holds the loans it does no good until the legal foreclosure process is completed.

  • That process is now taking upwards of a year or more thanks to the backlash from the robo signing scandal. The tenants were served eviction notices but they either didn’t leave or they came back. They are anything but good neighbors.

  • They often don’t have water. The city turns it off for non-payment and then they bypass it. That results in the city removing the meter and shutting off the flow of water.

  • Electricity and natural gas bills have been cut off for non-payment. Some use noisy generators to keep the lights going.Others - if they have a swimming pool - use that stagnant water to flush toilets.


  • You call the police. They respond. They are caught in a twilight zone. They can’t order anyone out of the home or arrest them for trespassing because they don’t have a complaint from the owner. It is a hassle to find out who the mortgage holder is but that is an exercise in futility since the legal owner is still the party the bank is foreclosing on.

  • So what can be done? In extreme cases, the city has stepped up its game. This week, City Manager Karen McLaughlin working with municipal workers exercised one of its few options.

  • They declared such a home uninhabitablefor public health reasons. They have the power to do that when there is no water and electricity to a house.

  • The posting gives police the ability to chase trespassers - a polite name for squatters - off the property. [...] McLaughlin correctly notes the city’s legal options are pretty limited in such cases. But she emphasized the city intends to work diligently and do what it can to try to get the problem under control.

For the story, see No water, no power = home uninhabitable.

Former Charleston Navy Base Foreclosure Leads To Boot For Homeless Veterans Benefitting From McKinney Act

In Charleston, South Carolina, The Post and Courier reports:
  • Since the Navy shuttered its base in North Charleston, more than 2,000 homeless veterans have lived there, rent-free, as they battled drug and alcohol addiction and tried to repair their lives. They resided in the "Veterans Villas," a series of neat brick ranch homes along Manley Avenue first built for naval officers and their families. Now that this property is owned by S.C. Public Railways, the few dozen veterans there are preparing to move.

  • Melissa Kelly, director of the Chesapeake Health Education Program, said the organization will consolidate operations at its site off Ashley Phosphate Road rather than sign a lease with S.C. Railroad Railways.

  • The Chesapeake Health Education Program, which has run the villas since 1998, originally got access to the properties through the McKinney Act -- a federal law that addressed homelessness in part by giving agencies that serve the homeless free access to surplus federal property.

  • That act no longer applies now that the base property has changed hands. The Noisette Co. had allowed Chesapeake to continue to occupy the homes at no cost -- the nonprofit pays insurance and maintenance costs -- but when the Public Railways acquired the property last year after Noisette's foreclosure, things began to change.


  • For the veterans, who stay in the program about four months on average, the move will mean a longer commute to their treatment at the Veterans Administration health center in downtown Charleston.

  • Their new neighborhood also won't have the same quietude -- or the quality and quantity of nearby parks or the chance to fish in the nearby creek. A regular narcotics support group meeting, known as "Staying Alive," also will relocate.

  • Kelly said the move is most unsettling to some older veterans who have grown familiar with the former base.

For more, see Homeless veterans to leave old base site (Group to relocate men to Ashley Phosphate facility).

Go here for more from HUD on the McKinney-Vento Act.

Landowner's Unpaid Water Bills & Mortgage Payments, Failing Sewage System Threaten To Drive Mobile Home Park Residents Out Of Their Homes

In Clermont County, Ohio, WKRC-TV Channel 12 reports:
  • Dozens of worried mobile home park residents crowd into a Clermont County courtroom, anxious to know if they're going to be forced out of their homes because their landlord hasn't been paying his bills.

  • If that scenario sounds familiar, that's because it's being repeated in courtrooms across the Tri-State with properties owned by the same man ... Lanny Holbrook. Holbrook owns at least 31 different properties across the area, and one by one, they're going into foreclosure, as millions of dollars in debts against him mount.

  • Today, the scene was a Clermont County Courtroom and Local 12's Rich Jaffe says one of the biggest concerns is raw sewage. Clermont County officials are concerned this mobile home park may have to be shut down, because the owner hasn't been paying the bills on this park and others, and sewage from this park is allegedly being channel straight into the Little Miami River.

  • The sewage system has failed health department inspections over and over again. You can see the putrid sludge accumulating, even though the system is running at full tilt, with the Little Miami just beyond.

  • Today in court, property owner Lanny Holbrook agreed with health department findings. He also agreed he owes more than 28,000 dollars in water bills. He also agreed he owes close to half a million dollars in back taxes on the three mobile home parks.

For more, see Property Owner In Court Again.

State Bar Gives Golden State Counsel Six Months In Penalty Box For Violating Tenants' Rights In Running Fraudulent Robosigning F'closure Eviction Mill

In San Francisco, California, Highland News reports:
  • Two years after Tenants Together demanded that attorney David Endres stop illegally evicting tenants, the State Bar of California has suspended Endres from practice. Endres has been notorious for pursuing eviction actions on behalf of major banks after foreclosure in violation of federal, state and local law. The Bar suspended Endres from practice for six months and ordered Endres to pay the costs of the proceeding in the amount of $4,000.

  • Dean Preston, Executive Director of Tenants Together, California’s statewide organization for renters’ rights, welcomed the news of disciplinary action, but called for stronger sanctions: “We are pleased to see the Bar taking action to police unethical eviction lawyers, but this 6-month suspension is not nearly enough. David Endres should be disbarred, if not put in jail. His fraudulent robo-signing eviction mill caused the mass eviction of thousands of tenants and undermined the integrity of the judicial system. He should never be permitted to practice law in this state again.”


  • Endres has handled thousands of eviction cases on behalf of major financial institutions including U.S. Bank, HSBC, and Aurora Loan Services. The August 23, 2011 suspension order from the State Bar notes that he filed over 1,000 cases between July 1, 2009 and December 31, 2009 alone.

  • To accomplish these mass filings, Endres had non-attorney staff prepare verified pleadings and sign on his behalf.

  • Endres knowingly submitted false verifications to the court. The Bar concluded that “respondent aided the unauthorized practice of law, in willful violation of Rules of Professional Conduct, Rule 1-300(A)” and “sought to mislead judicial officers, in willful violation of Business and Professions Code section 6068(d).”

For more, see California Bar Suspends Attorney for Illegal Foreclosure Evictions of Tenants (Statewide Tenant Organization Calls for Stiffer Sanctions).

See also, Davis attorney suspended in foreclosure evictions probe.

Outfits Peddling Anti-Homestead Tax Exemption Fraud Software, Services Target Cash-Strapped Counties Desperate For Funds

From a press release from LexisNexis regarding a recent conference of county tax assessment administrators:
  • LexisNexis will be conducting demos of their Homestead Exemption Fraud Detection Solution on the exhibit floor at Booth #506. Attendees will learn how leveraging the combined power of public records and advanced search technology enables cities to discover millions of dollars in revenue from back taxes and new revenue assessments.

Source: Remarks to Focus on Leveraging Public Records to Detect Homestead Exemption Fraud and Boost Tax Revenue.


In Forsyth County, Georgia, Forsyth News reports:

  • Forsyth County commissioners expressed interest Tuesday in a plan to attack tax fraud. The proposal, aired during a work session, could net the county up to $2.5 million in three years.

  • The money would come from taxes owed by residents claiming more than the one homestead exemption allowed, said Royce Lain of Affiliated Computer Services Inc.

  • The Fairfax, Va.-based company offered to launch a nationwide search of records to determine which Forsyth County homeowners may be taking advantage of the exemption, Lain said. From there, the service would narrow the results and present cases to the board of assessors.

For more, see Group offers to hunt down tax cheats (Proposal would target homestead exemptions).

Cops Bust Foreclosed Homeowner On Charges Of Stripping Fixtures From Former Home, Using Craigslist Ads To Unload Goods

In Woodbury, Minnesota, KSTP-TV Channel 5 reports:
  • A 35-year-old Woodbury woman is accused of selling thousands of dollars worth of fixtures and property, after her home fell into foreclosure. According to the criminal complaint, Riana Bennerotte made her first court appearance on September 14 on charges of defeating security on realty.

  • According to Woodbury Police, Bennerotte and her then husband obtained a mortgage of about $359,000 to purchase the property in July of 2005. The couple defaulted on their mortgage in August of 2008, but were given time to correct the default. The loan was assigned to US Bank in 2009. During this time, the couple separated, and Bennerotte's husband moved out of the home in January of 2010.

  • Bennerotte was served with a foreclosure notice on January 14, 2010, and a foreclosure sale occurred on March 25, 2010. A six month redemption period went into affect, in which she was permitted to stay in the home.(1)

  • During this time investigators learned Bennerotte was placing ads on Craigslist and other online services to sell items from the home. Among other items, the ads included a china hutch, office suite, and chandelier. Bennerotte's phone number was listed with each ad as the contact.(2)

For more, see Woodbury Woman Accused of Gutting Foreclosed Home.

See also, Woodbury Bulletin: Felony charge filed against woman accused of gutting foreclosed Woodbury home (A Woodbury woman whose home fell into bank ownership after foreclosure is accused of gutting the house and selling off tens of thousands of dollars in fixtures before she moved out).

(1) See State v. Zacher, 490 NW 2d 149 (Minn. App. 1992) for an example of one property owner who successfully scored a reversal of a conviction of this charge where the property was taken after the sheriff's foreclosure sale had taken place (owner removed the fixtures one day before the end of the statutory six-month redemption period).

(2) See Minnesota Prosecutors Invoke Seldom-Used Law To Charge Office Building Owner In Foreclosure With Removing/Damaging Property Subject To Mortgage for another story on a criminal prosecution of a real estate owner in foreclosure who was charged with stripping the fixtures from his property.

Cops Pinch Man Facing F'closure For Running Indoor Pot Farm Out Of Home; Suspect Said He Needed To Supplement Income After Boss Cut His Hours At Work

In Oak Lawn, Illinois, The SouthtownStar reports:
  • A 34-year-old Oak Lawn man who allegedly was growing more than a dozen marijuana plants at his home faces drug charges after an anonymous tip led police to the home Saturday, Oak Lawn police said.

  • Mark A. Korzeniewski, [...] was charged with manufacturing and possessing marijuana with intent to deliver, possession of drug paraphernalia and unlawful production of marijuana plants, police said.

  • Police said they found five marijuana plants in the back yard and 11 plants in a “grow room” in the basement. The room also had heat lamps, a ventilation system on a timer, fertilizers and a digital scale. Police also found several clear plastic bags that contained about 290 grams of marijuana, police said.

  • Korzeniewski, who gave police consent to search the house, told police he was growing the marijuana plants to supplement his income. He said his house is in foreclosure and his hours at work have been cut.

Source: Police: Home in foreclosure, so Oak Lawn man grew pot to sell.

Vacant Foreclosed Home Hijacking Incidents On The Rise In Los Angeles

In Los Angeles, California, Fox Channel 11 reports:
  • Law enforcement officials say that when houses go into foreclosure, well-organized criminals break into the homes and create illegal titles. They set up the utilities in their names and they live there until they are evicted. In other cases, the criminals take over the foreclosed houses and then rent them to unsuspecting victims.

  • We approached the people living in one Hollywood Hills home that residents in the neighborhood accused of being squatters. Bank officials say they want them out and law enforcement is also investigating.

  • When FOX 11's Gina Silva approached them -- after an ugly confrontation -- they told us they paid $5,000 to rent the house. The man yelling obscenities in the video is rapper, J.O. Felony. His girlfriend told us they rented the house and insisted they are not squatters.

  • A lot of innocent people are caught up in these illegal foreclosure scams. Los Angeles city attorneys tell us they prosecute one case a week.

Source: Squatting Cases on the Rise in Los Angeles.

Friday, September 23, 2011

Kentucky AG On Foreclosure Fraud Probe: "There Should Be Absolutely No Criminal, Civil Immunity Given To Banks For Activity Not Yet Investigated!"

The Huffington Post reports:
    li>Kentucky Attorney General Jack Conway has added his name to a list of state law enforcers who fear that a settlement being negotiated among government officials and big banks isn't backed by a sufficient investigation into potential wrongdoing.

  • As law enforcers approach a deal with banks to settle allegations that the companies improperly foreclosed on American homeowners, the banks are pushing for a broad release from liability for actions that have not yet been fully investigated, Conway said in a Thursday email to the Progressive Change Campaign Committee, obtained by The Huffington Post.

  • By raising these concerns, Conway has aligned himself with New York Attorney General Eric Schneiderman and law enforcers from other states who have questioned the adequacy of the groundwork underlying the settlement talks.

  • "Today's economic crisis was caused by Wall Street acting improperly," Conway, a Democrat, said in the email. "Every American has paid the price -- with families losing their homes, investors losing their money, and many Americans losing their jobs. There should be absolutely no criminal or civil immunity given to banks for activity that has not yet been investigated."

For more, see Kentucky Attorney General Backs New York's Schneiderman In National Foreclosure Settlement Talks.

'Stagecoach To Hell' Accused Of More Sleaze; Homeowners' Attorney: "They Forged Signatures, They Backdated Documents. We've Got Them Cold!"

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • A Las Vegas attorney who represents people facing foreclosure has accused Wells Fargo of forging loan documents. The allegation is the latest sign that efforts to hold mortgage lenders accountable are escalating in Nevada.

  • In court papers filed this month in Clark County District Court, attorney Dave Crosby alleged bank employees committed forgery and fraud in making a $350,000 loan to a father of four who was unemployed at the time. "They forged signatures, they backdated documents," Crosby said. "We've got them cold."

  • Crosby said the bank has presented two deeds of trust for the same property. One bears the signature of Olivia A. Todd, who on Jan. 27, 2010, was identified as an assistant secretary with MERS, Inc., a mortgage servicer from the Phoenix area and a co-defendant in the lawsuit.

  • But on Feb. 16, 2010, Todd's signature appears on a second deed of trust, where she is identified as the firm's president. Both assignments were notarized as authentic, Crosby said in court papers.

  • Crosby made his allegations in a request to have a judge review three failed mediations between him and his clients, Ryan and Mical Henderson of Las Vegas, and lawyers with Wells Fargo, formerly Wells Fargo Home Mortgage.


  • Crosby said he suspects robo-signing is widespread in Nevada. One of his cases was the subject of an appeal filed with the state's high court, and he used the lender's own words against it. Supreme Court justices found in favor of Crosby's client, Moises Leyva, ruling unanimously that lenders have an absolute duty to strictly follow foreclosure mediation rules exactly as written.(1)

For more, see Wells Fargo accused of forging loan documents.

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

Federal Appeals Court Affirms 10-Year Prison Sentence For Notorious Central Florida Foreclosure Rescue, Home Equity Scammer

From a recent ruling from a federal appeals court:
  • Peter James Porcelli, II, appeals his sentence for one count of mail fraud, in violation of 18 U.S.C. § 1341. He raises four issues on appeal.

    First, he argues that the district court erred in applying the U.S.S.G. § 3B1.3 offense-level enhancement for abuse of trust or use of a special skill, particularly in light of its simultaneous application of the § 3B1.1 aggravated-role enhancement.

    Second, he claims that the financially distressed victims facing home foreclosure were not "vulnerable victims" for purposes of § 3A1.1(b)(1).

    Third, he contends that the portion of the forfeiture money judgment that exceeded the loss amount constituted a violation of the Excessive Fines Clause of the Eighth Amendment.

    Finally, he argues that the decision to impose the instant sentence to run consecutively to his sentence in a Southern District of Illinois telemarketing-fraud case was substantively unreasonable.

    For the reasons set forth below, we affirm.

For the ruling, see U.S. v. Porcelli, No. 10-14777 (11th Cir. September 21, 2011) (unpublished).

(1) Among the observations made by the appeals court in ruling against this lowlife are those appearing in the following five excerpts (anyone going after dirtbags lilke this guy, either in criminal prosecutions or civil lawsuits (either in state court or federal court), would be well advised to work into their presentations in court the following points in seeking stiff criminal penalties, and, in the case of civil lawsuits, stiff compensatory and punitive damages):

  1. Porcelli and the others searched for homeowners who were in jeopardy of losing their homes through foreclosure, specifically targeting those who still had equity in their homes.

  2. The probation officer calculated that 68 homeowner-victims borrowed a total of approximately $1.8 million. Of that amount, approximately $1.2 million constituted fraudulent loan fees and costs, and, thus, was the "loss and restitution" amount owed to the victims.

  3. At the first sentencing hearing, several victims testified that Porcelli had caused them emotional and physical distress by manipulating, intimidating, and confusing them into the agreements, then harassing and threatening them and stealing their homes after they defaulted. One victim experienced high blood pressure and a heart attack as a result of Porcelli's actions, another was seeing a psychologist and taking considerable medication, and a third attempted to commit suicide.

  4. "[T]he primary concern of § 3B1.3 is to penalize defendants who take advantage of a position that provides them freedom to commit or conceal a difficult-to-detect wrong." Garrison, 133 F.3d at 838 (quotation marks omitted). The court "must distinguish between those arms-length commercial relationships where trust is created by the defendant's personality or the victim's credulity, and relationships in which the victim's trust is based on [the] defendant's position in the transaction." Id. (quotation marks omitted).

    "Fraudulently inducing trust in an investor is not the same as abusing a bona fide relationship of trust with that investor." United States v. Mullens,
    65 F.3d 1560, 1567 (11th Cir. 1995).

    Here, Porcelli falsely held out Safe Harbour as a nonprofit foundation dedicated to "foreclosure relief." Victims contacted Porcelli in reliance on that representation, as well as on the misrepresentations that Safe Harbour was established to "keep [people] in [their] home[s]," "give [them] a second chance," "[s]ave [their] credit," and protect them from "predators" who wanted to profit from their misfortunes.

    Porcelli then took advantage of the victims' belief that he was a nonprofit foreclosure-relief counselor in order to induce them to take out second mortgages through Silverstone Lending or another of his for-profit lenders. Silverstone Lending's ability to make such mortgages and to create the attendant fees depended on Porcelli's state-issued mortgage-lending license.

    Under all the circumstances, the district court did not clearly err in finding that Porcelli held, or falsely led the victims to believe that he held, a bona fide relationship of trust with them. See § 3B1.3 & comment. (n.3); Garrison, 133 F.3d at 837.

    Furthermore, Porcelli's interactions with the victims were not limited to "arms-length" lending transactions in which Porcelli, as a representative of Silverstone Lending, "[f]raudulently induc[ed] trust in" the borrowers. See Garrison, 133 F.3d at 838; Mullens, 65 F.3d at 1567.

    Rather, Porcelli also used his falsely assumed position as a nonprofit foreclosure-relief coordinator to manipulate and intimidate the victims into believing that a second mortgage from Silverstone Lending was their only remaining option, and, in doing so, caused the victims to be more susceptible to signing the exorbitant mortgage contracts. Thus, the court did not err in finding that Porcelli abused his falsely assumed position of trust with the victims. See § 3B1.3 & comment. (n.3); Garrison, 133 F.3d at 837-38; Mullens, 65 F.3d at 1567.

  5. "If the defendant knew or should have known that a victim of the offense was a vulnerable victim," he is subject to a two-level enhancement. § 3A1.1(b)(1).

    A "vulnerable victim" is a victim "who is unusually vulnerable due to age, physical or mental condition, or who is otherwise particularly susceptible to the criminal conduct." Id., comment. (n.2). The adjustment applies when the defendant selects his victim due to his perception of the victim's vulnerability to the offense. United States v. Day,
    405 F.3d 1293, 1296 (11th Cir. 2005).

    Thus, in determining whether the victims were "vulnerable," we focus on the facts known to the defendant when he decided to target the victims, not on the harm actually suffered by the victims. United States v. Page,
    69 F.3d 482, 489 & n.6 (11th Cir. 1995). "It is clear that having bad credit or otherwise being in a precarious financial situation is a `vulnerability' to fraudulent financial solicitations . . . ." Id.

    When a fraudulent loan scheme is "specifically addressed . . . to persons with bad credit," it "target[s] the most desperate victims." Id. at 490. "We will not absolve. . . defendants of their culpability for having targeted `vulnerable victims' simply because, in casting out their net, they happened to ensnare and defraud some individuals who did not share this vulnerability." Id. at 491-92.

    Porcelli specifically targeted individuals who were financially distressed and were in danger of losing their homes through foreclosure. He marketed Safe Harbour as a nonprofit organization that would "give people a second chance when no one else w[ould]," and he wrote the marketing materials to appeal to people who were facing "financial pressures," bankruptcy, harassment by creditors, and "ruin[ed] . . . credit ratings."

    Although Porcelli suggests that some or all of the victims might have lost their homes despite their involvement with him, the actual harm suffered is irrelevant to this analysis. See Page, 69 F.3d at 489 n.6.

    Furthermore, his speculation that some of the victims might not have been financially distressed or might have sought the mortgages for reasons other than imminent foreclosure does not prove that the vulnerable-victim finding was plainly erroneous. See Massey, 443 F.3d at 818; Page, 69 F.3d at 491-92. The district court did not plainly err in finding that the victims were unusually susceptible to the mortgage-fraud scheme, that Porcelli had targeted them for that reason, and, thus, that the vulnerable-victim enhancement applied. See § 3A1.1(b)(1) & comment. (n.2); Massey, 443 F.3d at 818; Page, 69 F.3d at 489-90.

Thursday, September 22, 2011

Dallas DA Fires Shot At MERS; Sues Suspected Racket, Others Over Alleged Mortgage Recording Fee Dodge Costing County Million$

In Dallas, Texas, the Dallas Observer reports:
  • District Attorney Craig Watkins on behalf of Dallas County, Texas, commenced an action against MERSCORP, Mortgage Electronic Registration System ("MERS"), Bank of America, and others seeking a judicial determination of whether the MERS System established by the mortgage banking industry to electronically track home mortgages violates Texas law related to the public recording of interests in home loans and the mortgages securing them.


  • Dallas County, Texas, believes that the MERS System may violate a number of laws applicable to the recordation of mortgages in Texas and has asked the court to order MERS and the other defendants to pay statutory penalties to Dallas County for having filed mortgage records which improperly claim that MERS is a beneficiary of tens of thousands of mortgages filed in the Dallas County deed records and for the filing fees that Dallas County would have been paid had all transfers of the subject mortgages been properly recorded in the deed records.

For more, see Craig Watkins Makes Good on Threat to Sue Mortgage Processor Over "Tens of Millions"

For the lawsuit, see Dallas County, Texas v. Merscorp Inc., et al.

See also, Reality Check: Dallas County, Texas Sues BofA through MERS for over $2.8 billion.

(1) The Dallas Observer describes the lawsuit as one:

  • [w]hich reads less like a lawsuit -- at least, initially -- and more like a treatise on the events leading up to the financial collapse of 2008, the history of the mortgage system in the U.S. and why "public recordation of mortgage interests in the U.S dates back to at least the middle of the 17th Century," augmented with charts, graphs and quotes from Frederic Mishkin and Paul Krugman.

Report Shines Light On Effects Of Robosigning Racket On Prince William Land Document Public Records

In Prince William County, Virginia, The Washington Post reports:


  • A team of more than 30 VOICE volunteers found widespread irregularities in a random selection of more than 1,600 real estate records, which amount to 10 percent of the foreclosures filed between 2004 and 2009, when foreclosures in Prince William peaked.

  • They found that one employee of a loan processing firm based in Jacksonville, Fla., signed foreclosure documents as an official for seven different banks. They also found mismatched signatures for the same notary public.

For more, see Probing Pr. William foreclosures, group sees widespread irregularities, ‘robo-signed’ papers.

Elderly Fresno-Area Senior Cops Plea To Grand Theft Charges In Vacant Foreclosed Home Hijacking Scam; Rented 13 Houses, Scouted 150 Others, Say Cops

In Fresno, California, KMJN Radio reports:
  • A Fresno man admitted his role in an elaborate foreclosure scam late Monday afternoon -- a scam in which he rented out foreclosed homes that he did not own. Sam Haley, 69, pleaded no contest -- the equivalent of guilty -- to three counts of grand theft. Haley did not have a real estate license, but he was able to find foreclosed homes -- then rent them out.

  • When he was arrested three years ago, police say he was renting out 13 homes, had another 19 people ready to rent and was scouting out another 150 homes in the Fresno area. Police Chief Jerry Dyer called him nothing more than a scam artist.

  • His plea could put Haley in jail for a year, but his lawyer will argue that he's suffering from post traumatic stress disorder from years in the military and ask a judge to give him probation and perhaps treatment. Haley agreed to pay $35,000 in restitution.(1)

Source: Alleged Fresno Scam Artist Admits It.

(1) I wonder if Haley's agreement to cough up $35K is part of a deal to buy his way out of any possible jail/prison time.

Wednesday, September 21, 2011

Utah Federal Judge Boots Post-Foreclosure Eviction Case Back To State Court

In Salt Lake City, Utah, KCSG-TV reports:
  • St. George attorney John Christian Barlow, representating homeowners who have been lost their home to the Bank of America's foreclosure machine ReconTrust, may have finally achieved a measure of victory in the battle of Utah homeowners against ReconTrust fraudulent foreclosures.

  • Federal Judge Clark Waddoups Thursday returned to Utah Fifth District Court in St. George a case in which ReconTrust was named as a third-party in the complaint claiming immunity under the National Bank Act in an unlawful detainer action. (Court Order and Memorandum).

For more, see Bank of America-ReconTrust to Face State Court Judicial Process in Illegal Homeowner Foreclosures.

Sleazy Banksters To Launch Toll-Free Phone Number In Search For Robosigner Victims?

The Wall Street Journal reports:
  • It probably won’t include “1-800-ROBO,” but big banks are preparing to launch a toll-free number to find consumers harmed by problems in foreclosure processing. The effort to find consumers is an outgrowth of the controversy over so-called robo-signing and other problematic foreclosure practices.(1)

For more, see Foreclosure Complaint? Stand By for New Toll-Free Number.

(1) Inasmuch as the banksters have demonstrated a complete inability to deal in good faith throughout this entire mortgage debacle (whether with the homeowners/consumers when originating or modifying the troubled loans, or the investors currently left holding the bag on the crappy securitized paper the banksters peddled all around the world), I hope there is nobody out their stupid enough to believe they are going to reform their ways at this late stage (except, of course, for some of the moronic regulators and bureaucrats who come up with these proposals).

Lamenting Booting Of 101 Year Old Homeowner, HUD Backpeddles, Says She Can Come Back To Her Home Of 50+ Years & Stay As Long As She Wants

In Detroit, Michigan, the Detroit Free Press reports:
  • A 101-year-old Detroit woman evicted from her home earlier this week says she's grateful for the outpouring of support. Texana Hollis was staying with a longtime friend on Detroit's west side Friday, looking forward to going home sometime in the next few days.


  • Hollis found out she was being evicted when officers from Detroit's 36th District Court showed up with disposal trailers Monday morning. She ended up at Henry Ford Hospital in Detroit after those around her realized her medication was buried in the trailer among the family's belongings. She went to Cheeks' home after she was released Thursday night and will stay there until her house is put back in order.

  • Warren Hollis, 64, said he had his mother sign a reverse mortgage in 2002, and he used the $32,000 they received to fix the roof and pay other bills. But he failed to continue paying the property taxes and insurance, a requirement for reverse mortgages to avoid going in arrears.

  • The U.S. Housing and Urban Development Department took over the mortgage in 2007 from Financial Freedom Senior Funding, a subsidiary of Lehman Brothers Bank, according to HUD spokesman Brian Sullivan and court records. HUD has made $6,964.60 in tax payments on the Hollises' behalf since then.

  • But Warren Hollis and brother Ira Hollis Jr., 69, did not follow through with repayment arrangements they made with HUD, Sullivan said this week. And they ignored 36th District Court officers' warnings since May that they were about to be evicted, according to Chief Judge Marylin Atkins.

  • After Texana Hollis' situation became national news and went viral on the Internet, HUD announced late Wednesday the agency would allow her to return to the home for as long as she wants.

  • "Truth be told, this foreclosure action shouldn't have been brought forward in the first place," Sullivan said Thursday. Sullivan said HUD officials mistakenly thought Hollis' home was a tax foreclosure before they reviewed the case.


  • While Hollis is staying with [a long-time frien and neighbor], a grassroots group called It Takes A Village Y'All and family friend Laurie Ridgell will fix up the home Hollis lived in for more than 50 years.

For the story, see Evicted 101-year-old grateful for support, ready to return home.

Tuesday, September 20, 2011

Real Estate Investor Scores Win With Court-Ordered Sale Stall In Effort To Save Home From Foreclosure Fraud; "We're Not Trying To Get A Free House!"

In San Antonio, Texas, the San Antonio Express News reports:
  • A San Antonio real estate investor who helps homeowners avoid foreclosure, recently found himself in the same predicament as his clients. Rather than simply fight to stop the foreclosure on his investment home, Ezequiel Martinez filed suit against his lender saying the mortgage should be voided because of phony loan documents and because he doesn't think the bank can prove it owns the mortgage note.

  • "We're not trying to get a free house," he said. "We're trying to save the house from foreclosure fraud."

  • Finding that Martinez "will probably prevail" at trial, state District Judge Karen Pozza on Aug. 26 issued an order prohibiting the house's foreclosure until the case either is settled or goes to trial in March.

  • Martinez's case is one of thousands across the country where homeowners are challenging the validity of foreclosure postings.

  • The robo-signing scandal erupted last fall with allegations that lenders had employees process foreclosure documents without required review and notarization. Since then, the foreclosure scandal has grown to include issues of not properly assigning mortgage notes - tracing the line of ownership as the note is packaged and resold through the secondary market - and the allegedly phony documents created to reconstruct the line of ownership where it's broken.

  • Rick Sharga, senior vice president with RealtyTrac, a national foreclosure website, said lenders likely can simply restart the foreclosure process if they need to correct faulty paperwork. But he said the prove-you-own-the-mortgage-note issue could become serious. "If you can't prove that I owe you money, that's a problem," he said. "It could throw the whole mortgage industry into chaos."

  • The lawsuits represent a tug-of-war that pits home-owners who fell behind on mortgages against lenders who insist any mistakes are mere technicalities.

  • John Fleming, general counsel for the Texas Mortgage Bankers Association, said that in almost all cases, he expects lenders or servicers will be able to cure any gap in mortgage assignments. "At the end of the day, if a homeowner or investor has not complied with the terms of the mortgage, they will face foreclosure," Fleming said.(1)

For the story, see Real estate investor sues lender to halt foreclosure.

See also, Fighting foreclosure and hoping for a free house (Missing links in the chain of ownership lead to some foreclosure postings being challenged).

(1) What this paid hack representing the bankster industry seems to conveniently ignore is why the phony documents are being manufactured to cure the gaps in the assignments in the first place.

'Forced Sale" Homestead Protection Pierced Where Out-Of-State Judgment Creditor Traces Cash Obtained Through "Constructive Fraud" To Florida Home

Lexology reports:
  • The District Court of Appeal of Florida upheld an exception to the Florida homestead exemption in a case where a trustee/deceased husband of the defendant breached his fiduciary duty as trustee in California, and the defendant later used the proceeds resulting from this breach to purchase real property in Florida.

  • Ordinarily the Florida homestead exemption law prevents the creditor of a Florida homeowner from taking the homeowner's residence in satisfaction of a monetary claim. In Hirchert, the defendant's deceased husband had been the beneficiary of a trust of which he was the trustee and was permitted to withdraw principal for his own benefit only if his personal assets had been fully dissipated.

  • After his marriage to the defendant, he withdrew a 75% interest in a California residence from the trust despite having other assets, sold the residence, and purchased a new California residence with the defendant. After the trustee's death, the defendant sold this residence and purchased a residence in Florida.

  • When the successor trustee of the trust learned that the defendant's husband had breached his fiduciary duty by withdrawing the 75% interest in the residence from the trust, he sued the defendant in California to recoup the proceeds received upon the sale of the residence. The successor trustee received a California judgment in his favor and sought to force the defendant to convey her Florida residence to a receiver to force a sale of the residence in satisfaction of his California judgment.(1)

  • The Florida court found that, while the Florida homestead exemption ordinarily protects a homeowner's equity from creditor claims, the exemption would not apply in this case because the trustee's original breach of his fiduciary duty was a "constructive fraud" that allowed for the application of an exception to the homestead protection. The Florida court then remanded the case to the trial court with instructions to enforce the injunction to convey title to the receiver and force the sale of the property.(2)

  • Although rare, this case illustrates one of the few exceptions in which an individual can lose the protection of the Florida homestead exemption despite no actual wrongdoing on their part.(3)

Source: Hirchert Family Trust v. Johnee Ann Alle Hirchert (District Court of Appeal of Florida, Fifth District, June 17, 2011) (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link for the story).

For the court ruling, see Hirchert Family Trust v. Hirchert, Case No. 5D09-3054 (Fla. App. 5th DCA, June 17, 2011).

(1) In addressing the enforceability of the foreign judgment in Florida, the court stated:

  • We do not believe that the Quitclaim Deed is entitled to full faith and credit because the California court did not have in rem jurisdiction over the property. However, the California court did have jurisdiction over Appellee and, therefore, the Postjudgment Order establishing a mandatory injunction requiring Appellee to convey the Kissimmee Property is entitled to full faith and credit.

    Robertson v. Howard, 229 U.S. 254, 261 (1913) ("[I]t may not be doubted that a court of equity in one state in a proper case could compel a defendant before it to convey property situated in another state." (citing Fall v. Eastin, 215 U. S. 1, 8 (1909))); Fall v. Eastin, 215 U. S. 1, 11-12 (1909) (holding that a court of equity can order a person over which it has jurisdiction to convey title to real property located in another state, but the court cannot itself transfer title because it does not have jurisdiction over such real property); Gardiner v. Gardiner, 705 So. 2d 1018, 1020 (Fla. 5th DCA 1998) (holding that a New York court had jurisdiction to a order a property owner to execute a quitclaim deed for property located in Florida); Hammond v. DSY Developers, LLC, 951 So. 2d 985 (Fla. 3d DCA 2007) (holding that a trial court outside of the circuit in which the subject property was located could order specific performance of a contract for sale of that land; but holding the portion of the order purporting to transfer title to that property unenforceable); Farley v. Farley, 790 So. 2d 574, 575 (Fla. 4th DCA 2001) (holding that an out-of-state order to sell real property located in Florida was not entitled to full faith and credit because enforcement requires the application of in rem jurisdiction; but noting that an out-of-state order directing one litigant to convey title to another would be entitled to full faith and credit (citing Sammons v. Sammons, 479 So. 2d 223, 225 (Fla. 3d DCA 1985); Gardiner)); Dusesoi v. Dusesoi, 498 So. 2d 1348, 1350 (Fla. 2d. DCA 1986) (holding that a decree from a foreign state purporting to award title to real property located in Florida was not entitled to full faith and credit; but stating in dictum that the portion of that decree ordering conveyance of the title "appears to be entitled to full faith and credit").

(2) In addressing the application of the protection against forced sale in Florida under Article X, Section 4 of the state constitution, the court stated:

  • The courts recognize an exception to the homestead protection if the property was acquired with funds generated by fraudulent activity and a constructive trust is necessary to prevent unjust enrichment. See, e.g., Labelle v. Labelle, 624 So. 2d 741, 742 (Fla. 5th DCA 1993) (stating, "[T]he protection[s] afforded by Article X, Section 4 of the Florida Constitution . . . do not apply to properties which are purchased with fraudulently obtained, traceable proceeds and which are, therefore, subject to the imposition of a constructive trust."); see also Zureikat v. Shaibani, 944 So. 2d 1019, 1024 (Fla. 5th DCA 2006) (affirming an equitable lien placed on a homestead where proceeds obtained from fraudulent or reprehensible conduct were used to invest in, purchase, or improve the homestead (citing, inter alia, Havoco of Am., Ltd. v. Hill, 790 So. 2d 1018 (Fla. 2001))); In re Fin. Federated Title & Trust, Inc., 347 F.3d 880, 881 (11th Cir. 2003) (holding that the Florida Constitution does not protect a homestead purchased with fraudulently obtained funds from an equitable lien or constructive trust).

    The exception to homestead protection applies even "where funds obtained through one spouse's fraud are used to invest in, purchase, or improve the homestead . . . despite the other spouse's innocence or ignorance of wrongdoing."
    Zureikat, 944 So. 2d at 1024 (citing Palm Beach Savings & Loan Ass'n v. Fishbein, 619 So. 2d 267 (Fla. 1993)).

    Contrary to the trial court's conclusion, we believe that a breach of fiduciary duty is "constructive fraud" and thus may form the basis to apply the exception to the homestead protection. As this court explained in
    First Union National Bank of Florida v. Whitener, 715 So. 2d 979, 982 (Fla. 5th DCA 1998):

    Constructive fraud is the term typically applied where a duty under a confidential or fiduciary relationship has been abused, or where an unconscionable advantage has been taken. Constructive fraud may be based on misrepresentation or concealment, or the fraud may consist of taking an improper advantage of the fiduciary relationship at the expense of the confiding party.

    Allie v. Ionata, 466 So. 2d 1108, 1110 (Fla. 5th DCA 1985), this court further explained:

    Florida courts have recognized that constructive fraud may exist independently of an intent to defraud. It is a term which is applied to a great variety of transactions that equity regards as wrongful, to which it attributes the same or similar effects of those that follow from actual fraud and for which it gives the same or similar relief.
    (Emphasis added)

    Moreover, the Florida Supreme Court has affirmed equitable liens on homes that qualify as homestead property to prevent unjust enrichment. See, e.g.,
    Fishbein, 619 So. 2d at 270 ("[I]t is apparent that where equity demands it this Court has not hesitated to permit equitable liens to be imposed on homesteads beyond the literal language of article X, section 4. . . . [T]here was no fraud involved in either La Mar [v. Lechlider, 185 So. 833 (Fla. 1939)] or Sonneman [v. Tuszynski, 191 So. 18 (Fla. 1939)].

    In those cases, the equitable liens were imposed to prevent unjust enrichment.");
    La Mar v. Lechlider, 185 So. 833, 836 (Fla. 1939) (affirmed equitable lien where defendants refused to give the plaintiffs an interest in their homestead, as promised, in exchange for improvements plaintiffs made to the homestead property); Craven v. Hartley, 135 So. 899, 901 (Fla. 1931) (equitable lien appropriate where homeowner borrowed money from lender to purchase property but failed to execute a mortgage in lender's favor as promised).

(3) The wrongdoing in this case was actually committed by the woman's now-deceased hubby. While she appears to have had nothing to do with improperly drawing the loot out of the trust that was ultimately traced into the Florida residence, she ends up picking up the tab by having to give up the home.

For additional background on this case, see the appeals court's earlier ruling in this litigation in Hirchert v. Hirchert Family Trust, 988 So.2d 63 (Fla. App. 5th DCA, 2008).

Homeowner's Post-F'closure Sale Bankrptcy Leaves Winning Bidder Holding The Bag Where Trustee's Deed Had Yet To Be Executed At Time Of Petition Filing

Lexology reports:
  • The United States Bankruptcy Court for the Central District of California recently held that the filing of a bankruptcy petition by a borrower can void a trustee sale even where the petition is filed after the trustee sale, so long as the borrower files the petition before the execution of the trustee's deed upon sale. In re: Gonzales 2011 WL3328508 (Bkrtcy. C.D.Cal. August 1, 2011).

  • A real property secured lender is generally aware that the borrower always has the option of filing a bankruptcy to stay the trustee sale prior to the trustee's sale but once a trustee sale occurs, most lenders believe the bankruptcy filing by the borrower does not impact the sale.


  • The Lender conducted a trustee sale and a third party successfully bid at the sale, paying $167,000 for the property. On the same day as the sale but after the sale, the borrower filed a Chapter 7 bankruptcy petition. The Trustee then issued the Trustee's deed, memorializing the sale to the third-party purchaser, and the deed was not recorded until a number of days later.

  • When the borrower was asked to vacate the residence, the borrower refused and the purchaser at the sale filed a motion for relief from the automatic stay in order to evict the borrower. The purchaser argued the deed issued by the foreclosure trustee was valid, notwithstanding the fact that it was not recorded until after the bankruptcy because it "related back" to the date and time of the foreclosure sale.

  • The Bankruptcy Court denied relief from the automatic stay and disagreed with a number of earlier Bankruptcy Court opinions, holding that the doctrine of relation back did not apply because California Civil Code section 1091 provides that title to real estate can pass only by deed or operation of law.

  • Since no deed had been executed prior to the bankruptcy filing, the title remained in the hands of the debtor/borrower. For a decision that disagrees, see In re: Garner 208 BR 698 (BK ND Cal 1997).

  • While you may disagree with the court, and the decision is not a binding precedent on any other court, it illustrates that once a trustee sale takes place, it is important to have the trustee's deed signed and recorded as soon as possible.

For the story, see It's important to record the trustee's deed promptly after foreclosure (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link for the story).

Monday, September 19, 2011

White Shoe Florida Law Firm Rushes To Defend Dubious Bankster Conduct With Rhetorical Flurry

In West Palm Beach, Florida, The Palm Beach Post reports:
  • The national law firm of Greenberg Traurig issued an alert(1) this week warning its lawyers that a 4th District Court of Appeal ruling in favor of Palm Beach County homeowners could "dramatically change the foreclosure landscape in Florida."

  • The Sept. 7 decision in the case of Gary and Anita Glarum vs. LaSalle Bank says that an affidavit of indebtedness submitted by the bank was hearsay because the person who signed it did not have personal knowledge of the case. It reversed a 2010 Palm Beach County Circuit Court summary judgment that said the Glarums owed the bank $422,677.

  • "This decision could have broad, sweeping application in the lending and loan servicing industries and affect thousands of foreclosure cases, among other types of cases, currently pending in Florida courts," says the alert posted on Greenberg Traurig's website.


  • Ice Legal of Royal Palm Beach represents the Glarums, who have been in foreclosure since 2008 and continue to live in the home. Ice Legal founder Tom Ice said the alert is a "transparent attempt to influence" the court to change its ruling.

  • "Being denied a prohibited shortcut may cost the banks a little more, but given that they are the deep pockets here, pockets lined with our own taxpayer money, the ruling is hardly unfair or earth-shaking," he said.

For more, see Law firm warns of foreclosure ruling's effect.

(1) See Lexology: The changing landscape of the business records exception under Florida law and its impact on Florida foreclosures (requires subscription; if no subscription, TRY HERE - then click the appropriate link for the story).

RI AG Shuts Doors On Loan Mod Outfit Accused Of Upfront Fee Ripoffs; Pair Allegedly Stiffed Homeowners On Promised Services, Refunds Of Unearned Fees

In Providence, Rhode Island, Legal Newsline reports:
  • Rhode Island Attorney General Peter Kilmartin announced Thursday that his office shut down two mortgage modification consultants and secured $5,500 in restitution for three consumers.


  • After receiving numerous consumer complaints last year, Kilmartin's office conducted an investigation into two individuals who claimed to represent mortgage modification and foreclosure servicers Mortgage Modification Center, IMOD Corporation and Latin Service International.

  • The investigation discovered that David Conti and Lucy Ruiz were advertising and soliciting consumers in violation of several laws, including the Deceptive Trade Practices Act and the Mortgage Foreclosure Consultant Regulation Act. Kilmartin's office said that since at least April 2009, Conti and Ruiz advertised, marketed and sold purported mortgage loan modification and foreclosure rescue services, with a focus on targeting the Hispanic community.

  • Conti and Ruiz engaged in a scheme to swindle distressed homeowners by enticing them with promises of negotiating loan modifications with lenders and saying they could secure lower, fixed interest rates, principal reductions and lower monthly payments, according to the Attorney General's Office.

  • Kilmartin said Conti and Ruiz also required homeowners to pay a fee, ranging from $1,000 to $3,000, in advance of providing services. After not performing the services for which they were contracted, Conti and Ruiz then refused to refund the homeowners' money, the attorney general said.

For the story, see R.I. AG shuts down mortgage consultants.

Antitrust Feds Ring Up More Bid-Rigging Convictions Related To Foreclosure Sale Auctions; Snagged Alabama Duo Agree To 'Sing' Against Co-Conspirators

In Mobile, Alabama, the Press Register reports:
  • Two real estate investors from the Mobile area have agreed to plead guilty to federal bid-rigging charges accusing them of manipulating auctions of foreclosed properties. According to plea agreements filed this week in U.S. District Court in Mobile, Harold M. Buchman and the company he co-owns, M&B Builders, conspired with Allen K. French and others to suppress bids at foreclosure auctions. Prosecutors allege that the conspiracy dated to May 2001 and lasted until at least March of last year.


  • The Antitrust Division continues to vigorously pursue bid-rigging conspiracies at real estate foreclosure auctions, and will work with its law enforcement partners to ensure that the process is fair and open so that consumers will benefit from competition,” [Acting Assistant Attorney General Sharis A.] Pozen stated.(1)


  • An attorney for French, Walter Honeycutt, said he expects indictments against other investors. The plea agreements for Buchman and French both reference their cooperation in the ongoing investigation.(2)

  • Foreclosure auctions typically are held at the county courthouse and allow mortgage holders to recoup the money they lose when homeowners default on their loans. Prosecutors contend that Buchman, French and others who have not been charged decided among themselves who would bid on various properties, while the others agreed not to compete.

  • When it started out, it was kind of a gentlemen’s agreement,” Honeycutt said. Then someone else took over the operation and implemented a formal scheme, Honeycutt said.

  • After one investor would get the property cheaply, according authorities, participants would hold a secret second auction among themselves. The winning bidder would make payoffs to other investors for not competing at the public auction, according to the allegations. The money would be paid out based on predetermined specifications. “It’s a complicated formula,” Honeycutt said.


  • The plea agreement calls for M&B Builders to plead guilty to violating the Sherman Antitrust Act and attempted mail fraud conspiracy. The company will pay a $250,000 fine and restitution in the amount of $18,345.20, under the agreement.

  • Buchman and French agreed to plead guilty to one count each of antitrust violations. Buchman will serve 6 months in prison and pay a fine of $21,141 and at least $30,000 in restitution. The plea document requires him to do all of his time in a minimum-security prison (ie. a 'Club Fed' facility(3)) and not home confinement or a halfway house.

  • French, meanwhile, agreed to pay a $20,000 fine and at least $23,000 in restitution. Under the terms, the judge would be required to sentence him to 6 months or less in prison.(4)

For the story, see Mobile real estate investors agree to plead guilty to manipulating foreclosure auctions.

For the U.S. Department of Justice press release, see Alabama Real Estate Investors Agree to Plead Guilty to Conspiracy to Rig Bids for the Purchase of Real Estate at Public Foreclosure Auctions.

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

(1) According to a U.S. Department of Justice press release, the Antitrust Division and the FBI have identified a pattern of collusive schemes among real estate investors aimed at eliminating competition at real estate foreclosure auctions, and these charges are part of the department’s ongoing effort to combat this conduct and restore competition to public auctions.

The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Southern Alabama is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Field Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit

See Foreclosure Auction Buyer: "Object Is To Get Cheapest Price We Can, Not To Bid Each Other Up" As Intimidation Accusations Flare Up At Courthouse Sales for an indication that these bid-rigging rackets at foreclosure sales appear to be pretty blatant activities that are often perpetrated with impunity.

(2) Evidently, Buchman and French have concluded that there is no honor among thieves and, consequently, have decided to throw their co-conspirators under the bus by beating them in the 'race to the prosecutor's office' and agreeing to cooperate with the Feds in an effort to save their butts. This time-honored approach to saving one's own rump has been cogently articulated 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 courthouse' that breaks out among participants in an uncovered criminal conspiracy).

(3) Possibly something 'comfy' and nearby the Mobile area so their families can stop by and visit them often, along the lines of the prison camp formerly located at Eglin Air Force Base in Ft. Walton Beach, Florida, or maybe the one over at the Pensacola Naval Air Station, in Pensacola, Florida.

(4) As has been pointed out here in an earlier post, suspects who have been pinched on bid-rigging charges and are considering copping guilty pleas should first consider whether their alleged unlawful bid rigging racket was really nothing more than an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Sunday, September 18, 2011

Bloomberg News: Cost To Five Biggest Banksters For Faulty Mortgages, Foreclosure Abuses - $65B & Counting

Bloomberg reports:
  • Faulty mortgages and foreclosure abuses have cost the nation’s five biggest home lenders at least $65.7 billion, according to a tally by Bloomberg News, and new claims may push the industrywide total to twice that amount.

  • Bank of America Corp. (BAC), the largest U.S. lender, had the biggest costs, totaling $39.1 billion since the start of 2007, according to data compiled by Bloomberg. JPMorgan Chase & Co. (JPM), ranked second by assets, followed with $16.3 billion, and Wells Fargo & Co. (WFC), the biggest U.S. home lender, had $5.09 billion, the data show.

  • The costs have eclipsed predictions from bankers and analysts that lenders would suffer only modest damage from what Bank of America Chief Executive Officer Brian T. Moynihan has called “the mortgage mess.”

  • Paul Miller, the FBR Capital Markets & Co. analyst, said costs for all banks could surpass $121 billion as the bill comes due for lax lending practices.

  • You’re not talking about improperly stapling together two documents, you’re talking about systematic fraud in the system,” Neil Barofsky, the former special inspector general for the U.S. Treasury’s Troubled Asset Relief Program, said in an interview. “What this shows is that before the financial crisis, the banks were essentially lying to the purchasers of the mortgages about the quality.”

  • The industry-wide errors “were not minor slip-ups,” said Peter Swire, a law professor at Ohio State University in Columbus, Ohio, and until last year a special assistant to President Barack Obama for economic policy. “Our biggest banks were talking homeowners into taking some of these bad loans at the front end and then dumping fraudulent loans on investors at the back end.”

For more, see Mortgage Debacle Costs U.S. Banks $66 Billion as Bad Home Loans Sap Profit.

Suspect Admits Using False Pretenses, Misreps To Rip Off Home Equity Out From Under Unwitting Owners' Thru Fraudulently Obtained Refinance Proceeds

From the Office of the U.S. Attorney (Albany, New York):
  • United States Attorney Richard S. Hartunian, Robert Bethel, [and others] announced that ARTHUR STRASNICK, age 63, of Ormond Beach, Florida, pled guilty on Monday, September 12, 2011, to two counts of mail fraud, [...], and one count of possession of means of identification of another with the intent to commit another crime, [...].


  • As part of his guilty plea, ARTHUR STRASNICK [] admitted that, from April 2004 through 2006, he defrauded homeowners by obtaining money representing equity in their homes though mortgages obtained by false pretenses, representations and promises.

  • The defendant did so by (i) forging home owners’ signatures on mortgage applications and mortgages; (ii) notarizing the forged signatures of said homeowners on said mortgages; (iii) obtaining mortgages and mortgage monies without the knowledge of said homeowners; (iv) obtaining mortgages and mortgage monies based on the false representation to the homeowners that he would assume responsibility for the homeowners’ mortgages; and (v) forging the signatures of homeowners on checks representing the proceeds of mortgages obtained in the names of homeowners.

For the U.S. Attorney press release, see Ormond Beach, Florida - Man pled guilty to two counts of mail fraud.

Appeals Court Ruling May Portend Dim Future For Some MERS' Mortgage Assignments & Foreclosures In NYS

Lexology has a report discussing the recent ruling, and ramifications flowing therefrom, in Bank of New York v. Silverberg, a June, 2011 decision by an intermediate New York appeals court in which the validity of mortgage assignments by Mortgage Electronic Registration Systems ("MERS") was rejected.
  • The New York Appellate Division, Second Department, has held that a lender does not have standing to commence a foreclosure action when the lender’s assignor was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but never actually held the underlying notes. Bank of New York v. Silverberg, 926 N.Y.S.2d 532 (2d Dep’t 2011).

  • The court’s decision casts doubt on the validity of loan assignments executed by the Mortgage Electronic Registration System (“MERS”), and has significant ramifications for the foreclosure process in New York, suggesting that foreclosing lenders may have to present substantially more robust documentation concerning the mortgage note’s history of assignment and transfer.


  • [T]he court commented that its earlier decision in MERS v. Coakley, [838] N.Y.S.2d 622 (2d Dep’t 2007), holding that MERS’ standing to foreclose is limited to circumstances where MERS actually holds the note before a foreclosure action is commenced.

  • In the BoNY case, MERS never held the note, and thus the court found that Coakley did not apply. Even though BoNY contended that the language in the first and second mortgages gave MERS the right to foreclose, the consolidation agreement superseded those mortgages. Either way, broad language “cannot overcome the requirement that the foreclosing party be both the holder or assignee of the subject mortgage, and the holder or assignee of the underlying note, at the time the action is commenced.”

For more, see New York Appellate Court rejects validity of loan assignments by MERS (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link for the story).

Alabama Supreme Court Rules In Favor Of MERS

Housing Wire reports:
  • The Alabama Supreme Court ruled Mortgage Electronic Registration Systems has standing to foreclose when it is nominee for the owner of an underlying debt and holder of the original mortgage note.

  • The state's highest court affirmed a lower court's opinion that found MERS is holder of the legal title to a mortgage, and as nominee can initiate a foreclosure under Alabama law.

  • The plantiff in MERS v. Henderson initially claimed the company lacked standing to foreclose because it didn't "present legal right to enforce the mortgage."

Source: Alabama Supreme Court rules in favor of MERS.