Saturday, November 19, 2011

Florida Cop Charged With Homestead Exemption Fraud Desperate To Save Career, Pension; Looks For Plea Deal To Dodge Felony Conviction

In Key West, Florida, the Florida Keys Keynoter reports:
  • A suspended Florida Department of Law Enforcement agent accused of homestead-exemption fraud is scheduled for court [...], with a pretrial conference set in anticipation of a Nov. 14 trial.

  • However, Vince Weiner, 47, won't go to trial that day, said Assistant Monroe County State Attorney Mark Wilson. That's because plea talks are ongoing, and Weiner hopes to keep a felony conviction off his record so he can retain his state police certification and not lose his state retirement (convicted government employees forfeit their retirements).

  • On Aug. 17, the FDLE -- his employer -- arrested the Key West-based Weiner on charges of felony grand theft and misdemeanor homestead-exemption fraud. He was immediately put on administrative leave.

  • Wilson said then that Weiner bought a Big Pine Key house in 2005, then got assigned to Fort Myers in 2006. While living in Fort Myers, Weiner rented his Keys house out but claimed the homestead exemption, Wilson said.

For more, see Suspended FDLE agent seeks plea deal.

S. Fla. Mayor Quits Post, Gets Free Pass Out Of Criminal Homestead Exemption Fraud Charges As State Attorney Punts On Moving Forward With Prosecution

In Miami, Florida, The Miami Herald reports:
  • Miami-Dade prosecutors opted not to charge North Bay Village’s former mayor, Corina Esquijarosa, with shirking on property taxes, and activists the tiny town say they are outraged.

  • But prosecutors rarely ever bring “homestead exemption” fraud cases against citizens, instead allowing the county’s property appraiser’s office to go after them with the ultimate goal of repaying the money owed to government coffers.

  • It would be an inconsistent application of our practice in similar cases to treat Ms. Esquijarosa different from other private citizens in similar circumstances,” Assistant State Attorney Tim VanderGiesen wrote in a final memo released Tuesday.(1)

  • Esquijarosa resigned Friday, avoiding prosecution for the homestead exemption fraud, an issue that dogged from her since the start of her troubled one-year tenure as the city’s mayor. A recall election, spurred by the very activists who uncovered the homestead exemption issue, had been imminent.

  • I understand a lot of people do this. I know it’s flagrant,” activist Al Blake, leader of the recall effort, said about homestead exemption fraud. “We understand that. But she’s an elected official and she’s got to be held to a higher standard.”

  • Florida property owners get a $50,000 tax break if they live in the home. More than 400,000 properties in Miami-Dade receive homestead exemptions, Miami-Dade Deputy Property Appraiser Lazaro Solis said Tuesday. The office employs seven full-time investigators and was recently loaned four Miami-Dade economic crimes detectives to ferret out fraud.

  • Giving false information in applying for the exemption is a misdemeanor and most cases — in which criminal intent is difficult to prove, and dollar amounts are not staggering — are handled administratively.

  • With Miami-Dade County facing a massive budget shortfall, homestead exemption cheating has become a hot-button issue in recent months. Earlier this fall, Miami-Dade’s police union — facing $74 million in cuts during contract negotiations — complained that the county wasn’t collecting on “rampant” homestead exemption cheats.

  • Miami-Dade Property Appraiser Pedro J. Garcia shot back, saying enforcement efforts has been stepped up.


  • According to VanderGiesen’s memo, prosecutors also took into consideration that the fraud “did not relate to her role as a public official” and occurred “prior to her becoming the mayor of North Bay Village.”

  • The county’s property appraiser’s office has filed a lein [sic] on the more than $3,000 she owed in back taxes and penalties, while the county’s ethics commission fined her $500 for not disclosing her rental income and mortgage.

  • The primary purpose of a formal criminal case would be to get her to pay back the money she owes,” VanderGiesen wrote. “Such a resolution is already being accomplished by the Miami-Dade Property Appraiser without the expense of additional criminal litigation.”

For the story, see North Bay Village mayor avoids charges in crime rarely charged in Miami-Dade (Prosecutors say homestead exemption fraud is usually left to the county property appraiser’s office to handle).

Go here and go here for Miami-Dade Inspector General press releases for two examples where alleged homestead exemption fraudsters were criminally charged with grand theft in Miami-Dade County, Florida.

Ohio AG Lawsuit: Rogue Contractor Violated State Law By Stiffing Homeowners Out Of $20K+ In Paving Work

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine announced that his office has filed a lawsuit against Cleveland-based Family Paving & Cement LLC for multiple violations of consumer law, including failure to deliver and shoddy work.

  • Consumers paid this company thousands of dollars for driveway paving or general home improvement work that either was never delivered or was done in a shoddy manner,” Attorney General DeWine said. “Previous attempts to resolve the issues have failed, leaving us no choice but to file this lawsuit.”


  • The Ohio Attorney General’s Office has received four consumer complaints against the business since August 2009. In the complaints, consumers report total losses of more than $20,000. One consumer said she paid $16,400 for windows and siding work that was never completed.

  • The Attorney General’s lawsuit charges Family Paving & Cement and its owner with multiple violations of Ohio’s Consumer Sales Practices Act, including failing to deliver, violating the Deposit Rule, performing shoddy work, failing to secure permits, and failing to register as a contractor. The lawsuit seeks injunctive relief, civil penalties, and restitution for consumers.

For the Ohio AG press release, see Attorney General DeWine Files Lawsuit Against Cleveland-Area Paving Company.

For the lawsuit, see State of Ohio v. Family Paving & Cement LLC, et al.

Stiffed Subs' Mechanics Liens, Threat Of F'closure Leave Recent Homebuyer In Pickle Over New Pool; Contractor Claims Bad Economy Left Him Sucking Wind

In Middleburg, Florida, First Coast News reports:
  • Elizabeth Theiss likes her new swimming pool, but she said she can't enjoy it if she has to pay for it twice: She recently received two notice of liens from two separate companies. "I love the pool, it is just the liens," said Theiss.

  • Most recently, a cement company sent Theiss a letter stating that unless the outstanding balance of $2,100 is paid in five days, under Florida's construction lien law, the company will file for foreclosure of her home.

  • "I don't want to lose this house. I just bought it. I don't want to lose it," she said. Theiss paid the pool contractor, Majestic Pools, $2,400. The pool company has a good reputation, helping other consumers and doing quality work. It has an 'A' rating with the Better Business Bureau.

  • Knowing that, Theiss said she was surprised to learn that Majestic Pools failed to pay its cement company. "I checked them out," she said. [...] . When reached by phone, [Majestic Pools'] owner Joe Fitzsimmons said his business is a victim of the economy. "This was not in my plans, I had no plans on sticking her," said Fitzsimmons. "I'm in a bind and can't do anything until I get some work," he said. "I am trying to sell some of my equipment."

  • The cement company told Theiss she has three options:

    Get the company to pay the balance,
    Pay it herself,
    Seek legal advice.

  • Theiss said she would rather pay it than lose her home to a foreclosure lawsuit. A consumer tip: Always get a waiver of lien from any construction related work on your home, before making the last payment, it gives you some protection against the state's construction lien.

Source: Homeowner Afraid she may Lose Home to Foreclosure Lien - all Because of a Pool.

Stiffed Sub To Eat $6K Mechanics' Lien On Adult Care Home After Contractor Files B'kptcy; 6 Elderly Tenants Dodge Displacement From Possible F'closure

In Portland, Michigan, the Lansing State Journal reports:
  • Allen Haskin, owner of HSV Redi-Mix Inc., said Tuesday he'll drop the construction lien from Joe and Lisa Shaltry's adult foster care home in Portland. That's good news for the Shaltrys; not so good for Haskin, who expects to eat the cost of the $6,000 worth of concrete used on the Shaltrys' new driveway.

  • "I have nothing against the Shaltrys," Haskin said. "We're just trying to survive. I guess I'll get (shortchanged) on the deal."

  • [T]he Shaltrys, who run Walnut Grove Assisted Living, hired Leik Foundation of Portland to replace the driveway at the home. They paid Leik $6,000 upfront and the remaining $6,000 when the job was finished.

  • As far as the Shaltrys were concerned, it was a done deal. But then they learned Leik Foundation, on its way to bankruptcy, failed to pay HSV Redi-Mix for the concrete. Exercising an option provided by Michigan law (and not knowing if the Shaltrys had paid Leik) HSV put a lien on the Shaltrys property.


  • The Shaltrys, who provide housing for six elderly people, were afraid of foreclosure. They were relieved to hear of Haskin's decision [].

For more, see Adult care home will be free of construction lien.

Friday, November 18, 2011

Nevada AG Scores Indictment Of Robosigner Duo; Charges Allege Massive Fraudulent Foreclosure Document Manufacturing Racket

From the Office of the Nevada Attorney General:
  • The Office of the Nevada Attorney General announced [] that the Clark County grand jury has returned a 606 count indictment against two title officers, Gary Trafford and Gerri Sheppard, who directed and supervised a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008.

  • According to the indictment, defendant Gary Trafford, a California resident, is charged with 102 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor).

  • The indictment charges defendant Gerri Sheppard, also a California resident, with 100 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor).

  • The grand jury found probable cause that there was a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008,” said Chief Deputy Attorney General John Kelleher.

  • The indictment alleges that both defendants directed the fraudulent notarization and filing of documents which were used to initiate foreclosure on local homeowners. The State alleges that these documents, referred to as Notices of Default, or “NODs”, were prepared locally.

  • The State alleges that the defendants directed employees under their supervision, to forge their names on foreclosure documents, then notarize the signatures they just forged, thereby fraudulently attesting that the defendants actually signed the documents, which was untrue and in violation of State law. The defendants then allegedly directed the employees under their supervision to file the fraudulent documents with the Clark County Recorder’s office, to be used to start foreclosures on homes throughout the County.

  • The indictment alleges that these crimes were done in secret in order to avoid detection. The fraudulent NODs were allegedly forged locally to allow them to be filed at the Clark County Recorder’s office on the same day they were prepared. District Court Judge Jennifer Togliatti has set bail in the amount of $500,000 for Sheppard and $500,000 for Trafford.

For the Nevada AG press release, see Office of the Attorney General Announces Indictment In Massive Clark County Robo-Signing Scheme (Defendants to be Held Criminally Accountable for Filing Tens of Thousands of Fraudulent Foreclosure Documents).

For the criminal indictment, see State of Nevada v. Trafford. et ano. (440 pages).

See LPS Responds to Nevada Attorney General Announcement for Lender Processing Services' response to their two employees being pinched for their alleged involvement in the manufacturing of fraudulent foreclosure documents.

Jacksonville-Area Clerk Of Court Joins Others In Tagging MERS w/ Lawsuit Over Alleged Mortgage Recording Fee-Dodging Racket; Action Seeks Class Status

In Jacksonville, Florida, the Jacksonville Business Journal reports:
  • Duval County Clerk of the Court Jim Fuller has filed a class action suit against the mortgage servicing company Merscorp Inc. and its wholly owned subsidiary Mortgage Electronic Registration Systems Inc.

  • The suit, filed in the Fourth Judicial Circuit in Jacksonville on behalf of all Florida Clerks of Court, claims that the defendants created a private mortgage recording system called MERS to circumvent state law that requires mortgages to be recorded publicly by the clerks of the court.

  • MERS is listed as the ‘mortgagee’ on millions of loans throughout the nation,” the suit states. “However, MERS does not originate any loans, lend any money, or own or hold any promissory notes. MERS instead acts merely as a straw man — a placeholder in the public records — allowing the true, beneficial owner of a loan to remain anonymous and to be changed at will without notice to the public and without recording an assignment in the official records or paying the fees.”

  • The eight-count suit, filed Oct. 31, claims civil conspiracy, unjust enrichment, fraudulent misrepresentation and negligent misrepresentation.

For the story, see Duval County Clerk of Court sues mortgage servicer.

MERS Scores Michigan Win As State High Court Reverses Earlier Unfavorable Appeals Court Ruling On Bankster's Right To Foreclose

In Lansing, Michigan, WILX-TV Channel 10 reports:
  • The Michigan Supreme Court ruled 4-3 in favor of Mortgage Electronic Registration Systems (MERS) Wednesday, allowing thousands of previously halted foreclosures around the state to resume.

  • The decision overturns a lower court ruling from April that had blocked MERS' foreclosures because the company doesn't own or have any interest in the homeowners' debt. MERS isn't a bank or lending institution itself, it acts as a middleman to help speed up transfer of properties.

  • Ingham Co. register of deeds Curtis Hertel Jr. says MERS was responsible for more than a quarter of the county's foreclosures during the last 4 years. "The Supreme Court’s decision affirms MERS' business model and will allow the Michigan real estate industry to get back to business as usual," said Bill Beckmann, MERS’ President and CEO in a statement sent to WILX. "This will allow homeowners to resolve title issues and buyers to move forward with the purchase of foreclosed properties, which is good for neighborhood stability.”

  • In Michigan, companies like MERS don't need a court to foreclose. They can simply post an ad in the paper and post a notice on the door once a homeowner is in default in a process known as foreclosure-by-advertisement.

  • Hertel Jr. says the extra delays the original court ruling added had helped homeowners fighting foreclosure have a fighting chance of staying in their homes. "It gave time for people to work out reasonable modifications and it gave time for people to recover financially," said Hertel Jr., who strongly disagrees with Wednesday's ruling. "This decision takes that time away."

Source: Mi. Supreme Court OK's MERS Foreclosures (The ruling reverses a lower court ruling that halted thousands of foreclosures in the state).

For the ruling, see Residential Funding v Saurman, No. 143178-9 (Mich. November 16, 2011).

Fannie Joins Freddie In Bouncing Baum From Future Foreclosures; Firm That Mocked Homeowners At Halloween Party On Embarrassing Road To Unraveling

In Buffalo, New York, The Buffalo News reports:
  • Steven J. Baum PC has suffered another blow, as Fannie Mae joined Freddie Mac in barring the Amherst law firm from getting any new foreclosure or other legal business from lenders servicing mortgages for the giant federally backed company. According to an updated version of Fannie Mae's "Retained Attorney List," dated Nov. 15, Baum's law firm is "not eligible for new referrals."


  • The action by Washington, D.C.-based Fannie Mae, the nation's dominant player in the mortgage industry with a $2.8 trillion book of business, follows on the heels of a similar step late last week by Freddie Mac, the No. 2 player with $2.1 trillion.

  • The impact of being banned by the federal mortgage giants can be devastating for a foreclosure firm. The last time a law firm such as Baum was banned from both Fannie Mae and Freddie Mac involved Florida lawyer David J. Stern. Other major servicers quickly followed suit in withdrawing their business from Stern. That firm is now virtually out of business, with just a skeleton crew wrapping up a few matters and handling lawsuits against its former lender clients.


  • "It is not surprising to see Fannie Mae suspend Steven Baum's firm after the announcement from Freddie Mac last week," said Rebecca Case-Grammatico, an attorney at Empire Justice Center in Rochester. "It is interesting to witness the unraveling of such a large player in New York's foreclosure field."

  • "It was expected Fannie and Freddie would dump Mr. Baum," said Susan Chana Lask, a New York City attorney who sued Baum on behalf of a client last year, fought off a defamation suit by Baum and was depicted in photos of Baum employees lampooning foreclosure victims at a company Halloween party last year. Those photos recently emerged into the national spotlight, and may have triggered some of actions against the firm. "How much more embarrassing can he be to the banking industry?," Lask said.


  • The firm has been at the center of the foreclosure controversy over "robo-signing," and has been accused by consumers, consumer advocates, other attorneys and even judges of submitting sloppy and perhaps fraudulent paperwork riddled with legal errors.

  • The firm is currently challenging as unconstitutional a new state rule requiring foreclosure attorneys to affirm, under penalty of perjury, that the documents they submit are accurate.

  • It agreed a few weeks ago to pay a $2 million fine and change its practices under a settlement with the U.S. Attorney Preet S. Bharara in Manhattan, capping a probe by the U.S. Justice Department. It's currently under investigation by New York Attorney General Eric T. Schneiderman, who has issued subpoenas to the firm and those associated with it. It has also been sued several times in class-action cases.

For the story, see Fannie Mae hits Baum firm with ban (Foreclosure specialist no longer gets referrals).

Thursday, November 17, 2011

Threat Of Triple Damages Over Possible False Claims Leaving Banksters Gun-Shy Over Submitting FHA Insurance Claims On Robosigner-Obtained F'closures?

The Wall Street Journal reports:
  • Today’s WSJ looks at how the Federal Housing Administration is facing steeper than projected losses that threaten to wipe out the agency’s reserves if home prices decline. Despite the potential for much bigger losses, the FHA actually saw its cash on hand go up in the last year. Taxpayers can thank the robo-signing crisis for that.

  • The FHA doesn’t actually make loans, but instead it insures lenders against losses on loans that meet its standards. The agency functions like an insurance company: It charges premiums to borrowers who take out FHA-backed loans, and holds those premiums in reserve to pay out against claims in the future.

  • Today’s report focuses on the FHA’s expected reserves after it subtracts all anticipated losses. Right now, that leaves the FHA with a razor-thin $2.6 billion in capital to pay for losses that aren’t baked into the current forecast. This is down from $4.7 billion last year and $3.6 billion in 2009.

  • But the FHA’s cash on hand increased by around $800 million to $33.7 billion. While banks are completing foreclosures on FHA-backed loans, they aren’t yet filing claims to be reimbursed because of the “robo-signing” and other dubious back-office practices that surfaced last year.

  • Banks that submit claims to the FHA for improperly handled mortgages can be liable under the False Claims Act to pay treble damages—or fines that are triple the amount of the claim the lender is submitting to the government.

  • Banks have been holding off on submitting claims, it seems, until they’ve double- and triple-checked their processes to ensure that their reimbursement requests to Uncle Sam are iron proof.

For the story, see More on the FHA: Robo-Signing’s Effect.

Suit: MERS, Michigan F'closure Mills, Title Agencies Perpetrated Tax-Dodging "Shell Game" In Connection w/ Dubious Title Transfers After Forced Sales

Michigan Messenger reports:
  • Two county registers of deeds filed a class action lawsuit Monday on behalf of Michigan’s 83 counties alleging that the Mortgage Electronic Registration Services owes millions of dollars in property title transfer taxes.

  • Curtis Hertel, Jr., the Ingham County Register of Deeds, and Branch County Registrar Nancy Hutchins filed the suit, which alleges that the company and numerous banks failed to pay property transfer taxes when the title to the company was transferred to another owner in the MERS system.

  • MERS created a shadow registry system that has made it very difficult for the public and for government offices like mine to keep track of who owns what mortgage,” Hertel said. “They have also stated they were created to avoid fees in my office. When we began the investigation into robo-signing I asked my attorneys to research MERS foreclosures to see if there were patterns of irregularity. This lawsuit is a direct result of that investigation. I believe there has been a systematic attempt to avoid paying taxes by MERS and the banks that use MERS.”

  • Hertel alleges the company has created a “shell game” designed to dodge taxes. “MERS has transformed the entire mortgage industry into a giant shell game”, said Hertel. “The current servicer of a mortgage is no longer a matter of public record, and once a property is foreclosed, the real games begin, as deeds and other paperwork are filed in such a way to avoid transfer taxes at every step. Property ownership is clouded, and the simple task of collecting transfer tax has been turned into this legal battle, largely because of the involvement of MERS.”

  • The lawsuit also targets three foreclosure attorneys — Marshall Isaacs from Orlans Associations and Ellen Coon and Jeanne Kivi of Trott and Trott. Both Orlans and Trott and Trott have come under fire in recent months for participating in robo-signing. Both organizations are also significant Republican donors in Michigan.

  • Also of interest, David Trott’s Attorney’s Title company is named as a defendant. Trott owns what is considered the largerst foreclosure law firm in the state. Linda Orlans’ title agency eTitle is also named. Orlans’ runs Orlans Associates.

For more, see Class action lawsuit filed against MERS over unpaid taxes (Foreclosure firms also implicated).

Minnesota AG: 'CitiMortgage Won't Give Us Straight Answer!' As Accounting Screw-Up Over 1 Loan Payment Leaves Homeowner Facing Imminent F'closure Sale

In St. Louis Park, Minnesota, the Star Tribune reports:
  • Nancy Gosselin cannot understand why CitiMortgage is about to foreclose on her St. Louis Park house. Neither can her local banker or the Minnesota attorney general.

  • At the heart of the dispute is a single monthly payment of $584 that CitiMorgage says she failed to make more than two years ago, according to the attorney general's office. Gosselin says she made all her payments. A loan officer at Bremer Bank agrees. The attorney general's office, which says it can't get a straight answer from CitiMortgage, has urged the mortgage giant to stop the foreclosure and work out a deal.

  • But the fallout from the alleged missed payment has been a series of cascading late fees and penalties and refused payments that has culminated in CitiMortgage's threat to auction Gosselin's home at a sheriff's sale Dec. 2.

For more, see Bank forecloses even though experts say homeowner made all payments (CitiMortgage claims she missed a single payment, but original lender and others disagree. Auction is set for Dec. 2).

Wednesday, November 16, 2011

Rogue Ch. 7 Bkptcy Trustee's Attempt To Block Debtor Conversion To Ch. 13, Then Pocket Cash By Rent Skimming Upside Down Homestead Gets Judicial Boot

From the Florida Bankruptcy Law Blog:
  • I’ve written recently about some Chapter 7 trustees trying to take or administer “upside down” homestead properties when the bankruptcy debtor chooses not to claim a homestead exemption because their home has no equity.

  • The debtors purposefully avoid claiming the homestead exemption in order to then qualify for the $4,000 wildcard exemption [available under applicable non-bankruptcy, state law - Section 222.25(4), Florida Statutes] that they can employ to protect cars and other personal property. Some trustees argue that since they can administer for the benefit of creditors all non-exempt debtor property they have the right to get money from the debtor’s homestead by, for example, making the debtors pay rent or by forcing a short sale of the upside down home.

  • A bankruptcy judge in south Florida rebuked a Chapter 7 trustee who wanted to take the upside down homestead and make the debtors pay rent to live there.

  • The trustee would collect rent but let the mortgage go into default (ie. 'rent skimming'). The trustee would then distribute rent collected to the unsecured creditors until the inevitable foreclosure.

  • The debtors in this case tried to save their upside down home from a Chapter 7 trustee by converting to Chapter 13. The Chapter 7 trustee tried to block the conversion; he argued that if the debtors wanted to save their homestead they should claim the homestead exemption and forfeit the wildcard exemption that had been protecting their cars. He said the debtors’ conversion was in bad faith.

  • The judge pointed out that a Chapter 7 trustee owes a fiduciary duty to all parties including unsecured creditors, secured creditors (mortgage company), and the debtors themselves. The trustees position, said the judge, ignores his fiduciary obligation to the debtors and the mortgagee. He said, “The Trustee’s proposed administration of this case would have allowed the Debtors’ home to be sold to a vulture-investor imply so that the Trustee could collect rent prior to a default on the mortgage and tax obligation.”

  • The court went on to say that, “The Trustee’s misguided and wholly inappropriate.”(1)

  • This decision should be used to protect debtors who try to extort money settlements from honest debtors by threatening to confiscate their upside down homesteads.

Source: Court Rebukes Chapter 7 Trustee's Attack On Debtors' Upside Down Homestead.

For the ruling, see In re Luban, Case No. 11-13633-AJC (Bankr. S.D. Fla., September 15, 2011).

For more on out-of-control Chapter 7 Trustees attempting to use over-the-top tactics to screw Florida homeowners in bankruptcy cases, see:

(1) In elaborating on the arguably egregious proposal by the Chapter 7 trustee, U.S. Bankruptcy Judge A. Jay Cristol made this point:

  • The Court seriously questions how it advances the purpose of the Bankruptcy Code for a Chapter 7 Trustee to administer this estate. The assets to be marshaled would be split among the Trustee and his professionals, leaving perhaps a small percentage of value for unsecured creditors.
  • However, the costs inflicted by such administration may include:

    (a) honest Debtors in need of a fresh start and their disabled son being driven from their home despite (or perhaps because of) the fact they are current on their mortgages;

    (b) a $133,857.00 first mortgage that is being paid going into default and the lien holder necessarily incurring the costs of a foreclosure action;

    (c) a $100,165.00 under-secured second mortgage that is being paid also going into default and the creditor likely suffering a significant loss;

    (d) a Miami-Dade County real property tax obligation that is being paid going into delinquency; and

    (e) another Miami-Dade County single family home going into foreclosure, and needlessly adding another case to an already-overburdened court system.
  • The Trustee's position in this case is misguided and wholly inappropriate. The Trustee appears to want to administer a fully secured asset primarily for his benefit and the benefit of his professionals, at great cost to the Debtors' interests and at great cost to the interests of the first and second mortgage holders, not to mention whatever damage would result to Miami-Dade County for delinquent tax revenues.

Jury Convicts 'Dream Homes' Founder, Ponzi Scheme Operator; Racket Promised Home Loan Eliminations In Exchange For Upfront Payments

From the Office of the U.S. Attorney (Greenbelt, Maryland):
  • A federal jury convicted Andrew Hamilton Williams, Jr., age 60, of Hollywood, Florida today of fraud conspiracy, wire fraud and conspiracy to commit money laundering in connection with his participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves.


  • According to evidence presented at the two week trial, beginning in 2005, Williams and his conspirators targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments, and pay off the homeowners’ mortgage within five to seven years.

For the entire press release, see Owner and Founder of “Metro Dream Homes” Convicted In $78 Million Mortgage Fraud Scheme (Conspirators Spent Millions of Dollars of Investor Funds to Employ Chauffeurs and Maintain a Fleet of Luxury Cars, Travel in Luxury to the NFL Super Bowl and NBA All-Star Game, Pay Off Prior Investors as Part of a Ponzi Scheme, and Fund Failed Investment Ventures and Undisclosed Third Party Businesses).

Beginning Of A Well-Deserved End For NYS Foreclosure Mill Sweatshop? Freddie Gives Baum The Boot; Whether Others Follow Suit Remains To Be Seen

In Buffalo, New York, The Buffalo News reports:
  • National mortgage servicing giant Freddie Mac has barred its loan servicers from referring any new foreclosure or bankruptcy cases in New York State to Steven J. Baum PC, delivering a severe blow to a firm that depends on such work.

  • According to a new bulletin posted on the Freddie Mac website on Thursday, effective "on or after" Nov. 10, the Amherst-based law firm is no longer an approved option for the many mortgage lenders that work with Freddie Mac.


  • Baum has been under heavy fire around the state, and even nationwide, for the firm's role in mortgage foreclosures and the "robo-signing" controversy. He and his firm have been castigated not only by consumers and consumer advocates, but also by other attorneys and even some judges, who have criticized the firm's paperwork as sloppy and riddled with errors.


  • Most recently, it's been denounced for making fun of foreclosure victims, after photos emerged from the firm's Halloween party last year,(1) showing staff dressed up in costumes as debtors and, in one case, mocking a New York City attorney. The attorney, Susan Chana Lask, sued the firm in 2010 on behalf of a client, and then fought off a defamation suit from Baum.

  • "This looks like the beginning of a well-deserved end for Baum," Lask said.

For more, see Freddie Mac bans Baum from N.Y. loan service.

(1) See The New York Times: What the Costumes Reveal.

Tuesday, November 15, 2011

Another County Takes Shot At Banksters Over Unpaid Fees For Unrecorded Mortgage Assignments; Lawsuit Seeks Class Status For All Pennsylvania Counties

In Washington County, Pennsylvania, the Pittsburgh Tribune Review reports:
  • Pennsylvania's 67 counties may have lost $100 million in fees because of a system that assigns mortgages without recording documents in county courthouses, according to a lawsuit filed by Washington County.

  • The county sued U.S. Bank Corp. of Minneapolis in Washington County Court, claiming the bank failed to pay a $52 recording fee when it acquired residential properties bundled in investment securities and sold them through the Mortgage Electronic Registration System Inc. of Reston, Va., known as MERS.


  • In the lawsuit, Washington County estimated it lost $1.6 million in recording fees over seven years from U.S. Bank's failure to record mortgages it acquired. Based on the estimated losses, about 30,470 mortgages were not recorded in the county.

  • Washington County Recorder of Deeds Deborah Bardella said that estimate may be low because the county does not know how many times the mortgages were assigned to different investors.

  • The lawsuit, filed Sept. 28, not only wants restitution from U.S. Bank but asks the court to require the bank to record prior mortgage assignments on all properties on which it foreclosed. The county also is seeking class-action status that would cover the lost recording fees in the state's 67 counties.

For more, see Counties lose $100 million in fees, suit claims.

8th Circuit Bankruptcy Appeals Panel OKs Chapter 13 Lien Stripping Move

In St. Paul, Minnesota, the Pioneer Press reports on a story of a homeowner/couple and their successful effort at getting a United States Bankruptcy Appellate Panel (made up of 3 bankruptcy judges) for the 8th Circuit Court of Appeals to allow for a lien stripping of a 2nd and 3rd lien on thier home where the amount owed on the first mortgage exceeded the value of the residence.

In obtaining the favorable ruling, the the couple convinced the appellate panel to overturn an earlier ruling of the bankruptcy judge who initially heard the case and ruled against the homeowners' move.

Reportedly, the appellate panel's decision is being appealed to the full 8th Circuit Court of Appeals, but attorneys say they expect the panel's decision to stand, as it mirrors decisions in other circuits,(1) the story states.(2)

For the story, see Bankruptcy made easier: Appeals court decision allows stripping of second mortgages.

For the court ruling, see Fisette v. Keller (In re Fisette), 455 B.R. 177 (B.A.P. 8th Cir. 2011).

Go here for other posts on lien stripping in bankruptcy cases.

(1) The court made the following observation in connection with this point:

(2) Worth noting is that within one year of the couple filing their Chapter 13 bankruptcy petition in this case, the couple had filed an earlier Chapter 7 bankruptcy case, in which the Debtor received a discharge of his unsecured debts. This maneuver is sometimes informally referred to by some bankruptcy practioners as a 'Chapter 20' bankruptcy (Ch.7 + Ch 13 = Ch.20). Go here for other posts on the so-called 'Chapter 20' bankruptcy.

Massive Foreclosures A Godsend For Vegas-Area Indoor Pot Farm Operators

The Los Angeles Times reports:
  • [L]as Vegas has a pot home problem. And like many of the region's maladies, it's tied to the housing slump.Last year, authorities took down 153 indoor grow sites in Nevada and seized more than 13,000 plants, compared with 18 sites and 1,000 plants in 2005, the U.S. Drug Enforcement Administration said. (By comparison, California busted 791 indoor sites last year.)

  • "You can't have crime without opportunity," said William Sousa, a criminologist at the University of Nevada, Las Vegas. "And all those empty homes present an opportunity for criminal activity."

  • Major cultivators spend tens of thousands of dollars turning cheap homes into greenhouses. Small-scale growers transform bedrooms into grow rooms, [...]. In neighborhoods where residents may be as transient as crowds in a subway station, growers are rarely questioned about dark windows and empty driveways. Those are also hallmarks of abandoned homes, of which America's foreclosure capital has plenty.

  • "I don't know anybody here, and I don't want to stick my nose in their business," an elderly man who lived near [the site of one recent indoor pot farm bust] said one afternoon. Then he shut his door.

For more, see In foreclosure-plagued Vegas, empty homes go to pot.

Monday, November 14, 2011

Texas Homestead Claim Fails To Fully Protect Sale Proceeds For Homeowner Who Unloaded Moldy Home Onto Unwitting Homebuying Couple

The following facts have been taken from a recent court ruling from a U.S. Bankruptcy Court in Dallas, Texas:
  • Home seller, Chastain, sells home to a homebuying couple, netting Chastain $482,718.14 in cash which she deposited in her bank accounts.

  • Later that month, Chastain used $72,028.39 of this amount for a down payment and closing costs on another home, financed the balance with a $161,000 mortgage, and subsequently used about $80,000 of the remaining cash to remodel and improve the new home.

  • Later that year, Chastain used some of the remaining proceeds to pay off her $161,000 mortgage.

  • Concurrently with the foregoing, the unwitting couple discovered that the home Chastain unloaded on them was a mold trap, that Chastain knew about it, and that she did nothing to disclose that fact to them.

  • The unwitting couple then obtained a judgment against Chastain for approximately $200,000, plus pre-judgment and post-judgment interest, plus costs of the damages lawsuit they brought against Chastain over the sale of the moldy home.

  • Chastain then filed for bankruptcy.

  • She sought to dodge the liability of the debt represented by the unwitting couple's judgment, and attempted to invoke the provisions of the Texas homestead exemption law to protect the loot she scored from the dirty deed she perpetrated on the unwitting couple from the claims of her creditors.

After taking testimony, the court sorted out this mess by ruling as follows:

  1. Upon Chastain's acquisition of the replacement home as her homestead within weeks of the sale of her moldy home, using $72,028.39 for the downpayment, the remaining proceeds of the sale of the home unloaded onto the unwitting couple—$410,689.75—immediately lost its homestead protection, even though the six-month transfer period allowed under Texas law had not expired. In re England, 975 F.2d 1168, 1174 (5th Cir. 1992); In re Presto, 376 B.R. 554 (Bankr. S. D. Tex. 2007).

  2. The $200, 000 judgment owed by Chastain to her two victims is a debt nondischargeable in bankruptcy, pursuant to the provisions of 11 U.S.C. § 523(a)(2)(A), in Chastain's bankruptcy case, because it is a debt that is the result of Chastain obtaining money from the unwitting couple based upon false pretenses, false representations, fraudulent omissions, and actual fraud concerning the condition of the moldy home.

  3. With regard to Chastain's expenditures of $80,000 in home improvements and $161,000 to pay off the mortgage used to financed her replacement home, the court believed that these expenditures constituted a conversion of nonexempt property into exempt property—spent to hinder and delay the unwitting couple in the collection of their judgment and, consequently, ruled that the value of Chastain's homestead exemption from creditors' claims for her replacement homestead must be reduced by $241,000 ($161K + $80K).

For the ruling, see In re Chastain, Case No. 10-37341-SGJ, Adversary No.: 11-03164-SGL (Bankr. N.D. Tex., Dallas Div. October 28, 2011).

Dubious Contract Clauses Not Uncommon In Attorney/Client Retainer Agreements

Buried in a recent story in the Orlando Sentinel is a reference to a clause in a retainer agreement used by a foreclosure defense attorney when taking on the representation of a client needing foreclosure assistance. The clause relates to fees charged by the lawyer:
  • In denying [the homeowner/client] a full refund, it also cited her contract with [the foreclosure defense attorney], which states that the original fee was a "flat, nonrefundable rate earned upon acceptance."

Notwithstanding the actual quality of the services that may be offered by the attorney, attempting to assert that the legal fee is a "flat, nonrefundable rate earned upon acceptance" appears to be, at a minimum, a bit of an overreach, and worse, a possible unfair or deceptive trade practice on the part of the attorney, and even worse yet, could make the entire retainer agreement void as against public policy if it is found to fail to comply with the Florida Bar lawyer disciplinary rules.(1)

Florida case law appears to make clear that attorneys practicing in the Sunshine State "are not free to negotiate just any fee" with their clients.(2)

Further, one can reasonably construe the clause to mean that, once the fee is paid, a client's change of heart and desire to withdraw from the agreement shortly thereafter and without the attorney doing any work will leave the client out the entire fee. Such a end result could be found to be the charging of a fee that is "clearly excessive."(3)

In conclusion, even if attorneys fully and in good faith intend to refund any part of the fee that may be unearned, such good intentions won't necessarily stop some "greedy, good-for-nothing, contingency fee class action consumer protection lawyer" (I hear there are a few out there) from trying to make an example out of them for slipping an arguably unenforceable clause into all of their retainer agreements, such clause having the capacity for potentially creating a false or misleading impression in the mind of the consumer (ie. the client) that the 'non-refundable fee, earned upon acceptance' is truly non-refundable, earned at acceptance. Such a practice could be found to be an unfair or deceptive trade practice and, consequently, make the foreclosure defense attorney a nice, juicy target for litigation.(4)

For the story, go here.

(1) See:

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

    (a) Illegal, Prohibited, or Clearly Excessive Fees and Costs
    : An attorney shall not enter into an agreement for, charge, or collect an illegal, prohibited, or clearly excessive fee or cost, or a fee generated by employment that was obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar.A fee or cost is clearly excessive when [...]. [Go here for more of Rule 4-1.5, Florida Rules of Professional Conduct].

  • Chandris, S.A. v. Yanakakis, 668 So.2d 180 (Fla.1995), where the Florida Supreme Court held that fee contracts that do not comply with the lawyer disciplinary rules are subject to being held void as against public policy. See also American Casualty Co. v. Coastal Caisson Drill Co., 542 So.2d 957, 958 (Fla.1989); City of Miami v. Benson, 63 So.2d 916 (Fla. 1953); City of Leesburg v. Ware, 113 Fla. 760, 767, 153 So. 87, 90 (1934).

(2) Franklin & Marbin, PA v. Mascola, 711 So. 2d 46 (Fla. App. 4th DCA 1998): Commenting on attorneys fee contracts with clients and their enforceabilty, generally, a state intermediate appeals court observed:

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

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

    164 So. at 833. To meet this public interest, the supreme court has adopted specific rules regulating attorney's fees.[7],[8] The issue of enforceability of lawyer fee contracts is set out in a specific rule that states:"Contracts or agreements for attorney's fees between an attorney and client will ordinarily be enforceable according to the terms of such contracts or agreements, unless found to be illegal, obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar, prohibited by this rule, or clearly excessive as defined by this rule."[9]

(3) See generally:

  • The Florida Bar v. Moriber, 314 So. 2d 145 (Fla. 1975):

    Few, if any, areas of attorney discipline are as subject to differing interpretations as the matter of what constitutes an excessive attorney's fee. See The Florida Bar v. Winn, 208 So.2d 809 (Fla. 1968), cert. den., 393 U.S. 914, 89 S.Ct. 236, 21 L.Ed.2d 199. The answer turns upon multiple factors including the difficulty of the case; the contingencies, if any, upon which the fee is based; the novelty of the legal issues presented; the experience of the attorney; the quality of his work product; and the amount of time spent in preparation and litigation.

Go here for approximately 100 or so links to Florida cases addressing the issue of attorneys' fees that are 'clearly excessive.'

(4) For more, generally, on the Florida Deceptive and Unfair Trade Practices Act ("FDUPTA" - F.S. Ch. 501, Part II), see The Florida Bar Journal:

Florida Bar Issues Quarterly 'Gossip Sheet'

From a recent issue of The Florida Bar's quarterly 'gossip sheet':
  • The Florida Bar, the state's guardian for the integrity of the legal profession, announces that the Florida Supreme Court in recent court orders disciplined 24 attorneys, disbarring 12 and suspending 10. Some attorneys received more than one form of discipline. Two attorneys were placed on probation; two attorneys were publicly reprimanded and two were ordered to pay restitution.

Among those making the 'honor roll' specifically for playing fast and loose with their clients' cash, and, in a couple of cases, for improper conduct in holding themselves as providing foreclosure defense and loan modification services are listed below. Also indicated is the appropriate hammering, commensurate with their handiwork, that each was belted with:

  1. Paul Francis Angueira, 1808 NW 126th Ave, Pembroke Pines, disbarred effective immediately, following an Aug. 25 court order. (Admitted to practice: 1997) Further, Angueira shall pay restitution of more than $11,000 to two clients. In several instances, Angueira misappropriated and misused client funds. (Case No. SC11-92).

  2. Thomas W. Dvorak, 633 S. Andrews Ave., Suite 402, Fort Lauderdale, suspended for one year, following an Aug. 25 court order. The suspension shall run consecutive to the one-year suspension ordered in June 2010 and is effective retroactive to July 24, 2011. Further, as a condition of his eligibility to apply for reinstatement, Dvorak shall pay restitution totaling approximately $125,000 to clients in both cases and enter into an agreement with Florida Lawyers Assistance Inc. (Admitted to practice: 2002) Dvorak is the subject of seven Bar investigations. After collecting legal fees from several clients in mortgage loan modifications and real estate foreclosure defense cases, Dvorak failed to keep the clients informed of their cases, failed to competently and diligently represent them and failed to communicate with them. He took little or no action in their cases. (Case No. SC11-1499).

  3. David Eric Hammer, 1005 N. Marion St., Tampa, disbarred, effective retroactive to Sept. 22, 2010, following an Aug. 30 court order. (Admitted to practice: 2006) Hammer misappropriated client trust funds for his personal use. (Case No. SC10-2029).

  4. Larry Elliot Klayman, 2929 Pennsylvania Ave. N.W., No. 35, Washington, D.C., publicly reprimanded following an Aug. 29 court order. (Admitted to practice: 1977) Klayman agreed to submit to mediation through The Florida Bar's Grievance Mediation Program after a former client filed a complaint alleging that he had failed to provide services in a criminal case for which he was paid a $25,000 retainer. After entering into a mediation agreement, Klayman failed to repay the money in full within the specified time. (Case No. SC11-247).

  5. Denise Letizia, P.O. Box 7256, Wesley Chapel, disbarred effective 30 days from an Aug. 10 court order. (Admitted to practice: 1993) Letizia engaged in dishonest conduct by using an invalid power of attorney to withdraw more than $100,000 from bank accounts bearing her developmentally disabled brother's name. She also demonstrated a pattern of misconduct regarding the representation of her brother and in the subsequent disciplinary proceedings. (Case No. SC09-1308).

  6. James Robert Mann, 1220 16th Street, Miami, disbarred effective immediately, following an Aug. 12 court order. (Admitted to practice: 1997) In several instances, a Bar auditor found trust account irregularities because of misuse of client funds. In one case, a client gave Mann $5,000 to fund a settlement agreement. Instead of holding the funds in his trust account as required, Mann used the money to satisfy his own unrelated personal and business obligations. (Case No. SC10-2318).

  7. William Timothy O’Toole, 1489 W. Palmetto Park Road, Suite 494, Boca Raton, suspended until further order, following a July 25 court order. (Admitted to practice: 1992) O’Toole is the subject of 20 Bar disciplinary matters. According to a petition for emergency suspension, O’Toole appeared to be causing great public harm by failing to properly communicate with clients and failing to diligently handle their cases. O’Toole allowed nonlawyers to improperly solicit clients on his behalf for loan modifications and foreclosure defense on a nationwide basis, despite the fact he can only practice law in Florida. He also split fees with nonlawyers, a violation of Bar rules. (Case No. SC11-1384).

  8. Jeffrey Alan Schwarz, 801 N.E. 167th Street, North Miami Beach, suspended until further order, following a Sept. 27 court order. (Admitted to practice: 1976) After being retained for $8,500 to represent two clients on charges of drug trafficking charges, Schwarz failed to adequately represent them. Schwarz neither met nor communicated with clients while they were in custody. Schwarz also allowed a non-lawyer assistant to communicate with the clients’ families and accept money for representation. The clients testified that the paralegal told them he was their lawyer and they believed that he was representing them. (Case No. SC09-766).

For the entire gossip sheet, see Supreme Court Disciplines 24 Attorneys (October 31, 2011).(1)

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help 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.

Sunday, November 13, 2011

Arkansas Federal Judge To 'Non-Judicial' Foreclosing Banksters Unauthorized To Do Business In State: 'Take A Hike!'

Self-described rogue journalist and recovering attorney Ethan C. Nobles writes in First Arkansas News:
  • The U.S. Bankruptcy Court for the Eastern District of Arkansas, Jonesboro Division, ruled on a case at the end of September that may well have a substantial impact on non-judicial foreclosure proceedings in the state.

  • Before getting into that, it’s worth mentioning that Arkansas is one of about half of the state in the Union that allow non-judicial foreclosures. All states, of course, allow a creditor to foreclose on a home through the courts system, but not all of them have non-judicial procedures in place.

  • Non-judicial foreclosures are, indeed, less costly for lenders and expedited. For those reasons, the non-judicial foreclosure process has become the most popular route for lenders to take when they deem it necessary to take homes from defaulting borrowers.

  • According to companies dealing with foreclosures, the case of In Re Johnson (case nos. 3:10-bk-19119, 3:11-bk-10602 and 3:10-bk-16541 in the Eastern District of Arkansas, Jonesoboro Division) has caused the number of foreclosure proceedings to drop significantly since the court issued its ruling on Sept. 28.

  • In a nutshell, the court found that lenders not authorized to do business in Arkansas can’t properly utilize the state’s Statutory Foreclosure Act as codified in Ark. Code Ann. §§ 18-50-101 through 18-50-117.(1)

  • The aforementioned non-judicial foreclosure act requires all companies wanting to take back homes under that act must be authorized to do business in the state — a real problem for mortgage companies located out-of-state that are servicing loans paid on by Arkansans.

For more, see Bankruptcy court throws wrench in non-judicial foreclosure proceedings.

See also, Bankruptcy court ruling slows down foreclosure sales in state, indicating that national title insurers may be beginning to slam the brakes on Arkansas realty sales involving homes recently foreclosed in non-judicial proceedings.

For the court ruling, see In Re Johnson, Case Nos. 3:10-bk-19119, 3:11-bk-10602, 3:10-bk-16541 (Bankr. E.D. Ark., Jonesboro Div. September 28, 2011).

Editor's Note: Buried in footnote 4 of the court ruling is this point of interest:

  • The Court notes that counsel for the Debtors argued that a determination that the statute had been violated would make any sale under the Statutory Foreclosure Act void ab initio. No property sales actually resulted from the foreclosure proceedings in these cases. The sole dispute in these cases is whether the foreclosure fees and costs incurred through use of Arkansas' non-judicial foreclosure process are owed.

(1) According to the court:

  • Absent compliance with Ark. Code Ann. § 18-50-117, J.P. Morgan's avenue for foreclosing on these properties was that of judicial foreclosure through the courts, not through Arkansas' non-judicial foreclosure process.

The court also made this observation on the Arkansas statutory provisions authorizing the use of non-judicial foreclosure procedings in the state:

  • These statutory provisions must be strictly construed. See Robbins v. M.E.R.S., 2006 WL 3507464, at *1 (Ark. Ct. App. 2006) ("It is also true that the Arkansas Statutory Foreclosure Act, being in derogation of common law, must be strictly construed.")

BofA To Cough Up $116K + Lost Equity To Each Servicemember/Borrower Who Lost Home To Unlawful Foreclosure Over Alleged SCRA Violations

From the U.S. Department of Justice:
  • The Justice Department announced [] that, as part of its settlement with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, servicemembers whose homes were unlawfully foreclosed upon will each receive a minimum $116,785 plus compensation for any equity lost to compensate them for the bank’s alleged violation of the Servicemember Civil Relief Act (SCRA).

  • Bank of America agreed to pay $20 million to approximately 160 servicemembers who were illegally foreclosed on between 2006 and the middle of 2009. Under the agreement, Bank of America agreed to provide information about its foreclosures from mid 2009-2010 and will pay damages in the same minimum amount to those servicemembers whose homes were illegally foreclosed upon to compensate for the loss of their homes. The review is on-going.

For the entire press release, see Department of Justice Announces Compensation for Servicemembers as Part of Settlement with Bank of America.

Arizona AG: Loan Modification Racket Targeted Spanish-Speaking Victims With Verbal Promises That Were Then Disclaimed In English-Text Contracts

In Pima County, Arizona, The Arizona Republic reports:
  • Arizona Attorney General Tom Horne's office has filed a consumer-fraud lawsuit against a mortgage loan-modification assistance company that targets Spanish-speaking homeowners in Phoenix, Tucson and Las Vegas.

  • A civil complaint filed Monday in Pima County Superior Court accuses Las Vegas-based Mortgage Capital USA Inc., Phoenix-based American Mortgage USA Inc. and affiliated businesses, all owned by Las Vegas resident Gustave "Gustavo" Anaya, of violating the Arizona Consumer Fraud Act.

  • According to the complaint, Anaya and his companies charge struggling homeowners from $500 to $3,500 to help them avoid foreclosure but provide little or no assistance in return.


  • The companies, which advertise through Spanish-language media, instruct clients to stop paying the mortgage and cut off all communication with loan servicers, which actually hastens foreclosure of their homes, the complaint states.


  • According to the complaint, Mortgage Capital and American Mortgage follow a strategy of making verbal promises of success in Spanish while requiring clients to sign service contracts in English that contain no such promises.

  • "Defendants verbally and routinely guaranteed consumers specific results from the negotiation process in Spanish while defendants' working agreement, written in English, disclaimed any guarantee or promise of a specific result," the complaint says.

For more, see Mortgage loan-aid company accused of fraud (Suit: Spanish-speaking homeowners targeted).

For the Arizona Attorney General press release, see AG Horne Files Complaint in Pima County Alleging Consumer Fraud Violations Against Mortgage Capital USA, Inc.

For the lawsuit, see State of Arizona v. Mortgage Capital USA, Inc., et al.

Cops: Prosecutors Likely To Get Case Against Local Man Suspected Of Renting Out Vacant Foreclosures To Unwitting Tenants

In Albuquerque, New Mexico, KOB-TV Channel 4 reports:
  • The Albuquerque Police Department is investigating a possible rental scam using foreclosed and abandoned properties. APD’s White Collar Crimes Unit has been investigating Shaun Anaya who owns Olive Tree Property Management out of Albuquerque.

  • According to police reports, Anaya is suspected of putting people in foreclosed and abandoned homes to be a caretakers of the house during the foreclosure process. According to the renters statements to police, Anaya charges the renter just a couple hundred dollars a month while they live in the house.

  • When police contacted the banks they said no one should be in the homes and they'd never had contact with Anaya or Olive Tree Property Management.

  • Neighbors in a recent incident tipped off police when someone moved into a nearby home that wasn't supposed to be occupied. "Olive Tree is coming in and saying they own property that the don't. I think they're forging something. Something not right," said Tina Conary, a neighbor in southwest Albuquerque. Anaya wouldn't give KOB Eyewitness News 4 an interview but over the phone he denied all the accusations.

  • Police warn if you have an abandoned or foreclosed house in your neighborhood and someone moves in that you don't think should be there, call police. Officers say they're seeing this growing problem in Las Vegas, Nevada and Phoenix.

  • Albuquerque Police officer say they'll likely submit a case against Anaya to the Bernalillo District Attorney's Office by the end of November. Officers say Anaya has an extensive criminal record.

Source: Rental scams hits Albuquerque foreclosed homes.