Saturday, February 18, 2012

BofA Continues To Be Targeted In Lawsuits Alleging Abuse Of Financially Strapped Homeowners With Loan Modification 'Run-Arounds'

In Helena, Montana, KXLH-TV Channel 9 reports:
  • When Donna Peterson bought her dream home in Helena in 2007, she didn't know her purchase would turn into a nightmare. After being diagnosed with stage four cervical cancer in 2009, she lost both of her home-based businesses while undergoing treatment.
    It was then that she asked Bank of America for help.

  • Donna recalled, "They said 'Oh, no problem. Given your circumstances we can get you right into a 2% loan. All you have to do is to go into default, you are not eligible unless your payments are late.'" That was more than two years ago. Donna filled out scores of documents to restructure the loan, but Bank of America claims they never received them, and eventually they started foreclosure proceedings.

  • Now, the only hope she has of remaining in her home is relying upon the attorneys she has hired to file suit. She said, "I feel like I've spent the last two years screaming at the top of my lungs about what Bank of America has done wrong. And nobody was listening. And now I feel like there's somebody in my corner helping my voice be heard."

  • Attorney Jonathan Motl said, "When they finally got around to telling her they weren't going to give her the 2%, she was in a position where she couldn't do anything. And so she has filed a lawsuit to hold them to the contract they have promised her."

  • The law firm has already filed 10 cases against Bank of America for not honoring contracts, and they continue to receive about five phone calls a week.

  • Typically, the two types of complaints are promises to restructure that aren't kept, and illegal foreclosure procedures.

For more, see Helena woman claims Bank Of America wrong-doing in foreclosure.

Suit: Sellers Pocketed Upfront Cash, Monthly Installments On Sale Of Real Estate On Land Contract, Then Refuses To Transfer Title To Buyer

In Galveston, Texas, The Southeast Texas Record reports:
  • Claiming Dickinson resident Barbara Jean Morgan and her late spouse Freddie Morgan Jr. refused to convey local real property to him, James M. Ayers has filed a lawsuit. Recent court papers filed Feb. 2 in Galveston County District Court allege the Morgans committed fraud by representing that they owned property which they did not.

  • The original petition explains that Ayers purchased a plot located in the Moores Addition subdivision in Dickinson, for $13,500 from the defendants on Oct. 25, 2006. Ayers placed a down payment of $1,500 and consented to remitting a monthly payment of $260.99 for five years. According to the complaint, the Morgans provided a sworn affidavit stating they were owners of the property in question and that all taxes, fees and any other charges against it had been paid through 2005.

  • The plaintiff states he made 28 months worth of payments when an individual named Earnest W. Walker contacted him that the property was actually under the ownership of Earnest W. Walker Family Limited Partnership, "and that (the Morgans) had no interest in the property and had no right to have sold it to the plaintiff or to have represented they had title."

  • Ayers claims he immediately contacted the defendants about the development, and Freddie Morgan Jr. promised the plaintiff he would purchase the property from Walker and convey it to him in accordance with the original agreement in 2006. The Earnest W. Walker Family Limited Partnership turned the property over to the Morgans in May 2009, but the defendants "have failed and refused to convey the property to the plaintiff," the suit says.

  • The plaintiff claims unpaid property taxes and fines arising from numerous code violations total approximately $9,000. Consequently, Ayers seeks a declaratory judgment indicating that he has no ownership interest in or responsibility for the maintenance or taxes on that property as well as a jury trial.

Source: Dickinson man claims property sale was fraudulent.

Suit: Texas Woman Swiped Partial Title To Property From Jailed Co-Owner

In Jefferson County, Texas, The Southeast Texas Record reports:
  • A Jefferson County man says he and an incarcerated man are the sole owners of a piece of property that a woman has also begun claiming an ownership interest in. Frederick Voorhies filed a lawsuit Jan. 17 in Jefferson County District Court against Debra B. Harris.

  • In his complaint, Voorhies claims Debra Harris is attempting to claim a portion of Jefferson County land for herself. The land in question belongs to Voorhies and Jack M. Harris, according to the complaint. However, Jack M. Harris was arrested and remains incarcerated at the Texas Department of Corrections.

  • Debra Harris is attempting to say Jack Harris transferred his ownership rights to her, the suit states. Voorhies contends he and Jack Harris are the only owners of the property.

  • In his complaint, Voorhies seeks a declaratory judgment, declaring the owners of the land in question. He also seeks costs, attorney's fees and other relief the court deems just.

Source: Woman claims incarcerated man transferred property rights.

Insurer Says There's No Duty To Defend Insured Home Seller In Suit Alleging He Knowingly Unloaded Home With Crappy Foundation On Unwitting Buyer

In Jefferson County, Texas, The Southeast Texas Record reports:
  • In a recently filed lawsuit, an insurance company alleges a homeowner lied about the condition of a house in a real estate transaction. Allstate Texas Lloyd's claims defendant Anthony Smith sold his home on Josey Street in Beaumont to defendants James and Cayla Huffman while representing that it was free from problems. However, the home's foundation had serious defects, according to the complaint filed Jan. 13 in Jefferson County District Court.

  • The Huffmans describe the home's problems as "patent defects," the suit states. They filed a lawsuit against Smith because of the problems, the complaint says. In their complaint, the Huffmans seek economic and mental anguish damages, according to Allstate's petition.

  • "The petition also alleges that Mr. Smith made material representations regarding the quality of the home that were not true and, further, that the misrepresentations are actionable because because they qualify as false, misleading and deceptive acts or practices under the Deceptive Trade Practices Act," the complaint says.

  • Smith made the comments to the Huffmans with the intent that they rely on the misrepresentations to purchase the home, according to the complaint. Allstate had insured the home for Smith and promised to provide defense for him in the event of bodily injury or property damage, the complaint says. However, the insurance company claims it should not be required to defend Smith in the Huffmans' lawsuit because there are no allegations of accidental conduct on his part.

  • In its complaint, Allstate is seeking a judgment that it has no duty to defend Smith or to pay any damages to Huffmans, plus other relief the court deems just.

For the story, see Bank accuses home seller of deceptive trade.

Condo Owner Blames Spreading Mold, Shaky Ceiling On Leaky Plumbing From Vacant, Foreclosed Bank-Owned Upstairs Unit; Gets Loan Servicer Run-Around

In Royal Palm Beach, Florida, WPEC-TV Channel 12 reports:
  • A Royal Palm Beach homeowner says her ceiling is saturated with water and is about to cave in. But it gets worse. There's mold spreading everywhere. Patricia Garcia says a leak in the condo above her has caused extensive damage to her unit. The problem is the property is in foreclosure and has been vacant for the last few years.

  • Chase Bank owns the condo above her but she says every time she calls she gets the runaround. "Everytime I called, someone will be over. I'm speaking with them. I'm waiting for them to email me back. Every other day I called them they had an excuse," said Garcia.

  • Chase Bank did send someone to fix the leak after about two weeks, but they have not repaired the damage to her ceiling. A spokeswoman with the bank says they plan to investigate the matter.

Source: Royal Palm Beach condo leak is causing a moldy mess.

Foreclosure Action, Threat Of Operator's License Revocation Add To Uncertainty For Residents In Mobile Home Park Saddled w/ Dozens Of Code Violations

In Kronenwetter, Wisconsin, the Wausau Daily Herald reports:
  • An Appleton bank is foreclosing on the owner of a troubled Kronenwetter mobile home park. Residents of Bouche’s Mobile Home Park received notice today that AnchorBank in Appleton filed foreclosure proceedings in Marathon County [] against park owner Randy Bouche.


  • The foreclosure is another blow for park residents, some of whom own their trailers and lease land in the park, others of whom rent trailers from Bouche. There are 19 privately-owned homes, four occupied rental trailers and 12 vacant trailers in the park. On Jan. 23 the Kronenwetter Village Board voted to revoke Bouche’s license to operate a mobile home park unless he fixes the homes and infrastructure in the park.

  • Village officials in December condemned six mobile homes in the trailer park at 1624 Old Highway 51 for health and building code violations, including plumbing issues, leaky roofs, and mold and holes in the ceilings, floors and walls of units.

For the story, see Bank forecloses on mobile home park owner.

Massachusetts AG Pinches Couple In Alleged Ripoff Of Tens Of Thousand$ Of Federal Public Housing Subsidies

In Weston, Massachusetts, The Metrowest Daily News reports:
  • A Weston couple has been indicted in connection with fraudulently obtaining tens of thousands of dollars in Section 8 public housing subsidies, and defrauding mortgage lenders of more than $250,000, Attorney General Martha Coakley announced [...].

  • Paulo Montenegro, 45, and his wife, Rosana Pereira, 48, were each indicted on charges of larceny by false pretense (three counts) and conspiracy to commit larceny by false pretense (three counts), in connection with fraudulently obtaining Section 8 public housing benefits and fraudulently obtaining mortgage loans from financial lending institutions.


  • The Section 8 Public Housing program is a government program that provides safe and affordable rental housing for eligible low-income families. The U.S. Department of Housing and Urban Development (HUD) administers federal aid to local housing authorities, including the Cambridge Housing Authority, to manage housing for low-income residents at rents they can afford.

  • Authorities allege that Montenegro and Pereira misrepresented material information to the Cambridge Housing Authority and HUD to obtain the benefit of Section 8 public housing subsidies. According to authorities, Pereira, in conspiracy with Montenegro, under-reported her income and assets, and reported that she was unmarried, when in fact she was married to and living with Montenegro in Weston.

For more, see Weston couple indicted in connection with Section 8 fraud.

Friday, February 17, 2012

Study Of San Francisco Foreclosures Shows Almost All Involved Legal Violations Or Use Of Dubious Documentation By Banksters

The New York Times reports:
  • An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

  • Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

  • The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

  • Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

  • Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

  • The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

  • But the precise terms of the states’ deal have not yet been disclosed. As the San Francisco analysis points out, “the settlement does not resolve most of the issues this report identifies nor immunizes lenders and servicers from a host of potential liabilities.” For example, it is a felony to knowingly file false documents with any public office in California.

  • In an interview late Tuesday, Mr. Ting said he would forward his findings and foreclosure files to the attorney general’s office and to local law enforcement officials. Kamala D. Harris, the California attorney general, announced a joint investigation into foreclosure abuses last December with the Nevada attorney general, Catherine Cortez Masto. The joint investigation spans both civil and criminal matters.

  • The depth of the problem raises questions about whether at least some foreclosures should be considered void, Mr. Ting said. “We’re not saying that every consumer should not have been foreclosed on or every lender is a bad actor, but there are significant and troubling issues,” he said.

For more, see Audit Uncovers Extensive Flaws in Foreclosures.

For the report, see Foreclosure In California - A Crisis Of Compliance.

Court Shuts Down Alleged Loan Modification Racket; Consumer Losses Approach $19M: FTC

From the Federal Trade Commission:
  • At the request of the Federal Trade Commission, a U.S. district court put the mortgage relief business permanently off limits to marketers who allegedly charged thousands of consumers up to $2,600 each, based on bogus promises to provide loan modifications that would make mortgages much more affordable.

  • The case against U.S. Mortgage Funding, Inc. is part of the FTC’s continuing crackdown on scams that target homeowners who are behind in their mortgage payments or facing foreclosure. According to the agency, the scheme caused consumer losses of nearly $19 million. All but two of the defendants settled with the agency, while the two remaining corporate defendants received default judgments.

  • The FTC alleged that the defendants used direct mail, the Internet, and telemarketing to target homeowners – even those whose lenders had denied them modifications or who had been sent foreclosure notices. The defendants typically asked for half of the fee up-front, falsely claiming a success rate of up to 100 percent, according to the complaint.

For the FTC press release, see FTC Action Leads to Ban on Alleged Mortgage Relief Scammers Who Harmed Thousands of Consumers (Defendant Ordered to Surrender Yacht, Cadillac, and Rolex).

Florida AG Continues Pattern Of Ineffectiveness In Foreclosures; 'Salvages' $59K In Restitution For 430 Homeowners Hurt By Upfront Fee Loan Mod Racket

In Tallahassee, Florida, WINK News reports:
  • Attorney General Pam Bondi's office has secured restitution of $59,000 for approximately 430 consumers(1) who were harmed by a foreclosure-related rescue service scam. The settlement resolves allegations that Home Owner Protection Economics, Inc., DC Financial Group, and Deleverage America, Inc., and owners Dennis Fischer and Christopher S. Godfrey illegally charged up-front fees for foreclosure-related rescue services and failed to perform the services for which they were paid.

  • Any homeowner who seeks the help of a foreclosure-related rescue service and is asked for an up-front fee should report that business to our office immediately,” stated Attorney General Pam Bondi. “This practice is prohibited by state law, and my office will continue to crack down on these illegal actions.”

  • An investigation revealed that the defendants purportedly charged as much as $2,000 a person in up-front fees, which is prohibited. Additionally, services were never rendered.

Source: Floridians harmed by foreclosure scams are getting relief.

(1) An average of $137.21 per victim.

Thursday, February 16, 2012

Suit: Banksters "Fraudulently Conceal Their Unlawful Assessment Of Improperly Marked-Up Or Unnecessary Fees For Default-Related Services"

In San Francisco, California, Courthouse News Service reports:
  • Wells Fargo Bank and J.P. Morgan Chase charge homebuyers who go into default inflated fees and interest rates, customers say in a federal RICO class action. Lead plaintiff Latara Bias claims the defendants, including Chase Home Finance, service almost 20 million mortgage loans, approximately 25 percent of the home loans made in the United States.

  • The class claims the defendants use an automated mortgage loan management system, and subsidiaries, to "fraudulently conceal their unlawful assessment of improperly marked-up or unnecessary fees for default-related services, cheating borrowers who have least afford it."

  • The plaintiffs concede that when mortgage borrowers go into default, it is natural for lenders to act to protect their interest in the property. "However, lenders are not permitted to mark up the fees for such services to earn a profit," the complaint states.

  • "Nor are lenders permitted to assess borrowers' accounts for defaulted-related service fees that are unreasonably and unnecessary. Nevertheless ... using false pretenses to conceal the truth from borrowers, that is precisely what defendants do. In effect, to generate hearty profits, defendants have substituted inflated interest rates with inflated fees.

For more, see Homebuyers Sue Banks in RICO Class Action.

For the lawsuit, see Bias, et al. v. Wells Fargo & Company, et al.

NY High Court Chief Announces Initiative Allowing All Empire State Homeowners With Some Legal Representation During Foreclosure Settlement Conferences

In Albany, New York, Reuters reports:
  • A new court initiative will allow all New York homeowners facing foreclosure to obtain legal representation and streamline the process of settling mortgage disputes out of court, Chief Judge Jonathan Lippman said Tuesday during his annual State of the Judiciary speech.

  • The "unprecedented" deal between the state, legal service groups and four large banks -- Wells Fargo, Citibank, Chase and Bank of America -- includes the creation of a new court part that will hear only foreclosure settlement conferences, Lippman said. Each week of the month will be dedicated to a different bank, with one attorney assigned to handle all cases for that lender.

  • "There will be no more excuses, no more delays," Lippman said. "Real negotiations will take place, and homeowners will leave the table with the best available offer."

  • The court system, Lippman said, is seeking to avoid scenarios that can delay settlement conferences for years, including homeowners being told their paperwork is out-of-date and lawyers for banks claiming to have incomplete sets of documents.

  • The program will kick off in New York City, where non-profit legal service groups have agreed to represent all homeowners entering the settlement conference process. The new part will not launch for "at least a couple of months," said Paul Lewis, who helps coordinate courts' handling of foreclosure proceedings for the Office of Court Administration.

For more, see Chief judge announces new foreclosure court part in state of judiciary speech.

Court Rulings Lean Heavily Against Screwed Over Homeowners Seeking To Sue For Banksters' HAMP Violations

Lexology reports:
  • The Home Affordable Modification Program (HAMP) is designed to help homeowners avoid foreclosure by modifying qualifying loans to a level that is both affordable and sustainable. The program is intended to provide clear and consistent loan modification guidelines for the mortgage industry and to incentivize loan modifications for borrowers, servicers and investors.


  • While HAMP does not mandate that any particular loan be modified (instead providing a framework for determining eligibility), the structure of the program has at least one undesirable side-effect: persuading borrowers who were either ineligible or unsuccessful in the program that their inalienable rights have been violated and that they should sue their servicer and investor for the failure to modify their loan.

  • Most of these lawsuits are subject to a motion to dismiss for failure to state a claim, because the vast majority of courts around the country have concluded that neither HAMP nor the Emergency Economic Stabilization Act of 2008 (EESA), under which the HAMP program was crafted, provide borrowers with a private right of action. According to a recent review, in 75 cases courts have found that there is no private right of action under HAMP.(1)

  • There have been two cases in which the opposite result was reached, both in the Southern District Court of California. A third trial court decision finding a private right of action is on appeal in Tennessee. These figures are not intended to be comprehensive, but to provide a broad view of the current status of this issue, and there may be other recently decided cases that were not included in the review.

For more, and a list of recent HAMP decisions, see No private right of action under HAMP: the growing consensus (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

(1) A possible 'work-around' to the obstacle that consumers have no private right of action under HAMP, at least in those states that have strong statutes prohibiting unfair and/or deceptive trade practices, is to bring an action under state law asserting that loan servicer conduct that violates HAMP constitutes a "per se" violation of the applicable state statute prohibiting unfair and deceptive trade practices. See, generally, National Consumer Law Center: CONSUMER PROTECTION IN THE STATES: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

For those in Florida looking for a helpful reference on this point, see The Florida Bar:

Wednesday, February 15, 2012

Savvy Business Reporters & Their Pinheaded Take On Foreclosure Fraud Settlement

Blogger David Dayen writes in Firedoglake:
  • We’re going to have to endure this line of argument from those savvy business reporters, and Diana Olick is at the head of the pack, so we might as well take on this argument about the foreclosure fraud settlement directly.

    "Let’s take a step back for a second to remember the fall of 2010, when “robo-signing” came to light. The idea that one low-paid guy sitting in a room was signing his, or perhaps somebody else’s, name to thousands of foreclosure documents was appalling. It is appalling, no question. But let us not forget that the vast, vast majority of those foreclosures being processed were in fact legitimate foreclosures; it was the documentation process that was fraudulent. Banks didn’t foreclose on borrowers for no reason, they foreclosed because borrowers weren’t paying their mortgages."

  • It continues to amaze me how this “no harm, no foul” argument gets employed, when it would not fly in any other context in jurisprudence. Let’s rewrite that claim slightly, with a different scenario but the same spirit.

    "The idea that one rogue cop sitting at the police station was fabricating evidence was appalling. It is appalling, no question. But let us not forget that the vast, vast majority of criminal suspects are in fact legitimately guilty of some crime; it was the evidence gathering that was fraudulent. Cops didn’t pick up suspects for no reason, they picked them up because they did something wrong."

  • This flies in the face of hundreds of years of established law, and the cop, as well as the police department, would be rightly condemned by everyone for allowing a systematic process of evidence fabrication to go on. Practically nobody would make the argument that the suspects were guilty anyway, evidence fabrication be damned. But that’s precisely what Diana Olick is saying with a straight face.

For more, see CNBC’s Diana Olick’s Wrongheaded Analysis of the Foreclosure Fraud Settlement.

Owners Of Bay State Island Summer Retreat Lose Property In Sale Leaseback Deal They Believed To Be Financing Arrangement; Now Face The Boot

In Swansea, Massachusetts, the Herald News reports:
  • The embattled owners of Pleasure Island have lost the one-time summer retreat and may be evicted from the property. Last week, a panel of three judges of the Commonwealth of Massachusetts Appeals Court in Boston ruled that the property is owned by Costa Management.

  • Former owners, Kenneth and Sandra Stebenne of 469 Corp., have been in a title dispute with Costa Management for the past two years. The Stebennes sought to retain the property, but apparently signed paperwork turning it over to Costa Management in 2005. The Stebennes, if they choose, may appeal the decision with the Supreme Judicial Court within 30 days.

  • Attorney John Francoeur of Levin and Levin, representing Edward Costa and Costa Management of Westport, said Monday his client plans to go through with eviction proceedings.


  • The Stebennes faced a looming foreclosure in 2005. They believed they had entered into a private financing agreement with Edward Costa and retained ownership of the island. [Swansea Town Attorney Arthur Frank Jr.] said they actually transferred the property and entered into a lease agreement. They did have an option to repurchase the island.

  • Frank said the judges looked at the documents, including a purchase and sale agreement, which Sandra Stebenne signed as “seller” and Edward Costa signed as “buyer,” and found that they were clear and straightforward, and were binding whether the plaintiff understood what was signed or not.

  • Costa Management in 2009 filed the $462,908 2005 deed after offering the Stebennes a chance to repurchase the property. [...] Francoeur said Costa Management will likely put Pleasure Island up for sale.

For the story, see Court rules on title of Pleasure Island, saying Swansea property belongs to new owner.

High Court Declines To Hear Appeal Of Innocent Wife Who Lost Home Over Tax-Delinquent Hubby's IRS Lien; Still Gets To Split Proceeds From Forced Sale

Lexology reports:
  • The Supreme Court of the United States recently denied the taxpayer's petition for certiorari in United States v. Barczyk, 6th Cir. No. 10-1498 (Aug. 18, 2011) cert denied (Jan. 17, 2012).

  • In Barczyk, the Sixth Circuit upheld the lower court's order allowing the United States to foreclose on its tax lien and sell real property Deborah Barczyk owned with her tax-delinquent husband as tenants by the entirety. The Court of Appeals ordered an equal distribution of the sale proceeds, to the Internal Revenue Service and to Deborah Barczyk, applying the presumption that Deborah Barczyk and her husband had equal interests in the marital home.

For more, see Tax Court reaffirms that a tax lien attaches to property held in tenancy by the entireties: United States v. Barczyk (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

For the Federal appeals court ruling that was allowed to stand, see United States v. Barczyk, No. 10-1498 (6th Cir. Aug. 18, 2011).

Tuesday, February 14, 2012

Suit: Bankster Waits Until Homeowner Successfully Completes Ch.13 Payment Plan To Stop Foreclosure, Then Belts Her With Bogus Fees; Takes Home Anyway

In Clark County, Nevada, KTNV-TV Channel 13 reports:
  • Wrongful foreclosure, fraud and deceit... all allegations at the center of a lawsuit against JPMorgan Chase. As Contact 13 Chief Investigator Darcy Spears reports, the nation's second largest mortgage lender is accused of taking a family's home while it was supposed to be under court protection.


  • It started when Cathy [Gaither's] mother, [homeowner] Jo Ann Gaither, filed bankruptcy in 2003. She did that to re-organize her finances and keep her home while paying off her debts.

  • Her mortgage, originally through Washington Mutual, was part of the bankruptcy plan. But [Cathy's attorney Chris] Keller says the bank ignored the rules, repeatedly sending her foreclosure notices despite the fact that she was under bankruptcy protection. The bankruptcy was successfully dismissed in 2008.

  • "We thought finally we've completed it, now we can move on and pay normal mortgage payments and there's not gonna be any more notices posted on the window and we can move on now, it's a fresh start," Cathy recalls.

  • Not from the bank's perspective. The same month the bankruptcy was discharged, Washington Mutual sent a letter saying Jo Ann owed more than $15,000. "And they were seeking to foreclose on the property that same month -- the very month that she finished the bankruptcy itself!" Keller says in disbelief.

  • [Cathy's] lawsuit says payments during the bankruptcy were "illegally applied" and that the bank tacked on inappropriate late fees and other charges.

  • Washington Mutual's May 2008 letter even says "we understand you have been discharged from the indebtedness through bankruptcy. Nevertheless, our records reflect that your account remains delinquent and foreclosure proceedings may be warranted."


  • In the midst of it all, Washington Mutual became Chase, the loan modification was denied, and Jo Ann Gaither died. "And the last foreclosure notice that was sent to the property was forwarded the month that she died in July of 2010," [attorney] Keller explains. The house immediately went into probate in another court that Keller says the mortgage lender chose to ignore.


  • The court has ruled that Cathy can stay at her family home until her lawsuit, which is now in federal court, is resolved. But even that has proved impossible since Fannie Mae took over the house.

  • "Since that time, the water company has refused to allow the water to be on at the property because, technically, the property is owned by Fannie Mae," says Keller. "They won't allow me to get the water on and they actually had my power turned off three days after Christmas also," Cathy says.

  • The power was turned back on after Keller threatened an even bigger lawsuit. But the house has been without water for an entire year. "I have a 5-gallon bottle I bring in for my dogs or to do little things and that's about it," Cathy says.

  • She asked to talk with us out front because the house is in such bad shape. Even vandals have struck. "This window got busted out. There's two, looks like pellet gun holes in the window right here."

  • Making Cathy wonder why the bank even wants the house, and why they're putting her through this. "And not just to me but to so many people. There's so many people out there that don't have homes because of something like this."

  • Keller says this situation illustrates the flaws in our banking system. "And the inability of the banks to police themselves." Both legally, he says, and morally.

  • Cathy hopes her story will empower others to push back against the big banks. "I didn't give up for my mom's sake. And now, yeah, my mom passed away but I'm still not gonna give up."

  • Cathy recently got an order from North Las Vegas Justice Court that forces Fannie Mae to allow her to have water at the house while the case is ongoing.

For the story, see Chase accused of wrongful foreclosure.

'All Cash' Homebuyer Loses Priceless Family Heirlooms To Bankster's Trash-Out Contractor; Cops On Refusal To Take Crime Report: 'It's A Civil Matter!'

In Kansas City, Missouri, KCTV Channel 5 reports:
  • A Kansas City man's plans to move his mother closer to his home turned into a nightmare. And, he says, led to the theft of priceless family heirlooms. In September 2010, Alan Danforth helped purchase a two-story house on Agnes Avenue for his mother Carol Higgs.

  • Because it was a $16,000 cash short sale, with the proceeds going to Chase Home Finance, there was no mortgage on the home. The sale was recorded with Jackson County that same month. "We just gave them a lowball offer and surprisingly they took it and so that's how we got it," Danforth said.

  • Danforth began remodeling the house. This included redoing the floors, hanging new doors and putting up fresh paint. Higgs began moving in furniture, kitchen supplies and even some family heirlooms. "There were things that I had for my grandchildren, my great grandchildren, to pass on and pass down," she said.

  • But in November 2010, Danforth's remodeling work came to an abrupt halt when he discovered the locks had been changed and a notice was on the door. "A lockbox was put on the door, notices that the house was foreclosed upon. That it had been cleaned and winterized," he said.

  • Chase Home Finance had begun foreclosure proceedings on the residence before the short sale to the Danforths. The financial institution failed to update its paperwork. As a result, Chase hired Safeguard Properties to winterize the home, clean it and lock it up.

  • But Danforth says Safeguard did much more than that. "They cleaned it out," Danforth said.. "It's gone. Everything's gone. They cleaned out the garage; they cleaned out the house, cleaned out the barn. Everything was gone."

  • That included the pieces of family history that his mother had collected. "Broke my heart when I found it was gone," Higgs said. "Materialistic stuff can always be replaced. But they took things that belonged to my mother and my grandmother. I cried."

  • The two have repeatedly tried to get answers from Safeguard about where they took the property but have been unsuccessful. Dealing with Chase has been a nightmare because bank operators want Danforth's mortgage information before discussing the missing property.

  • "I kept explaining, 'There is no mortgage on this home. We paid cash for it,'" an exasperated Danforth said "And they were like, 'Why are you contacting us?' And I said, ‘Because I want help finding where the stuff went.' They're thinking I need help with the mortgage. There is no mortgage, it's paid for."

  • He tried to file a theft report with the Kansas City Police Department but officers declined to accept the report because it appears to be a civil dispute over a mortgage. "I explained to the police, ‘No we paid cash for it. There is no mortgage,'" said Alan. "And he goes, "That's between you and Chase.'"(1)

  • In desperation, the mother and son reached out to KCTV5's Investigative Unit. A Chase spokesman eventually admitted a mistake had been made.

  • The company accidentally sent Safeguard Properties into a home Chase no longer owned to winterize, clean, and change the locks. However, Chase denied the allegations that personal property was removed. Chase claimed it has pictures proving the Danforth home was empty when Safeguard entered it. But the bank refused to produce those pictures or do an on-camera interview with KCTV5.


  • [University of Missouri at Kansas City law professor Patrick] Randolph points out that in similar cases, some courts have hit banks with punitive damages of more than a million dollars.(2) "You've got to keep in mind, that the invasion itself that would justify punitive damages. It would be exacerbated by the fact that they lost this woman's treasures of a lifetime."

  • While punitive damages might pay for some of the property Higgs has had to replace, they won't bring back those heirlooms. For that reason, Higgs is seeking an apology from Chase. "Right is right and wrong is wrong and the least I would have expected was a 'sorry,'" Higgs said. "There is no 'sorry.'"

  • Danforth and Higgs are hoping to find an attorney willing to take their case and seek damages.(3) And hopefully get the return of the family heirlooms that no money can replace.

For the story, see KCTV5 Investigates: Chase for Answers.

Go here for other stories on homeowners getting screwed over by improper 'trash-outs.'

(1) This isn't the first time that cops have washed their hands when investigating these real estate-related crimes. See:

(2) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

(3) For examples of filed lawsuits involving illegal bank break-in, "trash-out" & lockout cases, see:

Landlord's Manager Charged w/ Theft After Allegedly Pocketing Rent, Failing To Pay Mortgage; Leads To F'closure Action, Owner's Credit In Shambles

In York, Pennsylvania, The York Dispatch reports:
  • A local attorney said the man accused of stealing more than $9,000 from him was a close friend for nearly two decades. "I totally trusted this guy," attorney Mike Fenton said of Stephen Lee Newport. "You just don't expect to be screwed by someone you've treated so well."

  • Newport, 58, of 718 Prospect St. in York City, remains free on his own recognizance, charged with the third-degree felony of theft by failure to make required disposition of funds. He was arraigned Feb. 1, according to court records.


  • The allegations: Since September 2005, Newport managed a property at 875 Prospect St. for Fenton, who bought it in September 2005, and Newport was supposed to collect rent from tenants and pay the mortgage on the property, according to his arrest affidavit. Instead, the mortgage wasn't paid, and the property went into foreclosure, the affidavit states.

  • Police said Newport collected rent, but didn't pay the mortgage and also allowed outstanding sewer and refuse bills to reach about $2,952, according to the affidavit. Court documents allege the scheme netted Newport $9,100. Fenton said the true amount is about $18,000.


  • [F]enton said he incurred fees in order to get the property out of foreclosure. The mortgage on the property is $432 a month, he said. "I have no idea why he would do this to me. I just paid more than $15,000 to cure the foreclosure," Fenton said. "I have a good tenant, and I'm back on course -- except for my credit, which is destroyed." Fenton said he believes the alleged scheme was going on for three or four years.

For the story, see Man charged with stealing thousands from York attorney.

Monday, February 13, 2012

Feds Bag Three More Northern California Real Estate Operators On Charges Of Bid Rigging At Public/Courthouse Foreclosure Sales

From the U.S. Department of Justice:
  • Three Northern California real estate investors have agreed to plead guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced. To date, as a result of the ongoing investigation, 20 individuals have agreed to plead guilty.

  • Charges were filed [] in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner of Brentwood, Calif.; Dominic Leung of Alameda, Calif.; and Hilton Wong of San Ramon, Calif.

  • According to court documents, for various lengths of time between August 2008 and January 2011, Heisner, Leung and Wong conspired with others not to bid against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.


  • Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.

  • The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. According to court documents, a forfeiture allegation was also included in the charges against Heisner.

  • The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices.

  • When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

  • Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.

  • The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.(1)

For the U.S. Justice Department press release, see Three Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 20 Plea Agreements to Date).

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

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions, generally.

(1) According to the press release, [these] charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif. The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Field Office and the FBI’s San Francisco office.

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit or call the FBI tip line at 415-553-7400.

By the way, by agreeing to plead guilty, these defendants (at least implicitly) have acknowledged that their 'arrangement' at the foreclosure sales was not an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Utah Foreclosures By BofA-Controlled Confederate To Be Governed By Texas State Law: Federal Trial Judge; State AG Seeks To Intervene

In Salt Lake City, Utah, The Salt Lake Tribune reports:
  • A federal judge has ruled that Texas laws, and not those of Utah, govern foreclosures by a unit of Bank of America. The ruling by U.S. District Judge Ted Stewart is the second to go that way in federal courts in this state, and the Utah Attorney General’s Office is asking to intervene to protect Utah’s ability to set its own laws regarding foreclosures.

  • Stewart handed down the decision this week in dismissing a proposed class-action lawsuit against BofA and its foreclosure arm, ReconTrust, as well as an attorney who performs the foreclosures in Utah for the bank. Stewart adopted the reasoning of Judge David Sam, who reached the same conclusion in a ruling handed down in December.

  • But Deputy Utah Attorney General John Swallow said his office intends to defend the state law that says only Utah attorneys and title companies with offices in the state can act as a trustee and foreclose on property.

  • Stewart held that ReconTrust performs its duties related to foreclosures in Texas, where it is headquartered. That means that under the National Bank Act that state’s laws govern foreclosures in Utah, the judge wrote.

  • "Foreclosures are personal, and foreclosure laws should be set by the state where the foreclosure is actually done," Swallow said. "We jealously guard our right to dictate how foreclosures work in Utah. I think they’re dead wrong when they try to rule otherwise."

For the story, see Federal judge: Texas law governs Utah foreclosures (State A.G. seeks to intervene in case to preserve state’s standing).

Attorney Pinched Again For Alleged Role In Another Dubious Real Estate Deal; Accused Of Pocketing Homebuyer's $75K Escrow Deposit From Trust Account

On Staten Island, New York, the Staten Island Advance reports:
  • A real estate lawyer already facing prosecution in a Brooklyn mortgage fraud scheme now stands accused of stealing a $75,000 down payment from a Staten Island woman who was selling her house.

  • Prosecutors say Jarrett Haber, 45, of Hicksville, had already been indicted in Brooklyn -- alongside a disgraced rabbi who would later be accused of arranging two murders -- when he helped himself to the money in 2010. Haber was representing a friend of his who was selling her Bentley Street home for $475,000, and the buyer had placed $75,000 in an escrow account as a down payment, prosecutors allege.

  • On July 29, 2010, the date of the closing, the money wasn't there, authorities allege. Haber told investigators the money was stolen from him, a law enforcement source said. Nevertheless, the source said, "The money came out of the account that he was in control over."

  • A grand jury returned an indictment against Haber last month, charging him with second-degree grand larceny and second-degree criminal possession of stolen property.(1)


  • Haber had been arrested back in Feb. 2010, accused of running a mortgage fraud scheme alongside Rabbi Victor Koltun of Brooklyn. That case is still pending.(2) [...] The two are accused of taking out a $225,000 mortgage on the home of a Brooklyn woman who was living in a nursing home. She got a call in October 2009 demanding payment on the mortgage, prosecutors said, which came as a surprise because she and her husband had owned the home since 1975, and hadn't had a mortgage on it since 1987.

  • Investigators found out that Haber and Koltun fraudulently used several properties to secure a $225,000 mortgage, which they used to pay down a debt from another real estate scam in Long Island.

For the story, see Real estate lawyer charged in 2010 fraud scheme now accused of stealing $75,000 from Staten Island woman.

(1) To the extent Haber is found guilty or otherwise responsible for the 'disappearance' of the homebuyer's $75,000 deposit, the victim may have some recourse if Haber fails to cough up and return the missing cash that a court may order he (Haber) pay in the form of restitution.

The Lawyers’ Fund For Client Protection Of the State of New York exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

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

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

(2) See New York Daily News: 3 lawyers and correction officer among 12 charged with real estate fraud.

Closing Attorney Gets Year & Day For Role In Escrow Account Ripoffs In Real Estate Deals; Losses Total $2.8M+; Title Insurer Left Holding $1.7M Bag

From the Office of the U.S. Attorney (Baltimore, Maryland):
  • U.S. District Judge William M. Nickerson sentenced Stephen J. Troese, Sr., age 72, of Davidsonville, Maryland, [] to a year and a day in prison followed by three years of supervised release for wire fraud arising from a scheme to defraud lenders and a title insurance company of $2,838,231.


  • According to his plea, Troese practiced as a title attorney and was variously an owner, part owner, or the controlling figure of a number of title companies that did business in the Baltimore, Annapolis and Washington, D.C. metropolitan areas, including Troese Title Services, Inc. (Troese Title), located in Camp Springs, Maryland; and [other entities].


  • Troese Title and Troese/Hughes, which Troese formed in 1994 with co-defendant James Kevin Hughes, shared a joint escrow account for the receipt and disbursement of funds in connection with real estate closings carried out by both title companies.


  • By 2005, the joint escrow account had developed a shortfall of more than $2 million, partly as a result of several major employee errors and embezzlements. [...] In approximately 2006, the real estate industry started to slow, resulting in a steep decline in business for Troese Title and Troese/Hughes, further aggravating the problem of the shortfall in the escrow accounts.

  • In 1994, Troese had refinanced his home, claiming that the $655,000 loan would be used to pay off the previous first and second mortgages. In fact, the mortgages were not paid off. In February 2006, Troese again refinanced his home, representing that the loan of $964,533.26, would be used to pay off the two existing mortgages. Again, the mortgages were not paid off, but instead the funds were used to help cover the existing shortfall in the Troese Title escrow account.

  • Troese concealed the fact that the mortgages were not paid off by continuing to make the monthly mortgage payments on all three loans. The resulting loss to Chicago Title was $937,183.47, which it was required to pay to satisfy the two previous mortgages and pass clear title to the new lender.

For more of Troese's handiwork, and the entire U.S. Attorney press release, see Owner of Troese Title Companies Sentenced to Prison In $2.838 Million Mortgage Fraud Scheme.

Sunday, February 12, 2012

Nationwide Federal/State Robosigning Settlement Not Yet Final?

American Banker reports:
  • More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren't public. The website created for the national settlement lists the document as "coming soon."

  • That's because a fully authorized, legally binding deal has not been inked yet. The implication of this is hard to say. Spokespersons for both the Iowa attorney general's office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court.

  • A representative for the North Carolina attorney general downplayed the significance of the document's non-final status, saying that the terms were already fixed. "Once the documents are finalized, they'll be posted to," the representative said in an email to American Banker.

  • Other sources who spoke with American Banker raised doubts that everything is yet in place.


  • Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.

  • Whatever the reason for the document's continued non-appearance, the lack of a public final settlement is already the cause for disgruntlement among those who closely follow the banking industry. Quite simply, the actual terms of a settlement matter.

  • "The devil's in the details," says Ron Glancz, chairman of law firm Venable LLP's Financial Services Group. "Until you see the document you're never quite sure what your rights are."

For more, see Missing Settlement Document Raises Doubts on $25B Deal.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage:

  • [I]t can't go far enough, because it can't address one of the most confounding problems the banks have created: the millions of properties nationwide that now have "clouded" titles. To put it plainly: Because of these bad titles, property owners can't prove they own the properties they think they bought, and banks can't prove the had the right to sell them.

Banksters' Big Win In Robosigning Scandal: Were America's Prosecutors Outgunned, Wilting Before Prospect Of Battling High-Priced, White Shoe Lawyers?

Rolling Stone columnist Matt Taibbi writes:
  • So the foreclosure settlement is through. A few weeks back, I was optimistic about it – I had been worried that it was going to contain broad liability waivers for all sorts of activities, and I was pleasantly surprised when I heard that its scope had essentially been narrowed to robosigning offenses.(1)

  • However, now that the settlement is finalized, and I've had time to think about it and talk to people who know far more than I do about this, I'm feeling pretty queasy.

  • It feels an awful lot like what happened here is the nation's criminal justice honchos collectively realized that a thorough investigation of the problem would require resources they simply do not have, or are reluctant to deploy, and decided to accept a superficially face-saving peace offer rather than fight it out.

  • So they settled the case in a way that reads in headlines like it's a bite out of the banks, but in fact is barely even that.


  • Really this looks like America's public prosecutors just wilted before the prospect of a long, drawn-out conflict with an army of highly-paid, determined white-shoe banker lawyers. The message this sends is that if you commit crimes on a large enough scale, and have enough high-priced legal talent sitting at the negotiating table after you get caught, the government will ultimately back down, conceding the inferiority of its resources.

For more, see Why the Foreclosure Deal May Not Be So Hot After All.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.

(1) In his earlier column, Taibbi emphasizes that he is not minimizing the significance of the robosigning scandal with the following observation:

  • Robosigning is not a small offense. It's not a "clerical" issue. It's a mass-perjury issue, a tax evasion issue, a contractual fraud issue, and it's a criminal conspiracy issue (the banks' highest executives were engaged in planning it) and it resulted in millions of errors that resulted in untold numbers of premature foreclosures.

The Top 12 Reasons Why The Nationwide Federal/State Mortgage Settlement Deal Stinks!

From Naked Capital blogger Yves Smith:
  • As readers likely know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen's overview at Firedoglake the best thus far.

  • The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they'll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

  • The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

For more, including a list of the top twelve reasons why this deal stinks, see The Top 12 Reasons Why You Should Hate the Mortgage Settlement.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.