Saturday, March 03, 2012

Small Dog Takes $20K 'Bite' Out Of HOA In DOJ Suit Alleging Association Refused To OK Support Animal To Help Disabled Combat Vet Cope With Depression

From the U.S. Department Of Justice ('DOJ'):
  • The Justice Department [] announced a $20,000 consent decree that resolves a lawsuit alleging that a Park City, Utah, condominium association and its management company violated the Fair Housing Act by refusing to grant a resident’s request for a reasonable accommodation.

  • The lawsuit, filed on Nov. 21, 2011, in U.S. District Court for the District of Utah, alleges that the Fox Point at Redstone Association, Property Management Systems and on-site property manager Derek Peterson refused to grant a reasonable accommodation so that Thomas Burton, a disabled combat veteran of the first Gulf War, could keep a small dog in the condominium he rented to help him cope with the effects of depression and anxiety disorder.

  • The lawsuit further alleges that the defendants refused to waive their pet fees and insurance requirements and issued multiple fines that eventually led to the non-renewal of Burton’s lease.

  • Under the consent decree, which was entered by the U.S. District Court in Utah, the defendants will pay $20,000 in monetary relief to Burton.

For the Justice Department press release, see Justice Department Settles Disability Discrimination Case Involving Disabled Veteran in Utah.

For the lawsuit setting forth the allegations, see United States v. Fox Point at Redstone Ass'n, Inc, et al. (go here for the $20K consent decree).

NYCHA Set To 'Gently Boot' 1000s Of Public Housing Hogs As Some City Tenants Use Federally Subsidized Rental 'Safety Net' As Comfortable 'Hammock'

In New York City, the New York Post reports:
  • About 55,000 city public- housing tenants are living in apartments far larger than they’re legally entitled to — and only a handful are cooperating with efforts to move them into smaller units, the head of the [New York City] Housing Authority ['NYCHA'] said [].

  • That’s a sizable number,” declared agency Chairman John Rhea at a hearing of the City Council’s Committee on Public Housing. “This is not a small issue.” He warned that tenant hoarding of huge apartments “fundamentally jeopardizes” the operation of the nation’s largest public-housing agency and its 178,882 apartments. The waiting list for city housing has 160,000 names.

  • And that doesn’t include the thousands of Housing Authority families crowded into apartments too small for them because turnover is so low for the largest units, which can be up to six bedrooms.

  • Councilwoman Rosie Mendez (D-Manhattan), the committee chair, said she knows of a family of three holding onto a six-bedroom apartment in her Lower East Side district. Mendez said the family was once filled with kids who have since moved out, leaving a mother and her two adult children. “They need to be moved to accommodate someone else who is in her situation [of years ago],” said Mendez.

  • The number we didn’t get [at the hearing] is how many people are in crowded or severely crowded apartments,” she added. “It really is a problem.”

  • Officials said that more than 25,000 single tenants are occupying two-bedroom units, which require a minimum of three residents under federal guidelines. Complicating matters is the fact that seniors are living in 30,000 of the 55,000 underutilized units and are generally reluctant to leave.

  • This is leading to unbelievable anxiety,” Councilwoman Melissa Mark-Viverito (D-Manhattan) said. Rhea agreed, but said his agency has no option in the matter because it stands to lose federal funding if the rules continue to be violated.

  • Right-sizing apartments is a very delicate issue,” Rhea conceded. “Having said that, we have an obligation to act. The reality is we need compliance.” He said the problem was “not aggressively handled” in prior administrations.


  • Comments posted by angry tenants on the Internet indicate the Housing Authority is in for some fights.

  • I’m all by myself in a two-bedroom app and I have lived here 26 years and I understand how people feel about families that needs apts but I’m not going to transfer from a community I’ve known my whole life . . . to move to bad neighborhood with a high crime rate and one day get shot,” a tenant identified as LinkCalderon wrote on the forum site.

  • On the other side, JayBrown80 recommended gripers pipe down because they’re all receiving government subsidies. “I totally support the safety net for those people who cannot help themselves,” he wrote. “But it’s a safety net, not a safety hammock where you get comfortable and stay there for the rest of your life.”

For the story, see Trough time booting public-housing hogs.

Indiana County Scores $1.5M In New Tax Revenue In Battle Against Fraudulent Homestead Exemption Claims

From a joint Lexis/Nexis and Tax Management Associates press release:
  • LexisNexis® Risk Solutions and Tax Management Associates, Inc. (TMA) [] announced that Delaware County, Ind. has discovered almost $1,500,000 in new revenue by leveraging the companies' Homestead Exemption Fraud Detection program.

  • The program -- the result of an alliance created by the companies -- combines LexisNexis analytics technology and public records databases with TMA's investigative capabilities to help counties detect Homestead Exemption fraud and discover new revenue.

  • Under the program, LexisNexis identified 3.6 percent of the applications in Delaware County's Homestead Exemption program were potentially fraudulent by examining key indicators of fraud such as:

    1) Exemptions filed by owners for rental properties;
    2) Individuals with multiple exemptions for multiple properties within Indiana;
    3) Individuals with multiple exemptions for multiple properties across multiple states;
    4) Businesses receiving exemptions; and
    5) Family members receiving exemptions under deceased property owners' names.

  • TMA further investigated the LexisNexis findings, verified the information and prioritized the accounts for collection by Delaware County.

For more, see LexisNexis and Tax Management Associates Identify Fraud and Discover Nearly $1,500,000 in New Revenue for Delaware County, Indiana (Alliance Leverages Data and Investigation Capabilities to Combat Homestead Exemption Fraud).

Florida Homestead Claims An Issue For Temporary Bay State Residents Registered To Vote In Massachusetts

In Essex, Massachusetts, the Gloucester Times reports:
  • Town voting officials are once again examining Essex's voting rolls with evidence that at least four people who are registered to vote in Essex, including a town official, claim primary residence in Florida, according to public records.

  • Steven and Margaret Hartley and Kristine and John True have filed for homestead exemptions on their Florida residences, which offer tax breaks as well as legal protections that can be applied only to a primary residence. Yet all four are registered to vote in Essex, records show.

  • A homestead exemption in the state of Florida prevents a home from being seized as part of bankruptcy filing, and protects the owner from being forced out of his or her home to cover debts, including potential long-term, health care needs. It also comes with substantial tax benefits: it allows the taxpayer to deduct $50,000 from the assessed value of the home, lowering the tax bill.


  • Both the Hartleys and the Trues are residents of Conomo Point, which is officially designated as summer housing only. Neither the Trues nor the Hartleys have another residence in Essex, and neither couple has permission to live on Conomo Point year-round.

For more, see Florida papers raise new red flags over Essex voting.

FTC Scores Preliminary Halt To Bill Collector Collecting 'Phony' Debts As Court Order Stops Outfit That Already Pocketed $5M+ From Alleged Victims

From the Federal Trade Commission:
  • At the request of the Federal Trade Commission, a U.S. district court has halted an operation that the FTC alleges collected phantom payday loan “debts” that consumers did not owe. Consumers received millions of collection calls from India, and that since January 2010 the operation took in more than $5 million from victims, according to the FTC.

  • In tough economic times, many consumers turn to high-interest, short-term payday loans between paychecks. The FTC alleges that information submitted by consumers who applied online for these loans found its way into the hands of the defendants.

  • Often pretending to be law enforcement or other government authorities, the callers working with the defendants would falsely threaten to immediately arrest and jail consumers if they did not agree to make a payment on a delinquent payday loan, the FTC’s court papers stated.

  • Claiming to be law enforcement, such as a local police department, the “Federal Department of Crime and Prevention,” or simply a “federal investigator,” the callers typically demanded more than $300, and sometimes as much as $2,000.

  • At other times, the callers said they were filing a large lawsuit against the consumer because of the delinquent payday loan or would have the consumer fired from his or her job, according to the FTC.

  • But the consumers did not owe money to defendants – either the payday loan debts did not exist or the defendants had no authority to collect them because they are owed to someone else, according to the FTC.

  • The court order stops the illegal conduct and freezes the operation’s assets while the FTC moves forward with the case.

For the FTC press release, and links to related court documents, see Court Halts Alleged Fake Debt Collector Calls from India, Grants FTC Request to Stop Defendants Who Often Posed as Law Enforcement.

For more on bill collectors attempting to collect on fake debts, see FTC Consumer Alert: Who's Calling? That Debt Collector Could Be a Fake.

Meth Lab Explosion Leaves Home Uninhabitable; Premises Suspected To Be In Foreclosure Drags Down Quality Of Life For Surrounding Neighbors

In Lilburn, Georgia, WGCL-TV Channel 46 reports:
  • Many residents in a Lilburn neighborhood are fed up with what's left of a home on Spring Mill Drive. One year ago, a meth lab explosion inside killed three children, and damaged the home beyond the point of being inhabitable. The people living there were either arrested or fled from authorities, and haven't been found.

  • Initially shocked by the tragedy, neighbors have become weary of the house as it falls into disrepair, without an owner to take care of it. Several windows are boarded up, and signs of damage from the explosion are visible.

  • "Can't really do anything to the house, and I don't know, maybe technically we're not even supposed to be in the yard," said nearby resident Donna Sowell. She said some of her neighbors have taken their own lawn mowers to occasionally trim the grass, and take care of fallen tree limbs. But the structure, itself, is out of their hands.

  • Most people in the neighborhood now assume the property went into foreclosure after the explosion, and is owned by a bank.

  • "It affects the quality of life for everyone on this street," said Sowell. "I'd hate to be trying to sell a house, and (the former meth lab house is) the first thing perspective buyers see coming into the neighborhood."

Source: One year after meth lab explosion, home lingers as eye sore.

Bank Has 2nd Thoughts On Completing Foreclosure Action After Homeowner Vacates; Premises Becomes Uninhabitable, Taking Down Neighbors' Quality Of Life

In Cleveland, Ohio, NewsChannel 5 reports:
  • For one woman, moving into a southeast Cleveland neighborhood in the 1980s was a dream come true. But years later, the dream spiraled into sleepless nights. "Despair. Frustration. Why did this have to happen?" Jennifer Simmons said.

  • Renting somewhere else now, Simmons cries over the home that slipped away. Foreclosure knocked on her door after she had taken loans against the house and fell behind in payments. "They served me papers at work, at my job, at home, in the mail. Everywhere," Simmons said.

  • Simmons moved out, and vandals hit the house within days. They turned it into a nightly stop, stripping away everything that was not nailed and some things that were, even the furnace. "People took the water meter out of the house and it caused the house to flood for three weeks straight," Simmons said.

  • Two years later, the bank called and said it was dropping foreclosure proceedings. But by then, the house was uninhabitable.

  • And the bank came back and said, 'Hey Jennifer, you can have your home back,’" said Jim Szakacs, director of the Nehemiah Mission, a church group helping people and properties. At no charge, the mission cleaned away debris and propped up the house to keep it from caving in.

  • "This used to be a kitchen. I'm looking around at the kitchen and utility room. I used to cook holiday meals in here," Simmons said. Simmons loves the house, even now. It was home . County ownership records still carry her name. "I can't look at pictures of Christmases past and holidays… The last holiday before I moved out and I cry. I can't look at the pictures anymore," Simmons said.

  • So now an abandoned house becomes a falling domino, taking with it lives of others. "What happens to the neighbor next door, to his property values because of this house?" Szakacs said.

  • Ask neighbor Rick Johnson, who has seen enough to know he has seen too much. "You go around any corner, there's at least seven empty houses on the street. Everybody used to own these houses around here. It wasn't like rental, stuff like that. They owned these houses now. Neighborhood tore. It's tore up bad," Johnson said.

  • It’s the story of a house which is a ghost of what it was, and of a woman who had sweet dreams before foreclosure. Problems of the abandoned house now ripple down the street, affecting the lives of those around it.

For more, see Cleveland woman gets her foreclosed home back after it's destroyed by vandals.

Friday, March 02, 2012

Review Of Bankster Annual Stockholder Report Necessary To Glean Some Substantive Terms Of National Foreclosure Fraud Settlement

Blogger David Dayen writes in Firedoglake:
  • It’s embarrassing that the most information we’ve yet received about the foreclosure fraud settlement comes from an annual report to stockholders by Wells Fargo. In other words, we had to wait for the banks to tell us what was in the settlement, I guess because the regulatory officials who negotiated it weren’t entirely proud of their work.

  • The Wells Fargo notice (it begins on page 74) isn’t legal language, and it states clearly that “the terms… do not become final until approval of the settlement agreement by the U.S. District Court and execution of a consent order.”

  • But it provides more detailed information than the broad sketch that has been released. For example, we have the first breakdown that I’ve seen of the credit system for principal reductions.

For more, see Wells Fargo Shareholder Report Reveals Information on Foreclosure Fraud Settlement.

Participants Sentenced For Roles In Reverse Mortgage Scam Conspiracy That Targeted Elderly Victims

From the Office of the U.S. Attorney (Atlanta, Georgia):
  • A group of mortgage fraud conspirators have been sentenced to prison [...] in federal district court on multiple charges relating to a “reverse mortgage” scheme targeting the elderly.

  • KELSEY TORREY HULL, 39, of Lithonia, Georgia; JONATHAN ALFRED KIMPSON, 28, of Lithonia, Georgia; JAMES MICHAEL GREEN, 44, of Lilburn, Georgia; HERBERT BUSH, 31, of Atlanta, Georgia; WILBUR “SONNY” LETAK, 44, of Atlanta, Georgia; KEVIN CLAUDE BARNETT, 28, of Atlanta, Georgia; were all sentenced for their roles in the scheme.(1)

  • United States Attorney Sally Quillian Yates said, “HUD’s Home Equity Conversion Program was designed to enable seniors to buy a home or to stay in a home at a time in their lives when it may be very difficult for them to obtain a conventional loan. These defendants took money out of the hands of the elderly and then put them in houses worth only a fraction of the amounts represented. This case represents yet another variation of mortgage fraud we are combatting through investigation and prosecution.

For the U.S. Attorney press release, see Fraudsters Sentenced To Prison For "Reverse Mortgage" Scheme.

(1) The sentencing fallout follows:

  • HULL was sentenced to 151 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
  • KIMPSON was sentenced to 102 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
  • GREEN was sentenced to 37 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
  • BUSH was sentenced to 37 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
  • LETAK was sentenced to 30 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
  • BARNETT was sentenced to five years of probation.

The defendants pleaded guilty to the charges in separate hearings between June 2010 and August 2011. Another co-defendant in the case, GIA JOY GLASSE-HARRIS, 28, of Atlanta, Georgia, was sentenced on November 3, 2011 to 2 years, 7 months in prison and 6 months of home confinement to be followed by 3 years of supervised release, and was ordered to pay $174,000 in restitution.

Court To Defendant Facing Prosecution In Scam Targeting Homeowners Facing Foreclosure: 'Turn Over The Computer Password'

In Denver, Colorado, The Associated Press reports:
  • A federal appeals court in Denver refuses to get involved in a mortgage and real estate fraud case that raises questions about whether turning over a computer password amounts to self-incrimination.

  • In a ruling issued Tuesday, the 10th U.S. Circuit Court of Appeals said it lacks jurisdiction because the case has not been resolved in a lower court.

  • That leaves Ramona Fricosu, of Colorado Springs, obligated to follow a judge's order to turn over an unencrypted version her hard drive that requires a password for investigators to examine documents. Her attorney and civil rights groups said it would violate the Fifth Amendment.


  • Fricosu and her husband, Scott Whatcott, are accused of targeting distressed homeowners in the Colorado Springs area, about 65 miles south of Denver.

  • Prosecutors allege the two promised to pay off the homeowner's mortgage, but then filed fraudulent documents in court to obtain title and sell the homes, without paying the outstanding mortgage.

For the story, see Colorado Woman Must Turn Over Computer Password.

Thursday, March 01, 2012

Feds: BofA Put Squeeze On Disabled Mortgage Applicants Attempting To Obtain Home Loans

Reuters reports:
  • The Department of Housing and Urban Development said [...] it is charging Bank of America Corp with discriminating against homebuyers with disabilities.

  • HUD alleged the second-largest U.S. bank by assets imposed "unnecessary and burdensome requirements" on borrowers who relied on disability income to qualify for their mortgages. The charge, now being handled by the Justice Department, is based on complaints by two borrowers in the state of Michigan and one in Wisconsin.


  • The Fair Housing Act makes it illegal to discriminate against borrowers based on a disability, including requiring different application or qualification guidelines. It is also illegal to ask about the severity of a disability except in limited circumstances, which HUD said were not applicable in the three cases.

For more, see BofA discriminated against disabled borrowers: agency.

Indiana Supremes: Defendants Have No Right To Jury Trial In F'closure Actions; State High Court Reaffirms Application Of 'Equitable Clean-Up Doctrine"

Lexology reports:
  • The Indiana Supreme Court recently clarified the standard for when defendants in mortgage foreclosure actions are entitled to have a jury, rather than a judge, consider their defenses and counterclaims. Lucas v. U.S. Bank, N.A., 953 N.E.2d 457 (Ind. 2011).

  • Plaintiff bank filed an action against two borrowers to enforce the terms of a promissory note and to foreclose the mortgage that secured the note. The borrowers asserted various statutory and common law defenses and counterclaims and filed a third-party complaint against the loan servicer, asserting similar common law and statutory claims. The borrowers also filed a demand for a jury trial “on all issues deemed so triable.”

  • The bank moved to strike the borrowers’ jury demand on the ground that a foreclosure action is essentially equitable in nature. The trial court granted the bank’s motion, holding that any legal claims or defenses the borrowers asserted were drawn into the equitable action. The court of appeals granted the borrowers leave to seek discretionary interlocutory review and reversed the trial court’s decision.

  • The statutory claims and defenses included alleged violations of the Truth in Lending Act, the Real Estate Settlement and Procedures Act, and the Fair Debt Collection Practices Act. The common law claims and defenses included alleged breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppels, civil conversion, and civil deception. The court of appeals noted that the statutory and common law defenses and claims asserted by the borrowers were legal, rather than equitable causes of action.

  • Further, the borrowers were seeking money damages, which is a legal remedy. The court also stated that the borrowers’ causes of action were distinct from the bank’s foreclosure action because they involved consumer protection statutes that seek not only to protect individual consumers, but also to protect the public at large and deter certain practices. Based on those factors, the court concluded that the borrowers’ legal claims and defenses were sufficiently distinct from the foreclosure action to be tried to a jury.

  • The Indiana Supreme Court granted transfer and reversed the court of appeals’ decision. The supreme court conducted a detailed review of the constitutional and statutory provisions that protect the right to trial by jury. Article 1, Section 20 of the Indiana Constitution provides that “[i]n all civil cases, the right of trial by jury shall remain inviolate.”

  • The Indiana Supreme Court had previously interpreted that provision to preserve the right to a jury trial only as it existed at common law. Songer v. Civitas Bank, 771 N.E.2d 61, 63 (Ind. 2002). , 771 N.E.2d 61, 63 (Ind. 2002). Accordingly, a party has no right to a jury trial on equitable claims. Id.

  • The constitutional protection to a jury trial is codified in Indiana Trial Rule 38(A), which provides:

    Issues of law and issues of fact in causes that prior to the eighteenth day of June, 1852, were of exclusive equitable jurisdiction shall be tried by the court; issues of fact in all other causes shall be triable as the same are now triable. In case of the joinder of causes of action or defenses which, prior to said date, were of exclusive equitable jurisdiction with causes of action or defenses which, prior to said date, were designated as actions at law and triable by jury—the former shall be triable by the court, and the latter by a jury, unless waived; the trial of both may be at the same time or at different times, as the court may direct.

  • To determine whether a court should sever separate counts of a complaint or counterclaim, with some tried to the court and some to a jury, the supreme court had previously held that a trial court should look to the “essential features of a suit.” Songer, 771 N.E.2d at 68.

  • If the lawsuit as a whole is equitable, and the legal causes of action are not “distinct or severable,” then there is no right to a jury trial because the entire case is drawn into the court’s equity jurisdiction. Id. The court referred to this process of equity subsuming a legal claim as the “equitable clean-up doctrine.”

  • The court reaffirmed its holding in Songer and concluded that the borrowers’ defenses and counterclaim in Lucas were all essentially equitable in nature. The court explained that “the heart of all of the legal claims in this case rest on whether the Lucases are, in fact, in default and, if so, what the amount of their debt is.” Lucas, 953 N.E.2d at 467.

  • The court, therefore, concluded that “the equitable clean-up doctrine is properly invoked, and the legal claims are subsumed into equity to obtain more final and effectual relief for the parties.” Id.

Source: Indiana Supreme Court reaffirms limits to jury trials in foreclosure actions (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

Ex-Real Estate Agent Hit With $180K Bail After Being Pinched On Burglary, Grand Theft, Perjury Charges In Alleged Vacant Home-Snatching Racket

In Martinez, California, KGO-TV Channel 7 reports:
  • A Martinez man has been arrested and charged for allegedly renting out foreclosed, empty homes throughout Contra Costa County to renters through the website Craigslist, according to the district attorney. Alfonso Salazar, 62, was arrested and charged with multiple counts of burglary, grand theft and perjury in connection with a fraudulent rental scheme involving at least four foreclosed or unoccupied homes in Walnut Creek, Hercules, Antioch, and Brentwood since last October, said Deputy District Attorney Ken McCormick.

  • The prosecutor said that Salazar's scheme likely touched some 20 households, and that authorities expect to find more victims as the investigation unfolds. "It's possible that there are more homes out there - and it's possible that the banks don't know about it," he said.

  • While investigators have found evidence that Salazar rented out empty homes since October, McCormick said he could have been defrauding renters for much longer. "Individuals like (Salazar) are just taking advantage of this economic downturn," he said. "The people who pay this rent are ultimately going to be evicted."

  • Salazar, a longtime Contra Costa County resident and former licensed real estate agent, sought out homes that were unoccupied or in foreclosure, the prosecutor said. Scattered throughout Contra Costa County, the empty homes were valued between $215,000 and $742,000, according to the district attorney's office.

  • Salazar would post a note on a home claiming the property was now owned by National Alliance of Homeowners for Justice, a Southern California-based company that employed him, McCormick said. If no one came forward to object, the former real estate agent would change the property's locks and use Craigslist to target unsuspecting renters.

  • Drawing on his realty expertise, Salazar drew up sophisticated lease documents that gave renters no reason to doubt his credibility, McCormick said. "He know how to talk the talk and walk the walk, because he's been a real estate agent," the prosecutor said. Victims of the scheme thought little of handing over first and last month's rent and a security deposit, he said.


  • Salazar is set to appear in court in Pittsburg on March 8 to enter a plea and remains in county jail on $180,000 bail. Anyone who believes they may have been victimized by Salazar is urged to contact Senior Inspector Darryl Holcombe at (925) 957-8762.

For the story, Man arrested for renting foreclosed homes on Craigslist.

Wednesday, February 29, 2012

NJ High Court: Actual Lender's Name, Address Must Be Disclosed When Notifying Homeowner Of Intent To Foreclose

In Trenton, New Jersey, Bloomberg reports:
  • New Jersey’s Supreme Court ruled that the lender must be named in documents indicating a bank’s intention to foreclose on a mortgage before a residential property can be seized.

  • The case involves the foreclosure on an East Orange home owned by Maryse and Emilio Guillaume, who received a notice of intention to foreclose in May 2008. That notice included the name of the mortgage servicer, America’s Servicing Co., while omitting the name of the lender. Credit Suisse AG (CSGN) made the loan and assigned it to US Bank NA.

  • The state high court in Trenton ruled [] that the notice sent to the Guillaumes failed to comply with New Jersey’s Fair Foreclosure Act, which requires the name and address of the actual lender, as well as contact information for a loan servicer. Failure to do so creates “potential for significant prejudice” to homeowners, the court said.

  • “A misunderstanding about a lender’s identity could prompt a homeowner to make a critical error at a time when he or she is struggling to avert foreclosure,” the court said in the opinion.

  • The court ruled that while a trial court judge erred on that point in interpreting the Fair Foreclosure Act, the judge reached the correct conclusion in ordering a default judgment against the couple. The Guillaumes failed to demonstrate either “excusable neglect” or a “meritorious defense” to their foreclosure, according to the ruling.

For the story, see Lenders Must Be Named in Foreclosures: NJ Court.

See also, The Star Ledger: State Supreme Court decision could unlock foreclosure floodgates in New Jersey:

  • The ruling also reversed a separate appellate decision, known as Laks, which said a foreclosure should be dismissed if its notice of intent did not comply. Now, trial court judges can dismiss the action, order a corrected notice or determine another appropriate solution. Attorney Mark Melodia, who represented ASC, said the Laks decision left attorneys unsure of what to include in their filings, effectively "clogging" the system.

For the ruling, see U.S. Nat'l Bank Association v. Guillaume.

Pair Cop Guilty Pleas For Hijacking Possession Of Vacant Homes In Foreclosure, Then Pocketing Cash By Renting Them Out To Unwitting Renters

In Barstow, California, the Desert Dispatch reports:
  • A Barstow woman is set to be sentenced in April after she pleaded guilty to renting out several houses going through foreclosure in 2010. Evelyn Thompson, 51, pleaded guilty to two counts of forgery and a trespassing charge [] in Barstow Superior Court. The other defendant in the case, Edward Tofoya, 54, pleaded guilty to unauthorized entry of property the same day.

  • Thompson was arrested in March 2010 after police learned she was renting five Barstow homes in 2010. Tenants of the homes told police Thompson would pose as the property manager and offer the homes for rent with no credit check under the alias Deborah Anderson. Tofoya was Thompson’s handyman, who police said they found changing locks on one of the homes. At the time Thompson worked at Exit Strategy Realty in Barstow, but was fired after her boss learned of her actions.

  • Thompson was convicted for renting four homes illegally, charging between $500 and $1,300 rent, said Deputy District Attorney Joel Buckingham. Most of the tenants had only recently moved in, he said. There were other homes she was trying to rent but was found out before any leases were signed.

  • Thompson is scheduled to be sentenced April 9, where she should receive 180 days in prison per her plea deal, Buckingham said. She could have faced a maximum of three years, eight months for her charges. Thompson will also be responsible for paying restitution to the tenants, the amount of which is still being determined, Buckingham said.

  • Tofoya received no jail time due to credit for time served. He owes about $200 in fees to the court.

Source: Two convicted in housing scam (Woman rented out homes going through foreclosure).

Squatter Faces Criminal Mischief Charge After Snatching Possession Of Temporarily Unoccupied Home While Owner Away On Business Trip

In Grapevine, Texas, the Star Telegram reports:
  • A 64-year-old man has been arrested in the first criminal case involving a squatter in Northeast Tarrant County. Billie V. Henderson has been formally charged with criminal mischief for trying to take possession of a home [...] in Grapevine, according to the Tarrant County district attorney's office.

  • "He went over there and had a locksmith come out and meet him there and change the locks," Grapevine police Sgt. Robert Eberling said. A neighbor who knew the homeowner alerted the police after Henderson had the locks changed, Eberling said. The owner was on a business trip, police said.

  • Henderson could not be reached for comment Wednesday. He was convicted of larceny after an arrest in August 1970, public records show. He has lived in several cities in the last five years, including Irving, Waxahachie, Fort Worth and Haltom City, records show.

  • The supposed squatter told Grapevine police that he had identified the home by surfing the Tarrant Appraisal District's website, police said. "In his mind, he determined that if they are owned by a financial institution, they are under foreclosure, which this house was not," Eberling said.

  • Henderson apparently did the same thing to a home in Coppell, and Grapevine police are working closely with Coppell authorities on the case, Eberling said. An investigation is pending, he said.

  • Since November, District Attorney Joe Shannon has formally charged eight people with felony burglary in connection with what he has called fraudulent affidavits filed with the Tarrant County clerk's office by squatters.

  • The affidavits of adverse possession stated that the individuals had claimed abandoned property. If an owner doesn't contest the claim for a period of years and the squatter provides upkeep and pays taxes, the squatter may eventually gain legal title.

  • Henderson did not file a fraudulent affidavit, Eberling said. Police thought the criminal mischief charge was more appropriate in the case, he said. "His MO was just to look at the [appraisal district's] website and find homes," Eberling said.

Source: Grapevine accuses 64-year-old squatter of criminal mischief.

Tuesday, February 28, 2012

Banksters' Big Win In Nationwide Foreclosure Fraud Settlement Includes $308B In Protection For Their Crappy 2nd Mortgage/Home Equity Loans

Bloomberg reports:
  • Bank of America Corp. (BAC), Wells Fargo & Co. (WFC) and three other banks that settled a nationwide probe of foreclosure practices this month will get a bonus from the deal: protection for $308 billion of home-equity loans they hold.

  • The banks that service about half the nation’s mortgages on behalf of investors will be able to share losses on their junior loans with bondholders and get credit toward the cash they pledged to spend in the settlement, said an Obama administration official involved in drafting the $25 billion agreement. Second liens would typically be wiped out before senior-mortgage investors take a loss, said Laurie Goodman, managing director at Amherst Securities Group LP in New York.

  • It’s “a gift to the banks, at investors’ expense,” said Goodman, a member of the Fixed Income Analysts Society’s Hall of Fame. “A proportionate write-down of the first and second represents a reversal of normal lien priority.”


  • The settlement has been criticized by money managers including Scott Simon at Pacific Investment Management Co., who said investors who bought mortgage-backed securities will suffer losses as banks earn credits for easing loan terms.

  • This was a relatively cheap resolution for the banks,” Simon, the mortgage head at Pimco, which runs the world’s largest bond fund, said after the settlement’s Feb. 9 announcement. “A lot of the principal reductions would have happened on their loans anyway, and they’re using other people’s money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load.”

For more, see Banks Win Reprieve on Home Equity Loans in Settlement.

Pa. Housing Advocates Respond To Recent Court Ruling w/ Call To Slam Brakes On F'closures Thru-out State; Banksters Ask For Full Appeals Court Review

In Pittsburgh, Pennsylvania, the Pittsburgh Post-Gazette reports:
  • Housing activists are calling on Pennsylvania banks and sheriffs to temporarily halt all home foreclosures, saying a paperwork error could save thousands of people their homes.

  • The state Superior Court on Jan. 30 ruled in favor of three women facing foreclosure who claimed they were not notified, as required by law, that they could have a face-to-face meeting with their mortgage holders to try to resolve outstanding payments.

  • The Pennsylvania Housing Finance Agency issued more than 100,000 such "Act 91" forms from 1999 through 2008 that did not contain that notification, their lawyer Michael Malakoff said.


  • Pending the appeal of the decision to the full Superior Court -- which was filed Feb. 13 by lenders Beneficial, HSBC and J.P. Morgan Chase -- the housing group says officials should put a halt on all foreclosure actions.

For more, see Halt foreclosures on homes due to paperwork errors, group says.

See also, Pittsburgh Tribune Review: Nonprofit group says 100,000 got flawed foreclosure notes.

For the court ruling, see Beneficial Consumer Discount Company v. Vukman, 2012 PA Super 18 (Pa. Super. January 30, 2012).

Now-Jailed Attorney Loses Law License For Pocketing $1.1M+ In Loan Proceeds From Client Home Refinance Transactions Meant For Existing Lien Payoffs reports:
  • The Kentucky Supreme Court permanently disbarred a local lawyer Thursday for keeping more than $1.1 million that should have gone to pay off closings on homes. Donald Lynn Richardson, 55, of Crescent Springs is currently at the federal prison in Ashland after previously being convicted of one count of bank fraud in federal court in Cincinnati. He is scheduled to be released in August.

  • Richardson’s trouble started in May 2010 when he and his Commitment Title Agency was used by Fifth Third Bank to refinance home mortgages. In one week, Richardson didn’t turn over $1,124,034.63 from five mortgages refinanced by the bank.

  • The Cincinnati-based bank found out about the incidents when customers called to complain about their old mortgages not being paid and receiving foreclosure threats. Because the bank didn’t want those refinanced homes to go into foreclosure, it forked over an additional $1.1 million to pay off the old mortgages.

  • Richardson and his title company “pose a significant risk of liquidating their assets and property and fleeing,” according to court records. Bank attorneys said in court that they suspected there were other similar transactions involving Richardson in which money went missing.

  • To complete home refinancings, the bank placed in escrow the money to pay off the old mortgages. Richardson and his title company didn’t forward that money to pay off the mortgages but kept it, spending it on the “purchase of real and personal property, to pay personal debts and to otherwise convert the funds to their own use,” according to court records. Four of the refinanced homes involved are in Ohio – all north of Columbus – and one is in Indiana.

Source: Attorney disbarred after keeping $1.1 million.

Monday, February 27, 2012

Garden State Duo Strike Plea Deal In Advance Of Being Charged In Municipal Tax Lien Auction Bid Rigging Scam; Agree To 'Sing' To Feds In Ongoing Probe

From the U.S. Department of Justice:
  • Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty [February 23] for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.

  • A felony charge was filed [February 23] in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.(1)

  • According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid.

  • According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.(2)


  • The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.


  • Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation 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.

  • Today’s pleas are the result of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions.(3) On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey municipal tax lien auctions.

For the U.S. Justice Department press release, see Two Financial Investors Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey.

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.

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

(2) The DOJ press release describes the nature of the bidding process on municipal tax liens in New Jersey:

  • When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption.

    By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

    According to the court documents, Stein conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Farber also agreed not bid against certain bidders at tax lien auctions. Because the conspiracies permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.

    Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

(3) The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

Another One Bites The Dust As Feds Continue Clean-Up In Probe Into Northern California Foreclosure Sale Bid Rigging Racket

In Sacramento, California, the Central Valley Business Times reports:
  • A Lodi real estate investor pleaded guilty Friday in U.S. District Court in Sacramento to conspiring to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County.

  • Wiley Chandler, 47, of Lodi, pleaded guilty to conspiring with a group of real estate speculators who agreed to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions in San Joaquin County, says U.S. Attorney Benjamin Wagner.

  • The goals of the conspiracies were to suppress and restrain competition, to fraudulently obtain selected real estate at noncompetitive prices and to divert money to coconspirators that would have gone to the beneficiaries, the department said in court papers, says Sharis Pozen, acting assistant attorney general of the Department of Justice’s Antitrust Division.


  • Public auctions are meant for the public, not for an elite group conspiring together for their own profit,” says Mr. Wagner. Specifically, Mr. Chandler pleaded guilty to bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either of those amounts is greater than the statutory maximum fine.

For more, see Another guilty plea in massive Central Valley foreclosure fraud (Lodi man is tenth to plead guilty to bid rigging and fraud; ‘Public auctions are meant for the public, not for an elite group conspiring together’).

For the U.S. Department of Justice press release, see Two Financial Investors Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey.

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.

Granite State Scam Peddler Saves Butt With 'Squeal Deal'; Gets 6 Months House Arrest, Leaving Victimized Homeowners To Pocket $0 Restitution

In Nashua, New Hampshire, the Nashua Telegraph reports:
  • When Tony DiSessa says “unbelievable,” he doesn’t sound all that disbelieving. Prosecutors say DiSessa is one of dozens of New Hampshire homeowners – or former owners – who were duped by a conspiracy that purported to save their homes but actually stripped their homes of equity and saddled the homes in thousands of dollars in extra debt.

  • One of the three people who have pleaded guilty to taking part in the scheme, Richard Winefield, was sentenced to probation and restitution in federal court recently.

  • That was my kids’ home. They grew up there,” DiSessa said of his former home at 22 Apple Blossom Drive in Londonderry. “Basically, it makes me want to cry. It’s pretty pathetic.”

  • Winefield, a licensed real estate agent, pleaded guilty to one count of aiding and abetting in mail fraud in U.S. District Court and, after several delays, was sentenced to three years of probation and six months of house arrest, and ordered to pay restitution, according to court documents.

  • He is still allowed to work in real estate with approval from his probation officer, according to the terms of his supervision.

  • Two other people – Walter Bressler and Sadie Stanhope Ng – have also pleaded guilty and are scheduled to be sentenced in April, according to court documents.

  • Winefield was part of a long-running criminal conspiracy whose members defrauded lenders and homeowners across New Hampshire, Assistant U.S. Attorney Michael Gunnison told Judge Steven Mc-Auliffe. Winefield joined the scheme, already in progress, in 2006, Gunnison said.

  • Winefield has since cooperated with investigators, which was a factor in his sentence, Gunnison said.(1)

  • The scam targeted a number of homeowners in addition to DiSessa. “The prospective investigation focuses on more than 50 transactions involving New Hampshire homeowners,” Gunnison said. That isn’t much solace to DiSessa, who moved his family into a condominium in Londonderry after losing his home in 2007.

  • I feel like the homeowners who were trying to save their homes totally got screwed,” he said. “I blame the federal government for not looking out and trying to help the homeowners.”

  • Homeowners won’t see any of the $407,500 in restitution Winefield was ordered to pay. That money will be paid to Citibank, First Franklin Division of National City Bank and Fannie Mae, according to court documents. Bressler and Ng are also liable for that amount, according to the documents. If Winefield had to pay the restitution himself, at the court-ordered amount of $300 a month, it would take about 113 years to pay off.

  • I’ll never recover from this, financially or emotionally,” DiSessa said. “My credit rating is just through the floor.”

For more, see Conspiracy duped homeowners, stripping equity and saddling them with debt.

Go here for the court documents on Richard Winefield's sentencing.

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

Florida Congressman/Senate Candidate To Face Questions Over 'Double Homestead' Tax Exemptions On Two Homes; County Official: Claim Probably OK

In Lee County, Florida, The Tampa Tribune reports:
  • Lee County Property Appraiser Ken Wilkinson said Wednesday he probably will investigate whether Rep. Connie Mack and his wife, Rep. Mary Bono of California, are entitled to two separate homestead exemptions in their home states, although his "first blush" opinion is that they are.

  • "My impression is they'll probably be all right," Wilkinson said. Wilkinson said his senior staff members will discuss the matter []; he expects the decision will be to conduct an investigation.

  • He said the office likely will ask Mack and Bono for financial documentation, possibly including tax filings and records of their homestead properties, mortgage and insurance bills.

  • Asked about an anti-fraud posting on his office's website that appears to suggest the dual exemptions aren't allowed, Wilkinson responded, "Semantics is an interesting science; the wordage could be better on the site."

  • Mack has a homestead exemption on his Fort Myers condo, and Bono has one on her Palm Springs home, even though the Florida Constitution says a single "family unit," which usually includes a married couple, can have only one.

  • Mack's attorney has said it is appropriate because the two are financially independent of each other.(2)

For more, see Mack could face scrutiny over exemption.

(1) Florida law and prior opinions issued by the state Attorney General appear to make pretty clear that, provided they otherwise qualify, there is nothing necessarily illegal or otherwise improper about a husband and a wife each claiming a homestead exemption on separate residences ('double homesteads') (while formal opinions issued by the Florida Attorney General are not binding on any court, the Florida case law set forth therein is). See:

  • Florida Administrative Code Rule 12D-7.007(7):

    "A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. If it is determined by the property appraiser that separate permanent residences and separate “family units” have been established by the husband and wife, and they are otherwise qualified, each may be granted homestead exemption from ad valorem taxation under Article VII, Section 6, 1968 State Constitution. The fact that both residences may be owned by both husband and wife as tenants by the entireties will not defeat the grant of homestead ad valorem tax exemption to the permanent residence of each."
  • Florida Attorney General Opinion 75 Op. Att'y Gen. 146 (1975), Husband And Wife Maintaining Separate Residences May Both Qualify For Homestead Exemption;
  • Florida Attorney General Opinion 05 Op. Att'y Gen. 60 (2005), Homestead Exemption -- separate residences and homestead exemption. Art. VII, s. 6, Fla. Const.
  • Wells v. Haldeos, Case No. 2D09-4250 (Fla. App. 2d DCA, October 22, 2010).

(2) While the fact that the two spouses are financially independent of each other certainly adds weight to the legitimacy of the claim, the rule is clear that said financial independence is not required. Florida Administrative Code Rule 12D-7.007(7):

  • "A married woman and her husband may establish separate permanent residences without showing “impelling reasons” or “just ground” for doing so. [...]"

Sunday, February 26, 2012

NJ Trial Court Ruling Slams Foreclosure Rescue Operators With $470K Bill For Predatory Sale Leaseback-Peddling Racket Targeting Deep-Debted Homeowners

In Union City, New Jersey, The Jersey Journal reports:
  • Two former Union City firms and two former city residents have been ordered to pay $470,000 in fines and restitution for defrauding struggling homeowners through deceptive mortgage foreclosure "rescue" schemes, officials said [].

  • "These defendants promised struggling homeowners help, but in the end only helped themselves," said state Attorney General Jeffrey S. Chiesa of PSRE Holding Company, Property Solutions, Edward Toledo and Raymond Vega. "For their callous exploitation of people in need, they are now, appropriately, being held accountable," said Chiesa.

  • The defendants typically contacted homeowners in foreclosure shortly after their homes were auctioned off and within the 10-day period the homeowners could keep the home by paying outstanding liens.

  • The defendants promised to save the homes by paying off the mortgages within the 10-day period and they promised to help the victims get financing that would allow them to keep their homes.

  • In this way, the defendants were able to buy the homes for the amount owed on the mortgage, usually far lower than what the properties would have sold for. As a result, the victim lost the right to keep the difference, which in one case was more than $150,000, officials said.

  • The defendants would then enter into a sale-leaseback agreement with the victims, giving them a chance to repurchase their homes on very unfavorable terms. Consumers who entered these agreements were able to remain in their homes for a period, but the arrangement typically did not last.

  • In some cases the monthly use and occupancy payments made by the victims were higher than the mortgage payments they had not been able to afford. In the end, three victims in the state's case either vacated or were evicted by the defendants -- even when they had remained current with the higher monthly payments.

  • In several cases, the defendants made false sworn statements that the victims had failed to make any of their use and occupancy payments, officials said.

Source: 2 men, Union City businesses fined for $470,000 in mortgage foreclosure rescue scam, authorities say.

For the New Jersey Attorney General press release, see Attorney General Announces $469,500 Mortgage Fraud Trial Decision (Defendants Must Pay Civil Penalties to State, Restitution to Consumers).

Feds, Colorado AG Form Tag Team In Civil Suit Targeting Outfit Allegedly Peddling Bogus Sale Leaseback Arrangements To Homeowners Facing Foreclosure

From the Office of the Colorado Attorney General:
  • Colorado Attorney General John Suthers and U.S. Attorney John Walsh announced today that they have filed a joint lawsuit against Georgia-based Bella Homes and its principals(1) on suspicion that they ran a nationwide foreclosure-rescue scam between March 2010 and February 2012.

  • According to the joint lawsuit, filed in U.S. District Court in Denver, Bella Homes preyed on homeowners facing foreclosure by accepting more than $3 million in fees disguised as “rent” while they did little to actually help homeowners avoid foreclosure.

  • Bella Homes is accused of asking homeowners to give the company the titles to their homes and then to enter into a lease agreement with Bella Homes where they would “rent” their homes while Bella Homes allegedly worked to halt the foreclosure and purchase their mortgages.


  • According to the complaint, the promises made by Bella Homes were false and Bella Homes did not provide any meaningful assistance to homeowners to avoid foreclosure and remain in their homes.(2)


  • Bella Homes accepted money from more than 450 consumers, including five in Colorado. Bella Homes’ suspected activities affected consumers living in more than two dozen states.

For the Colorado AG press release, see Attorney General, U.S. Attorney announce joint lawsuit, injunction to end national foreclosure-rescue scam.

Go here for:

(1) The individual defendants named in the lawsuit are:

  • Daniel David Delpiano,
  • David Delpiano,
  • Mark Stephen Diamond,
  • Michael Terrell, and
  • Laura C. Tabrizipour.

(2) According to the complaint, Bella Homes told consumers they would:

  • Avoid foreclosure;
  • Allow Bella Homes to purchase or settle their mortgages;
  • Be protected under federal law from eviction during the terms of the lease agreements;
  • Be able to repurchase their homes in three years for 90 percent of its fair market value and receive credit for 60 percent of the rent paid to Bella Homes;
  • Enjoy a mortgage payment following their repurchase that is 40 percent to 60 percent lower than previous payments; and
  • Not have foreclosures noted on their credit reports.

Trustee Screw-Up In California F'closure Sale Allowing Property Worth $220K To Be Sold To Investor For $22K To Be Decided By State High Court

In Santa Cruz, California, the San Jose Mercury News reports:
  • The state Supreme Court has agreed to review a civil case first filed in Santa Cruz County Court in 2009. The case, Biancalana v. T.D. Service Co., deals with issues surrounding the sale of a foreclosed property.

  • Plaintiff David Biancala purchased a property at a foreclosure sale in 2008, but the defendants allege that the wrong opening bid was announced and therefore the sale is void.

  • Attorneys for Biancala claim that the trustee for the property did not have the discretionary authority to set aside the foreclosure sale due to that error, and the property rightfully belongs to the purchaser.

  • An appeals court eventually overturned a Santa Cruz County judge's judgment in favor of the defendant. The defendant, T.D. Service Co., filed the petition for review of the case by the State Supreme Court. The state's highest court announced last week that it had accepted the case for review.(1)

Source: State's highest court to review foreclosure case.

For the California appeals court ruling to be taken up by the state high court, see Biancalana v. TD Service Co. (2011) 200 Cal. App. 4th 527 [132 Cal. Rptr. 3d 719].

(1) The events surrounding the foreclosure sale follow, as set forth in the appeals court ruling:

  • On or about July 22, 2008, TD was substituted in as trustee under a deed of trust securing real property located at 434 Winchester Drive in Watsonville, California (the subject property). TD subsequently provided notice that the subject property would be sold at a foreclosure sale scheduled to take place on September 10, 2008. The beneficiary submitted a specified credit bid in the amount of $219,105 for TD to use as the opening bid for the sale. However, TD erroneously submitted the delinquency amount of $21,894.17 to the auctioneer as the opening credit bid on the subject property.

    While researching upcoming foreclosure sales, Biancalana learned of the scheduled sale of the subject property and, on the day of the sale, called the telephone number TD listed on the sales notice to inquire about the opening bid. The recording advised that the opening bid for the property was $21,894.17. After checking comparable property values and asking a colleague to physically view the property, Biancalana again called the recording. The amount of the opening bid was unchanged.

    Biancalana decided to bid on the property, so he obtained a cashier's check in the amount of $22,000 and proceeded to the auction site. Having arrived before the scheduled start of the sale, Biancalana discussed this property and other foreclosures with the auctioneer. The auctioneer called TD twice before the start of the sale and spoke to two different employees, both of whom advised him the opening bid for the property was $21,894.17. The auctioneer was not instructed by TD to make any further bids on the property over and above the opening bid.

    The sale commenced and the auctioneer, as instructed, announced that the opening bid on the subject property was $21,894.17. Biancalana submitted a bid of $21,896 and, when no other bids were forthcoming, the auctioneer declared this as the high bid. The auctioneer accepted a cashier's check in the amount of $22,000 from Biancalana.

    TD discovered the mistake when it reviewed sales figures from September 10, 2008. On September 11 or 12, 2008, TD notified Biancalana that the opening bid it submitted was incorrect, that the sale was void and that a new foreclosure sale would be scheduled. TD did not issue a trustee's deed upon sale and returned Biancalana's cashier's check. Biancalana rejected the check and sent it back to TD. When TD refused to issue the deed, Biancalana sued TD, among other defendants, for quiet title, specific performance, declaratory and injunctive relief.