Saturday, March 24, 2012

Ohio AG Tags Suspected Debt Settlement Racket With Civil Suit Alleging Deceptive Practices, Failure To Deliver Promised Services

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine [] announced a lawsuit against Jeremy Nelson of Trabuco Canyon, California, and his two companies for operating debt settlement businesses that took money from consumers to settle their debts but failed to deliver on their promises.


  • According to the Attorney General’s lawsuit, filed in the Franklin County Court of Common Pleas, Jeremy Nelson is the president of Jackson Hunter Morris & Knight, a Nevada corporation that represents that its principal place of business is in Newport Beach, California. Mr. Nelson was also the president of Nelson Gamble & Associates, which previously was a Colorado corporation and represented that its principal place of business was in Irvine, California. Neither business was registered with the Ohio Secretary of State to do business in the state.

  • Through his businesses, Mr. Nelson advertised that his businesses could help consumers settle their debts. He advertised online and gave consumers the impression that they were getting professional services associated with legal counsel.

  • Representatives told consumers over the phone that the business would negotiate with consumers’ creditors so that they could settle their debts by paying only a portion of what they owed. According to the Attorney General, consumers paid money for these services but did not have their debts settled.

  • The Attorney General’s lawsuit charges Jeremy Nelson and his businesses with violating Ohio’s Consumer Sales Practices Act and Debt Adjuster Act. Specific counts include failure to deliver, misrepresentation, and charging higher fees than Ohio law allows. Through the lawsuit, the Attorney General seeks injunctive relief, civil penalties, and consumer restitution.

For the Ohio AG press release, see Attorney General DeWine Sues California Man for Operating Unfair Debt Settlement Operation.

For the lawsuit, see State of Ohio v. Nelson Gamble & Associates, et al.

Trial Set After Plea Negotiations Break Down For Florida Cop Charged With Claiming Fraudulent Homestead Claim That Resulted In Lower Property Tax Bill

Down On the Florida Keys in Monroe County, Florida, reports:
  • Negotiations over a plea deal for a suspended Keys state law enforcement agent charged with homestead-exemption fraud have fallen through, and now he's set for trial on April 23 in Key West. Following the breakdown in talks, Vince Weiner, 47, demanded a speedy trial and on Thursday, Monroe County Circuit Court Judge Mark Jones set the trial for the Freeman Justice Center.

  • The Florida Department of Law Enforcement arrested the Key West-based Weiner, an FDLE agent, last Aug. 17. He's charged with felony grand theft and misdemeanor homestead-exemption fraud.

  • Florida homeowners are allowed one homestead exemption, which allows for a property-tax break on their permanent residence. It can be claimed only when the owners live in the house.

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

  • The FDLE says Weiner claimed the Big Pine exemption for the tax years 2007 to 2010. As a result, the FDLE says, Weiner received at least $5,918 in tax exemptions to which he was not entitled.

  • Weiner had hoped he could cop a plea that would allow him to retain his state police certification. But prosecutors wouldn't go for a misdemeanor plea.

  • Weiner was assigned back to the Keys from Fort Myers in May 2010. He has worked in Fort Myers or Key West since becoming an FDLE agent in 1993. He previously was a Florida Highway Patrol trooper.(1)

Source: Trial set for suspended Keys FDLE agent.

(1) If, after Weiner was assigned to Fort Myers (assuming he didn't claim a homestead exemption for another residence in the interim), he had a good faith intention to ultimately move back to his home in Big Pine Key, it would seem unfair that Weiner would not be entitled to keep his tax exemption allowed under Article VII, Section 6 of the Florida Constitution. Certainly, he would have been entitled to maintain the exemption if, rather than renting it out, had he simply kept the home vacant, or even let people live there rent-free.

Further, there are Florida Supreme Court rulings that have allowed for the temporary rental of a homestead where the homeowner was entitled to keep the tax exemption associated with homesteads. See:

  • L'Engle v. Forbes, 81 So. 2d 214 (Fla. 1955) (in the context of a member of the armed services who was called away for military service and who intended to return to his home when his military obligation was satisfied; he was deemed not to have involuntarily abandoned his homestead despite the fact that he rented out the home during the entire period of his absence. Accordingly, he was entitled to the homestead exemption for the time he was away in the military);
  • City of Jacksonville v. Bailey, 30 So. 2d 529 (Fla. 1947) (holding that homestead was not abandoned where the property owner resided in home for six years; the owner rented the home out during the winter season; and during the course of the rental, left his personal items on the property);

See also:

  • Poppell v. Padrick, 117 So. 2d 435 (Fla. 2d D.C.A. 1959) (where an intermediate appeals court held that a property owner who rented his home during the winter months, over the course of several years to live with his widowed mother, and maintained his personal property in the homesteaded property did not abandon homestead and was entitled to the property tax benefit);
  • Florida Att’y Gen. Op. 058-229 (where the state Attorney General opined that a property owner who rents a home in another county for work purposes did not abandon homestead where property owner had maintained homesteaded address for voter registration and voted in the subject county).

However, subsequent to these court rulings, in 1959 (possibly in an attempt to nullify or otherwise minimize the significance of these court rulings), the legislature slipped a provision into the statute (See 196.061, Florida Statutes: Rental of homestead to constitute abandonment), that specifically states that, in the context of the tax exemption for homesteads, a rental of an entire homestead constitutes an abandonment (the legislature does carve out an exception to this rule for a "member of the Armed Forces of the United States whose service in such forces is the result of a mandatory obligation imposed by the federal Selective Service Act or who volunteers for service as a member of the Armed Forces of the United States", possibly to reflect the fact pattern in the aforementioned case, L'Engle v. Forbes). See, generally, Florida Bar Journal: The Loss of Homestead Through Rental.

Whether Section 196.061 constitutes an improper exercise by the legislature to change the provisions of the Florida Constitution, as interpreted by the then-existing case law, through legislative action has never been addressed by the Florida Supreme Court (keep in mind that the Florida Constitution can only be changed, altered , modified, etc. by constitutional amendment to be voted on by the citizens of the State, not by legislative fiat). Arguably, however, the wording of Article VII, Section 6 of the Florida Constitution is such that it does permit the state legislature some leeway in passing laws to implement the intent of the state Constitution (unlike the constitutional provisions in Article X, Section 4, which deals with the homestead exemption relating to forced sales, lien attachments - where no such leeway is permitted).

Palm Beach County Says 'Enough Already!' To Property Owners Claiming Undeserved Property Tax Benefits From Improper Homestead Claims

In West Palm Beach, Florida, The Palm Beach Post reports on how the county's homestead fraud squad inspectors track down people trying to get double duty on homestead exemptions and are otherwise claiming undeserved property tax benefits.

For the story, see County's homestead fraud squad targets ineligible exemptions (requires subscription).

Baltimore City Triples Spending On Program Targeting Fraudulent Claims Resulting In Undeserved Homestead Real Estate Tax Benefits

In Baltimore, Maryland, The Baltimore Sun reports:
  • The number of city workers charged with rooting out property tax fraud and errors would triple — from one employee to three — under Mayor Stephanie Rawlings-Blake's budget proposal for next fiscal year.

  • The "billing integrity" program, launched last spring, has focused on finding homestead property tax credits that go to owners who don't live in the homes receiving the break, which violates the rules. The Finance Department wants extra staff to audit all tax credits and investigate the accuracy of property assessments.

  • William Voorhees, the department's director of revenue and tax analysis, said Rawlings-Blake "is dedicated to making sure that we get every dollar the city is due." The budget request triples spending on the program to $337,000, which would more than pay for itself, Voorhees said.

  • An investigation by The Baltimore Sun has found multiple problems that reduce city tax collection, particularly in the homestead program — "double-dippers" collecting on multiple properties, breaks going to boarded-up homes and homestead credits inflated by errors.

  • So far, the city has requested the state revoke over $1.3 million in homestead credits from 2,157 properties — rentals and vacant homes — and almost $1 million in tax exemptions on properties that the city believes do not actually qualify for the nonprofit break. The Finance Department expects to soon forward a list of several thousand more homestead credits to the state to revoke, potentially $2 million in breaks, Voorhees said.

  • Though the city is responsible for billing, the state Department of Assessments and Taxation oversees the homestead program and makes the call on revocations. [...] Voorhees said the city looked for properties receiving homestead credits even though they are registered as rentals, were cited for not registering or have been slapped with a vacant-building notice. The new staffer members would allow the department to ferret out even more properties getting undeserved homestead credits.

For more, see Mayor wants to expand property-tax effort ('Billing integrity' program aims to stamp out fraud, mistakes).

Foreclosure Auction Purchaser Swears Out Felony Complaints Against Former Tenants Claiming Missing Light Fixtures Were Swiped

In Roanoke, Virginia, The Roanoke Times reports:
  • A man who purchased two Roanoke buildings at a foreclosure auction last month has taken out felony warrants against a former tenant and her fiance, claiming they stole light fixtures that belonged to him.

  • Richard Bishop, who put in the winning bid on the Grandin Village real estate at the Feb. 29 auction, swore out the warrants against Benjamin Ward and Nicole Coleman on March 11, according to court documents. Ward, a former manager of The Isaacs Mediterranean Restaurant, and Coleman, who co-owns the restaurant, were arrested March 13 and released on their own recognizance.

  • The Isaacs, which was housed at 1910 Memorial Ave. S.W. since 2007, closed March 10. Ward and Bishop have said the two parties could not strike a new lease agreement.

For the story, see Buyer says Isaacs operators stole fixtures.

Wedding Venue Operator Goes Belly Up After Knowingly Pocketing Customer Cash While In Foreclosure, Leaving Brides Scrambling For New Place To Tie Knot

In Memphis, Tennessee, WMC-TV Channel 5 reports:
  • The owner of a Memphis wedding venue knew her business was going into foreclosure months before the brides who booked with her knew. Brides who spent thousands of dollars just to reserve Le Pavillion have been abandoned by the well known Memphis attorney who owned the building. The event venue in East Memphis is in foreclosure.

  • "The most disturbing part is that the foreclosure happened in November and nobody told us," said bride Stephanie Maynard. "They still collected our second half of the payment in January."

  • Action News 5's investigation revealed the building was owned by Memphis attorney Gail Mathes. Brides never imagined that in October of last year, Mathes would begin foreclosure proceedings and abandon her East Memphis real estate with almost $90,000 in back property taxes. A foreclosure document, which ironically reads "to have and to hold," is the legal transfer of Le Pavillion to Commercial Bank and Trust. Mathes no longer occupies her downtown Memphis office. She did not answer her cell phone Thursday and no one answered at Le Pavillion.

  • Now, brides who are out thousands of dollars in deposits are scrambling to find another place to tie the knot. Mathes did not return Action News 5's calls Thursday. Documents show she also began bankruptcy proceedings but missed a filing deadline that would have protected her from creditors.

Source: Brides left scrambling after East Memphis wedding venue foreclosed.

Friday, March 23, 2012

Where Are The Indictments?

Blogger Abigail C. Field writes:
  • Let’s be clear why there’s a mortgage deal: the banks broke the law. Several laws in fact, in ways that appear criminal as well as civil. Limiting their liability is the only reason the banks did a deal.

  • In this post I’m going to look at what the banks could be held liable for; how much liability “their” money persuaded law enforcers to ignore will be the next post. But one important kind of peace has not been bought: criminal.

  • So as I detail the wrong doing exposed by the deal, I highlight the crimes our law enforcers seem to allege the bankers committed. After all, a liability release isn’t simply what it says, it’s what law enforcers do with their remaining freedom to act. If crimes were committed, and indictments don’t follow, the release is much broader than its text.

  • A close read of the complaint and the related language that precedes the releases (see Exhibits F and G) reveals: [...]


  • In all, at least three types of criminal conduct–False Claims Act violations, Servicemember Civil Relief Act violations, and False Statements violations–appear to have been substantiated.

  • So where are the indictments?

For more, see Where are the Indictments?

MERS Tagged Again With Another Suit By Municipality Accusing Bankster With Dodging Recording, Fee Payment Requirements

In Le Mars, Iowa, the Sioux City Journal reports:
  • Plymouth County has filed a class-action lawsuit against a national electronic mortgage registry company it says has enabled banks to avoid paying Iowa mortgage recording fees.

  • Plymouth County Attorney Darin Raymond filed the suit on behalf of all 99 Iowa counties against MERSCORP Holdings Inc. and Mortgage Electronic Registration Systems Inc., known as MERS, which tracks mortgages sold and traded among banks that subscribe to the company's service. The suit also names several of the nation's largest banks and mortgage companies.

  • In the lawsuit, Raymond said MERS has allowed banks to skirt Iowa's public information and recording laws by trading mortgages through an electronic registry that lists MERS as the mortgage holder, even though the banks are buying and selling the mortgages.

  • Iowa law requires a document called an assignment of mortgage to be filed in the county recorder's office when a mortgage is sold. The MERS system enables banks to avoid that practice and the payment of the accompanying filing fees, the lawsuit said.

  • Plymouth County is asserting claims of unjust enrichment and civil conspiracy, is seeking an unspecified amount of damages and has asked that the defendants record all past mortgage transactions that were not recorded from Jan. 1, 1998, through the present.

  • The suit was originally filed in Plymouth County District Court, but was transferred last week to U.S. District Court in Sioux City. No hearings have been scheduled. Plymouth County is not the first to file suit against MERS to recover recording fees. Similar lawsuits have been filed in Pennsylvania, Texas and North Carolina.

For more, see Plymouth County sues over mortgage recording practices.

For the lawsuit, see Plymouth County, Iowa v. Merscorp, et al.

Elderly Homeowner Sues To Recover Home Lost In Tax Foreclosure Sale; Says 'I Was Never Properly Notified Of My Redemption Rights!'

In Ripley, West Virginia, The West Virginia Record reports:
  • A Jackson County woman who lost her home is seeking to get it back after the company that bought it failed to follow state law in taking ownership of it. Ora B. Thomas filed a property dispute lawsuit against NAJ, LLC in Jackson Circuit Court. In her complaint filed Feb. 17, Thomas, 86, alleges NAJ, a real estate holding company located on Timberline Drive in Charleston, failed to properly redeem her property it bought in a tax sale two years ago.

  • According to her suit, Thomas took ownership of her property on Ravenswood Pike in Ripley on June 13, 2003. When she became delinquent in paying her 2007 taxes, NAJ bought it on Nov. 19, 2008, at a sale administered by Jackson County Sheriff Michael G. Bright. According to the Jackson County Assessor's Office, Thomas bought the property for $45,000.

  • In the tax sale, NAJ paid $1,563 for it. By law, before NAJ could formally claim title to the property, it had to notify Thomas of her right to redeem it. In her suit, Thomas alleges NAJ made little, if any, effort. Though she does not provide specifics, Thomas maintains NAJ attempted to notify her via certified mail to an unspecified address, but the notice was returned as "undelieverable."

  • Also, she alleges NAJ failed to take "additional reasonable steps" to notify her about redeeming the property including "constructive notice by publication" in a newspaper of general circulation.

  • Nevertheless, a deed giving NAJ title to the property was executed May 18, 2010, by Jackson County Clerk Jeff Waybright. The deed was recorded in the Clerk's Office the next day.

  • Along with an order setting aside the deed, Thomas seeks compensation in the amount of not only what would have been required to redeem the property, but also the taxes that have been paid on it since May 2010 along with 12 percent interest, court costs and attorney fees.(1)

Source: Jackson woman files suit to reclaim home.

(1) In a similar case, New York State's highest court, in reversing a state appeals court ruling, recently found that notification of redemption rights to a homeowner in a tax foreclosure action is not necessary and results in no due process rights violation. See NYS High Court: No Due Process Violation Where Municipality Fails To Inform Property Owners Of Buyback Rights In Tax Foreclosure.

In the current West Virginia case, unlike the New York case, in which it was the foreclosing municipality that screwed up on giving proper notification, it is a private, tax lien investor who is alleged to have fumbled the ball on properly notifying the property owner. It may be that the New York court was loathe to rule against the municipality for its screw-up (which may have resulted in a tremendous burden for municipalities across the state regarding the process by which they collect property taxes, not to mention all the crappy land titles that would have arisen from the screw-up); accordingly, it 'reverse engineered' the necessary logic needed to support a (predetermined?) 'conclusion' that no due process rights were violated.

In the current West Virginia case, because it is a private, tax lien investor rights involved (as opposed to a state tax collecting authority), the state court may be less reluctant to rule against said investor because no imposition would be created for said tax collecting authorities. The burden would be on each individual tax lien investor to clean up the mess created by its own screw-up.

Oregon Tax Foreclosure Law That Resulted In Entire Loss Of Home Equity For Elderly Siblings Eliminated From The Books

In Eugene, Oregon, The Register Guard reports:
  • No one is sure how the state law that required the city of Eugene in 1994 to sell John and Betty Neely’s $65,000 Santa Clara house for no more than the $7,411 the Neelys owed on an improvement lien got on the books.

  • But it did. And, despite the repeated efforts of Vida resident Scott Rohter to change it in the nearly two decades since the high-profile Neely dispute, the law stayed in place until this year.

  • It’s hard to imagine what (lawmakers) were thinking of,” said Dave Hunnicutt, president of Oregonians in Action — an advocacy group that lobbies for property owners’ rights — when the Legislature long ago required that cities, when foreclosing on a property to cover an improvement lien, could not sell that property for a penny more than the amount of the lien. That meant that those rare homeowners who were foreclosed on for failing to pay improvement liens would lose all their equity.

  • This year, however, Rohter — helped by Hunnicutt and state lawmakers Rep. Jim Weidner, a Yamhill Republican, and Sen. Floyd Prozanski, a Eugene Democrat — secured unanimous approval in the Legislature for House Bill 4111, which addresses the issue. Gov. John Kitzhaber signed the bill into law last week.

  • HB 4111 requires local governments to sell such property for at least 75 percent of its assessed value, and that any money left over after the lien is paid goes back to the home­owner.

  • The long-drawn-out Santa Clara dispute, and the bitter outcome for the Neelys, has long galled Rohter, a Lane County appliance repairman. Siblings John and Betty Neely, who were 76 and 65 at the time, got nothing when they were evicted from their home in 1994 after refusing, for years, to pay their share of a Eugene-mandated sanitary sewer improvement in their Santa Clara neighborhood. The Neelys initially owed $5,000 for the sewer line, which grew to $7,411 as they stalled and the city tacked on fees.

  • At the time, many Santa Clara residents were reluctant to be absorbed into Eugene. Many preferred remaining in county jurisdiction, hooked up to wells and septic systems. “It was a rural setting at the time,” Betty Neely, now 83 and living in Cupertino, Calif., said in a recent interview. “People there wanted to live out of the city.”

  • Santa Clara residents never had a chance to vote on whether they wanted the new sewer lines, Betty Neely remembers bitterly to this day. “We didn’t get a vote,” she said. “That’s very important in this America.”


  • The Neelys moved in with neighbors, and John Neely died later that year. Courtroom battles over the legality of imposing the sewer improvements without a public vote continued for several years. “It took a lot out of both of us,” Betty Neely said. “It was dirty business. I will always think so.”

  • The property was purchased in a foreclosure sale by Leroy Bench and Marilyn Goss for $7,411 in 1994. Under state foreclosure sale law, the city had to put the property up for sale for the amount owed on it. Five years later, the new owners sold the property for $100,650, county property records show.

For more, see Bizarre Oregon foreclosure law finally off the books (The law was at the center of a dispute that led to the sale of a foreclosed home for $7,411 — the amount of a sewer lien — in 1994).

Thursday, March 22, 2012

Fired CBO Analyst Continues Asking Why Federal Watchdog Agency Appeared To Sweep Securitization, Robosigning Shams Under Rug When Informing Congress

ABC News reports:
  • Lan Pham, an economist fired by the Congressional Budget Office two years ago, is still asking whether the watchdog agency appeared to "diminish or deny" the problem of foreclosure fraud while providing analysis to Congress.

  • As lawmakers enter budget season in Washington D.C. and wrangle over House Republicans' new budget blueprint, Pham is hoping to draw more attention to the housing market's woes.

  • "Why is one of the most powerful government agencies that can determine the direction of the nation's policies appearing to diminish or deny that the issue of mortgage securitization is a problem?" she said. "If it is a problem, we have a $7 trillion in mortgage-backed securities that has brought chaos to homeowners, whether or not they are in foreclosure."

  • Pham said her questions like those have led attorneys general to reach the $25 billion foreclosure abuse deal announced last month, and could affect not just underwater homeowners across the country but the entire U.S. housing market.

  • With a Ph.D. from the University of Minnesota, Pham worked for the Congressional Budget Office (CBO) for only two and a half months before she was fired in December 2010. In Pham's termination letter, her supervisor, Deborah Lucas, CBO's assistant director, said "a number of performance issues are the basis for the decision."

  • But Pham said she was fired for providing an analysis about the banking sector and foreclosure fraud issues involving mortgage-backed securities and robosigning that she said displeased her bosses.

  • Pham said the main issues of foreclosure problems relate to securitization, the pooling of mortgages that collateralize mortgage-backed securities, and the Mortgage Electronic Registration System, which has electronic records of ownership on about 65 million mortgages, about half in the country.

  • In her first interview since releasing a letter addressed to Sen. Chuck Grassley, R-Iowa, through the website Zero Hedge on Thursday, Pham said she is less concerned with losing her job but rather with bringing more transparency to her former employer.

  • "Because you see the losses around the country from those who purchased homes with banks foreclosing on homeowners that don't have the title to the mortgage, this is an issue where financially we're talking about a $7 trillion mortgage backed securities problem," Pham, who is looking for employment, said. "To me, talking about my career is just beside the point."

  • Pham said she was assigned to write a brief, or short paper, about foreclosures and that her supervisor rejected her discussions on the decline in property taxes, home prices, and the impact of foreclosures on homeowner assets or wealth.

  • Pham said her supervisor handed her policy thoughts from Morgan Stanley and Goldman Sachs which "appeared to minimize the exposure of banks to securitized mortgage problems." She said her supervisor said foreclosure problems were just media "sensationalism," and asked, "Don't you want house prices to go up?"

For more, see 'Whistleblower' Says Mortgage Securitization Still an Issue for U.S. Homeowners.

For even more, see, Zero Hedge: Terminated CBO Whistleblower Shares Her Full Story With Zero Hedge, Exposes Deep Conflicts At "Impartial" Budget Office:

  • The bottom line is that the CBO was warned at least by Ms. Pham (and possibly others) over the dangers of precisely the issue that Attorneys General are scrambling to shove under the rug in exchange for a wristslap to all mortgage originators (i.e., the same banks that somehow are now getting bailed out by taxpayers and the GSEs on an annual basis).

  • And just like every other issue that merely gets a cosmetic and very transitory liquidity facelift, nothing ever is actually fixed.

  • As Ms. Pham says: "It is unclear how the recent State attorney generals’ agreement to a proposed yet unpublished terms of the $25 billion robo-signing settlement would repair the chain of title issues that continue to mutate. In January 2011, the Massachusetts Supreme Judicial Court reversed the foreclosure actions of two banks for lacking proof of clear title, followed by a decision in October 2011 that a buyer who purchased a house that was improperly foreclosed upon does not make the buyer the new owner of the house; the sale does not transfer the property."

NC Appeals Court: Summary Judgment Improper In Suit On Defaulted Note Where Creditor Fails To Prove Merger With Predecessor Note Holder

A recent ruling from the North Carolina Court of Appeals reversed a lower court screw-up and said that the party suing on an allegedly defaulted promissory note was not entitled to summary judgment where the note was in the name of the original creditor, despite the fact that the suing party claimed that it had acquired the original creditor through merger.

On review of the lower court ruling, the appeals court pointed out that although the plaintiff argued that it now stands in the place of the original creditor on the note due to a merger between the two entities, neither the complaint nor any other documents in the record which were presented to the trial court revealed any evidence of a merger or explained why the party bringing suit named itself as plaintiff instead of its alleged predecessor.

For the ruling, see T.D. Bank, N.A. v. Mirabella, No. COA11-1178 (N.C. Ct. of App., March 20, 2012).

Zsa Zsa's Kid: Ailing Mom's Hubby Is Keeping Her Increasingly Isolated & Heavily Sedated While Draining Equity From $10M Mansion Now In Foreclosure

In Los Angeles, California, CNN reports:
  • Francesca Hilton, Zsa Zsa Gabor's daughter, is asking a judge to appoint a conservator to oversee the 95-year-old actress's finances and medical care. The Hungarian-born actress was once one of Hollywood's most glamorous women, but a broken hip and leg amputation in the past two years have left her confined to a bed.

  • "What Ms. Hilton is seeking here is for the court to make sure that Zsa Zsa's best interests are not being sacrificed for the selfish interests of anyone involved in Zsa Zsa's life," her lawyer, Kenneth Kossoff, said.

  • A conservatorship petition that Hilton's lawyer said he will file in a Los Angeles court Tuesday contends that Gabor's ninth husband, Prince Frederic von Anhalt, is keeping her "increasingly isolated" and "heavily sedated."

  • The filing questions von Anhalt's handling of Gabor's finances, saying he recently borrowed against on Gabor's $10 million Bel Air mansion, but the house is in foreclosure after several missed mortgage payments.

  • "In spite of her conflicts with von Anhalt, Francesca has been hoping he had Zsa Zsa's interests at heart," Kossoff said. "However, having just recently learned that he took out a $700,000 loan, and that there was a notice of default recorded against the property in late February 2012 because he apparently has not been paying Zsa Zsa's mortgage payment, it became clear to Francesca that if she did not seek to protect her mother, no one else would."

  • Hilton and von Anhalt have publicly battled for several years over Gabor's finances and her access to her mother. "He's basically taken my mother away from me," Hilton told CNN in an interview a year ago.

For more, see Judge asked to intervene in Zsa Zsa Gabor's care.

Wednesday, March 21, 2012

Use Of Contracts For Deed On The Upswing, As Are The Complaints

In Minneapolis, Minnesota, the Star Tribune reports:
  • Contracts for deeds have nearly doubled between 2004 and 2010 to 1,200. Experts say the actual number is likely three times higher because most contracts are informal and are never recorded.

  • But with that rapid growth has come an increasing amount of complaints about the terms of such deals. While a popular last resort for house hunters who can't get financed otherwise, contracts for deeds are largely unregulated and are ripe for abuse.

  • Some housing advocates warn that these arrangements have now taken the place of the mortgage scams that contributed to the fall of the housing market six years ago. [...] The most common problems are associated with terms that favor sellers, including high interest rates and short repayment terms.

  • Typically, a contract for deed is offered by a seller who doesn't have a mortgage on the property. The sales price is paid in installments. Often, the interest rate is a couple of percentage points higher than market rate and the term is usually five to seven years, which requires the buyer to refinance or make a large balloon payment when the contract expires. Once all the payments have been made, the owner gives the buyer the deed to the property.

  • Some sellers tout the low cost of executing a contract because an appraisal isn't required, but that's risky because a buyer could agree to pay more than the house is worth, making an eventual refinancing impossible.

For more, see Seller-financed contracts skyrocket, but so do gripes (An alternative financing form, contracts for deeds are becoming increasingly popular among people who might not otherwise qualify for a mortgage. But buyers need to be cautious of their terms).

(1) Use of contracts for deed and other similar arrangements (ie. land contracts, conditional/installment sale contracts, agreements for deed, lease/options, lease-purchases, rent-to-own, etc.) are among favored methods for scam artists to rip off unwitting homebuyers in real estate deals for property the scammer can't otherwise unload through a conventional sale (due to structural defects, title defects, over-mortgaged/underwater homes, etc.). See, for example:

Couple Buy Purportedly Tax-Foreclosed Home From Upstate NY County, Spend Cash On Improvements, Then Find Out They Don't Have Good Title To Residence

In Livingston County, New York, WHEC-TV Channel 10 reports:
  • Imagine buying a home, putting money into it, then months later finding out you don't really own it. Seems crazy, but it happened to a Mount Morris couple. Apparently, Livingston County sold them a home claiming it was foreclosed on, but in reality the bank had the rights to it. Anne Sapienza, the town of Leicester's sole assessor says it all happened.

  • Sapienza said, "It was a mistake, and it was missed but I don't know why it was missed." The home was classified as a single family dwelling, but you can see it is actually a mobile home. Sapienza says it was classified that way so they could value it properly, but to be clear it was described as a mobile home on the town's website. Something, she says, was missed when the county looked into foreclosing the home. Sapienza said, "If someone went out and took a picture you can see it was a manufactured home."

  • All the problems started after the county sold it for $53,000 at a tax foreclosure auction in July. News10NBC spoke to Kevin Van Allen, the lawyer representing the family who bought the home.

  • Van Allen said, "Fast forward a few months later, they received an eviction notice saying that the bank from a prior owner that lent the money to the prior owner, was trying to collect. Basically recover the mobile home." The bank had a lien against the mobile home and is who it really belongs too.

  • Sapienza said, "The lien was sitting there, why in the title search it wasn't found, I don't know." News10NBC was told that New York State mobile homes are personal property, so they can't be foreclosed on.

  • Sapienza said, "The fact is there was a bank, just like if you bought a car, and took a loan out for the car. There was someone who had a lien out against that property. And because it was personal property under banking and titling laws, they literally could go in and pull the home off." Basically, the family spend thousands of dollars to own just the land here.

  • Van Allen said, "They had actually invested some of their own money, which is obviously a big concern for them, if the bank is trying to reclaim that. They just want this behind them as quickly as possible."

  • News10NBC contacted the Livingston County attorney David Morris, but he said he didn't have time to talk to us about this. The lawyer representing the family who bought the home says they are doing everything possible to resolve this quickly. He adds the county and bank are working them.

Source: Home wrongfully sold in Livingston County.

Consumer Lawsuit Alleges Creditor's Agent Violated Federal Debt Collection Law; Says 'Bill Collector Sued Me In The Wrong Court!'

In Marshall, Texas, The Southeast Texas Record reports:
  • A Gilmer County consumer has filed a lawsuit against several debt collectors for violating the Fair Debt Collection Practices Act by filing a lawsuit in a distant court.

  • Roberta Ford filed suit against Samara Portfolio Management, Law Office of Joseph Onwuteaka P.C. and Joseph Onwuteaka on March 7 in the Eastern District of Texas, Marshall Division.

  • At issue is a retail installment contact that Ford signed on Dec. 16, 2003, for the purchase of a 2004 Kia Sorento, which was signed in Gregg County. According to court documents, the defendants filed a lawsuit against Ford in a Justice Court in Houston, Harris County on Jan. 24, 2011. The lawyers are attempting to recover a deficiency judgment of $8,376 and attorney's fees of $1,600. The case is currently pending and has not been set for trial.

  • Ford claims that the defendants are in violation of the Fair Debt Collection Practices Act by filing the lawsuit to collect on a consumer debt in a distant forum,(1) the suit states. The plaintiff is asking for an award of statutory damages, attorney's fees, and court costs.

  • Ford is represented by Richard Tomlinson of Lone Star Legal Aid in Houston.(2)

Source: Consumer sues debt collectors for filing lawsuit in a distant court.

(1) If the allegations are true, this case appears to be a slam dunk win for the consumer. See §811(a)(2) of the Act (15 USC 1692i(a)(2)):

  • (a) Any debt collector who brings any legal action on a debt against any consumer shall—

    (2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity

    (A) in which such consumer signed the contract sued upon; or
    (B) in which such consumer resides at the commencement of the action.

Reportedly, the consumer allegedly signed the contract in Gregg County and apparently resided in Gilmer County at the time the debt collector filed its lawsuit - which the debt collector filed in Harris County.

(2) Lone Star Legal Aid is a non-profit service provider of free legal aid having 13 offices throughout east, southeast, and northeast Texas serving 72 Texas counties and four southwest Arkansas counties.

Note that in the event the consumer prevails in this litigation, the consumer's law firm will be entitled to clip the debt collector for legal fees (despite the fact that it's a non-profit law firm providing no-cost/low cost legal services to its clients), as awarded by the court. See §813(a)(3) of the Act (15 USC 1692k(a)(3)):

  • (a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this title with respect to any person is liable to such person in an amount equal to the sum of—

    (1) [...];
    (2) [...]; and
    (3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court.

Tuesday, March 20, 2012

Distinction Between 'Mortgage' & 'Deed Of Trust' Significant Under California Law Governing Foreclosures

In San Francisco, California, the San Francisco Chronicle reports:
  • Does slipshod paperwork provide legal grounds to overturn a foreclosure? In Massachusetts, courts have said "yes" in two landmark cases upheld last year by the state's highest tribunal, the Supreme Judicial Court. Judges in other states have ruled likewise.

  • But California courts have consistently refused to void foreclosures even when banks botched the process.

  • Now a case argued in an appeals court in San Francisco last week might get the California Supreme Court to weigh in. The case hinges on a single word in a civil statute written over a century ago.


  • One of the biggest barriers for homeowners in foreclosure lawsuits turns out to be the definition of "mortgage." California Civil Code 2932.5, enacted in 1874, says lenders must record their ownership of a mortgage before foreclosing or selling a property. That sounds crystal clear.

  • But nowadays, almost no home in California is secured with a mortgage. Instead the state uses a slightly different instrument called "deed of trust."

For more, see Is it important who forecloses?

Chase, BofA Top Scofflaw List When Producing Required Documents Under Nevada Foreclosure Mediation Program

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • When homeowners headed for foreclosure sit down with their bank to see if they can work out an agreement, state law requires the lender come equipped with documents proving who owns the home, among other things. In one-third of those mediation meetings, however, banks failed to produce the required documents, according to an analysis of the last six months of 2011.

  • The figures appear to provide statistical evidence to support what many homeowners have claimed — that banks aren’t negotiating in good faith to help them stay in their houses.

  • JP Morgan Chase had the highest rate of noncompliance with the state law. It failed to produce required documents in 52 percent of mediations, which homeowners may request before a bank forecloses. The figures were released Thursday by the state’s Foreclosure Mediation Program.

  • Bank of America, by far the biggest private lender in Nevada, did not produce the necessary documents 41 percent of the time.

For more, see A third of the time, lenders don’t have paperwork in foreclosure mediation sessions.

Defect In Mtg. Assignment Sinks Lender's Post-F'closure Sale Attempt To Boot Ex-Homeowners; May Not Have Had Power To Foreclose When Proceedings Began

The Court of Civil Appeals of Alabama recently reversed a lower court ruling favoring a foreclosing lender and nixed an attempt by the lender to boot the homeowners out of their home after the foreclosure sale already took place.

In the case, the lender filed an action seeking possession of certain real property that was in the possession of the homeowners, who were using it as their residence. the lender claimed that it had acquired title to the real property through a foreclosure sale and that the homeowners had unlawfully detained the real property following the termination of their right of possession in the home.

The homeowners filed a pro se answer generally denying the allegations in the complaint, saying that "we can show that our property was foreclosed on without just cause."

The basis for the reversal revolved around a conflict with the date the mortgage was assigned to the foreclosing lender. According to the facts, a notary certified that the document was signed on April 20, 2009. On the other hand, the lender attached an affidavit by an employee indicating that it had acquired the mortgage via a sale effective December 30, 2009.

Meanwhile, the evidence showed that the foreclosing lender accelerated the debt as of December 11, 2009, and that the notice of the foreclosure sale was first published on December 15, 2009, prior to the date the mortgage was acquired by the lender according to its affidavit.

Based on the foregoing dates, it was established that the foreclosure proceedings might have been initiated by the lender without first having acquired a valid assignment of mortgage, creating a genuine issue of material fact as to whether it had the power to foreclose and sell the property when the foreclosure proceedings were initiated.

The court ruled that the foreclosing lender may have lacked standing to initiate the foreclosure process when it did which would have rendered the foreclosure deed void. Accordingly, it reversed the lower court ruling indicating otherwise.(1)

For the ruling, see Byrd v. MorEquity, Inc., No. 2100734 (Ala. Ct. of Civ. App. March 16, 2012).

(1) From the court ruling:
  • The conflict as to the date of assignment materially impacts the standing issue. In Sturdivant, this court held that, in order to conduct a foreclosure sale, a party must have the power to foreclose and sell the property as of the date of the initiation of the foreclosure proceedings, ___ So. 3d at ___, which is the date the party "accelerates the maturity date of the indebtedness and publishes notice of a foreclosure sale," Perry v. Federal Nat'l Mortg. Ass'n, [Ms. 2100235, Dec. 30, 2011] ___ So. 3d ___, ___ (Ala. Civ. App. 2011), impliedly overruled on other grounds by Ex parte Secretary of Veterans Affairs, [Ms. 1101171, Feb. 10, 2012] ___ So. 3d ___ (Ala. 2012).

    The undisputed evidence in this case shows that the debt had been accelerated as of December 11, 2009, and that the notice of the foreclosure sale was first published on December 15, 2009, which was long after the alleged April 20, 2009, assignment date but over two weeks before the alleged December 30, 2009, assignment date.

    If the latter date is accurate, MorEquity would not have had authority to initiate the foreclosure proceedings; only Wilmington Finance, Inc., or MERS could have started foreclosure proceedings at that time.

    Pointedly, two December 11, 2009, letters submitted by MorEquity, notifying the Byrds individually of the acceleration of the debt, and the notices of foreclosure sale published beginning on December 15, 2009, all indicate that Wilmington Finance, Inc., had invoked the foreclosure process, implying that the assignment had not yet occurred by mid-December, as the document attached to Schutte's affidavit reflects.

    MorEquity did not present a prima facie case of standing because its own evidence creates a genuine issue of material fact as to whether it had the power to foreclose and sell the property when the foreclosure proceedings were initiated on December 15, 2009.

Monday, March 19, 2012

'Head-In-The-Sand' Approach Prevails With Title Insurers, Agents When Dealing With Foreclosed Properties

The San Francisco Chronicle reports:
  • Chain of title - proof of who really owns a house - underpins the entire U.S. system of real estate. Broken chain of title due to slipshod paperwork was a serious issue uncovered in the nationwide robosigning scandal and again last month in a city report that found San Francisco foreclosure paperwork riddled with errors. Those revelations draw new attention to title companies, which insure a home's clear title for both buyers and lenders.


  • When the robosigning issue first exploded on the scene in October 2010, major title insurers briefly stopped writing policies for some foreclosed properties. That could have stopped foreclosure sales cold: Without title insurance, a bank will not issue a mortgage.


  • But the title insurance industry said its concerns have been addressed and it's not worried about the latest disclosures undercutting the assurances it provides people who buy foreclosed houses from banks.

  • "When robosigning first came to light publicly, it caused the industry to pause, almost hiccup for a second, in that would we be able to meet our obligations and protect homeowners who purchased homes out of foreclosure if these irregularities had occurred in the process," said Steve Gottheim, legislative and regulatory counsel for the American Land Title Association, the industry's trade group. "The whole goal of that small period was to get more information. When we had more information, the industry was able to get back to what it does best, insuring title."

  • That additional information consisted of finding that some of the paperwork defects were not that egregious and of reviewing legal statutes, he said. "Folks who buy (property) and have no knowledge that there may be some defect in the chain of title are protected very strongly by state law," he said. "Every state provides protection to bona fide purchasers of real property for value."(1)

  • It's a high bar for the purchaser to know about a title defect. Media reports, or even government reports like the one produced by Ting, would not be sufficient, he said. Suppose the previous homeowner camps out in front of the house with a sign saying the foreclosure was unjust? "It would take a lot more than picketing the property," he said. "It would take really good evidence and a court order that says it was an illegal foreclosure."

  • Gottheim said title insurers are prepared to step up when issues arise. "At the end of the day we are the folks who are going to be on the front lines protecting the new homeowner," he said. "If a homeowner has purchased a title insurance policy and a defect in the foreclosure comes up after the fact, we will stand there and protect them."

  • However, he said there has not been a wave of lawsuits by foreclosed-upon people seeking to take back their properties. "They don't have the money to bring these lawsuits," he said. "Even if they have a valid lawsuit and a chance to win, which state law would make very difficult for them, if they did win, they get the house back, but also get back the mortgage which they were unable to pay."

For more, see Robosigning focuses attention on title companies.

(1) What this title insurance industry flack fails to mention (either intentionally, or merely ignorantly) is whether or not one qualifies for protection as a bona fide purchaser does not turn merely on the purchaser's lack of knowledge. It turns on the purchaser's lack of notice, which could be actual notice, constructive notice, or implied notice (in some states, implied notice is considered to be a sub-category of actual notice).

In effect, protection as a bona fide purchaser turns on whether the purchaser either knew or should have known about the defects in the title. And there is at least a school of thought that finds great support in the case law that posits that any defect in a foreclosure action that could have been discerned by a purchaser by a careful review of a foreclosure file (in judicial states) and the recorded documents at the county land title registry (in all jurisdictions) that would have either:

  • revealed irregularities in the process, or
  • revealed facts that would lead any reasonably prudent person, using ordinary diligence, to make further inquiries concerning possible irregularities. Such a failure to make further inquiries would leave the negiligent purchaser chargeable with notice of what such inquiries and the exercise of ordinary caution would have disclosed. If all the inquiry which due diligence requires is made, and the irregualrity remains undiscovered, the purchaser is excused and is not deemed to be on notice. But a failure to use due diligence leaves the purchaser chargeable, as a matter of law, with notice of every fact (ie. irregularity) which the inquiry would have disclosed.

See, for example, Kordecki v. Rizzo, 106 Wis.2d 713, 317 NW 2d 479 (Wis. 1982), in which the court stated that had the party claiming bona fide purchaser status at a foreclosure sale examined the record prior to purchase, which he did not, the purchaser would have found the lis pendens recorded against the property being foreclosed. The lis pendens, in turn, would have led the purchaser to the county circuit court file on the foreclosure proceedings (the foreclosure court file number is typically noted on the lis pendens), and more specifically to the documents contained in said foreclosure file that, had they been examined, would have placed the purchaser on notice of defects in the process. Accordingly, the court ruled that the purchaser was not entitled to protection as a bona fide purchaser.

See also, Carnation Co. v. Midstates Marketers, Inc., 2 Kan. App. 2d 236, 577 P. 2d 827 (Kan. Ct. of App. 1978), supporting the proposition that an adequate title search of land requires the inspection/examination of a court file which is referred to in a recorded instrument affecting title to land:

  • [I]t is apparent that the appellant's argument that he had no notice of the lien is without foundation. The entry on the judgment docket is intended to serve as an index which alerts an interested party that judgment has been rendered. Specific and detailed information regarding the action is located in the appearance docket and the court file.

    A reasonably diligent search of the records available to the appellant would have revealed that judgment was entered on September 20, 1973, for that was the date reflected in the appearance docket and the court file containing the journal entry of judgment.

Whistleblowers Score Million$ In Seperate Suits Targeting Duibious Bankster Mortgage Lending, Foreclosure Practices

ProPublica reports:
  • Buried in the sweeping mortgage settlement with banks, for which final documents were filed this week, are five whistleblower cases that shed light on the litany of foreclosure abuses by the banks.

  • According to one suit, Bank of America allegedly passed bad loans on to the Federal Housing Administration. According to another, the bank allegedly denied qualified homeowners access to HAMP, the government's loan modification program.

  • The suits were all settled as part of the overall $25 billion mortgage deal. They were filed under the False Claims Act, which provides incentives for whistleblowers to come forward in cases in which someone has defrauded the government. Whistleblowers can net up to 25 percent of the total settlement from False Claims suits, and in some of these cases, the reward is in the millions.

  • Details are available for four of the cases; documents in a fifth, against JPMorgan Chase, have not yet been filed in Massachusetts. While the cases were settled as part of the overarching agreement, they still have to be accepted by the courts in which they were originally filed. In reaching the settlements, none of the banks admits or denies the lawsuits' allegations. We've laid out the details of each case.


  • [Kyle] Lagow's suit was settled for $75 million, and was a component of the FHA's $1 billion settlement with Bank of America over FHA insurance. Documents detailing his cut of the $75 million haven't yet been filed. [... Lynn Szymoniak's] suit was settled for $95 million, and she will receive $18 million. [...] [A] JPMorgan [lawsuit] settled for $45 million. The two whistleblowers, Victor Bibby and Brian Donnelly, told Reuters that together they would receive $11 million. They also said they would continue their case against the other banks. [...] [A Bank of America] suit was settled for $6.5 million, and [whistleblower Gregory] Mackler's cut has not been finalized.

For more, see Four Whistleblowers Who Sounded the Alarm on Banks’ Mortgage Shenanigans.

See also, Reuters: Whistleblowers reap millions in U.S. mortgage suits.

Los Angeles Feds Step Up, Lend Assist In 86-Year Old Woman's Effort To Regain Ownership Of Home Of 40+ Years After Home Title Ripoff

In Los Angeles, California, NBC Los Angeles Channel 4 reports:
  • An alleged con who swindled a senior out of her house has local and federal agencies working to solve the case, which involves a former LAPD officer and the bishop of a local church.

  • In an attempt to block the foreclosure scheduled for Wednesday, Keta Davis filed bankruptcy on behalf of her mother, Vistula Graham, who is in a nursing home and unaware of what’s happening with her home.

  • The tangled web of fraud begins with Leroy Dowd, a 74-year-old, self-proclaimed charismatic leader of a now-defunct South LA church called Triumph Church of God. Dowd conned Graham into giving him money and signing over her house – a three-bedroom ranch in Lynwood that she bought more than 40 years ago and paid off in the late nineties, Davis said.

  • He called himself a bishop, he called himself a prophet,” she said. Profit off her mother is more like it, she said.

  • Davis said no one could believe the story until an exclusive NBC 4 investigation exposed the plot that investigators have been trying to untangle for years. “You did what you had to do and you investigated it,” Davis said.

  • After the NBC 4 report aired, the FBI took notice and did something the agency said it rarely does: the FBI gave Davis a letter to use in her fight to save her mother’s house. The letter identifies her mother, 86-year-old Vistula Graham, is a potential victim of real estate fraud scheme and that the case remains under investigation by the federal agency.

  • Detectives from three law enforcement agencies said Bishop LeRoy Dowd, who allegedly co-signed on more than $800,000 dollars in loans and bank accounts using Graham’s house as collateral. Police uncovered a fellow officer who apparently benefitted from at least one of the fraudulent loans.

  • I don’t know how that occurred, I never met this woman,” Davis said, referring to Darcy Greenfield, who was an LAPD officer at the time of the suspected con. Greenfield had the house put in her company’s name and received $261,000 as the beneficiary of a loan, according to records obtained by NBC 4.

  • Greenfield is no longer on the LAPD and is facing ten felony counts in an unrelated real estate fraud case in San Bernardino. Greenfield has pleaded not guilty, but in public statements has blamed Dowd for ripping her off.

For more, see Investigation: Daughter Files Bankruptcy for Mom Swindled Out of Her Home (In a rare move, the FBI intervened on the family's behalf following NBC 4's initial investigation).

Sunday, March 18, 2012

B'klyn-Based Duo Who Ran Equity Stripping Ripoffs Get Multi-Year Prison Stays After Guilty Pleas; Pair Pinched For Peddling Predatory Sale Leasebacks

From the Office of the U.S. Attorney (Newark, New Jersey):
  • Two Brooklyn, N.Y., men were sentenced [] for conspiring with each other and others in a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, U.S. Attorney Paul J. Fishman announced.

  • Phil A. Simon, 35, and Garth Celestine, 46, were sentenced to 66 months and 36 months in prison, respectively. Both defendants previously pleaded guilty before U.S. District Judge Dennis M. Cavanaugh to conspiracy to commit wire fraud. Judge Cavanaugh also imposed the sentence [] in Newark federal court.

  • According to documents filed in this case and statements made in court:

    From 2004 to 2007, Simon and Celestine owned and operated Home Savers Consulting Corp., which held itself out as a foreclosure rescue company with two locations in New York. Simon and Celestine conspired with each other and others to defraud both homeowners facing foreclosure and mortgage lenders by making false statements and promises. Simon and Celestine defrauded more than 40 homeowners and mortgage lenders, causing losses to the victims of more than $3.3 million.

    Home Savers advertised to homeowners and promised to help them avoid foreclosure, keep their homes and repair their damaged credit. Simon and Celestine told the homeowners they could avoid foreclosure by signing contracts of sale and transferring title to their homes to individuals who would act as “straw buyers” of the properties.

    Simon and Celestine promised the homeowners that after they transferred their title to these straw buyers, Home Savers would help them improve their credit ratings, help them obtain more favorable mortgages on their homes, and ultimately direct the straw buyers to transfer the title to their homes back to the homeowners within six months to one year.

    Simon and Celestine typically told the homeowners the equity withdrawn from their properties would be kept in a separate account and used to pay the mortgages and expenses on their homes.

    After the homeowners were signed up, Simon and Celestine recruited individuals with good credit scores to act as straw buyers and paid them about $10,000 per property. Using the homeowners’ properties and the good credit ratings of the straw buyers, Simon and Celestine applied for mortgages in the names of the straw buyers to extract the maximum available equity from the homes

For the U.S. Attorney press release, see Co-Owners of Home Savers Consulting Corp. sentenced to prison for orchestrating mortgage foreclosure rescue scheme.

(1) For more on this type of foreclosure rescue ripoff, see:

Virginia Foreclosure Rescue Operator Wastes No Time (2 Months) Copping Guilty Plea In Sale Leaseback-Peddling Racket Targeting High-Equity Homeowners

From the Office of the U.S. Attorney (Norfolk, Virginia):
  • Philip Villasis, 41, of Chesapeake, Va., pleaded guilty [] in Norfolk federal court to conspiracy to commit wire fraud. Villasis faces a maximum penalty of 30 years in prison when he is sentenced on June 18, 2012. [...] A federal grand jury previously indicted Villasis on January 19, 2012. Villasis’ co-defendant, Ray D. Gata, previously pled guilty to the same charge on February 28, 2012.

  • According to court documents, from November 2006 until February 2011, Villasis and Gata engaged in a foreclosure rescue scheme that defrauded homeowners and mortgage lenders.

  • Villasis promised homeowners that he could save them from foreclosure by arranging a sale of their homes to Gata and other straw borrowers. To further entice the homeowners, Villasis promised that they could remain in their homes after the sale, pay rent, and he would resell the homes back to them once they were more financially secure.

  • Villasis and Gata profited from this scheme by taking all of the proceeds from the home sales. To complete the scheme, Villasis and Gata executed false closing documents that showed the proceeds of the sale going back to the homeowners when, in fact, the proceeds were going to Villasis, Gata and the other straw borrowers.

  • The homeowners received nothing from the sale of their homes while Villasis, Gata and others received in excess of $170,000. In almost every case, Villasis required the homeowners to pay more in rent to cover a larger mortgage, and ultimately evicted these homeowners from their homes.(1)

For the U.S. Attorney press release, see Chesapeake Man Pleads Guilty to Mortgage Fraud Scheme.

(1) For more on this type of foreclosure rescue ripoff, see:

Non-Profit Group Targets Another Suspected Foreclosure Rescue Racket In Civil Suit; Accuses Long Island Law Firm With Peddling Faulty Loan Mod Help

The Lawyers' Committee for Civil Rights Under Law(1) recently announced:
  • The Lawyers' Committee for Civil Rights Under Law (Lawyers' Committee) and pro bono counsel Davis Polk & Wardwell LLP (Davis Polk) have filed their fourth lawsuit against a network of for-profit loan modification companies.

  • The suit, Masheyeva v. Law Offices of David M. Green, was filed in New York Supreme Court in Nassau County, on behalf of 18 homeowners from New York and six other states. It alleges that the loan modification scam, operated by multiple corporate and individual defendants centered around David M. Green and his Nassau County-based firm, Law Offices of David M. Green, defrauded vulnerable homeowners out of tens of thousands of dollars by falsely promising—for substantial upfront fees—to obtain much-needed mortgage modifications on their behalf, but then consistently failing to deliver results.

  • The case seeks to recover monetary damages, including the illegal upfront fees paid by plaintiffs, and injunctive relief to put an end to the deceptive practices of the named defendants. The Lawyers’ Committee and Davis Polk are representing the plaintiffs free of charge. (Click here to view Complaint)

  • The scheme at issue in this case is alleged in the complaint to have operated as follows:

    1) In exchange for sizable advance fees of up to $5,000, collected in violation of New York law, defendants promised to work directly with plaintiffs’ lenders to renegotiate their home loans and to secure lower monthly payments and interest rates, and, in some instances, avoid impending foreclosure.

    2) They lured plaintiffs by touting their specialized experience in the industry, offering the services and expertise of seasoned attorneys, and claiming to have personal connections with key employees of plaintiffs’ lenders.

    3) Ultimately, defendants performed little to no work on plaintiffs’ loan modification applications, typically failing to make any contact with their lenders.

For more, see Lawyers' Committee & Davis Polk File Fourth Suit Targeting Loan Modification Scam in Nassau County.

(1) The Lawyers' Committee for Civil Rights Under Law, a nonpartisan, nonprofit organization, was formed in 1963 at the request of President John F. Kennedy to involve the private bar in providing legal services to address racial discrimination.

Bank Of America: Like The World's Worst-Behaved Teenager?

Rolling Stone columnist Matt Taibbi opines:
  • At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time.

  • Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers?

  • Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral.

  • They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

For more, see Bank of America: Too Crooked to Fail (The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?)

In a related story, see J.P. Morgan Chase's Ugly Family Secrets Revealed.