Saturday, May 05, 2012

NJ Homeowner's State Court Class Action Civil Suit Targeting Alleged Tax Lien Foreclosure Sale Bid Rigging Racket Moves To Federal Court

In Lebanon Township, New Jersey, the Hunterdon County Democrat reports:
  • Defendants in a class-action suit initiated by a Lebanon Township homeowner have until June 1 to file their answers to the complaint. Jeanne Boyer, who has been fighting to save her own home from foreclosure, filed the suit on behalf of herself and potentially thousands of other homeowners in similar situations.

  • The suit was filed in Hunterdon County Superior Court on March 13 and removed to federal court on March 28.

  • Boyer alleges that she is one of many victims of a bid-rigging scheme that allowed tax lien investors to charge the highest amount of interest allowed by law. Since the suit was filed, two more people and a company have pleaded guilty in federal court. Several pleaded guilty in federal court to Sherman Act violations by conspiring to eliminate any competition at tax sales.
  • Boyer was about to lose her home on Musconetcong River Road unless she came up with a total of $113,500 by March 15. Of that amount, more than $64,000 is accumulated interest. However, Superior Court Judge Yolanda Ciccone granted a temporary restraining order in light of a class action suit initiated by Boyer through attorney Michael Perle. A decision on a motion to extend the injunction until the class action suit is resolved is still pending.

Bankster Requests Transfer Of West Virginia Homeowner's State Court Predatory Lending, Loan Flipping Suit To Federal Court

In Charleston, West Virginia, The West Virginia Record reports:
  • One of West Virginia's largest banks has asked that a lawsuit brought against it for predatory lending be moved to a federal court(1). Earlier this month, Huntington National Bank submitted an eight-page notice of removal to have the suit transferred to the U.S. District Court for the Southern District of West Virginia.

  • Plaintiff Gary Miller sued the bank, its mortgage group and three other defendants in Kanawha County Circuit Court in December 2011. Miller accused them of "flipping," or using inflated appraisals and other unlawful practices to induce "unsophisticated" consumers into a series of unwise and expensive loans.

  • Flipping maximizes fee income to banks, but strips homeowners of equity in their homes, pushing them into default and, in some cases, foreclosure.

(1) An ABA Journal article (see Judge Says Firm Must Explain ‘Fraudulent’ Removals or Pony Up $25K) offers this observation on the legal maneuver used in this story by Huntington National Bank to find a friendlier forum to defend against this lawsuit, one commonly used in civil cases by big-time corporate defendants and their white-shoe law firms in lawsuits brought by (possibly under-financed) individuals and other plaintiffs on behalf of individuals, of moving a case from a state to a federal court:

  • [I]t is widely believed that plaintiffs, particularly individuals rather than corporations, fare better in state courts where they have greater likelihood of getting to a jury and often benefit from more favorable interpretations of law. Defendants in turn tend to prefer the federal courts. Thus removals can become a cat-and-mouse game in which a plaintiff names a party having nothing to do with the matter as one of the defendants to prevent the other side from removing the matter to federal court. That court can find fraudulent joinder and keep the case or remand it.

  • But studies have shown a greater increase in recent years of defendants removing cases to federal court, only for them to be dispatched back to state court for erroneous removal. One researcher, a third-year student at New York University School of Law, found that most often in such situations, the plaintiffs are individuals. And the rate of their cases being remanded back to state court is higher, too, wrote Christopher Terranova in last summer’s edition of the Willamette Law Review (PDF).

  • He adds that “the delays and costs of that extra procedural step to federal court are more costly and burdensome for most individual plaintiffs than they are for bigger defendants with more assets."

For the above-referenced Willamette Law Review article, see Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder (article also available at

For an example of one Federal judge excoriating a lawyer and law firm for, according to the judge, their history of fraudulent removal requests of cases from state court to Federal court, see Hollier v. Willstaff Worldwide, Case 6:08-cv-01382-TLM-CMH (W.D. La. 2009):

  • Sadly, the Court is not surprised by G.W. Premier’s counsels’ tactics in this proceeding as Ungarino & Eckert, L.L.C.’s reputation proceeds it. This case is but one in a long line of fraudulent and improper removals that Ungarino & Eckert, and more specifically Matthew Ungarino, have filed in this and other districts. [...] [For more, see Hollier v. Willstaff Worldwide (pp. 4-9).]

S. Fla Woman In F'closure Among 350+ Allegedly Screwed Over By Investment Peddler Who Used Faith To Target Churchgoers; SEC: Racket Was A Ponzi Scheme

In Broward County, Florida, WSVN-TV Channel 7 reports:
  • A man who preached at South Florida churches is now accused of running a huge Ponzi scheme. And investigators say his victims were the church members who trusted him.
  • Darrilyn Bryant-Hudson: "My house is in foreclosure. Devastating, devastating. I'm sorry." Darrilyn Bryant-Hudson says she lost her retirement savings of $250,000 after investing with [Ephren Taylor, Jr.]. He preached at her Pembroke Park church promising "biblically sound financial advice." "When you come to church, me especially, you are trustworthy. You don't expect anybody from the outside to come into the congregation to tell lies and to deceive you."

  • And now the Securities and Exchange Commission says that's exactly what happened to Darrilyn and hundreds of others. Eric Bustillo, SEC: "This was nothing but a fraud from the beginning." In a scathing lawsuit the SEC charges Taylor "operated a Ponzi scheme to swindle over $11 million, primarily from African-American churchgoers."
  • Calling himself a social capitalist, Taylor used faith to convince church members their money would be used to buy businesses in disadvantaged communities. Eric Bustillo, SEC: "These investors put their money in thinking that they were investing with somebody who truly wanted to do some good, who truly had a track history as he claimed he had and in reality it turned out to be it was all false." Officials say more than 350 investors were taken by Taylor.
For the SEC lawsuit, see SEC v. City Capital Corporation, et al. (Go here for SEC press release).

Florida Cop Accused Of Claiming Improper Homestead Tax Break Dodges Felony Conviction With Plea Deal; Quits Force

In Monroe County, Florida, the Florida Keys Keynoter reports:
  • Although he avoided having a criminal record by entering into a plea agreement [...], whether suspended state law enforcement agent Vince Weiner will keep his police certification is still very much an open question.

  • Weiner, on extended leave from his job as a Keys-based agent for the Florida Department of Law Enforcement, pleaded no contest to petit theft and paid $223 in court costs, $75 in prosecutorial fees and $40 to the FDLE in investigative fees; presiding Circuit Court Judge Mark Jones withheld adjudication.

  • Weiner, 47, was charged last Aug. 17 with felony grand theft and misdemeanor homestead-exemption fraud. Here's what prosecutors allege: Weiner bought a Big Pine Key house in 2005, then got assigned to Fort Myers in 2006. While living in Southwest Florida, Weiner rented his Keys house while still claiming the homestead exemption from 2007-10.

  • 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 owner lives in the house.
For story update, see Disgraced FDLE agent quits following plea deal (Vince Weiner, a Keys-based Florida Department of Law Enforcement agent, will resign effective May 1 following his no-contest plea on Monday to petty theft).

Cook County Officials Call On Illinois Lawmakers For Strong Laws To Pursue Real Estate Tax Cheats Making Improper Homestead Exemption Claims

In Chicago, Illinois, the Chicago Tribune reports:
  • Cook County Board President Toni Preckwinkle and Assessor Joe Berrios on Tuesday urged state lawmakers to give them more power to go after property owners who improperly claim tax breaks, saying they could recover more than $150 million in three years with the new authority.

  • Under legislation pending in Springfield, counties could go after back taxes from people who have wrongly received homestead exemptions. The tax break should only be applied to a property owner's primary residence, but people often also claim it for rental properties, vacation homes and secondary residences.

  • Other property owners get inappropriate property tax reductions for being a senior citizen, disabled person or disabled veteran.
  • Based on the number of exemption cheats he said he has found to date, Berrios estimated $154 million would be returned to the county, school districts and the like during the first three years the plan was in effect.

Sweep Of Improper Homestead Claims Asserting Real Estate Tax Benefit Entitlements Continues In Indiana

In Porter County, Indiana, the Post Tribune reports:
  • Owners of multi-family dwellings such as apartments who live in those buildings face a bad news/good news scenario in Porter County.

  • The bad news is, hundreds of them have been receiving homestead property tax exemptions for entire buildings, not just the units they live in, resulting in thousands of dollars owed to the county. The good news is, they can go to Porter County Auditor Bob Wichlinski’s office and get their exemptions straightened out without having to pay back taxes or penalties. If they put off that task until next year, though, they will have to pay those back taxes and penalties.

  • Letters went out to property owners saying they were in violation of the homestead exemption late last week, Wichlinski said Thursday. Given the scope of the problem, and the fact that there is no way to know whether property owners were purposefully dishonest when filing the necessary documents at closing when they took ownership of their buildings, his office decided to give property owners amnesty — for now.

  • We’re going to notify everybody who’s in this condition, we’re not going to seek back pay but starting in ’12 — pay in ’13 — we’re going to get it right,” Wichlinski said, adding the number of property owners is “in the hundreds — that we know of.”

  • That certainly provides property owners a break; Wichlinski said one owner who came in owed around $12,000 in back taxes and penalties. The county has been working to verify homestead exemptions, and the multi-unit buildings are just the most recent phase of that sweep, Wichlinski said.

  • Through early April, the auditor’s office has collected more than $1.4 million from single-family home owners who were committing homestead exemption fraud, he said.

Suit: Taser-Toting HOA Guards Mistakenly Storm Foreclosed Condo, Hold Unwitting Residents Against Their Will For Two Hours, Then Apologize For Error

In Sacramento, California, Courthouse News Service reports:
  • Nine condo residents claim Taser-toting private security guards burst into their homes at 3 a.m. and assaulted them, forcing them into the street in their underwear, in a foreclosure the residents had never been informed of.
  • After a default judgment was issued, "in the wee hours of April 30, 2011, defendants came onto plaintiffs' residence, uninvited, at approximately between 3 a.m. and 3:30 a.m., performing a military style raid of plaintiffs' residence," according to the complaint.
  • Saxon says he explained to a security officer that he had been paying all of the utilities and the security officer said that, "'between you, me and the lamppost, the homeowners' association is over-zealous." "The security officers apologized and said it was all a misunderstanding, and then left," the complaint states.

  • "They occupied and controlled the premises approximately two hours, holding plaintiffs against their will and preventing them by the use of force and/or the threat to use force for freely moving and entering their residence. ...

  • "During this approximate two-hour ordeal, the armed men threatened arrest and incarceration, menaced the plaintiffs with weapons, engaged in intimidation, positioning themselves immediately in front of and/or behind the plaintiffs, glaring at them menacingly and invading the plaintiffs' space."

  • When the plaintiffs returned to their homes, they saw that their personal belongings had been sifted through, and one man discovered that "naked photos of his girlfriend and himself ... had been taken."

  • The plaintiffs seek damages for trespass, extortion, assault and battery, false imprisonment, invasion of privacy, conversion and intentional infliction of emotional distress.

Friday, May 04, 2012

WV High Court: Lender Not Obligated To Disclose Environmental Tainting At Foreclosure Auction; Ruling Leaves Winning Bidder Holding Contaminated Bag

In Charleston, West Virginia, The State Journal reports:
  • A bank was not required to disclose environmental contamination issues of a Bluefield property purchased at an auction foreclosure sale, West Virginia Supreme Court justices ruled in an April 27 memorandum decision.

  • Danny E. Lusk and Gordon M. Lusk II filed their suit in Mercer County Circuit Court against First Century Bank, Regency Real Estate and Auction Co. and Cooper Industry asserting Cooper negligently contaminated the property and failed to remediate contamination. The Lusks also asserted the bank had a duty to disclose such contamination.
  • The Lusks purchased the Bluefield property in 2006, asserting they received assurance from an auctioneer and a First Century Bank representative that the property was clean, documents stated. According to court documents, the Lusks placed a bid of $49,000 for the property and later received a notice of trustees' sale along with an advertising notice for the sale that stated it was subject to environmental regulations and the property was sold "as is." Therefore, the property would be sold without a warranty.

  • The Lusks also received a notice of potential liability from the U.S. Environmental Protection Agency, which notified the Lusks they may be responsible for the cleanup of the property. Documents note the EPA had not sued the Lusks for remediation costs at the time briefs were filed.
  • On appeal, the Lusks argued the circuit court should not have granted summary judgment in favor of the bank on assertions of intentional failure to disclose contamination and breach of good faith. The Lusks additionally argued a real estate seller has a duty to disclose a property's defects and if a seller fails to do so, it constitutes constructive fraud. The foreclosure deed, the Lusks argued, constituted a contract with the bank and would be sufficient to form the assertion of a breach of duty of good faith and fair dealing.

  • According to court documents, the circuit court found a trust creditor under a deed of trust does not own an interest in the property and concluded a creditor under a deed of trust is not required to make disclosures concerning the condition of a property being sold.

  • The circuit court ruling also held petitioners did not have a contractual relationship with the bank and they purchased the property with constructive notice. The circuit court's ruling noted the Lusks purchased the property "as is."

  • In a 4-1 vote, West Virginia Supreme Court justices said they found no errors in the circuit court's ruling and affirmed the decision. Justice Brent Benjamin dissented from the majority's ruling.
For the ruling, see Lusk v. First Century Bank, NA., No. 11-0665 (WV April 27, 2012).

Up For Re-Election, Nevada State Senator/Law Partner In Firm Representing F'closure Document Mill Slips & Slides His Way Around Robosigning Questions

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • Robo-signing left tens of thousands of Nevadans not knowing if they own their home. State leaders take a near unanimous stand against it but one Nevada politician may be voting one way, while profiting another way.

  • State Senator Greg Brower joined a near unanimous vote last year in a high-profile bill combating robo-signing. The Reno-area Republican is in one of the most competitive races in the state. The power balance at the state capital is at stake. But perhaps, more important, a clear answer From Brower on the question: Is robo-signing good or bad?
  • Brower is Nevada's former U.S. Attorney. He's now a partner at a private law firm paid to represent Lender Processing Services. Nevada's attorney general sued that company for what the state calls the largest case of illegal robo-signing. Brower's fellow attorneys filed a court paper which states robo-signing is not illegal; it is expressly permitted, and is not forgery.

  • The I-Team wanted to see if Brower himself supports robo-signing. At first, he told us, on the phone, he had nothing to do with the high-profile robo-signing case. The I-Team wanted Brower to explain his position. His office canceled one interview and postponed several times. Finally the I-Team caught up to Brower at a Las Vegas legislative hearing at the end of the lunch break.

Title Industry Survey Respondents Evenly Divided On Which Type Of Real Estate Fraud Is Of Most Concern

From a recent press release from Ernst Publishing Company:
  • Ernst Publishing Company has released the results of a title industry survey, revealing thoughts and perceptions held by industry insiders regarding mortgage fraud. The survey touched about 9,000 industry participants, many of whom provided detailed answers.

  • About 40 percent of respondents felt that fraud in real estate transactions had increased in the last year, while the respondents were evenly divided on the topic of which type of fraud they were most concerned about. Among the choices: Robo-signing, identity theft, integrity of the record, fraud within the loan transaction, and foreclosure fraud.
For more, see Ernst Survey Reveals Industry Take on Mortgage Fraud (It’s a growing problem and players in the mortgage space are ready to take action).

Homeowner Activists Will Be Crushed Under Their Own Weight

Columnist Richard Zombeck writes in The Huffington Post:
  • Homeowner activists will be crushed under the sheer weight of their gigantic egos; 11 million blogs, websites, and Facebook pages; intellectual dishonesty; Internet turf wars; and a stranglehold on information -- leaving homeowners sifting through debris for decades.

  • Since 2009, which by most people's naive assessment is when the housing crisis and foreclosure fiasco began, the Internet has become littered with self-proclaimed mortgage experts and homeowner activists doing little more than drawing attention to themselves and pointing to their manufactured biographies and made up resumes. A vast majority of these bloggers do little to help homeowners and, in many cases, are doing irreparable harm with histrionics, inane screeching, disparate calls to action, and ignorant advice for struggling and desperate homeowners.

  • Every once in a while someone will pop up in the news or on a blog to take personal credit for having exposed "robo-signing" or for having coined the term "mortgage servicing fraud." The media has been all too accommodating and eager to present these clowns as "citizen heroes" without a shred of research into their backgrounds, expertise, or credibility.

  • As a result, these re-branded former traders, mortgage brokers, and, in some cases, convicted felons are allowed to pass themselves off as concerned citizens. In actuality, much of the mortgage mess was being discussed long before what many consider ground zero - as early as 2005 in some cases. (See: ML-Implode, MSFraud, and GetDShirtz.)

For more, see Homeowner Activists Will Be Crushed Under Their Own Weight.

Thursday, May 03, 2012

Tenants Accuse Bldg Manager Of Lease-Purchase Scam After Discovery That Foreclosure Action Predated Rent-To-Own Contracts; Duped Victims Face The Boot

In Rockaway, Queens, the New York Daily News reports:

  • It was supposed to be a dream home by the ocean — but instead turned into a sea of red tape. Management at the Metroplex on the Atlantic, a 15-story luxury apartment complex in Far Rockaway, offered prospective homeowners a rent-to-buy contract.

  • But after a year of plunking down money on above market-rate rent and on improvements for units they hoped to someday own, some would-be homeowners now say they were duped. The building was going into foreclosure, a process that would void their contracts.

  • I was sick to my stomach when I heard,” said single mom and registered nurse Andrea Ahanonu. Residents said they were taken with building manager Jerzy Szymcyzk, a charismatic 62-year-old who would playfully demonstrate headstands for them.

  • Karla Shah said she agreed to pay $1,600 a month for a one-bedroom unit, above market rate in the neighborhood, if it meant soon owning a condo in a building with a sweeping ocean view. Shah, like her neighbors, believed she was signing a contract that would let her to buy the unit in a year. She said she also had a gentleman’s deal with Szymczyk that 3% of the rent would go toward a downpayment. I was so close to getting a loan approved,” said Shah, who teaches English as a second language.

  • But last fall, the tenants were surprised to learn the building was in foreclosure and their contracts were invalid. Furthermore, court papers show the foreclosure began in September 2010, even before Szymcyzk signed up prospective buyers.

  • The tenants had two options: continue paying the pricey rents without a rent-to-own agreement or leave their homes. Many of the tenants have since stopped paying rent and have received eviction notices from the property’s receiver, Walter and Samuels Inc. Residents blame the smooth-talking Szymczyk for pulling the wool over their eyes.

  • But Szymczyk said the tenants didn’t read the contract carefully and denied there was a 3% gentleman’s agreement. He also blamed the foreclosure receiving company for not honoring the rent-to-buy deal. Walter and Samuels did not return a call seeking comment. I didn’t cheat no one,” said Szymcyzk, who has an unrelated labor lawsuit pending against him filed by Metroplex employees.

  • Meanwhile, the building is deteriorating. Its elevators now have four violations with the city Buildings Department, an empty pool sits on the unlocked rooftop and a broken garage door allows anyone to slip in the building unnoticed. I just want this to be over,” said Ahanonu. “I want my money — that’s what I want and then I’m gone.”
Source: Rockaway residents say they lost thousands after rent-to-own building went into foreclosure (Tenants say Metroplex on the Atlantic manager knew their contracts would soon be voided).

Force-Placed Insurance Racket Alleged In Federal Suit Tagging GMAC, Notorious Provider w/ Charges Of Illegal Kickbacks That Screwed Homeowners

In New York City, the law firm Kirby McInerney LLP recently announced:

  • The law firm of Kirby McInerney LLP has filed a class action lawsuit in the United States District Court for the Southern District of New York against GMAC Mortgage, LLC and Balboa Insurance Company in connection with an allegedly unlawful kickback scheme involving force-placed insurance.

  • The case is brought on behalf of a putative class consisting of all residential mortgage borrowers who have been charged costs associated with force-placed insurance in connection with loans serviced by GMAC at any time from March 6, 2003 to the present. The case alleges that GMAC, a mortgage loan servicer, extracted kickbacks or bribes from Balboa, a provider of force-placed insurance coverage, which artificially inflated reimbursements sought by GMAC from borrowers.

  • To protect the lenders' interest in secured property, mortgage loan contracts require the borrower to maintain specified levels of hazard insurance. If the borrower's coverage lapses, the lender is entitled to purchase coverage for the home, "force place" it, and be reimbursed by the borrower for the cost.

  • Beginning in March 2003, GMAC entered into an agreement to buy force-placed insurance coverage with respect to its mortgage loan servicing portfolio from Balboa. Plaintiff alleges that GMAC, as a quid pro quo for awarding Balboa its force-placed insurance business, has required Balboa to pay GM kickbacks.

  • These kickbacks have been in the form of bogus "commissions" paid to a GMAC affiliate, "GMAC Agency Marketing," an unincorporated division and/or fictitious "doing business as" name of defendant GMAC Insurance Marketing, Inc. Plaintiff alleges that Balboa agreed to label these payments as "commissions" -- and to funnel them through GMAC Agency Marketing -- to disguise their true nature as bribes or kickbacks.

NYS Regulator To Begin Formal Public Hearings Into Force-Placed Insurance Racket; 'Invites' Fifteen Banksters To 'Join Festivities' & Testify

In New York City, The Associated Press reports:

  • New York’s Department of Financial Services has set public hearings [this] month to review whether rates for so-called “force-placed” insurance are excessive and to examine the relationships between insurers, banks, mortgage servicers, insurance agents and brokers. Banks and mortgage holders take out that insurance when a homeowner misses a mortgage payment or fails to maintain coverage required by the mortgage.

  • Department Superintendent Benjamin Lawsky has said the high cost adds to struggling homeowners’ debt, making it harder to avoid foreclosure. The department plans to start hearings May 17 at its Manhattan offices. They’re expected to continue two more days and will be webcast.

  • It has sent letters to 15 financial services companies directing them to provide testimony. That includes banks, mortgage servicers, insurance agents and brokers, insurers and reinsurers.

Wednesday, May 02, 2012

Purported Clergyman Who Peddled Sale Leasebacks To Homeowners In F'closure Cops Plea To Felony Charges; Prosecutors: 3 Victims Scammed Out Of $650K

In Santa Clara County, California, the San Jose Mercury News reports:

  • A San Juan Bautista man pleaded guilty to felony charges that he cheated Silicon Valley homeowners out of more than $650,000 and took title to their homes. Wesley Fort, 56, was a bishop of the Newlife Family Worship Center Church of God in Christ in Hollister when he scammed three families in San Jose and Milpitas, according to the Santa Clara County District Attorney's Office.

  • He will be sentenced to no more than two years and eight months in jail, three years of supervision and may be required to make restitution to the victims.

  • Fort, acting as a foreclosure consultant in 2005 and 2006, told the families he could save their homes from foreclosure. He convinced them to transfer title of their homes to him and also to make mortgage payments to him, in one case a victim paid him more than the regular mortgage payments. He told the owners he would eventually return title to them, according to prosecutors.

  • But all three families lost their homes. Fort, meanwhile, made money through either refinancing the homes or by selling the properties to himself, according to prosecutors. It is a felony for a foreclosure consultant to acquire an interest in a foreclosed home from a client.

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

(2) State court prosecutors appear to be stepping up to the plate and bringing criminal charges against these scammers in these cases which, at one time, were generally thought of as being civil cases. See, for example:

Outfit Scoring Deeds In Exchange For Dubious Short Sale Promises Now Tagged By Stiffed HOAs For Assessment Non-Payment, Unit Rentals Without Approval

In West Palm Beach, Florida, The Palm Beach Post reports:

  • A Palm Beach County foreclosure­-rescue company is acquiring distressed homes and renting them out, but some home­owners association leaders say it's not paying the dues vital for community upkeep.

  • The for-profit Nationwide Investment Firm, which recently moved its Boca Raton headquarters to a Flagler Drive office in downtown West Palm Beach, has homeowners quit claim-deed their properties to the company with promises to broker a short sale, while also defending the case in court.

  • Homeowners, who remain on the hook for the mortgage while no longer owning the home, have filed several lawsuits against Nationwide, complaining they unwittingly gave away their property without receiving the help they sought.

  • And community associations say there's a deeper ripple effect in neighborhoods where Nationwide seeks to put tenants in homes without association approval or paying fees required for maintenance, security, landscaping and other services. Associations trying to recoup delinquent fees have filed tens of thousands of dollars in liens against Nationwide and properties deeded to the firm.

  • Florida property appraiser records show Nationwide owns 73 homes in Palm Beach, Broward, Miami-Dade, Collier, Lee, St. Lucie and Highlands counties. Nationwide President Guilfort Dieuvil, a licensed Realtor, said his company is working with the associations to settle the bills.

  • The Palm Beach Post first reported on Nationwide in November(1) when five lawsuits within a year's time accused the company of fraud. Two more homeowner lawsuits have been filed since then, and there have been several homeowner complaints sent to the Florida Attorney General's Office.

  • The Florida Office of Financial Regulation said on Monday that it is investigating the company. The Palm Beach County State Attorney's Office had no comment when asked if it was looking into the company, said spokeswoman Christine Weiss.

  • Kevin Fabrikant, a Hollywood­-based attorney who began representing Nationwide in the fall, has defended its quit claim practices, saying homeowners are explained the plan in both Creole and English. Because Nationwide advertises on Haitian television and radio stations, many of its clients speak Creole as their first language.

  • Fabrikant has since withdrawn from Nationwide's cases, telling The Post he had "irreconcilable differences" with the company. Most of the lawsuits against Nationwide are from homeowners who describe questionable short-sale business models, but unsuspecting renters can also get caught up in the deals.

CFPB Works To Finalize Dodd-Frank Regs' Definition Of "Qualified Mortgage"; Bankster Violations To Lead To Harsh Liability

American Banker reports:
  • The Consumer Financial Protection Bureau is working to finalize the definition of a Qualified Mortgage ["QM"] under the forthcoming ability-to-pay regulations. These regulations will have profound implications for the entire U.S. residential mortgage market.
  • Under the Dodd Frank Act, the liability for violating the ability-to-repay standard is intended to be harsh. The law provides borrowers and their counsel a strong arsenal to stop foreclosure, obtain substantial compensation, and cover the attorney's fees. Adding such a significant element of legal risk to every underwriting decision a lender makes, and to every loan an investor buys, has the potential to drive capital away from the mortgage market.

  • Recognizing this, Congress created the QM and granted legal protections to lenders making these loans in order to establish QMs as the "preferred" product in the market. Under this incentive structure, borrowers would seek out QMs, and lenders would make them widely available; conversely, lenders that originate non-QMs would be subject to significantly enhanced legal risks.

Tuesday, May 01, 2012

Central Florida HOA Obtains Questionable Court Order To Commandeer Possession Of Owner's House, Then Rent It Out To Tenant

In Wesley Chapel, Florida, The Tampa Tribune reports:

  • Joanne McCarn owns her home, but her homeowners association has taken it over and calls the sheriff's office if she comes near the property. What's more, the Bridgewater Community Association evicted her tenant, changed the locks and moved in its own renter.

  • "This is not a foreclosed house," McCarn said. "This is still my house. It's unfair how much power the HOA has. It's so surreal to me."

  • The association's president and attorney aren't talking. Public records detailing the steps they have taken show McCarn's house is just one of six the association is seeking to rent out. That doesn't count homes the association has taken in foreclosure and is now renting.

  • It's a tricky legal path for a group that has gone to extreme measures before to recoup money it lost in the housing downturn. Last fall, the Bridgewater Community Association made headlines by charging hundreds of dollars in fees to people seeking to purchase houses in foreclosure.

  • "Taking possession of the property and renting the unit out, that part is not something afforded by the law," said Ben Solomon, a south Florida-based homeowners association lawyer. Solomon works on behalf of associations nationwide to collect past-due fees from homeowners. He's typically in favor of forcing delinquent homeowners to pay up. But in this case, Solomon said, the Bridgewater association and its president, Mark Spector, went too far.

  • The association did persuade a judge to issue an eviction order for McCarn's tenant and order a receiver appointed to manage the property. In Solomon's view, that doesn't make it right — or legal. It's more a measure of how complicated the housing bust has grown.

  • "Judges rely on what rights attorneys tell them their clients are afforded under the law," Solomon said. "If there's no attorney on the other side to argue that it's wrong, the judge most often takes the word of the attorney and grants the motion. Plus, these judges hearing these cases usually are not experts in real estate law."

  • Solomon and other legal authorities contacted by the Tribune say the eviction may be legal. The reason: McCarn moved a tenant into the house without paying off a lien the association had imposed. But there are no legal grounds, Solomon said, for the association to change locks and move in another tenant.

Texas Couple: 'Our Son Used Forged Document To Add More Land Than We Actually Conveyed To Him!' Suit Alleges Slander Of Title, Seeks Correction Deed

In Port Arthur, Texas, The Southeast Texas Record reports:
  • A Port Arthur couple has filed suit against their son, claiming he forged documents making it seem like he owned additional property. Elgie Jenkins Jr. and Inez Jenkins allege their son, defendant Elgin Jenkins Jr. altered a deed addressed to him.

  • On the original deed, a certain lot was conveyed to Elgin Jenkins Jr., but he amended the agreement to add to more lots of land, according to the complaint filed March 29 in Jefferson County District Court.

  • "Plaintiffs did not make any of these handwritten additions to the deed," the suit states. "Furthermore, Plaintiffs do not own, nor have they ever owned Lot Number Eight, Montrose 1 Addition to the City of Port Arthur."

  • On Jan. 18, the plaintiffs sent their son a letter requesting that he voluntarily correct his deed, but he refused to do so, the complaint says. Instead, Elgin Jenkins Jr. brought the letter to his lawyer, who replied that the plaintiffs allowed an unnamed preparer to make the altercation [sic] in their presence. The plaintiffs contend the lawyer's statement is false.

  • In their complaint, the plaintiffs are allegeing slander of title, statutory fraud and malice against Elgin Jenkins Jr. They are seeking a correction deed; actual, exemplary, consequential and additional damages; pre- and post-judgment interest at the highest rate allowed by law; and attorney's fees. They are also seeking costs and other relief the court deems just.

Bankster Negligence, Excessive Sale Cancellations Lead To Havoc For Neighborhoods Littered w/ Vacant Abandoned Homes Going Through F'closure Process

In Tampa, Florida, the Tampa Bay Times reports:

  • The foreclosure crisis has littered the region with thousands of abandoned homes. The houses sit idle as banks have been slow to seize them in the final stage of the foreclosure process, the public auction.

  • Although recent headlines proclaim the worst of the housing crisis is over, the decrepit homes are a constant reminder that cleaning up the foreclosure mess remains a work in progress.

  • The house on Lane's street in Lithia went into foreclosure in 2008 and has been vacant for more than a year. Aurora Loan Services had set an auction for February but canceled it.

  • It's an oft-repeated pattern. In the last 12 months, lenders have canceled auctions on 4,204 properties in Pinellas and Hillsborough counties. Sales have been canceled two, three, even nine times on some homes.

  • In many cases, banks delay seizures to avoid having to pay maintenance bills or homeowner association fees. Meanwhile, neighbors fend off vandals and thieves and worry about property values falling because of the deteriorating houses.
In related stories from the South Florida Sun Sentinel:, see:
  • Neighborhoods crumble as thousands of homes sit in legal limbo, Sun Sentinel finds:

    Banks that made reckless home loans have been tiptoeing away from foreclosures in a tactic designed to cut their losses. The result: Orphaned, dilapidated homes dot the landscape from Kendall to Lake Worth.

  • Bad-neighbor banks neglect thousands of South Florida homes, Sun Sentinel finds:

    Thousands of vacant homes across South Florida have deteriorated into eyesores that violate local health and safety laws, depress property values and spread blight. The owners of these homes: some of the world's biggest banks.

    Banks shift the blame, saying maintenance isn't their job but the responsibility of another bank or company, known as a "loan servicer." And they delay or evade accountability simply because they are faceless institutions, usually based in other states, even other countries.

    The Sun Sentinel, in its investigation, identified banks as owners only in cases in which they held title to the property. But the newspaper also found that years after launching foreclosure suits, some banks or their agents balk at completing the process and taking title to homes that are unlikely to sell for much. That practice fuels a separate legal "limbo" problem that traps thousands of vacated homes in years-long court cases, often as they tumble into ruin.

    Banks pay little price for letting neighborhoods rot.

Monday, April 30, 2012

LA Sale Leaseback Peddler 'Strikes Out'; Gets 25 To Life For Equity Stripping Ripoffs That Targeted Poor, Elderly With Promises Of Foreclosure Rescue

In Los Angeles, California, the Los Angeles Times reports:

  • An Orange County man who swindled elderly people out of their homes after promising to help them avoid foreclosure was sentenced to 25 years to life in prison under California's tough three-strikes law. Defense lawyers and prosecutors across the state could not recall any other case in which a white-collar offender received such a lengthy sentence under a statute typically applied in violent crime cases.

  • The sentencing of Timothy Barnett was unusual because his entire criminal record involved fraud. The 49-year-old was convicted last month of 17 felonies for tricking five people into unknowingly granting him title to their homes. He had been convicted of similar charges in the 1990s.

  • "The worst thing you can do is take somebody's home," Los Angeles County Superior Court Judge Stephen A. Marcus said Friday in explaining the lengthy sentence. "Instead of helping people, he stripped the equity from their homes and left five people homeless," the judge said. "Even Bernie Madoff didn't take people's homes from them."
  • Barnett's latest crimes occurred between 2005 and 2007. The victims were older residents of poor South Los Angeles communities who had used the explosion of real estate values to borrow against their equity, only to fall behind on the payments.

  • That's when Barnett appeared. Victims testified that he went to their homes and prayed with them, saying he could help keep their homes, bring loans current and reduce monthly payments. What Barnett didn't make clear enough was that he would end up owning the homes, Marcus said. Along with their homes, the victims cumulatively lost nearly $900,000 of equity to Barnett.(1)
  • Many people across the country have been accused of victimizing desperate homeowners since the real estate market collapsed in 2008, without facing a potential life sentence. What set Barnett's case apart was two prior "strikes" he received after pleading guilty to two burglary charges in the 1990s. That made him eligible for a life sentence if convicted of a new felony, as he was in March.

  • Under California law, a person can be convicted of burglary if he or she enters someone's home with the intent to commit a crime, as Barnett did. Burglary is one of the dozens of serious or violent crimes considered strikes under state law. "He's a career criminal who specializes in real estate fraud," Marcus said. "He preys on the weakest people in our society."

  • Among the most recent victims was an 85-year-old blind widow named Dorothy King. Her niece, Angenetta Allen, said Barnett deserved the harsh punishment. "Mr. Barnett did prison time for the very same thing, and as soon as he got out he did the same thing," Allen said. When the judge announced Barnett's sentence, some victims and their families cried out in approval(2).
For more, see Housing scam brings up to life sentence under three-strikes law (An Orange County man who swindled elderly people out of their homes is sentenced to 25 years to life in prison under California's three-strikes law, which is typically applied in violent crime cases).

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

(2) At one time, many in state and local law enforcement once passed on prosecuting these sale leaseback equity stripping ripoffs that under the flimsy pretense that these cases were merely 'civil matters.'

Over the last couple of years, it's been primarily the Feds (U.S. Attorneys, FBI, Secret Service, etc.) that have been bringing prosecutions in these equity stripping ripoffs. However, as this story reflects, more and more state court prosecutors now appear to be stepping up to the plate and showing some guts by bringing criminal charges against these scammers. See, for example:

Mobile Feds, Antitrust Cops Pinch Guilty Plea Out Of Another Alabama R/E Investor In Ongoing Probe Into Foreclosure Sale Bid Rigging Activity

From the U.S. Department of Justice (Mobile, Alabama):

  • An Alabama real estate investor has agreed to plead guilty and to serve one year in prison for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced today [Friday, April 27, 2012]. To date, as a result of the ongoing investigation, four individuals and one company have pleaded guilty.

  • Charges were filed yesterday in the U.S. District Court for the Southern District of Alabama in Mobile, Ala., against Steven J. Cox of Mobile. Cox was charged with one count of bid rigging and one count of conspiracy to commit mail fraud. According to the plea agreement, which is subject to court approval, Cox has agreed to serve one year in prison, to pay a $10,000 criminal fine and to cooperate with the department’s ongoing investigation.

  • According to court documents, Cox conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.

  • Cox was also charged with conspiring to use the U.S. mail to carry out a scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. Cox participated in the bid-rigging and mail fraud conspiracies from as early as January 2004 until at least May 2010.

Northern California Foreclosure Sale Bid Rigging Suspects Continue Going Down As Two More Cop Guilty Pleas In Ongoing Probe

In Sacramento, California, The Daily Journal reports:

  • Two real estate investors who do business in San Mateo County have pleaded guilty to mail fraud and rigging public foreclosure auctions outside the Redwood City courthouse by agreeing not to bid against each other, according to the Department of Justice.

  • Lydia Fong and Matthew Worthing, both of San Francisco, were charged yesterday in the case, joining 20 other individuals throughout four Bay Area counties who have pleaded guilty or agreed to plead guilty in similar bid rigging and public auction fraud cases.
  • According to federal prosecutors, Fong and Worthing conspired with others for varied stretches between October 2009 and January 2011. Worthing is also charged with participating in a similar San Francisco County conspiracy in September 2010.

  • During the scheme, those involved agree not to bid against each other for foreclosed properties auctioned off outside the county courthouse. Instead, they kept the winning price low which, in turn, federal prosecutors say, damaged the real estate market and defrauded those expecting a level playing field.

  • When property is auctioned, the proceeds pay off the mortgage and debt with any remaining money going to the homeowner. Squelching competitive bids limits how much money is available for both.

  • Fong and Worthing used the postal service to send title documents to others in the conspiracy, make and receive payoffs and divert money, leading to the mail fraud charges.
For the U.S. Attorney press release, see Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 22 Plea Agreements to Date).

Virginia Supreme Court: Lender's Failure To Have Face-To-Face Meeting With FHA-Financed Homeowner Before Starting Enforcement Process Sinks F'closure

In Lynchburg, Virginia, The News & Advance reports:

  • The Supreme Court of Virginia ruled in favor of a Lovingston-area couple in their fight against the foreclosure of their property. On April 20, the court decided the lender failed to comply with terms of the mortgage taken out by Richard M. and Karin L. Mathews that required a face-to-face meeting before beginning the foreclosure process.

  • It also overturned Circuit Court Judge Michael Gamble’s ruling the meeting wasn’t required under U.S. Department of Housing and Urban Development regulations because the mortgage company’s offices were too far away.

  • Court records show the Mathewses fell behind on their loan payments and the holder of their note, PHH Mortgage Corp., appointed another company to begin foreclosure. A foreclosure sale was set for early November 2009. The day before the sale, the couple filed a complaint in Nelson County Circuit Court to stop it, noting PHH representatives were required to meet with them at least 30 days before beginning foreclosure but did not.

  • The mortgage company responded under Virginia common law, the person who first breaks a contract cannot sue to enforce it. It also said it was excluded from the meeting requirement because HUD had determined it was only required if the lender had a servicing office within 200 miles of the mortgaged property. The company had no such office. Gamble agreed, and dismissed the Mathews’ complaint in February 2011.

  • The Supreme Court of Virginia agreed in October to hear an appeal. An opinion rendered by Justice William Mims reverses both of the circuit-court rulings and sends the case back to be reheard.

  • The Mathewses and the attorney for PHH Mortgage Corp. could not be reached for comment. The Mathews’ attorney declined to comment about the decision. Although the couple could not be reached, Nelson County records show they still own a home in the Lovingston area.

  • The justices opined that under a similar 2008 case,(1) lenders must comply with all terms in a contract leading up to foreclosure and nonpayment of a mortgage is not the sort of material breach precluding borrowers from seeking to enforce the terms.

  • The HUD meeting requirements were incorporated into the couple’s loan because it was backed by the Federal Housing Administration. Under the regulation, the meetings are not required if the mortgaged property is not within 200 miles of a lender’s branch office. HUD, however, attempted to limit the definition of “branch” office to be a servicing office with staff trained to discuss options with the borrower behind on his payments. Department interpretations noted many “branch” offices are not staffed with properly trained employees.

  • The regulation itself does not support this limitation,” Mims wrote. “To accept HUD’s interpretation would amount to allowing it to create a new regulation or tacitly amend (the regulation) without following the proper statutory procedure.” The court noted borrowers should be able to travel to a lender’s branch office and meet with properly trained employees via tele- or video-conference.

  • A re-hearing of the issue in NelsonCountyhas not yet been set. A HUD spokeswoman had no comment about the ruling except to say the department is studying it.
For the ruling, see Mathews v. PHH Mortgage Corp., No. 110967 (Va. April 20, 2012).
(1) Bayview Loan Servicing, LLC v. Simmons, 275 Va. 114, 654 S.E.2d 898 (2008).